Annual revenue grew 5%; cash balance increased by $100M for the year
HANOVER, Md. — 12/13/2012
Ciena® Corporation (NASDAQ: CIEN), the network specialist, today announced unaudited financial results for its fiscal fourth quarter and year ended October 31, 2012.
For the fiscal fourth quarter 2012, Ciena reported revenue of $465.5 million as compared to $455.5 million for the fiscal fourth quarter 2011. For fiscal year 2012, Ciena reported revenue of $1.8 billion, as compared to $1.7 billion for fiscal year 2011.
On the basis of generally accepted accounting principles (GAAP), Ciena’s net loss for the fiscal fourth quarter 2012 was $(38.8) million, or $(0.39) per common share, which compares to a GAAP net loss of $(22.3) million, or $(0.23) per common share, for the fiscal fourth quarter 2011. For fiscal year 2012, Ciena had a GAAP net loss of $(144.0) million, or $(1.45) per common share, which compares to a GAAP net loss of $(195.5) million or $(2.04) per common share for fiscal year 2011.
Ciena’s adjusted (non-GAAP) net loss for the fiscal fourth quarter 2012 was $(6.7) million, or $(0.07) per common share, which compares to an adjusted (non-GAAP) net income of $3.3 million, or $0.03 per common share, for the fiscal fourth quarter 2011. For fiscal year 2012, Ciena’s adjusted (non-GAAP) net loss was $(23.5) million, or $(0.24) per common share, as compared to $(24.2) million, or $(0.25) per common share for fiscal year 2011.
“With five percent annual revenue growth and fourth quarter financial performance in line with our expectations, we continued to significantly outpace the market and take share in 2012 despite the challenging environment. That momentum resulted in record order flow and year-end backlog,” said Gary Smith, president and CEO of Ciena. “Customers require more network convergence with greater programmability to deliver more services, and we believe our portfolio is leading the transformation to next-generation intelligent networks.”
Fiscal Fourth Quarter 2012 Performance Summary
The tables below (in millions, except percentage data) provide comparisons of certain quarterly results to prior periods, including sequential quarterly and year over year changes. A reconciliation between the GAAP and adjusted (non-GAAP) measures contained in this release is included in Appendices A and B.
| GAAP Results | |||||||||||||||||||
| Q4 | Q3 | Q4 | Period Change | ||||||||||||||||
| FY 2012 | FY 2012 | FY 2011 | Q-T-Q* | Y-T-Y* | |||||||||||||||
| Revenue | $ | 465.5 | $ | 474.1 | $ | 455.5 | (1.8) % | 2.2 % | |||||||||||
| Gross margin | 41.3 % | 38.2 % | 41.7 % | 3.1 % | (0.4) % | ||||||||||||||
| Operating expense | $ | 214.1 | $ | 196.6 | $ | 206.2 | 8.9 % | 3.8 % | |||||||||||
| Operating margin | (4.7) % | (3.2) % | (3.6) % | (1.5) % | (1.1) % | ||||||||||||||
| Non-GAAP Results | ||||||||||||||||||
| Q4 | Q3 | Q4 | Period Change | |||||||||||||||
| FY 2012 | FY 2012 | FY 2011 | Q-T-Q* | Y-T-Y* | ||||||||||||||
| Revenue | $ | 465.5 | $ | 474.1 | $ | 455.5 | (1.8) % | 2.2 % | ||||||||||
| Adj. gross margin | 42.7 % | 39.6 % | 43.2 % | 3.1 % | (0.5) % | |||||||||||||
| Adj. operating expense | $ | 191.8 | $ | 175.6 | $ | 180.8 | 9.2 % | 6.1 % | ||||||||||
| Adj. operating margin | 1.4 % | 2.5 % | 3.5 % | (1.1) % | (2.1) % | |||||||||||||
| Revenue by Segment | |||||||||||||||||||||
| Q4 FY 2012 | Q3 FY 2012 | Q4 FY 2011 | |||||||||||||||||||
| Revenue | % | Revenue | % | Revenue | % | ||||||||||||||||
| Packet-Optical Transport | $ | 289.4 | 62.2 | $ | 298.5 | 63.0 | $ | 296.2 | 65.1 | ||||||||||||
| Packet-Optical Switching | 20.5 | 4.4 | 37.8 | 8.0 | 41.2 | 9.0 | |||||||||||||||
| Carrier-Ethernet Solutions | 47.9 | 10.3 | 31.3 | 6.6 | 28.8 | 6.3 | |||||||||||||||
| Software and Services | 107.7 | 23.1 | 106.5 | 22.4 | 89.3 | 19.6 | |||||||||||||||
| Total | $ | 465.5 | 100.0 | $ | 474.1 | 100.0 | $ | 455.5 | 100.0 | ||||||||||||
| * Denotes % change, or in the case of margin, absolute change Additional Performance Metrics for Fiscal Fourth Quarter 2012
Business Outlook for Fiscal First Quarter 2013 Statements relating to business outlook are forward-looking in nature and actual results may differ materially. These statements should be read in the context of the Notes to Investors below. Ciena expects financial performance for fiscal first quarter 2013, a quarter in which we typically experience seasonal reductions in order volume and customer deployment activity, to include:
Live Web Broadcast of Unaudited Fiscal Fourth Quarter 2012 Results Ciena will host a discussion of its unaudited fiscal fourth quarter 2012 and year-end results with investors and financial analysts today, Thursday, December 13, 2012 at 8:30 a.m. (Eastern). The live broadcast of the discussion will be available via Ciena’s homepage at http://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.
