LINTHICUM, Md.--(BUSINESS WIRE)--Aug. 22, 2002--CIENA(R)
Corporation (NASDAQ:CIEN.Q) today reported revenue of $50.0 million for
its third fiscal quarter ended July 31, 2002. Under GAAP, CIENA's
reported net loss for the period was $160.0 million, or a net loss of
$0.42 per share.
CIENA completed its acquisition of ONI Systems Corp. on June 21,
2002. As a result, the Company's third quarter results include
approximately six weeks of combined CIENA and ONI financial results.
During the quarter, CIENA took a restructuring charge of
approximately $18.6 million, associated with workforce reductions,
lease terminations, non-cancelable lease costs and the write-down of
certain property, equipment and leasehold improvements. The Company
also recorded a credit to doubtful accounts of $1.2 million. In
addition, CIENA recorded a charge of approximately $41.2 million,
primarily related to excess inventory associated with its long-haul
transport products and non-cancelable purchase commitments with
suppliers.
"In the face of the pronounced downturn in telecom spending, CIENA
continues to strive for a balance between sustained, strategic
investment that will drive future revenues and prudent cost management
that will help return us to profitability," said Gary Smith, CIENA's
president and chief executive officer. "Achieving that balance means
making tough decisions and prioritizing our resources based on market
opportunity. As a result, during the third quarter we successfully
reduced our ongoing operating expenses even with the inclusion of
approximately six weeks of ONI-related expenses."
Despite the difficult telecom environment, CIENA continued to
broaden its customer base, adding 19 new customers in the quarter,
including 14 customers as a result of its acquisition of ONI.
In addition to GAAP results, management also analyzes CIENA's
results by excluding certain charges or credits that are required by
GAAP. These items, which are identified in the table below, share one
or more of the following characteristics: they are unusual and CIENA
does not expect them to recur in the ordinary course of its business;
they do not involve the expenditure of cash; they are unrelated to the
ongoing operation of the business in the ordinary course; or their
magnitude and timing is largely outside of the Company's control.
-0-
*T
Quarter Ended
July 31, 2002 Per Share
Item (in thousands) Effect
------------- ---------
Payroll tax on stock options $ 3 $ 0.00
Deferred stock compensation
costs 4,958 0.01
Amortization of intangible
asset 2,343 0.01
Restructuring costs 18,562 0.05
Provision for doubtful
accounts (1,242) (0.01)
Income tax effect 47,164 0.13
------- ------
$71,788 $ 0.19
Please see appendix A for additional information about this table.
*T
The total per share effect of the items identified in the table
above on CIENA's GAAP reported net loss was $0.19. Adjusting CIENA's
quarterly GAAP results by this per share effect would reduce the
Company's net loss in the quarter to $0.23 per share. In addition,
adjusting further to account for the approximately $0.07 after-tax per
share effect of the $41.2 million excess and obsolete inventory charge
in the quarter would further reduce the Company's net loss in the
quarter to $0.16 per share. These adjustments are not in accordance
with GAAP and making such adjustments may not permit meaningful
comparisons to other companies.
Business Outlook
"Service providers' re-evaluation of theirnetworks and their
business models has resulted in uncertainty and volatility in the
telecom equipment industry, but we believe longer-term, this process
will provide the opportunity for new leaders to emerge," said Smith.
"We firmly believe CIENA's ability to offer carriers identifiable,
measurable economic benefits from next-generation solutions that are
proven in large, distributed network environments uniquely positions
us to capture capex dollars that, in a more complacent environment,
might have gone to legacy solutions."
"CIENA's short-term goals are focused on increasing our presence
with incumbent carriers and preserving our strong cash balance. As
demonstrated by our recent Telmex win and other positive indicators
we've received from incumbents, we believe we are making solid
progress in this market. We also are taking steps across the company
to minimize our quarterly cash burn rate and to lower our break-even
revenue point," continued Smith.
"Our ongoing deployment at an incumbent carrier combined with the
general level of activity we see entering our fiscal fourth quarter
leads us to believe that CIENA's fiscal fourth quarter revenue could
be flat to slightly up from our fiscal third quarter results. In
addition, we are guardedly optimistic about opportunities we are
currently pursuing that should we be successful, could restore revenue
stability and growth over the course of 2003," concluded Smith.
Certification of Financial Statements
CIENA's President and CEO, Gary Smith and Senior Vice President,
Finance and CFO, Joseph Chinnici, in accordance with SEC Order No.
4-460 and Section 906 of the Sarbanes-Oxley Act, today will sign and
submit to the U.S. Securities and Exchange Commission (SEC) statements
affirming the accuracy of CIENA's current and historic financial
reports.
Live Web Broadcast of Q3 Fiscal Year 2002 Results
In conjunction with this announcement, CIENA will host a
discussion of its fiscal third quarter results with investors and
financial analysts on Thursday, August 22, 2002 at 8:30 AM (Eastern).
