þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
(State or other jurisdiction of
incorporation or organization)
|
23-2725311
(I.R.S. Employer Identification No.)
|
7035 Ridge Road, Hanover, MD
(Address of Principal Executive Offices)
|
21076
(Zip Code)
|
Large accelerated filer
þ
|
Accelerated filer
o
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Non-accelerated filer
o
(do not check if smaller reporting company)
|
Smaller reporting company
o
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Class
|
|
Outstanding at June 3, 2016
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common stock, $0.01 par value
|
|
138,116,410
|
|
PAGE
NUMBER
|
|
|
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
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2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Products
|
$
|
523,978
|
|
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$
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511,880
|
|
|
$
|
981,567
|
|
|
$
|
934,195
|
|
Services
|
116,739
|
|
|
109,722
|
|
|
232,265
|
|
|
216,569
|
|
||||
Total revenue
|
640,717
|
|
|
621,602
|
|
|
1,213,832
|
|
|
1,150,764
|
|
||||
Cost of goods sold:
|
|
|
|
|
|
|
|
||||||||
Products
|
291,778
|
|
|
286,898
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|
|
552,260
|
|
|
523,446
|
|
||||
Services
|
65,846
|
|
|
62,293
|
|
|
127,029
|
|
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124,612
|
|
||||
Total cost of goods sold
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357,624
|
|
|
349,191
|
|
|
679,289
|
|
|
648,058
|
|
||||
Gross profit
|
283,093
|
|
|
272,411
|
|
|
534,543
|
|
|
502,706
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
114,603
|
|
|
105,202
|
|
|
222,649
|
|
|
205,963
|
|
||||
Selling and marketing
|
86,668
|
|
|
82,471
|
|
|
169,146
|
|
|
159,183
|
|
||||
General and administrative
|
35,203
|
|
|
30,302
|
|
|
66,345
|
|
|
59,855
|
|
||||
Acquisition and integration costs
|
2,285
|
|
|
1,020
|
|
|
3,584
|
|
|
1,020
|
|
||||
Amortization of intangible assets
|
15,566
|
|
|
11,019
|
|
|
32,428
|
|
|
22,038
|
|
||||
Restructuring costs
|
535
|
|
|
(17
|
)
|
|
919
|
|
|
8,068
|
|
||||
Total operating expenses
|
254,860
|
|
|
229,997
|
|
|
495,071
|
|
|
456,127
|
|
||||
Income from operations
|
28,233
|
|
|
42,414
|
|
|
39,472
|
|
|
46,579
|
|
||||
Interest and other income (loss), net
|
967
|
|
|
(5,549
|
)
|
|
(7,809
|
)
|
|
(13,782
|
)
|
||||
Interest expense
|
(12,608
|
)
|
|
(12,947
|
)
|
|
(25,318
|
)
|
|
(26,608
|
)
|
||||
Income before income taxes
|
16,592
|
|
|
23,918
|
|
|
6,345
|
|
|
6,189
|
|
||||
Provision for income taxes
|
2,595
|
|
|
3,265
|
|
|
3,894
|
|
|
4,315
|
|
||||
Net income
|
$
|
13,997
|
|
|
$
|
20,653
|
|
|
$
|
2,451
|
|
|
$
|
1,874
|
|
Basic net income per common share
|
$
|
0.10
|
|
|
$
|
0.18
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
Diluted net income per potential common share
|
$
|
0.10
|
|
|
$
|
0.17
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
Weighted average basic common shares outstanding
|
137,950
|
|
|
113,555
|
|
|
137,313
|
|
|
110,578
|
|
||||
Weighted average dilutive potential common shares outstanding
|
138,889
|
|
|
128,017
|
|
|
138,693
|
|
|
111,762
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
13,997
|
|
|
$
|
20,653
|
|
|
$
|
2,451
|
|
|
$
|
1,874
|
|
Change in unrealized gain on available-for-sale securities, net of tax
|
234
|
|
|
(60
|
)
|
|
256
|
|
|
(24
|
)
|
||||
Change in unrealized loss on foreign currency forward contracts, net of tax
|
3,984
|
|
|
3,041
|
|
|
1,464
|
|
|
(1,472
|
)
|
||||
Change in unrealized loss on forward starting interest rate swap, net of tax
|
423
|
|
|
347
|
|
|
94
|
|
|
(2,218
|
)
|
||||
Change in cumulative translation adjustment
|
7,516
|
|
|
8,837
|
|
|
4,693
|
|
|
(3,411
|
)
|
||||
Other comprehensive income (loss)
|
12,157
|
|
|
12,165
|
|
|
6,507
|
|
|
(7,125
|
)
|
||||
Total comprehensive income (loss)
|
$
|
26,154
|
|
|
$
|
32,818
|
|
|
$
|
8,958
|
|
|
$
|
(5,251
|
)
|
|
April 30,
2016 |
|
October 31,
2015 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
922,033
|
|
|
$
|
790,971
|
|
Short-term investments
|
195,179
|
|
|
135,107
|
|
||
Accounts receivable, net
|
555,056
|
|
|
550,792
|
|
||
Inventories
|
190,861
|
|
|
191,162
|
|
||
Prepaid expenses and other
|
214,920
|
|
|
196,178
|
|
||
Total current assets
|
2,078,049
|
|
|
1,864,210
|
|
||
Long-term investments
|
125,233
|
|
|
95,105
|
|
||
Equipment, building, furniture and fixtures, net
|
248,649
|
|
|
191,973
|
|
||
Goodwill
|
267,681
|
|
|
256,434
|
|
||
Other intangible assets, net
|
184,920
|
|
|
202,673
|
|
||
Other long-term assets
|
77,051
|
|
|
84,656
|
|
||
Total assets
|
$
|
2,981,583
|
|
|
$
|
2,695,051
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
225,237
|
|
|
$
|
222,140
|
|
Accrued liabilities
|
283,096
|
|
|
316,283
|
|
||
Deferred revenue
|
116,799
|
|
|
126,111
|
|
||
Current portion of long-term debt
|
5,000
|
|
|
2,500
|
|
||
Total current liabilities
|
630,132
|
|
|
667,034
|
|
||
Long-term deferred revenue
|
70,233
|
|
|
62,962
|
|
||
Other long-term obligations
|
106,817
|
|
|
72,540
|
|
||
Long-term debt, net
|
1,505,389
|
|
|
1,271,639
|
|
||
Total liabilities
|
$
|
2,312,571
|
|
|
$
|
2,074,175
|
|
Commitments and contingencies (Note 22)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock – par value $0.01; 20,000,000 shares authorized; zero shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock – par value $0.01; 290,000,000 shares authorized; 138,008,639 and 135,612,217 shares issued and outstanding
|
1,380
|
|
|
1,356
|
|
||
Additional paid-in capital
|
6,679,590
|
|
|
6,640,436
|
|
||
Accumulated other comprehensive loss
|
(15,619
|
)
|
|
(22,126
|
)
|
||
Accumulated deficit
|
(5,996,339
|
)
|
|
(5,998,790
|
)
|
||
Total stockholders’ equity
|
669,012
|
|
|
620,876
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,981,583
|
|
|
$
|
2,695,051
|
|
|
Six Months Ended April 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows provided by operating activities:
|
|
|
|
||||
Net income
|
$
|
2,451
|
|
|
$
|
1,874
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements
|
30,237
|
|
|
27,322
|
|
||
Share-based compensation costs
|
29,210
|
|
|
22,136
|
|
||
Amortization of intangible assets
|
40,488
|
|
|
26,439
|
|
||
Provision for inventory excess and obsolescence
|
20,104
|
|
|
10,834
|
|
||
Provision for warranty
|
9,563
|
|
|
7,658
|
|
||
Other
|
8,578
|
|
|
10,266
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(4,865
|
)
|
|
(46,630
|
)
|
||
Inventories
|
(19,022
|
)
|
|
27,952
|
|
||
Prepaid expenses and other
|
(7,670
|
)
|
|
(15,621
|
)
|
||
Accounts payable, accruals and other obligations
|
(29,400
|
)
|
|
(28,982
|
)
|
||
Deferred revenue
|
(3,992
|
)
|
|
16,694
|
|
||
Net cash provided by operating activities
|
75,682
|
|
|
59,942
|
|
||
Cash flows used in investing activities:
|
|
|
|
||||
Payments for equipment, furniture, fixtures and intellectual property
|
(53,050
|
)
|
|
(21,899
|
)
|
||
Restricted cash
|
—
|
|
|
(44
|
)
|
||
Purchase of available for sale securities
|
(199,994
|
)
|
|
(130,239
|
)
|
||
Proceeds from maturities of available for sale securities
|
110,000
|
|
|
90,000
|
|
||
Settlement of foreign currency forward contracts, net
|
(4,834
|
)
|
|
10,364
|
|
||
Acquisition of business, net of cash acquired
|
(32,000
|
)
|
|
—
|
|
||
Purchase of cost method investment
|
—
|
|
|
(2,000
|
)
|
||
Net cash used in investing activities
|
(179,878
|
)
|
|
(53,818
|
)
|
||
Cash flows provided by (used in) financing activities:
|
|
|
|
||||
Proceeds from issuance of term loan, net
|
248,750
|
|
|
—
|
|
||
Payment of long term debt
|
(15,264
|
)
|
|
(8,190
|
)
|
||
Payment for debt issuance costs
|
(3,778
|
)
|
|
(247
|
)
|
||
Payment of capital lease obligations
|
(3,769
|
)
|
|
(4,745
|
)
|
||
Proceeds from issuance of common stock
|
9,968
|
|
|
9,980
|
|
||
Net cash provided by (used in) financing activities
|
235,907
|
|
|
(3,202
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(649
|
)
|
|
(3,304
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
131,062
|
|
|
(382
|
)
|
||
Cash and cash equivalents at beginning of period
|
790,971
|
|
|
586,720
|
|
||
Cash and cash equivalents at end of period
|
$
|
922,033
|
|
|
$
|
586,338
|
|
Supplemental disclosure of cash flow information
|
|
|
|
||||
Cash paid during the period for interest
|
$
|
19,620
|
|
|
$
|
21,882
|
|
Cash paid during the period for income taxes, net
|
$
|
6,991
|
|
|
$
|
5,811
|
|
Non-cash investing activities
|
|
|
|
||||
Purchase of equipment in accounts payable
|
$
|
11,437
|
|
|
$
|
11,733
|
|
Equipment acquired under capital lease
|
$
|
3,012
|
|
|
$
|
—
|
|
Building subject to capital lease
|
$
|
8,993
|
|
|
$
|
10,032
|
|
Construction in progress subject to build-to-suit lease
|
$
|
21,606
|
|
|
$
|
—
|
|
Non-cash financing activities
|
|
|
|
||||
Conversion of 4.0% convertible senior notes, due March 15, 2015 into 8,898,387 shares of common stock
|
$
|
—
|
|
|
$
|
180,645
|
|
(1)
|
INTERIM FINANCIAL STATEMENTS
|
(2)
|
SIGNIFICANT ACCOUNTING POLICIES
|
•
|
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities;
|
•
|
Level 2 inputs are quoted prices for identical or similar assets or liabilities in less active markets or model-derived valuations in which significant inputs are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and
|
•
|
Level 3 inputs are unobservable inputs based on Ciena's assumptions used to measure assets and liabilities at fair value.
