Ciena Reports Unaudited Fiscal First Quarter 2010 Results
Nortel MEN transaction expected to close by end of March
Linthicum, MD — 03/04/2010 — Ciena Corporation (NASDAQ: CIEN), the network specialist, today announced unaudited results for its fiscal first quarter ended January 31, 2010. Revenue for the fiscal first quarter 2010 totaled $175.9 million, which compares to $167.4 million for the fiscal first quarter 2009.
On the basis of generally accepted accounting principles (GAAP), Ciena’s net loss for the fiscal first quarter 2010 was $(53.3) million, or $(0.58) per common share, which compares to a GAAP net loss of $(24.8) million, or $(0.27) per diluted common share for the fiscal first quarter of 2009. The fiscal first quarter 2010 included $27.0 million in acquisition and integration-related expenses associated with the pending acquisition of the optical networking and carrier Ethernet assets of Nortel’s Metro Ethernet Networks (MEN) business. Ciena’s adjusted (non-GAAP) net loss for the fiscal first quarter 2010 was $(11.4) million, or $(0.12) per common share, which compares to an adjusted (non-GAAP) net loss of $(8.3) million, or $(0.09) per diluted common share for the fiscal first quarter 2009. A reconciliation between the GAAP and adjusted (non-GAAP) measures contained in this release is provided in the table in Appendix A.
“Revenue recognition delays associated with initial deployments of new platforms with certain customers adversely impacted fiscal first quarter revenue,” said Gary Smith, Ciena’s CEO and president. “However, with strong order flow in the quarter we remain encouraged by continued signs of an improving market environment.”
First Quarter 2010 Performance Summary
• $175.9 million in fiscal first quarter revenue.
• Non-U.S. customers contributed 29.6% of total quarterly revenue.
• At 24% of total revenue, one customer accounted for greater than 10% of revenue.
• GAAP gross margin of 45.6%.
• Adjusted (non-GAAP) gross margin of 46.4%, excluding share-based compensation costs and amortization of intangible assets.
• GAAP net loss of $(53.3) million, or $(0.58) per common share.
• Adjusted (non-GAAP) net loss of $(11.4) million or $(0.12) per common share.
• Generated $4.5 million in cash from operations during the quarter, which includes the effect of $11.4 million of cash spent on acquisition and integration-related costs.
• Incurred $27.0 million in acquisition and integration related expenses.
Business Outlook
Until the Nortel transaction has closed, any guidance provided by Ciena will be limited to Ciena as a standalone entity and will not include pro-forma estimates for combined company expectations.
“Based on our current view of the business, we anticipate that our fiscal second quarter revenue will be in the range of $185 million to $195 million,” stated Smith. “We also expect that as-adjusted gross margin will be within our target range of mid to high 40s, and as-adjusted operating expense exclusive of integration costs will be roughly flat with that of our first fiscal quarter.”
Nortel MEN Acquisition
“With respect to our pending acquisition of Nortel’s MEN business, our ongoing customer interactions indicate strong validation of the value of the combined company, and the integration planning activities are proceeding well and on schedule,” said Smith. “We continue to expect the transaction to close later this month, and will soon be providing updates on several important milestones related to the integration timeline, including the organizational structure of the new company and its leadership team as well as detail on our combined product portfolio.”
The assets to be acquired generated revenue of approximately US $798 million in the first nine months of Nortel’s fiscal 2009. As previously disclosed, prior to the closing of the Nortel transaction, Ciena may elect to replace some or all of the US $239 million in convertible notes that are to be issued as part of the total purchase price with cash equal to 102% of the face amount of such notes replaced. Ciena regularly assesses the conditions in the capital markets and will consider opportunities to make this election, which could include accessing the capital markets through an equity-linked issuance.
About Ciena
Ciena specializes in practical network transition. We offer leading network infrastructure solutions, intelligent software and a comprehensive services practice to help our customers use their networks to fundamentally change the way they compete. With a global presence, Ciena leverages its heritage of practical innovation to deliver maximum performance and economic value in communications networks worldwide. We routinely post recent news, financial results and other important announcements and information about Ciena on our website. For more information, visit www.ciena.com.
