Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Apr. 30, 2016 | Jun. 03, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CIENA CORP | |
Entity Central Index Key | 936,395 | |
Current Fiscal Year End Date | --10-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Apr. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 138,116,410 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2016 | Apr. 30, 2015 | Apr. 30, 2016 | Apr. 30, 2015 | |
Revenue: | ||||
Products | $ 523,978 | $ 511,880 | $ 981,567 | $ 934,195 |
Services | 116,739 | 109,722 | 232,265 | 216,569 |
Total revenue | 640,717 | 621,602 | 1,213,832 | 1,150,764 |
Cost of goods sold: | ||||
Products | 291,778 | 286,898 | 552,260 | 523,446 |
Services | 65,846 | 62,293 | 127,029 | 124,612 |
Total cost of goods sold | 357,624 | 349,191 | 679,289 | 648,058 |
Gross profit | 283,093 | 272,411 | 534,543 | 502,706 |
Operating expenses: | ||||
Research and development | 114,603 | 105,202 | 222,649 | 205,963 |
Selling and marketing | 86,668 | 82,471 | 169,146 | 159,183 |
General and administrative | 35,203 | 30,302 | 66,345 | 59,855 |
Acquisition and integration costs | 2,285 | 1,020 | 3,584 | 1,020 |
Amortization of intangible assets | 15,566 | 11,019 | 32,428 | 22,038 |
Restructuring costs | 535 | (17) | 919 | 8,068 |
Total operating expenses | 254,860 | 229,997 | 495,071 | 456,127 |
Income from operations | 28,233 | 42,414 | 39,472 | 46,579 |
Interest and other income (loss), net | 967 | (5,549) | (7,809) | (13,782) |
Interest expense | (12,608) | (12,947) | (25,318) | (26,608) |
Income before income taxes | 16,592 | 23,918 | 6,345 | 6,189 |
Provision for income taxes | 2,595 | 3,265 | 3,894 | 4,315 |
Net income | $ 13,997 | $ 20,653 | $ 2,451 | $ 1,874 |
Basic net income per common share (in dollars per share) | $ 0.10 | $ 0.18 | $ 0.02 | $ 0.02 |
Diluted net income per potential common share (in dollars per share) | $ 0.10 | $ 0.17 | $ 0.02 | $ 0.02 |
Weighted average basic common shares outstanding (in shares) | 137,950 | 113,555 | 137,313 | 110,578 |
Weighted average diluted common shares outstanding (in shares) | 138,889 | 128,017 | 138,693 | 111,762 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2016 | Apr. 30, 2015 | Apr. 30, 2016 | Apr. 30, 2015 | |
Net income | $ 13,997 | $ 20,653 | $ 2,451 | $ 1,874 |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Change in unrealized gain on available-for-sale securities, net of tax | 234 | (60) | 256 | (24) |
Change in cumulative translation adjustment | 7,516 | 8,837 | 4,693 | (3,411) |
Other comprehensive income (loss) | 12,157 | 12,165 | 6,507 | (7,125) |
Total comprehensive income (loss) | 26,154 | 32,818 | 8,958 | (5,251) |
Foreign Exchange Forward | Cash Flow Hedging | ||||
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Change in unrealized loss on foreign currency forward contracts and forward starting interest rate swaps, net of tax | 3,984 | 3,041 | 1,464 | (1,472) |
Interest Rate Swap | Cash Flow Hedging | Designated as Hedging Instrument | ||||
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Change in unrealized loss on foreign currency forward contracts and forward starting interest rate swaps, net of tax | $ 423 | $ 347 | $ 94 | $ (2,218) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Apr. 30, 2016 | Oct. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 922,033 | $ 790,971 |
Short-term investments | 195,179 | 135,107 |
Accounts receivable, net | 555,056 | 550,792 |
Inventories | 190,861 | 191,162 |
Prepaid expenses and other | 214,920 | 196,178 |
Total current assets | 2,078,049 | 1,864,210 |
Long-term investments | 125,233 | 95,105 |
Equipment, building, furniture and fixtures, net | 248,649 | 191,973 |
Goodwill | 267,681 | 256,434 |
Other intangible assets, net | 184,920 | 202,673 |
Other long-term assets | 77,051 | 84,656 |
Total assets | 2,981,583 | 2,695,051 |
Current liabilities: | ||
Accounts payable | 225,237 | 222,140 |
Accrued liabilities | 283,096 | 316,283 |
Deferred revenue | 116,799 | 126,111 |
Current portion of long-term debt | 5,000 | 2,500 |
Total current liabilities | 630,132 | 667,034 |
Long-term deferred revenue | 70,233 | 62,962 |
Other long-term obligations | 106,817 | 72,540 |
Long-term debt, net | 1,505,389 | 1,271,639 |
Total liabilities | $ 2,312,571 | $ 2,074,175 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock – par value $0.01; 20,000,000 shares authorized; zero shares issued and outstanding | $ 0 | $ 0 |
Common stock – par value $0.01; 290,000,000 shares authorized; 138,008,639 and 135,612,217 shares issued and outstanding | 1,380 | 1,356 |
Additional paid-in capital | 6,679,590 | 6,640,436 |
Accumulated other comprehensive loss | (15,619) | (22,126) |
Accumulated deficit | (5,996,339) | (5,998,790) |
Total stockholders’ equity | 669,012 | 620,876 |
Total liabilities and stockholders’ equity | $ 2,981,583 | $ 2,695,051 |
CONDENSED CONSOLIDATED BALANCE5
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Apr. 30, 2016 | Oct. 31, 2015 |
Stockholders' equity (deficit): | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 290,000,000 | 290,000,000 |
Common stock, shares issued | 138,008,639 | 135,612,217 |
Common stock, shares outstanding | 138,008,639 | 135,612,217 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Apr. 30, 2016 | Apr. 30, 2015 | |
Cash flows provided by operating activities: | ||
Net income | $ 2,451 | $ 1,874 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements | 30,237 | 27,322 |
Share-based compensation costs | 29,210 | 22,136 |
Amortization of intangible assets | 40,488 | 26,439 |
Provision for inventory excess and obsolescence | 20,104 | 10,834 |
Provision for warranty | 9,563 | 7,658 |
Other | 8,578 | 10,266 |
Changes in assets and liabilities: | ||
Accounts receivable | (4,865) | (46,630) |
Inventories | (19,022) | 27,952 |
Prepaid expenses and other | (7,670) | (15,621) |
Accounts payable, accruals and other obligations | (29,400) | (28,982) |
Deferred revenue | (3,992) | 16,694 |
Net cash provided by operating activities | 75,682 | 59,942 |
Cash flows used in investing activities: | ||
Payments for equipment, furniture, fixtures and intellectual property | (53,050) | (21,899) |
Restricted cash | 0 | (44) |
Purchase of available for sale securities | (199,994) | (130,239) |
Proceeds from maturities of available for sale securities | 110,000 | 90,000 |
Settlement of foreign currency forward contracts, net | (4,834) | 10,364 |
Acquisition of business, net of cash acquired | (32,000) | 0 |
Purchase of cost method investment | 0 | (2,000) |
Net cash used in investing activities | (179,878) | (53,818) |
Cash flows provided by (used in) financing activities: | ||
Proceeds from issuance of term loan, net | 248,750 | 0 |
Payment of long term debt | (15,264) | (8,190) |
Payment for debt issuance costs | (3,778) | (247) |
Payment of capital lease obligations | (3,769) | (4,745) |
Proceeds from issuance of common stock | 9,968 | 9,980 |
Net cash provided by (used in) financing activities | 235,907 | (3,202) |
Effect of exchange rate changes on cash and cash equivalents | (649) | (3,304) |
Net increase (decrease) in cash and cash equivalents | 131,062 | (382) |
Cash and cash equivalents at beginning of period | 790,971 | 586,720 |
Cash and cash equivalents at end of period | 922,033 | 586,338 |
Supplemental disclosure of cash flow information | ||
Cash paid during the period for interest | 19,620 | 21,882 |
Cash paid during the period for income taxes, net | 6,991 | 5,811 |
Non-cash investing activities | ||
Purchase of equipment in accounts payable | 11,437 | 11,733 |
Construction in progress subject to build-to-suit lease | 21,606 | 0 |
Conversion of 4.0% convertible senior notes, due March 15, 2015 into 8,898,387 shares of common stock | 0 | 180,645 |
Equipment | ||
Non-cash investing activities | ||
Equipment acquired under capital lease | 3,012 | 0 |
Building | ||
Non-cash investing activities | ||
Equipment acquired under capital lease | $ 8,993 | $ 10,032 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - 4.0% Convertible Senior Notes due March 15, 2015 | 6 Months Ended |
Apr. 30, 2016shares | |
Interest rate on convertible notes | 4.00% |
Stock issued through senior note conversion (in shares) | 8,898,387 |
INTERIM FINANCIAL STATEMENTS
INTERIM FINANCIAL STATEMENTS | 6 Months Ended |
Apr. 30, 2016 | |
Quarterly Financial Data [Abstract] | |
INTERIM FINANCIAL STATEMENTS | INTERIM FINANCIAL STATEMENTS The interim financial statements included herein for Ciena Corporation and its wholly owned subsidiaries (“Ciena”) have been prepared by Ciena, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). In the opinion of management, the financial statements included in this report reflect all normal recurring adjustments that Ciena considers necessary for the fair statement of the results of operations for the interim periods covered and of the financial position of Ciena at the date of the interim balance sheets. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to such rules and regulations. The Condensed Consolidated Balance Sheet as of October 31, 2015 was derived from audited financial statements, but does not include all disclosures required by GAAP. However, Ciena believes that the disclosures are adequate to understand the information presented herein. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. These financial statements should be read in conjunction with Ciena’s audited consolidated financial statements and the notes thereto included in Ciena’s annual report on Form 10-K for the fiscal year ended October 31, 2015 . Ciena has a 52 or 53-week fiscal year , which ends on the Saturday nearest to the last day of October of each year. Fiscal 2015 and 2016 are 52-week fiscal years. For purposes of financial statement presentation, each fiscal year is described as having ended on October 31, and the fiscal quarters are described as having ended on January 31, April 30 and July 31 of each fiscal year. Ciena previously identified prior period errors in the classification of foreign currency differences on changes in operating assets and liabilities for each quarterly period during the nine months ended July 31, 2015. The matters identified had no impact on any of the cash flow statement subtotals in any of the quarters, and were limited to equal and offsetting errors within the subtotal of cash provided by operations. Ciena concluded that the errors were not material to any of its previously issued financial statements. Ciena has revised the affected periods as they are presented in fiscal 2016 on a comparable basis to reflect the correction. The revisions resulted in net reclassifications within the cash flows from operating activities section of the cash flow from "Other" to “Changes in operating assets and liabilities” of $10.4 million for the six-month period ending April 30, 2015. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Apr. 30, 2016 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Business Combinations Ciena records acquisitions using the purchase method of accounting. All of the assets acquired, liabilities assumed, contractual contingencies and contingent consideration are recognized at their fair value as of the acquisition date. The excess of the purchase price over the estimated fair values of the net tangible and net intangible assets acquired is recorded as goodwill. The application of the purchase method of accounting for business combinations requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in order to properly allocate purchase price consideration between assets that are depreciated and amortized from goodwill. These assumptions and estimates include a market participant's use of the asset and the appropriate discount rates for a market participant. Ciena's estimates are based on historical experience, information obtained from the management of the acquired companies and, when appropriate, includes assistance from independent third-party appraisal firms. Significant assumptions and estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost savings expected to be derived from acquiring an asset. These estimates are inherently uncertain and unpredictable. In addition, unanticipated events and circumstances may occur which may affect the accuracy or validity of such estimates. Use of Estimates The preparation of the financial statements and related disclosures in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates are used for selling prices for multiple element arrangements, shared-based compensation, convertible notes payable valuations, bad debts, valuation of inventories and investments, recoverability of intangible assets, other long-lived assets and goodwill, income taxes, warranty obligations, restructuring liabilities, derivatives, incentive compensation, contingencies and litigation. Ciena bases its estimates on historical experience and assumptions that it believes are reasonable. Actual results may differ materially from management’s estimates. Cash and Cash Equivalents Ciena considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Any restricted cash collateralizing letters of credit is included in other current assets and other long-term assets depending upon the duration of the restriction. Investments Ciena's investments are classified as available-for-sale and are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income (loss). Ciena recognizes losses in the income statement when it determines that declines in the fair value of its investments below their cost basis are other-than-temporary. In determining whether a decline in fair value is other-than-temporary, Ciena considers various factors, including market price (when available), investment ratings, the financial condition and near-term prospects of the investee, the length of time and the extent to which the fair value has been less than Ciena's cost basis, and Ciena's intent and ability to hold the investment until maturity or for a period of time sufficient to allow for any anticipated recovery in market value. Ciena considers all marketable debt securities that it expects to convert to cash within one year or less to be short-term investments, with all others considered to be long-term investments. Ciena has a minority equity investment in a privately held technology company that is classified in other long-term assets. This investment is carried at cost because Ciena owns less than 20% of the voting equity and does not have the ability to exercise significant influence over the company. Ciena monitors this investment for impairment and makes appropriate reductions to the carrying value when necessary. As of April 30, 2016 , the carrying value of this investment was $2.0 million . Ciena has not estimated the fair value of this cost method investment because determining the fair value is not practicable. Ciena has not evaluated this investment for impairment as there have not been any events or changes in circumstances that Ciena believes would have had a significant adverse effect on the fair value of this investment. Inventories Inventories are stated at the lower of cost or market, with cost computed using standard cost, which approximates actual cost, on a first-in, first-out basis. Ciena records a provision for excess and obsolete inventory when an impairment has been identified. Segment Reporting Ciena's chief operating decision maker, its chief executive officer, evaluates the company's performance and allocates resources based on multiple factors, including measures of segment profit (loss). Operating segments are defined as components of an enterprise that engage in business activities that may earn revenue and incur expense, for which discrete financial information is available, and for which such information is evaluated regularly by the chief operating decision maker for purposes of allocating resources and assessing performance. As of the first quarter of fiscal 2016, Ciena considers the following to be its operating segments for reporting purposes: (i) Networking Platforms, (ii) Software and Software-Related Services, and (iii) Global Services. See Note 21 below. Goodwill Goodwill is the excess of the purchase price over the fair values assigned to the net assets acquired in a business combination. Ciena tests goodwill for impairment on an annual basis, which it has determined to be the last business day of fiscal September each year. Ciena also tests goodwill for impairment between annual tests if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the reporting unit below its carrying value. The first step in the process of assessing goodwill impairment is to compare the fair value of the reporting unit with the unit’s carrying amount, including goodwill. If this test indicates that the fair value is less than the carrying value, then step two is required to compare the implied fair value of the reporting unit’s goodwill with the carrying amount of the reporting unit’s goodwill. A non-cash goodwill impairment charge would have the effect of decreasing earnings or increasing losses in such period. If Ciena is required to take a substantial impairment charge, its operating results would be materially adversely affected in such period. Long-lived Assets Long-lived assets include: equipment, building, furniture and fixtures; intangible assets; and maintenance spares. Ciena tests long-lived assets for impairment whenever triggering events or changes in circumstances indicate that the asset's carrying amount is not recoverable from its undiscounted cash flows. An impairment loss is measured as the amount by which the carrying amount of the asset or asset group exceeds its fair value. Ciena's long-lived assets are assigned to asset groups that represent the lowest level for which cash flows can be identified. Equipment, Building, Furniture and Fixtures and Internal Use Software Equipment, building, furniture and fixtures are recorded at cost. Depreciation and amortization are computed using the straight-line method over useful lives of two to five years for equipment and furniture and fixtures and the shorter of useful life or lease term for leasehold improvements. During fiscal 2015 and fiscal 2016, Ciena gained access to portions of an office building in Ottawa, Canada pursuant to a lease arrangement accounted for as a capital lease, which is depreciated over the lease term. The leased building is part of Ciena's new campus facility that will replace the "Lab 10" research and development center on the former Nortel Carling campus. See Note 11 below. Ciena establishes assets and liabilities for the estimated construction costs incurred under build-to-suit lease arrangements to the extent that Ciena is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease. See Notes 11 and 14 below. Qualifying internal use software and website development costs incurred during the application development stage, which consist primarily of outside services and purchased software license costs, are capitalized and amortized straight-line over the estimated useful lives of two to five years. Intangible Assets Ciena has recorded finite-lived intangible assets as a result of several acquisitions. Finite-lived intangible assets are carried at cost less accumulated amortization. Amortization is computed using the straight-line method over the expected economic lives of the respective assets, up to seven years, which approximates the use of intangible assets. Ciena has recorded in-process research and development projects acquired as the result of an acquisition as indefinite-lived intangible assets. Upon completion of the projects, the assets will be amortized on a straight-line basis over the expected economic life of the asset, which will be determined on that date. Should the project be determined to be abandoned, the full value of the asset will be charged to expense. Maintenance Spares Maintenance spares are recorded at cost. Spares usage cost is expensed ratably over four years. Concentrations Substantially all of Ciena's cash and cash equivalents are maintained at a small number of major U.S. financial institutions. The majority of Ciena's cash equivalents consist of money market funds. Deposits held with banks may exceed the amount of insurance provided on such deposits. Because these deposits generally may be redeemed upon demand, management believes that they bear minimal risk. Historically, a significant percentage of Ciena's revenue has been concentrated among sales to a small number of large communications service providers. Consolidation among Ciena's customers has increased this concentration. Consequently, Ciena's accounts receivable are concentrated among these customers. See Note 21 below. Additionally, Ciena's access to certain materials or components is dependent upon sole or limited source suppliers. The inability of any of these suppliers to fulfill Ciena's supply requirements, or significant changes in supply cost, could affect future results. Ciena relies on a small number of contract manufacturers to perform the majority of the manufacturing for its products. If Ciena cannot effectively manage these manufacturers or forecast future demand, or if these manufacturers fail to deliver products or components on time, Ciena's business and results of operations may suffer. Revenue Recognition Ciena recognizes revenue when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the price to the buyer is fixed or determinable; and collectibility is reasonably