|
(3)
|
BUSINESS COMBINATIONS
|
|
Amount
|
||
Inventory
|
$
|
119
|
|
Fixed assets
|
1,381
|
|
|
Developed technology
|
16,468
|
|
|
In-process technology
|
3,949
|
|
|
Goodwill
|
10,083
|
|
|
Total purchase consideration
|
$
|
32,000
|
|
(4)
|
RESTRUCTURING COSTS
|
|
Workforce
reduction
|
|
Consolidation
of excess
facilities
|
|
Total
|
||||||
Balance at October 31, 2015
|
$
|
591
|
|
|
$
|
688
|
|
|
$
|
1,279
|
|
Additional liability recorded
|
929
|
|
|
—
|
|
|
929
|
|
|||
Adjustments to previous estimates
|
—
|
|
|
(10
|
)
|
|
(10
|
)
|
|||
Cash payments
|
(823
|
)
|
|
(203
|
)
|
|
(1,026
|
)
|
|||
Balance at April 30, 2016
|
$
|
697
|
|
|
$
|
475
|
|
|
$
|
1,172
|
|
Current restructuring liabilities
|
$
|
697
|
|
|
$
|
309
|
|
|
$
|
1,006
|
|
Non-current restructuring liabilities
|
$
|
—
|
|
|
$
|
166
|
|
|
$
|
166
|
|
|
Workforce
reduction
|
|
Consolidation
of excess
facilities
|
|
Total
|
||||||
Balance at October 31, 2014
|
$
|
181
|
|
|
$
|
1,134
|
|
|
$
|
1,315
|
|
Additional liability recorded
|
8,068
|
|
(a)
|
—
|
|
|
8,068
|
|
|||
Cash payments
|
(7,518
|
)
|
|
(260
|
)
|
|
(7,778
|
)
|
|||
Balance at April 30, 2015
|
$
|
731
|
|
|
$
|
874
|
|
|
$
|
1,605
|
|
Current restructuring liabilities
|
$
|
731
|
|
|
$
|
391
|
|
|
$
|
1,122
|
|
Non-current restructuring liabilities
|
$
|
—
|
|
|
$
|
483
|
|
|
$
|
483
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Interest income
|
$
|
982
|
|
|
$
|
246
|
|
|
$
|
1,668
|
|
|
$
|
465
|
|
Gain (loss) on non-hedge designated foreign currency forward contracts
|
(10,600
|
)
|
|
14,351
|
|
|
(15,213
|
)
|
|
10,002
|
|
||||
Foreign currency exchange gain (loss)
|
10,506
|
|
|
(18,832
|
)
|
|
6,130
|
|
|
(22,485
|
)
|
||||
Other
|
79
|
|
|
(1,314
|
)
|
|
(394
|
)
|
|
(1,764
|
)
|
||||
Interest and other income (loss), net
|
$
|
967
|
|
|
$
|
(5,549
|
)
|
|
$
|
(7,809
|
)
|
|
$
|
(13,782
|
)
|
(6)
|
SHORT-TERM AND LONG-TERM INVESTMENTS
|
|
April 30, 2016
|
||||||||||||||
|
Amortized Cost
|
|
Gross Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated Fair
Value
|
||||||||
U.S. government obligations:
|
|
|
|
|
|
|
|
||||||||
Included in short-term investments
|
$
|
190,123
|
|
|
$
|
87
|
|
|
(28
|
)
|
|
$
|
190,182
|
|
|
Included in long-term investments
|
125,091
|
|
|
157
|
|
|
(15
|
)
|
|
125,233
|
|
||||
|
$
|
315,214
|
|
|
$
|
244
|
|
|
$
|
(43
|
)
|
|
$
|
315,415
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial paper:
|
|
|
|
|
|
|
|
||||||||
Included in short-term investments
|
$
|
4,997
|
|
|
—
|
|
|
—
|
|
|
$
|
4,997
|
|
||
|
$
|
4,997
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,997
|
|
|
October 31, 2015
|
||||||||||||||
|
Amortized Cost
|
|
Gross Unrealized
Gains
|
|
Gross Unrealized
Losses
|
|
Estimated Fair
Value
|
||||||||
U.S. government obligations:
|
|
|
|
|
|
|
|
||||||||
Included in short-term investments
|
$
|
110,108
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
110,118
|
|
Included in long-term investments
|
95,171
|
|
|
—
|
|
|
(66
|
)
|
|
95,105
|
|
||||
|
$
|
205,279
|
|
|
$
|
10
|
|
|
$
|
(66
|
)
|
|
$
|
205,223
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial paper:
|
|
|
|
|
|
|
|
||||||||
Included in short-term investments
|
$
|
24,989
|
|
|
—
|
|
|
—
|
|
|
$
|
24,989
|
|
||
|
$
|
24,989
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,989
|
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
Less than one year
|
$
|
195,120
|
|
|
$
|
195,179
|
|
Due in 1-2 years
|
125,091
|
|
|
125,233
|
|
||
|
$
|
320,211
|
|
|
$
|
320,412
|
|
(7)
|
FAIR VALUE MEASUREMENTS
|
|
April 30, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
749,856
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
749,856
|
|
U.S. government obligations
|
—
|
|
|
315,415
|
|
|
—
|
|
|
315,415
|
|
||||
Commercial paper
|
—
|
|
|
69,969
|
|
|
—
|
|
|
69,969
|
|
||||
Foreign currency forward contracts
|
—
|
|
|
1,173
|
|
|
—
|
|
|
1,173
|
|
||||
Total assets measured at fair value
|
$
|
749,856
|
|
|
$
|
386,557
|
|
|
$
|
—
|
|
|
$
|
1,136,413
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
—
|
|
|
$
|
548
|
|
|
$
|
—
|
|
|
$
|
548
|
|
Forward starting interest rate swap
|
—
|
|
|
5,428
|
|
|
—
|
|
|
5,428
|
|
||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
5,976
|
|
|
$
|
—
|
|
|
$
|
5,976
|
|
|
October 31, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
642,073
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
642,073
|
|
U.S. government obligations
|
—
|
|
|
205,223
|
|
|
—
|
|
|
205,223
|
|
||||
Commercial paper
|
—
|
|
|
74,983
|
|
|
—
|
|
|
74,983
|
|
||||
Foreign currency forward contracts
|
—
|
|
|
89
|
|
|
—
|
|
|
89
|
|
||||
Total assets measured at fair value
|
$
|
642,073
|
|
|
$
|
280,295
|
|
|
$
|
—
|
|
|
$
|
922,368
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
—
|
|
|
$
|
512
|
|
|
$
|
—
|
|
|
$
|
512
|
|
Forward starting interest rate swap
|
—
|
|
|
5,522
|
|
|
—
|
|
|
5,522
|
|
||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
6,034
|
|
|
$
|
—
|
|
|
$
|
6,034
|
|
|
April 30, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
749,856
|
|
|
$
|
64,972
|
|
|
$
|
—
|
|
|
$
|
814,828
|
|
Short-term investments
|
—
|
|
|
195,179
|
|
|
—
|
|
|
195,179
|
|
||||
Prepaid expenses and other
|
—
|
|
|
1,173
|
|
|
—
|
|
|
1,173
|
|
||||
Long-term investments
|
—
|
|
|
125,233
|
|
|
—
|
|
|
125,233
|
|
||||
Total assets measured at fair value
|
$
|
749,856
|
|
|
$
|
386,557
|
|
|
$
|
—
|
|
|
$
|
1,136,413
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Accrued liabilities
|
$
|
—
|
|
|
$
|
548
|
|
|
$
|
—
|
|
|
$
|
548
|
|
Other long-term obligations
|
—
|
|
|
5,428
|
|
|
—
|
|
|
5,428
|
|
||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
5,976
|
|
|
$
|
—
|
|
|
$
|
5,976
|
|
|
October 31, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
642,073
|
|
|
$
|
49,994
|
|
|
$
|
—
|
|
|
$
|
692,067
|
|
Short-term investments
|
—
|
|
|
135,107
|
|
|
—
|
|
|
135,107
|
|
||||
Prepaid expenses and other
|
—
|
|
|
89
|
|
|
—
|
|
|
89
|
|
||||
Long-term investments
|
—
|
|
|
95,105
|
|
|
—
|
|
|
95,105
|
|
||||
Total assets measured at fair value
|
$
|
642,073
|
|
|
$
|
280,295
|
|
|
$
|
—
|
|
|
$
|
922,368
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Accrued liabilities
|
$
|
—
|
|
|
$
|
512
|
|
|
$
|
—
|
|
|
$
|
512
|
|
Other long-term obligations
|
—
|
|
|
5,522
|
|
|
—
|
|
|
5,522
|
|
||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
6,034
|
|
|
$
|
—
|
|
|
$
|
6,034
|
|
(8)
|
ACCOUNTS RECEIVABLE
|
(9)
|
INVENTORIES
|
|
April 30,
2016 |
|
October 31,
2015 |
||||
Raw materials
|
$
|
50,612
|
|
|
$
|
53,082
|
|
Work-in-process
|
12,910
|
|
|
9,120
|
|
||
Finished goods
|
120,356
|
|
|
125,966
|
|
||
Deferred cost of goods sold
|
70,403
|
|
|
55,995
|
|
||
|
254,281
|
|
|
244,163
|
|
||
Provision for excess and obsolescence
|
(63,420
|
)
|
|
(53,001
|
)
|
||
|
$
|
190,861
|
|
|
$
|
191,162
|
|
(10)
|
PREPAID EXPENSES AND OTHER
|
|
April 30,
2016 |
|
October 31,
2015 |
||||
Prepaid VAT and other taxes
|
$
|
85,479
|
|
|
$
|
74,754
|
|
Product demonstration equipment, net
|
49,626
|
|
|
41,611
|
|
||
Deferred deployment expense
|
23,834
|
|
|
26,193
|
|
||
Prepaid expenses
|
25,749
|
|
|
25,074
|
|
||
Financing receivable
|
20,016
|
|
|
19,869
|
|
||
Other non-trade receivables
|
9,043
|
|
|
8,588
|
|
||
Derivative assets
|
1,173
|
|
|
89
|
|
||
|
$
|
214,920
|
|
|
$
|
196,178
|
|
(11)
|
EQUIPMENT, BUILDING, FURNITURE AND FIXTURES
|
|
April 30,
2016 |
|
October 31,
2015 |
||||
Equipment, furniture and fixtures
|
$
|
428,985
|
|
|
$
|
404,935
|
|
Building subject to capital lease
|
24,042
|
|
|
13,459
|
|
||
Construction in progress subject to build-to-suit lease
|
42,337
|
|
|
18,663
|
|
||
Leasehold improvements
|
58,963
|
|
|
49,196
|
|
||
|
554,327
|
|
|
486,253
|
|
||
Accumulated depreciation and amortization
|
(305,678
|
)
|
|
(294,280
|
)
|
||
|
$
|
248,649
|
|
|
$
|
191,973
|
|
(12)
|
OTHER INTANGIBLE ASSETS
|
|
April 30, 2016
|
|
October 31, 2015
|
||||||||||||||||||||
|
Gross Intangible
|
|
Accumulated Amortization
|
|
Net Intangible
|
|
Gross
Intangible
|
|
Accumulated
Amortization
|
|
Net
Intangible
|
||||||||||||
Developed technology
|
$
|
348,584
|
|
|
$
|
(226,517
|
)
|
|
$
|
122,067
|
|
|
$
|
506,647
|
|
|
$
|
(382,130
|
)
|
|
$
|
124,517
|
|
In-process research and development
|
4,405
|
|
|
—
|
|
|
4,405
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Patents and licenses
|
6,565
|
|
|
(6,182
|
)
|
|
383
|
|
|
46,538
|
|
|
(46,072
|
)
|
|
466
|
|
||||||
Customer relationships, covenants not to compete, outstanding purchase orders and contracts
|
358,648
|
|
|
(300,583
|
)
|
|
58,065
|
|
|
388,621
|
|
|
(310,931
|
)
|
|
77,690
|
|
||||||
Total other intangible assets
|
$
|
718,202
|
|
|
$
|
(533,282
|
)
|
|
$
|
184,920
|
|
|
$
|
941,806
|
|
|
$
|
(739,133
|
)
|
|
$
|
202,673
|
|
Period ended October 31,
|
|
|
||
2016 (remaining six months)
|
$
|
37,853
|
|
|
2017
|
45,447
|
|
|
|
2018
|
22,766
|
|
|
|
2019
|
22,219
|
|
|
|
2020
|
21,192
|
|
|
|
Thereafter
|
31,038
|
|
|
|
|
$
|
180,515
|
|
(1)
|
(13)
|
GOODWILL
|
|
|
Balance at October 31, 2015
|
|
Acquisitions
|
|
Impairments
|
|
Translation
(1)
|
|
Balance at April 30, 2016
|
||||||||||
Software and Software-Related Services
|
|
$
|
201,428
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
201,428
|
|
Networking Platforms
|
|
55,006
|
|
|
10,083
|
|
|
—
|
|
|
1,164
|
|
|
66,253
|
|
|||||
Total
|
|
$
|
256,434
|
|
|
$
|
10,083
|
|
|
$
|
—
|
|
|
$
|
1,164
|
|
|
$
|
267,681
|
|
(14)
|
OTHER BALANCE SHEET DETAILS
|
|
April 30,
2016 |
|
October 31,
2015 |
||||
Maintenance spares, net
|
$
|
54,441
|
|
|
$
|
55,259
|
|
Deferred debt issuance costs, net
|
12,608
|
|
|
10,820
|
|
||
Financing receivable
|
—
|
|
|
10,107
|
|
||
Other
|
10,002
|
|
|
8,470
|
|
||
|
$
|
77,051
|
|
|
$
|
84,656
|
|
|
April 30,
2016 |
|
October 31,
2015 |
||||
Compensation, payroll related tax and benefits
|
$
|
75,444
|
|
|
$
|
109,466
|
|
Warranty
|
56,021
|
|
|
56,654
|
|
||
Vacation
|
38,285
|
|
|
34,189
|
|
||
Capital lease obligations
|
3,135
|
|
|
4,923
|
|
||
Interest payable
|
5,265
|
|
|
5,389
|
|
||
Other
|
104,946
|
|
|
105,662
|
|
||
|
$
|
283,096
|
|
|
$
|
316,283
|
|
Six months ended
|
|
Beginning
|
|
|
|
|
|
Ending
|
||||||
April 30,
|
|
Balance
|
|
Provisions
|
|
Settlements
|
|
Balance
|
||||||
2015
|
|
$
|
55,997
|
|
|
7,658
|
|
|
(9,696
|
)
|
|
$
|
53,959
|
|
2016
|
|
$
|
56,654
|
|
|
9,563
|
|
|
(10,196
|
)
|
|
$
|
56,021
|
|
|
April 30,
2016 |
|
October 31,
2015 |
||||
Products
|
$
|
49,191
|
|
|
$
|
66,527
|
|
Services
|
137,841
|
|
|
122,546
|
|
||
|
187,032
|
|
|
189,073
|
|
||
Less current portion
|
(116,799
|
)
|
|
(126,111
|
)
|
||
Long-term deferred revenue
|
$
|
70,233
|
|
|
$
|
62,962
|
|
|
April 30,
2016 |
|
October 31,
2015 |
||||
Construction liability
|
$
|
42,337
|
|
|
$
|
18,663
|
|
Capital lease obligations
|
25,070
|
|
|
13,794
|
|
||
Income tax liability
|
12,244
|
|
|
13,308
|
|
||
Deferred tenant allowance
|
9,553
|
|
|
9,807
|
|
||
Straight-line rent
|
6,749
|
|
|
6,237
|
|
||
Forward starting interest rate swap
|
5,428
|
|
|
5,522
|
|
||
Other
|
5,436
|
|
|
5,209
|
|
||
|
$
|
106,817
|
|
|
$
|
72,540
|
|
Period ended October 31,
|
|
||
2016 (remaining six months)
|
$
|
3,196
|
|
2017
|
3,446
|
|
|
2018
|
3,108
|
|
|
2019
|
2,896
|
|
|
2020
|
2,550
|
|
|
Thereafter
|
32,002
|
|
|
Net minimum capital lease payments
|
47,198
|
|
|
Less: Amount representing interest
|
(18,993
|
)
|
|
Present value of minimum lease payments
|
28,205
|
|
|
Less: Current portion of present value of minimum lease payments
|
(3,135
|
)
|
|
Long-term portion of present value of minimum lease payments
|
$
|
25,070
|
|
(15)
|
DERIVATIVE INSTRUMENTS
|
|
Unrealized
|
|
Unrealized
|
|
Unrealized
|
|
Cumulative
|
|
|
||||||||||
|
Gain/(Loss) on
|
|
Gain/(Loss) on
|
|
Gain/(Loss) on Forward
|
|
Foreign Currency
|
|
|
||||||||||
|
Marketable Securities
|
|
Foreign Currency Contracts
|
|
Starting Interest Rate Swap
|
|
Translation Adjustment
|
|
Total
|
||||||||||
Balance at October 31, 2015
|
$
|
(78
|
)
|
|
$
|
(268
|
)
|
|
$
|
(5,522
|
)
|
|
$
|
(16,258
|
)
|
|
$
|
(22,126
|
)
|
Other comprehensive income (loss) before reclassifications
|
256
|
|
|
760
|
|
|
(1,478
|
)
|
|
4,693
|
|
|
4,231
|
|
|||||
Amounts reclassified from AOCI
|
—
|
|
|
704
|
|
|
1,572
|
|
|
—
|
|
|
2,276
|
|
|||||
Balance at April 30, 2016
|
$
|
178
|
|
|
$
|
1,196
|
|
|
$
|
(5,428
|
)
|
|
$
|
(11,565
|
)
|
|
$
|
(15,619
|
)
|
|
Unrealized
|
|
Unrealized
|
|
Unrealized
|
|
Cumulative
|
|
|
||||||||||
|
Gain/(Loss)
on
|
|
Gain/(Loss)
on
|
|
Gain/(Loss) on Forward
|
|
Foreign Currency
|
|
|
||||||||||
|
Marketable Securities
|
|
Foreign Currency Contracts
|
|
Starting Interest Rate Swap
|
|
Translation Adjustment
|
|
Total
|
||||||||||
Balance at October 31, 2014
|
$
|
71
|
|
|
$
|
(173
|
)
|
|
(2,083
|
)
|
|
$
|
(12,483
|
)
|
|
$
|
(14,668
|
)
|
|
Other comprehensive income (loss) before reclassifications
|
(24
|
)
|
|
(4,233
|
)
|
|
(2,218
|
)
|
|
(3,411
|
)
|
|
(9,886
|
)
|
|||||
Amounts reclassified from AOCI
|
—
|
|
|
2,761
|
|
|
—
|
|
|
—
|
|
|
2,761
|
|
|||||
Balance at April 30, 2015
|
$
|
47
|
|
|
$
|
(1,645
|
)
|
|
$
|
(4,301
|
)
|
|
$
|
(15,894
|
)
|
|
$
|
(21,793
|
)
|
(17)
|
SHORT-TERM AND LONG-TERM DEBT
|
•
|
mature on April 25, 2021;
|
•
|
amortize in equal quarterly installments in aggregate amounts of
$0.6 million
(equal to
0.25%
of the original principal amount), with the balance payable at maturity;
|
•
|
be subject to mandatory prepayment on the same basis as Ciena’s existing 2019 Term Loan under the Term Loan Credit Agreement;
|
•
|
bear interest, at Ciena’s election, at a per annum rate equal to (a) LIBOR (subject to a floor of
0.75%
) plus a margin ranging from 3.25% to 3.50%, or (b) a base rate (subject to a floor of
1.75%
) plus a margin ranging from 2.25% to 2.50%, in each case, with the actual margin determined according to Ciena’s total net leverage ratio;
|
•
|
be repayable at any time at Ciena's election, provided that repayment of the 2021 Term Loan with proceeds of certain indebtedness prior to October 25, 2016 shall require a prepayment premium of
1%
of the aggregate principal amount of such prepayment; and
|
•
|
except as described above or otherwise set forth in the Incremental Term Loan Credit Agreement, have identical terms as the existing 2019 Term Loan under the Term Loan Credit Agreement.
