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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
February 19, 2004
Date of Report (Date of earliest event reported)
CIENA Corporation
(Exact name of registrant as specified in its charter)
Delaware 0-21969 23-2725311
(State or other (Commission File No.) (IRS Employer Identification No.)
jurisdiction
of incorporation)
1201 Winterson Road, Linthicum, Maryland 21090
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(410) 865-8500
Not applicable
(Former name or former address, if changed since last report)
Exhibit Index on Page 2
The information in this Report, including the exhibit, is furnished under Item
12 of Form 8-K and, pursuant to General Instruction B.6. thereunder, is not
"filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or
otherwise subject to the liabilities of that section. Furthermore, the
information in this Report, including the exhibit, is not incorporated by
reference into the filings of the registrant under the Securities Act of 1933.
Item 12 -- Regulation FD Disclosure (Information Provided Under Item 12 Results
of Operations and Financial Condition)
On February 19, 2004, CIENA Corporation issued a press release announcing its
financial results for the fiscal quarter ended January 31, 2004. The text of the
press release is furnished as Exhibit 99.1 to this Report.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CIENA CORPORATION
Dated: February 19, 2004 By: /s/ Russell B. Stevenson, Jr.
---------------------------------------
Senior Vice President, General Counsel
and Secretary
3
Exhibit 99.1
CIENA Reports First Quarter 2004 Results
LINTHICUM, Md.--(BUSINESS WIRE)--Feb. 19, 2004--CIENA Corporation
(NASDAQ: CIEN)
Separately Today: Expands Solution Portfolio to Include Broadband
Service Delivery Solutions with Acquisitions of Catena Networks and
Internet Photonics
CIENA(R) Corporation (NASDAQ: CIEN), a leading global provider of innovative
networking solutions, today reported its first fiscal quarter results for the
period ending January 31, 2004. Consistent with the Company's preliminary
results announcement, revenue for the quarter totaled $66.4 million. On a
generally accepted accounting principles (GAAP) basis, CIENA's reported net loss
for the quarter was $76.7 million, or a net loss of $0.16 per share.
First Quarter 2004 Highlights
-- Announced Tier One customer wins with CIENA's selection to provide
next-generation optical solutions for the Defense Information Systems
Agency (DISA) Global Information Grid Bandwidth Expansion (GIG-BE)
project and a multi-year contract with SingTel for ONLINE Edge
deployment.
-- Recognized revenue from 100 customers including 14 new
revenue-generating customers in the quarter.
-- Ended the quarter with cash and short- and long-term investments valued
at $1.52 billion.
-- Meaningfully reduced long-term debt with the redemption of approximately
$49 million remaining outstanding 5% convertible notes.
Non-GAAP Presentation
In evaluating the operating performance of its business, CIENA's management
excludes 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.
Quarter Ended
------------------
January 31, 2004
------------------
Item (in thousands)
----------------------------------- ------------------
Deferred stock compensation $2,844
Amortization of intangible assets 3,396
Restructuring costs 3,393
Gain on equity investments, net (454)
Loss on extinguishment of debt 8,216
Income tax benefit on adjusted net
loss 21,035
------------------
Total Adjustments $38,430
==================
GAAP Net Loss $(76,708)
Adjusted for items above 38,430
------------------
Non GAAP Net Loss $(38,278)
==================
Please see Appendix A for additional information about this table.
These adjustments are not in accordance with GAAP, and making these
adjustments may not permit meaningful comparisons to other companies. As of the
quarter ended January 31, 2004, CIENA's weighted average shares outstanding were
approximately 472,935,000. Adjusting CIENA's quarterly GAAP results as noted
would reduce the Company's net loss in its first fiscal quarter to $0.08 per
share.
Strategy and Vision
Separately today, CIENA announced its intent to acquire two companies,
Catena Networks, Inc. and Internet Photonics, Inc. Catena is a leader in the
emerging broadband access market. Internet Photonics is a leading provider of
optical Ethernet transport and switching solutions. Please see the news releases
titled "CIENA Announces Execution of Agreement to Acquire Catena Networks; Adds
Industry-Leading Broadband Access to Its Growing Solutions Portfolio," and
"CIENA Announces Intent to Acquire Internet Photonics; Expands Broadband Service
Offerings with Carrier-Grade Ethernet Solutions," respectively, on CIENA's
website at www.CIENA.com for further details on these announcements.
"The acquisitions of Catena and Internet Photonics are part of CIENA's
ongoing efforts to fuel long-term revenue growth and sustained profitability by
expanding our addressable market; capitalizing on new growth opportunities in
adjacent and complementary markets," said Gary Smith, CIENA's president and CEO.
"In the simplest of terms, these acquisitions enhance the scope of the solutions
we can offer our customers and further extend CIENA's network reach and
presence.
"More strategically, these acquisitions are part of CIENA's vision to offer
our customers a comprehensive set of solutions that enable them to realize a
true, all-service network," said Smith. "The near-term opportunity for carriers
and enterprises is optimizing delivery of any broadband service anywhere as
opposed to any one specific service in any isolated portion of the network.
