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)
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21076
(Zip Code)
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Large accelerated filer
þ
|
Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
o
|
|
|
|
Emerging growth company
o
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Class
|
|
Outstanding at June 2, 2017
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common stock, $0.01 par value
|
|
141,831,617
|
|
PAGE
NUMBER
|
|
|
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
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2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Products
|
$
|
584,630
|
|
|
$
|
523,978
|
|
|
$
|
1,091,623
|
|
|
$
|
981,567
|
|
Services
|
122,392
|
|
|
116,739
|
|
|
236,896
|
|
|
232,265
|
|
||||
Total revenue
|
707,022
|
|
|
640,717
|
|
|
1,328,519
|
|
|
1,213,832
|
|
||||
Cost of goods sold:
|
|
|
|
|
|
|
|
||||||||
Products
|
327,295
|
|
|
291,778
|
|
|
614,106
|
|
|
552,260
|
|
||||
Services
|
61,487
|
|
|
65,846
|
|
|
122,388
|
|
|
127,029
|
|
||||
Total cost of goods sold
|
388,782
|
|
|
357,624
|
|
|
736,494
|
|
|
679,289
|
|
||||
Gross profit
|
318,240
|
|
|
283,093
|
|
|
592,025
|
|
|
534,543
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
121,623
|
|
|
114,603
|
|
|
238,492
|
|
|
222,649
|
|
||||
Selling and marketing
|
88,551
|
|
|
86,668
|
|
|
173,553
|
|
|
169,146
|
|
||||
General and administrative
|
34,990
|
|
|
35,203
|
|
|
70,854
|
|
|
66,345
|
|
||||
Amortization of intangible assets
|
10,980
|
|
|
15,566
|
|
|
25,531
|
|
|
32,428
|
|
||||
Acquisition and integration costs
|
—
|
|
|
2,285
|
|
|
—
|
|
|
3,584
|
|
||||
Restructuring costs
|
4,276
|
|
|
535
|
|
|
6,671
|
|
|
919
|
|
||||
Total operating expenses
|
260,420
|
|
|
254,860
|
|
|
515,101
|
|
|
495,071
|
|
||||
Income from operations
|
57,820
|
|
|
28,233
|
|
|
76,924
|
|
|
39,472
|
|
||||
Interest and other income (loss), net
|
(2,918
|
)
|
|
967
|
|
|
(2,548
|
)
|
|
(7,809
|
)
|
||||
Interest expense
|
(13,308
|
)
|
|
(12,608
|
)
|
|
(28,511
|
)
|
|
(25,318
|
)
|
||||
Income before income taxes
|
41,594
|
|
|
16,592
|
|
|
45,865
|
|
|
6,345
|
|
||||
Provision for income taxes
|
3,568
|
|
|
2,595
|
|
|
3,978
|
|
|
3,894
|
|
||||
Net income
|
$
|
38,026
|
|
|
$
|
13,997
|
|
|
$
|
41,887
|
|
|
$
|
2,451
|
|
Basic net income per common share
|
$
|
0.27
|
|
|
$
|
0.10
|
|
|
$
|
0.30
|
|
|
$
|
0.02
|
|
Diluted net income per potential common share
|
$
|
0.25
|
|
|
$
|
0.10
|
|
|
$
|
0.29
|
|
|
$
|
0.02
|
|
Weighted average basic common shares outstanding
|
141,743
|
|
|
137,950
|
|
|
141,223
|
|
|
137,313
|
|
||||
Weighted average dilutive potential common shares outstanding
|
165,273
|
|
|
138,889
|
|
|
147,842
|
|
|
138,693
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
38,026
|
|
|
$
|
13,997
|
|
|
$
|
41,887
|
|
|
$
|
2,451
|
|
Change in unrealized gain (loss) on available-for-sale securities, net of tax
|
(278
|
)
|
|
234
|
|
|
(527
|
)
|
|
256
|
|
||||
Change in unrealized gain on foreign currency forward contracts, net of tax
|
(899
|
)
|
|
3,984
|
|
|
526
|
|
|
1,464
|
|
||||
Change in unrealized gain on forward starting interest rate swap, net of tax
|
405
|
|
|
423
|
|
|
4,897
|
|
|
94
|
|
||||
Change in cumulative translation adjustments
|
(2,243
|
)
|
|
7,516
|
|
|
(1,753
|
)
|
|
4,693
|
|
||||
Other comprehensive income
|
(3,015
|
)
|
|
12,157
|
|
|
3,143
|
|
|
6,507
|
|
||||
Total comprehensive income
|
$
|
35,011
|
|
|
$
|
26,154
|
|
|
$
|
45,030
|
|
|
$
|
8,958
|
|
|
April 30,
2017 |
|
October 31,
2016 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
628,623
|
|
|
$
|
777,615
|
|
Short-term investments
|
274,779
|
|
|
275,248
|
|
||
Accounts receivable, net
|
564,856
|
|
|
576,235
|
|
||
Inventories
|
287,073
|
|
|
211,251
|
|
||
Prepaid expenses and other
|
186,919
|
|
|
172,843
|
|
||
Total current assets
|
1,942,250
|
|
|
2,013,192
|
|
||
Long-term investments
|
89,852
|
|
|
90,172
|
|
||
Equipment, building, furniture and fixtures, net
|
299,792
|
|
|
288,406
|
|
||
Goodwill
|
266,773
|
|
|
266,974
|
|
||
Other intangible assets, net
|
113,245
|
|
|
146,711
|
|
||
Other long-term assets
|
65,191
|
|
|
68,120
|
|
||
Total assets
|
$
|
2,777,103
|
|
|
$
|
2,873,575
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
249,556
|
|
|
$
|
235,942
|
|
Accrued liabilities and other short-term obligations
|
262,482
|
|
|
310,353
|
|
||
Deferred revenue
|
105,514
|
|
|
109,009
|
|
||
Current portion of long-term debt
|
189,221
|
|
|
236,241
|
|
||
Total current liabilities
|
806,773
|
|
|
891,545
|
|
||
Long-term deferred revenue
|
81,349
|
|
|
73,854
|
|
||
Other long-term obligations
|
113,254
|
|
|
124,394
|
|
||
Long-term debt, net
|
929,182
|
|
|
1,017,441
|
|
||
Total liabilities
|
$
|
1,930,558
|
|
|
$
|
2,107,234
|
|
Commitments and contingencies (Note 21)
|
|
|
|
||||
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; 141,768,448
and 139,767,627 shares issued and outstanding |
1,418
|
|
|
1,398
|
|
||
Additional paid-in capital
|
6,750,632
|
|
|
6,715,478
|
|
||
Accumulated other comprehensive loss
|
(21,186
|
)
|
|
(24,329
|
)
|
||
Accumulated deficit
|
(5,884,319
|
)
|
|
(5,926,206
|
)
|
||
Total stockholders’ equity
|
846,545
|
|
|
766,341
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,777,103
|
|
|
$
|
2,873,575
|
|
|
Six Months Ended April 30,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows provided by operating activities:
|
|
|
|
||||
Net income
|
$
|
41,887
|
|
|
$
|
2,451
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements
|
35,548
|
|
|
30,237
|
|
||
Share-based compensation costs
|
24,830
|
|
|
29,210
|
|
||
Amortization of intangible assets
|
33,466
|
|
|
40,488
|
|
||
Provision for inventory excess and obsolescence
|
19,623
|
|
|
20,104
|
|
||
Provision for warranty
|
2,347
|
|
|
9,563
|
|
||
Other
|
10,416
|
|
|
8,578
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
9,381
|
|
|
(4,865
|
)
|
||
Inventories
|
(95,554
|
)
|
|
(19,022
|
)
|
||
Prepaid expenses and other
|
(15,054
|
)
|
|
(7,670
|
)
|
||
Accounts payable, accruals and other obligations
|
(24,974
|
)
|
|
(29,400
|
)
|
||
Deferred revenue
|
3,832
|
|
|
(3,992
|
)
|
||
Net cash provided by operating activities
|
45,748
|
|
|
75,682
|
|
||
Cash flows used in investing activities:
|
|
|
|
||||
Payments for equipment, furniture, fixtures and intellectual property
|
(60,328
|
)
|
|
(53,050
|
)
|
||
Purchase of available for sale securities
|
(179,833
|
)
|
|
(199,994
|
)
|
||
Proceeds from maturities of available for sale securities
|
180,000
|
|
|
110,000
|
|
||
Settlement of foreign currency forward contracts, net
|
(2,965
|
)
|
|
(4,834
|
)
|
||
Acquisition of business, net of cash acquired
|
—
|
|
|
(32,000
|
)
|
||
Net cash used in investing activities
|
(63,126
|
)
|
|
(179,878
|
)
|
||
Cash flows provided by (used in) financing activities:
|
|
|
|
||||
Proceeds from issuance of term loan, net
|
—
|
|
|
248,750
|
|
||
Payment of long-term debt
|
(47,296
|
)
|
|
(15,264
|
)
|
||
Payment for modification of term loans
|
(93,625
|
)
|
|
—
|
|
||
Payment of debt issuance costs
|
—
|
|
|
(3,778
|
)
|
||
Payment of capital lease obligations
|
(1,528
|
)
|
|
(3,769
|
)
|
||
Proceeds from issuance of common stock
|
10,345
|
|
|
9,968
|
|
||
Net cash provided by (used in) financing activities
|
(132,104
|
)
|
|
235,907
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
490
|
|
|
(649
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
(148,992
|
)
|
|
131,062
|
|
||
Cash and cash equivalents at beginning of period
|
777,615
|
|
|
790,971
|
|
||
Cash and cash equivalents at end of period
|
$
|
628,623
|
|
|
$
|
922,033
|
|
Supplemental disclosure of cash flow information
|
|
|
|
||||
Cash paid during the period for interest
|
$
|
23,439
|
|
|
$
|
20,432
|
|
Cash paid during the period for income taxes, net
|
$
|
11,379
|
|
|
$
|
6,991
|
|
Non-cash investing activities
|
|
|
|
||||
Purchase of equipment in accounts payable
|
$
|
3,818
|
|
|
$
|
11,437
|
|
Equipment acquired under capital lease
|
$
|
—
|
|
|
$
|
3,012
|
|
Building subject to capital lease
|
$
|
20,695
|
|
|
$
|
8,993
|
|
Construction in progress subject to build-to-suit lease
|
$
|
—
|
|
|
$
|
21,606
|
|
(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)
|
RESTRUCTURING COSTS
|
|
Workforce
reduction
|
|
Consolidation
of excess
facilities
|
|
Total
|
||||||
Balance at October 31, 2016
|
$
|
868
|
|
|
$
|
1,970
|
|
|
$
|
2,838
|
|
Additional liability recorded
|
2,369
|
|
(1)
|
4,302
|
|
(2)
|
6,671
|
|
|||
Cash payments
|
(3,084
|
)
|
|
(1,133
|
)
|
|
(4,217
|
)
|
|||
Balance at April 30, 2017
|
$
|
153
|
|
|
$
|
5,139
|
|
|
$
|
5,292
|
|
Current restructuring liabilities
|
$
|
153
|
|
|
$
|
4,928
|
|
|
$
|
5,081
|
|
Non-current restructuring liabilities
|
$
|
—
|
|
|
$
|
211
|
|
|
$
|
211
|
|
(1)
|
Reflects a global workforce reduction of approximately
50
employees during the first quarter of fiscal 2017 as part of a business optimization strategy to improve gross margin, constrain operating expense and redesign certain business processes and systems.
