-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UU4gF19FXGfH/fdBTMgi085m6gPWwC5nvjwNeRwNcCgafRTAulJUoloecYW40SLI apHgOmBA4M4qFR70rTRpkQ== 0001157523-05-005203.txt : 20050611 0001157523-05-005203.hdr.sgml : 20050611 20050602071657 ACCESSION NUMBER: 0001157523-05-005203 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050602 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050602 DATE AS OF CHANGE: 20050602 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIENA CORP CENTRAL INDEX KEY: 0000936395 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 232725311 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-21969 FILM NUMBER: 05872107 BUSINESS ADDRESS: STREET 1: 1201 WINTERSON ROAD CITY: LINTHICUM STATE: MD ZIP: 21090 BUSINESS PHONE: 4108658500 MAIL ADDRESS: STREET 1: 1201 WINTERSON ROAD CITY: LINTHICUM STATE: MD ZIP: 21090 8-K 1 a4901162.txt CIENA CORPORATION 8-K 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) June 2, 2005 --------------------------- Ciena Corporation - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Delaware - -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 0-21969 23-2725311 - -------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 1201 Winterson Road, Linthicum, MD 21090 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (410) 865-8500 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) - -------------------------------------------------------------------------------- (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 June 2, 2005, Ciena Corporation issued a press release announcing its financial results for the second quarter ended April 30, 2005. 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 June 2, 2005, issued by Ciena Corporation, reporting its results of operations for the second quarter ended April 30, 2005 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: June 2, 2005 By: /S/ Russell B. Stevenson, Jr. -------------------------------------- Russell B. Stevenson, Jr. Senior Vice President, General Counsel and Secretary EX-99.1 2 a4901162ex991.txt CIENA CORPORATION EXHIBIT 99.1 Exhibit 99.1 Ciena Reports Fiscal Second Quarter 2005 Results LINTHICUM, Md.--(BUSINESS WIRE)--June 2, 2005--Ciena(R) Corporation (NASDAQ:CIEN), the network specialist, today reported its fiscal second quarter 2005 results for the period ending April 30, 2005. Revenue for the second quarter totaled $103.8 million, representing a 9.6% sequential increase, and an increase of 39.0% over the same period a year ago. On the basis of generally accepted accounting principles (GAAP), Ciena's reported net loss for the fiscal second quarter was $74.8 million, or a net loss of $0.13 per share. This loss compares to a GAAP net loss of $76.2 million, or a net loss of $0.16 per share, in the same period a year ago. For the six-month period ended April 30, 2005, Ciena's reported GAAP net loss was $131.8 million, or a net loss of $0.23 per share. This loss compares to a GAAP net loss of $152.9 million, or a net loss of $0.32 per share, in the same six-month period a year ago. "Ciena's application-driven, network specialist approach enables us to differentiate ourselves in an often crowded market, and is clearly resonating with our customers," said Gary Smith, Ciena's president and CEO. "With our fifth sequential quarter of solid revenue growth, we are growing faster than the market and beginning to take share on a global basis. In addition to strong revenue growth, we continue to improve other important financial metrics, including delivering gross margin improvement and reducing our use of cash in our fiscal second quarter." Second Quarter 2005 Highlights -- Delivered sequential revenue growth of 9.6% and year-over-year revenue growth of 39.0%. -- Improved overall gross margin from 25.6% in the fiscal first quarter to 26.2% in the fiscal second quarter. -- Announced that BT had selected Ciena as a preferred supplier to support its 21st Century Network (21CN), including Ciena's optical switching, optical transport and Ethernet transport platforms. -- For the second consecutive year, Ciena was honored by SBC Communications as an "Outstanding Supplier." -- Ciena expanded its strategic relationship with TELMEX and announced that its CoreDirector(R) multiservice switching system had been selected for Telefonos de Mexico's nationwide long-distance network and that new Ethernet modules will be added to existing CoreDirectors in TELMEX's Mexico City metro area network. -- Reduced cash burn from operations by 15.5% sequentially, from $43.3 million in the fiscal first quarter of 2005 to $36.6 million in the fiscal second quarter 2005. -- Ended the fiscal second quarter 2005 with cash and short- and long-term investments valued at $1.19 billion. Non-GAAP Presentation of Quarterly Results 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 tables that follow, 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 -------------- -------------- April 30, April 30, 2004 2005 -------------- -------------- Item (in thousands) (in thousands) - -------- -------------- -------------- Stock