That's why CIENA is integrating the best optical, data and access solutions to
enable delivery of a wider range of broadband services."
Business Outlook
"Exclusive of any potential impact from the acquisitions announced today, we
continue to expect that revenue in our second fiscal quarter will be up by as
much as 20% from our fiscal first quarter revenue, though as always, these
expectations include some risk," said Smith. "In addition, we remain committed
to our previously stated goal of reducing our ongoing operating expenses,
exclusive of the effects of the acquisitions announced today.
"We firmly believe the steps we've taken to evolve CIENA's vision and
solution set to encompass new technologies and new areas of network growth and
investment, position us for sustainable revenue and earnings growth long term,"
Smith said.
Live Web Broadcast of Q1 Results and Acquisitions Discussion
CIENA will host a discussion of this morning's announcements with investors
and financial analysts today, Thursday, February 19, 2004 at 8:30 a.m.
(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: the acquisitions of Catena and Internet Photonics are part of CIENA's
ongoing efforts to fuel long-term revenue growth and sustained profitability by
expanding our addressable market; capitalizing on new growth opportunities in
adjacent and complementary markets; in the simplest of terms, these acquisitions
enhance the scope of the solutions we can offer our customers and further extend
CIENA's network reach and presence; more strategically, these acquisitions are
part of CIENA's vision to offer our customers a comprehensive set of solutions
that enable them to realize a true, all-service network; the near-term
opportunity for carriers and enterprises is optimizing delivery of any broadband
service anywhere as opposed to any one specific service in any isolated portion
of the network; CIENA is integrating the best optical, data and access solutions
to enable delivery of a wider range of broadband services; exclusive of any
potential impact from the acquisitions announced today, we continue to expect
that revenue in our second fiscal quarter will be up by as much as 20% from our
fiscal first quarter revenue, though as always, these expectations include some
risk; we remain committed to our previously stated goal of reducing our ongoing
operating expenses, exclusive of the effects of the acquisitions announced
today; we firmly believe the steps we've taken to evolve CIENA's vision and
solution set to encompass new technologies and new areas of network growth and
investment, position us for sustainable revenue and earnings growth long term,
and the proposed CIENA/Catena and CIENA/Internet Photonics transactions, 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
today, February 19, 2004. The following factors, among others, could cause
actual results to differ materially from those described herein: inability to
obtain, or meet conditions imposed for governmental and other approvals for
CIENA's acquisition of Catena or Internet Photonics, including approval by the
stockholders of Catena and Internet Photonics respectively; the risk that the
CIENA and Catena or CIENA and Internet Photonics businesses will not be
integrated successfully; the costs related to the mergers; and other economic,
business, competitive and/or regulatory factors affecting CIENA's, Catena's and
Internet Photonics' businesses generally. 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.
CIENA, its directors, executive officers and certain other members of
management and employees may be soliciting proxies from Catena stockholders and
Internet Photonics stockholders. Catena Networks, Inc., its directors, executive
officers and certain other members of management and employees may be soliciting
proxies from Catena stockholders. Internet Photonics, Inc., its directors,
executive officers and certain other members of management and employees may be
soliciting proxies from Internet Photonics stockholders.
INVESTORS ARE URGED TO READ THE PROXY STATEMENTS-PROSPECTUSES RELATING TO
THE FOREGOING TRANSACTIONS THAT CIENA EXPECTS TO FILE WITH THE SEC BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION. THE PROXY STATEMENTS-PROSPECTUSES AND OTHER
DOCUMENTS FILED WITH THE SEC BY CIENA MAY BE OBTAINED, WHEN THEY BECOME
AVAILABLE, FOR FREE AT THE SEC'S WEB SITE, WWW.SEC.GOV. THE PROXY
STATEMENTS-PROSPECTUSES AND THESE OTHER DOCUMENTS MAY ALSO BE OBTAINED FOR FREE
FROM CIENA, OR WITH RESPECT TO THE TRANSACTION THAT INVOLVES IT, FROM EITHER
CATENA NETWORKS OR INTERNET PHOTONICS. REQUESTS TO CIENA MAY BE DIRECTED TO
CIENA, 1201 WINTERSON RD., LINTHICUM, MD, 21090-2205, ATTENTION: INVESTOR
RELATIONS. REQUESTS TO CATENA MAY BE DIRECTED TO: CATENA NETWORKS, INC., 307
LEGGET DRIVE, KANATA, ON, K2K 3C8, ATTENTION: KEVIN FORBES, VP OF FINANCE.
REQUESTS TO INTERNET PHOTONICS MAY BE DIRECTED TO: INTERNET PHOTONICS, INC.,
1030 BROAD STREET, SHREWSBURY, NJ 07702, ATTENTION: STEVE WASZAK, CHIEF
FINANCIAL OFFICER.