|
(2)
|
Reflects unfavorable lease commitments and relocation costs incurred during the second quarter of fiscal 2017 in connection with the facility transition from Ciena's existing research and development center located at Lab 10 on the former Nortel Carling Campus to a new campus facility in Ottawa, Canada.
|
|
Workforce
reduction
|
|
Consolidation
of excess
facilities
|
|
Total
|
||||||
Balance at October 31, 2015
|
$
|
591
|
|
|
$
|
688
|
|
|
$
|
1,279
|
|
Additional liability recorded
|
929
|
|
|
—
|
|
|
929
|
|
|||
Adjustment 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
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Interest income
|
$
|
1,507
|
|
|
$
|
982
|
|
|
$
|
2,789
|
|
|
$
|
1,668
|
|
Losses on non-hedge designated foreign currency forward contracts
|
(2,749
|
)
|
|
(10,600
|
)
|
|
(1,725
|
)
|
|
(15,213
|
)
|
||||
Foreign currency exchange gain (loss)
|
1,292
|
|
|
10,506
|
|
|
(1,125
|
)
|
|
6,130
|
|
||||
Modification of term loan
|
(2,924
|
)
|
|
—
|
|
|
(2,924
|
)
|
|
—
|
|
||||
Other
|
(44
|
)
|
|
79
|
|
|
437
|
|
|
(394
|
)
|
||||
Interest and other income (loss), net
|
$
|
(2,918
|
)
|
|
$
|
967
|
|
|
$
|
(2,548
|
)
|
|
$
|
(7,809
|
)
|
(5)
|
SHORT-TERM AND LONG-TERM INVESTMENTS
|
|
April 30, 2017
|
||||||||||||||
|
Amortized Cost
|
|
Gross Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated Fair
Value
|
||||||||
U.S. government obligations:
|
|
|
|
|
|
|
|
||||||||
Included in short-term investments
|
$
|
255,042
|
|
|
$
|
—
|
|
|
(233
|
)
|
|
$
|
254,809
|
|
|
Included in long-term investments
|
89,987
|
|
|
—
|
|
|
(135
|
)
|
|
89,852
|
|
||||
|
$
|
345,029
|
|
|
$
|
—
|
|
|
$
|
(368
|
)
|
|
$
|
344,661
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial paper:
|
|
|
|
|
|
|
|
||||||||
Included in short-term investments
|
$
|
19,970
|
|
|
—
|
|
|
—
|
|
|
$
|
19,970
|
|
||
|
$
|
19,970
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,970
|
|
|
October 31, 2016
|
||||||||||||||
|
Amortized Cost
|
|
Gross Unrealized
Gains
|
|
Gross Unrealized
Losses
|
|
Estimated Fair
Value
|
||||||||
U.S. government obligations:
|
|
|
|
|
|
|
|
||||||||
Included in short-term investments
|
$
|
260,125
|
|
|
$
|
140
|
|
|
$
|
(6
|
)
|
|
$
|
260,259
|
|
Included in long-term investments
|
90,145
|
|
|
57
|
|
|
(30
|
)
|
|
90,172
|
|
||||
|
$
|
350,270
|
|
|
$
|
197
|
|
|
$
|
(36
|
)
|
|
$
|
350,431
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial paper:
|
|
|
|
|
|
|
|
||||||||
Included in short-term investments
|
$
|
14,989
|
|
|
—
|
|
|
—
|
|
|
$
|
14,989
|
|
||
|
$
|
14,989
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,989
|
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
Less than one year
|
$
|
275,012
|
|
|
$
|
274,779
|
|
Due in 1-2 years
|
89,987
|
|
|
89,852
|
|
||
|
$
|
364,999
|
|
|
$
|
364,631
|
|
(6)
|
FAIR VALUE MEASUREMENTS
|
|
April 30, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
474,476
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
474,476
|
|
U.S. government obligations
|
—
|
|
|
344,661
|
|
|
—
|
|
|
344,661
|
|
||||
Commercial paper
|
—
|
|
|
79,917
|
|
|
—
|
|
|
79,917
|
|
||||
Foreign currency forward contracts
|
—
|
|
|
827
|
|
|
—
|
|
|
827
|
|
||||
Total assets measured at fair value
|
$
|
474,476
|
|
|
$
|
425,405
|
|
|
$
|
—
|
|
|
$
|
899,881
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
—
|
|
|
$
|
1,811
|
|
|
$
|
—
|
|
|
$
|
1,811
|
|
Forward starting interest rate swap
|
—
|
|
|
1,070
|
|
|
—
|
|
|
1,070
|
|
||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
2,881
|
|
|
$
|
—
|
|
|
$
|
2,881
|
|
|
October 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
625,277
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
625,277
|
|
U.S. government obligations
|
—
|
|
|
350,431
|
|
|
—
|
|
|
350,431
|
|
||||
Commercial paper
|
—
|
|
|
69,959
|
|
|
—
|
|
|
69,959
|
|
||||
Foreign currency forward contracts
|
—
|
|
|
175
|
|
|
—
|
|
|
175
|
|
||||
Total assets measured at fair value
|
$
|
625,277
|
|
|
$
|
420,565
|
|
|
$
|
—
|
|
|
$
|
1,045,842
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
—
|
|
|
$
|
1,396
|
|
|
$
|
—
|
|
|
$
|
1,396
|
|
Forward starting interest rate swap
|
—
|
|
|
5,967
|
|
|
—
|
|
|
5,967
|
|
||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
7,363
|
|
|
$
|
—
|
|
|
$
|
7,363
|
|
|
April 30, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
474,476
|
|
|
$
|
59,947
|
|
|
$
|
—
|
|
|
$
|
534,423
|
|
Short-term investments
|
—
|
|
|
274,779
|
|
|
—
|
|
|
274,779
|
|
||||
Prepaid expenses and other
|
—
|
|
|
827
|
|
|
—
|
|
|
827
|
|
||||
Long-term investments
|
—
|
|
|
89,852
|
|
|
—
|
|
|
89,852
|
|
||||
Total assets measured at fair value
|
$
|
474,476
|
|
|
$
|
425,405
|
|
|
$
|
—
|
|
|
$
|
899,881
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Accrued liabilities
|
$
|
—
|
|
|
$
|
1,811
|
|
|
$
|
—
|
|
|
$
|
1,811
|
|
Other long-term obligations
|
—
|
|
|
1,070
|
|
|
—
|
|
|
1,070
|
|
||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
2,881
|
|
|
$
|
—
|
|
|
$
|
2,881
|
|
|
October 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
625,277
|
|
|
$
|
54,970
|
|
|
$
|
—
|
|
|
$
|
680,247
|
|
Short-term investments
|
—
|
|
|
275,248
|
|
|
—
|
|
|
275,248
|
|
||||
Prepaid expenses and other
|
—
|
|
|
175
|
|
|
—
|
|
|
175
|
|
||||
Long-term investments
|
—
|
|
|
90,172
|
|
|
—
|
|
|
90,172
|
|
||||
Total assets measured at fair value
|
$
|
625,277
|
|
|
$
|
420,565
|
|
|
$
|
—
|
|
|
$
|
1,045,842
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Accrued liabilities
|
$
|
—
|
|
|
$
|
1,396
|
|
|
$
|
—
|
|
|
$
|
1,396
|
|
Other long-term obligations
|
—
|
|
|
5,967
|
|
|
—
|
|
|
5,967
|
|
||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
7,363
|
|
|
$
|
—
|
|
|
$
|
7,363
|
|
(7)
|
ACCOUNTS RECEIVABLE
|
(8)
|
INVENTORIES
|
|
April 30,
2017 |
|
October 31,
2016 |
||||
Raw materials
|
$
|
43,905
|
|
|
$
|
44,644
|
|
Work-in-process
|
12,859
|
|
|
12,852
|
|
||
Finished goods
|
204,376
|
|
|
156,402
|
|
||
Deferred cost of goods sold
|
85,164
|
|
|
59,856
|
|
||
|
346,304
|
|
|
273,754
|
|
||
Provision for excess and obsolescence
|
(59,231
|
)
|
|
(62,503
|
)
|
||
|
$
|
287,073
|
|
|
$
|
211,251
|
|
(9)
|
PREPAID EXPENSES AND OTHER
|
|
April 30,
2017 |
|
October 31,
2016 |
||||
Prepaid VAT and other taxes
|
$
|
86,572
|
|
|
$
|
77,474
|
|
Product demonstration equipment, net
|
48,897
|
|
|
42,259
|
|
||
Deferred deployment expense
|
23,482
|
|
|
19,138
|
|
||
Prepaid expenses
|
23,996
|
|
|
25,659
|
|
||
Other non-trade receivables
|
3,145
|
|
|
4,398
|
|
||
Financing receivable
|
—
|
|
|
3,740
|
|
||
Derivative assets
|
827
|
|
|
175
|
|
||
|
$
|
186,919
|
|
|
$
|
172,843
|
|
(10)
|
EQUIPMENT, BUILDING, FURNITURE AND FIXTURES
|
|
April 30,
2017 |
|
October 31,
2016 |
||||
Equipment, furniture and fixtures
|
$
|
468,630
|
|
|
$
|
451,029
|
|
Building subject to capital lease
|
42,347
|
|
|
22,529
|
|
||
Construction in progress subject to build-to-suit lease
|
33,157
|
|
|
57,602
|
|
||
Leasehold improvements
|
78,136
|
|
|
60,011
|
|
||
|
622,270
|
|
|
591,171
|
|
||
Accumulated depreciation and amortization
|
(322,478
|
)
|
|
(302,765
|
)
|
||
|
$
|
299,792
|
|
|
$
|
288,406
|
|
(11)
|
OTHER INTANGIBLE ASSETS
|
|
April 30, 2017