assured. Customer purchase agreements and customer purchase orders are generally used to determine the existence of an arrangement. Shipping documents and evidence of customer acceptance, when applicable, are used to verify delivery or services rendered. Ciena assesses whether the price is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. Ciena assesses collectibility based primarily on the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer's payment history. Revenue for maintenance services is deferred and recognized ratably over the period during which the services are performed. Shipping and handling fees billed to customers are included in revenue, with the associated expenses included in product cost of goods sold. Ciena applies the percentage-of-completion method to long-term arrangements where Ciena is required to undertake significant production, customization or modification engineering, and reasonable and reliable estimates of revenue and cost are available. Utilizing the percentage-of-completion method, Ciena recognizes revenue based on the ratio of actual costs incurred to date to total estimated costs expected to be incurred. In instances that do not meet the percentage-of-completion method criteria, recognition of revenue is deferred until there are no uncertainties regarding customer acceptance. Unbilled percentage-of-completion revenues recognized are included in accounts receivable, net. Billings in excess of revenues recognized on these contracts are recorded within deferred revenue. The percentage of total revenue recognized using the percentage-of-completion method for the six months ended April 30, 2016 and April 30, 2015 was 0.4% and 1.7% , respectively. Software revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectibility is probable. In instances where final acceptance criteria of the software are specified by the customer, revenue is deferred until there are no uncertainties regarding customer acceptance. Ciena limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services, future performance obligations or subject to customer-specified return or refund privileges. Revenue for multiple element arrangements is allocated to each unit of accounting based on the relative selling price of each delivered element, with revenue recognized for each delivered element when the revenue recognition criteria are met. Ciena determines the selling price for each deliverable based upon the selling price hierarchy for multiple-deliverable arrangements. Under this hierarchy, Ciena uses vendor-specific objective evidence ("VSOE") of selling price, if it exists, or third party evidence ("TPE") of selling price if VSOE does not exist. If neither VSOE nor TPE of selling price exists for a deliverable, Ciena uses its best estimate of selling price ("BESP") for that deliverable. For multiple element software arrangements where VSOE of undelivered maintenance does not exist, revenue for the entire arrangement is recognized over the maintenance term. VSOE, when determinable, is established based on Ciena's pricing and discounting practices for the specific product or service when sold separately. In determining whether VSOE exists, Ciena requires that a substantial majority of the selling prices for a product or service fall within a reasonably narrow pricing range. Ciena has been unable to establish TPE of selling price because its go-to-market strategy differs from that of others in its markets, and the extent of customization and differentiated features and functions varies among comparable products or services from its peers. Ciena determines BESP based upon management-approved pricing guidelines, which consider multiple factors including the type of product or service, gross margin objectives, competitive and market conditions, and the go-to-market strategy, all of which can affect pricing practices. Warranty Accruals Ciena provides for the estimated costs to fulfill customer warranty obligations upon recognition of the related revenue. Estimated warranty costs include estimates for material costs, technical support labor costs and associated overhead. Warranty is included in cost of goods sold and is determined based upon actual warranty cost experience, estimates of component failure rates and management's industry experience. Ciena's sales contracts do not permit the right of return of the product by the customer after the product has been accepted. Accounts Receivable, Net Ciena's allowance for doubtful accounts is based on its assessment, on a specific identification basis, of the collectibility of customer accounts. Ciena performs ongoing credit evaluations of its customers and generally has not required collateral or other forms of security from them. In determining the appropriate balance for Ciena's allowance for doubtful accounts, management considers each individual customer account receivable in order to determine collectibility. In doing so, management considers creditworthiness, payment history, account activity and communication with the customer. If a customer's financial condition changes, Ciena may be required to record an allowance for doubtful accounts for that customer, which could negatively affect its results of operations. Research and Development Ciena charges all research and development costs to expense as incurred. Types of expense incurred in research and development include employee compensation, prototype equipment, consulting and third party services, depreciation, facility costs and information technology. Government Grants Ciena accounts for proceeds from government grants as a reduction of operating expense when there is reasonable assurance that Ciena has complied with the conditions attached to the grant and that the grant proceeds will be received. Grant benefits are recorded to the line item in the Condensed Consolidated Statement of Operations to which the grant activity relates. Advertising Costs Ciena expenses all advertising costs as incurred. Legal Costs Ciena expenses legal costs associated with litigation defense as incurred. Share-Based Compensation Expense Ciena measures and recognizes compensation expense for share-based awards based on estimated fair values on the date of grant. Ciena estimates the fair value of each option-based award on the date of grant using the Black-Scholes option-pricing model. This model is affected by Ciena's stock price as well as estimates regarding a number of variables, including expected stock price volatility over the expected term of the award and projected employee stock option exercise behaviors. Ciena estimates the fair value of each restricted stock unit award based on the fair value of the underlying common stock on the date of grant. In each case, Ciena only recognizes expense in its Condensed Consolidated Statement of Operations for those stock options or restricted stock units that are expected ultimately to vest. Ciena recognizes the estimated fair value of performance-based awards, net of estimated forfeitures, as share-based expense over the performance period, using graded vesting, which considers each performance period or tranche separately, based upon Ciena's determination of whether it is probable that the performance targets will be achieved. At the end of each reporting period, Ciena reassesses the probability of achieving the performance targets and the performance period required to meet those targets and the expense is adjusted accordingly. Ciena uses the straight-line method to record expense for share-based awards with only service-based vesting. See Note 20 below. Income Taxes Ciena accounts for income taxes using an asset and liability approach that recognizes deferred tax assets and liabilities for the expected future tax consequences attributable to differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases, and for operating loss and tax credit carryforwards. In estimating future tax consequences, Ciena considers all expected future events other than the enactment of changes in tax laws or rates. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the ordinary course of business, transactions occur for which the ultimate outcome may be uncertain. In addition, tax authorities periodically audit Ciena's income tax returns. These audits examine significant tax filing positions, including the timing and amounts of deductions and the allocation of income tax expenses among tax jurisdictions. Ciena is currently under audit in India for 2010 and 2012 through 2014 and in Canada for 2010 through 2013. Management does not expect the outcome of these audits to have a material adverse effect on Ciena's consolidated financial position, results of operations or cash flows. Ciena's major tax jurisdictions and the earliest open tax years are as follows: United States (2012), United Kingdom (2013), Canada (2010) and India (2010). Limited adjustments can be made to Federal U.S. tax returns in earlier years in order to reduce net operating loss carryforwards. Ciena classifies interest and penalties related to uncertain tax positions as a component of income tax expense. Ciena has not provided for U.S. deferred income taxes on the cumulative unremitted earnings of its non-U.S. affiliates, as it plans to indefinitely reinvest cumulative unremitted foreign earnings outside the U.S., and it is not practicable to determine the unrecognized deferred income taxes. These cumulative unremitted foreign earnings relate to ongoing operations in foreign jurisdictions and are required to fund foreign operations, capital expenditures and future expansion requirements. Ciena recognizes windfall tax benefits associated with the exercise of stock options or release of restricted stock units directly to stockholders' equity only when realized. A windfall tax benefit occurs when the actual tax benefit realized by Ciena upon an employee's disposition of a share-based award exceeds the deferred tax asset, if any, associated with the award that Ciena had recorded. When assessing whether a tax benefit relating to share-based compensation has been realized, Ciena follows the “with-and-without” method. Under the with-and-without method, the windfall is considered realized and recognized for financial statement purposes only when an incremental benefit is provided after considering all other tax benefits including Ciena's net operating losses. The with-and-without method results in the windfall from share-based compensation awards always being effectively the last tax benefit to be considered. Consequently, the windfall attributable to share-based compensation will not be considered realized in instances where Ciena's net operating loss carryover (that is unrelated to windfalls) is sufficient to offset the current year's taxable income before considering the effects of current-year windfalls. Loss Contingencies Ciena is subject to the possibility of various losses arising in the ordinary course of business. These may relate to disputes, litigation and other legal actions. Ciena considers the likelihood of loss or the incurrence of a liability, as well as Ciena's ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Ciena regularly evaluates current information available to it in order to determine whether any accruals should be adjusted and whether new accruals are required. Fair Value of Financial Instruments The carrying value of Ciena's cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates fair market value due to the relatively short period of time to maturity. For information related to the fair value of Ciena's convertible notes and term loans, see Note 17 below. Fair value for the measurement of financial assets and liabilities is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Ciena utilizes a valuation hierarchy for disclosure of the inputs for fair value measurement. This hierarchy prioritizes the inputs into three broad levels as follows: • 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. By distinguishing between inputs that are observable in the marketplace, and therefore more objective, and those that are unobservable, and therefore more subjective, the hierarchy is designed to indicate the relative reliability of the fair value measurements. A financial asset's or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. Restructuring From time to time, Ciena takes actions to better align its workforce, facilities and operating costs with perceived market opportunities, business strategies and changes in market and business conditions. Ciena recognizes a liability for the cost associated with an exit or disposal activity in the period in which the liability is incurred, except for one-time employee termination benefits related to a service period, typically of more than 60 days , which are accrued over the service period. See Note 4 below. Foreign Currency Certain of Ciena's foreign branch offices and subsidiaries use the U.S. dollar as their functional currency because Ciena Corporation, as the U.S. parent entity, exclusively funds the operations of these branch offices and subsidiaries. For those subsidiaries using the local currency as their functional currency, assets and liabilities are translated at exchange rates in effect at the balance sheet date, and the statement of operations is translated at a monthly average rate. Resulting translation adjustments are recorded directly to a separate component of stockholders' equity. Where the monetary assets and liabilities are transacted in a currency other than the entity's functional currency, re-measurement adjustments are recorded in interest and other income (loss), net on the Condensed Consolidated Statement of Operations. See Note 5 below. Derivatives From time to time, Ciena uses foreign currency forward contracts to reduce variability in certain forecasted non-U.S. dollar denominated cash flows. Generally, these derivatives have maturities of 12 months or less. Ciena also has interest rate hedge arrangements to reduce variability in certain forecasted interest expense associated with its term loans. All of these derivatives are designated as cash flow hedges. At the inception of the cash flow hedge, and on an ongoing basis, Ciena assesses whether the derivative has been effective in offsetting changes in cash flows attributable to the hedged risk during the hedging period. The effective portion of the derivative's net gain or loss is initially reported as a component of accumulated other comprehensive income (loss), and, upon occurrence of the forecasted transaction, is subsequently reclassified to the line item in the Condensed Consolidated Statement of Operations to which the hedged transaction relates. Any net gain or loss associated with the ineffectiveness of the hedging instrument is reported in interest and other income (loss), net. To date, no ineffectiveness has occurred. From time to time, Ciena uses foreign currency forward contracts to hedge certain balance sheet exposures. These forward contracts are not designated as hedges for accounting purposes, and any net gain or loss associated with these derivatives is reported in interest and other income (loss), net on the Condensed Consolidated Statement of Operations. Ciena records derivative instruments in the Condensed Consolidated Statements of Cash Flows within operating, investing, or financing activities consistent with the cash flows of the hedged items. See Notes 7 and 15 below. Computation of Net Income (Loss) per Share Ciena calculates basic earnings per share ("EPS") by dividing earnings attributable to common stock by the weighted average number of common shares outstanding for the period. Diluted EPS includes other potential dilutive shares that would be outstanding if securities or other contracts to issue common stock were exercised or converted into common stock. Ciena uses a dual presentation of basic and diluted EPS on the face of its income statement. A reconciliation of the numerator and denominator used for the basic and diluted EPS computations is set forth in Note 19 below. Software Development Costs Ciena develops software for sale to its customers. GAAP requires the capitalization of certain software development costs that are incurred subsequent to the date technological feasibility is established and prior to the date the product is generally available for sale. The capitalized cost is then amortized straight-line over the estimated life of the product. Ciena defines technological feasibility as being attained at the time a working model is completed. To date, the period between Ciena achieving technological feasibility and the general availability of such software has been short, and software development costs qualifying for capitalization have been insignificant. Accordingly, Ciena has not capitalized any software development costs. Newly Issued Accounting Standards - Not Yet Effective In May 2014, Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides guidance for revenue recognition. This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. In August 2015, the FASB issued an amendment to defer the effective date by one year and allow entities to early adopt no earlier than the original effective date. Based on this amendment, the standard will be effective for Ciena beginning in the first quarter of fiscal 2019. Ciena is currently evaluating the impact of the adoption of this ASU on its Consolidated Financial Statements and disclosures. In April 2015, FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs . ASU 2015-03 requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying value of that debt liability, consistent with debt discounts. The guidance is effective retrospectively for fiscal years, and interim periods within those years, and will be effective for Ciena beginning in the first quarter of fiscal 2017. Ciena does not expect that the impact of the adoption of this ASU will be material to its Consolidated Financial Statements or disclosures. In February 2016, FASB issued ASU No. 2016-02, Leases , which requires an entity to recognize assets and liabilities on the balance sheet for the rights and obligations created by leased assets and provide additional disclosures. ASU 2016-02 is effective for Ciena beginning in the first quarter of fiscal 2020. Ciena is currently evaluating the impact of the adoption of this ASU on its Consolidated Financial Statements and disclosures. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting , which provides guidance on several aspects of accounting for share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification on the statement of cash flows. ASU 2016-09 is effective for Ciena beginning in the first quarter of fiscal 2018. Ciena does not expect that the impact of the adoption of this ASU will be material to its Consolidated Financial Statements or disclosures. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 6 Months Ended |
Apr. 30, 2016 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS On February 1, 2016, Ciena, through a Canadian subsidiary, acquired certain high-speed photonics components ("HSPC") assets of TeraXion Inc. ("TeraXion") and its wholly-owned subsidiary for approximately $32 million in cash. The assets purchased include TeraXion’s high-speed indium phosphide and silicon photonics technologies as well as the underlying intellectual property. These technologies support development of Ciena's WaveLogic coherent optical chipsets. This transaction has been accounted for as the acquisition of a business. The following table summarizes the final purchase price allocation related to the acquisition of the HSPC assets based on the estimated fair value of the acquired assets and assumed liabilities (in thousands): Amount Inventory $ 119 Fixed assets 1,381 Developed technology 16,468 In-process technology 3,949 Goodwill 10,083 Total purchase consideration $ 32,000 Developed technology represents purchased technology that had reached technological feasibility and for which TeraXion had substantially completed development as of the date of acquisition. Fair value was determined using future discounted cash flows related to the projected income stream of the developed technology for a discrete projection period. Cash flows were discounted to their present value as of the closing date. Developed technology is amortized on a straight line basis over its estimated useful life of five years. In-process technology represents purchased technology that had not reached technological feasibility as of the date of acquisition. Fair value was determined using future discounted cash flows related to the projected income stream of the in-process technology for a discrete projection period. Cash flows were discounted to their present value as of the closing date. Upon completion of the in-process technology, it will be amortized on a straight line basis over its estimated useful life, which will be determined on that date. The goodwill generated from the acquisition of the HSPC assets was primarily related to expected synergies and has been allocated to the Networking Platforms segment. The goodwill is not deductible for income tax purposes. Pro forma disclosures have not been included due to immateriality. |
RESTRUCTURING COSTS
RESTRUCTURING COSTS | 6 Months Ended |