The live broadcast of the discussion will be available via CIENA's
homepage at www.CIENA.com. An archived version of the discussion will
be available shortly following the conclusion of the live broadcast on
the Investor Relations page of CIENA's website at:
www.CIENA.com/investors.
NOTE TO CIENA INVESTORS
This press release contains certain forward-looking statements
based on current expectations, forecasts and assumptions of CIENA (the
Company) that involve risks and uncertainties. Forward-looking
statements in this release, including in the face of the pronounced
downturn in telecom spending, CIENA continues to strive for a balance
between sustained, strategic investment that will drive future
revenues and prudent cost management that will help return us to
profitability, achieving that balance means making tough decisions and
prioritizing our resources based on market opportunity, service
providers' re-evaluation of their networks and their business models
has resulted in uncertainty and volatility in the telecom equipment
industry, but we believe longer-term, this process will provide the
opportunity for new leaders to emerge, we firmly believe CIENA's
ability to offer carriers identifiable, measurable economic benefits
from next-generation solutions that are proven in large, distributed
network environments uniquely positions us to capture capex dollars
that, in a more complacent environment, might have gone to legacy
solutions, CIENA's short-term goals are focused on increasing our
presence with incumbent carriers and preserving our strong cash
balance, as demonstrated by our recent Telmex win and other positive
indicators we've received from incumbents, we believe we are making
solid progress in this market, we also are taking steps across the
company to minimize our quarterly cash burn rate and to lower our
break-even revenue point, our ongoing deployment at an incumbent
carrier combined with the general level of activity we see entering
our fiscal fourth quarter leads us to believe that CIENA's fiscal
fourth quarter revenue could be flat to slightly up from our fiscal
third quarter results, we are guardedly optimistic about opportunities
we are currently pursuing that should we be successful, could restore
revenue stability and growth over the course of 2003, CIENA's
President and CEO, Gary Smith and Senior Vice President, Finance and
CFO, Joseph Chinnici, in accordance with SEC Order No. 4-460 and
Section 906 of the Sarbanes-Oxley Act, today will sign and submit to
the U.S. Securities and Exchange Commission (SEC) statements affirming
the accuracy of CIENA's current and historic financial reports, are
based on information available to the Company as of the date hereof.
The Company's actual results could differ materially from those stated
or implied in such forward-looking statements, due to risks and
uncertainties associated with the Company's business, which include
the risk factors disclosed in the Company's Report on Form 10-Q filed
with the Securities and Exchange Commission on August 22, 2002.
Forward-looking statements include statements regarding the Company's
expectations, beliefs, intentions or strategies regarding the future
and can be identified by forward-looking words such as "anticipate,"
"believe," "could," "estimate," "expect," "intend," "may," "should,"
"will," and "would" or similar words. The Company assumes no
obligation to update the information included in this press release,
whether as a result of new information, future events or otherwise.
(Condensed Consolidated Statements of Operations and Consolidated
Balance Sheets follow)
-0-
*T
CIENA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Quarter Ended Nine Months Ended
--------------------- ------------------------
July 31, July 31, July 31, July 31,
2001 2002 2001 2002
-------- --------- ----------- ---------
Revenue $458,070 $ 50,028 $ 1,235,455 $ 299,237
Excess and
obsolete
inventory
costs 37,767 41,192 51,825 284,883
Cost of
goods sold 221,882 50,960 631,170 257,758
-------- --------- ----------- ---------
Gross
profit
(loss) 198,421 (42,124) 552,460 (243,404)
-------- --------- ----------- ---------
Operating
expenses:
Research and
development
(exclusive of
$6,464, $3,860,
$8,136, $11,277
deferred stock
compensation
costs) 65,788 53,950 162,636 178,264
Selling and
marketing
(exclusive of
$6,928, $842,
$7,419, $2,649
deferred stock
compensation
costs) 39,622 30,829 108,040 98,264
General and
administrative
(exclusive of
$8,839, $256,
$9,411, $658
deferred stock
compensation
costs) 14,790 10,798 42,722 37,729
Deferred stock
compensation
costs 22,231 4,958 24,966 14,584
Amortization
-- 101,913 --
Amortization
of intangible
assets 1,382 2,343 2,491 5,969
In-process
research and
development -- -- 45,900 --
Restructuring
costs -- 18,562 -- 146,738
Provision for
doubtful
accounts (6,579) (1,242) (6,579) 14,813
-------- --------- ----------- ---------
Total
operating
expenses 212,876 120,198 482,089 496,361
-------- --------- ----------- ---------
Income (loss)
from operations (14,455) (162,322) 70,371 (739,765)
Interest and
other income,
net 19,820 13,558 44,823 44,775
Interest
expense (11,278) (10,614) (18,493) (29,756)
Loss on
equity
investments,
net -- -- -- (5,740)
-------- --------- ----------- ---------
Income (loss)