|
|
October 31, 2016
|
||||||||||||||||||||
|
Gross Intangible
|
|
Accumulated Amortization
|
|
Net Intangible
|
|
Gross
Intangible
|
|
Accumulated
Amortization
|
|
Net
Intangible
|
||||||||||||
Developed technology
|
$
|
347,727
|
|
|
$
|
(267,663
|
)
|
|
$
|
80,064
|
|
|
$
|
347,727
|
|
|
$
|
(248,128
|
)
|
|
$
|
99,599
|
|
In-process research and development
|
4,200
|
|
|
—
|
|
|
4,200
|
|
|
4,200
|
|
|
—
|
|
|
4,200
|
|
||||||
Patents and licenses
|
7,165
|
|
|
(6,410
|
)
|
|
755
|
|
|
7,165
|
|
|
(6,285
|
)
|
|
880
|
|
||||||
Customer relationships, covenants not to compete, outstanding purchase orders and contracts
|
358,648
|
|
|
(330,422
|
)
|
|
28,226
|
|
|
358,647
|
|
|
(316,615
|
)
|
|
42,032
|
|
||||||
Total other intangible assets
|
$
|
717,740
|
|
|
$
|
(604,495
|
)
|
|
$
|
113,245
|
|
|
$
|
717,739
|
|
|
$
|
(571,028
|
)
|
|
$
|
146,711
|
|
Period ended October 31,
|
|
|
||
2017 (remaining six months)
|
$
|
11,895
|
|
|
2018
|
22,680
|
|
|
|
2019
|
22,133
|
|
|
|
2020
|
21,106
|
|
|
|
2021
|
18,172
|
|
|
|
Thereafter
|
13,059
|
|
|
|
|
$
|
109,045
|
|
(1)
|
(12)
|
GOODWILL
|
|
|
Balance at October 31, 2016
|
|
Acquisitions
|
|
Impairments
|
|
Translation
|
|
Balance at April 30, 2017
|
||||||||||
Software and Software-Related Services
|
|
$
|
201,428
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
201,428
|
|
Networking Platforms
|
|
65,546
|
|
|
—
|
|
|
—
|
|
|
(201
|
)
|
|
65,345
|
|
|||||
Total
|
|
$
|
266,974
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(201
|
)
|
|
$
|
266,773
|
|
(13)
|
OTHER BALANCE SHEET DETAILS
|
|
April 30,
2017 |
|
October 31,
2016 |
||||
Maintenance spares, net
|
$
|
48,447
|
|
|
$
|
49,535
|
|
Deferred debt issuance costs, net
(1)
|
1,202
|
|
|
1,363
|
|
||
Financing receivable
|
—
|
|
|
1,870
|
|
||
Other
|
15,542
|
|
|
15,352
|
|
||
|
$
|
65,191
|
|
|
$
|
68,120
|
|
|
April 30,
2017 |
|
October 31,
2016 |
||||
Compensation, payroll related tax and benefits
|
$
|
71,567
|
|
|
$
|
106,687
|
|
Warranty
|
46,025
|
|
|
52,324
|
|
||
Vacation
|
40,317
|
|
|
36,112
|
|
||
Capital lease obligations
|
2,716
|
|
|
2,321
|
|
||
Interest payable
|
4,312
|
|
|
4,649
|
|
||
Other
|
97,545
|
|
|
108,260
|
|
||
|
$
|
262,482
|
|
|
$
|
310,353
|
|
Six months ended
|
|
Beginning
|
|
|
|
|
|
Ending
|
||||||
April 30,
|
|
Balance
|
|
Provisions
|
|
Settlements
|
|
Balance
|
||||||
2016
|
|
$
|
56,654
|
|
|
9,563
|
|
|
(10,196
|
)
|
|
$
|
56,021
|
|
2017
|
|
$
|
52,324
|
|
|
2,347
|
|
|
(8,646
|
)
|
|
$
|
46,025
|
|
|
April 30,
2017 |
|
October 31,
2016 |
||||
Products
|
$
|
49,909
|
|
|
$
|
45,216
|
|
Services
|
136,954
|
|
|
137,647
|
|
||
|
186,863
|
|
|
182,863
|
|
||
Less current portion
|
(105,514
|
)
|
|
(109,009
|
)
|
||
Long-term deferred revenue
|
$
|
81,349
|
|
|
$
|
73,854
|
|
|
April 30,
2017 |
|
October 31,
2016 |
||||
Construction liability
|
$
|
33,157
|
|
|
$
|
57,602
|
|
Capital lease obligations
|
42,197
|
|
|
24,298
|
|
||
Income tax liability
|
14,001
|
|
|
14,122
|
|
||
Deferred tenant allowance
|
8,663
|
|
|
9,164
|
|
||
Straight-line rent
|
7,277
|
|
|
6,406
|
|
||
Forward starting interest rate swap
|
1,070
|
|
|
5,967
|
|
||
Other
|
6,889
|
|
|
6,835
|
|
||
|
$
|
113,254
|
|
|
$
|
124,394
|
|
Period ended October 31,
|
|
||
2017 (remaining six months)
|
$
|
2,966
|
|
2018
|
5,796
|
|
|
2019
|
5,378
|
|
|
2020
|
4,399
|
|
|
2021
|
4,292
|
|
|
Thereafter
|
51,284
|
|
|
Net minimum capital lease payments
|
74,115
|
|
|
Less: Amount representing interest
|
(29,202
|
)
|
|
Present value of minimum lease payments
|
44,913
|
|
|
Less: Current portion of present value of minimum lease payments
|
(2,716
|
)
|
|
Long-term portion of present value of minimum lease payments
|
$
|
42,197
|
|
(14)
|
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, 2016
|
$
|
139
|
|
|
$
|
(1,091
|
)
|
|
$
|
(5,967
|
)
|
|
$
|
(17,410
|
)
|
|
$
|
(24,329
|
)
|
Other comprehensive income (loss) before reclassifications
|
(527
|
)
|
|
4,897
|
|
|
(815
|
)
|
|
(1,753
|
)
|
|
1,802
|
|
|||||
Amounts reclassified from AOCI
|
—
|
|
|
—
|
|
|
1,341
|
|
|
—
|
|
|
1,341
|
|
|||||
Balance at April 30, 2017
|
$
|
(388
|
)
|
|
$
|
3,806
|
|
|
$
|
(5,441
|
)
|
|
$
|
(19,163
|
)
|
|
$
|
(21,186
|
)
|
|
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
|
)
|
(16)
|
SHORT-TERM AND LONG-TERM DEBT
|
|
|
April 30, 2017
|
|
October 31, 2016
|
||||
Term Loan Payable due July 15, 2019
|
|
$
|
—
|
|
|
$
|
241,359
|
|
Term Loan Payable due April 25, 2021
|
|
—
|
|
|
244,944
|
|
||
Term Loan Payable due January 30, 2022
|
|
393,377
|
|
|
—
|
|
||
|
|
$
|
393,377
|
|
|
$
|
486,303
|
|
•
|
be subject to mandatory prepayment on the same basis as 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 an applicable margin of
2.50%
, or (b) a base rate (subject to a floor of
1.75%
) plus an applicable margin of
1.50%
; and
|
•
|
be repayable at any time at Ciena's election, provided that repayment of the 2022 Term Loan with proceeds of certain indebtedness prior to July 30, 2017 will require a prepayment premium of
1%
of the aggregate principal amount of such prepayment.
|
|
|
|
|
|
|
|
|
||||||
|
Principal Balance
|
|
Unamortized Discount
|
|
Deferred Debt Issuance Costs
|
|
Net Carrying Amount
|
||||||
Term Loan Payable due January 30, 2022
|
$
|
399,000
|
|
|
$
|
(2,153
|
)
|
|
$
|
(3,470
|
)
|
|
$393,377
|
|
|
April 30, 2017
|
||||||
|
|
Carrying Value
|
|
Fair Value
(2)
|
||||
Term Loan Payable due January 30, 2022
(1)
|
|
$
|
393,377
|
|
|
$
|
401,494
|
|
(1)
|
Includes unamortized debt discount and debt issuance costs.
|
(2)
|
Ciena's term loan is categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its term loan using a market approach based upon observable inputs, such as current market transactions involving comparable securities.
|
|
|
April 30, 2017
|
|
October 31, 2016
|
||||
0.875% Convertible Senior Notes due June 15, 2017
|
|
$
|
185,221
|
|
|
$
|
231,240
|
|
3.75% Convertible Senior Notes due October 15, 2018
|
|
348,248
|
|
|
347,630
|
|
||
4.0% Convertible Senior Notes due December 15, 2020
|
|
191,557
|
|
|
188,509
|
|
||
|
|
$
|
725,026
|
|
|
$
|
767,379
|
|
|
Liability Component
|
|
Equity Component
|
||||||||||||||
|
Principal Balance
|
|
Unamortized Discount
|
|
Deferred Debt Issuance Costs
|
|
Net Carrying Amount
|
|
Net Carrying Amount
|
||||||||
0.875% Convertible Senior Notes due June 15, 2017
|
$
|
185,258
|
|
|
$
|
—
|
|
|
$
|
(37
|
)
|
|
$185,221
|
|
$
|
—
|
|
3.75% Convertible Senior Notes due October 15, 2018
|
$
|
350,000
|
|
|
$
|
—
|
|
|
$
|
(1,752
|
)
|
|
$348,248
|
|
$
|
—
|
|
4.0% Convertible Senior Notes due December 15, 2020
|
$
|
203,093
|
|
|
$
|
(10,428
|
)
|
|
$
|
(1,108
|
)
|
|
$191,557
|
|
$
|
43,131
|
|
|
|
April 30, 2017
|
||||||
|
|
Carrying Value
(1)
|
|
Fair Value
(2)
|
||||
0.875% Convertible Senior Notes due June 15, 2017
|
|
$
|
185,221
|
|
|
$
|
185,085
|
|
3.75% Convertible Senior Notes due October 15, 2018
|
|
348,248
|
|
|
449,313
|
|
||
4.0% Convertible Senior Notes due December 15, 2020
|
|
191,557
|
|
|
254,925
|
|
||
|
|
$
|
725,026
|
|
|
$
|
889,323
|
|
(1)
|
Includes unamortized debt discount, accretion of principal and debt issuance costs.
|
(2)
|
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.