Apr. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING COSTS | RESTRUCTURING COSTS Ciena has undertaken a number of restructuring activities intended to reduce expense and better align its workforce and costs with market opportunities, product development and business strategies. The following table sets forth the restructuring activity and balance of the restructuring liability accounts for the six months ended April 30, 2016 (in thousands): Workforce reduction Consolidation of excess facilities Total Balance at October 31, 2015 $ 591 $ 688 $ 1,279 Additional liability recorded 929 — 929 Adjustments to previous estimates — (10 ) (10 ) Cash payments (823 ) (203 ) (1,026 ) Balance at April 30, 2016 $ 697 $ 475 $ 1,172 Current restructuring liabilities $ 697 $ 309 $ 1,006 Non-current restructuring liabilities $ — $ 166 $ 166 The following table sets forth the restructuring activity and balance of the restructuring liability accounts for the six months ended April 30, 2015 (in thousands): Workforce reduction Consolidation of excess facilities Total Balance at October 31, 2014 $ 181 $ 1,134 $ 1,315 Additional liability recorded 8,068 (a) — 8,068 Cash payments (7,518 ) (260 ) (7,778 ) Balance at April 30, 2015 $ 731 $ 874 $ 1,605 Current restructuring liabilities $ 731 $ 391 $ 1,122 Non-current restructuring liabilities $ — $ 483 $ 483 (a) During the fiscal quarter ended January 31, 2015, Ciena recorded a charge of $8.1 million of severance and other employee-related costs associated with a global workforce reduction of approximately 125 employees. |
INTEREST AND OTHER INCOME (LOSS
INTEREST AND OTHER INCOME (LOSS), NET | 6 Months Ended |
Apr. 30, 2016 | |
Other Income and Expenses [Abstract] | |
INTEREST AND OTHER INCOME (LOSS), NET | INTEREST AND OTHER INCOME (LOSS), NET The components of interest and other income (loss), net, are as follows (in thousands): Quarter Ended April 30, Six Months Ended April 30, 2016 2015 2016 2015 Interest income $ 982 $ 246 $ 1,668 $ 465 Gain (loss) on non-hedge designated foreign currency forward contracts (10,600 ) 14,351 (15,213 ) 10,002 Foreign currency exchange gain (loss) 10,506 (18,832 ) 6,130 (22,485 ) Other 79 (1,314 ) (394 ) (1,764 ) Interest and other income (loss), net $ 967 $ (5,549 ) $ (7,809 ) $ (13,782 ) Ciena Corporation, as the U.S. parent entity, uses the U.S. dollar as its functional currency; however, some of its foreign branch offices and subsidiaries use the local currency as their functional currency. During the first six months of fiscal 2016 and the first six months of fiscal 2015 , Ciena recorded $6.1 million of foreign currency exchange rate gains and $22.5 million in foreign currency exchange rate losses, respectively, as a result of monetary assets and liabilities that were transacted in a currency other than the entity's functional currency, and the re-measurement adjustments were recorded in interest and other income (loss), net on the Condensed Consolidated Statement of Operations. From time to time, Ciena uses foreign currency forwards to hedge these balance sheet exposures. These forwards are not designated as hedges for accounting purposes and any net gain or loss associated with these derivatives is reported in interest and other income (loss), net on the Condensed Consolidated Statement of Operations. During the first six months of fiscal 2016 and fiscal 2015 , Ciena recorded losses of $15.2 million and gains of $10.0 million , respectively, from non-hedge designated foreign currency forward contracts. |
SHORT-TERM AND LONG-TERM INVEST
SHORT-TERM AND LONG-TERM INVESTMENTS | 6 Months Ended |
Apr. 30, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
SHORT-TERM AND LONG-TERM INVESTMENTS | SHORT-TERM AND LONG-TERM INVESTMENTS As of the dates indicated, investments are comprised of the following (in thousands): April 30, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value U.S. government obligations: Included in short-term investments $ 190,123 $ 87 (28 ) $ 190,182 Included in long-term investments 125,091 157 (15 ) 125,233 $ 315,214 $ 244 $ (43 ) $ 315,415 Commercial paper: Included in short-term investments $ 4,997 — — $ 4,997 $ 4,997 $ — $ — $ 4,997 October 31, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value U.S. government obligations: Included in short-term investments $ 110,108 $ 10 $ — $ 110,118 Included in long-term investments 95,171 — (66 ) 95,105 $ 205,279 $ 10 $ (66 ) $ 205,223 Commercial paper: Included in short-term investments $ 24,989 — — $ 24,989 $ 24,989 $ — $ — $ 24,989 The following table summarizes the final legal maturities of debt investments at April 30, 2016 (in thousands): Amortized Cost Estimated Fair Value Less than one year $ 195,120 $ 195,179 Due in 1-2 years 125,091 125,233 $ 320,211 $ 320,412 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Apr. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS As of the date indicated, the following table summarizes the assets and liabilities that are recorded at fair value on a recurring basis (in thousands): April 30, 2016 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 749,856 $ — $ — $ 749,856 U.S. government obligations — 315,415 — 315,415 Commercial paper — 69,969 — 69,969 Foreign currency forward contracts — 1,173 — 1,173 Total assets measured at fair value $ 749,856 $ 386,557 $ — $ 1,136,413 Liabilities: Foreign currency forward contracts $ — $ 548 $ — $ 548 Forward starting interest rate swap — 5,428 — 5,428 Total liabilities measured at fair value $ — $ 5,976 $ — $ 5,976 October 31, 2015 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 642,073 $ — $ — $ 642,073 U.S. government obligations — 205,223 — 205,223 Commercial paper — 74,983 — 74,983 Foreign currency forward contracts — 89 — 89 Total assets measured at fair value $ 642,073 $ 280,295 $ — $ 922,368 Liabilities: Foreign currency forward contracts $ — $ 512 $ — $ 512 Forward starting interest rate swap — 5,522 — 5,522 Total liabilities measured at fair value $ — $ 6,034 $ — $ 6,034 As of the date indicated, the assets and liabilities above are presented on Ciena’s Condensed Consolidated Balance Sheet as follows (in thousands): April 30, 2016 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 749,856 $ 64,972 $ — $ 814,828 Short-term investments — 195,179 — 195,179 Prepaid expenses and other — 1,173 — 1,173 Long-term investments — 125,233 — 125,233 Total assets measured at fair value $ 749,856 $ 386,557 $ — $ 1,136,413 Liabilities: Accrued liabilities $ — $ 548 $ — $ 548 Other long-term obligations — 5,428 — 5,428 Total liabilities measured at fair value $ — $ 5,976 $ — $ 5,976 October 31, 2015 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 642,073 $ 49,994 $ — $ 692,067 Short-term investments — 135,107 — 135,107 Prepaid expenses and other — 89 — 89 Long-term investments — 95,105 — 95,105 Total assets measured at fair value $ 642,073 $ 280,295 $ — $ 922,368 Liabilities: Accrued liabilities $ — $ 512 $ — $ 512 Other long-term obligations — 5,522 — 5,522 Total liabilities measured at fair value $ — $ 6,034 $ — $ 6,034 Ciena did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 6 Months Ended |
Apr. 30, 2016 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | ACCOUNTS RECEIVABLE As of April 30, 2016 and October 31, 2015 , one customer accounted for 11.2% and 10.4% of Ciena's net accounts receivable, respectively. Ciena has not historically experienced a significant amount of bad debt expense. Allowance for doubtful accounts was $3.4 million and $3.0 million as of April 30, 2016 and October 31, 2015 , respectively. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Apr. 30, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES As of the dates indicated, inventories are comprised of the following (in thousands): April 30, October 31, Raw materials $ 50,612 $ 53,082 Work-in-process 12,910 9,120 Finished goods 120,356 125,966 Deferred cost of goods sold 70,403 55,995 254,281 244,163 Provision for excess and obsolescence (63,420 ) (53,001 ) $ 190,861 $ 191,162 Ciena writes down its inventory for estimated obsolescence or unmarketable inventory by an amount equal to the difference between the cost of inventory and the estimated net realizable value based on assumptions about future demand and market conditions. During the first six months of fiscal 2016 , Ciena recorded a provision for excess and obsolescence of $20.1 million , primarily related to a decrease in the forecasted demand for certain Converged Packet Optical and Optical Transport products. Deductions from the provision for excess and obsolete inventory relate primarily to disposal activities. |
PREPAID EXPENSES AND OTHER
PREPAID EXPENSES AND OTHER | 6 Months Ended |
Apr. 30, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER | PREPAID EXPENSES AND OTHER As of the dates indicated, prepaid expenses and other are comprised of the following (in thousands): April 30, October 31, Prepaid VAT and other taxes $ 85,479 $ 74,754 Product demonstration equipment, net 49,626 41,611 Deferred deployment expense 23,834 26,193 Prepaid expenses 25,749 25,074 Financing receivable 20,016 19,869 Other non-trade receivables 9,043 8,588 Derivative assets 1,173 89 $ 214,920 $ 196,178 Depreciation of product demonstration equipment was $5.2 million and $4.8 million for the first six months of fiscal 2016 and 2015 , respectively. |
EQUIPMENT, BUILDING, FURNITURE
EQUIPMENT, BUILDING, FURNITURE AND FIXTURES | 6 Months Ended |
Apr. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
EQUIPMENT, BUILDING, FURNITURE AND FIXTURES | EQUIPMENT, BUILDING, FURNITURE AND FIXTURES As of the dates indicated, equipment, building, furniture and fixtures are comprised of the following (in thousands): April 30, October 31, Equipment, furniture and fixtures $ 428,985 $ 404,935 Building subject to capital lease 24,042 13,459 Construction in progress subject to build-to-suit lease 42,337 18,663 Leasehold improvements 58,963 49,196 554,327 486,253 Accumulated depreciation and amortization (305,678 ) (294,280 ) $ 248,649 $ 191,973 During fiscal 2014, Ciena entered into a lease agreement to lease an office building located in Ottawa, Canada. During fiscal 2015 and fiscal 2016, Ciena gained access to portions of the building and recorded the corresponding capital lease asset and liability. Ciena capitalizes construction in progress and records a corresponding long-term liability for build-to-suit lease agreements where Ciena is considered the owner, for accounting purposes, during the construction period. On April 15, 2015, Ciena entered into a build-to-suit lease arrangement pursuant to which the landlord will construct, and Ciena will subsequently lease, two new office buildings at its new Ottawa, Canada campus. The landlord will construct the buildings and contribute up to a maximum of CAD $290.00 per rentable square foot in total construction costs plus certain allowances for tenant improvements, and Ciena will be responsible for any additional construction costs. As of April 30, 2016 , there were $42.3 million in costs incurred under this build-to-suit lease arrangement. Upon occupancy of the facilities, Ciena expects this arrangement to qualify as a capital lease. As a result, the facilities will be depreciated over the shorter of their useful life or the lease term. The total of depreciation of equipment, furniture and fixtures, and amortization of leasehold improvements, was $24.8 million and $22.5 million for the first six months of fiscal 2016 and 2015 , respectively. |
OTHER INTANGIBLE ASSETS
OTHER INTANGIBLE ASSETS | 6 Months Ended |
Apr. 30, 2016 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
OTHER INTANGIBLE ASSETS | OTHER INTANGIBLE ASSETS As of the dates indicated, other intangible assets are comprised of the following (in thousands): April 30, 2016 October 31, 2015 Gross Intangible Accumulated Amortization Net Intangible Gross Intangible Accumulated Amortization Net Intangible Developed technology $ 348,584 $ (226,517 ) $ 122,067 $ 506,647 $ (382,130 ) $ 124,517 In-process research and development 4,405 — 4,405 — — — Patents and licenses 6,565 (6,182 ) 383 46,538 (46,072 ) 466 Customer relationships, covenants not to compete, outstanding purchase orders and contracts 358,648 (300,583 ) 58,065 388,621 (310,931 ) 77,690 Total other intangible assets $ 718,202 $ (533,282 ) $ 184,920 $ 941,806 $ (739,133 ) $ 202,673 In the second quarter of fiscal 2016, certain fully amortized intangible assets of approximately $246.4 million have been eliminated from gross intangible assets and accumulated amortization during the period, with no corresponding impact to the income statement. These assets were primarily technology for products no longer being sold by Ciena. The aggregate amortization expense of intangible assets was $40.5 million and $26.4 million for the first six months of fiscal 2016 and 2015 , respectively. Expected future amortization of intangible assets for the fiscal years indicated is as follows (in thousands): Period ended October 31, 2016 (remaining six months) $ 37,853 2017 45,447 2018 22,766 2019 22,219 2020 21,192 Thereafter 31,038 $ 180,515 (1) (1) Does not include amortization of in-process research and development, as estimation of the timing of future amortization expense would be impractical. |
GOODWILL
GOODWILL | 6 Months Ended |
Apr. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL | GOODWILL Ciena's goodwill was generated from the acquisition of Cyan, Inc. ("Cyan") during fiscal 2015 and the acquisition of the HSPC assets of TeraXion during the second quarter of fiscal 2016, and is primarily related to expected synergies. The following table presents the goodwill allocated to Ciena's reportable segments as of the dates indicated (in thousands): Balance at October 31, 2015 Acquisitions Impairments Translation (1) Balance at April 30, 2016 Software and Software-Related Services $ 201,428 $ — $ — $ — $ 201,428 Networking Platforms 55,006 10,083 — 1,164 66,253 Total $ 256,434 $ 10,083 $ — $ 1,164 $ 267,681 (1) Represents translation on goodwill related to the acquisition of the HSPC assets by Ciena's Canadian subsidiary. |
OTHER BALANCE SHEET DETAILS
OTHER BALANCE SHEET DETAILS | 6 Months Ended |
Apr. 30, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |
OTHER BALANCE SHEET DETAILS | OTHER BALANCE SHEET DETAILS As of the dates indicated, other long-term assets are comprised of the following (in thousands): April 30, October 31, Maintenance spares, net $ 54,441 $ 55,259 Deferred debt issuance costs, net 12,608 10,820 Financing receivable — 10,107 Other 10,002 8,470 $ 77,051 $ 84,656 Deferred debt issuance costs relate to Ciena's convertible notes payable (described in Note 17 below), term loans (described in Note 17 below) and ABL Credit Facility (described in Note 18 below). Deferred debt issuance costs are amortized using the straight-line method, which approximates the effect of the effective interest rate method, through the maturity of the related debt. The amortization of deferred debt issuance costs is included in interest expense, and was $2.1 million and $2.5 million during the first six months of fiscal 2016 and 2015 , respectively. As of the dates indicated, accrued liabilities and other short-term obligations are comprised of the following (in thousands): April 30, October 31, Compensation, payroll related tax and benefits $ 75,444 $ 109,466 Warranty 56,021 56,654 Vacation 38,285 34,189 Capital lease obligations 3,135 4,923 Interest payable 5,265 5,389 Other 104,946 105,662 $ 283,096 $ 316,283 The following table summarizes the activity in Ciena’s accrued warranty for the fiscal periods indicated (in thousands): Six months ended Beginning Ending April 30, Balance Provisions Settlements Balance 2015 $ 55,997 7,658 (9,696 ) $ 53,959 2016 $ 56,654 9,563 (10,196 ) $ 56,021 As of the dates indicated, deferred revenue is comprised of the following (in thousands): April 30, October 31, Products $ 49,191 $ 66,527 Services 137,841 122,546 187,032 189,073 Less current portion (116,799 ) (126,111 ) Long-term deferred revenue $ 70,233 $ 62,962 As of the dates indicated, other long-term obligations are comprised of the following (in thousands): April 30, October 31, Construction liability $ 42,337 $ 18,663 Capital lease obligations 25,070 13,794 Income tax liability 12,244 13,308 Deferred tenant allowance 9,553 9,807 Straight-line rent 6,749 6,237 Forward starting interest rate swap 5,428 5,522 Other 5,436 5,209 $ 106,817 $ 72,540 Ciena capitalizes construction in progress and records a corresponding long-term liability for build-to-suit lease agreements where Ciena is considered the owner during the construction period for accounting purposes. The following is a schedule by fiscal year of future minimum lease payments under capital leases and the present value of minimum lease payments as of April 30, 2016 (in thousands): Period ended October 31, 2016 (remaining six months) $ 3,196 2017 3,446 2018 3,108 2019 2,896 2020 2,550 Thereafter 32,002 Net minimum capital lease payments 47,198 Less: Amount representing interest (18,993 ) Present value of minimum lease payments 28,205 Less: Current portion of present value of minimum lease payments (3,135 ) Long-term portion of present value of minimum lease payments $ 25,070 |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 6 Months Ended |
Apr. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS Foreign Currency Derivatives As of April 30, 2016 and October 31, 2015 , Ciena had forward contracts in place to reduce the variability in its Canadian Dollar and Indian Rupee denominated expense, which principally related to its research and development activities. The notional amount of these contracts was approximately $32.4 million and $68.1 million as of April 30, 2016 and October 31, 2015 , respectively. These foreign exchange contracts have maturities of 12 months or less and have been designated as cash flow hedges. During the first six months of fiscal 2016 and fiscal 2015 , in order to hedge certain balance sheet exposures, Ciena entered into forward contracts to mitigate risk due to volatility in the Brazilian Real, Canadian Dollar and Mexican Peso. The notional amount of these contracts was approximately $112.5 million and $146.5 million as of April 30, 2016 and October 31, 2015 , respectively. These foreign exchange contracts have maturities of 12 months or less and have not been designated as hedges for accounting purposes. Interest Rate Derivatives During fiscal 2014 , Ciena entered into floating interest rate to fixed interest rate swap arrangements ("interest rate swaps") that fix the interest rate under the 2019 Term Loan (as defined in Note 17) at 5.004% for the period commencing on July 20, 2015 through July 19, 2018. The total notional amount of these derivatives as of April 30, 2016 and October 31, 2015 was $245.6 million and $246.9 million , respectively. In May 2016, Ciena entered into interest rate swaps that fix the total interest rate under the 2021 Term Loan (as defined in Note 17) at 4.62% to 4.87% , depending on the applicable margin, for the period commencing on June 20, 2016 through June 22, 2020. Ciena expects the variable rate payments to be received under the terms of the interest rate swaps to exactly offset the forecasted variable rate payments on the equivalent notional amounts of the 2019 Term Loan and 2021 Term Loan. These derivative contracts have been designated as cash flow hedges. Other information regarding Ciena's derivatives is immaterial for separate financial statement presentation. See Note 5 and Note 7 above. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | 6 Months Ended |
Apr. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | ACCUMULATED OTHER COMPREHENSIVE INCOME The following table summarizes the changes in accumulated balances of other comprehensive income ("AOCI") for the six months ending April 30, 2016 : 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 ) The following table summarizes the changes in AOCI for the six months ending April 30, 2015 : Unrealized Unrealized Unrealized Cumulative Gain/(Loss) on Gain/(Loss) on Gain/(Loss) on Forward Foreign Currency Marketable Securities Foreign Currency Contracts Starting Interest Rate Swap Translation Adjustment Total Balance at October 31, 2014 $ 71 $ (173 ) (2,083 ) $ (12,483 ) $ (14,668 ) Other comprehensive income (loss) before reclassifications (24 ) (4,233 ) (2,218 ) (3,411 ) (9,886 ) Amounts reclassified from AOCI — 2,761 — — 2,761 Balance at April 30, 2015 $ 47 $ (1,645 ) $ (4,301 ) $ (15,894 ) $ (21,793 ) All amounts reclassified from AOCI related to settlement (gains) losses on foreign currency forward contracts designated as cash flow hedges impacted research and development on the Condensed Consolidated Statements of Operations. All amounts reclassified from accumulated other comprehensive income related to settlement (gains) losses on forward starting interest swaps designated as cash flow hedges impacted interest and other income (loss), net on the Condensed Consolidated Statements of Operations. |
SHORT-TERM AND LONG-TERM DEBT
SHORT-TERM AND LONG-TERM DEBT | 6 Months Ended |
Apr. 30, 2016 | |
Debt Disclosure [Abstract] | |