|
|
|
Principal Balance
|
|
Unamortized Discount
|
|
Net Carrying Amount
|
||||||
Term Loan Payable due April 25, 2021
|
|
$
|
250,000
|
|
|
$
|
1,247
|
|
|
$
|
248,753
|
|
|
|
April 30, 2016
|
||||||
|
|
Carrying Value
|
|
Fair Value
(2)
|
||||
Term Loan Payable due April 25, 2021
(1)
|
|
$
|
248,753
|
|
|
$
|
250,938
|
|
(1)
|
Includes unamortized bond discount.
|
(2)
|
The 2021 Term Loan is categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its 2021 Term Loan using a market approach based upon observable inputs, such as current market transactions involving comparable securities.
|
|
|
Principal Balance
|
|
Unamortized Discount
|
|
Net Carrying Amount
|
||||||
Term Loan Payable due July 15, 2019
|
|
$
|
245,625
|
|
|
$
|
929
|
|
|
$
|
244,696
|
|
|
|
April 30, 2016
|
||||||
|
|
Carrying Value
|
|
Fair Value
(2)
|
||||
Term Loan Payable due July 15, 2019
(1)
|
|
$
|
244,696
|
|
|
$
|
245,011
|
|
(1)
|
Includes unamortized bond discount.
|
(2)
|
The 2019 Term Loan is categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its 2019 Term Loan using a market approach based upon observable inputs, such as current market transactions involving comparable securities.
|
|
Liability Component
|
|
Equity Component
|
||||||||||||
|
Principal Balance
|
|
Unamortized Discount
|
|
Net Carrying Amount
|
|
Net Carrying Amount
|
||||||||
4.0% Convertible Senior Notes due December 15, 2020
|
$
|
199,400
|
|
|
$
|
12,446
|
|
|
$
|
186,954
|
|
|
$
|
43,131
|
|
|
|
April 30, 2016
|
||||||
|
|
Carrying Value
|
|
Fair Value
(1)
|
||||
0.875% Convertible Senior Notes due June 15, 2017
|
|
$
|
479,985
|
|
|
$
|
471,585
|
|
3.75% Convertible Senior Notes due October 15, 2018
|
|
350,000
|
|
|
395,063
|
|
||
4.0% Convertible Senior Notes due December 15, 2020
(2)
|
|
186,954
|
|
|
224,766
|
|
||
|
|
$
|
1,016,939
|
|
|
$
|
1,091,414
|
|
(1)
|
The convertible notes are categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its outstanding convertible notes using a market approach based upon observable inputs, such as current market transactions involving comparable securities.
|
(2)
|
Includes unamortized discount and accretion of principal.
|
(18)
|
ABL CREDIT FACILITY
|
•
|
increase the total commitment from
$200 million
to
$250 million
, of which
$200 million
is available for issuances of letters of credit;
|
•
|
extend the maturity date from December 31, 2016 to December 31, 2020, provided an earlier maturity date would apply in the event that Ciena and its subsidiaries are unable to satisfy a minimum liquidity test
90
days prior to the maturity date of any debt equal to
$100 million
or greater;
|
•
|
reduce the minimum aggregate amount of unrestricted cash and cash equivalents that Ciena and its domestic subsidiaries are required to maintain at all times from
$150 million
to
$100 million
; and
|
•
|
reduce the interest rate by 0.25% on borrowings to either (a) LIBOR plus a margin ranging from 1.25% to 1.75% (instead of the previous 1.50% to 2.0%) or (b) a base rate plus a margin ranging from 0.25% to 0.75% (instead of the previous 0.50% to 1.0%), in each case with the actual margin determined according to the Ciena’s utilization of the facility.
|
(19)
|
EARNINGS (LOSS) PER SHARE CALCULATION
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
Numerator
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
13,997
|
|
|
$
|
20,653
|
|
|
$
|
2,451
|
|
|
$
|
1,874
|
|
Add: Interest expense associated with 0.875% Convertible Senior Notes due 2017
|
—
|
|
|
1,387
|
|
|
—
|
|
|
—
|
|
||||
Net income used to calculate Diluted EPS
|
$
|
13,997
|
|
|
$
|
22,040
|
|
|
$
|
2,451
|
|
|
$
|
1,874
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||
Denominator
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Basic weighted average shares outstanding
|
137,950
|
|
|
113,555
|
|
|
137,313
|
|
|
110,578
|
|
Add: Shares underlying outstanding stock options and restricted stock units and issuable under employee stock purchase plan
|
939
|
|
|
1,354
|
|
|
1,380
|
|
|
1,184
|
|
Add: Shares underlying 0.875% Convertible Senior Notes due 2017
|
—
|
|
|
13,108
|
|
|
—
|
|
|
—
|
|
Dilutive weighted average shares outstanding
|
138,889
|
|
|
128,017
|
|
|
138,693
|
|
|
111,762
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
EPS
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Basic EPS
|
$
|
0.10
|
|
|
$
|
0.18
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
Diluted EPS
|
$
|
0.10
|
|
|
$
|
0.17
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Shares underlying stock options and restricted stock units
|
2,439
|
|
|
961
|
|
|
2,092
|
|
|
1,923
|
|
4.0% Convertible Senior Notes due March 15, 2015
|
—
|
|
|
4,346
|
|
|
—
|
|
|
6,772
|
|
0.875% Convertible Senior Notes due June 15, 2017
|
12,583
|
|
|
—
|
|
|
12,748
|
|
|
13,108
|
|
3.75% Convertible Senior Notes due October 15, 2018
|
17,356
|
|
|
17,356
|
|
|
17,356
|
|
|
17,356
|
|
4.0% Convertible Senior Notes due December 15, 2020
|
9,198
|
|
|
9,198
|
|
|
9,198
|
|
|
9,198
|
|
Total shares excluded due to anti-dilutive effect
|
41,576
|
|
|
31,861
|
|
|
41,394
|
|
|
48,357
|
|
(20)
|
SHARE-BASED COMPENSATION EXPENSE
|
|
Shares Underlying
Options
Outstanding
|
|
Weighted
Average
Exercise Price
|
|||
Balance at October 31, 2015
|
2,293
|
|
|
$
|
24.45
|
|
Exercised
|
(234
|
)
|
|
9.73
|
|
|
Canceled
|
(276
|
)
|
|
39.06
|
|
|
Balance at April 30, 2016
|
1,783
|
|
|
$
|
24.13
|
|
|
|
|
|
|
|
Options Outstanding at
|
|
Vested Options at
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
April 30, 2016
|
|
April 30, 2016
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
Number
|
|
Weighted
Average
Remaining
|
|
Weighted
|
|
|
|
Number
|
|
Weighted
Average
Remaining
|
|
Weighted
|
|
|
|||||||||||||||
Range of
|
|
of
|
|
Contractual
|
|
Average
|
|
Aggregate
|
|
of
|
|
Contractual
|
|
Average
|
|
Aggregate
|
|||||||||||||||||||
Exercise
|
|
Underlying
|
|
Life
|
|
Exercise
|
|
Intrinsic
|
|
Underlying
|
|
Life
|
|
Exercise
|
|
Intrinsic
|
|||||||||||||||||||
Price
|
|
Shares
|
|
(Years)
|
|
Price
|
|
Value
|
|
Shares
|
|
(Years)
|
|
Price
|
|
Value
|
|||||||||||||||||||
$
|
0.05
|
|
|
—
|
|
|
$
|
11.16
|
|
|
297
|
|
|
2.95
|
|
$
|
6.88
|
|
|
$
|
2,958
|
|
|
295
|
|
|
2.91
|
|
$
|
6.86
|
|
|
$
|
2,947
|
|
$
|
11.34
|
|
|
—
|
|
|
$
|
17.24
|
|
|
483
|
|
|
5.54
|
|
13.49
|
|
|
1,615
|
|
|
438
|
|
|
5.39
|
|
13.38
|
|
|
1,514
|
|
||||
$
|
17.50
|
|
|
—
|
|
|
$
|
30.52
|
|
|
410
|
|
|
1.72
|
|
26.60
|
|
|
—
|
|
|
386
|
|
|
1.32
|
|
27.08
|
|
|
—
|
|
||||
$
|
31.93
|
|
|
—
|
|
|
$
|
37.10
|
|
|
339
|
|
|
2.93
|
|
35.14
|
|
|
—
|
|
|
321
|
|
|
2.72
|
|
35.12
|
|
|
—
|
|
||||
$
|
37.82
|
|
|
—
|
|
|
$
|
55.63
|
|
|
254
|
|
|
5.31
|
|
45.82
|
|
|
—
|
|
|
204
|
|
|
4.87
|
|
45.84
|
|
|
—
|
|
||||
$
|
0.05
|
|
|
—
|
|
|
$
|
55.63
|
|
|
1,783
|
|
|
3.70
|
|
$
|
24.13
|
|
|
$
|
4,573
|
|
|
1,644
|
|
|
3.40
|
|
$
|
23.70
|
|
|
$
|
4,461
|
|
|
Restricted
Stock Units
Outstanding
|
|
Weighted
Average Grant
Date Fair Value
Per Share
|
|
Aggregate
Fair Value
|
|||||
Balance at October 31, 2015
|
4,886
|
|
|
$
|
20.02
|
|
|
$
|
117,951
|
|
Granted
|
2,055
|
|
|
|
|
|
||||
Vested
|
(1,686
|
)
|
|
|
|
|
||||
Canceled or forfeited
|
(253
|
)
|
|
|
|
|
||||
Balance at April 30, 2016
|
5,002
|
|
|
$
|
19.91
|
|
|
$
|
84,182
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Product costs
|
$
|
629
|
|
|
$
|
653
|
|
|
$
|
1,200
|
|
|
$
|
1,140
|
|
Service costs
|
693
|
|
|
574
|
|
|
1,285
|
|
|
1,093
|
|
||||
Share-based compensation expense included in cost of sales
|
1,322
|
|
|
1,227
|
|
|
2,485
|
|
|
2,233
|
|
||||
Research and development
|
3,791
|
|
|
2,534
|
|
|
7,219
|
|
|
4,701
|
|
||||
Sales and marketing
|
3,923
|
|
|
3,841
|
|
|
8,658
|
|
|
7,500
|
|
||||
General and administrative
|
4,968
|
|
|
3,723
|
|
|
10,097
|
|
|
7,642
|
|
||||
Acquisition and integration costs
|
697
|
|
|
—
|
|
|
714
|
|
|
—
|
|
||||
Share-based compensation expense included in operating expense
|
13,379
|
|
|
10,098
|
|
|
26,688
|
|
|
19,843
|
|
||||
Share-based compensation expense capitalized in inventory, net
|
32
|
|
|
4
|
|
|
37
|
|
|
60
|
|
||||
Total share-based compensation
|
$
|
14,733
|
|
|
$
|
11,329
|
|
|
$
|
29,210
|
|
|
$
|
22,136
|
|
(21)
|
SEGMENTS AND ENTITY WIDE DISCLOSURES
|
•
|
Networking Platforms
reflects sales of Ciena’s Converged Packet Optical, Packet Networking and Optical Transport product lines
.
|
◦
|
Converged Packet Optical
—
includes the 6500 Packet-Optical Platform and the 5430 Reconfigurable Switching System, which feature Ciena's WaveLogic coherent optical processors. Products also include the Waveserver stackable interconnect system, the family of CoreDirector® Multiservice Optical Switches and the OTN configuration for the 5410 Reconfigurable Switching System. This product line also includes sales of the Z-Series Packet-Optical Platform acquired from Cyan.
|
◦
|
Packet Networking
—
includes the 3000 family of service delivery switches and service aggregation switches and the 5000 family of service aggregation switches. This product line also includes the 8700 Packetwave Platform and the Ethernet packet configuration for the 5410 Service Aggregation Switch.
|
◦
|
Optical Transport
—
includes the 4200 Advanced Services Platform, 5100/5200 Advanced Services Platform, Common Photonic Layer (CPL) and 6100 Multiservice Optical Platform. Ciena's Optical Transport products have either been previously discontinued, or are expected to be discontinued during fiscal 2016, reflecting network operators' transition toward next-generation converged network architectures.
|
•
|
Software and Software-Related Services
reflects sales of Ciena’s network virtualization, management, control and orchestration software solutions and software-related services, including subscription, installation, support, and consulting services.
|
◦
|
This segment includes Ciena’s element and network management solutions and planning tools, including the OneControl Unified Management System, ON-Center® Network & Service Management Suite, Ethernet Services Manager, Optical Suite Release and Planet Operate.
|
◦
|
This segment includes Ciena's Blue Planet network virtualization, service orchestration and network management software platform, including the multi-domain service orchestration (MDSO), network function virtualization (NFV) management and orchestration (NFV MANO), and Management and Control Platform (MCP), and Ciena's SDN Multilayer WAN Controller and its related applications.
|
•
|
Global Services
reflects sales of a broad range of Ciena’s services for consulting and network design, installation and deployment, maintenance support and training activities. Revenue from this segment is included in services revenue on the Condensed Consolidated Statement of Operations.