CIENA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Quarter ended January 31,
-------------------------
2003 2004
---------- ----------
Revenues:
Products $61,221 $54,674
Services 9,253 11,740
---------- ----------
Total revenue $70,474 $66,414
Costs:
Products 42,234 33,517
Services 14,632 11,301
Provision (benefit) for excess and obsolete
inventory costs (2,657) 1,043
---------- ----------
Total cost of goods sold 54,209 45,861
---------- ----------
Gross profit 16,265 20,553
---------- ----------
Operating expenses:
Research and development 53,734 47,177
Selling and marketing 26,605 25,468
General and administrative 14,706 7,091
Deferred stock compensation costs:
Research and development 3,798 2,205
Sales and marketing 759 518
General and administrative 374 121
Amortization of intangible assets 3,554 3,396
Restructuring costs - 3,393
---------- ----------
Total operating expenses 103,530 89,369
---------- ----------
Loss from operations (87,265) (68,816)
Interest and other income (expense), net 13,301 7,678
Interest expense (12,203) (7,384)
Gain (loss) on equity investments, net (10) 454
Loss on extinguishment of debt (20,606) (8,216)
---------- ----------
Loss before income taxes (106,783) (76,284)
Provision for income taxes 359 424
---------- ----------
Net loss $(107,142) $(76,708)
========== ==========
Basic and diluted net loss per common share
and dilutive potential common share $ (0.25) $ (0.16)
========== ==========
Weighted average basic common and dilutive
potential common shares outstanding 432,572 472,935
========== ==========
CIENA CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
October 31, January 31,
2003 2004
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $309,665 $296,315
Short-term investments 796,809 757,318
Accounts receivable, net 43,600 45,876
Inventories, net 44,995 49,242
Prepaid expenses and other 34,334 31,767
----------- -----------
Total current assets 1,229,403 1,180,518
Long-term investments 519,744 465,638
Equipment, furniture and fixtures, net 114,930 107,590
Goodwill 336,039 335,918
Other intangible assets, net 108,408 104,045
Other long-term assets 69,641 70,614
----------- -----------
Total assets $2,378,165 $2,264,323
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $44,402 $40,459
Accrued liabilities 98,926 95,004
Restructuring liabilities 14,378 12,018
Unfavorable lease commitments 9,380 9,269
Income taxes payable 4,640 5,095
Deferred revenue 14,473 20,811
----------- -----------
Total current liabilities 186,199 182,656
Long-term deferred revenue 14,547 15,606
Long-term restructuring liabilities 52,164 50,967
Long-term unfavorable lease commitments 61,312 58,833
Other long-term obligations 2,698 2,650
Convertible notes payable 730,428 690,000
----------- -----------
Total liabilities 1,047,348 1,000,712
----------- -----------
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;
473,214,856 and 474,809,938 shares
issued and outstanding 4,732 4,748
Additional paid-in capital 4,861,182 4,867,544
Deferred stock compensation (9,664) (6,565)
Notes receivable from stockholders (448) (448)
Accumulated other comprehensive income 2,447 2,472
Accumulated deficit (3,527,432) (3,604,140)
----------- -----------
1,330,817 1,263,611
----------- -----------
Total liabilities and stockholders'
equity $2,378,165 $2,264,323
=========== ===========
Appendix A
The adjustments management makes in analyzing CIENA's first quarter fiscal
2004 GAAP results are as follows:
-- 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.
-- Amortization of intangible assets - a non-cash expense unrelated to
normal operations arising from acquisitions of intangible assets,
principally developed technology acquired in the Cyras, ONI, WaveSmith
and Akara acquisitions which CIENA is required to amortize over its
expected useful life.
-- Restructuring costs - non-recurring charges, unrelated to normal
operations, incurred as the result of reducing the size of the Company's
operations to align its resources with the reduced size of the
telecommunications market as well as the result of targeting new segment
opportunities within the overall market.
-- Gain on equity investments, net - a non-recurring gain unrelated to
normal operations.
-- Loss on extinguishment of debt - a non-recurring expense, unrelated to
normal operations.
-- Income tax benefit on adjusted net loss - the income tax charge or
benefit on the adjusted net loss, which is a necessary adjustment for
consistency. The Company currently has a full valuation allowance for
GAAP reporting purposes and accordingly does not recognize a tax benefit
for losses generated.
ABOUT CIENA
CIENA Corporation delivers innovative network solutions to the world's
largest service providers and enterprises, increasing the cost-efficiency of
current services while enabling the creation of new carrier-class data services
built upon the existing network infrastructure. Additional information about
CIENA can be found at www.ciena.com.
ABOUT CATENA NETWORKS
Catena integrated broadband access solutions enable service providers to
profitably deliver voice, data and video services and smoothly migrate to
packet-based networks. These solutions include the CNX-5 Broadband DSL System,
the CN1000 Broadband Loop Carrier, and the CN1000FX Fiber-to-the-X solution.
ABOUT INTERNET PHOTONICS
Internet Photonics, Inc. is an innovative growth company delivering the
first carrier-grade Intelligent Wavelength Platforms, which allow network
operators (service providers and cable MSOs) to sell profitable high-bandwidth
data services alongside existing legacy services. For more information, please
visit www.internetphotonics.com.
CONTACT: CIENA Corporation
Investor Contacts:
Suzanne DuLong or Jessica Towns, 888-243-6223
ir@ciena.com
or
Press Contacts:
Denny Bilter or Aaron Graham, 877-857-7377
pr@ciena.com