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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 1, 2007
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Ciena Corporation
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-21969 23-2725311
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(Commission File Number) (IRS Employer Identification No.)
1201 Winterson Road, Linthicum, MD 21090
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(Address of Principal Executive Offices) (Zip Code)
(410) 865-8500
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 2.02 - RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On March 1, 2007, Ciena Corporation issued a press release announcing
its financial results for the first fiscal quarter ended January 31, 2007. The
text of the press release is furnished as Exhibit 99.1 to this Report. The
information in this Report shall not be deemed "filed" for purposes of Section
18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to
the liabilities of that section, and shall not be incorporated by reference into
any registration statement pursuant to the Securities Act of 1933, as amended.
ITEM 9.01 - FINANCIAL STATEMENTS AND EXHIBITS
(c) The following exhibit is being filed herewith:
Exhibit Number Description of Document
-------------- -----------------------
Exhibit 99.1 Text of Press Release dated March 1, 2007, issued by
Ciena Corporation, reporting its results of operations
for the first fiscal quarter ended January 31, 2007.
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
Date: March 1, 2007 By: /S/ Russell B. Stevenson, Jr.
------------------------------------
Russell B. Stevenson, Jr.
Senior Vice President, General Counsel
and Secretary
Exhibit 99.1
Ciena Reports Fiscal First Quarter 2007 Results
Company Delivers Twelfth Straight Quarter of Sequential Revenue Growth
LINTHICUM, Md.--(BUSINESS WIRE)--March 1, 2007--Ciena(R)
Corporation (NASDAQ:CIEN), the network specialist, today announced
results for its fiscal first quarter 2007 ended January 31, 2007.
Revenue for the first quarter totaled $165.1 million, representing a
3.2% sequential increase from fiscal fourth quarter revenue of $160.0
million, and an increase of 37.1% over the same period a year ago when
the Company reported sales of $120.4 million.
On the basis of generally accepted accounting principles (GAAP),
Ciena's net income for the fiscal first quarter 2007 was $11.1
million, or net income of $0.12 per diluted share. This compares with
a reported GAAP net loss of $6.3 million, or a net loss of $0.08 per
share, for the same period a year ago.
"As bandwidth demands escalate across multiple traffic types,
service provider and enterprise customers alike are increasingly
looking for solutions that allow them to transition their networks
toward powerful converged network architectures capable of delivering
any service at any time," said Gary Smith, Ciena's president and CEO.
"Ciena's differentiated positioning as the transition specialist and
our FlexSelect(TM) vision of next-generation networks are driving
demand for our solutions worldwide, enabling us to deliver our twelfth
sequential quarter of revenue growth."
Non-GAAP Presentation of Quarterly Results
In evaluating the operating performance of its business, Ciena's
management excludes certain charges and credits that are required by
GAAP. These items, which are identified in the table that follows (in
thousands except per share data), 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 Quarter
Ended Ended
January 31, January 31,
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2006 2007
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Stock-based compensation-product $ 135 $ 221
Stock-based compensation-services 188 193
Stock-based compensation-research and
development 1,637 743
Stock-based compensation-sales and
marketing 1,046 1,040
Stock-based compensation-general and
administrative 821 1,000
Amortization of intangible assets 6,295 6,295
Restructuring costs (recoveries) 2,015 (466)
Long-lived asset impairment (3) -
Recovery of doubtful accounts, net (2,604) (10)
Gain on lease settlement (6,020) -
Loss on equity investments, net 733 -
Gain on extinguishment of debt (6,690) -
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Total adjustments $ (2,447) $ 9,016
============= =============
GAAP net income (loss) $ (6,291) $ 11,056
Adjustment for items above (2,447) 9,016
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Adjusted (non-GAAP) net (loss) income $ (8,738) $ 20,072
============= =============
Weighted average basic common shares
outstanding 82,967 84,953
Weighted average dilutive potential
common shares outstanding 82,967 93,259
Adjusted (non-GAAP) net (loss) income per
share $ (0.11) $ 0.22
Please see Appendix A for additional information about this table.
Adjusting Ciena's unaudited fiscal first quarter 2007 GAAP net
income of $11.1 million for the items noted above would increase the
Company's adjusted (non-GAAP) net income in the quarter to $20.1
million, or an adjusted (non-GAAP) net income of $0.22 per adjusted
diluted share. This compares with an adjusted (non-GAAP) net loss of
$8.7 million, or an adjusted (non-GAAP) net loss of $0.11 per share,
in the same year-ago period.
First Quarter 2007 Performance Highlights
-- Achieved sequential quarterly revenue growth of 3.2% and
year-over-year quarterly revenue growth of 37.1%.
-- Delivered overall gross margin of 44.6% and product gross
margin of 48.7%.
-- Ended the fiscal first quarter 2007 with cash, cash
equivalents and short- and long-term investments of $1.2
billion.
First Quarter 2007 Customer Highlights
-- Verizon Business chose Ciena's CoreDirector(R) Multiservice
Optical Switches to build a trans-Atlantic mesh network.
