Ciena® Corporation (NASDAQ:CIEN), the network specialist, today announced unaudited results for its fiscal second quarter ended April 30, 2009.

Revenue for the fiscal second quarter 2009 totaled $144.2 million, compared to fiscal first quarter 2009 revenue of $167.4 million, and the same period a year ago when Ciena reported revenue of $242.2 million.

On the basis of generally accepted accounting principles (GAAP), Ciena’s net loss for the fiscal second quarter 2009 was $(503.2) million, or $(5.53) per common share. This compares to fiscal first quarter 2009 GAAP net loss of $(24.8) million, or $(0.27) per common share, and a reported GAAP net income of $23.8 million, or $0.23 per diluted common share, for the same period a year ago.

Ciena’s GAAP net loss for the fiscal second quarter includes a non-cash charge of $455.7 million for impairment of goodwill, which represents the total book value of the Company’s goodwill on its balance sheet. This charge does not impact the Company's normal business operations nor will it result in any current or future cash expense. The charge results from an interim impairment assessment conducted based on a combination of factors, including current macroeconomic conditions and the decline in the Company’s common stock price and market capitalization below its net book value.

Ciena’s adjusted (non-GAAP) net loss for the fiscal second quarter 2009 was $(22.5) million, or $(0.25) per common share. This compares to fiscal first quarter 2009 adjusted (non-GAAP) net loss of $(8.3) million, or $(0.09) per common share, and adjusted (non-GAAP) net income of $42.3 million, or $0.40 per diluted common share for the fiscal second quarter 2008. A reconciliation between the GAAP and adjusted (non-GAAP) measures contained in this release is provided in the table in Appendix A.

Business Outlook

“Our fiscal second quarter was particularly challenging, reflecting the difficult macro and industry environment and continued delays in customer spending,” said Gary Smith, Ciena’s CEO and president. “While recent service providers’ public commentary about expected annual capital expenditures has given the industry reason to be more optimistic about the second half of the year, our customers continue to spend cautiously, and as a result, our visibility remains limited. However, based on our direct conversations with customers and supported by trends we are seeing currently in the business, including recently improved order flow, we expect to deliver sequential revenue growth in our fiscal third quarter.”

Second Quarter 2009 Performance Summary

• $144.2 million in revenue.
• Non-U.S. customers contributed 36% of total revenue.
• At 28% of total revenue, one customer accounted for greater than 10% of revenue.
• GAAP gross margin of 42%.
• Non-GAAP gross margin of 43% excludes share-based compensation costs and amortization of intangible assets but includes charges of $5.8 million related to customer loss contracts associated with securing optical transport footprint.
• GAAP net loss of $(503.2) million or $(5.53) per common share.
• Non-GAAP net loss of $(22.5) million or $(0.25) per common share.
• Generated $2.9 million in cash from operations during the quarter, ending the quarter with cash, cash equivalents and short- and long-term investments of $1.1 billion.

Second Quarter 2009 Customer and Product Summary

• In partnership with NYSE Euronext, announced plans to implement the first 100G network enabling NYSE Euronext to provide both the speed and ultra-low latency to facilitate unparalleled execution of equities quotes, trades, options data and other financial transactions in the U.S., Europe and globally.
• Captured footprint and secured future optical transport revenue opportunities with two non-U.S. Tier One service providers, one of which is in an entirely new region for Ciena.
• The Korea Exchange, a premier capital market in Northeast Asia, deployed Ciena’s optical service delivery platforms as part of its data center consolidation efforts.
• Ciena expanded its Carrier Ethernet Service Delivery portfolio with new service delivery and aggregation switches, which leverage a common service-aware operating system and unified Ethernet management software.
• Kärntner Elektrizitäts-Aktiengesellschaft (KELAG), a regional electricity supplier in Austria, deployed the CN 4200® to deliver high-performance, low-latency storage and Local Area Network (LAN) connectivity between its data centers.

Live Web Broadcast of Unaudited Fiscal Second Quarter 2009 Results

Ciena will host a discussion of its unaudited fiscal second quarter 2009 results with investors and financial analysts today, Thursday, June 4, 2009 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 website at: http://www.ciena.com/investors.

Note to Investors

Forward-looking statements. 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, which Ciena filed with the Securities and Exchange Commission on March 5, 2009. 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: based on our direct conversations with customers and supported by trends we are seeing currently in the business, including recently improved order flow, we expect to deliver sequential revenue growth in our fiscal third 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.

Non-GAAP Presentation of Quarterly Results. This release includes non-GAAP measures of Ciena’s gross profit, operating expenses, income from operations, net income and net income 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. For a complete GAAP to non-GAAP reconciliation of the non-GAAP measures contained in this release, see Appendix A.

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.

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 cost – a non-cash expense incurred in accordance with SFAS 123(R).
• Amortization of intangible assets – a non-cash expense arising from acquisition of intangible assets, principally developed technology, which Ciena is required to amortize over its expected useful life.
• Fair value adjustment of acquired inventory – an infrequent charge required by purchase accounting rules resulting from the revaluation of finished goods inventory acquired from World Wide Packets to estimated fair value. This revaluation resulted in a net increase in inventory carrying value and a $1.1 million increase in cost of goods sold during the second quarter of fiscal 2008.
• Restructuring costs – infrequent costs incurred as the result of restructuring activities (or in the case of recoveries, previous restructuring activities) taken to align resources with perceived market opportunities that Ciena believes are not reflective of its ongoing operating costs.
• Impairment of goodwill – a non-cash charge reflecting the impairment of the remaining goodwill on Ciena’s balance sheet. Ciena conducted an interim impairment assessment of goodwill during the second quarter of fiscal 2009 based on a combination of factors, including current macroeconomic conditions and the sustained decline in Ciena’s common stock price and market capitalization below its net book value.
• Loss on cost method investment – a non-cash loss related to changes in the value of the Ciena’s equity investments in technology companies which Ciena believes is not reflective of its ongoing operating costs.