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Ciena Reports Fiscal Third Quarter 2016 Financial Results

HANOVER, Md.--(BUSINESS WIRE)--Ciena® Corporation (NYSE: CIEN), the network specialist, today announced unaudited financial results for its fiscal third quarter ended July 31, 2016.

“Through strategic investments to broaden our portfolio, market application and customer and geographic base, we have positioned Ciena to deliver sustainable long-term growth and increased profitability.”

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For the fiscal third quarter 2016, Ciena reported revenue of $670.6 million as compared to $602.9 million for the fiscal third quarter 2015.

On the basis of generally accepted accounting principles (GAAP), Ciena's net income for the fiscal third quarter 2016 was $33.5 million, or $0.23 per diluted common share, which compares to a GAAP net income of $23.6 million, or $0.19 per diluted common share, for the fiscal third quarter 2015.

Ciena's adjusted (non-GAAP) net income for the fiscal third quarter 2016 was $67.6 million, or $0.42 per diluted common share, which compares to an adjusted (non-GAAP) net income of $50.7 million, or $0.37 per diluted common share, for the fiscal third quarter 2015.

“We posted strong results on all financial operating metrics in our fiscal third quarter, continuing a trend of consistently improving financial performance and demonstrating the value of having a diversified business to manage through market dynamics,” said Gary B. Smith, president and CEO, Ciena. “Through strategic investments to broaden our portfolio, market application and customer and geographic base, we have positioned Ciena to deliver sustainable long-term growth and increased profitability.”

Fiscal Third Quarter 2016 Performance Summary

The tables below (in millions, except percentage data) provide comparisons of certain quarterly results to prior periods, including sequential quarter and year-over-year changes. A reconciliation between the GAAP and adjusted (non-GAAP) measures contained in this release is included in Appendix A.

GAAP Results
Q3 Q2 Q3 Period Change
FY 2016 FY 2016 FY 2015 Q-T-Q* Y-T-Y*
Revenue $ 670.6 $ 640.7 $ 602.9 4.7 % 11.2 %
Gross margin 46.0 % 44.2 % 44.8 % 1.8 % 1.2 %
Operating expense $ 251.5 $ 254.9 $ 225.4 (1.3 )% 11.6 %
Operating margin 8.5 % 4.4 % 7.4 % 4.1 % 1.1 %
Non-GAAP Results
Q3 Q2 Q3 Period Change
FY 2016 FY 2016 FY 2015 Q-T-Q* Y-T-Y*
Revenue $ 670.6 $ 640.7 $ 602.9 4.7 % 11.2 %
Adj. gross margin 46.8 % 45.1 % 45.3 % 1.7 % 1.5 %
Adj. operating expense $ 223.4 $ 222.6 $ 202.1 0.4 % 10.5 %
Adj. operating margin 13.5 % 10.3 % 11.8 % 3.2 % 1.7 %

*Denotes % change, or in the case of margin, absolute change

Revenue by Segment
Q3 FY 2016 Q2 FY 2016 Q3 FY 2015
Revenue %** Revenue %** Revenue %**
Networking Platforms
Converged Packet Optical $ 467.6 69.7 $ 435.2 67.9 $ 408.0 67.7
Packet Networking 63.7 9.5 68.5 10.7 57.2 9.5
Optical Transport 9.6 1.4 8.5 1.3 17.5 2.9
Total Networking Platforms 540.9 80.6 512.2 79.9 482.7 80.1
Software and Software-Related Services
Software Platforms 12.6 1.9 11.8 1.9 11.2 1.9
Software-Related Services 19.0 2.8 18.7 2.9 15.3 2.5
Total Software and Software-Related Services 31.6 4.7 30.5 4.8 26.5 4.4
Global Services
Maintenance Support and Training 56.0 8.4 57.1 8.9 59.9 9.9
Installation and Deployment 31.2 4.7 30.2 4.7 25.2 4.2
Consulting and Network Design 10.9 1.6 10.7 1.7 8.6 1.4
Total Global Services 98.1 14.7 98.0 15.3 93.7 15.5
Total $ 670.6 100.0 $ 640.7 100.0 $ 602.9 100.0

Additional Performance Metrics for Fiscal Third Quarter 2016

Revenue by Geographic Region
Q3 FY 2016 Q2 FY 2016 Q3 FY 2015
Revenue % ** Revenue % ** Revenue % **
North America $ 438.0 65.3 $ 395.5 61.7 $ 389.6 64.6
Europe, Middle East and Africa 104.3 15.5 96.2 15.0 93.2 15.5
Caribbean and Latin America 46.6 7.0 57.9 9.0 65.1 10.8
Asia Pacific 81.7 12.2 91.1 14.3 55.0 9.1
Total $ 670.6 100.0 $ 640.7 100.0 $ 602.9 100.0

**Denotes % of total revenue

  • U.S. customers contributed 61.1% of total revenue
  • One customer accounted for greater than 10% of revenue and represented 16% of total revenue
  • Cash and investments totaled $1.27 billion
  • Cash flow from operations totaled $77.1 million
  • Average days' sales outstanding (DSOs) were 79
  • Accounts receivable balance was $588.4 million
  • Inventories totaled $221.6 million, including:
    • Work in process: $13.8 million
    • Finished goods: $158.8 million
    • Reserve for excess and obsolescence: $(63.8) million
  • Product inventory turns were 5.4
  • Headcount totaled 5,559

Business Outlook for Fiscal Fourth Quarter 2016

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 each of the "Forward-Looking Statements" and "Non-GAAP Presentation of Quarterly Results" found in the Notes to Investors below.

Ciena expects fiscal fourth quarter 2016 financial performance to include:

Live Web Broadcast of Unaudited Fiscal Third Quarter 2016 Results

Ciena will host a discussion of its unaudited fiscal third quarter 2016 results with investors and financial analysts today, Thursday, September 1, 2016 at 8:30 a.m. (Eastern). The live broadcast will be available at www.ciena.com, and an archived replay 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. Ciena will also post to the Investor Relations page a presentation that includes certain highlighted information discussed on the call and certain historical results of operations.

Notes to Investors

Forward-Looking Statements.You are encouraged to review the Investors section of our website, where we routinely post press releases, SEC filings, recent news, financial results, supplemental financial information, and other announcements. From time to time we exclusively post material information to this website along with other disclosure channels that we use. 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: “We posted strong results on all financial operating metrics in our fiscal third quarter, continuing a trend of consistently improving financial performance and demonstrating the value of having a diversified business to manage through market dynamics."; "Through strategic investments to broaden our portfolio, market application and customer and geographic base, we have positioned Ciena to deliver sustainable long-term growth and increased profitability."; "Ciena expects fiscal fourth quarter 2016 financial performance to include: Revenue in the range of $700 to $730 million; Adjusted (non-GAAP) gross margin in the mid-40s percentage range; Adjusted (non-GAAP) operating expense of approximately $230 to $235 million."

Ciena's actual results, performance or events may differ materially from these forward-looking statements made or implied due to 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...


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