|
(17)
|
ABL CREDIT FACILITY
|
(18)
|
EARNINGS PER SHARE CALCULATION
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
Numerator
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
38,026
|
|
|
$
|
13,997
|
|
|
$
|
41,887
|
|
|
$
|
2,451
|
|
Add: Interest expense associated with 0.875% Convertible Senior Notes due 2017
|
495
|
|
|
—
|
|
|
1,097
|
|
|
—
|
|
||||
Add: Interest expense associated with 3.75% convertible senior notes due 2018
|
3,588
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net income used to calculate Diluted EPS
|
$
|
42,109
|
|
|
$
|
13,997
|
|
|
$
|
42,984
|
|
|
$
|
2,451
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||
Denominator
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Basic weighted average shares outstanding
|
141,743
|
|
|
137,950
|
|
|
141,223
|
|
|
137,313
|
|
Add: Shares underlying outstanding stock options and restricted stock units and issuable under employee stock purchase plan
|
1,317
|
|
|
939
|
|
|
1,409
|
|
|
1,380
|
|
Add: Shares underlying 0.875% Convertible Senior Notes due 2017
|
4,857
|
|
|
—
|
|
|
5,210
|
|
|
—
|
|
Add: Shares underlying 3.75% convertible senior notes due 2018
|
17,356
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Dilutive weighted average shares outstanding
|
165,273
|
|
|
138,889
|
|
|
147,842
|
|
|
138,693
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
EPS
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Basic EPS
|
$
|
0.27
|
|
|
$
|
0.10
|
|
|
$
|
0.30
|
|
|
$
|
0.02
|
|
Diluted EPS
|
$
|
0.25
|
|
|
$
|
0.10
|
|
|
$
|
0.29
|
|
|
$
|
0.02
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Shares underlying stock options and restricted stock units
|
725
|
|
|
2,439
|
|
|
1,141
|
|
|
2,092
|
|
0.875% Convertible Senior Notes due June 15, 2017
|
—
|
|
|
12,583
|
|
|
—
|
|
|
12,748
|
|
3.75% Convertible Senior Notes due October 15, 2018
|
—
|
|
|
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
|
9,923
|
|
|
41,576
|
|
|
27,695
|
|
|
41,394
|
|
(19)
|
SHARE-BASED COMPENSATION EXPENSE
|
|
Shares Underlying
Options
Outstanding
|
|
Weighted
Average
Exercise Price
|
|||
Balance at October 31, 2016
|
1,387
|
|
|
$
|
26.90
|
|
Exercised
|
(167
|
)
|
|
—
|
|
|
Canceled
|
(225
|
)
|
|
—
|
|
|
Balance at April 30, 2017
|
995
|
|
|
$
|
29.55
|
|
|
|
|
|
|
|
Options Outstanding at
|
|
Vested Options at
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
April 30, 2017
|
|
April 30, 2017
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
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
|
|||||||||||||||||||
$
|
1.88
|
|
|
—
|
|
|
$
|
10.18
|
|
|
83
|
|
|
2.67
|
|
$
|
8.16
|
|
|
$
|
1,229
|
|
|
82
|
|
|
2.61
|
|
$
|
8.14
|
|
|
$
|
1,216
|
|
$
|
11.34
|
|
|
—
|
|
|
$
|
17.24
|
|
|
207
|
|
|
4.91
|
|
13.42
|
|
|
1,964
|
|
|
198
|
|
|
4.80
|
|
13.34
|
|
|
1,893
|
|
||||
$
|
17.50
|
|
|
—
|
|
|
$
|
30.46
|
|
|
145
|
|
|
1.97
|
|
25.66
|
|
|
167
|
|
|
135
|
|
|
1.55
|
|
26.20
|
|
|
121
|
|
||||
$
|
31.93
|
|
|
—
|
|
|
$
|
37.10
|
|
|
323
|
|
|
1.85
|
|
35.19
|
|
|
—
|
|
|
323
|
|
|
1.85
|
|
35.19
|
|
|
—
|
|
||||
$
|
37.82
|
|
|
—
|
|
|
$
|
55.63
|
|
|
237
|
|
|
4.07
|
|
45.89
|
|
|
—
|
|
|
231
|
|
|
4.02
|
|
45.91
|
|
|
—
|
|
||||
$
|
1.88
|
|
|
—
|
|
|
$
|
55.63
|
|
|
995
|
|
|
3.10
|
|
$
|
29.55
|
|
|
$
|
3,360
|
|
|
969
|
|
|
2.99
|
|
$
|
29.73
|
|
|
$
|
3,230
|
|
|
Restricted
Stock Units
Outstanding
|
|
Weighted
Average Grant
Date Fair Value
Per Share
|
|
Aggregate
Fair Value
|
|||||
Balance at October 31, 2016
|
4,280
|
|
|
$
|
19.96
|
|
|
$
|
83,511
|
|
Granted
|
2,092
|
|
|
|
|
|
||||
Vested
|
(1,306
|
)
|
|
|
|
|
||||
Canceled or forfeited
|
(433
|
)
|
|
|
|
|
||||
Balance at April 30, 2017
|
4,633
|
|
|
$
|
21.22
|
|
|
$
|
106,143
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Product costs
|
$
|
708
|
|
|
$
|
629
|
|
|
$
|
1,269
|
|
|
$
|
1,200
|
|
Service costs
|
679
|
|
|
693
|
|
|
1,307
|
|
|
1,285
|
|
||||
Share-based compensation expense included in cost of sales
|
1,387
|
|
|
1,322
|
|
|
2,576
|
|
|
2,485
|
|
||||
Research and development
|
3,653
|
|
|
3,791
|
|
|
6,862
|
|
|
7,219
|
|
||||
Sales and marketing
|
3,513
|
|
|
3,923
|
|
|
6,386
|
|
|
8,658
|
|
||||
General and administrative
|
3,417
|
|
|
4,968
|
|
|
8,870
|
|
|
10,097
|
|
||||
Acquisition and integration costs
|
—
|
|
|
697
|
|
|
—
|
|
|
714
|
|
||||
Share-based compensation expense included in operating expense
|
10,583
|
|
|
13,379
|
|
|
22,118
|
|
|
26,688
|
|
||||
Share-based compensation expense capitalized in inventory, net
|
35
|
|
|
32
|
|
|
136
|
|
|
37
|
|
||||
Total share-based compensation
|
$
|
12,005
|
|
|
$
|
14,733
|
|
|
$
|
24,830
|
|
|
$
|
29,210
|
|
(20)
|
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.
|
◦
|
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 2017, 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. As Ciena seeks adoption of its Blue Planet software platform and transitions features, functionality and customers to this platform, Ciena expects revenue declines for its other element and network management solutions.
|
◦
|
This segment includes Ciena’s Blue Planet network virtualization, service orchestration and network management software platform. Ciena's Blue Planet platform includes multi-domain service orchestration (MDSO), network function virtualization (NFV), management and orchestration (NFV MANO), and Ciena's manage, control and plan (MCP) solution, SDN Multilayer Controller and V-WAN application.
|
•
|
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,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Networking Platforms
|
|
|
|
|
|
|
|
||||||||
Converged Packet Optical
|
$
|
502,131
|
|
|
$
|
435,173
|
|
|
$
|
914,783
|
|
|
$
|
824,341
|
|
Packet Networking
|
66,326
|
|
|
68,582
|
|
|
138,520
|
|
|
116,779
|
|
||||
Optical Transport
|
3,030
|
|
|
8,451
|
|
|
8,128
|
|
|
20,596
|
|
||||
Total Networking Platforms
|
571,487
|
|
|
512,206
|
|
|
1,061,431
|
|
|
961,716
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Software and Software-Related Services
|
|
|
|
|
|
|
|
||||||||
Software Platforms
|
13,143
|
|
|
11,772
|
|
|
30,192
|
|
|
19,851
|
|
||||
Software-Related Services
|
24,573
|
|
|
18,701
|
|
|
46,904
|
|
|
36,048
|
|
||||
Total Software and Software-Related Services
|
37,716
|
|
|
30,473
|
|
|
77,096
|
|
|
55,899
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Global Services
|
|
|
|
|
|
|
|
||||||||
Maintenance Support and Training
|
58,241
|
|
|
57,069
|
|
|
113,231
|
|
|
113,127
|
|
||||
Installation and Deployment
|
28,695
|
|
|
30,232
|
|
|
56,614
|
|
|
61,072
|
|
||||
Consulting and Network Design
|
10,883
|
|
|
10,737
|
|
|
20,147
|
|
|
22,018
|
|
||||
Total Global Services
|
97,819
|
|
|
98,038
|
|
|
189,992
|
|
|
196,217
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Consolidated revenue
|
$
|
707,022
|
|
|
$
|
640,717
|
|
|
$
|
1,328,519
|
|
|
$
|
1,213,832
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Segment profit (loss):
|
|
|
|
|
|
|
|
||||||||
Networking Platforms
|
$
|
150,464
|
|
|
$
|
132,606
|
|
|
$
|
264,210
|
|
|
$
|
239,588
|
|
Software and Software-Related Services
|
4,551
|
|
|
192
|
|
|
12,252
|
|
|
(3,382
|
)
|
||||
Global Services
|
41,602
|
|
|
35,692
|
|
|
77,071
|
|
|
75,688
|
|
||||
Total segment profit
|
196,617
|
|
|
168,490
|
|
|
353,533
|
|
|
311,894
|
|
||||
Less: Non-performance operating expenses
|
|
|
|
|
|
|
|
||||||||
Selling and marketing
|
88,551
|
|
|
86,668
|
|
|
173,553
|
|
|
169,146
|
|
||||
General and administrative
|
34,990
|
|
|
35,203
|
|
|
70,854
|
|
|
66,345
|
|
||||
Amortization of intangible assets
|
10,980
|
|
|
15,566
|
|
|
25,531
|
|
|
32,428
|
|
||||
Acquisition and integration costs
|
—
|
|
|
2,285
|
|
|
—
|
|
|
3,584
|
|
||||
Restructuring costs
|
4,276
|
|
|
535
|
|
|
6,671
|
|
|
919
|
|
||||
Add: Other non-performance financial items
|
|
|
|
|
|
|
|
||||||||
Interest expense and other income (loss), net
|
(16,226
|
)
|
|
(11,641
|
)
|
|
(31,059
|
)
|
|
(33,127
|
)
|
||||
Less: Provision for income taxes
|
3,568
|
|
|
2,595
|
|
|
3,978
|
|
|
3,894
|
|
||||
Consolidated net income
|
$
|
38,026
|
|
|
$
|
13,997
|
|
|
$
|
41,887
|
|
|
$
|
2,451
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
North America
|
$
|
424,373
|
|
|
$
|
395,505
|
|
|
$
|
830,301
|
|
|
$
|
788,209
|
|
EMEA
|
105,776
|
|
|
96,175
|
|
|
197,319
|
|
|
176,897
|
|
||||
CALA
|
33,971
|
|
|
57,896
|
|
|
69,117
|
|
|
101,706
|
|
||||
APAC
|
142,902
|
|
|
91,141
|
|
|
231,782
|
|
|
147,020
|
|
||||
Total
|
$
|
707,022
|
|
|
$
|
640,717
|
|
|
$
|
1,328,519
|
|
|
$
|
1,213,832
|
|
|
April 30,
2017 |
|
October 31,
2016 |
||||
United States
|
$
|
99,694
|
|
|
$
|
103,018
|
|
Canada
|
188,804
|
|
|
173,885
|
|
||
Other International
|
11,294
|
|
|
11,503
|
|
||
Total
|
$
|
299,792
|
|
|
$
|
288,406
|
|
|
Quarter Ended April 30,
|
|
Six Months Ended April 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
AT&T
|
$
|
107,532
|
|
|
$
|
116,014
|
|
|
$
|
203,969
|
|
|
$
|
242,614
|
|
(21)
|
COMMITMENTS AND CONTINGENCIES
|
•
|
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;
|
•
|
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;
|
•
|
the impact of pricing pressure and price erosion that we regularly encounter in our markets;
|
•
|
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 manage effectively 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 new distribution relationships under which we will make available certain technology as a component;
|
•
|
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;
|
•
|
future legislation or executive action in the U.S. relating to tax policy or trade regulation;
|
•
|
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
2017
increased
by
$77.6 million
, primarily reflecting revenue increases in Converged Packet Optical within our Networking Platforms segment.
|
•
|
Service revenue for the
second
quarter of fiscal
2017
increased
by
$7.9 million
.
|
•
|
North America revenue for the
second
quarter of fiscal
2017
was
$424.4 million
,
an increase
from
$405.9 million
in the
first
quarter of fiscal
2017
. This primarily reflects revenue increases of $20.8 million within our Networking Platforms segment and $2.2 million within our Global Services segment. These increases were partially offset by a revenue decrease of $4.5 million within our Software and Software-Related Services segment.
|
•
|
Europe, Middle East and Africa ("EMEA") revenue for the
second
quarter of fiscal
2017
was
$105.8 million
,
an increase
from
$91.5 million
in the
first
quarter of fiscal
2017
. This primarily reflects revenue increases of $10.4 million within our Networking Platforms segment, $2.6 million within our Global Services segment and $1.2 million within our Software and Software-Related Services segment.