SHORT-TERM AND LONG-TERM DEBT | SHORT-TERM AND LONG-TERM DEBT Term Loan due 2021 On April 25, 2016, Ciena entered into an Incremental Joinder and Amendment Agreement (the “Incremental Term Loan Credit Agreement”) that amends the Credit Agreement (the "Term Loan Credit Agreement"), dated July 15, 2014. The Incremental Term Loan Credit Agreement provides for a new tranche of senior secured term loans under the Term Loan Credit Agreement in an aggregate principal amount of $250 million (the “2021 Term Loan”). The proceeds of approximately $246.1 million , net of fees and expenses, will initially supplement cash on the balance sheet and are expected to provide additional liquidity to contribute, in part, to the repayment of the outstanding principal amount owing under Ciena’s 0.875% senior convertible notes due June 15, 2017. The 2021 Term Loan will, among other things: • mature on April 25, 2021; • amortize in equal quarterly installments in aggregate amounts of $0.6 million (equal to 0.25% of the original principal amount), with the balance payable at maturity; • be subject to mandatory prepayment on the same basis as Ciena’s existing 2019 Term Loan under the Term Loan Credit Agreement; • bear interest, at Ciena’s election, at a per annum rate equal to (a) LIBOR (subject to a floor of 0.75% ) plus a margin ranging from 3.25% to 3.50%, or (b) a base rate (subject to a floor of 1.75% ) plus a margin ranging from 2.25% to 2.50%, in each case, with the actual margin determined according to Ciena’s total net leverage ratio; • be repayable at any time at Ciena's election, provided that repayment of the 2021 Term Loan with proceeds of certain indebtedness prior to October 25, 2016 shall require a prepayment premium of 1% of the aggregate principal amount of such prepayment; and • except as described above or otherwise set forth in the Incremental Term Loan Credit Agreement, have identical terms as the existing 2019 Term Loan under the Term Loan Credit Agreement. Except as amended by the Incremental Term Loan Credit Agreement, the remaining terms of the Term Loan Credit Agreement remain in full force and effect. The principal balance, unamortized discount and net carrying amount of the 2021 Term Loan were as follows as of April 30, 2016 (in thousands): Principal Balance Unamortized Discount Net Carrying Amount Term Loan Payable due April 25, 2021 $ 250,000 $ 1,247 $ 248,753 The following table sets forth the carrying value and the estimated fair value of the 2021 Term Loan (in thousands): April 30, 2016 Carrying Value Fair Value (2) Term Loan Payable due April 25, 2021 (1) $ 248,753 $ 250,938 (1) Includes unamortized bond discount. (2) The 2021 Term Loan is categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its 2021 Term Loan using a market approach based upon observable inputs, such as current market transactions involving comparable securities. Term Loan due 2019 On July 15, 2014, Ciena entered into the Term Loan Credit Agreement providing for senior secured term loans in an aggregate principal amount of $250 million (the “2019 Term Loan”) with a maturity date of July 15, 2019. The 2019 Term Loan requires Ciena to make installment payments of approximately $0.6 million on a quarterly basis. The principal balance, unamortized discount and net carrying amount of the 2019 Term Loan were as follows as of April 30, 2016 (in thousands): Principal Balance Unamortized Discount Net Carrying Amount Term Loan Payable due July 15, 2019 $ 245,625 $ 929 $ 244,696 The following table sets forth the carrying value and the estimated fair value of the 2019 Term Loan (in thousands): April 30, 2016 Carrying Value Fair Value (2) Term Loan Payable due July 15, 2019 (1) $ 244,696 $ 245,011 (1) Includes unamortized bond discount. (2) The 2019 Term Loan is categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its 2019 Term Loan using a market approach based upon observable inputs, such as current market transactions involving comparable securities. Outstanding Convertible Notes Payable During the first quarter of fiscal 2016, Ciena entered into certain private transactions to repurchase $14.1 million of the outstanding principal amount of its 0.875% Convertible Senior Notes due June 15, 2017, for a cash purchase price slightly below par. The principal balance, unamortized discount and net carrying amount of the liability and equity components of Ciena's 4.0% Convertible Senior Notes due December 15, 2020 are as follows as of April 30, 2016 : Liability Component Equity Component Principal Balance Unamortized Discount Net Carrying Amount Net Carrying Amount 4.0% Convertible Senior Notes due December 15, 2020 $ 199,400 $ 12,446 $ 186,954 $ 43,131 The following table sets forth, in thousands, the carrying value and the estimated fair value of Ciena’s outstanding issues of convertible notes: April 30, 2016 Carrying Value Fair Value (1) 0.875% Convertible Senior Notes due June 15, 2017 $ 479,985 $ 471,585 3.75% Convertible Senior Notes due October 15, 2018 350,000 395,063 4.0% Convertible Senior Notes due December 15, 2020 (2) 186,954 224,766 $ 1,016,939 $ 1,091,414 (1) The convertible notes are categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its outstanding convertible notes using a market approach based upon observable inputs, such as current market transactions involving comparable securities. (2) Includes unamortized discount and accretion of principal. |
ABL CREDIT FACILITY
ABL CREDIT FACILITY | 6 Months Ended |
Apr. 30, 2016 | |
Debt Disclosure [Abstract] | |
ABL CREDIT FACILITY | ABL CREDIT FACILITY Ciena Corporation and certain of its subsidiaries are parties to a senior secured asset-based revolving credit facility (the “ABL Credit Facility”). Ciena principally uses the ABL Credit Facility to support the issuance of letters of credit that arise in the ordinary course of its business and thereby to reduce its use of cash required to collateralize these instruments. On January 8, 2016, Ciena amended the ABL Credit Facility to, among other things: • increase the total commitment from $200 million to $250 million , of which $200 million is available for issuances of letters of credit; • extend the maturity date from December 31, 2016 to December 31, 2020, provided an earlier maturity date would apply in the event that Ciena and its subsidiaries are unable to satisfy a minimum liquidity test 90 days prior to the maturity date of any debt equal to $100 million or greater; • reduce the minimum aggregate amount of unrestricted cash and cash equivalents that Ciena and its domestic subsidiaries are required to maintain at all times from $150 million to $100 million ; and • reduce the interest rate by 0.25% on borrowings to either (a) LIBOR plus a margin ranging from 1.25% to 1.75% (instead of the previous 1.50% to 2.0%) or (b) a base rate plus a margin ranging from 0.25% to 0.75% (instead of the previous 0.50% to 1.0%), in each case with the actual margin determined according to the Ciena’s utilization of the facility. As of April 30, 2016 , letters of credit totaling $66.7 million were collateralized by the ABL Credit Facility. There were no borrowings outstanding under the ABL Credit Facility as of April 30, 2016 . |
EARNINGS (LOSS) PER SHARE CALCU
EARNINGS (LOSS) PER SHARE CALCULATION | 6 Months Ended |
Apr. 30, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS (LOSS) PER SHARE CALCULATION | EARNINGS (LOSS) PER SHARE CALCULATION The following table (in thousands except per share amounts) is a reconciliation of the numerator and denominator of the basic net income per common share (“Basic EPS”) and the diluted net income per potential common share (“Diluted EPS”). Basic EPS is computed using the weighted average number of common shares outstanding. Diluted EPS is computed using the weighted average number of the following, in each case, to the extent the effect is not anti-dilutive: (i) common shares outstanding, (ii) shares issuable upon vesting of restricted stock units, (iii) shares issuable under Ciena’s employee stock purchase plan and upon exercise of outstanding stock options, using the treasury stock method, and (iv) shares underlying Ciena’s outstanding convertible notes. Quarter Ended April 30, Six Months Ended April 30, Numerator 2016 2015 2016 2015 Net income $ 13,997 $ 20,653 $ 2,451 $ 1,874 Add: Interest expense associated with 0.875% Convertible Senior Notes due 2017 — 1,387 — — Net income used to calculate Diluted EPS $ 13,997 $ 22,040 $ 2,451 $ 1,874 Quarter Ended April 30, Six Months Ended April 30, Denominator 2016 2015 2016 2015 Basic weighted average shares outstanding 137,950 113,555 137,313 110,578 Add: Shares underlying outstanding stock options and restricted stock units and issuable under employee stock purchase plan 939 1,354 1,380 1,184 Add: Shares underlying 0.875% Convertible Senior Notes due 2017 — 13,108 — — Dilutive weighted average shares outstanding 138,889 128,017 138,693 111,762 Quarter Ended April 30, Six Months Ended April 30, EPS 2016 2015 2016 2015 Basic EPS $ 0.10 $ 0.18 $ 0.02 $ 0.02 Diluted EPS $ 0.10 $ 0.17 $ 0.02 $ 0.02 The following table summarizes the weighted average shares excluded from the calculation of the denominator for Diluted EPS due to their anti-dilutive effect for the periods indicated (in thousands): Quarter Ended April 30, Six Months Ended April 30, 2016 2015 2016 2015 Shares underlying stock options and restricted stock units 2,439 961 2,092 1,923 4.0% Convertible Senior Notes due March 15, 2015 — 4,346 — 6,772 0.875% Convertible Senior Notes due June 15, 2017 12,583 — 12,748 13,108 3.75% Convertible Senior Notes due October 15, 2018 17,356 17,356 17,356 17,356 4.0% Convertible Senior Notes due December 15, 2020 9,198 9,198 9,198 9,198 Total shares excluded due to anti-dilutive effect 41,576 31,861 41,394 48,357 |
SHARE-BASED COMPENSATION EXPENS
SHARE-BASED COMPENSATION EXPENSE | 6 Months Ended |
Apr. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION EXPENSE | SHARE-BASED COMPENSATION EXPENSE Ciena has outstanding equity awards issued under its 2008 Omnibus Incentive Plan, as well as certain legacy equity plans and equity plans assumed as a result of previous acquisitions. In connection with its acquisition of Cyan during the fourth quarter of fiscal 2015, Ciena assumed the Cyan, Inc. 2006 Stock Plan and Cyan, Inc. 2013 Equity Incentive Plan and exchanged Cyan stock options and unvested restricted stock unit awards outstanding thereunder at closing for options to acquire approximately 2.4 million shares of Ciena common stock and 1.0 million Ciena restricted stock units. Ciena grants equity awards under its 2008 Omnibus Incentive Plan (the "2008 Plan") and makes shares of its common stock available for purchase under its Amended and Restated Employee Stock Purchase Plan (the “ESPP”). These plans were approved by stockholders and are described below. 2008 Plan The 2008 Plan authorizes the issuance of awards including stock options, restricted stock units (RSUs), restricted stock, unrestricted stock, stock appreciation rights (SARs) and other equity and/or cash performance incentive awards to employees, directors and consultants of Ciena. Subject to certain restrictions, the Compensation Committee of the Board of Directors has broad discretion to establish the terms and conditions for awards under the 2008 Plan, including the number of shares, vesting conditions, and the required service or performance criteria. Options and SARs have a maximum term of ten years, and their exercise price may not be less than 100% of fair market value on the date of grant. Repricing of stock options and SARs is prohibited without stockholder approval. Certain change in control transactions may cause awards granted under the 2008 Plan to vest, unless the awards are continued or substituted for in connection with the transaction. The total number of shares authorized for issuance under the 2008 Plan is 25.1 million shares. As of April 30, 2016 , approximately 3.9 million shares remained available for issuance under the 2008 Plan. Stock Options Outstanding stock option awards to employees are generally subject to service-based vesting conditions and vest incrementally over a four -year period. The following table is a summary of Ciena’s stock option activity for the period indicated (shares in thousands): Shares Underlying Options Outstanding Weighted Average Exercise Price Balance at October 31, 2015 2,293 $ 24.45 Exercised (234 ) 9.73 Canceled (276 ) 39.06 Balance at April 30, 2016 1,783 $ 24.13 The total intrinsic value of options exercised during the first six months of fiscal 2016 and fiscal 2015 was $2.5 million and $0.8 million , respectively. Ciena did not grant any stock options during the first six months of fiscal 2016 or fiscal 2015 . The following table summarizes information with respect to stock options outstanding at April 30, 2016 , based on Ciena’s closing stock price on the last trading day of Ciena’s second fiscal quarter of 2016 (shares and intrinsic value in thousands): Options Outstanding at Vested Options at April 30, 2016 April 30, 2016 Number Weighted Average Remaining Weighted Number Weighted Average Remaining Weighted Range of of Contractual Average Aggregate of Contractual Average Aggregate Exercise Underlying Life Exercise Intrinsic Underlying Life Exercise Intrinsic Price Shares (Years) Price Value Shares (Years) Price Value $ 0.05 — $ 11.16 297 2.95 $ 6.88 $ 2,958 295 2.91 $ 6.86 $ 2,947 $ 11.34 — $ 17.24 483 5.54 13.49 1,615 438 5.39 13.38 1,514 $ 17.50 — $ 30.52 410 1.72 26.60 — 386 1.32 27.08 — $ 31.93 — $ 37.10 339 2.93 35.14 — 321 2.72 35.12 — $ 37.82 — $ 55.63 254 5.31 45.82 — 204 4.87 45.84 — $ 0.05 — $ 55.63 1,783 3.70 $ 24.13 $ 4,573 1,644 3.40 $ 23.70 $ 4,461 Assumptions for Option-Based Awards Ciena recognizes the fair value of service-based options as share-based compensation expense on a straight-line basis over the requisite service period. Restricted Stock Units A restricted stock unit is a stock award that entitles the holder to receive shares of Ciena common stock as the unit vests. Ciena's outstanding restricted stock unit awards are subject to service-based vesting conditions and/or performance-based vesting conditions. Awards subject to service-based conditions typically vest in increments over a three or four -year period. However, the 2008 Plan permits the Company to grant service-based stock awards with shorter vesting periods to certain recipients, including non-employee directors and Ciena's Executive Chairman. Awards with performance-based vesting conditions require the achievement of certain operational, financial or other performance criteria or targets as a condition of vesting, or the acceleration of vesting, of such awards. Ciena recognizes the estimated fair value of performance-based awards, net of estimated forfeitures, as share-based compensation expense over the performance period, using graded vesting, which considers each performance period or tranche separately, based upon Ciena's determination of whether it is probable that the performance targets will be achieved. At the end of each reporting period, Ciena reassesses the probability of achieving the performance targets and the performance period required to meet those targets. The following table is a summary of Ciena's restricted stock unit activity for the period indicated, with the aggregate fair value of the balance outstanding at the end of each period, based on Ciena's closing stock price on the last trading day of the relevant period (shares and aggregate fair value in thousands): Restricted Stock Units Outstanding Weighted Average Grant Date Fair Value Per Share Aggregate Fair Value Balance at October 31, 2015 4,886 $ 20.02 $ 117,951 Granted 2,055 Vested (1,686 ) Canceled or forfeited (253 ) Balance at April 30, 2016 5,002 $ 19.91 $ 84,182 The total fair value of restricted stock units that vested and were converted into common stock during the first six months of fiscal 2016 and fiscal 2015 was $33.0 million and $23.0 million , respectively. The weighted average fair value of each restricted stock unit granted by Ciena during the first six months of fiscal 2016 and fiscal 2015 was $19.73 and $18.68 respectively. Assumptions for Restricted Stock Unit Awards The fair value of each restricted stock unit award is based on the closing price on the date of grant. Share-based expense for service-based restricted stock unit awards is recognized, net of estimated forfeitures, ratably over the vesting period on a straight-line basis. Share-based expense for performance-based restricted stock unit awards, net of estimated forfeitures, is recognized ratably over the performance period based upon Ciena's determination of whether it is probable that the performance targets will be achieved. At the end of each reporting period, Ciena reassesses the probability of achieving the performance targets and the performance period required to meet those targets. The estimation of whether the performance targets will be achieved involves judgment, and the estimate of expense is revised periodically based on the probability of achieving the performance targets. Revisions are reflected in the period in which the estimate is changed. If any performance goals are not met, no compensation cost is ultimately recognized against that goal and, to the extent previously recognized, compensation expense is reversed. Because share-based compensation expense is recognized only for those awards that are ultimately expected to vest, the amount of share-based compensation expense recognized reflects a reduction for estimated forfeitures. Ciena estimates forfeitures at the time of grant and revises those estimates in subsequent periods based upon new or changed information. Amended and Restated Employee Stock Purchase Plan (ESPP) Under the ESPP, eligible employees may enroll in a twelve -month offer period that begins in December and June of each year. Each offer period includes two six -month purchase periods. Employees may purchase a limited number of shares of Ciena common stock at 85% of the fair market value on either the day immediately preceding the offer date or the purchase date, whichever is lower. The ESPP is considered compensatory for purposes of share-based compensation expense. Pursuant to the ESPP's “evergreen” provision, on December 31 of each year, the number of shares available under the ESPP increases by up to approximately 0.6 million shares, provided that the total number of shares available at that time shall not exceed 8.2 million shares. Unless earlier terminated, the ESPP will terminate on January 24, 2023. During the first six months of fiscal 2016 , Ciena issued 0.5 million shares under the ESPP. At April 30, 2016 , 6.5 million shares remained available for issuance under the ESPP. Share-Based Compensation Expense for Periods Reported The following table summarizes share-based compensation expense for the periods indicated (in thousands): Quarter Ended April 30, Six Months Ended April 30, 2016 2015 2016 2015 Product costs $ 629 $ 653 $ 1,200 $ 1,140 Service costs 693 574 1,285 1,093 Share-based compensation expense included in cost of sales 1,322 1,227 2,485 2,233 Research and development 3,791 2,534 7,219 4,701 Sales and marketing 3,923 3,841 8,658 7,500 General and administrative 4,968 3,723 10,097 7,642 Acquisition and integration costs 697 — 714 — Share-based compensation expense included in operating expense 13,379 10,098 26,688 19,843 Share-based compensation expense capitalized in inventory, net 32 4 37 60 Total share-based compensation $ 14,733 $ 11,329 $ 29,210 $ 22,136 As of April 30, 2016 , total unrecognized share-based compensation expense related was approximately $85.1 million : (i) $1.2 million , which relates to unvested stock options and is expected to be recognized over a weighted-average period of 1.4 years, and (ii) $83.9 million which relates to unvested restricted stock units and is expected to be recognized over a weighted-average period of 1.5 years . |
SEGMENTS AND ENTITY WIDE DISCLO
SEGMENTS AND ENTITY WIDE DISCLOSURES | 6 Months Ended |
Apr. 30, 2016 | |
Segment Reporting [Abstract] | |