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Networking Platforms
|
|
|
|
|
|
|
|
||||||||
Converged Packet Optical
|
$
|
435,173
|
|
|
$
|
432,911
|
|
|
$
|
824,341
|
|
|
$
|
769,471
|
|
Packet Networking
|
68,582
|
|
|
53,288
|
|
|
116,779
|
|
|
108,271
|
|
||||
Optical Transport
|
8,451
|
|
|
16,454
|
|
|
20,596
|
|
|
38,793
|
|
||||
Total Networking Platforms
|
512,206
|
|
|
502,653
|
|
|
961,716
|
|
|
916,535
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Software and Software-Related Services
|
|
|
|
|
|
|
|
||||||||
Software Platforms
|
11,772
|
|
|
9,227
|
|
|
19,851
|
|
|
17,660
|
|
||||
Software-Related Services
|
18,701
|
|
|
14,686
|
|
|
36,048
|
|
|
29,781
|
|
||||
Total Software and Software-Related Services
|
30,473
|
|
|
23,913
|
|
|
55,899
|
|
|
47,441
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Global Services
|
|
|
|
|
|
|
|
||||||||
Maintenance Support and Training
|
57,069
|
|
|
53,085
|
|
|
113,127
|
|
|
106,986
|
|
||||
Installation and Deployment
|
30,232
|
|
|
30,703
|
|
|
61,072
|
|
|
56,884
|
|
||||
Consulting and Network Design
|
10,737
|
|
|
11,248
|
|
|
22,018
|
|
|
22,918
|
|
||||
Total Global Services
|
98,038
|
|
|
95,036
|
|
|
196,217
|
|
|
186,788
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Consolidated revenue
|
$
|
640,717
|
|
|
$
|
621,602
|
|
|
$
|
1,213,832
|
|
|
$
|
1,150,764
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Segment profit (loss):
|
|
|
|
|
|
|
|
||||||||
Networking Platforms
|
$
|
132,606
|
|
|
$
|
131,252
|
|
|
$
|
239,588
|
|
|
$
|
226,326
|
|
Software and Software-Related Services
|
192
|
|
|
806
|
|
|
(3,382
|
)
|
|
3,394
|
|
||||
Global Services
|
35,692
|
|
|
35,151
|
|
|
75,688
|
|
|
67,023
|
|
||||
Total segment profit
|
168,490
|
|
|
167,209
|
|
|
311,894
|
|
|
296,743
|
|
||||
Less: Non-performance operating expenses
|
|
|
|
|
|
|
|
||||||||
Selling and marketing
|
86,668
|
|
|
82,471
|
|
|
169,146
|
|
|
159,183
|
|
||||
General and administrative
|
35,203
|
|
|
30,302
|
|
|
66,345
|
|
|
59,855
|
|
||||
Acquisition and integration costs
|
2,285
|
|
|
1,020
|
|
|
3,584
|
|
|
1,020
|
|
||||
Amortization of intangible assets
|
15,566
|
|
|
11,019
|
|
|
32,428
|
|
|
22,038
|
|
||||
Restructuring costs
|
535
|
|
|
(17
|
)
|
|
919
|
|
|
8,068
|
|
||||
Add: Other non-performance financial items
|
|
|
|
|
|
|
|
||||||||
Interest expense and other income (loss), net
|
(11,641
|
)
|
|
(18,496
|
)
|
|
(33,127
|
)
|
|
(40,390
|
)
|
||||
Less: Provision for income taxes
|
2,595
|
|
|
3,265
|
|
|
3,894
|
|
|
4,315
|
|
||||
Consolidated net income
|
$
|
13,997
|
|
|
$
|
20,653
|
|
|
$
|
2,451
|
|
|
$
|
1,874
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
North America
|
$
|
395,505
|
|
|
$
|
397,181
|
|
|
$
|
788,209
|
|
|
$
|
728,716
|
|
EMEA
|
96,175
|
|
|
102,194
|
|
|
176,897
|
|
|
213,200
|
|
||||
CALA
|
57,896
|
|
|
47,891
|
|
|
101,706
|
|
|
90,633
|
|
||||
APAC
|
91,141
|
|
|
74,336
|
|
|
147,020
|
|
|
118,215
|
|
||||
Total
|
$
|
640,717
|
|
|
$
|
621,602
|
|
|
$
|
1,213,832
|
|
|
$
|
1,150,764
|
|
|
April 30,
2016 |
|
October 31,
2015 |
||||
United States
|
$
|
97,327
|
|
|
$
|
96,292
|
|
Canada
|
140,056
|
|
|
84,318
|
|
||
Other International
|
11,266
|
|
|
11,363
|
|
||
Total
|
$
|
248,649
|
|
|
$
|
191,973
|
|
(22)
|
COMMITMENTS AND CONTINGENCIES
|
•
|
Luvishis v. Cyan, Inc., et al., C.A. No. 11027-CB, filed May 15, 2015
|
•
|
Poll v. Cyan, Inc., et al., C.A. No. 11028-CB, filed May 15, 2015
|
•
|
Canzano v. Floyd, et al., C.A. No. 11052-CB, filed May 20, 2015
|
•
|
Kassis v. Cyan, Inc., et al., C.A. No. 11069-CB, filed May 27, 2015
|
•
|
Fenske v. Cyan, Inc., et al., C.A. No. 11090-CB, filed June 3, 2015
|
•
|
our ability to execute our business and growth strategies;
|
•
|
fluctuations in our revenue and operating results and our financial results generally;
|
•
|
the loss of any of our large customers, a significant reduction in their spending, or a material change in their networking or procurement strategies;
|
•
|
the competitive environment in which we operate and the impact of pricing pressure and recurring market-based price erosion that we regularly encounter;
|
•
|
market acceptance of products and services currently under development and delays in product or software development;
|
•
|
lengthy sales cycles and onerous contract terms with communications service providers, Web-scale providers and other large customers;
|
•
|
product performance problems and undetected errors;
|
•
|
our ability to diversify our customer base beyond our traditional customers and broaden the application for our solutions in communications networks;
|
•
|
the level of growth in network traffic and bandwidth consumption and corresponding level of investment in network infrastructures by network operators;
|
•
|
the international scale of our operations and fluctuations in currency exchange rates;
|
•
|
our ability to forecast accurately demand for our products for purposes of inventory purchase practices;
|
•
|
our ability to enforce our intellectual property rights, and costs we may incur in response to intellectual property right infringement claims made against us;
|
•
|
the continued availability on commercially reasonable terms of software and other technology under third party licenses;
|
•
|
failure to maintain the security of confidential, proprietary or otherwise sensitive business information or systems or to protect against cyber security attacks;
|
•
|
the performance of our third party contract manufacturers;
|
•
|
changes or disruption in components or supplies provided by third parties, including sole and limited source suppliers;
|
•
|
our ability to effectively manage our relationships with third party service partners and distributors;
|
•
|
unanticipated risks and additional obligations in connection with our resale of complementary products or technology of other companies;
|
•
|
our exposure to the credit risks of our customers and our ability to collect receivables;
|
•
|
modification or disruption of our internal business processes and information systems;
|
•
|
the effect of our outstanding indebtedness on our liquidity and business;
|
•
|
fluctuations in our stock price and our ability to access the capital markets to raise capital;
|
•
|
unanticipated expenses or disruptions to our operations caused by facilities transitions or restructuring activities;
|
•
|
inability to attract and retain experienced and qualified personnel;
|
•
|
disruptions to our operations caused by strategic acquisitions and investments or the inability to achieve the expected benefits and synergies of newly-acquired businesses;
|
•
|
our ability to grow our software business and address networking strategies including software-defined networking and network function virtualization;
|
•
|
changes in, and the impact of, government regulations, including with respect to: the communications industry generally; the business of our customers; the use, import or export of products; and the environment, potential climate change and other social initiatives;
|
•
|
impairment charges caused by the write-down of goodwill or long-lived assets;
|
•
|
our ability to maintain effective internal controls over financial reporting and liabilities that result from the inability to comply with corporate governance requirements; and
|
•
|
adverse results in litigation matters.
|
•
|
Product revenue for the
second
quarter of fiscal
2016
increased
by
$66.4 million
, primarily reflecting revenue increases within our Networking Platforms segment, with product line increases of $46.0 million in Converged Packet Optical and $20.4 million in Packet Networking.
|
•
|
Service revenue for the
second
quarter of fiscal
2016
increased
by
$1.2 million
.
|
•
|
North America revenue for the
second
quarter of fiscal
2016
was
$395.5 million
,
an increase
from
$392.7 million
in the
first
quarter of fiscal
2016
. This primarily reflects a revenue increase of $5.2 million within our Software and Software-Related Services segment, partially offset by a decrease of $2.1 million within our Global Services segment. North America revenue within our Networking Platforms segment remained relatively flat, with a product line increase of $16.3 million in Packet Networking offset by product line decreases of $14.4 million in Converged Packet Optical and $2.2 million in Optical Transport.
|
•
|
Europe, Middle East and Africa ("EMEA") revenue for the
second
quarter of fiscal
2016
was
$96.2 million
,
an increase
from
$80.7 million
in the
first
quarter of fiscal
2016
. This primarily reflects an $11.5 million increase within our Networking Platforms segment, with a product line increase of $14.5 million in Converged Packet Optical, partially offset by product line decreases of $1.6 million in Optical Transport and $1.4 million in Packet Networking. EMEA revenue also reflects a revenue increase of $3.6 million within our Global Services segment.
|
•
|
Caribbean and Latin America ("CALA") revenue for the
second
quarter of fiscal
2016
was
$57.9 million
,
an increase
from
$43.8 million
in the
first
quarter of fiscal
2016
. This primarily reflects a product line increase of $14.4 million in Converged Packet Optical, within our Networking Platforms segment.
|
•
|
Asia Pacific ("APAC") revenue for the
second
quarter of fiscal
2016
was
$91.1 million
,
an increase
from
$55.9 million
in the
first
quarter of fiscal
2016
. This primarily reflects a $37.1 million increase within our Networking Platforms segment, with product line increases of $31.5 million in Converged Packet Optical and $5.3 million in Packet Networking. This increase was partially offset by a revenue decrease of $1.2 million within our Global Services segment.
|
•
|
For the
second
quarter and
first
quarter of fiscal
2016
, AT&T accounted for
18.1%
and
22.1%
of total revenue, respectively.
|
•
|
Networking Platforms
segment revenue
increased
, primarily reflecting increases of $15.3 million in sales of our Packet Networking products and $2.3 million in sales of our Converged Packet Optical products, partially offset by a decrease of $8.0 million in sales of our Optical Transport products.
|
◦
|
Converged Packet Optical sales reflect the addition of $20.0 million in sales relating to the Z-Series Packet-Optical Platform acquired from Cyan. Converged Packet Optical sales also reflects an increase of $13.0 million in sales of our 5430 Reconfigurable Switching System. These increases within our Converged Packet Optical product line were partially offset by decreases of $23.1 million in sales of our 6500 Packet-Optical Platform, $4.9 million in sales of our OTN configuration for the 5410 Reconfigurable Switching System and $2.9 million in sales of our CoreDirector® Multiservice Optical Switches.
|
◦
|
Packet Networking sales reflect increases of $9.9 million in sales of our 3000 family of service delivery switches and service aggregation switches and $6.2 million in sales of our 8700 Packetwave Platform.
|
◦
|
Optical Transport sales, which have continued to experience expected sales declines, reflect network operators' transition from this product line toward next-generation converged network solutions. As a result, our Optical Transport products have either been previously discontinued or are expected to be discontinued during fiscal 2016.
|
•
|
Software and Software-Related Services
segment revenue
increased
, primarily reflecting increases of $4.0 million in software-related services sales and $2.5 million in sales of our software platforms. The increase in software-related services sales is primarily due to increased sales of software subscription services. The increase in software platform sales reflects $2.3 million in initial sales of our Blue Planet network virtualization, service orchestration and network management software platform. Segment revenue also includes $0.6 million in sales of Planet Operate software acquired from Cyan.
|
•
|
Global Services
segment revenue
increased
, primarily reflecting an increase of $4.0 million in sales of maintenance support services. Segment revenue includes $4.2 million in services revenue related to the Cyan acquisition.
|
|
Quarter Ended April 30,
|
|
Increase
|
|
|
|||||||||||||
|
2016
|
|
%*
|
|
2015
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
North America
|
$
|
395,505
|
|
|
61.7
|
|
$
|
397,181
|
|
|
63.9
|
|
$
|
(1,676
|
)
|
|
(0.4
|
)
|
EMEA
|
96,175
|
|
|
15.0
|
|
102,194
|
|
|
16.4
|
|
(6,019
|
)
|
|
(5.9
|
)
|
|||
CALA
|
57,896
|
|
|
9.0
|
|
47,891
|
|
|
7.7
|
|
10,005
|
|
|
20.9
|
|
|||
APAC
|
91,141
|
|
|
14.3
|
|
74,336
|
|
|
12.0
|
|
16,805
|
|
|
22.6
|
|
|||
Total
|
$
|
640,717
|
|
|
100.0
|
|
$
|
621,602
|
|
|
100.0
|
|
$
|
19,115
|
|
|
3.1
|
|
•
|
North America revenue
primarily reflects decreases of $13.8 million within our Networking Platforms segment, partially offset by increases of $7.0 million within our Software and Software-Related Services segment and $5.2 million within our Global Services segment. The revenue decrease within our Networking Platforms segment primarily reflects decreases of $17.7 million of Converged Packet Optical sales and $4.1 million in Optical Transport sales, partially offset by an increase of $8.0 million of Packet Networking sales. Converged Packet Optical sales reflect a decrease of $31.8 million in sales of our 6500 Packet-Optical Platform, which reflects decreased sales to cable and multiservice operators and communication service providers, partially offset by increased sales to enterprise customers, submarine network operators and government customers. Converged Packet Optical sales also reflect $17.8 million of sales for our Z-Series Packet-Optical Platform acquired from Cyan.