before income
taxes (5,913) (159,378) 96,701 (730,486)
Provision
(benefit) for
income taxes (11,567) 607 88,481 112,243
-------- --------- ----------- ---------
Net income
(loss) $ 5,654 $(159,985) $ 8,220 $(842,729)
======== ========= =========== =========
Basic net
income (loss)
per common
share $ 0.02 $ (0.42) $ 0.03 $ (2.45)
======== ========= =========== =========
Diluted net
income (loss)
per common
share and
dilutive
potential
common share $ 0.02 $ (0.42) $ 0.03 $ (2.45)
======== ========= =========== =========
Weighted
average basic
common shares
outstanding 324,368 376,548 305,965 344,242
======== ========= =========== =========
Weighted
average basic
common and
dilutive
potential
common shares
outstanding 337,877 376,548 319,722 344,242
======== ========= =========== =========
CIENA CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
October 31, July 31,
2001 2002
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 397,890 $ 715,180
Short-term investments 902,594 971,762
Accounts receivable, net of
allowance of $1,491 and $16,331 395,063 43,289
Inventories, net 254,968 65,478
Deferred income taxes, net 186,861 19,324
Prepaid expenses and other 53,713 45,476
------------ ------------
Total current assets 2,191,089 1,860,509
Long-term investments 494,657 566,535
Equipment, furniture and fixtures, net 331,490 248,135
Goodwill 178,891 765,913
Other intangible assets, net 47,874 57,005
Deferred income taxes, net - 54,479
Other long-term assets 73,300 77,455
------------ ------------
Total assets $ 3,317,301 $ 3,630,031
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 68,735 $ 53,143
Accrued liabilities 133,084 156,310
Restructuring liabilities 15,439 17,845
Unfavorable lease commitments - 8,112
Income taxes payable 6,649 7,271
Deferred revenue 29,480 20,174
Other current obligations 9951,239
------------ ------------
Total current liabilities 254,382 264,094
Deferred income taxes 64,072 58,318
Long-term deferred revenue - 15,333
Other long-term obligations 5,982 5,436
Long-term restructuring liabilities - 35,840
Long-term unfavorable lease commitments - 70,200
Convertible notes payable 863,883 910,591
------------ ------------
Total liabilities $ 1,188,319 $ 1,359,812
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock - par value
$0.01; 20,000,000 shares
authorized; zero shares issued
and outstanding - -
Common stock - par value $0.01;
980,000,000 shares authorized;
328,022,264 and 431,507,332
shares issued and outstanding 3,280 4,315
Additional paid-in capital 3,667,512 4,649,754
Notes receivable from stockholders (3,236) (6,595)
Accumulated other comprehensive income 4,842 8,890
Accumulated deficit (1,543,416) (2,386,145)
------------ ------------
Total stockholders' equity 2,128,982 2,270,219
------------ ------------
Total liabilities and stockholders' equity $ 3,317,301 $ 3,630,031
============ ============
*T
Appendix A
The adjustments management makes in analyzing CIENA's third
quarter GAAP results are as follows:
-- Payroll tax on stock options - an uncontrollable expense,
largely unrelated to normal operations, that fluctuates
significantly depending largely on the price of our stock and
the magnitude of option exercises in a given period.
-- Deferred stock compensation costs - a non-cash expense largely
unrelated to normal operations, and which arises under GAAP
accounting from the assumption of unvested stock options
issued by any companies we acquire, including Cyras.
-- Amortization of intangible asset - a non-cash expense
unrelated to normal operations arising from acquisitions of
intangible assets, principally developed technology acquired
in the Cyras acquisition which CIENA is required to amortize
over its expected useful life.
-- Restructuring costs - non-recurring charges, unrelated to
normal operations, incurred as a result of reducing the size
of the Company's operations to align its resources with the
reduced size of the telecommunications market.
-- Provision for doubtful accounts - non-recurring charges that
are outside of the Company's control that arise when our
customers' ability to pay is in doubt, in recent periods
primarily related to the financial health of service provider
customers.
-- Income tax effect - the income tax charge or benefit on the
adjusted net loss, which is a necessary adjustment for
consistency.
ABOUT CIENA
CIENA Corporation's market-leading intelligent optical networking
systems form the core for the new era of networks and services
worldwide. CIENA's LightWorks(TM) architecture enables next-generation
optical services and changes the fundamental economics of
service-provider networks by simplifying the network and reducing the
cost to operate it. Additional information about CIENA can be found at
www.CIENA.com.
--30--CRB/ph* des/ph
CONTACT: CIENA Corporation
Investor Contacts:
Suzanne DuLong or Jessica Towns, 888/243-6223
email: ir@ciena.com
or
Press Contacts:
Denny Bilter or Glenn Jasper, 877/857-7377
email: pr@ciena.com
KEYWORD: MARYLAND
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS NETWORKING
TELECOMMUNICATIONS CONFERENCE CALLSEARNINGS
SOURCE: CIENA Corporation
Today's News On The Net - Business Wire's full file on the Internet
with Hyperlinks to your home page.
URL: businesswire.com
Copyright 2002, Business Wire |