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The adjusted (non-GAAP) measures above and their reconciliation to Ciena’s GAAP results for the periods presented reflect adjustments relating to the following items:
- Share-based compensation expense – a non-cash expense incurred in accordance with share-based compensation accounting guidance.
- Amortization of intangible assets – a non-cash expense arising from the acquisition of intangible assets, principally developed technologies and customer-related intangibles acquired from the MEN Business, that Ciena is required to amortize over its expected useful life.
- Fair value adjustment of acquired inventory – an infrequent charge required by acquisition accounting rules resulting from the required revaluation of inventory acquired from the MEN Business to estimated fair value. This revaluation resulted in a net increase in inventory carrying value and an increase in cost of goods sold for the periods indicated.
- Acquisition and integration costs – reflects transaction expense, and consulting and third party service fees associated with the acquisition of the Nortel MEN Business and the integration of this business into Ciena’s operations.
- Restructuring costs – costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities.
- Change in fair value of contingent consideration – a non-cash, unrealized gain during the periods identified related to Nortel’s intent to exercise its early termination right relating to the Carling, Canada facility lease entered into as part of the acquisition of the MEN Business.
- Settlement of patent litigation– included in general and administrative expense during our first quarter of fiscal 2011 is a $0.5 million patent litigation settlement.
- Gain on cost method investments –a non-cash gain related to the sale of a privately held technology company in which Ciena held a minority equity investment, which gain Ciena does not believe is reflective of its ongoing operating costs.
- Change in fair value of embedded redemption feature – a non-cash unrealized gain or loss reflective of a mark to market fair value adjustment of an embedded derivative related to the redemption feature of Ciena’s outstanding 4.0% senior convertible notes.
About Ciena Ciena is the network specialist. We collaborate with customers worldwide to unlock the strategic potential of their networks and fundamentally change the way they perform and compete. Ciena leverages its deep expertise in packet and optical networking and distributed software automation to deliver solutions in alignment with OPn, its approach for building open next-generation networks. We enable a high-scale, programmable infrastructure that can be controlled and adapted by network-level applications, and provide open interfaces to coordinate computing, storage and network resources in a unified, virtualized environment. 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.
Notes to Investors Forward-looking statements. This press release contains certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts, assumptions and other information available to the Company as of the date hereof. 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: “With five percent annual revenue growth and fourth quarter financial performance in line with our expectations, we continued to significantly outpace the market and take share in 2012 despite the challenging environment”; “That momentum resulted in record order flow and year-end backlog”; “Customers require more network convergence with greater programmability to deliver more services, and we believe our portfolio is leading the transformation to next-generation intelligent networks”; “Ciena expects financial performance for fiscal first quarter 2013, a quarter in which we typically experience seasonal reductions in order volume and customer deployment activity, to include revenue in the range of $435 to $460 million, adjusted (non-GAAP) gross margin percentage in the low 40s range, adjusted (non-GAAP) operating expense in the high $180s million range.”
Ciena’s actual results, performance or events may differ materially from these forward-looking statements made or implied due a number of risks and uncertainties relating to Ciena’s business, including: the effect of broader economic and market conditions on our customers and their business; changes in network spending or network strategy by large communication service providers; seasonality and the timing and size of customer orders, including our ability to recognize revenue relating to such sales; the level of competitive pressure we encounter; the product, customer and geographic mix of sales within the period; supply chain disruptions and the level of success relating to efforts to optimize Ciena’s operations; changes in foreign currency exchange rates affecting revenue and operating expense; and the other risk factors disclosed in Ciena’s Report on Form 10-Q filed with the Securities and Exchange Commission on September 5, 2012. Ciena assumes no obligation to update any forward-looking information included in this press release.
Non-GAAP Presentation of Quarterly Results. This release includes non-GAAP measures of Ciena’s gross profit, operating expense, income (loss) from operations, net income (loss) and net income (loss) per share. In evaluating the operating performance of Ciena’s business, management excludes certain charges and credits that are required by GAAP. These items 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 Ciena’s control. Management believes that the non-GAAP measures below provide management and investors useful information and meaningful insight to the operating performance of the business. The presentation of these non-GAAP financial measures should be considered in addition to Ciena’s GAAP results and these measures are not intended to be a substitute for the financial information prepared and presented in accordance with GAAP. Ciena’s non-GAAP measures and the related adjustments may differ from non-GAAP measures used by other companies and should only be used to evaluate Ciena’s results of operations in conjunction with our corresponding GAAP results. To the extent not previously disclosed in a prior Ciena financial results press release, Appendixes A and B to this press release sets forth a complete GAAP to non-GAAP reconciliation of the non-GAAP measures contained in this release.
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