|
•
|
EMEA revenue
primarily
reflects a decrease of $10.2 million within our Networking Platform segment, partially offset by revenue increases of $2.5 million within our Global Services segment and $1.7 million within our Software and Software-Related Services segment. Networking Platform segment revenue reflects a product line decrease of $7.8 million in Converged Packet Optical sales, primarily for the 6500 Packet-Optical Platform and the OTN configuration for the 5410 Reconfigurable Switching System. In recent periods, we have seen certain of our large service provider customers in EMEA take steps to constrain their capital expenditure budgets. This measured spending environment, together with macroeconomic conditions, has adversely impacted the spending levels we have experienced from certain customers in this region as compared to prior periods.
|
•
|
CALA revenue
primarily
reflects an increase of $10.6 million within our Networking Platform segment. CALA revenue benefited from increased sales to submarine network operators, cable and multiservice operators, Web-scale providers and to AT&T in Mexico, partially offset by lower sales to other service providers, primarily in Brazil.
|
•
|
APAC revenue
primarily reflects an increase of $23.0 million within our Networking Platform segment, partially offset by decreases of $4.5 million within our Global Services segment and $1.7 million within our Software and Software-Related Services segment. The revenue increase within our Networking Platforms segment primarily reflects an increase of our 6500 Packet-Optical Platform sales to enterprise customers and submarine network operators and sales through our strategic relationship with Ericsson, partially offset by lower sales to service providers. The timing of revenue recognition for large network projects in this region can result in significant variations in revenue results in any particular quarter.
|
|
Quarter Ended April 30,
|
|
Increase
|
|
|
||||||||||||
|
2016
|
|
%*
|
|
2015
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
Total revenue
|
$
|
640,717
|
|
|
100.0
|
|
$
|
621,602
|
|
|
100.0
|
|
$
|
19,115
|
|
|
3.1
|
Total cost of goods sold
|
357,624
|
|
|
55.8
|
|
349,191
|
|
|
56.2
|
|
8,433
|
|
|
2.4
|
|||
Gross profit
|
$
|
283,093
|
|
|
44.2
|
|
$
|
272,411
|
|
|
43.8
|
|
$
|
10,682
|
|
|
3.9
|
|
Quarter Ended April 30,
|
|
Increase
|
|
|
||||||||||||
|
2016
|
|
%*
|
|
2015
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
Product revenue
|
$
|
523,978
|
|
|
100.0
|
|
$
|
511,880
|
|
|
100.0
|
|
$
|
12,098
|
|
|
2.4
|
Product cost of goods sold
|
291,778
|
|
|
55.7
|
|
286,898
|
|
|
56.0
|
|
4,880
|
|
|
1.7
|
|||
Product gross profit
|
$
|
232,200
|
|
|
44.3
|
|
$
|
224,982
|
|
|
44.0
|
|
$
|
7,218
|
|
|
3.2
|
|
Quarter Ended April 30,
|
|
Increase
|
|
|
||||||||||||
|
2016
|
|
%*
|
|
2015
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
Service revenue
|
$
|
116,739
|
|
|
100.0
|
|
$
|
109,722
|
|
|
100.0
|
|
$
|
7,017
|
|
|
6.4
|
Service cost of goods sold
|
65,846
|
|
|
56.4
|
|
62,293
|
|
|
56.8
|
|
3,553
|
|
|
5.7
|
|||
Service gross profit
|
$
|
50,893
|
|
|
43.6
|
|
$
|
47,429
|
|
|
43.2
|
|
$
|
3,464
|
|
|
7.3
|
•
|
Gross profit as a percentage of revenue
increased
as a result of the following factors:
|
•
|
Gross profit on products as a percentage of product revenue
increased
, as a result of product cost reductions, improved manufacturing efficiencies and higher software revenue, partially offset by the impact of market-based price erosion and an increased provision for excess and obsolete inventory expense.
|
•
|
Gross profit on services as a percentage of services revenue
increased
, primarily due to increased sales of higher margin software subscription services and improved efficiencies for maintenance and support services.
|
|
Quarter Ended April 30,
|
|
Increase
|
|
|
||||||||||||||
|
2016
|
|
%*
|
|
2015
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||||
Research and development
|
$
|
114,603
|
|
|
17.9
|
|
$
|
105,202
|
|
|
16.9
|
|
|
$
|
9,401
|
|
|
8.9
|
|
Selling and marketing
|
86,668
|
|
|
13.5
|
|
82,471
|
|
|
13.3
|
|
|
4,197
|
|
|
5.1
|
|
|||
General and administrative
|
35,203
|
|
|
5.5
|
|
30,302
|
|
|
4.9
|
|
|
4,901
|
|
|
16.2
|
|
|||
Acquisition and integration costs
|
2,285
|
|
|
0.4
|
|
1,020
|
|
|
0.2
|
|
|
1,265
|
|
|
124.0
|
|
|||
Amortization of intangible assets
|
15,566
|
|
|
2.4
|
|
11,019
|
|
|
1.8
|
|
|
4,547
|
|
|
41.3
|
|
|||
Restructuring costs
|
535
|
|
|
0.1
|
|
(17
|
)
|
|
—
|
|
|
552
|
|
|
(3,247.1
|
)
|
|||
Total operating expenses
|
$
|
254,860
|
|
|
39.8
|
|
$
|
229,997
|
|
|
37.1
|
|
|
$
|
24,863
|
|
|
10.8
|
|
•
|
Research and development expense
benefited
from
$4.3 million
as a result of foreign exchange rates, net of hedging, primarily due to a stronger U.S. dollar in relation to the Canadian Dollar. Including the effect of foreign exchange rates, research and development expenses increased by
$9.4 million
. This change reflects increases of $6.1 million in employee and compensation costs, $2.2 million in facilities and information technology costs, $1.3 million in depreciation expense and $1.0 million in professional services. These increases were partially offset by a decrease of $1.9 million in prototype expense.
|
•
|
Selling and marketing expense
increased
by
$4.2 million
, primarily reflecting increases of $3.9 million in employee and compensation costs and $1.0 million in facilities and information technology costs, partially offset by a decrease of $1.0 million in trade show and related costs.
|
•
|
General and administrative expense
increased
by
$4.9 million
, primarily reflecting increases of $3.0 million in employee and compensation costs and $1.2 million for legal settlements related to certain patent litigation.
|
•
|
Acquisition and integration costs
reflects expense for financial, legal and accounting advisors and severance and other employee compensation costs, related to our acquisition of Cyan on August 3, 2015 and our acquisition of certain HSPC assets of TeraXion and its wholly-owned subsidiary on February 1, 2016.
|
•
|
Amortization of intangible assets
increased
due to expense related to acquired intangible assets from our acquisition of Cyan on August 3, 2015 and our acquisition of certain HSPC assets of TeraXion and its wholly-owned subsidiary on February 1, 2016.
|
•
|
Restructuring costs
primarily reflect certain severance and related expense associated with headcount reductions and initiatives to improve efficiency. As we look to manage operating expense and drive further efficiency and leverage from our operations, we will continue to assess allocation of headcount, facilities and other resources to ensure that they are optimized toward key growth opportunities.
|
|
Quarter Ended April 30,
|
|
Increase
|
|
|
||||||||||||||
|
2016
|
|
%*
|
|
2015
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||||
Interest and other income (loss), net
|
$
|
967
|
|
|
0.2
|
|
$
|
(5,549
|
)
|
|
(0.9
|
)
|
|
$
|
6,516
|
|
|
117.4
|
|
Interest expense
|
$
|
12,608
|
|
|
2.0
|
|
$
|
12,947
|
|
|
2.1
|
|
|
$
|
(339
|
)
|
|
(2.6
|
)
|
Provision for income taxes
|
$
|
2,595
|
|
|
0.4
|
|
$
|
3,265
|
|
|
0.5
|
|
|
$
|
(670
|
)
|
|
(20.5
|
)
|
•
|
Interest and other income (loss), net
reflects the improved impact of foreign exchange rates on assets and liabilities denominated in a currency other than the relevant functional currency, net of hedging activity.
|
•
|
Interest expense
remained relatively unchanged.
|
•
|
Provision for income taxes
decreased primarily due to foreign tax expense.
|
•
|
Networking Platforms
segment revenue
increased
, primarily reflecting increases of $54.9 million in sales of our Converged Packet Optical products and $8.5 million of Packet Networking products, partially offset by a decrease of $18.2 million in sales of our Optical Transport products.
|
◦
|
Converged Packet Optical sales reflect an increase of $12.3 million of our 6500 Packet-Optical Platform, primarily due to increased sales to enterprise customers, AT&T, government customers and sales through our strategic relationship with Ericsson. These increases were partially offset by decreases in sales of our 6500 Packet-Optical Platform to Web-scale and other service providers, cable and multiservice operators and submarine network operators. Increased sales from Converged Packet Optical also reflects the addition of $54.1 million in sales relating to the Z-Series Packet-Optical Platform acquired from Cyan. These increases within our Converged Packet Optical product line were partially offset by decreases of $7.7 million in sales of our OTN configuration for the 5410 Reconfigurable Switching System and $3.2 million in sales of our CoreDirector® Multiservice Optical Switches.
|
◦
|
Packet Networking sales reflect increases of $7.6 million in sales of our 8700 Packetwave Platform and $2.7 million in sales of our 3000 family of service delivery switches, partially offset by a decrease of $1.3 million in sales of our 5410 Service Aggregation Switch.
|
◦
|
Optical Transport sales, which generally have experienced continued declines, reflect network operators' transition from this product line toward next-generation converged network solutions. As a result, our Optical Transport products have either been previously discontinued or are expected to be discontinued during fiscal 2016.
|
•
|
Software and Software-Related Services
segment revenue
increased
, primarily reflecting increases of $6.3 million in software-related services sales and $2.2 million in sales of our software platforms. The increase in software-related services sales is primarily due to increased sales of software subscription services. The increase in software platform sales reflects $2.4 million in initial sales of our Blue Planet network virtualization, service orchestration and network management software platform. Segment revenue also includes $0.8 million in sales of Planet Operate software acquired from Cyan.
|
•
|
Global Services
segment revenue
increased
, primarily reflecting increases of $6.1 million in sales of our maintenance and support services and $4.2 million in sales of our installation and deployment services. Global Services segment revenue includes $10.2 million of services revenue acquired from Cyan.
|
|
Six Months Ended April 30,
|
|
Increase
|
|
|
|||||||||||||
|
2016
|
|
%*
|
|
2015
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
North America
|
$
|
788,209
|
|
|
64.9
|
|
$
|
728,716
|
|
|
63.3
|
|
$
|
59,493
|
|
|
8.2
|
|
EMEA
|
176,897
|
|
|
14.6
|
|
213,200
|
|
|
18.5
|
|
(36,303
|
)
|
|
(17.0
|
)
|
|||
CALA
|
101,706
|
|
|
8.4
|
|
90,633
|
|
|
7.9
|
|
11,073
|
|
|
12.2
|
|
|||
APAC
|
147,020
|
|
|
12.1
|
|
118,215
|
|
|
10.3
|
|
28,805
|
|
|
24.4
|
|
|||
Total
|
$
|
1,213,832
|
|
|
100.0
|
|
$
|
1,150,764
|
|
|
100.0
|
|
$
|
63,068
|
|
|
5.5
|
|
•
|
North America revenue
primarily reflects increases of $42.9 million within our Networking Platforms segment, $8.4 million within our Global Services segment, and $8.2 million within our Software and Software-Related Services segment. The revenue increase within our Networking Platforms segment primarily reflects an increase of $52.6 million of Converged Packet Optical sales, partially offset by decreases of $7.7 million in Optical Transport sales and $2.0 million of Packet Networking sales. Converged Packet Optical sales reflect increases of $12.4 million in sales of our 6500 Packet-Optical Platform, which reflects increased sales to communication service providers, enterprise customers, government customers and network submarine operators, slightly offset by reduced sales to cable and multiservice operators and Web-scale providers. Converged Packet Optical sales also include $46.2 million of sales for our Z-Series Packet-Optical Platform acquired from Cyan.
|
•
|
EMEA revenue
primarily
reflects a decrease of $39.2 million within our Networking Platform segment. Networking Platform segment revenue reflects a product line decrease of $34.0 million in Converged Packet Optical sales, primarily for the 6500 Packet-Optical Platform. In recent periods, we have seen certain of our large service provider customers in EMEA take steps to constrain their capital expenditure budgets. This measured spending environment, together with macroeconomic conditions, has adversely impacted the spending levels we have experienced from certain customers in this region as compared to prior periods.
|
•
|
CALA revenue
primarily
reflects an increase of $12.0 million within our Networking Platform segment. CALA revenue benefited from increased sales to to AT&T in Mexico, submarine network operators, cable and multiservice operators and Web-scale providers, partially offset by lower sales to other service providers, primarily in Brazil.
|
•
|
APAC revenue
primarily
reflects an increase of $29.5 million within our Networking Platform segment. The revenue increase within our Networking Platforms segment primarily reflects an increase of our 6500 Packet-Optical Platform sales to certain communications service provider and enterprise customers, submarine network operators and sales through our strategic partnership with Ericsson. The timing of revenue recognition for large network projects in this region can result in significant variations in revenue results in any particular quarter.
|
|
Six Months Ended April 30,
|
|
Increase
|
|
|
||||||||||||
|
2016
|
|
%*
|
|
2015
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
Total revenue
|
$
|
1,213,832
|
|
|
100.0
|
|
$
|
1,150,764
|
|
|
100.0
|
|
$
|
63,068
|
|
|
5.5
|
Total cost of goods sold
|
679,289
|
|
|
56.0
|
|
648,058
|
|
|
56.3
|
|
31,231
|
|
|
4.8
|
|||
Gross profit
|
$
|
534,543
|
|
|
44.0
|
|
$
|
502,706
|
|
|
43.7
|
|
$
|
31,837
|
|
|
6.3
|
|
Six Months Ended April 30,
|
|
Increase
|
|
|
||||||||||||
|
2016
|
|
%*
|
|
2015
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
Product revenue
|
$
|
981,567
|
|
|
100.0
|
|
$
|
934,195
|
|
|
100.0
|
|
$
|
47,372
|
|
|
5.1
|
Product cost of goods sold
|
552,260
|
|
|
56.3
|
|
523,446
|
|
|
56.0
|
|
28,814
|
|
|
5.5
|
|||
Product gross profit
|
$
|
429,307
|
|
|
43.7
|
|
$
|
410,749
|
|
|
44.0
|
|
$
|
18,558
|
|
|
4.5
|
|
Six Months Ended April 30,
|
|
Increase
|
|
|
||||||||||||
|
2016
|
|
%*
|
|
2015
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
Service revenue
|
$
|
232,265
|
|
|
100.0
|
|
$
|
216,569
|
|
|
100.0
|
|
$
|
15,696
|
|
|
7.2
|
Service cost of goods sold
|
127,029
|
|
|
54.7
|
|
124,612
|
|
|
57.5
|
|
2,417
|
|
|
1.9
|
|||
Service gross profit
|
$
|
105,236
|
|
|
45.3
|
|
$
|
91,957
|
|
|
42.5
|
|
$
|
13,279
|
|
|
14.4
|
•
|
Gross profit as a percentage of revenue
increased
as a result of the following factors:
|
•
|
Gross profit on products as a percentage of product revenue
decreased
as a result of market-based price erosion and an increased provision for excess and obsolete inventory expense partially offset by product cost reductions, higher software revenue and improved manufacturing efficiencies.