|
•
|
Caribbean and Latin America ("CALA") revenue for the
second
quarter of fiscal
2017
was
$33.9 million
,
a decrease
from
$35.2 million
in the
first
quarter of fiscal
2017
. This primarily reflects revenue decreases of $1.9 million within our Global Services segment, partially offset by a revenue increase of $1.0 million within our Networking Platforms segment.
|
•
|
Asia Pacific ("APAC") revenue for the
second
quarter of fiscal
2017
was
$142.9 million
,
an increase
from
$88.9 million
in the
first
quarter of fiscal
2017
. This primarily reflects revenue increases of $49.5 million within our Networking Platforms segment, $2.7 million within our Global Services segment and $1.8 million within our Software and Software-Related Services segment.
|
•
|
For the
second
quarter of fiscal
2017
, AT&T accounted for 15.2% of total revenue. AT&T accounted for 15.5% of total revenue and Verizon accounted for 11.8% in the
first
quarter of fiscal
2017
.
|
|
Quarter Ended April 30,
|
|
Increase
|
|
|
|||||||||||||
|
2017
|
|
%*
|
|
2016
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Networking Platforms
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Converged Packet Optical
|
$
|
502,131
|
|
|
71.0
|
|
$
|
435,173
|
|
|
67.9
|
|
$
|
66,958
|
|
|
15.4
|
|
Packet Networking
|
66,326
|
|
|
9.4
|
|
68,582
|
|
|
10.7
|
|
(2,256
|
)
|
|
(3.3
|
)
|
|||
Optical Transport
|
3,030
|
|
|
0.4
|
|
8,451
|
|
|
1.3
|
|
(5,421
|
)
|
|
(64.1
|
)
|
|||
Total Networking Platforms
|
571,487
|
|
|
80.8
|
|
512,206
|
|
|
79.9
|
|
59,281
|
|
|
11.6
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Software and Software-Related Services
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Software Platforms
|
13,143
|
|
|
1.9
|
|
11,772
|
|
|
1.9
|
|
1,371
|
|
|
11.6
|
|
|||
Software-Related Services
|
24,573
|
|
|
3.5
|
|
18,701
|
|
|
2.9
|
|
5,872
|
|
|
31.4
|
|
|||
Total Software and Software-Related Services
|
37,716
|
|
|
5.4
|
|
30,473
|
|
|
4.8
|
|
7,243
|
|
|
23.8
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Global Services
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Maintenance Support and Training
|
58,241
|
|
|
8.2
|
|
57,069
|
|
|
8.9
|
|
1,172
|
|
|
2.1
|
|
|||
Installation and Deployment
|
28,695
|
|
|
4.1
|
|
30,232
|
|
|
4.7
|
|
(1,537
|
)
|
|
(5.1
|
)
|
|||
Consulting and Network Design
|
10,883
|
|
|
1.5
|
|
10,737
|
|
|
1.7
|
|
146
|
|
|
1.4
|
|
|||
Total Global Services
|
97,819
|
|
|
13.8
|
|
98,038
|
|
|
15.3
|
|
(219
|
)
|
|
(0.2
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Consolidated revenue
|
$
|
707,022
|
|
|
100.0
|
|
$
|
640,717
|
|
|
100.0
|
|
$
|
66,305
|
|
|
10.3
|
|
•
|
Networking Platforms
segment revenue
increased
, primarily reflecting a product line sales increase of
$67.0 million
of our Converged Packet Optical products, partially offset by decreases of
$5.4 million
in sales of our Optical Transport products and
$2.3 million
in sales of our Packet Networking products.
|
◦
|
Converged Packet Optical sales reflect increases of $33.9 million of our 6500 Packet-Optical Platform, $18.5 million of our 5430 Reconfigurable Switching System, $18.3 million of our Waveserver stackable interconnect system and $3.7 million of our OTN configuration for the 5410 Reconfigurable Switching System. These increases were partially offset by sales decreases of $5.9 million of our Z-Series Packet-Optical Platform and $1.5 million of our CoreDirector® Multiservice Optical Switches.
|
◦
|
Packet Networking sales primarily reflects a decrease of $4.1 million of our 8700 Packetwave Platform, partially offset by a sales increase of $1.8 million of our 3000 and 5000 families of service delivery and aggregation switches.
|
◦
|
Optical Transport sales have continued to experience significant declines, as expected. Our Optical Transport products have either been previously discontinued, or are expected to be discontinued, reflecting network operators’ transition toward next-generation converged network architectures addressed by solutions within our Converged Packet Optical product line.
|
•
|
Software and Software-Related Services
segment revenue
increased
, primarily reflecting sales increases of
$5.9 million
in software-related services and
$1.4 million
of our software platforms. The increase in software-related services is primarily due to sales increases of $4.2 million of software subscription services and $1.5 million of services supporting our Blue Planet software platform and advance software applications. The increase in software platform sales primarily reflects an increase of $1.1 million in sales of our OneControl Unified Management System.
|
•
|
Global Services
segment revenue
decreased
slightly, primarily reflecting a sales decrease of $1.5 million of our installation and deployment services offset by a sales increase of $1.2 million of our maintenance support and training.
|
|
Quarter Ended April 30,
|
|
Increase
|
|
|
|||||||||||||
|
2017
|
|
%*
|
|
2016
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
North America
|
$
|
424,373
|
|
|
60.0
|
|
$
|
395,505
|
|
|
61.7
|
|
$
|
28,868
|
|
|
7.3
|
|
EMEA
|
105,776
|
|
|
15.0
|
|
96,175
|
|
|
15.0
|
|
9,601
|
|
|
10.0
|
|
|||
CALA
|
33,971
|
|
|
4.8
|
|
57,896
|
|
|
9.0
|
|
(23,925
|
)
|
|
(41.3
|
)
|
|||
APAC
|
142,902
|
|
|
20.2
|
|
91,141
|
|
|
14.3
|
|
51,761
|
|
|
56.8
|
|
|||
Total
|
$
|
707,022
|
|
|
100.0
|
|
$
|
640,717
|
|
|
100.0
|
|
$
|
66,305
|
|
|
10.3
|
|
•
|
North America revenue
primarily reflects increases of $27.2 million within our Networking Platforms segment and $2.9 million within our Software and Software-Related Services segment, partially offset by a revenue decrease of $1.2 million within our Global Services segment. The revenue increase within our Networking Platforms segment primarily reflects a product line increase of $31.0 million of Converged Packet Optical sales, partially offset by product line decreases of $2.7 million of Packet Networking sales and $1.1 million in Optical Transport sales. The revenue increase within Converged Packet Optical primarily reflects increases of $15.2 million in sales of our Waveserver stackable interconnect system and $13.3 million in sales of our 6500 Packet-Optical Platform. The revenue increase for our Waveserver stackable interconnect system primarily reflects increased sales to Web-scale providers. The revenue increase for our 6500 Packet-Optical Platform primarily reflects increased sales to communications service providers, partially offset by decreases in sales to AT&T and to a certain cable and multiservice operator who was acquired during the third quarter of 2016. The increase within our Software and Software-Related Services segment primarily reflects a sales increase of $3.3 million of our software subscription services.
|
•
|
EMEA revenue
primarily
reflects increases of $10.9 million within our Networking Platforms segment and $1.7 million within our Software and Software-Related Services segment, partially offset by a revenue decrease of $3.0 million within our Global Services segment. Our Networking Platforms segment revenue primarily reflects a product line increase of $9.6 million in Converged Packet Optical sales, primarily due to increases of $6.4 million of sales for
|
•
|
CALA revenue
primarily
reflects a decrease of $24.4 million within our Networking Platforms segment. The revenue decrease within our Networking Platforms segment primarily reflects product line decreases of $23.1 million of Converged Packet Optical sales and $1.6 million in Optical Transport sales. The revenue decrease within Converged Packet Optical primarily reflects decreases of $12.2 million in sales of our 5430 Reconfigurable Switching System and $9.4 million in sales of our 6500 Packet-Optical Platform. The decrease in CALA revenue primarily relates to decreased sales to certain communications service providers in Brazil.
|
•
|
APAC revenue
primarily reflects increases of $45.6 million within our Networking Platforms segment, $3.5 million within our Global Services segment and $2.6 million within our Software and Software-Related Services segment. The revenue increase within our Networking Platforms segment primarily reflects a product line increase of $49.5 million of Converged Packet Optical sales, partially offset by product line decreases of $2.9 million of Packet Networking sales and $1.0 million in Optical Transport sales. The revenue increase within Converged Packet Optical reflects an increase of $25.3 million in sales of our 5430 Reconfigurable Switching System, primarily due to increased sales to Reliance Jio Infocomm, a communications service provider in India. In addition, this product line reflects a revenue increase of $23.6 million in sales of our 6500 Packet-Optical Platform, primarily related to sales through our strategic relationship with Ericsson in Australia, communication service providers, Web-scale providers and submarine network operators in Singapore, and sales to Reliance Jio Infocomm in India. APAC revenue has increased meaningfully in recent periods reflecting in part significant revenue growth in India, where we have benefited from initiatives to gain subscribers and unprecedented subscriber growth and related network projects. Changes in spending and 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
|
|
|
||||||||||||
|
2017
|
|
%*
|
|
2016
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
Total revenue
|
$
|
707,022
|
|
|
100.0
|
|
$
|
640,717
|
|
|
100.0
|
|
$
|
66,305
|
|
|
10.3
|
Total cost of goods sold
|
388,782
|
|
|
55.0
|
|
357,624
|
|
|
55.8
|
|
31,158
|
|
|
8.7
|
|||
Gross profit
|
$
|
318,240
|
|
|
45.0
|
|
$
|
283,093
|
|
|
44.2
|
|
$
|
35,147
|
|
|
12.4
|
|
Quarter Ended April 30,
|
|
Increase
|
|
|
||||||||||||
|
2017
|
|
%*
|
|
2016
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
Product revenue
|
$
|
584,630
|
|
|
100.0
|
|
$
|
523,978
|
|
|
100.0
|
|
$
|
60,652
|
|
|
11.6
|
Product cost of goods sold
|
327,295
|
|
|
56.0
|
|
291,778
|
|
|
55.7
|
|
35,517
|
|
|
12.2
|
|||
Product gross profit
|
$
|
257,335
|
|
|
44.0
|
|
$
|
232,200
|
|
|
44.3
|
|
$
|
25,135
|
|
|
10.8
|
|
Quarter Ended April 30,
|
|
Increase
|
|
|
|||||||||||||
|
2017
|
|
%*
|
|
2016
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
Service revenue
|
$
|
122,392
|
|
|
100.0
|
|
$
|
116,739
|
|
|
100.0
|
|
$
|
5,653
|
|
|
4.8
|
|
Service cost of goods sold
|
61,487
|
|
|
50.2
|
|
65,846
|
|
|
56.4
|
|
(4,359
|
)
|
|
(6.6
|
)
|
|||
Service gross profit
|
$
|
60,905
|
|
|
49.8
|
|
$
|
50,893
|
|
|
43.6
|
|
$
|
10,012
|
|
|
19.7
|
|
•
|
Gross profit as a percentage of revenue
reflects improved services gross profit partially offset by reduced product gross profit.
