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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
May 20, 2004
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Date of Report (Date of earliest event reported)
CIENA Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-21969 23-2725311
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
1201 Winterson Road, Linthicum, Maryland 21090
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(410) 865-8500
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Not applicable
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(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 May 20, 2004, CIENA Corporation issued a press release announcing its
financial results for the fiscal quarter ended April 30, 2004. The text of the
press release is furnished as Exhibit 99.1 to this Report.
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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: May 20, 2004 By: /s/ Russell B. Stevenson, Jr.
---------------------------------
Senior Vice President, General Counsel
and Secretary
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Exhibit 99.1
CIENA Reports Second Quarter 2004 Results
LINTHICUM, Md.--(BUSINESS WIRE)--May 20, 2004--CIENA(R)
Corporation (NASDAQ:CIEN), a leading global provider of innovative
networking solutions, today reported its second fiscal quarter results
for the period ending April 30, 2004. Revenue for the quarter totaled
$74.7 million, representing a 12.5% sequential increase and an
increase of 1.6% for the same period a year ago. On a generally
accepted accounting principles (GAAP) basis, CIENA's reported net loss
for the quarter was $76.2 million, or a net loss of $0.16 per share.
"The last quarter was important for CIENA as we took significant
and deliberate steps in two key areas aimed at improving our business
in both the immediate and longer-term," said Gary Smith, CIENA's
president and CEO. "First, with the acquisitions of Catena Networks
and Internet Photonics, we have added products to help build CIENA
into a leading provider of service-delivery solutions. Second, we
initiated the next phase of strategic operating expense reductions
that will improve our cost structure and shorten the path to our
near-term goals of achieving cash flow breakeven and profitability."
Second Quarter 2004 Highlights
-- Ended the quarter with cash and short- and long-term
investments valued at $1.46 billion, using cash of $60 million
in the quarter.
-- Announced expected annualized cost savings of $60 to $70
million, including $55 to $65 million at the operating expense
level, associated with closing the Company's San Jose, Calif.,
facility and related headcount reductions.
-- Announced customer wins spanning CIENA's networking solutions
portfolio including:
-- MCI's selection of CIENA as a strategic supplier for its
new nationwide, ultra long-haul network.
-- Verizon's choice of CIENA's multiservice switching
solutions to enhance the efficiency of its nationwide
enterprise data services.
-- Red Electrica's deployment of CIENA solutions to expand
its broadband services.
-- An exclusive agreement with UK-carrier, THUS, for CIENA's
multiservice solutions in metro and edge applications.
-- Spanish Internet service provider, Arsys Internet's,
selection of CIENA and reseller partner Laurel Networks,
for a Broadband Remote Access Server (B-RAS) application.
-- In addition, SBC recognized CIENA as an outstanding supplier
for the superior performance of its DN 7000(TM) Series
Multiservice Edge Switch.
-- From a solutions perspective, CIENA announced and began
deployments of the next-generation of its core networking
capabilities with CoreStream(TM) Agility, designed to enable
efficient delivery of high-growth broadband services, and also
a new-generation CN 2000(TM) Storage Over SONET/SDH Platform
to incorporate Dynamic Bandwidth Assignment capabilities and
the latest ITU Generic Framing Procedure (GFP) standard.
In addition, on May 3, 2004, just following completion of CIENA's
second fiscal quarter, the Company announced it had completed the
acquisitions of Catena Networks, Inc. and Internet Photonics, Inc.
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 6 Months Ended
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April 30, 2004 April 30, 2004
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Item (in thousands) (in thousands)
- ---- -------------- ---------------
Deferred stock compensation $ 1,902 $ 4,746
Amortization of intangible assets 3,395 6,791
Accelerated amortization of leasehold
improvements 1,649 1,649
Restructuring costs 5,185 8,578
Recovery of use tax payments (1,931) (1,931)
Recovery of doubtful accounts, net (2,794) (2,794)
Gain on equity investments, net (139) (593)
Loss on extinguishment of debt - 8,216
Income tax benefit on adjusted net loss 24,402 45,437
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Total Adjustments $ 31,669 $ 70,099
============== ===============
GAAP Net Loss $ (76,216) $ (152,924)
Adjusted for items above 31,669 70,099
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Non GAAP Net Loss $ (44,547) $ (82,825)
============== ===============
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 April 30, 2004, CIENA's weighted average
shares outstanding were approximately 475,189,000. Adjusting CIENA's
quarterly GAAP results as noted would reduce the Company's net loss in
its second fiscal quarter to $0.09 per share.
For the six months ended April 30, 2004, CIENA's weighted average
shares outstanding were approximately 474,192,000. Adjusting CIENA's
six month GAAP results as noted would reduce the Company's net loss
for the period to $0.17 per share.
Business Outlook
"While it appears the industry has achieved a certain level of
stability, customers are maintaining an overall cautious and focused
approach to spending," said CIENA's Smith. "Spending in the core of
the network remains a secondary priority as service providers focus on
getting more users on to their networks and generating more revenue
from that traffic. With the addition of new service delivery platforms
from Catena and Internet Photonics, CIENA is better positioned to
benefit from that focus.
"In part as a result of our broader portfolio reach, we expect
revenue for our third fiscal quarter will increase by as much as 30
percent from our fiscal second quarter revenue," said Smith.
