[Q4 and year results]
CIENA Reports First Quarter Revenue of $134.3 Million, Earnings Per
Share of $0.37
LINTHICUM, MD--(BUSINESS WIRE)--February 19, 1998--
Completes Alta Acquisition, Issues Guidance Toward Second Quarter and
Fiscal Year 1998 Expectations
CIENA Corporation (NASDAQ:CIEN), today reported revenue of
$134.3 million for its first fiscal quarter ended January 31, 1998.
This compares with $53.9 million in revenue reported for the first
fiscal quarter of 1997 and $121 million for the previous quarter ended
October 31, 1997.
Net income for the quarter increased to $39.8 million, or $0.37
per share, compared with net income of $13.1 million, or $0.13 per
share, for the same period in 1996 and $37.3 million, or $0.35 per
share, for the fiscal fourth quarter 1997.
All earnings per share amounts represent diluted earnings per
share as defined within Statement of Financial Accounting Standards
No. 128 (SFAS 128).
"We are particularly pleased with the quarter's results given the
fact that we are currently in the process of transitioning from being
a single product manufacturer to a Company with a broader product
family," said Patrick Nettles, CIENA's president and chief executive
officer. "It takes more than research and development to actually
build and deliver industry-leading DWDM products; it requires
engineering for manufacturability and an organization that is
absolutely committed to delivering on its promises to its customers.
CIENA has proven that we can do just that."
Demonstrating its ability to deliver, CIENA expects to begin
commercial shipments of its 40-channel, 100 gigabit per second
capacity MultiWave(R) 4000 during the second fiscal quarter as
scheduled. CIENA will be demonstrating the MultiWave 4000 system,
running 40 channels at 50 GHz spacing, at booth #515 at the upcoming
OFC trade show in San Jose, February 24 to 26, 1998.
Commenting about the Company's income statement for the quarter,
Joseph Chinnici, CIENA's senior vice president, finance and chief
financial officer said, "As expected, CIENA's operating expenses
continue to increase, both in real dollars and as a percentage of
total revenue. We believe that investors should view this growth as
evidence of our commitment to building our infrastructure and growing
our R&D effort: critical steps toward sustaining the long-term
potential of the Company."
The Company also disclosed that it has recently received a
material update from WorldCom. Earlier in the week, WorldCom apprised
CIENA of a change in its deployment policy which will result in a
substantial reduction in system requirements from CIENA during fiscal
1998 as compared to the prior year. According to information shared
with CIENA earlier this week, WorldCom purchased equipment during 1997
based on a policy designed to meet an estimated two years' worth of
anticipated network capacity requirements. WorldCom's new policy calls
for purchasing activity and bandwidth deployment to transition to more
closely coincide with just-in-time bandwidth deployment, which,
according to WorldCom, means significant purchasing from CIENA may
resume in the latter part of calendar 1998.
"CIENA has been and remains our DWDM supplier of choice," said
John Sidgmore, WorldCom's vice chairman and chief operating officer.
"During 1997, CIENA delivered more capacity and at a faster rate than
we frankly thought was possible. As a result, our long-distance
capacity deployment is ahead of schedule."
"While there may be a short-term slowdown in WorldCom's order
rate to CIENA, WorldCom has not changed its commitment to being the
bandwidth leader and intends to continue to aggressively provision the
capacity afforded by CIENA's DWDM systems throughout our growing
network," concluded Sidgmore.
With respect to its relationship with AT&T, CIENA reported that
it has made important progress in AT&T's testing and evaluation
process, although volume, duration and timing of any purchases which
might ensue from AT&T remain unpredictable.
The Company also announced it completed its acquisition of ATI
Telecom International, Ltd. (Alta), a provider of telecommunications
engineering, furnishing and installation services.
"We continue to believe we have the best product at the best
price for AT&T and we are confident the testing and evaluation process
is confirming this view," stated Patrick Nettles. "We remain
optimistic about the revenue potential of this relationship for fiscal
1998 and beyond and will continue to focus our efforts on obtaining
the majority share of the total opportunity. The addition of Alta
provides CIENA with the installation experience and extensive field
support capability required to assist a customer like AT&T with
expeditious equipment deployment."
The Company issued the following guidance regarding its fiscal
second quarter and the remainder of fiscal year 1998:
"In the past, we have cautioned investors about the potential for
fluctuations in quarterly results as a result of our highly
concentrated customer base," said Nettles. "The uncertainty resulting
from the recent news from WorldCom combined with our planned continued
re-investment in the business is likely to result in sequentially
lower net income for the second quarter."
"As it is still early on in the quarter, it is difficult to
assess the impact the WorldCom news will have on our top-line,"
continued Nettles. "We intend to move aggressively to offset the
majority of the revenue shortfall from WorldCom, both in the second
quarter and for the remainder of fiscal 1998, with additional revenue
from existing and potential customers. However, at present, it appears
likely that revenue in the second quarter of fiscal 1998 will be
sequentially flat or possibly lower than that reported in the first
quarter," said Nettles.
"There is no doubt we have our work cut out for us, but it is
very early in the year, and based on the significant increase in
proposal activity we're experiencing in the U.S. and internationally,
market demand for DWDM systems appears to us to be accelerating,"
concluded Nettles. "I am very optimistic we have a realistic
opportunity to achieve the consensus revenue expectations for fiscal
1998, which at approximately $600 million, would represent a solid
achievement in year-to-year growth. More importantly, over the
long-term, our product line expansion and diversification will lead to
a broader customer base and a stronger, more robust revenue stream."