|
•
|
Gross profit on products as a percentage of product revenue
decreased
slightly as a result of market-based price erosion partially offset by product cost reductions, lower warranty expense and improved manufacturing efficiencies.
|
•
|
Gross profit on services as a percentage of services revenue
increased
primarily due to sales of higher margin software subscription services and improved margin on installation and professional services.
|
|
Quarter Ended April 30,
|
|
Increase
|
|
|
|||||||||||||
|
2017
|
|
%*
|
|
2016
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
Research and development
|
$
|
121,623
|
|
|
17.2
|
|
$
|
114,603
|
|
|
17.9
|
|
$
|
7,020
|
|
|
6.1
|
|
Selling and marketing
|
88,551
|
|
|
12.5
|
|
86,668
|
|
|
13.5
|
|
1,883
|
|
|
2.2
|
|
|||
General and administrative
|
34,990
|
|
|
4.9
|
|
35,203
|
|
|
5.5
|
|
(213
|
)
|
|
(0.6
|
)
|
|||
Amortization of intangible assets
|
10,980
|
|
|
1.6
|
|
15,566
|
|
|
2.4
|
|
(4,586
|
)
|
|
(29.5
|
)
|
|||
Acquisition and integration costs
|
—
|
|
|
—
|
|
2,285
|
|
|
0.4
|
|
(2,285
|
)
|
|
(100.0
|
)
|
|||
Restructuring costs
|
4,276
|
|
|
0.6
|
|
535
|
|
|
0.1
|
|
3,741
|
|
|
699.3
|
|
|||
Total operating expenses
|
$
|
260,420
|
|
|
36.8
|
|
$
|
254,860
|
|
|
39.8
|
|
$
|
5,560
|
|
|
2.2
|
|
•
|
Research and development expense
increased by
$7.0 million
. This change reflects increases of $4.0 million in employee and compensation costs and $3.0 million in facilities and information technology costs.
|
•
|
Selling and marketing expense
increased
by
$1.9 million
, primarily reflecting increases of $0.6 million in employee and compensation costs and $0.6 million in facilities and information technology costs.
|
•
|
General and administrative expense
remained relatively unchanged.
|
•
|
Amortization of intangible assets
decreased
due to certain intangible assets having reached the end of their economic lives.
|
•
|
Acquisition and integration costs
incurred during fiscal 2016 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.
|
•
|
Restructuring costs
increased primarily reflecting unfavorable lease commitments and relocation costs incurred in connection with the facility transition from our existing research and development center located at Lab 10 on the former Nortel Carling Campus to a new campus facility in Ottawa, Canada.
|
|
Quarter Ended April 30,
|
|
Increase
|
|
|
|||||||||||||
|
2017
|
|
%*
|
|
2016
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
Interest and other income (loss), net
|
$
|
(2,918
|
)
|
|
(0.4
|
)
|
|
$
|
967
|
|
|
0.2
|
|
$
|
(3,885
|
)
|
|
401.8
|
Interest expense
|
$
|
13,308
|
|
|
1.9
|
|
|
$
|
12,608
|
|
|
2.0
|
|
$
|
700
|
|
|
5.6
|
Provision for income taxes
|
$
|
3,568
|
|
|
0.5
|
|
|
$
|
2,595
|
|
|
0.4
|
|
$
|
973
|
|
|
37.5
|
•
|
Interest and other income (loss), net
primarily reflects $2.9 million in debt modification expenses related to the 2022 Term Loan that was entered into in the second quarter of fiscal 2017. For additional information about our term loans, see Note
16
to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report.
|
•
|
Interest expense
increased
primarily due to the 2022 Term Loan that was entered into in the second quarter of fiscal 2017 and the 2021 Term Loan that was entered into in the second quarter of fiscal 2016. For additional information about our term loans, see Note
16
to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report.
|
•
|
Provision for income taxes
increased
primarily due to foreign and state tax expense.
|
•
|
Networking Platforms
segment revenue
increased
, primarily reflecting product line sales increases of
$90.5 million
of our Converged Packet Optical products and
$21.7 million
of our Packet Networking products, partially offset by a decrease of
$12.5 million
in sales of our Optical Transport products.
|
◦
|
Converged Packet Optical sales primarily reflect increases of $66.3 million of our 6500 Packet-Optical Platform, $30.7 million of our Waveserver stackable interconnect system, $13.6 million of our 5430 Reconfigurable Switching System and $3.8 million of our OTN configuration for the 5410 Reconfigurable Switching System. These increases were partially offset by sales decreases of $18.0 million of our Z-Series Packet-Optical Platform and $5.8 million of our CoreDirector® Multiservice Optical Switches.
|
◦
|
Packet Networking sales primarily reflect increases of $20.5 million of our 3000 and 5000 families of service delivery and aggregation switches and $1.0 million of our 8700 Packetwave Platform.
|
◦
|
Optical Transport sales have continued to experience significant declines, as expected. Our Optical Transport products have either been previously discontinued, or are expected to be discontinued, reflecting network operators’ transition toward next-generation converged network architectures addressed by solutions within our Converged Packet Optical product line.
|
•
|
Software and Software-Related Services
segment revenue
increased
, primarily reflecting sales increases of
$10.9 million
in software-related services and
$10.3 million
of our software platforms. The increase in software-related services is primarily due to sales increases of $7.3 million of software subscription services, $2.4 million of services supporting our Blue Planet software platform and advance software applications and $1.1 million of software-enabled services. The increase in software platform sales reflects increases of $6.9 million in sales of our Blue Planet software platform and advanced software applications and $3.4 million in sales of our other legacy software platforms.
|
•
|
Global Services
segment revenue
decreased
, primarily reflecting sales decreases of $4.5 million of our installation and deployment services and $1.9 million of our consulting and network design services.
|
|
Six Months Ended April 30,
|
|
Increase
|
|
|
|||||||||||||
|
2017
|
|
%*
|
|
2016
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
North America
|
$
|
830,301
|
|
|
62.5
|
|
$
|
788,209
|
|
|
64.9
|
|
$
|
42,092
|
|
|
5.3
|
|
EMEA
|
197,319
|
|
|
14.9
|
|
176,897
|
|
|
14.6
|
|
20,422
|
|
|
11.5
|
|
|||
CALA
|
69,117
|
|
|
5.2
|
|
101,706
|
|
|
8.4
|
|
(32,589
|
)
|
|
(32.0
|
)
|
|||
APAC
|
231,782
|
|
|
17.4
|
|
147,020
|
|
|
12.1
|
|
84,762
|
|
|
57.7
|
|
|||
Total
|
$
|
1,328,519
|
|
|
100.0
|
|
$
|
1,213,832
|
|
|
100.0
|
|
$
|
114,687
|
|
|
9.4
|
|
•
|
North America revenue
primarily reflects increases of $33.3 million within our Networking Platforms segment and$15.5 million within our Software and Software-Related Services segment, partially offset by a revenue decrease of $6.7 million within our Global Services segment. The revenue increase within our Networking Platforms segment primarily reflects product line increases of $25.6 million of Converged Packet Optical sales and $10.6 million of Packet Networking sales, partially offset by a product line decrease of $2.9 million in Optical Transport sales. The revenue increase within Converged Packet Optical sales primarily reflects increases of $26.1 million in sales of our Waveserver stackable interconnect system and $12.7 million in sales of our 6500 Packet-Optical Platform, partially offset by a decrease of $16.7 million in sales of our Z-Series Packet-Optical Platform. The revenue increase for our Waveserver stackable interconnect system primarily reflects increased sales to Web-scale providers. The revenue increase for our 6500 Packet-Optical Platform primarily reflecting increased sales to service providers, partially offset by decreases in sales to AT&T and to a certain cable and multiservice operator who was acquired during the third quarter of 2016. The revenue increase within Packet Networking primarily reflects an increase of $12.2 million in sales of our 3000 and 5000 families of service delivery and aggregation switches to AT&T and other communication service providers. The revenue increase within our Software and Software-Related Services segment primarily reflects sales increases of $6.5 million of our software subscription services, $4.3 million in sales of our Blue Planet software platform, $2.4 million of our other legacy software platforms and $2.3 million of other software related services.
|
•
|
EMEA revenue
primarily
reflects increases of $22.9 million within our Networking Platforms segment and $2.5 million within our Software and Software-Related Services segment, partially offset by a revenue decrease of $5.0 million within our Global Services segment. Our Networking Platforms segment revenue reflects a product line
|
•
|
CALA revenue
primarily
reflects a decrease of $35.2 million within our Networking Platforms segment partially offset by a revenue increase of $2.4 million within our Global Services segment. The revenue decrease within our Networking Platforms segment primarily reflects product line decreases of $33.3 million of Converged Packet Optical sales and $3.3 million in Optical Transport sales partially offset by a product line increase of $1.4 million of Packet Networking sales. The revenue decrease within Converged Packet Optical primarily reflects decreases of $15.9 million in sales of our 6500 Packet-Optical Platform and $15.2 million in sales of our 5430 Reconfigurable Switching System. The decrease in CALA revenue primarily relates to decreased sales in Brazil and Mexico.
|
•
|
APAC revenue
primarily reflects increases of $78.7 million within our Networking Platforms segment, $3.1 million within our Global Services segment and $2.9 million within our Software and Software-Related Services segment. The revenue increase within our Networking Platforms segment primarily reflects product line increases of $75.5 million of Converged Packet Optical sales and $4.9 million of Packet Networking sales, partially offset by a product line decrease of $1.7 million in Optical Transport sales. The revenue increase within Converged Packet Optical reflects an increase of $48.3 million in sales of our 6500 Packet-Optical Platform primarily due to increased sales to Reliance Jio Infocomm in India, sales through our strategic relationship with Ericsson in Australia, communication service providers, Web-scale providers and submarine network operators in Singapore and communication service providers in Japan. The revenue increase within Converged Packet Optical also reflects an increase of $26.4 million of our 5430 Reconfigurable Switching System sales primarily due to increased sales to Reliance Jio Infocomm in India. 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
|
|
|
||||||||||||
|
2017
|
|
%*
|
|
2016
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
Total revenue
|
$
|
1,328,519
|
|
|
100.0
|
|
$
|
1,213,832
|
|
|
100.0
|
|
$
|
114,687
|
|
|
9.4
|
Total cost of goods sold
|
736,494
|
|
|
55.4
|
|
679,289
|
|
|
56.0
|
|
57,205
|
|
|
8.4
|
|||
Gross profit
|
$
|
592,025
|
|
|
44.6
|
|
$
|
534,543
|
|
|
44.0
|
|
$
|
57,482
|
|
|
10.8
|
|
Six Months Ended April 30,
|
|
Increase
|
|
|
||||||||||||
|
2017
|
|
%*
|
|
2016
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
Product revenue
|
$
|
1,091,623
|
|
|
100.0
|
|
$
|
981,567
|
|
|
100.0
|
|
$
|
110,056
|
|
|
11.2
|
Product cost of goods sold
|
614,106
|
|
|
56.3
|
|
552,260
|
|
|
56.3
|
|
61,846
|
|
|
11.2
|
|||
Product gross profit
|
$
|
477,517
|
|
|
43.7
|
|
$
|
429,307
|
|
|
43.7
|
|
$
|
48,210
|
|
|
11.2
|
|
Six Months Ended April 30,
|
|
Increase
|
|
|
|||||||||||||
|
2017
|
|
%*
|
|
2016
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
Service revenue
|
$
|
236,896
|
|
|
100.0
|
|
$
|
232,265
|
|
|
100.0
|
|
$
|
4,631
|
|
|
2.0
|
|
Service cost of goods sold
|
122,388
|
|
|
51.7
|
|
127,029
|
|
|
54.7
|
|
(4,641
|
)
|
|
(3.7
|
)
|
|||
Service gross profit
|
$
|
114,508
|
|
|
48.3
|
|
$
|
105,236
|
|
|
45.3
|
|
$
|
9,272
|
|
|
8.8
|
|
•
|
Gross profit as a percentage of revenue
reflects improved services gross profit.