Live Web Broadcast of Q2 Results
CIENA will host a discussion of this morning's announcements with
investors and financial analysts today, Thursday, May 20, 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 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 but not limited to: we initiated
the next phase of strategic operating expense reductions that will
improve our cost structure and shorten the path to our near-term goals
of achieving cash flow breakeven and profitability; while it appears
the industry has achieved a certain level of stability, customers are
maintaining an overall cautious and focused approach to spending;
spending in the core of the network remains a secondary priority as
service providers focus on getting more users on to their networks and
generating more revenue from that traffic; with the addition of new
service delivery platforms from Catena and Internet Photonics, CIENA
is better positioned to benefit from that focus; and, in part as a
result of our broader portfolio reach, we expect revenue for our third
fiscal quarter will increase by as much as 30 percent from our fiscal
second quarter revenue, 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, which we expect to file with the
Securities and Exchange Commission on May 20, 2004. 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 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,
2003 2004 2003 2004
--------- --------- ---------- ----------
Revenues:
Products $ 63,399 $ 62,422 $ 124,620 $ 117,096
Services 10,141 12,277 19,394 24,017
--------- --------- ---------- ----------
Total revenue 73,540 74,699 144,014 141,113
Costs:
Products 40,406 56,289 79,983 90,849
Services 14,919 10,188 29,551 21,489
--------- --------- ---------- ----------
Total cost of goods sold 55,325 66,477 109,534 112,338
--------- --------- ---------- ----------
Gross profit 18,215 8,222 34,480 28,775
--------- --------- ---------- ----------
Operating expenses:
Research and development 52,193 46,479 105,927 93,656
Selling and marketing 25,663 25,075 52,268 50,543
General and administrative 8,066 5,992 22,772 13,083
Deferred stock
compensation costs:
Research and development 3,406 1,408 7,204 3,613
Selling and marketing 676 415 1,435 933
General and
administrative 346 79 720 200
Amortization of intangible
assets 3,421 3,395 6,975 6,791
Restructuring costs 2,724 5,185 2,724 8,578
Recovery of use tax
payments - (1,931) - (1,931)
Recovery of doubtful
accounts, net - (2,794) - (2,794)
--------- --------- ---------- ----------
Total operating expenses 96,495 83,303 200,025 172,672
--------- --------- ---------- ----------
Loss from operations (78,280) (75,081) (165,545) (143,897)
Interest and other income,
net 11,131 5,614 24,432 13,292
Interest expense (8,061) (6,473) (20,264) (13,857)
Gain (loss) on equity
investments, net - 139 (10) 593
Loss on extinguishment of
debt - - (20,606) (8,216)
--------- --------- ---------- ----------
Loss before income taxes (75,210) (75,801) (181,993) (152,085)
Provision for income taxes 251 415 610 839
--------- --------- ---------- ----------
Net loss $(75,461) $(76,216) $(182,603) $(152,924)
========= ========= ========== ==========
Basic and diluted net loss
per common share and
dilutive potential common
share $ (0.17) $ (0.16) $ (0.42) $ (0.32)
========= ========= ========== ==========
Weighted average basic 433,932 475,189 433,330 474,192
common and dilutive ========= ========= ========== ==========
potential common shares
outstanding
CIENA CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
October 31, April 30,
2003 2004
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 309,665 $ 218,145
Short-term investments 796,809 824,929
Accounts receivable, net 43,600 38,593
Inventories, net 44,995 34,457
Prepaid expenses and other 34,334 42,388
----------- -----------
Total current assets 1,229,403 1,158,512
Long-term investments 519,744 416,199
Equipment, furniture and fixtures, net 114,930 100,123
Goodwill 336,039 335,974
Other intangible assets, net 108,408 99,681
Other long-term assets 69,641 67,346
----------- -----------
Total assets $2,378,165 $2,177,835
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 44,402 $ 38,532
Accrued liabilities 98,926 89,797
Restructuring liabilities 14,378 12,605
Unfavorable lease commitments 9,380 9,467
Income taxes payable 4,640 5,596
Deferred revenue 14,473 16,373
----------- -----------
Total current liabilities 186,199 172,370
Long-term deferred revenue 14,547 16,964
Long-term restructuring liabilities 52,164 45,888
Long-term unfavorable lease commitments 61,312 56,362
Other long-term obligations 2,698 2,741
Convertible notes payable 730,428 690,000
----------- -----------
Total liabilities 1,047,348 984,325
----------- -----------
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
476,940,672 shares issued and outstanding 4,732 4,769
Additional paid-in capital 4,861,182 4,874,950
Deferred stock compensation (9,664) (4,572)
Notes receivable from stockholders (448) (448)
Accumulated other comprehensive income
(loss) 2,447 (833)
Accumulated deficit (3,527,432) (3,680,356)
----------- -----------
1,330,817 1,193,510
----------- -----------
Total liabilities and stockholders' equity $2,378,165 $2,177,835
=========== ===========
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.
-- Accelerated amortization of leasehold improvements - a
non-cash expense related to the planned closing of our San
Jose, California facility.
-- 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.
-- Recovery of use tax payments - a non-recurring gain unrelated
to normal operations.
-- Recovery of doubtful accounts, net - a non-recurring gain
unrelated to normal operations due to payment received from a
customer from which payment was previously deemed doubtful due
to the customer's financial condition.
-- 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.
CONTACT: CIENA Corporation
Investor Contacts:
Suzanne DuLong or Jessica Towns, 888-243-6223
ir@ciena.com
or
Press Contacts:
Aaron Graham or Nicole Anderson, 877-857-7377
pr@ciena.com