The Earnings Report:
CIENA Reports Second Quarter Revenue of $111.5 million, Net Income of $0.01 per Diluted Share
Business Wire - May 20, 1999 17:01
LINTHICUM, Md.--(BUSINESS WIRE)--May 20, 1999--CIENA Corporation (NASDAQ: CIEN) today reported revenue of $111.5 million for its
second fiscal quarter ended April 30, 1999, as compared to revenue of $100.4 million in the previous quarter and $142.7 million for the same period a year
ago.
Net income for the second quarter was $1.6 million, or $0.01 per diluted share, including merger-related costs of $2.3 million associated with the
acquisition of Lightera Networks, Inc. This compares with net income of $0.3 million, or break-even ($0.00) earnings per share, reported in the previous
quarter and net income of $15.2 million, or $0.14 per diluted share, for the same period in fiscal 1998.(1) First Call consensus expectations for the second
quarter 1999 were for a loss of $0.03 per diluted share.
"Coming out of fiscal 1998, we felt it was necessary to set some aggressive performance targets for ourselves, and we are pleased to have met those targets
for the second straight quarter," said Patrick Nettles, CIENA's president and chief executive officer. "It's our goal to continue to demonstrate measured
revenue and margin improvement in this very competitive market environment."
For the six months ended April 30, 1999, CIENA reported revenue of $211.9 million, compared with $287.8 million for the first half of 1998. For the first
six months of 1999, net income totaled $1.9 million, or $0.01 per diluted share, as compared with $54.9 million, or $0.50 per diluted share, for the same
period in 1998.(1)
CIENA's revenue during the quarter came from a total of 14 optical transport customers, including recently announced customers IXC and BellSouth, as
well as from one customer yet to be named publicly. This compares with just six revenue-generating customers in the same period a year ago. CIENA has
now delivered transport systems commercially to a total of 19 customers. In addition, during the quarter, the company recognized revenue from Alta's (its
CIENA Services subsidiary) base of more than 50 customers.
On March 15, with its announced acquisitions of Lightera Networks, Inc. and Omnia Communications, Inc., CIENA launched its LightWorks
Initiative(TM), an architectural vision designed to change the fundamental economics of optical service provider networks. By sweeping the functionality and
performance of several legacy network elements into dramatically fewer next-generation elements, CIENA's LightWorks architecture will enable service
providers to drastically reduce both network equipment and operating costs.
"The addition of Lightera's and Omnia's products to CIENA's product family and the resulting availability of CIENA's LightWorks optical architecture
serves as a springboard in our continuing efforts to broaden our market presence and diversify our customer base," said Nettles. "Initial customer reaction to
the CoreDirector(TM) optical core switch and Omnia's AXR 500 edge multi-service delivery platform has been overwhelmingly positive."
CIENA announced the completion of its acquisition of Lightera on March 31, 1999 and continues to expect the Omnia transaction to close in the June/July
1999 timeframe.
Commenting on the business outlook for CIENA, Nettles said: "CIENA has staked its claim to compete for a significant portion of what is likely to be a
critical market for telco equipment providers over the next several years. We continue to win business in the face of tough competition from the larger
equipment providers, often despite their ability to offer bundled pricing and financing deals."
"Overall, we remain optimistic about the near-term growth of our core MultiWave optical transport business and expect pull-through opportunities to
emerge over the longer term across our core transport, switching and edge product offerings as carriers recognize the value inherent in our LightWorks
architecture," Nettles concluded.
NOTE TO INVESTORS
Forward-looking statements in this release, including statements regarding the potential benefits of CIENA's LightWorks Initiative, as well as optimism
about near-term growth in the core optical transport business and the value inherent in the Company's LightWorks architecture 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. The forward-looking statements should be considered in the context of
these and other risk factors disclosed in the Company's report on Form 10-Q, as filed with the Securities and Exchange Commission on May 21, 1999.
