Ciena Reports Unaudited Fiscal Third Quarter 2011 Results

Ciena® Corporation, the network specialist, today announced unaudited financial results for its fiscal third quarter ended July 31, 2011.

The fiscal third quarter 2011

For the fiscal third quarter 2011, Ciena reported revenue of $435.3 million. On the basis of as a rule accepted accounting principles, Ciena's net loss for the fiscal third quarter 2011 was $(31.5) million, or $(0.33) per common share, which compares to a GAAP net loss of $(109.9) million, or $(1.18) per common share, for the fiscal third quarter 2010. Ciena's adjusted net income for the fiscal third quarter 2011 was $8.3 million, or $0.08 per common share, which compares to an adjusted net loss of $(8.0) million, or $(0.09) per common share, for the fiscal third quarter 2010.

"Our third quarter results, which included a favorable product mix and reduced operating expense to achieve an as-adjusted operating profit, demonstrate our early progress in delivering additional operating leverage from the business," said Gary Smith, president and CEO of Ciena. "In spite of current macroeconomic headwinds that could cause the rate of market growth to be moderated, we believe that we are then-positioned to capitalize on the continued modernization of today's networks and to grow faster than the market."

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.

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 just as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. Forward-looking statements in this release include: "Our third quarter results, which included a favorable product mix and solid operating expense controls to achieve an as-adjusted operating profit, demonstrate our early progress in delivering additional operating leverage for the business"; "During we believe that we are then-positioned to capitalize on the continued modernization of today's networks and to grow faster than the market, current macroeconomic and industry headwinds could cause the rate of market growth to be moderated"; "Ciena expects fiscal fourth quarter 2011 financial performance to include revenue in the range of $440 to $460 million, adjusted gross margin percentage in the low 40s range, adjusted operating expense in the upper $170s 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 clients and their business; changes in network spending or network strategy by large communication service providers; 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; 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 March 10, 2011. 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 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 just in case to Ciena's GAAP results and these measures are not intended to be a substitute for the financial information prepared and presented under 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 before disclosed in a prior Ciena financial results press release, Appendix A to this press release sets forth a complete GAAP to non-GAAP reconciliation of the non-GAAP measures contained in this release.

- 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.

Infrequent charge required

- 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. Ciena does not believe that these costs are reflective of its ongoing operating expense following its completion of these integration activities.