|
•
|
Gross profit on services as a percentage of services revenue
increased
primarily due to increased sales of higher margin software subscription services and reduced repair costs to support maintenance service contracts.
|
|
Six Months Ended April 30,
|
|
Increase
|
|
|
|||||||||||||
|
2016
|
|
%*
|
|
2015
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
Research and development
|
$
|
222,649
|
|
|
18.3
|
|
$
|
205,963
|
|
|
17.9
|
|
$
|
16,686
|
|
|
8.1
|
|
Selling and marketing
|
169,146
|
|
|
13.9
|
|
159,183
|
|
|
13.8
|
|
9,963
|
|
|
6.3
|
|
|||
General and administrative
|
66,345
|
|
|
5.5
|
|
59,855
|
|
|
5.2
|
|
6,490
|
|
|
10.8
|
|
|||
Acquisition and integration costs
|
3,584
|
|
|
0.3
|
|
1,020
|
|
|
0.1
|
|
2,564
|
|
|
251.4
|
|
|||
Amortization of intangible assets
|
32,428
|
|
|
2.7
|
|
22,038
|
|
|
1.9
|
|
10,390
|
|
|
47.1
|
|
|||
Restructuring costs
|
919
|
|
|
0.1
|
|
8,068
|
|
|
0.7
|
|
(7,149
|
)
|
|
(88.6
|
)
|
|||
Total operating expenses
|
$
|
495,071
|
|
|
40.8
|
|
$
|
456,127
|
|
|
39.6
|
|
$
|
38,944
|
|
|
8.5
|
|
•
|
Research and development expense
benefited
$13.6 million
as a result of foreign exchange rates, net of hedging, primarily due to a stronger U.S. dollar in relation to the Canadian Dollar. Including the effect of foreign exchange rates, research and development expenses
increased by
$16.7 million
. This change reflects increases of $10.8 million in employee and compensation costs, $4.2 million in facilities and information technology costs, $1.9 million in professional services and $1.7 million in depreciation expense. Research and development expense for fiscal 2016 also reflects a $1.7 million reduction in reimbursements from our strategic jobs investment fund grant from the province of Ontario, due to the maximum funding limit being met in the second quarter of fiscal 2015. These increases were partially offset by a decrease of $4.4 million in prototype expense.
|
•
|
Selling and marketing expense
benefited
$4.7 million
as a result of foreign exchange rates, primarily due to a stronger U.S. dollar in relation to the Euro, Canadian Dollar and Brazilian Real. Including the effect of foreign exchange rates, selling and marketing expense
increased by
$10.0 million
, primarily reflecting increases of $7.6 million in employee and compensation costs, $2.1 million in professional services, $1.4 million in facilities and information technology costs and $1.0 million in travel and related costs. These increases were partially offset by a decrease of $1.7 million in trade shows and related costs.
|
•
|
General and administrative expense
benefited
$1.6 million
as a result of foreign exchange rates, primarily due to a stronger U.S. dollar in relation to the Brazilian Real, Canadian Dollar and Euro. Including the effect of foreign exchange rates, general and administrative expense increased by
$6.5 million
, primarily due to increased employee and compensation costs of $5.3 million and $1.2 million for legal settlements related to certain patent litigations.
|
•
|
Acquisition and integration costs
reflects expense for financial, legal and accounting advisors, and severance and other employee compensation costs, related to our acquisition of Cyan on August 3, 2015 and our acquisition of certain HSPC assets of TeraXion and its wholly-owned subsidiary on February 1, 2016.
|
•
|
Amortization of intangible assets
increased
due to expense related to acquired intangible assets from our acquisition of Cyan during fiscal 2015 and our acquisition of certain HSPC assets of TeraXion and its wholly-owned subsidiary on February 1, 2016.
|
•
|
Restructuring costs
primarily reflect certain severance and related expense associated with headcount reductions and initiatives to improve efficiency. As we look to manage operating expense and drive further efficiency and leverage from our operations, we will continue to assess allocation of headcount, facilities and other resources to ensure that they are optimized toward key growth opportunities
|
|
Six Months Ended April 30,
|
|
Increase
|
|
|
|||||||||||||||
|
2016
|
|
%*
|
|
2015
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||||
Interest and other income (loss), net
|
$
|
(7,809
|
)
|
|
(0.6
|
)
|
|
$
|
(13,782
|
)
|
|
(1.2
|
)
|
|
$
|
5,973
|
|
|
43.3
|
|
Interest expense
|
$
|
25,318
|
|
|
2.1
|
|
|
$
|
26,608
|
|
|
2.3
|
|
|
$
|
(1,290
|
)
|
|
(4.8
|
)
|
Provision for income taxes
|
$
|
3,894
|
|
|
0.3
|
|
|
$
|
4,315
|
|
|
0.4
|
|
|
$
|
(421
|
)
|
|
(9.8
|
)
|
•
|
Interest and other income (loss), net
reflects the improved impact of foreign exchange rates on assets and liabilities denominated in a currency other than the relevant functional currency, net of hedging activity.
|
•
|
Interest expense
decreased
, primarily due to a reduction in aggregate of outstanding debt due to the maturity of our outstanding 4.0% Convertible Senior Notes on March 15, 2015.
|
•
|
Provision for income taxes
decreased primarily due to foreign tax expense.
|
|
Quarter Ended April 30,
|
|
|
|
||||||||||
|
2016
|
|
2015
|
|
Increase (decrease)
|
|
%*
|
|||||||
Segment profit:
|
|
|
|
|
|
|
|
|||||||
Networking Platforms
|
$
|
132,606
|
|
|
$
|
131,252
|
|
|
$
|
1,354
|
|
|
1.0
|
|
Software and Software-Related Services
|
$
|
192
|
|
|
$
|
806
|
|
|
$
|
(614
|
)
|
|
(76.2
|
)
|
Global Services
|
$
|
35,692
|
|
|
$
|
35,151
|
|
|
$
|
541
|
|
|
1.5
|
|
•
|
Networking Platforms
segment
profit
increased
, primarily due to higher sales volume, as described above, and improved gross margin partially offset by higher research and development costs. The improved gross margin was the result of product cost reductions and improved manufacturing efficiencies partially offset by market-based price erosion and an increased provision for excess and obsolete inventory expense.
|
•
|
Software and Software-Related Services
segment
profit
decreased
, primarily due to higher research and development costs and lower gross margin from increased amortization of intangibles expense, partially offset by higher sales volume. Higher research and development costs reflect the addition of expenses relating to the development of our Blue Planet software platform.
|
•
|
Global Services
segment
profit
increased
, primarily due to higher sales volume, as described above, partially offset by reduced gross margin.
|
|
Six Months Ended April 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Increase (decrease)
|
|
%*
|
|||||||
Segment profit (loss):
|
|
|
|
|
|
|
|
|||||||
Networking Platforms
|
$
|
239,588
|
|
|
$
|
226,326
|
|
|
$
|
13,262
|
|
|
5.9
|
|
Software and Software-Related Services
|
$
|
(3,382
|
)
|
|
$
|
3,394
|
|
|
$
|
(6,776
|
)
|
|
(199.6
|
)
|
Global Services
|
$
|
75,688
|
|
|
$
|
67,023
|
|
|
$
|
8,665
|
|
|
12.9
|
|
•
|
Networking Platforms
segment
profit
increased
, primarily due to higher sales volume as described above. The increased sales volume was partially offset by higher research and development costs and reduced gross margin. The reduced gross margin was the result of market-based price erosion and an increased provision for excess and obsolete inventory expense partially offset by product cost reductions and improved manufacturing efficiencies.
|
•
|
Software and Software-Related Services
segment
loss
primarily reflects higher research and development costs and reduced gross margin from increased amortization of intangibles expense, partially offset by higher sales volume. Higher research and development costs reflect the addition of expenses relating to the development of our Blue Planet software platform.
|
•
|
Global Services
segment
profit
increased
, primarily due to higher sales volume and improved gross margin. The improved gross margin reflects lower costs for maintenance, support, installation and deployment services.
|
|
April 30,
2016 |
|
October 31,
2015 |
|
Increase
(decrease)
|
||||||
Cash and cash equivalents
|
$
|
922,033
|
|
|
$
|
790,971
|
|
|
$
|
131,062
|
|
Short-term investments in marketable debt securities
|
195,179
|
|
|
135,107
|
|
|
60,072
|
|
|||
Long-term investments in marketable debt securities
|
125,233
|
|
|
95,105
|
|
|
30,128
|
|
|||
Total cash and cash equivalents and investments in marketable debt securities
|
$
|
1,242,445
|
|
|
$
|
1,021,183
|
|
|
$
|
221,262
|
|
•
|
$75.7 million
cash
generated from
operations, consisting of
$140.6 million
provided by
net
income
(adjusted for non-cash charges) offset by
$64.9 million
used in
working capital;
|
•
|
$53.1 million
used for purchases of equipment, furniture and fixtures and intellectual property;
|
•
|
$4.8 million
used for settlement of foreign currency forward contracts, net;
|
•
|
$3.8 million
used to pay capital lease obligations;
|
•
|
$32.0 million used for the purchase price to acquire the HSPC assets of TeraXion;
|
•
|
$15.3 million
used for repayment of long-term debt;
|
•
|
$10.0 million
provided by stock issuances under our employee stock purchase plan and exercise of stock options;
|
•
|
$1.1 million
used for payment of debt issuance costs, other than costs associated with the 2021 Term Loan; and
|
•
|
$0.6 million
decrease due to the effect of exchange rate changes on cash and cash equivalents.
|
|
Six months ended
|
||
|
April 30, 2016
|
||
Net income
|
$
|
2,451
|
|
Adjustments for non-cash charges:
|
|
||
Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements
|
30,237
|
|
|
Share-based compensation costs
|
29,210
|
|
|
Amortization of intangible assets
|
40,488
|
|
|
Provision for inventory excess and obsolescence
|
20,104
|
|
|
Provision for warranty
|
9,563
|
|
|
Other
|
8,578
|
|
|
Net income (adjusted for non-cash charges)
|
$
|
140,631
|
|
|
Six months ended
|
||
|
April 30, 2016
|
||
Cash used in accounts receivable
|
$
|
(4,865
|
)
|
Cash used in inventories
|
(19,022
|
)
|
|
Cash used in prepaid expenses and other
|
(7,670
|
)
|
|
Cash used in accounts payable, accruals and other obligations
|
(29,400
|
)
|
|
Cash used in deferred revenue
|
(3,992
|
)
|
|
Total cash used for working capital
|
$
|
(64,949
|
)
|
•
|
The
$4.9 million
of cash
used by
accounts receivable during the first
six
months of fiscal
2016
reflects higher proportional sales volume at the end of the second quarter of fiscal 2016;
|
•
|
The
$19.0 million
of cash
used in
inventory during the first
six
months of fiscal
2016
primarily reflects increases in deferred costs of goods sold;
|
•
|
Cash
used in
prepaid expense and other during the first
six
months of fiscal
2016
was
$7.7 million
, primarily reflecting higher prepaid value added taxes and product demonstration equipment;
|
•
|
The
$29.4 million
of cash
used in
accounts payable, accruals and other obligations during the first
six
months of fiscal
2016
reflects, among other things, the annual payment under our cash incentive compensation plan to employees; and
|
•
|
The
$4.0 million
of cash
used in
deferred revenue during the first
six
months of fiscal
2016
represents an increase in the recognition of revenue for which we received advanced payments from customers.
|
|
Six months ended
|
||
|
April 30, 2016
|
||
0.875% Convertible Senior Notes due June 15, 2017
(1)
|
$
|
2,162
|
|
3.75% Convertible Senior Notes, due October 15, 2018
(2)
|
6,562
|
|
|
4.0% Convertible Senior Notes, due December 15, 2020
(3)
|
3,750
|
|
|
Term Loan due July 15, 2019
(4)
|
4,676
|
|
|
Term Loan due April 25, 2021
(5)
|
—
|
|
|
Interest rate swaps
(6)
|
1,572
|
|
|
ABL Credit Facility
(7)
|
898
|
|
|
Cash paid during period
|
$
|
19,620
|
|
(1)
|
Interest on our outstanding 0.875% Convertible Senior Notes, due June 15, 2017, is payable on June 15 and December 15 of each year.
|
(2)
|
Interest on our outstanding 3.75% Convertible Senior Notes, due October, 2018, is payable on April 15 and October 15 of each year.
|
(3)
|
Interest on our outstanding 4.0% Convertible Senior Notes, due December 15, 2020, is payable on June 15 and December 15 of each year.
|
(4)
|
Interest on our outstanding 2019 Term Loan is payable periodically based on the underlying market index rate selected for borrowing. The 2019 Term Loan bears interest at LIBOR plus a spread of 3.00% subject to a minimum LIBOR rate of 0.75%. During the first
six
months of fiscal
2016
, the interest rate on the 2019 Term Loan was 3.75%.
|
(5)
|
No interest was paid on our outstanding 2021 Term Loan. Interest is payable periodically based on the underlying market index rate selected for borrowing. From April 25, 2016 through May 5, 2016, the interest rate in effect on our 2021 Term Loan was 6.0%, which was a base rate borrowing. After this initial period, the 2021 Term Loan bears interest at LIBOR plus a spread of 3.25% to 3.50% subject to a minimum LIBOR rate of 0.75%.
|
(6)
|
Payments on our interest rate swaps are variable and effectively fix the total interest rate under the 2019 Term Loan at 5.004% from July 20, 2015 through July 19, 2018.
|
(7)
|
During the first
six
months of fiscal
2016
, we utilized the ABL Credit Facility to collateralize certain standby letters of credit and paid
$0.9 million
in commitment fees, interest expense and other administrative charges relating to our ABL Credit Facility.