ABOUT CIENA
CIENA Corporation's market leading optical networking systems form the core of telecommunications networks worldwide. CIENA's LightWorks(TM)
Initiative changes the fundamental economics of service provider networks by simplifying the network architecture and reducing the cost to operate it.
CIENA's networking solutions utilize bandwidth expanding dense wavelength division multiplexing (DWDM) technology and include the MultiWave(R)
family of products for long-haul, short-haul and metropolitan applications. CIENA's CoreDirector(TM), an intelligent optical core switch, delivers dynamic
provisioning, grooming, flexible capacity management and survivability. Through its CIENA Services subsidiary, CIENA provides a range of engineering,
furnishing and installation (EF&I) services for telecommunications service providers in the areas of transport, switching and wireless communications.
Additional information about CIENA and its LightWorks Initiative can be found on its worldwide Website: ciena.com.
(1)Past financial results have been restated to reflect the consolidated results of Lightera Networks, Inc., acquired by CIENA in a pooling transaction on
March 31, 1999. All earnings per share amounts represent diluted earnings per share as defined within Statement of Financial Accounting Standards No.
128 (SFAS 128).
CIENA Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Quarter Ended Six Months Ended
April 30, April 30, April 30, April 30,
1998 1999 1998 1999
Revenue $142,718 $111,490 $287,810 $211,907
Cost of goods sold 63,915 71,238 122,895 137,016
Gross profit 78,803 40,252 164,915 74,891
Operating expenses:
Research and development 16,706 21,167 26,909 40,950
Selling and marketing 11,063 12,427 21,031 25,301
General and
administrative 4,519 5,467 8,311 10,229
Merger costs -- 2,253 -- 2,253
Purchased research and
development 9,503 -- 9,503 --
Pirelli litigation 10,000 -- 10,000 --
Total operating expenses 51,791 41,314 75,754 78,733
Income (loss)
from operations 27,012 (1,062) 89,161 (3,842)
Interest and
other income
(expense), net 3,433 3,614 7,208 6,876
Interest expense (81) (94) (165) (168)
Income before
income taxes 30,364 2,458 96,204 2,866
Provision for
income taxes 15,154 864 41,296 989
Net income $15,210 $1,594 $54,908 $1,877
Basic net income
per common share $0.14 $0.01 $0.53 $0.02
Diluted net income
per common
share and dilutive
potential common share $0.14 $0.01 $0.50 $0.01
Weighted average
basic common
shares outstanding 106,245 121,135 103,443 120,646
Weighted average
basic common
and dilutive
potential common shares
outstanding 112,455 128,910 110,045 127,824
CIENA Corporation
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
October 31, April 30,
1998 1999
ASSETS
Current assets:
Cash and cash equivalents $ 239,780 $ 194,920
Marketable debt securities 15,993 100,021
Accounts receivable, net 85,472 96,448
Inventories, net 70,908 54,062
Deferred income taxes 16,421 13,514
Prepaid income taxes 8,558 -
Prepaid expenses and other 4,524 9,615
Total current assets 441,656 468,580
Equipment, furniture and fixtures, net 124,792 127,085
Goodwill and other intangible assets, net 16,270 14,446
Other assets 4,848 4,737
Total assets $ 587,566 $ 614,848
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 25,925 $24,144
Accrued liabilities 34,437 40,773
Income taxes payable -- 9,216
Deferred revenue 1,084 719
Other current obligations 953 1,276
Total current liabilities 62,399 76,128
Deferred income taxes 34,125 36,580
Other long-term obligations 2,257 3,703
Total liabilities 98,781 116,411
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;
360,000,000 shares authorized;
119,817,209 and 121,330,173
shares issued and outstanding 1,198 1,213
Additional paid-in capital 310,888 319,268
Unearned compensation - (687)
Notes receivable from stockholders (568) (629)
Cumulative translation adjustment (107) 21
Retained earnings 177,374 179,251
Total stockholders' equity 488,785 498,437
Total liabilities and stockholders'
equity $ 587,566 $ 614,848
CONTACT: CIENA Corporation
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