|
•
|
Gross profit on products as a percentage of product revenue
reflects a lower warranty provision and product cost reductions offset by market-based price erosion.
|
•
|
Gross profit on services as a percentage of services revenue
increased
primarily due to sales of higher margin software subscription services and improved margin on installation and professional services.
|
|
Six Months Ended April 30,
|
|
Increase
|
|
|
|||||||||||||
|
2017
|
|
%*
|
|
2016
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
Research and development
|
$
|
238,492
|
|
|
18.0
|
|
$
|
222,649
|
|
|
18.3
|
|
$
|
15,843
|
|
|
7.1
|
|
Selling and marketing
|
173,553
|
|
|
13.1
|
|
169,146
|
|
|
13.9
|
|
4,407
|
|
|
2.6
|
|
|||
General and administrative
|
70,854
|
|
|
5.3
|
|
66,345
|
|
|
5.5
|
|
4,509
|
|
|
6.8
|
|
|||
Amortization of intangible assets
|
25,531
|
|
|
1.9
|
|
32,428
|
|
|
2.7
|
|
(6,897
|
)
|
|
(21.3
|
)
|
|||
Acquisition and integration costs
|
—
|
|
|
—
|
|
3,584
|
|
|
0.3
|
|
(3,584
|
)
|
|
(100.0
|
)
|
|||
Restructuring costs
|
6,671
|
|
|
0.5
|
|
919
|
|
|
0.1
|
|
5,752
|
|
|
625.9
|
|
|||
Total operating expenses
|
$
|
515,101
|
|
|
38.8
|
|
$
|
495,071
|
|
|
40.8
|
|
$
|
20,030
|
|
|
4.0
|
|
•
|
Research and development expense
was adversely affected by
$2.0 million
as a result of foreign exchange rates, net of hedging, primarily due to a weaker U.S. Dollar in relation to the Canadian Dollar. Including the effect of foreign exchange rates, research and development expenses
increased by
$15.8 million
. This change primarily reflects increases of $8.7 million in employee and compensation costs and $8.1 million in facilities and information technology costs.
|
•
|
Selling and marketing expense
increased by
$4.4 million
, primarily reflecting increases of $1.7 million in employee and compensation costs, $1.2 million in facilities and information technology costs and $1.0 million in selling and marketing related costs.
|
•
|
General and administrative expense
increased by
$4.5 million
, primarily reflecting increases $2.3 million for professional services and legal fees and $1.1 million for facilities and information technology costs.
|
•
|
Amortization of intangible assets
decreased
due to certain intangible assets having reached the end of their economic lives.
|
•
|
Acquisition and integration costs
incurred during fiscal 2016 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.
|
•
|
Restructuring costs
increased primarily reflecting unfavorable lease commitments and relocation costs incurred in connection with the facility transition from our existing research and development center located at Lab 10 on the former Nortel Carling Campus to a new campus facility in Ottawa, Canada. Also contributing to the increase was a global workforce reduction of approximately 50 employees in the first quarter of fiscal 2017 as part of our business optimization strategy to improve our gross margin, constrain operating expense and redesign certain business processes, systems, and resources.
|
|
Six Months Ended April 30,
|
|
Increase
|
|
|
||||||||||||||
|
2017
|
|
%*
|
|
2016
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||||
Interest and other income (loss), net
|
$
|
(2,548
|
)
|
|
(0.2
|
)
|
|
$
|
(7,809
|
)
|
|
(0.6
|
)
|
|
$
|
5,261
|
|
|
67.4
|
Interest expense
|
$
|
28,511
|
|
|
2.1
|
|
|
$
|
25,318
|
|
|
2.1
|
|
|
$
|
3,193
|
|
|
12.6
|
Provision for income taxes
|
$
|
3,978
|
|
|
0.3
|
|
|
$
|
3,894
|
|
|
0.3
|
|
|
$
|
84
|
|
|
2.2
|
•
|
Interest and other income (loss), net
primarily 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, partially offset by $2.9 million in debt modification expenses related to the 2022 Term Loan that was entered into in the second quarter of fiscal 2017. For additional information about our term loans, see Note
16
to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report.
|
•
|
Interest expense
increased
primarily due to the 2022 Term Loan that was entered into in the second quarter of fiscal 2017 and the 2021 Term Loan that was entered into in the second quarter of fiscal 2016. For additional information about our term loans, see Note
16
to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report.
|
•
|
Provision for income taxes
slightly
increased
primarily due to increased state tax expense.
|
|
Quarter Ended April 30,
|
|
|
|
||||||||||
|
2017
|
|
2016
|
|
Increase (decrease)
|
|
%*
|
|||||||
Segment profit:
|
|
|
|
|
|
|
|
|||||||
Networking Platforms
|
$
|
150,464
|
|
|
$
|
132,606
|
|
|
$
|
17,858
|
|
|
13.5
|
|
Software and Software-Related Services
|
$
|
4,551
|
|
|
$
|
192
|
|
|
$
|
4,359
|
|
|
(2,270.3
|
)
|
Global Services
|
$
|
41,602
|
|
|
$
|
35,692
|
|
|
$
|
5,910
|
|
|
16.6
|
|
•
|
Networking Platforms
segment
profit
increased
, primarily due to higher sales volume, as described above, resulting in increased gross profits, partially offset by increased research and development costs. Research and development costs primarily reflect increased expenses relating to the continued development of our coherent modem technology, including our WaveLogic Ai coherent optical chipset, and relocation costs as a result of the facility transition from our existing research and development center located at Lab 10 on the former Nortel Carling Campus to a new campus facility in Ottawa, Canada.
|
•
|
Software and Software-Related Services
segment
profit
increased
primarily due to higher sales volume, as described above, resulting in increased gross profits, partially offset by increased research and development costs. Research and development costs primarily reflect increased expense relating to the continued development of our Blue Planet software platform.
|
•
|
Global Services
segment
profit
increased
, primarily due to improved gross margin on installation and deployment services and consulting and network design services.
|
|
Six Months Ended April 30,
|
|
|
|
|
||||||||
|
2017
|
|
2016
|
|
Increase (decrease)
|
|
%*
|
||||||
Segment profit (loss):
|
|
|
|
|
|
|
|
||||||
Networking Platforms
|
$
|
264,210
|
|
|
$
|
239,588
|
|
|
$
|
24,622
|
|
|
10.3
|
Software and Software-Related Services
|
$
|
12,252
|
|
|
$
|
(3,382
|
)
|
|
$
|
15,634
|
|
|
462.3
|
Global Services
|
$
|
77,071
|
|
|
$
|
75,688
|
|
|
$
|
1,383
|
|
|
1.8
|
•
|
Networking Platforms
segment
profit
increased
, primarily due to higher sales volume, as described above, partially offset by increased research and development costs and reduced gross margin. The reduced gross margin primarily reflects market-based price erosion partially offset by product cost reductions and lower warranty expense. Research and development costs primarily reflect increased expenses relating to the continued development of our coherent modem technology, including our WaveLogic Ai coherent optical chipset, and relocation costs as a result of the facility transition from our existing research and development center located at Lab 10 on the former Nortel Carling Campus to a new campus facility in Ottawa, Canada.
|
•
|
Software and Software-Related Services
segment
profit
reflects higher sales volume, as described above, and improved gross margin, partially offset by increased research and development costs. Research and development costs primarily reflect increased expenses relating to the continued development of our Blue Planet software platform.
|
•
|
Global Services
segment
profit
increased
, primarily due to improved gross margin, as described above, partially offset by lower sales volume.
|
|
April 30,
2017 |
|
October 31,
2016 |
|
Increase
(decrease)
|
||||||
Cash and cash equivalents
|
$
|
628,623
|
|
|
$
|
777,615
|
|
|
$
|
(148,992
|
)
|
Short-term investments in marketable debt securities
|
274,779
|
|
|
275,248
|
|
|
(469
|
)
|
|||
Long-term investments in marketable debt securities
|
89,852
|
|
|
90,172
|
|
|
(320
|
)
|
|||
Total cash and cash equivalents and investments in marketable debt securities
|
$
|
993,254
|
|
|
$
|
1,143,035
|
|
|
$
|
(149,781
|
)
|
|
Six months ended
|
||
|
April 30, 2017
|
||
Net income
|
$
|
41,887
|
|
Adjustments for non-cash charges:
|
|
||
Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements
|
35,548
|
|
|
Share-based compensation costs
|
24,830
|
|
|
Amortization of intangible assets
|
33,466
|
|
|
Provision for inventory excess and obsolescence
|
19,623
|
|
|
Provision for warranty
|
2,347
|
|
|
Other
|
10,416
|
|
|
Net income (adjusted for non-cash charges)
|
$
|
168,117
|
|
|
Six months ended
|
||
|
April 30, 2017
|
||
Cash provided by accounts receivable
|
$
|
9,381
|
|
Cash used in inventories
|
(95,554
|
)
|
|
Cash used in prepaid expenses and other
|
(15,054
|
)
|
|
Cash used in accounts payable, accruals and other obligations
|
(24,974
|
)
|
|
Cash provided by deferred revenue
|
3,832
|
|
|
Total cash used for working capital
|
$
|
(122,369
|
)
|
•
|
The
$9.4 million
of cash
provided by
accounts receivable during the first
six
months of fiscal
2017
reflects increased sales volume and improved collections as of the end of the second quarter of fiscal 2017;
|
•
|
The
$95.6 million
of cash
used in
inventory during the first
six
months of fiscal
2017
primarily reflects increases in finished goods to meet customer delivery schedules and deferred costs of sales awaiting customer acceptance;
|
•
|
Cash
used in
prepaid expense and other during the first
six
months of fiscal
2017
was
$15.1 million
, primarily reflecting higher prepaid value added taxes and product demonstration equipment;
|
•
|
The
$25.0 million
of cash
used in
accounts payable, accruals and other obligations during the first
six
months of fiscal
2017
primarily reflects the timing of bonus payments to employees under our annual cash incentive compensation plan; and
|
•
|
The
$3.8 million
of cash
provided by
deferred revenue during the first
six
months of fiscal
2017
represents an increase in advanced payments received from customers prior to revenue recognition.