|
|
Total
|
|
Less than one year
|
|
One to three years
|
|
Three to five years
|
|
Thereafter
|
||||||||||
Principal due at maturity on convertible notes
(1)
|
$
|
1,047,112
|
|
|
$
|
—
|
|
|
$
|
829,985
|
|
|
$
|
217,127
|
|
|
$
|
—
|
|
Principal due on term loans
|
495,625
|
|
|
5,000
|
|
|
10,000
|
|
|
480,625
|
|
|
—
|
|
|||||
Interest due on convertible notes
|
76,875
|
|
|
25,000
|
|
|
36,875
|
|
|
15,000
|
|
|
—
|
|
|||||
Interest due on term loans
(2)
|
82,528
|
|
|
20,010
|
|
|
39,615
|
|
|
22,903
|
|
|
—
|
|
|||||
Payments due under interest rate swaps
(2)
|
13,074
|
|
|
4,404
|
|
|
6,914
|
|
|
1,756
|
|
|
—
|
|
|||||
Operating leases
(3)
|
138,210
|
|
|
34,880
|
|
|
39,955
|
|
|
21,219
|
|
|
42,156
|
|
|||||
Purchase obligations
(4)
|
216,484
|
|
|
216,484
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital leases— equipment
|
4,937
|
|
|
2,778
|
|
|
1,730
|
|
|
429
|
|
|
—
|
|
|||||
Capital leases— buildings
(5)
|
132,214
|
|
|
2,242
|
|
|
13,544
|
|
|
15,627
|
|
|
100,801
|
|
|||||
Other obligations
|
1,585
|
|
|
1,085
|
|
|
382
|
|
|
118
|
|
|
—
|
|
|||||
Total
(6)
|
$
|
2,208,644
|
|
|
$
|
311,883
|
|
|
$
|
979,000
|
|
|
$
|
774,804
|
|
|
$
|
142,957
|
|
(1)
|
Includes the accretion of the principal amount on our outstanding 4.0% Convertible Senior Notes, due December 15, 2020 payable at maturity at a rate of 1.85% per year compounded semi-annually, commencing December 27, 2012.
|
(2)
|
Interest on the term loans and payments due under the interest rate swaps are variable and were calculated using the rate in effect on the balance sheet date. For additional information about our term loans and the interest rate swaps, see Notes
15
and
17
to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report.
|
(3)
|
Does not include variable insurance, taxes, maintenance and other costs required by the applicable operating lease. These costs are not expected to have a material future impact.
|
(4)
|
Purchase obligations relate to purchase order commitments to our contract manufacturers and component suppliers for inventory. In certain instances, we are permitted to cancel, reschedule or adjust these orders. Consequently, only a portion of the amount reported above relates to firm, non-cancelable and unconditional obligations.
|
(5)
|
This represents the total minimum lease payments due for all buildings that are subject to capital lease accounting, as well as buildings that are expected to be recorded as capital leases upon the commencement of the lease term. Payment timing is based on the excepted commencement of the lease term. Does not include variable insurance, taxes, maintenance and other costs required by the applicable capital lease. These costs are not expected to have a material future impact.
|
(6)
|
As of
April 30, 2016
, we also had approximately
$12.2 million
of other long-term obligations in our Condensed Consolidated Balance Sheet for unrecognized tax positions that are not included in this table because the timing of any cash settlement with the respective tax authority, if any, cannot be reasonably estimated.
|
|
Total
|
|
Less than one year
|
|
One to three years
|
|
Three to five years
|
|
Thereafter
|
||||||||||
Standby letters of credit
|
$
|
69,203
|
|
|
$
|
34,017
|
|
|
$
|
14,973
|
|
|
$
|
9,368
|
|
|
$
|
10,845
|
|
•
|
Luvishis v. Cyan, Inc., et al., C.A. No. 11027-CB, filed May 15, 2015
|
•
|
Poll v. Cyan, Inc., et al., C.A. No. 11028-CB, filed May 15, 2015
|
•
|
Canzano v. Floyd, et al., C.A. No. 11052-CB, filed May 20, 2015
|
•
|
Kassis v. Cyan, Inc., et al., C.A. No. 11069-CB, filed May 27, 2015
|
•
|
Fenske v. Cyan, Inc., et al., C.A. No. 11090-CB, filed June 3, 2015
|
•
|
broader macroeconomic conditions, including weakness and volatility in global markets, that affect our customers;
|
•
|
changes in capital spending by large communications service providers;
|
•
|
order timing, volume and cancellations;
|
•
|
backlog levels;
|
•
|
the level of competition and pricing pressure in our industry;
|
•
|
the impact of commercial concessions or unfavorable commercial terms required to maintain incumbency or secure new opportunities with key customers;
|
•
|
our level of success in achieving cost reductions and improved efficiencies in our supply chain;
|
•
|
the impact of market-based price erosion that we regularly encounter;
|
•
|
our incurrence of start-up costs required to support initial deployments, gain new customers or enter new markets;
|
•
|
the timing of revenue recognition on sales, particularly relating to large orders;
|
•
|
the mix of revenue by product segment, geography and customer in any particular quarter;
|
•
|
installation service availability and readiness of customer sites;
|
•
|
adverse impact of foreign exchange; and
|
•
|
seasonal effects in our business.
|
•
|
product functionality, speed, capacity, scalability and performance;
|
•
|
price and total cost of ownership of our solutions;
|
•
|
incumbency and existing business relationships;
|
•
|
ability to offer comprehensive networking solutions, consisting of equipment, software and network consulting services;
|
•
|
product development plans and the ability to meet customers' immediate and future network requirements;
|
•
|
flexibility and openness of platforms, including ease of integration, interoperability and integrated software programmability and management;
|
•
|
space and power considerations;
|
•
|
manufacturing and lead-time capability; and
|
•
|
services and support capabilities.
|
•
|
reductions in customer spending and delay, deferral or cancellation of network infrastructure initiatives;
|
•
|
increased competition for fewer network projects and sales opportunities;
|
•
|
increased pricing pressure that may adversely affect revenue, gross margin and profitability;
|
•
|
difficulty forecasting operating results and making decisions about budgeting, planning and future investments;
|
•
|
increased overhead and production costs as a percentage of revenue;
|
•
|
tightening of credit markets needed to fund capital expenditures by Ciena or our customers;
|
•
|
customer financial difficulty, including longer collection cycles and difficulties collecting accounts receivable or write-offs of receivables; and
|
•
|
increased risk of charges relating to excess and obsolete inventories and the write-off of other intangible assets.
|
•
|
damage to our reputation, declining sales and order cancellations;
|
•
|
increased costs to remediate defects or replace products;
|
•
|
payment of liquidated damages, contractual or similar penalties, or other claims for performance failures or delays;
|
•
|
increased warranty expense or estimates resulting from higher failure rates, additional field service obligations or other rework costs related to defects;
|
•
|
increased inventory obsolescence;
|
•
|
costs and claims that may not be covered by liability insurance coverage or recoverable from third parties; and
|
•
|
delays in recognizing revenue or collecting accounts receivable.
|
•
|
the impact of economic conditions in countries outside the United States;
|
•
|
effects of adverse changes in currency exchange rates;
|
•
|
greater difficulty in collecting accounts receivable and longer collection periods;
|
•
|
difficulty and cost of staffing and managing foreign operations;
|
•
|
less protection for intellectual property rights in some countries;
|
•
|
adverse tax and customs consequences, particularly as related to transfer-pricing issues;
|
•
|
social, political and economic instability;
|
•
|
compliance with certain testing, homologation or customization of products to conform to local standards;
|
•
|
higher incidence of corruption or unethical business practices that could expose us to liability or damage our reputation;
|
•
|
trade protection measures, export compliance, domestic preference procurement requirements, qualification to transact business and additional regulatory requirements; and
|
•
|
natural disasters, epidemics and acts of war or terrorism.
|
•
|
pay substantial damages or royalties;
|
•
|
comply with an injunction or other court order that could prevent us from offering certain of our products;
|
•
|
seek a license for the use of certain intellectual property, which may not be available on commercially reasonable terms or at all;
|
•
|
develop non-infringing technology, which could require significant effort and expense and ultimately may not be successful; and
|
•
|
indemnify our customers or other third parties pursuant to contractual obligations to hold them harmless or pay expenses or damages on their behalf.
|
•
|
reduced control over delivery schedules and planning;
|
•
|
reliance on the quality assurance procedures of third parties;
|
•
|
potential uncertainty regarding manufacturing yields and costs;
|
•
|
availability of manufacturing capability and capacity, particularly during periods of high demand;
|
•
|
risks and uncertainties relating to the locations and geographies of our international contract manufacturing sites;
|
•
|
limited warranties provided to us;
|
•
|
potential misappropriation of our intellectual property; and
|
•
|
potential manufacturing disruptions, including disruptions caused by geopolitical events or environmental factors affecting the locations and geographies of our international contract manufacturing sites.
|
•
|
delays in recognizing revenue;
|
•
|
liability for injuries to persons, damage to property or other claims relating to the actions or omissions of our service partners;
|
•
|
our services revenue and gross margin may be adversely affected; and
|
•
|
our relationships with customers could suffer.
|
•
|
increasing our vulnerability to adverse economic and industry conditions;
|
•
|
limiting our ability to obtain additional financing, particularly in unfavorable capital and credit market conditions;
|
•
|
debt service and repayment obligations that may adversely impact our results of operations and reduce the availability of cash resources for other business purposes;
|
•
|
limiting our flexibility in planning for, or reacting to, changes in our business and the markets; and
|
•
|
placing us at a possible competitive disadvantage to competitors that have better access to capital resources.
|
•
|
failure to achieve the anticipated transaction benefits or the projected financial results and operational synergies;
|
•
|
greater than expected acquisition and integration costs;
|
•
|
disruption due to the integration and rationalization of operations, products, technologies and personnel;
|
•
|
diversion of management attention;
|
•
|
difficulty completing projects of the acquired company and costs related to in-process projects;
|
•
|
difficulty managing customer transitions or entering into new markets;
|
•
|
the loss of key employees;
|
•
|
disruption on termination of business relationships with customers, suppliers, vendors, landlords, licensors and other business partners;
|
•
|
ineffective internal controls over financial reporting;
|
•
|
dependence on unfamiliar suppliers or manufacturers;
|
•
|
assumption of or exposure to unanticipated liabilities, including intellectual property infringement claims; and
|
•
|
adverse tax or accounting effects including amortization expense related to intangible assets and charges associated with impairment of goodwill.
|
|
|
10.1
|
Incremental Joinder and Amendment Agreement (Term Loan) dated as of April 25, 2016, by and among Ciena Corporation, as borrower, Ciena Communications, Inc. and Ciena Government Solutions, Inc., as guarantors, the lenders party thereto, and Bank of America, N.A., as administrative agent.
|
10.2
|
Amendment No. 4 to Ciena Corporation 2008 Omnibus Incentive Plan dated as of March 24, 2016.
|
31.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
Ciena Corporation
|
||
Date:
|
June 8, 2016
|
By:
|
/s/ Gary B. Smith
|
|
|
|
|
Gary B. Smith
|
|
|
|
|
President, Chief Executive Officer
and Director
(Duly Authorized Officer)
|
|
|
|
|
||
Date:
|
June 8, 2016
|
By:
|
/s/ James E. Moylan, Jr.
|
|
|
|
|
James E. Moylan, Jr.
|
|
|
|
|
Senior Vice President, Finance and
Chief Financial Officer
(Principal Financial Officer)
|
1.
|
2016 Term Loans.
Subject to the terms and conditions set forth herein and pursuant to Section 2.01 of the Credit Agreement, each 2016 Term Loan Lender party hereto hereby agrees to make a 2016 Term Loan on the 2016 Term Incremental Effective Date (as defined below) in the principal amount set forth opposite such 2016 Term Loan Lender’s name in Schedule 1 to this Incremental Joinder under the caption “2016 Term Loan Commitment”. Accordingly Section 2.01 is hereby amended to (a) make the first two sentences of existing Section 2.01 as a new clause (a), (b) renumber the last two sentences of existing Section 2.01 as a new clause (c) and (c) insert the following clause (b) above such new clause (c):
|
2.
|
Terms of 2016 Term Loans.
Pursuant to Section 2.13 of the Credit Agreement and notwith-standing anything to the contrary set forth in the Credit Agreement or as a result of the 2016 Term Loans constituting Term Loans thereunder, the 2016 Term Loans shall have the following terms:
|
(a)
|
Applicable Rate
. The Applicable Rate with respect to the 2016 Term Loans shall mean, initially, a percentage per annum equal to (i) with respect to Eurodollar Rate 2016 Term Loans, 3.50% and (ii) with respect to Base Rate 2016 Term Loans, 2.50%;
provided
that on and after the first Adjustment Date (as defined in Section 2(i) below), the Applicable Rate for the 2016 Term Loans will be determined in accordance with the Pricing Grid (as defined in Section 2(i) below).
|
(b)
|
Mandatory Prepayments
. The 2016 Term Loans shall be subject to mandatory prepayments on the same basis as Term Loans as set forth in Section 2.03(b) of the Credit Agreement. Such mandatory prepayments shall be applied ratably among the Term Loans outstanding under the Credit Agreement prior to the date hereof (“
Existing Term Loans
”) and the 2016 Term Loans. Mandatory prepayments of the 2016 Term Loans shall be applied in accordance with Section 2.03(b)(iv) of the Credit Agreement.
|
(c)
|
Optional Prepayments
. The 2016 Term Loans may be optionally prepaid as set forth in Section 2.03(a) of the Credit Agreement. Optional prepayments of Existing Term Loans and any 2016 Term Loans shall be applied as directed by the Borrower;
provided
that except as provided in the immediately following proviso of this clause (c), such prepayments shall be applied ratably among the outstanding Existing Term Loans and 2016 Term Loans;
provided
, further that the 2016 Term Loans may be prepaid on a less than pro-rata basis with the Existing Term Loans as directed by the Borrower (including directing the application of such prepayments entirely to the Existing Term Loans). Subject to the foregoing sentence, optional prepayments of the 2016 Term Loans shall be applied in accordance with the last sentence of the first paragraph of Section 2.03(a) of the Credit Agreement.
|
(d)
|
Prepayment Premium
. The provisions of Section 2.03(a)(i) of the Credit Agreement shall apply to the 2016 Term Loans (and solely to the 2016 Term Loans) for the period from the 2016 Term Incremental Effective Date to the six-month anniversary of such date, and each reference therein to Term Loans and Term Lenders shall mean the 2016 Term Loans and 2016 Term Loan Lenders, respectively.