SEGMENTS AND ENTITY WIDE DISCLOSURES | SEGMENTS AND ENTITY WIDE DISCLOSURES Segment Reporting During the first quarter of fiscal 2016, in connection with the creation of a new Chief Operating Officer organization, Ciena reorganized its internal organizational structure, the management of its business, and the reporting of its operating segments. This resulted in three new operating segments: Networking Platforms, Software and Software-Related Services, and Global Services. Ciena’s previous Converged Packet-Optical, Packet Networking and Optical Transport segments were realigned to form the Networking Platforms segment under a single operating segment manager. Ciena's previous Software and Services operating segment was reorganized into two separate operating segments: (i) Software and Software-Related Services, and (ii) Global Services. Ciena's segment revenue and segment profit for fiscal 2015 have been restated to reflect the new operating segments adopted in fiscal 2016. The following describes each of the newly reorganized operating segments: • Networking Platforms reflects sales of Ciena’s Converged Packet Optical, Packet Networking and Optical Transport product lines . ◦ Converged Packet Optical — includes the 6500 Packet-Optical Platform and the 5430 Reconfigurable Switching System, which feature Ciena's WaveLogic coherent optical processors. Products also include the Waveserver stackable interconnect system, the family of CoreDirector® Multiservice Optical Switches and the OTN configuration for the 5410 Reconfigurable Switching System. This product line also includes sales of the Z-Series Packet-Optical Platform acquired from Cyan. ◦ Packet Networking — includes the 3000 family of service delivery switches and service aggregation switches and the 5000 family of service aggregation switches. This product line also includes the 8700 Packetwave Platform and the Ethernet packet configuration for the 5410 Service Aggregation Switch. ◦ Optical Transport — includes the 4200 Advanced Services Platform, 5100/5200 Advanced Services Platform, Common Photonic Layer (CPL) and 6100 Multiservice Optical Platform. Ciena's Optical Transport products have either been previously discontinued, or are expected to be discontinued during fiscal 2016, reflecting network operators' transition toward next-generation converged network architectures. The Networking Platforms segment also includes sales of operating system software and enhanced software features embedded in each of the product lines above. Revenue from this segment is included in product revenue on the Condensed Consolidated Statement of Operations. • Software and Software-Related Services reflects sales of Ciena’s network virtualization, management, control and orchestration software solutions and software-related services, including subscription, installation, support, and consulting services. ◦ This segment includes Ciena’s element and network management solutions and planning tools, including the OneControl Unified Management System, ON-Center® Network & Service Management Suite, Ethernet Services Manager, Optical Suite Release and Planet Operate. ◦ This segment includes Ciena's Blue Planet network virtualization, service orchestration and network management software platform, including the multi-domain service orchestration (MDSO), network function virtualization (NFV) management and orchestration (NFV MANO), and Management and Control Platform (MCP), and Ciena's SDN Multilayer WAN Controller and its related applications. Revenue from the software platforms portion of this segment is included in product revenue on the Condensed Consolidated Statement of Operations. Revenue from software-related services is included in services revenue on the Condensed Consolidated Statement of Operations. • 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. Ciena's long-lived assets, including equipment, building, furniture and fixtures, finite-lived intangible assets and maintenance spares, are not reviewed by the chief operating decision maker for purposes of evaluating performance and allocating resources. As of April 30, 2016 , equipment, building, furniture and fixtures, net totaling $248.6 million primarily supported asset groups within Ciena's Networking Platforms and Software and Software-Related Services segments and supported Ciena's unallocated selling and general and administrative activities. As of April 30, 2016 , $100.7 million of Ciena's intangible assets, net were assigned to Ciena's Networking Platforms segment and $84.2 million of Ciena's intangible assets, net were assigned to asset groups within Ciena's Software and Software-Related Services segment. As of April 30, 2016 , all of the maintenance spares, net, totaling $54.4 million , were assigned to asset groups within Ciena's Global Services segment. Segment Revenue The table below (in thousands) sets forth Ciena’s segment revenue for the respective periods: Quarter Ended April 30, Six Months Ended April 30, 2016 2015 2016 2015 Revenue: Networking Platforms Converged Packet Optical $ 435,173 $ 432,911 $ 824,341 $ 769,471 Packet Networking 68,582 53,288 116,779 108,271 Optical Transport 8,451 16,454 20,596 38,793 Total Networking Platforms 512,206 502,653 961,716 916,535 Software and Software-Related Services Software Platforms 11,772 9,227 19,851 17,660 Software-Related Services 18,701 14,686 36,048 29,781 Total Software and Software-Related Services 30,473 23,913 55,899 47,441 Global Services Maintenance Support and Training 57,069 53,085 113,127 106,986 Installation and Deployment 30,232 30,703 61,072 56,884 Consulting and Network Design 10,737 11,248 22,018 22,918 Total Global Services 98,038 95,036 196,217 186,788 Consolidated revenue $ 640,717 $ 621,602 $ 1,213,832 $ 1,150,764 Segment Profit (Loss) Segment profit (loss) is determined based on internal performance measures used by the chief executive officer to assess the performance of each operating segment in a given period. In connection with that assessment, the chief executive officer excludes the following items: selling and marketing costs; general and administrative costs; acquisition and integration costs; amortization of intangible assets; restructuring costs; interest and other income (loss), net; interest expense; and provisions for income taxes. The table below (in thousands) sets forth Ciena’s segment profit (loss) and the reconciliation to consolidated net income during the respective periods indicated: Quarter Ended April 30, Six Months Ended April 30, 2016 2015 2016 2015 Segment profit (loss): Networking Platforms $ 132,606 $ 131,252 $ 239,588 $ 226,326 Software and Software-Related Services 192 806 (3,382 ) 3,394 Global Services 35,692 35,151 75,688 67,023 Total segment profit 168,490 167,209 311,894 296,743 Less: Non-performance operating expenses Selling and marketing 86,668 82,471 169,146 159,183 General and administrative 35,203 30,302 66,345 59,855 Acquisition and integration costs 2,285 1,020 3,584 1,020 Amortization of intangible assets 15,566 11,019 32,428 22,038 Restructuring costs 535 (17 ) 919 8,068 Add: Other non-performance financial items Interest expense and other income (loss), net (11,641 ) (18,496 ) (33,127 ) (40,390 ) Less: Provision for income taxes 2,595 3,265 3,894 4,315 Consolidated net income $ 13,997 $ 20,653 $ 2,451 $ 1,874 Entity Wide Reporting Ciena's operating segments each engage in business across four geographic regions: North America; Europe, Middle East and Africa (“EMEA”); Asia Pacific (“APAC”); and Caribbean and Latin America ("CALA"). North America includes only activities in the United States and Canada. The following table reflects Ciena’s geographic distribution of revenue principally based on the relevant location for Ciena's delivery of products and performance of services. For the periods below, Ciena’s geographic distribution of revenue was as follows (in thousands): Quarter Ended April 30, Six Months Ended April 30, 2016 2015 2016 2015 North America $ 395,505 $ 397,181 $ 788,209 $ 728,716 EMEA 96,175 102,194 176,897 213,200 CALA 57,896 47,891 101,706 90,633 APAC 91,141 74,336 147,020 118,215 Total $ 640,717 $ 621,602 $ 1,213,832 $ 1,150,764 North America includes $367.1 million and $367.6 million of United States revenue for fiscal quarters ended April 30, 2016 and 2015 , respectively. For the six months ended April 30, 2016 and 2015 , United States revenue was $732.3 million and $665.3 million , respectively. No other country accounted for at least 10% of total revenue for the periods presented above. The following table reflects Ciena's geographic distribution of equipment, building, furniture and fixtures, net, with any country accounting for at least 10% of total equipment, building, furniture and fixtures, net, specifically identified. Equipment, building, furniture and fixtures, net, attributable to geographic regions outside of the United States and Canada are reflected as “Other International.” For the periods below, Ciena's geographic distribution of equipment, building, furniture and fixtures was as follows (in thousands): April 30, October 31, United States $ 97,327 $ 96,292 Canada 140,056 84,318 Other International 11,266 11,363 Total $ 248,649 $ 191,973 AT&T accounted for greater than 10% of Ciena's revenue in Ciena's fiscal quarters ended April 30, 2016 and 2015 with total revenue of $116.0 million and $117.4 million , respectively. AT&T also accounted for greater than 10% of Ciena's revenue for the six months ended April 30, 2016 and 2015 with total revenue of $242.6 million and $234.0 million , respectively. AT&T purchases products and services from each of Ciena's operating segments. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Apr. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Foreign Tax Contingencies Ciena is subject to various tax liabilities arising in the ordinary course of business. Ciena does not expect that the ultimate settlement of these liabilities will have a material effect on its results of operations, financial position or cash flows. Litigation From May 15 through June 3, 2015, five separate putative class action lawsuits in connection with Ciena’s then-pending acquisition of Cyan, Inc. (“Cyan”) were filed in the Court of Chancery of the State of Delaware: • Luvishis v. Cyan, Inc., et al., C.A. No. 11027-CB, filed May 15, 2015 • Poll v. Cyan, Inc., et al., C.A. No. 11028-CB, filed May 15, 2015 • Canzano v. Floyd, et al., C.A. No. 11052-CB, filed May 20, 2015 • Kassis v. Cyan, Inc., et al., C.A. No. 11069-CB, filed May 27, 2015 • Fenske v. Cyan, Inc., et al., C.A. No. 11090-CB, filed June 3, 2015 Each of the complaints named Cyan (except for the Canzano complaint), Ciena, Neptune Acquisition Subsidiary, Inc., a Ciena subsidiary created solely for the purpose of effecting the acquisition (“Merger Sub”), and the members of Cyan’s board of directors as defendants. On June 23, 2015, each of these lawsuits was consolidated into a single case captioned In Re Cyan, Inc. Shareholder Litigation, Consol. C.A. No. 11027-CB. On July 9, 2015, the plaintiffs filed a verified amended class action complaint, which named as defendants Ciena, Merger Sub, and the members of Cyan’s board of directors. On August 5, 2015, the defendants filed motions to dismiss the amended complaint. On October 1, 2015, the plaintiffs filed a second amended complaint which named as defendants the members of Cyan’s board of directors. Cyan, Ciena, and Merger Sub were not named as defendants. The second amended complaint generally alleges that the Cyan board members breached their fiduciary duties by engaging in a conflicted and unfair sales process, failing to maximize stockholder value in the acquisition, taking steps to preclude competitive bidding, and failing to disclose material information necessary for stockholders to make an informed decision regarding the acquisition. The second amended complaint seeks (i) a declaration that the plaintiffs are entitled to a quasi-appraisal remedy, (ii) rescissory damages, (iii) recovery through an accounting of all damages caused as a result of the alleged breaches of fiduciary duties, (iv) compensatory damages, and (v) costs including attorneys’ fees and experts’ fees. On October 15, 2015, the defendants filed a renewed motion to dismiss. In response, plaintiffs filed a motion for leave to amend their complaint. The defendants opposed the motion and it is set for hearing on June 14, 2016. As a result of Ciena's acquisition of Cyan in August 2015, Ciena became a defendant in a securities class action lawsuit. On April 1, 2014, a purported stockholder class action lawsuit was filed in the Superior Court of California, County of San Francisco, against Cyan, the members of Cyan’s board of directors, Cyan’s former Chief Financial Officer, and the underwriters of Cyan’s initial public offering. On April 30, 2014, a substantially similar lawsuit was filed in the same court against the same defendants. The two cases have been consolidated as Beaver County Employees Retirement Fund, et al. v. Cyan, Inc. et al., Case No. CGC-14-538355. The consolidated complaint alleges violations of federal securities laws on behalf of a purported class consisting of purchasers of Cyan’s common stock pursuant or traceable to the registration statement and prospectus for Cyan’s initial public offering in April 2013, and seeks unspecified compensatory damages and other relief. In July 2014, the defendants filed a demurrer to the consolidated complaint, which the court overruled in October 2014 and allowed the case to proceed. On May 19, 2015, the proposed class was certified. On August 25, 2015, the defendants filed a motion for judgment on the pleadings based on an alleged lack of subject matter jurisdiction over the case, which motion was denied on October 23, 2015. On May 24, 2016, the defendants filed a petition for a writ of certiorari with the United States Supreme Court. Ciena believes that the consolidated lawsuit is without merit and intends to defend it vigorously. On May 29, 2008, Graywire, LLC filed a complaint in the United States District Court for the Northern District of Georgia against Ciena and four other defendants, alleging, among other things, that certain of the parties' products infringe U.S. Patent 6,542,673 (the “'673 Patent”), relating to an identifier system and components for optical assemblies. The complaint seeks injunctive relief and damages. In July 2009, upon request of Ciena and certain other defendants, the U.S. Patent and Trademark Office (“PTO”) granted the defendants' inter partes application for reexamination with respect to certain claims of the '673 Patent, and the district court granted the defendants' motion to stay the case pending reexamination of all of the patents-in-suit. In December 2010, the PTO confirmed the validity of some claims and rejected the validity of other claims of the '673 Patent, to which Ciena and other defendants filed an appeal. On March 16, 2012, the PTO on appeal rejected multiple claims of the '673 Patent, including the two claims on which Ciena is alleged to infringe. Subsequently, the plaintiff requested a reopening of the prosecution of the '673 Patent, which request was denied by the PTO on April 29, 2013. Thereafter, on May 28, 2013, the plaintiff filed an amendment with the PTO in which it canceled the claims of the '673 Patent on which Ciena is alleged to infringe. The case currently remains stayed, and there can be no assurance as to whether or when the stay will be lifted. In addition to the matters described above, Ciena is subject to various legal proceedings and claims arising in the ordinary course of business, including claims against third parties that may involve contractual indemnification obligations on the part of Ciena. Ciena does not expect that the ultimate costs to resolve these matters will have a material effect on its results of operations, financial position or cash flows. |
SIGNIFICANT ACCOUNTING POLICI30
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Apr. 30, 2016 | |
Accounting Policies [Abstract] | |
Business Combinations | Ciena records acquisitions using the purchase method of accounting. All of the assets acquired, liabilities assumed, contractual contingencies and contingent consideration are recognized at their fair value as of the acquisition date. The excess of the purchase price over the estimated fair values of the net tangible and net intangible assets acquired is recorded as goodwill. The application of the purchase method of accounting for business combinations requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed in order to properly allocate purchase price consideration between assets that are depreciated and amortized from goodwill. These assumptions and estimates include a market participant's use of the asset and the appropriate discount rates for a market participant. Ciena's estimates are based on historical experience, information obtained from the management of the acquired companies and, when appropriate, includes assistance from independent third-party appraisal firms. Significant assumptions and estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost savings expected to be derived from acquiring an asset. These estimates are inherently uncertain and unpredictable. In addition, unanticipated events and circumstances may occur which may affect the accuracy or validity of such estimates. |
Use of Estimates | The preparation of the financial statements and related disclosures in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates are used for selling prices for multiple element arrangements, shared-based compensation, convertible notes payable valuations, bad debts, valuation of inventories and investments, recoverability of intangible assets, other long-lived assets and goodwill, income taxes, warranty obligations, restructuring liabilities, derivatives, incentive compensation, contingencies and litigation. Ciena bases its estimates on historical experience and assumptions that it believes are reasonable. Actual results may differ materially from management’s estimates. |
Cash and Cash Equivalents | Ciena considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Any restricted cash collateralizing letters of credit is included in other current assets and other long-term assets depending upon the duration of the restriction. |
Investments | Ciena's investments are classified as available-for-sale and are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income (loss). Ciena recognizes losses in the income statement when it determines that declines in the fair value of its investments below their cost basis are other-than-temporary. In determining whether a decline in fair value is other-than-temporary, Ciena considers various factors, including market price (when available), investment ratings, the financial condition and near-term prospects of the investee, the length of time and the extent to which the fair value has been less than Ciena's cost basis, and Ciena's intent and ability to hold the investment until maturity or for a period of time sufficient to allow for any anticipated recovery in market value. Ciena considers all marketable debt securities that it expects to convert to cash within one year or less to be short-term investments, with all others considered to be long-term investments. Ciena has a minority equity investment in a privately held technology company that is classified in other long-term assets. This investment is carried at cost because Ciena owns less than 20% of the voting equity and does not have the ability to exercise significant influence over the company. Ciena monitors this investment for impairment and makes appropriate reductions to the carrying value when necessary. As of April 30, 2016 , the carrying value of this investment was $2.0 million . Ciena has not estimated the fair value of this cost method investment because determining the fair value is not practicable. Ciena has not evaluated this investment for impairment as there have not been any events or changes in circumstances that Ciena believes would have had a significant adverse effect on the fair value of this investment. |
Inventories | Inventories are stated at the lower of cost or market, with cost computed using standard cost, which approximates actual cost, on a first-in, first-out basis. Ciena records a provision for excess and obsolete inventory when an impairment has been identified. |
Segment Reporting | Ciena's chief operating decision maker, its chief executive officer, evaluates the company's performance and allocates resources based on multiple factors, including measures of segment profit (loss). Operating segments are defined as components of an enterprise that engage in business activities that may earn revenue and incur expense, for which discrete financial information is available, and for which such information is evaluated regularly by the chief operating decision maker for purposes of allocating resources and assessing performance. As of the first quarter of fiscal 2016, Ciena considers the following to be its operating segments for reporting purposes: (i) Networking Platforms, (ii) Software and Software-Related Services, and (iii) Global Services. |
Goodwill | Goodwill is the excess of the purchase price over the fair values assigned to the net assets acquired in a business combination. Ciena tests goodwill for impairment on an annual basis, which it has determined to be the last business day of fiscal September each year. Ciena also tests goodwill for impairment between annual tests if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the reporting unit below its carrying value. The first step in the process of assessing goodwill impairment is to compare the fair value of the reporting unit with the unit’s carrying amount, including goodwill. If this test indicates that the fair value is less than the carrying value, then step two is required to compare the implied fair value of the reporting unit’s goodwill with the carrying amount of the reporting unit’s goodwill. A non-cash goodwill impairment charge would have the effect of decreasing earnings or increasing losses in such period. If Ciena is required to take a substantial impairment charge, its operating results would be materially adversely affected in such period. |
Long-lived Assets | Long-lived assets include: equipment, building, furniture and fixtures; intangible assets; and maintenance spares. Ciena tests long-lived assets for impairment whenever triggering events or changes in circumstances indicate that the asset's carrying amount is not recoverable from its undiscounted cash flows. An impairment loss is measured as the amount by which the carrying amount of the asset or asset group exceeds its fair value. Ciena's long-lived assets are assigned to asset groups that represent the lowest level for which cash flows can be identified. |
Equipment, Building, Furniture and Fixtures | Equipment, building, furniture and fixtures are recorded at cost. Depreciation and amortization are computed using the straight-line method over useful lives of two to five years for equipment and furniture and fixtures and the shorter of useful life or lease term for leasehold improvements. During fiscal 2015 and fiscal 2016, Ciena gained access to portions of an office building in Ottawa, Canada pursuant to a lease arrangement accounted for as a capital lease, which is depreciated over the lease term. The leased building is part of Ciena's new campus facility that will replace the "Lab 10" research and development center on the former Nortel Carling campus. See Note 11 below. Ciena establishes assets and liabilities for the estimated construction costs incurred under build-to-suit lease arrangements to the extent that Ciena is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease. |