compensation costs $ 1,902 $ 3,481 Amortization of intangible assets 3,395 10,204 Restructuring costs 5,185 9,765 Long-lived asset impairment - (25) Recovery of use tax payments (1,931) - Recovery of doubtful accounts, net (2,794) - Loss (gain) on equity investments, net (139) 7,300 Income tax benefit on adjusted net loss 24,979 15,723 ============== ============== Total Adjustments $ 30,597 $ 46,448 ============== ============== GAAP Net Loss $ (76,216) $ (74,807) Adjustment for items above 30,597 46,448 -------------- -------------- Non-GAAP Net Loss $ (45,619) $ (28,359) ============== ============== Please see Appendix A for additional information about this table. As of the quarter ended April 30, 2005, Ciena's weighted average shares outstanding were approximately 573,569,000. Adjusting Ciena's quarterly GAAP results as noted above would reduce the Company's net loss in its fiscal second quarter 2005 to $28.4 million, or a loss of $0.05 per share. This compares with an adjusted net loss of $45.6 million, or a loss of $0.10 per share, in the same period a year ago. These adjustments are not in accordance with GAAP, and making these adjustments may not permit meaningful comparisons to other companies. Business Outlook "We expect continued revenue growth, improving gross margin and lower operating expenses will combine to drive meaningful improvement in Ciena's financial performance over the balance of 2005," said Smith. "In addition to our expectations of five percent sequential revenue growth in our fiscal third quarter, we also expect product mix and ongoing cost reduction efforts to drive meaningful gross margin improvement for the second half of our fiscal year." Live Web Broadcast of Fiscal Second Quarter Results Ciena will host a discussion of its fiscal second quarter results with investors and financial analysts today, Thursday, June 2, 2005 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-Q filed with the Securities and Exchange Commission on June 2, 2005. 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 expect continued revenue growth, improving gross margin and lower operating expenses will combine to drive meaningful improvement in Ciena's financial performance over the balance of 2005; and in addition to our expectations of five percent sequential revenue growth in our fiscal third quarter, we also expect product mix and ongoing cost reduction efforts to drive meaningful gross margin improvement for the second half of our fiscal year. Ciena 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 BALANCE SHEETS (in thousands, except share data) (unaudited) ASSETS October 31, April 30, 2004 2005 ----------------------- Current assets: Cash and cash equivalents $202,623 $255,822 Short-term investments 753,251 682,766 Accounts receivable, net 45,878 66,482 Inventories, net 47,614 45,489 Prepaid expenses and other 29,906 33,740 ----------- ----------- Total current assets 1,079,272 1,084,299 Long-term investments 329,704 251,951 Equipment, furniture and fixtures, net 51,252 41,019 Goodwill 408,615 408,615 Other intangible assets, net 208,015 185,466 Other long-term assets 60,196 49,015 ----------- ----------- Total assets $2,137,054 $2,020,365 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $31,509 $36,441 Accrued liabilities 76,045 76,732 Restructuring liabilities 16,203 15,638 Unfavorable lease commitments 9,902 9,640 Income taxes payable 3,354 4,169 Deferred revenue 21,566 32,144 ----------- ----------- Total current liabilities 158,579 174,764 Long-term deferred revenue 16,010 14,446 Long-term restructuring liabilities 65,180 63,002 Long-term unfavorable lease commitments 51,341 46,293 Other long-term obligations 1,522 1,321 Convertible notes payable 690,000 690,000 ----------- ----------- Total liabilities 982,632 989,826 ----------- ----------- 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; 571,656,659 and 575,511,943 shares issued and outstanding as of October 31, 2004 and April 30, 2005, respectively 5,717 5,755 Additional paid-in capital 5,482,175 5,485,257 Deferred stock compensation (13,761) (6,554) Notes receivable from stockholders (48) - Changes in unrealized gains on investments, net (2,488) (4,940) Translation adjustment (277) (281) Accumulated deficit (4,316,896) (4,448,698) ----------- ----------- Total stockholders' equity 1,154,422 1,030,539 ----------- ----------- Total liabilities and stockholders' equity $2,137,054 $2,020,365 =========== =========== CIENA CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Quarter Ended Six Months Ended April 30, April 30, --------------------- --------------------- 2004 2005 2004 2005 ---------- ---------- ---------- ---------- Revenues: Products $62,422 $91,618 $117,096 $173,918 Services 12,277 12,228 24,017 24,676 ---------- ---------- ---------- ---------- Total revenue 74,699 103,846 141,113 198,594 ---------- ---------- ---------- ---------- Costs: Products 56,289 65,843 90,849 126,691 Services 10,188 10,837 21,489 20,506 ---------- ---------- ---------- ---------- Total cost