|
(e)
|
Amortization and Maturity Date
. The Borrower shall repay to the Administrative Agent in dollars for the ratable account of the 2016 Term Loan Lenders on April 30, July 31, October 31 and January 31 of each year, commencing with July 31, 2016, an aggregate amount equal to 0.25% of the aggregate principal amount of the 2016 Term Loans advanced on the 2016 Term Incremental Effective Date (which payments in each case shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth herein). To the extent not previously paid, all 2016 Term Loans shall be due and payable on April 25, 2021 [
the date that is five years after the 2016 Term Incremental Effective Date
], together with accrued and unpaid interest on the principal amount to but excluding the date of payment.
|
(f)
|
Upfront Fee
. The Borrower agrees to pay on the 2016 Term Incremental Effective Date to each 2016 Term Loan Lender party to this Incremental Joinder on the 2016 Term Incremental Effective Date, as fee compensation for the funding of such 2016 Term Loan Lender’s 2016 Term Loan, a funding fee in an amount equal to 0.5% of the stated principal amount of such 2016 Term Loan Lender’s 2016 Term Loan funded on the 2016 Term Incremental Effective Date.
|
(g)
|
Incremental Facilities
. Section 2.13(c)(vi) is hereby amended to insert the following proviso at the end of Section 2.13(c)(vi) of the Credit Agreement: “
provided
,
further
, that in the case of the 2016 Term Loans, in the event that the All-in Yield for any Incremental Term Loan incurred at any time after the 2016 Incremental Effective Date is greater than the All-in Yield for the 2016 Term Loans by more than 50 basis points, then the Applicable Rate for the 2016 Term Loans shall be increased to the extent necessary so that the All-in Yield for the Incremental Term Loans is 50 basis points higher than the All-in Yield for the 2016 Term Loans;”.
|
(h)
|
Voting.
|
(i)
|
The consent of 2016 Term Loan Lenders holding more than 50% of the aggregate outstanding principal amount of the 2016 Term Loans shall be required for any amendments or waivers of (i) Section 8.03 of the Credit Agreement or (ii) the order of application of any prepayment of Loans among the 2014 Term Facility or the 2016 Term Facility from the application thereof set forth in the applicable provisions of Section 2.03(b) of the Credit Agreement, in each case, in a manner that materially and adversely affects the Lenders under the 2016 Term Facility, and accordingly Section 10.01(f) is hereby amended to (A) insert “(x)” immediately before “the Lenders under the Term Facility” where it appears in clause (ii) thereof, (B) change the reference in such clause (x) from “Term Facility” to “2014 Term Facility”, (C) change the reference in such clause (x) from “Required Lenders” to “Required 2014 Term Lenders” and (D) insert immediately thereafter the following to read as follows: “or (y) the Lenders under the 2016 Term Facility without the written consent of the Required 2016 Term Lenders”.
|
(ii)
|
Section 10.01(g) is hereby amended to insert (i) insert “(x)” at the beginning of Section 10.01(g) of the Credit Agreement and (ii) insert the following at the end of Section 10.01(g) of the Credit Agreement: ‘, (y) change the definition of “Required 2014 Term Loan Lenders” without the written consent of each 2014 Term Loan Lender or (z) change the definition of Required 2016 Term Loan Lenders” without the written consent of each 2016 Term Loan Lender.’
|
(i)
|
Credit Agreement Governs; Technical Amendments
. Except as set forth in this Incremental Joinder, the 2016 Term Loans shall have identical terms as the Existing Term Loans and shall otherwise be subject to the provisions, including any provisions restricting the rights, or regarding the obligations, of the Loan Parties or any provisions regarding the rights or obligations of the Lenders, of the Credit Agreement and the other Loan Documents and shall constitute “Term Loans” for all purposes under the Credit Agreement. The following defined terms are hereby added to the Credit Agreement in the appropriate alphabetical order:
|
Level
|
Total Net Leverage Ratio
|
Applicable Rate for Eurodollar Rate Loans
|
Applicable Rate for Base Rate Loans
|
I
|
> 3.00:1.00
|
3.50%
|
2.50%
|
II
|
≤ 3.00: 1.00
|
3.25%
|
2.25%
|
3.
|
Conditions to Effectiveness
. This Incremental Joinder shall become effective as of April 25, 2016 (the “
2016 Term Incremental Effective Date
”) when:
|
(i)
|
this Incremental Joinder shall have been executed and delivered by the Borrower, the Loan Parties, each 2016 Term Loan Lender party hereto and the Administrative Agent;
|
(ii)
|
the Administrative Agent shall have received a certificate of a Responsible Officer of each Loan Party dated the date hereof certifying (w) that attached thereto is a true and complete copy of the certificate or articles of incorporation, including all amendments thereto of such Loan Party certified as of a recent date by the Secretary of State of the state of organization of such Loan Party and a certificate as to the good standing of such Loan Party as of a recent date, (x) that attached thereto is a true and complete copy of the by-laws (or equivalent organizational document) of such Loan Party as in effect on such date, (y) that attached is a true and complete copy of the resolutions duly adopted by the board of directors (or equivalent governing body) of such Loan Party authorizing the execution, delivery and performance of the Incremental Joinder (including, as applicable, the guaranty of the 2016 Term Loans), all documents executed in connection therewith, the borrowings thereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on such date and (z) as to the incumbency and specimen signature of each officer executing the Incremental Joinder and any document executed in connection therewith and countersigned by another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing such certificate;
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(iii)
|
a certificate signed by a Responsible Officer of the Borrower certifying (A) that the conditions specified in Sections 4.02(a) and (b) of the Credit Agreement have been satisfied, (B) that there has been no event or circumstance since the date of the most recent annual audited financial statements furnished pursuant to Sections 6.01(a) of the Credit Agreement that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect and (C) as of the 2016 Term Incremental Effective Date, there are no actions, suits, claims, demands, investigations, inspections, audits, charges or proceedings pending or to the knowledge of any Responsible Officer of a Loan Party, threatened in writing (i) with respect to this Incremental Joinder, the Credit Agreement or any other Loan Document, or (ii) which has had, or could reasonably be expected to have, a Material Adverse Effect;
|
(iv)
|
all fees and out-of-pocket expenses required to be paid or reimbursed by Borrower as separately agreed by Borrower and Bank of America, N.A. and Deutsche Bank Securities Inc. as joint lead arrangers (the “
Arrangers
”), including reasonable and documented fees and out-of-pocket expenses of the Arrangers and all reasonable and documented fees and out-of-pocket expenses of counsel to the Administrative Agent and the Arrangers shall have been paid or reimbursed, on or prior to the date hereof;
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(v)
|
the Arrangers, the 2016 Term Loan Lenders and the Administrative Agent shall have received (a) an opinion of Hogan Lovells US LLP, counsel to the Loan Parties, in form and substance reasonably satisfactory to the Arrangers and the Administrative Agent and (b) a solvency certificate from the chief financial officer of the Borrower certifying that the Loan Parties (on a consolidated basis) are Solvent as of the date hereof and after giving effect to the 2016 Term Loans and the use of proceeds therefrom in form and substance reasonably satisfactory to the Arrangers and the Administrative Agent;
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(vi)
|
the Administrative Agent shall have received a Note in substantially the form attached as Exhibit C to the Credit Agreement executed by the Borrower in favor of each 2016 Term Loan Lender requesting a Note;
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(vii)
|
the representations and warranties of the Borrower contained in Article V of the Credit Agreement or in any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects (or, with respect to any such representation or warranty that is qualified by materiality or Material Adverse Effect, in all respects as drafted) on and as
|
(viii)
|
the representations and warranties in Section 4 of this Incremental Joinder shall be true and correct in all material respects as of the date hereof;
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(ix)
|
the 2016 Term Loan Lenders party hereto and the Administrative Agent shall have received at least 5 Business Days prior to the date hereof all documentation and other information about the Borrower and the Guarantors required under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act;
|
(x)
|
the Administrative Agent shall have received a Request for Credit Extension in accordance with the requirements of the Credit Agreement; and
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(xi)
|
no Default shall exist on the date hereof before or after giving effect to the 2016 Term Loans.
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4.
|
Representations and Warranties
. By its execution of this Incremental Joinder, the Borrower hereby certifies that:
|
(i)
|
This Incremental Joinder and the other documents executed in connection herewith have been duly executed and delivered by each Loan Party party hereto and constitute a legal, valid and binding obligation of such Loan Party enforceable against such Loan Party in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, receivership, moratorium or similar laws of general applicability relating to or limiting creditors’ rights generally or by general equity principles;
|
(ii)
|
On the date hereof and after giving effect to the 2016 Term Loans and the use of proceeds therefrom, the Loan Parties (on a consolidated basis) are Solvent; and
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(iii)
|
The execution, delivery and performance by a Loan Party of this Incremental Joinder and the other documents executed in connection herewith to which such Person is a party (a) have been duly authorized by all requisite corporate or other organizational of such Loan Party, (b) do not (i) violate (A) any provision of (x) any applicable law, statute, rule or regulation, or (y) of the certificate or articles of incorporation, bylaws or other constitutive documents of such Loan Party, (B) any applicable order of any Governmental Authority or (C) any provision of any indenture, agreement or other instrument to which such Person is a party or by which any of them or any of their property is bound (including the Loan Documents, the ABL Credit Agreement and the Permitted Convertible Notes Indentures), (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under or give rise to any right to require the prepayment, repurchase or redemption of any obligation under any such indenture, agreement or other instrument or (iii) result in the creation or imposition of any Lien upon or with respect to any property or assets now owned or hereafter acquired by the Borrower or any Subsidiary (other than Liens created or permitted under the Credit Agreement or under the Collateral Documents), in case under this clause (b), to the extent that such violation, conflict, breach,
|
5.
|
Borrower Covenants
. By its execution of this Incremental Joinder, the Borrower hereby covenants and agrees that the proceeds of the 2016 Term Loans shall be used by Borrower in accordance with Section 6.11 of the Credit Agreement.
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6.
|
Acknowledgments
. Each Loan Party hereby expressly acknowledges the terms of this Incremental Joinder and reaffirms, as of the date hereof, (i) the covenants and agreements contained in each Loan Document to which it is a party, including, in each case, such covenants and agreements as in effect immediately after giving effect to this Incremental Joinder and the transactions contemplated hereby and (ii) its guarantee of the Obligations (including, without limitation, the 2016 Term Loans) under the Guaranty and its grant of Liens on the Collateral to secure the Obligations (including, without limitation, the Obligations with respect to the 2016 Term Loans) pursuant to the Collateral Documents.
|
7.
|
Amendment, Modification and Waiver
. This Incremental Joinder may not be amended, modified or waived except in accordance with Section 10.01 of the Credit Agreement.
|
8.
|
Liens Unimpaired
. After giving effect to this Incremental Joinder, neither the modification of the Credit Agreement effected pursuant to this Incremental Joinder nor the execution, delivery, performance or effectiveness of this Incremental Joinder:
|
(a)
|
impairs the validity, effectiveness or priority of the Liens granted pursuant to any Loan Document, and such Liens continue unimpaired with the same priority to secure repayment of all Obligations, whether heretofore or hereafter incurred; or
|
(b)
|
requires that any new filings be made or other action taken to perfect or to maintain the perfection of such Liens.
|
9.
|
Representations to the Agents
. Each 2016 Term Loan Lender, solely for the benefit of the Administrative Agent, hereby (i) confirms that it has received a copy of the Credit Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Incremental Joinder; (ii) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; and (iii) agrees that it shall be bound by the terms of the Credit Agreement as a Lender thereunder and it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
|
10.
|
Entire Agreement
. This Incremental Joinder, the Credit Agreement and the other Loan Documents constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties hereto with respect to the subject matter hereof. Except as expressly set forth herein, this Incremental Joinder shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of any party under, the Credit Agreement, nor alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement, all of which are ratified and affirmed in all respects and shall continue in full force and effect. It is understood and agreed that each reference in each Loan Document to the Credit Agreement, whether direct or
|
11.
|
GOVERNING LAW. THIS INCREMENTAL JOINDER AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTIONS 10.14 AND 10.15 OF THE CREDIT AGREEMENT ARE HEREBY INCORPORATED BY REFERENCE INTO THIS INCREMENTAL JOINDER AND SHALL APPLY HERETO.
|
12.
|
Severability.
If any provision of this Incremental Joinder is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Incremental Joinder shall not be affected or impaired thereby. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
|
13.
|
Counterparts
. This Incremental Joinder may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by telecopier or other electronic means of an executed counterpart of a signature page to this Incremental Joinder shall be effective as delivery of an original executed counterpart of this Incremental Joinder.
|
|
BANK OF AMERICA, N.A.
, as Administrative Agent and as a 2016 Term Loan Lender
|
|
By:
/s/ Vikas Singh
Name: Vikas Singh
Title: Director |
LOAN PARTIES:
|
CIENA CORPORATION
|
|
By:
/s/ Elizabeth Dolce
Name: Elizabeth Dolce Title: Vice President and Treasurer |
|
|
|
CIENA COMMUNICATIONS, INC.
|
|
By:
/s/ Elizabeth Dolce
Name: Elizabeth Dolce Title: Vice President and Treasurer |
|
|
|
CIENA GOVERNMENT SOLUTIONS, INC.
|
|
By:
/s/ Elizabeth Dolce
Name: Elizabeth Dolce Title: Vice President and Treasurer |
2016 TERM LOAN LENDER
Bank of America, N.A.
|
2016 TERM LOAN COMMITMENT
$250,000,000
|
1.
|
The following paragraph is added to the end of Section 3.3 of the Plan:
|
2.
|
Section 6.3 of the Plan is deleted and replaced in its entirety as follows:
|
3.
|
Section 10.2(b) of the Plan is deleted and replaced in its entirety as follows:
|
4.
|
Section 10.6(b)(i) of the Plan is amended to replace the reference to “Section 10.2(b)(ii)” with a reference to “Section 10.2(b)(iii).”
|
|
CIENA CORPORATION
|
|
|
|
|
|
By:
|
/s/ David M. Rothenstein
|
|
Name:
|
David M. Rothenstein
|
|
Title:
|
Senior Vice President, General Counsel & Secretary
|
|
Date:
|
March 24, 2016
|
|
/s/ Gary B. Smith
|
|
Gary B. Smith
|
|
President and Chief Executive Officer
|
|
/s/ James E. Moylan Jr.
|
|
James E. Moylan Jr.
|
|
Senior Vice President and Chief Financial Officer
|
/s/ Gary B. Smith
|
Gary B. Smith
|
President and Chief Executive Officer
|
June 8, 2016
|
/s/ James E. Moylan Jr.
|
Senior Vice President and Chief Financial Officer
|
June 8, 2016
|