Internal Use Software | Qualifying internal use software and website development costs incurred during the application development stage, which consist primarily of outside services and purchased software license costs, are capitalized and amortized straight-line over the estimated useful lives of two to five years. |
Intangible Assets | Ciena has recorded finite-lived intangible assets as a result of several acquisitions. Finite-lived intangible assets are carried at cost less accumulated amortization. Amortization is computed using the straight-line method over the expected economic lives of the respective assets, up to seven years, which approximates the use of intangible assets. Ciena has recorded in-process research and development projects acquired as the result of an acquisition as indefinite-lived intangible assets. Upon completion of the projects, the assets will be amortized on a straight-line basis over the expected economic life of the asset, which will be determined on that date. Should the project be determined to be abandoned, the full value of the asset will be charged to expense. |
Maintenance Spares | Maintenance spares are recorded at cost. Spares usage cost is expensed ratably over four years. |
Concentrations | Substantially all of Ciena's cash and cash equivalents are maintained at a small number of major U.S. financial institutions. The majority of Ciena's cash equivalents consist of money market funds. Deposits held with banks may exceed the amount of insurance provided on such deposits. Because these deposits generally may be redeemed upon demand, management believes that they bear minimal risk. Historically, a significant percentage of Ciena's revenue has been concentrated among sales to a small number of large communications service providers. Consolidation among Ciena's customers has increased this concentration. Consequently, Ciena's accounts receivable are concentrated among these customers. See Note 21 below. Additionally, Ciena's access to certain materials or components is dependent upon sole or limited source suppliers. The inability of any of these suppliers to fulfill Ciena's supply requirements, or significant changes in supply cost, could affect future results. Ciena relies on a small number of contract manufacturers to perform the majority of the manufacturing for its products. If Ciena cannot effectively manage these manufacturers or forecast future demand, or if these manufacturers fail to deliver products or components on time, Ciena's business and results of operations may suffer. |
Revenue Recognition | Ciena recognizes revenue when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the price to the buyer is fixed or determinable; and collectibility is reasonably assured. Customer purchase agreements and customer purchase orders are generally used to determine the existence of an arrangement. Shipping documents and evidence of customer acceptance, when applicable, are used to verify delivery or services rendered. Ciena assesses whether the price is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. Ciena assesses collectibility based primarily on the creditworthiness of the customer as determined by credit checks and analysis, as well as the customer's payment history. Revenue for maintenance services is deferred and recognized ratably over the period during which the services are performed. Shipping and handling fees billed to customers are included in revenue, with the associated expenses included in product cost of goods sold. Ciena applies the percentage-of-completion method to long-term arrangements where Ciena is required to undertake significant production, customization or modification engineering, and reasonable and reliable estimates of revenue and cost are available. Utilizing the percentage-of-completion method, Ciena recognizes revenue based on the ratio of actual costs incurred to date to total estimated costs expected to be incurred. In instances that do not meet the percentage-of-completion method criteria, recognition of revenue is deferred until there are no uncertainties regarding customer acceptance. Unbilled percentage-of-completion revenues recognized are included in accounts receivable, net. Billings in excess of revenues recognized on these contracts are recorded within deferred revenue. The percentage of total revenue recognized using the percentage-of-completion method for the six months ended April 30, 2016 and April 30, 2015 was 0.4% and 1.7% , respectively. Software revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectibility is probable. In instances where final acceptance criteria of the software are specified by the customer, revenue is deferred until there are no uncertainties regarding customer acceptance. Ciena limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services, future performance obligations or subject to customer-specified return or refund privileges. Revenue for multiple element arrangements is allocated to each unit of accounting based on the relative selling price of each delivered element, with revenue recognized for each delivered element when the revenue recognition criteria are met. Ciena determines the selling price for each deliverable based upon the selling price hierarchy for multiple-deliverable arrangements. Under this hierarchy, Ciena uses vendor-specific objective evidence ("VSOE") of selling price, if it exists, or third party evidence ("TPE") of selling price if VSOE does not exist. If neither VSOE nor TPE of selling price exists for a deliverable, Ciena uses its best estimate of selling price ("BESP") for that deliverable. For multiple element software arrangements where VSOE of undelivered maintenance does not exist, revenue for the entire arrangement is recognized over the maintenance term. VSOE, when determinable, is established based on Ciena's pricing and discounting practices for the specific product or service when sold separately. In determining whether VSOE exists, Ciena requires that a substantial majority of the selling prices for a product or service fall within a reasonably narrow pricing range. Ciena has been unable to establish TPE of selling price because its go-to-market strategy differs from that of others in its markets, and the extent of customization and differentiated features and functions varies among comparable products or services from its peers. Ciena determines BESP based upon management-approved pricing guidelines, which consider multiple factors including the type of product or service, gross margin objectives, competitive and market conditions, and the go-to-market strategy, all of which can affect pricing practices. |
Warranty Accruals | Ciena provides for the estimated costs to fulfill customer warranty obligations upon recognition of the related revenue. Estimated warranty costs include estimates for material costs, technical support labor costs and associated overhead. Warranty is included in cost of goods sold and is determined based upon actual warranty cost experience, estimates of component failure rates and management's industry experience. Ciena's sales contracts do not permit the right of return of the product by the customer after the product has been accepted. |
Accounts Receivable, Net | Ciena's allowance for doubtful accounts is based on its assessment, on a specific identification basis, of the collectibility of customer accounts. Ciena performs ongoing credit evaluations of its customers and generally has not required collateral or other forms of security from them. In determining the appropriate balance for Ciena's allowance for doubtful accounts, management considers each individual customer account receivable in order to determine collectibility. In doing so, management considers creditworthiness, payment history, account activity and communication with the customer. If a customer's financial condition changes, Ciena may be required to record an allowance for doubtful accounts for that customer, which could negatively affect its results of operations. |
Research and Development | Ciena charges all research and development costs to expense as incurred. Types of expense incurred in research and development include employee compensation, prototype equipment, consulting and third party services, depreciation, facility costs and information technology. |
Government Grants | Ciena accounts for proceeds from government grants as a reduction of operating expense when there is reasonable assurance that Ciena has complied with the conditions attached to the grant and that the grant proceeds will be received. Grant benefits are recorded to the line item in the Condensed Consolidated Statement of Operations to which the grant activity relates. |
Advertising Costs | Ciena expenses all advertising costs as incurred. |
Legal Costs | Ciena expenses legal costs associated with litigation defense as incurred. |
Share-Based Compensation Expense | Ciena measures and recognizes compensation expense for share-based awards based on estimated fair values on the date of grant. Ciena estimates the fair value of each option-based award on the date of grant using the Black-Scholes option-pricing model. This model is affected by Ciena's stock price as well as estimates regarding a number of variables, including expected stock price volatility over the expected term of the award and projected employee stock option exercise behaviors. Ciena estimates the fair value of each restricted stock unit award based on the fair value of the underlying common stock on the date of grant. In each case, Ciena only recognizes expense in its Condensed Consolidated Statement of Operations for those stock options or restricted stock units that are expected ultimately to vest. Ciena recognizes the estimated fair value of performance-based awards, net of estimated forfeitures, as share-based expense over the performance period, using graded vesting, which considers each performance period or tranche separately, based upon Ciena's determination of whether it is probable that the performance targets will be achieved. At the end of each reporting period, Ciena reassesses the probability of achieving the performance targets and the performance period required to meet those targets and the expense is adjusted accordingly. Ciena uses the straight-line method to record expense for share-based awards with only service-based vesting. |
Income Taxes | Ciena accounts for income taxes using an asset and liability approach that recognizes deferred tax assets and liabilities for the expected future tax consequences attributable to differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases, and for operating loss and tax credit carryforwards. In estimating future tax consequences, Ciena considers all expected future events other than the enactment of changes in tax laws or rates. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the ordinary course of business, transactions occur for which the ultimate outcome may be uncertain. In addition, tax authorities periodically audit Ciena's income tax returns. These audits examine significant tax filing positions, including the timing and amounts of deductions and the allocation of income tax expenses among tax jurisdictions. Ciena is currently under audit in India for 2010 and 2012 through 2014 and in Canada for 2010 through 2013. Management does not expect the outcome of these audits to have a material adverse effect on Ciena's consolidated financial position, results of operations or cash flows. Ciena's major tax jurisdictions and the earliest open tax years are as follows: United States (2012), United Kingdom (2013), Canada (2010) and India (2010). Limited adjustments can be made to Federal U.S. tax returns in earlier years in order to reduce net operating loss carryforwards. Ciena classifies interest and penalties related to uncertain tax positions as a component of income tax expense. Ciena has not provided for U.S. deferred income taxes on the cumulative unremitted earnings of its non-U.S. affiliates, as it plans to indefinitely reinvest cumulative unremitted foreign earnings outside the U.S., and it is not practicable to determine the unrecognized deferred income taxes. These cumulative unremitted foreign earnings relate to ongoing operations in foreign jurisdictions and are required to fund foreign operations, capital expenditures and future expansion requirements. Ciena recognizes windfall tax benefits associated with the exercise of stock options or release of restricted stock units directly to stockholders' equity only when realized. A windfall tax benefit occurs when the actual tax benefit realized by Ciena upon an employee's disposition of a share-based award exceeds the deferred tax asset, if any, associated with the award that Ciena had recorded. When assessing whether a tax benefit relating to share-based compensation has been realized, Ciena follows the “with-and-without” method. Under the with-and-without method, the windfall is considered realized and recognized for financial statement purposes only when an incremental benefit is provided after considering all other tax benefits including Ciena's net operating losses. The with-and-without method results in the windfall from share-based compensation awards always being effectively the last tax benefit to be considered. Consequently, the windfall attributable to share-based compensation will not be considered realized in instances where Ciena's net operating loss carryover (that is unrelated to windfalls) is sufficient to offset the current year's taxable income before considering the effects of current-year windfalls. |
Loss Contingencies | Ciena is subject to the possibility of various losses arising in the ordinary course of business. These may relate to disputes, litigation and other legal actions. Ciena considers the likelihood of loss or the incurrence of a liability, as well as Ciena's ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Ciena regularly evaluates current information available to it in order to determine whether any accruals should be adjusted and whether new accruals are required. |
Fair Value of Financial Instruments | The carrying value of Ciena's cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates fair market value due to the relatively short period of time to maturity. For information related to the fair value of Ciena's convertible notes and term loans, see Note 17 below. Fair value for the measurement of financial assets and liabilities is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Ciena utilizes a valuation hierarchy for disclosure of the inputs for fair value measurement. This hierarchy prioritizes the inputs into three broad levels as follows: • 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. By distinguishing between inputs that are observable in the marketplace, and therefore more objective, and those that are unobservable, and therefore more subjective, the hierarchy is designed to indicate the relative reliability of the fair value measurements. A financial asset's or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. |
Restructuring | From time to time, Ciena takes actions to better align its workforce, facilities and operating costs with perceived market opportunities, business strategies and changes in market and business conditions. Ciena recognizes a liability for the cost associated with an exit or disposal activity in the period in which the liability is incurred, except for one-time employee termination benefits related to a service period, typically of more than 60 days , which are accrued over the service period. |
Foreign Currency | Certain of Ciena's foreign branch offices and subsidiaries use the U.S. dollar as their functional currency because Ciena Corporation, as the U.S. parent entity, exclusively funds the operations of these branch offices and subsidiaries. For those subsidiaries using the local currency as their functional currency, assets and liabilities are translated at exchange rates in effect at the balance sheet date, and the statement of operations is translated at a monthly average rate. Resulting translation adjustments are recorded directly to a separate component of stockholders' equity. Where the monetary assets and liabilities are transacted in a currency other than the entity's functional currency, re-measurement adjustments are recorded in interest and other income (loss), net on the Condensed Consolidated Statement of Operations. |
Derivatives | From time to time, Ciena uses foreign currency forward contracts to reduce variability in certain forecasted non-U.S. dollar denominated cash flows. Generally, these derivatives have maturities of 12 months or less. Ciena also has interest rate hedge arrangements to reduce variability in certain forecasted interest expense associated with its term loans. All of these derivatives are designated as cash flow hedges. At the inception of the cash flow hedge, and on an ongoing basis, Ciena assesses whether the derivative has been effective in offsetting changes in cash flows attributable to the hedged risk during the hedging period. The effective portion of the derivative's net gain or loss is initially reported as a component of accumulated other comprehensive income (loss), and, upon occurrence of the forecasted transaction, is subsequently reclassified to the line item in the Condensed Consolidated Statement of Operations to which the hedged transaction relates. Any net gain or loss associated with the ineffectiveness of the hedging instrument is reported in interest and other income (loss), net. To date, no ineffectiveness has occurred. From time to time, Ciena uses foreign currency forward contracts to hedge certain balance sheet exposures. These forward contracts are not designated as hedges for accounting purposes, and any net gain or loss associated with these derivatives is reported in interest and other income (loss), net on the Condensed Consolidated Statement of Operations. Ciena records derivative instruments in the Condensed Consolidated Statements of Cash Flows within operating, investing, or financing activities consistent with the cash flows of the hedged items. |
Computation of Net Income (Loss) per Share | Ciena calculates basic earnings per share ("EPS") by dividing earnings attributable to common stock by the weighted average number of common shares outstanding for the period. Diluted EPS includes other potential dilutive shares that would be outstanding if securities or other contracts to issue common stock were exercised or converted into common stock. Ciena uses a dual presentation of basic and diluted EPS on the face of its income statement. |
Software Development Costs | Ciena develops software for sale to its customers. GAAP requires the capitalization of certain software development costs that are incurred subsequent to the date technological feasibility is established and prior to the date the product is generally available for sale. The capitalized cost is then amortized straight-line over the estimated life of the product. Ciena defines technological feasibility as being attained at the time a working model is completed. To date, the period between Ciena achieving technological feasibility and the general availability of such software has been short, and software development costs qualifying for capitalization have been insignificant. Accordingly, Ciena has not capitalized any software development costs. |
Newly Issued Accounting Standards - Not Yet Effective | In May 2014, Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides guidance for revenue recognition. This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. In August 2015, the FASB issued an amendment to defer the effective date by one year and allow entities to early adopt no earlier than the original effective date. Based on this amendment, the standard will be effective for Ciena beginning in the first quarter of fiscal 2019. Ciena is currently evaluating the impact of the adoption of this ASU on its Consolidated Financial Statements and disclosures. In April 2015, FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs . ASU 2015-03 requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying value of that debt liability, consistent with debt discounts. The guidance is effective retrospectively for fiscal years, and interim periods within those years, and will be effective for Ciena beginning in the first quarter of fiscal 2017. Ciena does not expect that the impact of the adoption of this ASU will be material to its Consolidated Financial Statements or disclosures. In February 2016, FASB issued ASU No. 2016-02, Leases , which requires an entity to recognize assets and liabilities on the balance sheet for the rights and obligations created by leased assets and provide additional disclosures. ASU 2016-02 is effective for Ciena beginning in the first quarter of fiscal 2020. Ciena is currently evaluating the impact of the adoption of this ASU on its Consolidated Financial Statements and disclosures. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting , which provides guidance on several aspects of accounting for share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification on the statement of cash flows. ASU 2016-09 is effective for Ciena beginning in the first quarter of fiscal 2018. Ciena does not expect that the impact of the adoption of this ASU will be material to its Consolidated Financial Statements or disclosures. |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Business Combinations [Abstract] | |
