8-KFinancial Events

CIENA CORP 8-K Report, Exit or Disposal Costs (Mar 21, 2006)

Filed March 21, 2006For Securities:CIEN

Summary

CIENA CORP (CIEN) filed an 8-K on March 21, 2006, reporting its decision to close its Shrewsbury, New Jersey facility by April 29, 2006, the end of its second fiscal quarter. This closure is part of a broader, ongoing initiative to streamline operations, reduce costs, and improve efficiency by consolidating research and development resources and aligning its workforce and facilities with current business opportunities. The company anticipates incurring restructuring charges between $3.8 million and $8.1 million, primarily related to severance, relocation costs for approximately 62 affected employees (with an additional 27 offered relocation), and facility lease obligations. These charges are expected to be paid out and recognized mostly in the second fiscal quarter of 2006, with some extending into the third and fourth quarters.

Key Highlights

  • 1Ciena Corporation is closing its Shrewsbury, New Jersey facility by April 29, 2006.
  • 2The closure is part of a strategic effort to reduce operating costs and improve efficiency.
  • 3Approximately 62 employees will be impacted by this headcount reduction.
  • 427 additional employees have been offered relocation to other Ciena facilities.
  • 5The company expects total restructuring charges to range from $3.8 million to $8.1 million.
  • 6These charges include severance, relocation, and facility lease costs.
  • 7Cash expenditures related to these charges are expected to occur primarily in Q2 and Q3 of fiscal year 2006.

Frequently Asked Questions

Ciena is closing the Shrewsbury facility as part of an ongoing effort to align its workforce, facilities, and operating costs with business opportunities, focusing on consolidating and restructuring research and development resources to reduce expenses and improve efficiency.

Ciena expects to record restructuring charges between $3.8 million and $8.1 million. These charges encompass severance, relocation costs for employees, and remaining lease payments for the facility. All of these are expected to result in future cash expenditures.

The closure is expected to result in a headcount reduction of 62 employees, primarily in research and development. This number could increase if any of the 27 additional employees offered relocation do not accept.

Severance and other employee costs are expected to be paid and incurred primarily during the second fiscal quarter of 2006, with some occurring in the third and fourth quarters. Facility costs are expected to be incurred in the second fiscal quarter of 2006 and paid during the second and third fiscal quarters of 2006.