of goods sold 66,477 76,680 112,338 147,197 ---------- ---------- ---------- ---------- Gross profit 8,222 27,166 28,775 51,397 ---------- ---------- ---------- ---------- Operating expenses Research and development 46,479 34,766 93,656 68,417 Selling and marketing 25,075 27,201 50,543 53,165 General and administrative 5,992 8,702 13,083 16,198 Stock compensation costs Research and development 1,408 842 3,613 1,853 Selling and marketing 415 2,447 933 3,323 General and administrative 79 192 200 352 Amortization of intangible assets 3,395 10,204 6,791 20,615 Restructuring costs 5,185 9,765 8,578 10,890 Long-lived asset impairments - (25) - 159 Recovery of use tax payments (1,931) - (1,931) - Recovery of doubtful accounts, net (2,794) - (2,794) - ---------- ---------- ---------- ---------- Total operating expenses 83,303 94,094 172,672 174,972 ---------- ---------- ---------- ---------- Loss from operations (75,081) (66,928) (143,897) (123,575) Interest and other income, net 5,614 6,346 13,292 13,022 Interest expense (6,473) (6,473) (13,857) (12,942) Gain (loss) on equity investments, net 139 (7,300) 593 (7,278) Loss on extinguishment of debt - - (8,216) - ---------- ---------- ---------- ---------- Loss before income taxes (75,801) (74,355) (152,085) (130,773) Provision for income taxes 415 452 839 1,029 ---------- ---------- ---------- ---------- Net loss $(76,216) $(74,807) $(152,924) $(131,802) ========== ========== ========== ========== Basic and diluted net loss per common share and dilutive potential common share $(0.16) $(0.13) $(0.32) $(0.23) ========== ========== ========== ========== Weighted average basic common and dilutive potential common shares outstanding 475,189 573,569 474,192 572,674 ========== ========== ========== ========== CIENA CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended April 30, --------------------- 2004 2005 ---------- ---------- Cash flows from operating activities: Net loss $(152,924) $(131,802) Adjustments to reconcile net loss to net cash used in operating activities: Early extinguishment of debt 8,216 - Amortization of premium on marketable securities 15,868 9,265 Non-cash impairment of long-lived assets - 159 Non-cash loss on equity investments - 7,278 Accretion of convertible notes payable 599 - Depreciation and amortization of leasehold improvements 27,639 16,292 Stock compensation 4,746 5,528 Amortization of intangibles 8,726 22,549 Provision of doubtful accounts 284 - Provision for inventory excess and obsolescence 1,082 2,695 Provision for warranty and other contractual obligations 4,996 5,802 Other 1,537 1,510 Changes in assets and liabilities: Accounts receivable 4,723 (20,604) Inventories 9,456 (570) Prepaid expenses and other (7,208) 598 Accounts payable and accrued liabilities (32,195) (8,437) Income taxes payable 956 815 Deferred revenue and other obligations 4,317 9,014 ---------- ---------- Net cash used in operating activities (99,182) (79,908) ---------- ---------- Cash flows from investing activities: Additions to equipment, furniture, fixtures and intellectual property (13,646) (6,457) Proceeds from sale of equipment, furniture and fixtures - 239 Purchases of available for sale securities (333,524) (316,529) Maturities of available for sale securities 389,877 453,050 Minority equity investments, net - (2,043) ---------- ---------- Net cash provided by investing activities 42,707 128,260 ---------- ---------- Cash flows from financing activities: Net proceeds from other obligations 46 - Repayment of convertible notes payable (49,243) - Proceeds from issuance of common stock 14,152 4,799 Repayment of notes receivable from stockholders - 48 ---------- ---------- Net cash used in financing activities (35,045) 4,847 ---------- ---------- Net increase in cash and cash equivalents (91,520) 53,199 Cash and cash equivalents at beginning of period 309,665 202,623 ---------- ---------- Cash and cash equivalents at end of period $218,145 $255,822 ========== ========== Appendix A The adjustments management makes in analyzing Ciena's fiscal second quarter 2005 GAAP results are as follows: -- Stock compensation costs - a non-cash expense which arises under GAAP accounting from the assumption of unvested stock options issued by any companies we acquire and which the Company feels is not reflective of its ongoing operating costs. -- 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 and which the Company feels is not reflective of its ongoing operating costs. -- Restructuring costs - non-recurring charges 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 impairments - non-recurring 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 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. -- Loss (gain) on equity investments, net - a non-recurring gain or 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. -- 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 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, 877-857-7377 pr@ciena.com or Investor Contact: Jessica Towns, 888-243-6223 ir@ciena.com -----END PRIVACY-ENHANCED MESSAGE-----