Schedule of purchase price allocation | The following table summarizes the final purchase price allocation related to the acquisition of the HSPC assets based on the estimated fair value of the acquired assets and assumed liabilities (in thousands): Amount Inventory $ 119 Fixed assets 1,381 Developed technology 16,468 In-process technology 3,949 Goodwill 10,083 Total purchase consideration $ 32,000 |
RESTRUCTURING COSTS (Tables)
RESTRUCTURING COSTS (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Activity and balance of the restructuring liability accounts | The following table sets forth the restructuring activity and balance of the restructuring liability accounts for the six months ended April 30, 2016 (in thousands): Workforce reduction Consolidation of excess facilities Total Balance at October 31, 2015 $ 591 $ 688 $ 1,279 Additional liability recorded 929 — 929 Adjustments to previous estimates — (10 ) (10 ) Cash payments (823 ) (203 ) (1,026 ) Balance at April 30, 2016 $ 697 $ 475 $ 1,172 Current restructuring liabilities $ 697 $ 309 $ 1,006 Non-current restructuring liabilities $ — $ 166 $ 166 The following table sets forth the restructuring activity and balance of the restructuring liability accounts for the six months ended April 30, 2015 (in thousands): Workforce reduction Consolidation of excess facilities Total Balance at October 31, 2014 $ 181 $ 1,134 $ 1,315 Additional liability recorded 8,068 (a) — 8,068 Cash payments (7,518 ) (260 ) (7,778 ) Balance at April 30, 2015 $ 731 $ 874 $ 1,605 Current restructuring liabilities $ 731 $ 391 $ 1,122 Non-current restructuring liabilities $ — $ 483 $ 483 (a) During the fiscal quarter ended January 31, 2015, Ciena recorded a charge of $8.1 million of severance and other employee-related costs associated with a global workforce reduction of approximately 125 employees. |
INTEREST AND OTHER INCOME (LO33
INTEREST AND OTHER INCOME (LOSS), NET (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Other Income and Expenses [Abstract] | |
Schedule of interest and other income (loss), net | The components of interest and other income (loss), net, are as follows (in thousands): Quarter Ended April 30, Six Months Ended April 30, 2016 2015 2016 2015 Interest income $ 982 $ 246 $ 1,668 $ 465 Gain (loss) on non-hedge designated foreign currency forward contracts (10,600 ) 14,351 (15,213 ) 10,002 Foreign currency exchange gain (loss) 10,506 (18,832 ) 6,130 (22,485 ) Other 79 (1,314 ) (394 ) (1,764 ) Interest and other income (loss), net $ 967 $ (5,549 ) $ (7,809 ) $ (13,782 ) |
SHORT-TERM AND LONG-TERM INVE34
SHORT-TERM AND LONG-TERM INVESTMENTS (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Short-term and long-term investments | As of the dates indicated, investments are comprised of the following (in thousands): April 30, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value U.S. government obligations: Included in short-term investments $ 190,123 $ 87 (28 ) $ 190,182 Included in long-term investments 125,091 157 (15 ) 125,233 $ 315,214 $ 244 $ (43 ) $ 315,415 Commercial paper: Included in short-term investments $ 4,997 — — $ 4,997 $ 4,997 $ — $ — $ 4,997 October 31, 2015 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value U.S. government obligations: Included in short-term investments $ 110,108 $ 10 $ — $ 110,118 Included in long-term investments 95,171 — (66 ) 95,105 $ 205,279 $ 10 $ (66 ) $ 205,223 Commercial paper: Included in short-term investments $ 24,989 — — $ 24,989 $ 24,989 $ — $ — $ 24,989 |
Legal maturities of debt investments | The following table summarizes the final legal maturities of debt investments at April 30, 2016 (in thousands): Amortized Cost Estimated Fair Value Less than one year $ 195,120 $ 195,179 Due in 1-2 years 125,091 125,233 $ 320,211 $ 320,412 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Summary of the fair value of assets and liabilities recorded on a recurring basis | As of the date indicated, the following table summarizes the assets and liabilities that are recorded at fair value on a recurring basis (in thousands): April 30, 2016 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 749,856 $ — $ — $ 749,856 U.S. government obligations — 315,415 — 315,415 Commercial paper — 69,969 — 69,969 Foreign currency forward contracts — 1,173 — 1,173 Total assets measured at fair value $ 749,856 $ 386,557 $ — $ 1,136,413 Liabilities: Foreign currency forward contracts $ — $ 548 $ — $ 548 Forward starting interest rate swap — 5,428 — 5,428 Total liabilities measured at fair value $ — $ 5,976 $ — $ 5,976 October 31, 2015 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 642,073 $ — $ — $ 642,073 U.S. government obligations — 205,223 — 205,223 Commercial paper — 74,983 — 74,983 Foreign currency forward contracts — 89 — 89 Total assets measured at fair value $ 642,073 $ 280,295 $ — $ 922,368 Liabilities: Foreign currency forward contracts $ — $ 512 $ — $ 512 Forward starting interest rate swap — 5,522 — 5,522 Total liabilities measured at fair value $ — $ 6,034 $ — $ 6,034 |
Assets and liabilities as presented on Ciena's Condensed Consolidated Balance Sheets | As of the date indicated, the assets and liabilities above are presented on Ciena’s Condensed Consolidated Balance Sheet as follows (in thousands): April 30, 2016 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 749,856 $ 64,972 $ — $ 814,828 Short-term investments — 195,179 — 195,179 Prepaid expenses and other — 1,173 — 1,173 Long-term investments — 125,233 — 125,233 Total assets measured at fair value $ 749,856 $ 386,557 $ — $ 1,136,413 Liabilities: Accrued liabilities $ — $ 548 $ — $ 548 Other long-term obligations — 5,428 — 5,428 Total liabilities measured at fair value $ — $ 5,976 $ — $ 5,976 October 31, 2015 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 642,073 $ 49,994 $ — $ 692,067 Short-term investments — 135,107 — 135,107 Prepaid expenses and other — 89 — 89 Long-term investments — 95,105 — 95,105 Total assets measured at fair value $ 642,073 $ 280,295 $ — $ 922,368 Liabilities: Accrued liabilities $ — $ 512 $ — $ 512 Other long-term obligations — 5,522 — 5,522 Total liabilities measured at fair value $ — $ 6,034 $ — $ 6,034 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | As of the dates indicated, inventories are comprised of the following (in thousands): April 30, October 31, Raw materials $ 50,612 $ 53,082 Work-in-process 12,910 9,120 Finished goods 120,356 125,966 Deferred cost of goods sold 70,403 55,995 254,281 244,163 Provision for excess and obsolescence (63,420 ) (53,001 ) $ 190,861 $ 191,162 |
PREPAID EXPENSES AND OTHER (Tab
PREPAID EXPENSES AND OTHER (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid expenses and other | As of the dates indicated, prepaid expenses and other are comprised of the following (in thousands): April 30, October 31, Prepaid VAT and other taxes $ 85,479 $ 74,754 Product demonstration equipment, net 49,626 41,611 Deferred deployment expense 23,834 26,193 Prepaid expenses 25,749 25,074 Financing receivable 20,016 19,869 Other non-trade receivables 9,043 8,588 Derivative assets 1,173 89 $ 214,920 $ 196,178 |
EQUIPMENT, BUILDING, FURNITUR38
EQUIPMENT, BUILDING, FURNITURE AND FIXTURES (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Equipment, furniture and fixtures | As of the dates indicated, equipment, building, furniture and fixtures are comprised of the following (in thousands): April 30, October 31, Equipment, furniture and fixtures $ 428,985 $ 404,935 Building subject to capital lease 24,042 13,459 Construction in progress subject to build-to-suit lease 42,337 18,663 Leasehold improvements 58,963 49,196 554,327 486,253 Accumulated depreciation and amortization (305,678 ) (294,280 ) $ 248,649 $ 191,973 |
OTHER INTANGIBLE ASSETS (Tables
OTHER INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Intangible assets | As of the dates indicated, other intangible assets are comprised of the following (in thousands): April 30, 2016 October 31, 2015 Gross Intangible Accumulated Amortization Net Intangible Gross Intangible Accumulated Amortization Net Intangible Developed technology $ 348,584 $ (226,517 ) $ 122,067 $ 506,647 $ (382,130 ) $ 124,517 In-process research and development 4,405 — 4,405 — — — Patents and licenses 6,565 (6,182 ) 383 46,538 (46,072 ) 466 Customer relationships, covenants not to compete, outstanding purchase orders and contracts 358,648 (300,583 ) 58,065 388,621 (310,931 ) 77,690 Total other intangible assets $ 718,202 $ (533,282 ) $ 184,920 $ 941,806 $ (739,133 ) $ 202,673 |
Expected future amortization of finite-lived intangible assets | Expected future amortization of intangible assets for the fiscal years indicated is as follows (in thousands): Period ended October 31, 2016 (remaining six months) $ 37,853 2017 45,447 2018 22,766 2019 22,219 2020 21,192 Thereafter 31,038 $ 180,515 (1) (1) Does not include amortization of in-process research and development, as estimation of the timing of future amortization expense would be impractical. |
GOODWILL (Tables)
GOODWILL (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The following table presents the goodwill allocated to Ciena's reportable segments as of the dates indicated (in thousands): Balance at October 31, 2015 Acquisitions Impairments Translation (1) Balance at April 30, 2016 Software and Software-Related Services $ 201,428 $ — $ — $ — $ 201,428 Networking Platforms 55,006 10,083 — 1,164 66,253 Total $ 256,434 $ 10,083 $ — $ 1,164 $ 267,681 (1) Represents translation on goodwill related to the acquisition of the HSPC assets by Ciena's Canadian subsidiary. |
OTHER BALANCE SHEET DETAILS (Ta
OTHER BALANCE SHEET DETAILS (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Balance Sheet Related Disclosures [Abstract] | |
Other long-term assets | As of the dates indicated, other long-term assets are comprised of the following (in thousands): April 30, October 31, Maintenance spares, net $ 54,441 $ 55,259 Deferred debt issuance costs, net 12,608 10,820 Financing receivable — 10,107 Other 10,002 8,470 $ 77,051 $ 84,656 |
Accrued liabilities | As of the dates indicated, accrued liabilities and other short-term obligations are comprised of the following (in thousands): April 30, October 31, Compensation, payroll related tax and benefits $ 75,444 $ 109,466 Warranty 56,021 56,654 Vacation 38,285 34,189 Capital lease obligations 3,135 4,923 Interest payable 5,265 5,389 Other 104,946 105,662 $ 283,096 $ 316,283 |
Accrued warranty | The following table summarizes the activity in Ciena’s accrued warranty for the fiscal periods indicated (in thousands): Six months ended Beginning Ending April 30, Balance Provisions Settlements Balance 2015 $ 55,997 7,658 (9,696 ) $ 53,959 2016 $ 56,654 9,563 (10,196 ) $ 56,021 |
Deferred revenue | As of the dates indicated, deferred revenue is comprised of the following (in thousands): April 30, October 31, Products $ 49,191 $ 66,527 Services 137,841 122,546 187,032 189,073 Less current portion (116,799 ) (126,111 ) Long-term deferred revenue $ 70,233 $ 62,962 |
Other liabilities | As of the dates indicated, other long-term obligations are comprised of the following (in thousands): April 30, October 31, Construction liability $ 42,337 $ 18,663 Capital lease obligations 25,070 13,794 Income tax liability 12,244 13,308 Deferred tenant allowance 9,553 9,807 Straight-line rent 6,749 6,237 Forward starting interest rate swap 5,428 5,522 Other 5,436 5,209 $ 106,817 $ 72,540 |
Future minimum lease payments under capital leases | The following is a schedule by fiscal year of future minimum lease payments under capital leases and the present value of minimum lease payments as of April 30, 2016 (in thousands): Period ended October 31, 2016 (remaining six months) $ 3,196 2017 3,446 2018 3,108 2019 2,896 2020 2,550 Thereafter 32,002 Net minimum capital lease payments 47,198 Less: Amount representing interest (18,993 ) Present value of minimum lease payments 28,205 Less: Current portion of present value of minimum lease payments (3,135 ) Long-term portion of present value of minimum lease payments $ 25,070 |
ACCUMULATED OTHER COMPREHENSI42
ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of accumulated other comprehensive income | The following table summarizes the changes in accumulated balances of other comprehensive income ("AOCI") for the six months ending April 30, 2016 : 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 ) The following table summarizes the changes in AOCI for the six months ending April 30, 2015 : Unrealized Unrealized Unrealized Cumulative Gain/(Loss) on Gain/(Loss) on Gain/(Loss) on Forward Foreign Currency Marketable Securities Foreign Currency Contracts Starting Interest Rate Swap Translation Adjustment Total Balance at October 31, 2014 $ 71 $ (173 ) (2,083 ) $ (12,483 ) $ (14,668 ) Other comprehensive income (loss) before reclassifications (24 ) (4,233 ) (2,218 ) (3,411 ) (9,886 ) Amounts reclassified from AOCI — 2,761 — — 2,761 Balance at April 30, 2015 $ 47 $ (1,645 ) $ (4,301 ) $ (15,894 ) $ (21,793 ) |
SHORT-TERM AND LONG-TERM DEBT (
SHORT-TERM AND LONG-TERM DEBT (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of carrying values and estimated fair values of convertible notes | The principal balance, unamortized discount and net carrying amount of the 2021 Term Loan were as follows as of April 30, 2016 (in thousands): Principal Balance Unamortized Discount Net Carrying Amount Term Loan Payable due April 25, 2021 $ 250,000 $ 1,247 $ 248,753 The following table sets forth the carrying value and the estimated fair value of the 2021 Term Loan (in thousands): April 30, 2016 Carrying Value Fair Value (2) Term Loan Payable due April 25, 2021 (1) $ 248,753 $ 250,938 (1) Includes unamortized bond discount. (2) The 2021 Term Loan is categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its 2021 Term Loan using a market approach based upon observable inputs, such as current market transactions involving comparable securities. The principal balance, unamortized discount and net carrying amount of the 2019 Term Loan were as follows as of April 30, 2016 (in thousands): Principal Balance Unamortized Discount Net Carrying Amount Term Loan Payable due July 15, 2019 $ 245,625 $ 929 $ 244,696 The following table sets forth the carrying value and the estimated fair value of the 2019 Term Loan (in thousands): April 30, 2016 Carrying Value Fair Value (2) Term Loan Payable due July 15, 2019 (1) $ 244,696 $ 245,011 (1) Includes unamortized bond discount. (2) The 2019 Term Loan is categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its 2019 Term Loan using a market approach based upon observable inputs, such as current market transactions involving comparable securities. The following table sets forth, in thousands, the carrying value and the estimated fair value of Ciena’s outstanding issues of convertible notes: April 30, 2016 Carrying Value Fair Value (1) 0.875% Convertible Senior Notes due June 15, 2017 $ 479,985 $ 471,585 3.75% Convertible Senior Notes due October 15, 2018 350,000 395,063 4.0% Convertible Senior Notes due December 15, 2020 (2) 186,954 224,766 $ 1,016,939 $ 1,091,414 (1) The convertible notes are categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its outstanding convertible notes using a market approach based upon observable inputs, such as current market transactions involving comparable securities. (2) Includes unamortized discount and accretion of principal. |
Schedule of details of convertible notes | The principal balance, unamortized discount and net carrying amount of the liability and equity components of Ciena's 4.0% Convertible Senior Notes due December 15, 2020 are as follows as of April 30, 2016 : Liability Component Equity Component Principal Balance Unamortized Discount Net Carrying Amount Net Carrying Amount 4.0% Convertible Senior Notes due December 15, 2020 $ 199,400 $ 12,446 $ 186,954 $ 43,131 |
EARNINGS (LOSS) PER SHARE CAL44
EARNINGS (LOSS) PER SHARE CALCULATION (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Earnings Per Share [Abstract] | |
Reconciliation of numerator and denominator of Basic and Diluted Earnings Per Share | The following table (in thousands except per share amounts) is a reconciliation of the numerator and denominator of the basic net income per common share (“Basic EPS”) and the diluted net income per potential common share (“Diluted EPS”). Basic EPS is computed using the weighted average number of common shares outstanding. Diluted EPS is computed using the weighted average number of the following, in each case, to the extent the effect is not anti-dilutive: (i) common shares outstanding, (ii) shares issuable upon vesting of restricted stock units, (iii) shares issuable under Ciena’s employee stock purchase plan and upon exercise of outstanding stock options, using the treasury stock method, and (iv) shares underlying Ciena’s outstanding convertible notes. Quarter Ended April 30, Six Months Ended April 30, Numerator 2016 2015 2016 2015 Net income $ 13,997 $ 20,653 $ 2,451 $ 1,874 Add: Interest expense associated with 0.875% Convertible Senior Notes due 2017 — 1,387 — — Net income used to calculate Diluted EPS $ 13,997 $ 22,040 $ 2,451 $ 1,874 Quarter Ended April 30, Six Months Ended April 30, Denominator 2016 2015 2016 2015 Basic weighted average shares outstanding 137,950 113,555 137,313 110,578 Add: Shares underlying outstanding stock options and restricted stock units and issuable under employee stock purchase plan 939 1,354 1,380 1,184 Add: Shares underlying 0.875% Convertible Senior Notes due 2017 — 13,108 — — Dilutive weighted average shares outstanding 138,889 128,017 138,693 111,762 Quarter Ended April 30, Six Months Ended April 30, EPS 2016 2015 2016 2015 Basic EPS $ 0.10 $ 0.18 $ 0.02 $ 0.02 Diluted EPS $ 0.10 $ 0.17 $ 0.02 $ 0.02 |
Weighted average shares excluded from calculation of denominator for Basic and Diluted EPS | The following table summarizes the weighted average shares excluded from the calculation of the denominator for Diluted EPS due to their anti-dilutive effect for the periods indicated (in thousands): Quarter Ended April 30, Six Months Ended April 30, 2016 2015 2016 2015 Shares underlying stock options and restricted stock units 2,439 961 2,092 1,923 4.0% Convertible Senior Notes due March 15, 2015 — 4,346 — 6,772 0.875% Convertible Senior Notes due June 15, 2017 12,583 — 12,748 13,108 3.75% Convertible Senior Notes due October 15, 2018 17,356 17,356 17,356 17,356 4.0% Convertible Senior Notes due December 15, 2020 9,198 9,198 9,198 9,198 Total shares excluded due to anti-dilutive effect 41,576 31,861 41,394 48,357 |
SHARE-BASED COMPENSATION EXPE45
SHARE-BASED COMPENSATION EXPENSE (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of stock option activity | The following table is a summary of Ciena’s stock option activity for the period indicated (shares in thousands): Shares Underlying Options Outstanding Weighted Average Exercise Price Balance at October 31, 2015 2,293 $ 24.45 Exercised (234 ) 9.73 Canceled (276 ) 39.06 Balance at April 30, 2016 1,783 $ 24.13 |
Summarizes information with respect to stock options outstanding | The following table summarizes information with respect to stock options outstanding at April 30, 2016 , based on Ciena’s closing stock price on the last trading day of Ciena’s second fiscal quarter of 2016 (shares and intrinsic value in thousands): Options Outstanding at Vested Options at April 30, 2016 April 30, 2016 Number Weighted Average Remaining Weighted Number Weighted Average Remaining Weighted Range of of Contractual Average Aggregate of Contractual Average Aggregate Exercise Underlying Life Exercise Intrinsic Underlying Life Exercise Intrinsic Price Shares (Years) Price Value Shares (Years) Price Value $ 0.05 — $ 11.16 297 2.95 $ 6.88 $ 2,958 295 2.91 $ 6.86 $ 2,947 $ 11.34 — $ 17.24 483 5.54 13.49 1,615 438 5.39 13.38 1,514 $ 17.50 — $ 30.52 410 1.72 26.60 — 386 1.32 27.08 — $ 31.93 — $ 37.10 339 2.93 35.14 — 321 2.72 35.12 — $ 37.82 — $ 55.63 254 5.31 45.82 — 204 4.87 45.84 — $ 0.05 — $ 55.63 1,783 3.70 $ 24.13 $ 4,573 1,644 3.40 $ 23.70 $ 4,461 |
Summary of restricted stock unit activity | The following table is a summary of Ciena's restricted stock unit activity for the period indicated, with the aggregate fair value of the balance outstanding at the end of each period, based on Ciena's closing stock price on the last trading day of the relevant period (shares and aggregate fair value in thousands): Restricted Stock Units Outstanding Weighted Average Grant Date Fair Value Per Share Aggregate Fair Value Balance at October 31, 2015 4,886 $ 20.02 $ 117,951 Granted 2,055 Vested (1,686 ) Canceled or forfeited (253 ) Balance at April 30, 2016 5,002 $ 19.91 $ 84,182 |