NOTE TO INVESTORS:
Forward-looking statements in this release, including statements
regarding (1) expected commercial shipments of the MultiWave 4000, (2)
optimism about the revenue potential of the AT&T relationship for 1998
and beyond, (3) the possibility that second quarter revenues will be
flat or possibly lower than the first quarter revenues, and (4)
optimism about achieving consensus revenue estimates for fiscal 1998
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 by such forward-looking statements, due to
risks and uncertainties associated with the Company's business, which
include, among others, its dependence on its major customers and their
spending patterns, the recent introduction of its products, and the
overall management of its expansion. The forward-looking statements
should be considered in the context of these and other risk factors
disclosed in the Company's Quarterly Report on Form 10-Q, as filed
with the Securities and Exchange Commission on February 19, 1998.
About CIENA
Based in Linthicum, Maryland, CIENA Corporation is a worldwide
market leader of open architecture, dense wavelength division
multiplexing (DWDM) systems for long-distance and local exchange
carriers. CIENA's DWDM solutions include the MultiWave(R) 1600
long-haul transport system, WaveWatcher(R) network management
software, the MultiWave Optical Add/Drop Multiplexer, the MultiWave
Sentry enhanced long-distance transport system and the new MultiWave
Firefly and MultiWave Metro short-haul systems. Through it's Alta
subsidiary, based in Norcross, GA, CIENA provide a range of
engineering, furnishing and installation (EF&I) for telecommunications
service providers in the areas of transport, switching and wireless
communications.
CIENA's DWDM equipment expands the carrying capacity of fiber
optic networks by dividing the optical signal into several separate
optical channels or wavelengths. An optical fiber without DWDM
technology carries a single color of laser light, or a single
wavelength, on which travels approximately 32,000 voice or data
transmissions. CIENA's DWDM technology divides the single wavelength
into multiple colors, or channels, thereby multiplying the capacity of
the fiber by the number of channels and enabling service providers to
expand bandwidth without the expensive process of adding more fibers.
Additional information about CIENA can be found on its World Wide
Website: ciena.com.
CIENA Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data) (unaudited)
Quarter Ended January 31,
1997 1998
--------------- --------
Revenue $ 53,933 $ 134,267
Cost of goods sold 20,832 50,575
--------- -----------
Gross profit 33,101 83,692
--------- -----------
Operating expenses:
Research and development 3,050 10,203
Selling and marketing 2,598 9,350
General and administrative 6,295 3,186
--------- -----------
Total operating expenses 11,943 22,739
--------- -----------
Income from operations 21,158 60,953
Interest and other income (expense), net 392 3,786
Interest expense (102)
--------- -----------
Income before income taxes 21,448 64,663
Provision for income taxes 8,365 24,895
--------- -----------
Net income $ 13,083 $ 39,768
========= ===========
Basic net income per common
share $ 0.99 $ 0.40
========= ===========
Diluted net income per common
share and dilutive
potential common share $ 0.13 $ 0.37
========= ===========
Weighted average basic
common shares outstanding 13,216 99,641
========= ===========
Weighted average basic common
and dilutive potential
common shares outstanding 99,128 106,552
========= ===========
CONSOLIDATED STATEMENTS OF OPERATIONS
Percentage of Revenue Analysis (unaudited)
Quarter Ended
January 31, January 31,
1998 1997(1)
---- ----
Revenue 100% 100%
Cost of goods sold 37.7% 38.6%
----------- ------------
Gross profit 62.3% 61.4%
Operating expenses
R&D 7.6% 5.7%
S&M 7.0% 4.8%
G&A 2.4% 11.7%
----------- ------------
Total operating expenses 16.9% 22.1%
----------- ------------
Income (loss) from operations 45.4% 39.2%
Other Income (expense) net 2.8% 0.7%
----------- ------------
Income (loss) before income taxes 48.2% 39.8%
Provision (benefit) for income taxes 18.5% 15.5%
----------- ------------
Net income 29.6% 24.3%
=========== ============
(1) Comparison includes a $5 million dollar charge taken in Q1
1997 due to an accrual of estimated legal and related costs associated
with pending litigation.
CIENA Corporation
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
October 31, January 31,
1997 1998
-------------- ------------
(Audited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 263,085 $ 251,919
Marketable debt securities - 31,089
Accounts receivable, net 63,227 79,258
Inventories, net 41,109 61,388
Deferred income taxes 9,006 9,556
Prepaid expenses and other 2,220 3,734
----------- --------------
Total current assets 378,647 436,944
Equipment, furniture and fixtures, net 67,412 83,356
Goodwill and other intangible assets, net - 10,978
Other assets 1,169 2,227
----------- --------------
Total assets $ 447,228 $ 533,505
=========== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 20,373 $ 28,687
Accrued liabilities 31,463 34,754
Income taxes payable - 16,322
Deferred revenue 776 -
Other current obligations 985 988
----------- --------------
Total current liabilities 53,597 80,751
Deferred income taxes 28,167 29,146
Other long-term obligations 1,880 1,942
----------- --------------
Total liabilities 83,644 111,839
Commitments and contingencies - -
Stockholders' equity:
Preferred stock - par value $.01;
20,000,000 shares authorized;
zero shares issued and outstanding - -
Common stock - par value $.01;
180,000,000 shares authorized;
99,287,653 and 100,093,109 shares
issued and outstanding 993 1,001
Additional paid-in capital 245,151 263,509
Notes receivable from stockholders (64) (116)
Retained earnings 117,504 157,272
----------- --------------
Total stockholders' equity 363,584 421,666
----------- --------------
Total liabilities and stockholders'
equity $ 447,228 $ 533,505
=========== ==============
CONTACT: Investor: Suzanne DuLong
CIENA Corporation
(888) 243-6223
email: ir@CIENA.com
Press: Denny Bilter
CIENA Corporation
(800) 921-1144 |