|
|
Six months ended
|
||
|
April 30, 2017
|
||
0.875% Convertible Senior Notes due June 15, 2017
(1)
|
$
|
1,013
|
|
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)
|
2,342
|
|
|
Term Loan due April 25, 2021
(5)
|
2,702
|
|
|
Term Loan due January 30, 2022
(6)
|
2,983
|
|
|
Interest rate swaps
(7)
|
2,058
|
|
|
ABL Credit Facility
(8)
|
813
|
|
|
Capital leases
|
1,216
|
|
|
Cash paid during period
|
$
|
23,439
|
|
(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 15, 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 the 2019 Term Loan was payable periodically based on the underlying market index rate selected for borrowing. The 2019 Term Loan bore interest at LIBOR plus a spread of 3.00% subject to a minimum LIBOR rate of 0.75%. On the first day of our second quarter of fiscal 2017, we refinanced and replaced this term loan with the 2022 Term Loan. See Note
16
to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report for more information.
|
(5)
|
Interest on the 2021 Term Loan was payable periodically based on the underlying market index rate selected for borrowing. The 2021 Term Loan bore interest at LIBOR plus a spread of 3.25% to 3.50% subject to a minimum LIBOR rate of 0.75%. On the first day of our second quarter of fiscal 2017, we refinanced and replaced this term loan with the 2022 Term Loan. See Note
16
to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report for more information.
|
(6)
|
Interest on the 2022 Term Loan is payable periodically based on the underlying market index rate selected for borrowing. The 2022 Term Loan bears interest at LIBOR plus a spread of 2.5% subject to a minimum LIBOR rate of 0.75%. As of the end of the second quarter of fiscal 2017 the interest rate on the 2022 Term Loan was 3.49%.
|
(7)
|
Prior to the term loan refinancing, payments on our interest rate swaps were variable and effectively fixed the total interest rate under the 2019 Term Loan at 5.004% from July 20, 2015 through July 19, 2018 and the 2021 Term Loan
|
(8)
|
During the first
six
months of fiscal
2017
, we utilized the ABL Credit Facility to collateralize certain standby letters of credit and paid
$0.8 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)
|
$
|
752,385
|
|
|
$
|
185,258
|
|
|
$
|
350,000
|
|
|
$
|
217,127
|
|
|
$
|
—
|
|
Principal due on Term Loan due January 30, 2022
(2)
|
399,000
|
|
|
4,000
|
|
|
8,000
|
|
|
8,000
|
|
|
379,000
|
|
|||||
Interest due on convertible notes
|
50,498
|
|
|
21,436
|
|
|
21,562
|
|
|
7,500
|
|
|
—
|
|
|||||
Interest due on Term Loan due January 30, 2022
(2)
|
66,082
|
|
|
14,081
|
|
|
27,778
|
|
|
24,223
|
|
|
—
|
|
|||||
Payments due under interest rate swaps
(2)
|
10,643
|
|
|
2,984
|
|
|
5,032
|
|
|
2,627
|
|
|
—
|
|
|||||
Operating leases
(3)
|
143,135
|
|
|
16,843
|
|
|
47,780
|
|
|
33,527
|
|
|
44,985
|
|
|||||
Purchase obligations
(4)
|
280,645
|
|
|
280,645
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Capital leases— equipment
|
4,015
|
|
|
1,759
|
|
|
2,256
|
|
|
—
|
|
|
—
|
|
|||||
Capital leases— buildings
(5)
|
118,679
|
|
|
7,041
|
|
|
14,143
|
|
|
14,507
|
|
|
82,988
|
|
|||||
Other obligations
|
2,340
|
|
|
1,015
|
|
|
1,325
|
|
|
—
|
|
|
—
|
|
|||||
Total
(6)
|
$
|
1,827,422
|
|
|
$
|
535,062
|
|
|
$
|
477,876
|
|
|
$
|
307,511
|
|
|
$
|
506,973
|
|
(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 2022 Term Loan and payments due under the interest rate swaps is variable and 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
14
and
16
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 expected 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, 2017
, we also had approximately
$14.0 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
|
$
|
77,681
|
|
|
$
|
36,511
|
|
|
$
|
18,455
|
|
|
$
|
12,542
|
|
|
$
|
10,173
|
|
•
|
broader macroeconomic conditions, including weakness and volatility in global markets, that affect our customers;
|
•
|
changes in capital spending by customers, in particular our large communications service provider customers;
|
•
|
changes in networking strategies;
|
•
|
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 pace and impact of price erosion that we regularly encounter in our markets;
|
•
|
our incurrence of start-up costs, including lower margin phases of projects 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;
|
•
|
availability of components and manufacturing capacity;
|
•
|
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 strength of existing business relationships;
|
•
|
ability to offer comprehensive networking solutions, consisting of equipment, software and network consulting services;
|
•
|
ability to adapt to customer needs and accommodate different consumption models;
|
•
|
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 us 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;
|
•
|
tax and customs changes that adversely impact our global sourcing strategy, manufacturing practices, transfer-pricing, or competitiveness of our products for global sales;
|
•
|
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;
|
•
|
significant changes to free trade agreements, trade protection measures, tariffs, 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 associated with the locations or countries where our products are manufactured, including potential manufacturing disruptions caused by social, geopolitical or environmental factors;
|
•
|
changes in U.S. law or policy governing foreign trade, manufacturing, development and investment in the countries where we currently manufacture our products, including the World Trade Organization Information Technology Agreement or other free trade agreements;
|
•
|
limited warranties provided to us; and
|
•
|
potential misappropriation of our intellectual property.
|
•
|
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 who 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 or 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 or other legal claims; and
|
•
|
adverse tax or accounting impact.
|
|
|
Ciena Corporation
|
||
Date:
|
June 7, 2017
|
By:
|
/s/ Gary B. Smith
|
|
|
|
|
Gary B. Smith
|
|
|
|
|
President, Chief Executive Officer
and Director
(Duly Authorized Officer)
|
|
|
|
|
||
Date:
|
June 7, 2017
|
By:
|
/s/ James E. Moylan, Jr.
|
|
|
|
|
James E. Moylan, Jr.
|
|
|
|
|
Senior Vice President, Finance and
Chief Financial Officer
(Principal Financial Officer)
|
1.
|
SHARES SUBJECT TO THE PLAN
|
(a)
|
A participating employee may, at any time prior to the fifth business day before the last day of the Purchase Period, by written notice to the Company, direct the Company to cease payroll deductions (or, if the payment for shares is being made through periodic cash payments, notify the Company that such payments will be terminated), in accordance with the following alternatives:
|
(i)
|
The employee’s option to purchase shall be reduced to the number of shares which may be purchased, as of the last day of the Purchase Period, with the amount then credited to the employee’s account; or
|
(ii)
|
Withdraw the amount in such employee’s account and terminate such employee’s option to purchase.
|
(b)
|
Any participating employee may decrease his or her payroll deduction or periodic cash payments, to take effect as soon as administratively practicable by delivering to the Company a new form regarding election to participate in the Plan under Section 5 above.
|
(c)
|
Any participating employee may increase his or her payroll deduction or periodic cash payments, to take effect on the first day of the next following Offering Period by delivering to the Company a new form regarding election to participate in the Plan under Section 5 above.
|
(a)
|
The employee’s option to purchase shall be reduced to the number of shares which may be purchased, as of the last day of the Purchase Period, with the amount then credited to the employee’s account; or
|
(b)
|
Withdraw the amount in such employee’s account and terminate such employee’s option to purchase.
|
(a)
|
The employee’s option to purchase shall be reduced to the number of shares that can be purchased with the amount, if any, then credited to the employee’s account plus the aggregate amount, if any, of all payroll deductions to be made thereafter; or
|
(b)
|
Withdraw the amount in the employee’s account and terminate the employee’s option to purchase.
|
(a)
|
The employee’s option to purchase shall be reduced to the number of shares which may be purchased, as of the last day of the Purchase Period, with the amount then credited to the employee’s account; or
|
(b)
|
Withdraw the amount in such employee’s account and terminate such employee’s option to purchase.
|
|
|
|
|
|
|
|
|
||
|
/s/ David M. Rothenstein
|
|
||
|
Secretary of the Company
|
|
||
|
|
|
||
|
|
By:
|
_________________________________
|
|
|
|
(Signature)
|
|
CIENA CORPORATION
AMENDED AND RESTATED 2003 EMPLOYEE STOCK PURCHASE PLAN
For Participants in Poland
|
|
CIENA CORPORATION
ZAMIENIONY PRACOWNICZY PLAN NABYWANIA AKCJI 2003
Dla Uczestników w Polsce
|
CONSENT FOR DEDUCTION
|
|
ZGODA NA POTRACENIE
|
I, the undersigned, in order to participate in the Ciena Corporation Amended and Restated 2003 Employee Stock Purchase Plan (“ESPP”), authorize my employer, i.e., Ciena Limited (Poland Branch), to withhold payroll deductions in the amount of ___% of eligible base salary (“eligible compensation”), or such other percentage as subsequently selected separately by me (in writing) under the ESPP. I understand that this amount must not be more than 10% of my eligible compensation for any Offering Period with the reservation that the deductions are made in accordance with the applicable provisions of Polish labor law.
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Ja nizej podpisany, w celu uczestnictwa w Zmienionym Pracowniczym Planie Nabywania Akcji Ciena Corporation Amended and Restated 2003 Employee Stock Purchase Plan (“ESPP”), upowazniam mojego pracodawce, i.e. Ciena Limited (Poland Branch), do potracenia kwoty w wysokosci ___% z mojego uprawnionego wynagrodzenia zasadniczego ("Uprawnione Wynagrodzenie") lub inny procent pózniej wskazany oddzielnie przeze mnie (na pismie) w ramach Planu. Przyjmuje do wiadomsci, iz ta kwota nie moze byc wieksza niz 10% mojego Uprawnionego Wynagrodzenia w kazdym Okresie Oferty z zastrzezeniem, ze potracenia beda dokonywane zgodnie z obowiazujacymi przepisami polskiego prawa pracy.
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I acknowledge and agree that any past payroll deductions from my eligible compensation, with respect to my participation in the ESPP complied with Polish law and that I authorized all such deductions.
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Niniejszym potwierdzam i zgadzam sie z tym, ze jakiekolwiek przeszle potracenia z mojego Uprawnionego Wynagrodzenia dokonane w zwiazku z moim uczestnictwem w Planie byly zgodne z polskim prawem i ze wyrazilem/am na nie zgode.
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All the terms written in capital letters shall have the meanings given to them in the ESPP.
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Wszystkie terminy pisane wielkimi literami maja znaczenie przypisane im w ramach Planu.
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In case of any discrepancies between the Polish language version of this document and its English language version, the Polish language version shall prevail.
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W przypadku jakichkolwiek rozbieznosci pomiedzy polska a angielska wersja jezykowa niniejszego dokumentu, wersja polska ma charakter wiazacy.
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__________________________ _________________
Employee/Pracownik Date/Data
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/s/ Gary B. Smith
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Gary B. Smith
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President and Chief Executive Officer
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/s/ James E. Moylan Jr.
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James E. Moylan Jr.
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Senior Vice President and Chief Financial Officer
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/s/ Gary B. Smith
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Gary B. Smith
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President and Chief Executive Officer
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June 7, 2017
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/s/ James E. Moylan Jr.
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Senior Vice President and Chief Financial Officer
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June 7, 2017
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