-- Hargray Communications selected Ciena's CN 4200(TM) FlexSelect
Advanced Services Platform to converge its regional transport
network and deliver quad-play and business services.
-- Cox Communications deployed Ciena's CoreDirector Multiservice
Optical Switches in the super headend of its San Diego network
to interconnect two metro rings.
-- Cogeco Cable became Ciena's first cable network deployment in
Canada with its use of the CN 4200 for its core infrastructure
upgrade.
-- USCarrier Telecom, LLC selected Ciena's CN 4200 to support
multiservice aggregation for metropolitan and regional
transport services.
Business Outlook
"Furthering our efforts to provide customers with a unique formula
for facilitating network transition, we recently announced Ethernet
enhancements to our FlexSelect Architecture, including new products,"
said Smith. "We're excited about the new opportunities we're targeting
with these new features and platforms, which we expect to contribute
to revenue growth this fiscal year, and we're even more excited about
the increasing alignment we see between Ciena's comprehensive
FlexSelect vision and the strategic direction in which our customers'
networks are headed."
"During the last several years we've invested significantly to
create a targeted solutions portfolio with the unified vision that
Ethernet is the most efficient and economical foundation for
next-generation, service-enabled networks," said Smith. "Whether
incorporated in new features on our traditional optical platforms or
forming the foundation of a completely new product, our FlexSelect
vision already is a driving force behind our revenue growth and will
be a factor in what we expect to be a five to ten percent sequential
increase in revenue from our fiscal first quarter to our fiscal second
quarter."
Live Web Broadcast of Fiscal First Quarter Results
Ciena will host a discussion of its fiscal first quarter results
with investors and financial analysts today, Thursday, March 1, 2007
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
Web site at: http://www.ciena.com/investors/investors.htm.
NOTE TO INVESTORS
This press release contains certain forward-looking statements
based on current expectations, forecasts and assumptions that involve
risks and uncertainties. These statements are based on information
available to the Company as of the date hereof; and Ciena's actual
results could differ materially from those stated or implied, due to
risks and uncertainties associated with its business, which include
the risk factors disclosed in its Report on Form 10-K filed with the
Securities and Exchange Commission on January 10, 2007.
Forward-looking statements include statements regarding Ciena'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. Forward-looking statements in
this release include: we're excited about the new opportunities we're
targeting with these new features and platforms, which we expect to
contribute to revenue growth this fiscal year, and we're even more
excited about the increasing alignment we see between Ciena's
comprehensive FlexSelect vision and the strategic direction in which
our customers' networks are headed; during the last several years
we've invested significantly to created a broad, yet targeted
solutions portfolio with the unified vision that Ethernet is the most
efficient and economical foundation for next-generation,
service-enabled networks; whether incorporated in new features for our
traditional optical platforms or the foundation of a completely new
product, our FlexSelect vision already is a driving force behind our
revenue growth and will be a factor in what we expect to be a five to
seven percent sequential increase in revenue from our fiscal first
quarter to our fiscal second quarter. Ciena assumes no obligation to
update the information included in this press release, whether as a
result of new information, future events or otherwise.
(Unaudited Condensed Consolidated Balance Sheets, Statement of
Operations and Cash Flows follow)
CIENA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
ASSETS
October 31, January 31,
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Current assets: 2006 2007
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Cash and cash equivalents $ 220,164 $ 374,079
Short-term investments 628,393 496,628
Accounts receivable, net 107,172 139,422
Inventories, net 106,085 103,548
Prepaid expenses and other 36,372 46,400
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Total current assets 1,098,186 1,160,077
Long-term investments 351,407 314,377
Equipment, furniture and fixtures, net 29,427 32,867
Goodwill 232,015 232,015
Other intangible assets, net 91,274 84,011
Other long-term assets 37,404 38,309
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Total assets $ 1,839,713 $ 1,861,656
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 39,277 $ 37,997
Accrued liabilities 79,282 90,065
Restructuring liabilities 8,914 7,621
Unfavorable lease commitments 8,512 7,614
Income taxes payable 5,981 6,298
Deferred revenue 19,637 20,015
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Total current liabilities 161,603 169,610
Long-term deferred revenue 21,039 22,847
Long-term restructuring liabilities 26,720 24,579
Long-term unfavorable lease commitments 32,785 30,691
Other long-term obligations 1,678 1,582
Convertible notes payable 842,262 842,262
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Total liabilities 1,086,087 1,091,571
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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;
140,000,000 shares authorized; 84,891,656
and 85,054,714 shares issued and
outstanding 849 851
Additional paid-in capital 5,505,853 5,511,921
Changes in unrealized gains on
investments, net (496) (1,001)
Translation adjustment (580) (742)
Accumulated deficit (4,752,000) (4,740,944)
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Total stockholders' equity 753,626 770,085
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Total liabilities and stockholders' equity $ 1,839,713 $ 1,861,656
============ ============
CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Quarter Ended January 31,
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2006 2007
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Revenues:
Products $ 105,941 $ 146,282
Services 14,489 18,819
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Total revenue 120,430 165,101
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Costs:
Products 60,399 74,979
Services 9,576 16,494
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Total cost of goods sold 69,975 91,473
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Gross profit 50,455 73,628
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Operating expenses:
Research and development 29,462 29,853
Selling and marketing 26,572 24,875
General and administrative 9,896 10,301
Amortization of intangible assets 6,295 6,295
Restructuring costs (recoveries) 2,015 (466)
Long-lived asset impairments (3) -
Recovery of doubtful accounts, net (2,604) (10)
Gain on lease settlement (6,020) -
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Total operating expenses 65,613 70,848
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Income (loss) from operations (15,158) 2,780
Interest and other income, net 9,262 14,845
Interest expense (6,053) (6,148)
Loss on equity investments, net (733) -
Gain on extinguishment of debt 6,690 -
------------ ------------
Income (loss) before income taxes (5,992) 11,477
Provision for income taxes 299 421
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Net income (loss) $ (6,291) $ 11,056
============ ============
Basic net income (loss) per common share $ (0.08) $ 0.13
============ ============
Diluted net income (loss) per potential
common share $ (0.08) $ 0.12
============ ============
Weighted average basic common shares
outstanding 82,967 84,953
============ ============
Weighted average dilutive potential common
shares outstanding 82,967 93,259
============ ============
CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended January 31,
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2006 2007
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Cash flows from operating activities:
Net income (loss) $ (6,291) $ 11,056
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Early extinguishment of debt (6,690) -
Amortization of premium (discount) on
marketable securities 1,176 (1,249)
Non-cash loss from equity investments 733 -
Depreciation and amortization of
equipment, furniture and fixtures 5,312 3,150
Stock compensation 4,183 3,289
Amortization of intangibles 7,263 7,263
Provision for inventory excess and
obsolescence 3,000 4,763
Provision for warranty and other
contractual obligations 2,470 4,791
Other 608 715
Changes in assets and liabilities:
Accounts receivable (8,350) (32,250)
Inventories (18,046) (2,226)
Prepaid expenses and other 10,151 (11,289)
Accounts payable and accrued
liabilities (30,813) (1,810)
Income taxes payable 61 317
Deferred revenue and other
obligations 3,195 2,186
-------------- ---------------
Net cash used in operating activities (32,038) (11,294)
-------------- ---------------
Cash flows from investing activities:
Additions to equipment, furniture,
fixtures and intellectual property (4,375) (6,590)
Restricted cash 1,102 (521)
Purchases of available for sale
securities (63,641) (88,632)
Maturities of available for sale
securities 136,219 258,171
-------------- ---------------
Net cash provided by investing
activities 69,305 162,428
-------------- ---------------
Cash flows from financing activities:
Repayment of convertible notes
payable (98,772) -
Proceeds from exercise of stock
options 2,117 2,781
-------------- ---------------
Net cash provided by (used in)
financing activities (96,655) 2,781
-------------- ---------------
Net increase (decrease) in cash and
cash equivalents (59,388) 153,915
Cash and cash equivalents at beginning
of period 358,012 220,164
-------------- ---------------
Cash and cash equivalents at end of
period $ 298,624 $ 374,079
============== ===============
Appendix A
The adjustments management makes in analyzing Ciena's fiscal first
quarter 2007 GAAP results are as follows:
-- Stock-based compensation costs - A non-cash expense incurred
in accordance with SFAS 123R using the modified prospective
application transition method.
-- Amortization of intangible assets - a non-cash expense arising
from acquisitions of intangible assets, principally developed
technology, which Ciena is required to amortize over its
expected useful life.
-- Restructuring costs (recoveries) - infrequent charges or
recoveries 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,
which the Company feels are not reflective of its ongoing
operating costs.
-- Long-lived asset impairment - infrequent charges, incurred as
a result of excess equipment classified as held for sale which
the Company feels are not reflective of its ongoing operating
costs.
-- Recovery of doubtful accounts - an infrequent gain unrelated
to normal operations resulting from the recovery of a
previously assessed doubtful payment due to a customer's
financial condition.
-- Gain on lease settlement - an infrequent gain unrelated to
normal operations resulting from termination of obligations
under a lease for an unused facility.
-- Loss on equity investments, net - an infrequent loss related
to changes in the value of the Company's equity investments
which the Company feels is not reflective of its ongoing
operating costs.
-- Gain on extinguishment of debt - an infrequent gain related to
the early extinguishment of outstanding debt.
About Ciena
Ciena Corporation is the network specialist, focused on expanding
the possibilities for its customers' networks while reducing their
cost of ownership. The Company's systems, software and services target
and cure specific network pain points so that telcos, cable operators,
governments and enterprises can best exploit the new applications that
are driving their businesses forward. For more information, visit
www.ciena.com.
CONTACT: Ciena Corporation
Press Contact:
Nicole Anderson, 410-694-5786
pr@ciena.com
or
Investor Contact:
Jessica Towns, 888-243-6223
ir@ciena.com