Share-based compensation expense | The following table summarizes share-based compensation expense for the periods indicated (in thousands): Quarter Ended April 30, Six Months Ended April 30, 2016 2015 2016 2015 Product costs $ 629 $ 653 $ 1,200 $ 1,140 Service costs 693 574 1,285 1,093 Share-based compensation expense included in cost of sales 1,322 1,227 2,485 2,233 Research and development 3,791 2,534 7,219 4,701 Sales and marketing 3,923 3,841 8,658 7,500 General and administrative 4,968 3,723 10,097 7,642 Acquisition and integration costs 697 — 714 — Share-based compensation expense included in operating expense 13,379 10,098 26,688 19,843 Share-based compensation expense capitalized in inventory, net 32 4 37 60 Total share-based compensation $ 14,733 $ 11,329 $ 29,210 $ 22,136 |
SEGMENTS AND ENTITY WIDE DISC46
SEGMENTS AND ENTITY WIDE DISCLOSURES (Tables) | 6 Months Ended |
Apr. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment revenue | The table below (in thousands) sets forth Ciena’s segment revenue for the respective periods: Quarter Ended April 30, Six Months Ended April 30, 2016 2015 2016 2015 Revenue: Networking Platforms Converged Packet Optical $ 435,173 $ 432,911 $ 824,341 $ 769,471 Packet Networking 68,582 53,288 116,779 108,271 Optical Transport 8,451 16,454 20,596 38,793 Total Networking Platforms 512,206 502,653 961,716 916,535 Software and Software-Related Services Software Platforms 11,772 9,227 19,851 17,660 Software-Related Services 18,701 14,686 36,048 29,781 Total Software and Software-Related Services 30,473 23,913 55,899 47,441 Global Services Maintenance Support and Training 57,069 53,085 113,127 106,986 Installation and Deployment 30,232 30,703 61,072 56,884 Consulting and Network Design 10,737 11,248 22,018 22,918 Total Global Services 98,038 95,036 196,217 186,788 Consolidated revenue $ 640,717 $ 621,602 $ 1,213,832 $ 1,150,764 |
Segment profit (loss) and the reconciliation to consolidated net income (loss) | The table below (in thousands) sets forth Ciena’s segment profit (loss) and the reconciliation to consolidated net income during the respective periods indicated: Quarter Ended April 30, Six Months Ended April 30, 2016 2015 2016 2015 Segment profit (loss): Networking Platforms $ 132,606 $ 131,252 $ 239,588 $ 226,326 Software and Software-Related Services 192 806 (3,382 ) 3,394 Global Services 35,692 35,151 75,688 67,023 Total segment profit 168,490 167,209 311,894 296,743 Less: Non-performance operating expenses Selling and marketing 86,668 82,471 169,146 159,183 General and administrative 35,203 30,302 66,345 59,855 Acquisition and integration costs 2,285 1,020 3,584 1,020 Amortization of intangible assets 15,566 11,019 32,428 22,038 Restructuring costs 535 (17 ) 919 8,068 Add: Other non-performance financial items Interest expense and other income (loss), net (11,641 ) (18,496 ) (33,127 ) (40,390 ) Less: Provision for income taxes 2,595 3,265 3,894 4,315 Consolidated net income $ 13,997 $ 20,653 $ 2,451 $ 1,874 |
Ciena's geographic distribution of revenue and long-lived assets | For the periods below, Ciena’s geographic distribution of revenue was as follows (in thousands): Quarter Ended April 30, Six Months Ended April 30, 2016 2015 2016 2015 North America $ 395,505 $ 397,181 $ 788,209 $ 728,716 EMEA 96,175 102,194 176,897 213,200 CALA 57,896 47,891 101,706 90,633 APAC 91,141 74,336 147,020 118,215 Total $ 640,717 $ 621,602 $ 1,213,832 $ 1,150,764 For the periods below, Ciena's geographic distribution of equipment, building, furniture and fixtures was as follows (in thousands): April 30, October 31, United States $ 97,327 $ 96,292 Canada 140,056 84,318 Other International 11,266 11,363 Total $ 248,649 $ 191,973 |
INTERIM FINANCIAL STATEMENTS (D
INTERIM FINANCIAL STATEMENTS (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Apr. 30, 2016 | Oct. 31, 2015 | |
Quarterly Financial Data [Abstract] | ||
Fiscal year | 52 or 53-week fiscal year | |
Fiscal Period [Line Items] | ||
Fiscal Period Duration | 364 days | |
Foreign Currency Reclassification Adjustments | ||
Fiscal Period [Line Items] | ||
Increase (decrease) in operating capital | $ 10.4 | |
Minimum | ||
Fiscal Period [Line Items] | ||
Fiscal Period Duration | 364 days | |
Maximum | ||
Fiscal Period [Line Items] | ||
Fiscal Period Duration | 371 days |
SIGNIFICANT ACCOUNTING POLICI48
SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions | 6 Months Ended | |
Apr. 30, 2016 | Apr. 30, 2015 | |
Significant Accounting Policies [Line Items] | ||
Carrying value of minority equity interest | $ 2 | |
Expected economic lives of finite-lived intangible assets, maximum (in years) | 7 years | |
Expected number of years Spares usage cost is expensed (in years) | 4 years | |
Percentage of revenue recognized using percent-of-completion method | 0.40% | 1.70% |
One-time employee termination benefits related service period (more than 60 days) | 60 days | |
Maximum | ||
Significant Accounting Policies [Line Items] | ||
Measurement period for marketable debt securities (in years) | 1 year | |
Derivative maturity (in months) | 12 months | |
Maximum | Equipment, furniture and fixtures | ||
Significant Accounting Policies [Line Items] | ||
Estimated useful lives capitalized and amortized straight-line (in years) | 5 years | |
Maximum | Software and Website Development | ||
Significant Accounting Policies [Line Items] | ||
Estimated useful lives capitalized and amortized straight-line (in years) | 5 years | |
Minimum | Equipment, furniture and fixtures | ||
Significant Accounting Policies [Line Items] | ||
Estimated useful lives capitalized and amortized straight-line (in years) | 2 years | |
Minimum | Software and Website Development | ||
Significant Accounting Policies [Line Items] | ||
Estimated useful lives capitalized and amortized straight-line (in years) | 2 years |
BUSINESS COMBINATIONS (Details)
BUSINESS COMBINATIONS (Details) - USD ($) $ in Thousands | Feb. 02, 2016 | Apr. 30, 2016 | Oct. 31, 2015 |
Business Acquisition [Line Items] | |||
Goodwill | $ 267,681 | $ 256,434 | |
TeraXion High Speed Photonics Components | |||
Business Acquisition [Line Items] | |||
Payments to acquire TeraXion Inc. | $ 32,000 | ||
Inventory | 119 | ||
Fixed assets | 1,381 | ||
Goodwill | 10,083 | ||
Total purchase consideration | 32,000 | ||
TeraXion High Speed Photonics Components | Developed Technology | |||
Business Acquisition [Line Items] | |||
Developed and In-process technology | $ 16,468 | ||
Acquired finite-lived intangible assets, useful life | 5 years | ||
TeraXion High Speed Photonics Components | In-process research and development | |||
Business Acquisition [Line Items] | |||
Developed and In-process technology | $ 3,949 |
RESTRUCTURING COSTS (Details)
RESTRUCTURING COSTS (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Apr. 30, 2016USD ($) | Apr. 30, 2015USD ($) | Apr. 30, 2016USD ($) | Apr. 30, 2015USD ($)employee | ||
Activity and balance of the restructuring liability accounts | |||||
Balance at beginning of period | $ 1,279 | $ 1,315 | |||
Additional liability recorded | 929 | ||||
Restructuring costs | $ 535 | $ (17) | 919 | 8,068 | |
Adjustments to previous estimates | (10) | ||||
Cash payments | (1,026) | (7,778) | |||
Balance at end of period | 1,172 | 1,605 | 1,172 | 1,605 | |
Current restructuring liabilities | 1,006 | 1,122 | 1,006 | 1,122 | |
Non-current restructuring liabilities | 166 | 483 | 166 | 483 | |
Workforce reduction | |||||
Activity and balance of the restructuring liability accounts | |||||
Balance at beginning of period | 591 | 181 | |||
Additional liability recorded | 929 | ||||
Restructuring costs | [1] | 8,068 | |||
Adjustments to previous estimates | 0 | ||||
Cash payments | (823) | (7,518) | |||
Balance at end of period | 697 | 731 | 697 | 731 | |
Current restructuring liabilities | 697 | 731 | 697 | 731 | |
Non-current restructuring liabilities | 0 | 0 | 0 | $ 0 | |
Workforce deduction | employee | 125 | ||||
Consolidation of excess facilities | |||||
Activity and balance of the restructuring liability accounts | |||||
Balance at beginning of period | 688 | $ 1,134 | |||
Additional liability recorded | 0 | ||||
Restructuring costs | 0 | ||||
Adjustments to previous estimates | (10) | ||||
Cash payments | (203) | (260) | |||
Balance at end of period | 475 | 874 | 475 | 874 | |
Current restructuring liabilities | 309 | 391 | 309 | 391 | |
Non-current restructuring liabilities | $ 166 | $ 483 | $ 166 | $ 483 | |
[1] | During the fiscal quarter ended January 31, 2015, Ciena recorded a charge of $8.1 million of severance and other employee-related costs associated with a global workforce reduction of approximately 125 employees. |
INTEREST AND OTHER INCOME (LO51
INTEREST AND OTHER INCOME (LOSS), NET (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2016 | Apr. 30, 2015 | Apr. 30, 2016 | Apr. 30, 2015 | |
Other Income and Expenses [Abstract] | ||||
Interest income | $ 982 | $ 246 | $ 1,668 | $ 465 |
Gain (loss) on non-hedge designated foreign currency forward contracts | (10,600) | 14,351 | (15,213) | 10,002 |
Foreign currency exchange gain (loss) | 10,506 | (18,832) | 6,130 | (22,485) |
Other | 79 | (1,314) | (394) | (1,764) |
Interest and other income (loss), net | $ 967 | $ (5,549) | $ (7,809) | $ (13,782) |
SHORT-TERM AND LONG-TERM INVE52
SHORT-TERM AND LONG-TERM INVESTMENTS (Details) - USD ($) $ in Thousands | Apr. 30, 2016 | Oct. 31, 2015 |
Long Term Investments | ||
Amortized Cost | $ 320,211 | |
Estimated Fair Value | 320,412 | |
U.S. government obligations | ||
Long Term Investments | ||
Amortized Cost | 315,214 | $ 205,279 |
Gross Unrealized Gains | 244 | 10 |
Gross Unrealized Losses | (43) | (66) |
Estimated Fair Value | 315,415 | 205,223 |
U.S. government obligations | Short-term investments | ||
Long Term Investments | ||
Amortized Cost | 190,123 | 110,108 |
Gross Unrealized Gains | 87 | 10 |
Gross Unrealized Losses | (28) | 0 |
Estimated Fair Value | 190,182 | 110,118 |
U.S. government obligations | Other Long-term investments | ||
Long Term Investments | ||
Amortized Cost | 125,091 | 95,171 |
Gross Unrealized Gains | 157 | 0 |
Gross Unrealized Losses | (15) | (66) |
Estimated Fair Value | 125,233 | 95,105 |
Commercial paper | ||
Long Term Investments | ||
Amortized Cost | 4,997 | 24,989 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 4,997 | 24,989 |
Commercial paper | Short-term investments | ||
Long Term Investments | ||
Amortized Cost | 4,997 | 24,989 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | $ 4,997 | $ 24,989 |
SHORT-TERM AND LONG-TERM INVE53
SHORT-TERM AND LONG-TERM INVESTMENTS (Details 2) $ in Thousands | Apr. 30, 2016USD ($) |
Legal maturities of debt investments | |
Amortized Cost, Less than one year | $ 195,120 |
Amortized Cost, Due in 1-2 years | 125,091 |
Amortized Cost | 320,211 |
Estimated Fair Value, Less than one year | 195,179 |
Estimated Fair Value, Due in 1-2 years | 125,233 |
Estimated Fair Value | $ 320,412 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Apr. 30, 2016 | Oct. 31, 2015 |
Assets: | ||
U.S. government obligations | $ 320,412 | |
Fair Value, Measurements, Recurring | ||
Assets: | ||
Money market funds | 749,856 | $ 642,073 |
U.S. government obligations | 315,415 | 205,223 |
Commercial paper | 69,969 | 74,983 |
Foreign currency forward contracts | 1,173 | 89 |
Total assets measured at fair value | 1,136,413 | 922,368 |
Liabilities: | ||
Foreign currency forward contracts and forward starting interest rate swaps | 548 | 512 |
Total liabilities measured at fair value | 5,976 | 6,034 |
Fair Value, Measurements, Recurring | Interest Rate Swap | Designated as Hedging Instrument | Cash Flow Hedging | ||
Liabilities: | ||
Foreign currency forward contracts and forward starting interest rate swaps | 5,428 | 5,522 |
Fair Value, Measurements, Recurring | Level 1 | ||
Assets: | ||
Money market funds | 749,856 | 642,073 |
Total assets measured at fair value | 749,856 | 642,073 |
Liabilities: | ||
Total liabilities measured at fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | ||
Assets: | ||
U.S. government obligations | 315,415 | 205,223 |
Commercial paper | 69,969 | 74,983 |
Foreign currency forward contracts | 1,173 | 89 |
Total assets measured at fair value | 386,557 | 280,295 |
Liabilities: | ||
Foreign currency forward contracts and forward starting interest rate swaps | 548 | 512 |
Total liabilities measured at fair value | 5,976 | 6,034 |
Fair Value, Measurements, Recurring | Level 2 | Interest Rate Swap | Designated as Hedging Instrument | Cash Flow Hedging | ||
Liabilities: | ||
Foreign currency forward contracts and forward starting interest rate swaps | 5,428 | 5,522 |
Fair Value, Measurements, Recurring | Level 3 | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
Liabilities: | ||
Total liabilities measured at fair value | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS (Deta55
FAIR VALUE MEASUREMENTS (Details 2) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Apr. 30, 2016 | Oct. 31, 2015 |
Assets: | ||
Assets measured at fair value | $ 1,136,413 | $ 922,368 |
Liabilities: | ||
Total liabilities measured at fair value | 5,976 | 6,034 |
Cash equivalents | ||
Assets: | ||
Assets measured at fair value | 814,828 | 692,067 |
Short-term investments | ||
Assets: | ||
Assets measured at fair value | 195,179 | 135,107 |
Prepaid expenses and other | ||
Assets: | ||
Assets measured at fair value | 1,173 | 89 |
Long-term investments | ||
Assets: | ||
Assets measured at fair value | 125,233 | 95,105 |
Accrued liabilities | ||
Liabilities: | ||
Total liabilities measured at fair value | 548 | 512 |
Other long-term obligations | ||
Liabilities: | ||
Other long-term obligations | 5,428 | 5,522 |
Level 1 | ||
Assets: | ||
Assets measured at fair value | 749,856 | 642,073 |
Liabilities: | ||
Total liabilities measured at fair value | 0 | 0 |
Level 1 | Cash equivalents | ||
Assets: | ||
Assets measured at fair value | 749,856 | 642,073 |
Level 2 | ||
Assets: | ||
Assets measured at fair value | 386,557 | 280,295 |
Liabilities: | ||
Total liabilities measured at fair value | 5,976 | 6,034 |
Level 2 | Cash equivalents | ||
Assets: | ||
Assets measured at fair value | 64,972 | 49,994 |
Level 2 | Short-term investments | ||
Assets: | ||
Assets measured at fair value | 195,179 | 135,107 |
Level 2 | Prepaid expenses and other | ||
Assets: | ||
Assets measured at fair value | 1,173 | 89 |
Level 2 | Long-term investments | ||
Assets: | ||
Assets measured at fair value | 125,233 | 95,105 |
Level 2 | Accrued liabilities | ||
Liabilities: | ||
Total liabilities measured at fair value | 548 | 512 |
Level 2 | Other long-term obligations | ||
Liabilities: | ||
Other long-term obligations | 5,428 | 5,522 |
Level 3 | ||
Assets: | ||
Assets measured at fair value | 0 | 0 |
Liabilities: | ||
Total liabilities measured at fair value | $ 0 | $ 0 |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Apr. 30, 2016 | Oct. 31, 2015 | |
Concentration Risk [Line Items] | ||
Allowance for doubtful accounts | $ 3.4 | $ 3 |
Accounts Receivable | Customer Concentration Risk | Unidentified Customer One | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 11.20% | 10.40% |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Apr. 30, 2016 | Apr. 30, 2015 | Oct. 31, 2015 | |
Inventories | |||
Raw materials | $ 50,612 | $ 53,082 | |
Work-in-process | 12,910 | 9,120 | |
Finished goods | 120,356 | 125,966 | |
Deferred cost of goods sold | 70,403 | 55,995 | |
Inventories before provision | 254,281 | 244,163 | |
Provision for excess and obsolescence | (63,420) | (53,001) | |
Total inventories | 190,861 | $ 191,162 | |
Provisions | $ 20,104 | $ 10,834 |
PREPAID EXPENSES AND OTHER (Det
PREPAID EXPENSES AND OTHER (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Apr. 30, 2016 | Apr. 30, 2015 | Oct. 31, 2015 | |
Prepaid expenses and other | |||
Prepaid VAT and other taxes | $ 85,479 | $ 74,754 | |
Product demonstration equipment, net | 49,626 | 41,611 | |
Deferred deployment expense | 23,834 | 26,193 | |
Prepaid expenses | 25,749 | 25,074 | |
Financing receivable | 20,016 | 19,869 | |
Other non-trade receivables | 9,043 | 8,588 | |
Derivative assets | 1,173 | 89 | |
Prepaid expenses and other | 214,920 | $ 196,178 | |
Depreciation of product demonstration equipment | $ 5,200 | $ 4,800 |
EQUIPMENT, BUILDING, FURNITUR59
EQUIPMENT, BUILDING, FURNITURE AND FIXTURES (Details) $ in Thousands | 6 Months Ended | |||
Apr. 30, 2016USD ($) | Apr. 30, 2015USD ($) | Oct. 31, 2015USD ($) | Apr. 15, 2015buildingCAD / ft² | |
Property, Plant and Equipment, Net [Abstract] | ||||
Equipment, furniture and fixtures, gross | $ 554,327 | $ 486,253 | ||
Accumulated depreciation and amortization | (305,678) | (294,280) | ||
Equipment, furniture and fixtures, net | 248,649 | 191,973 | ||
Equipment, furniture and fixtures (Textuals) [Abstract] | ||||
Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements | 30,237 | $ 27,322 | ||
Equipment, furniture and fixtures | ||||
Property, Plant and Equipment, Net [Abstract] | ||||
Equipment, furniture and fixtures, gross | 428,985 | 404,935 | ||
Building subject to capital lease | ||||
Property, Plant and Equipment, Net [Abstract] | ||||
Equipment, furniture and fixtures, gross | 24,042 | 13,459 | ||
Construction in progress subject to build-to-suit lease | ||||
Property, Plant and Equipment, Net [Abstract] | ||||
Equipment, furniture and fixtures, gross | 42,337 | 18,663 | ||
Equipment, furniture and fixtures (Textuals) [Abstract] | ||||
Newly constructed assets to be leased | building | 2 | |||
Maximum landlord contribution per rentable square feet | CAD / ft² | 290 | |||
Leasehold improvements | ||||
Property, Plant and Equipment, Net [Abstract] | ||||
Equipment, furniture and fixtures, gross | 58,963 | $ 49,196 | ||
Equipment Furniture Fixtures And Leasehold Improvements | ||||
Equipment, furniture and fixtures (Textuals) [Abstract] | ||||
Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements | $ 24,800 | $ 22,500 |
OTHER INTANGIBLE ASSETS (Detail
OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Apr. 30, 2016 | Apr. 30, 2016 | Apr. 30, 2015 | Oct. 31, 2015 | ||
Other Intangible Assets | |||||
Accumulated Amortization | $ (533,282) | $ (533,282) | $ (739,133) | ||
Net Intangible | [1] | 180,515 | 180,515 | ||
Total other intangible assets, gross | 718,202 | 718,202 | 941,806 | ||
Total other intangible assets, net | 184,920 | 184,920 | 202,673 | ||
Expected future amortization of finite-lived intangible assets | |||||
2016 (remaining six months) | 37,853 | 37,853 | |||
2,017 | 45,447 | 45,447 | |||
2,018 | 22,766 | 22,766 | |||
2,019 | 22,219 | 22,219 | |||
2,020 | 21,192 | 21,192 | |||
Thereafter | 31,038 | 31,038 | |||
Net Intangible | [1] | 180,515 | 180,515 | ||
Other Intangible Assets (Textuals) [Abstract] | |||||
Intangible assets written off due to obsolescence | 246,400 | ||||
Amortization of intangible assets excluding amortization included in property, plant and equipment | 40,488 | $ 26,439 | |||
In-process research and development | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Indefinite lived intangible assets | 4,405 | 4,405 | 0 | ||
Developed Technology | |||||
Other Intangible Assets | |||||
Gross Intangible | 348,584 | 348,584 | 506,647 | ||
Accumulated Amortization | (226,517) | (226,517) | (382,130) | ||
Net Intangible | 122,067 | 122,067 | 124,517 | ||
Expected future amortization of finite-lived intangible assets | |||||
Net Intangible | 122,067 | 122,067 | 124,517 | ||
Patents And Licenses | |||||
Other Intangible Assets | |||||
Gross Intangible | 6,565 | 6,565 | 46,538 | ||
Accumulated Amortization | (6,182) | (6,182) | (46,072) | ||
Net Intangible | 383 | 383 | 466 | ||
Expected future amortization of finite-lived intangible assets | |||||
Net Intangible | 383 | 383 | 466 | ||
Customer Relationships, Covenants Not To Compete, Outstanding Purchase Orders And Contracts | |||||
Other Intangible Assets | |||||
Gross Intangible | 358,648 | 358,648 | 388,621 | ||
Accumulated Amortization | (300,583) | (300,583) | (310,931) | ||
Net Intangible | 58,065 | 58,065 | 77,690 | ||
Expected future amortization of finite-lived intangible assets | |||||
Net Intangible | $ 58,065 | $ 58,065 | $ 77,690 | ||
[1] | Does not include amortization of in-process research and development, as estimation of the timing of future amortization expense would be impractical. |
GOODWILL (Details)
GOODWILL (Details) $ in Thousands | 6 Months Ended | |
Apr. 30, 2016USD ($) | ||
Goodwill [Roll Forward] | ||
Goodwill | $ 256,434 | |
Acquisitions | 10,083 | |
Impairments | 0 | |
Translation | 1,164 | [1] |
Goodwill | 267,681 | |
Software and Software-Related Services | ||
Goodwill [Roll Forward] | ||
Goodwill | 201,428 | |
Acquisitions | 0 | |
Impairments | 0 | |
Translation | 0 | [1] |
Goodwill | 201,428 | |
Networking Platforms | ||
Goodwill [Roll Forward] | ||
Goodwill | 55,006 | |
Acquisitions | 10,083 | |
Impairments | 0 | |
Translation | 1,164 | [1] |
Goodwill | $ 66,253 | |
[1] | Represents translation on goodwill related to the acquisition of the HSPC assets by Ciena's Canadian subsidiary. |
OTHER BALANCE SHEET DETAILS (De
OTHER BALANCE SHEET DETAILS (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Apr. 30, 2016 | Apr. 30, 2015 | Oct. 31, 2015 | |
Other long-term assets | |||
Maintenance spares, net | $ 54,441 | $ 55,259 | |
Deferred debt issuance costs, net | 12,608 | 10,820 | |
Financing receivable | 0 | 10,107 | |
Other | 10,002 | 8,470 | |
Total other long-term assets | 77,051 | $ 84,656 | |
Other Balance Sheet Details (Textuals) [Abstract] | |||
Amortization of debt issuance costs included in interest expense | $ 2,100 | $ 2,500 |
OTHER BALANCE SHEET DETAILS (63
OTHER BALANCE SHEET DETAILS (Details 2) - USD ($) $ in Thousands | Apr. 30, 2016 | Oct. 31, 2015 | Apr. 30, 2015 | Oct. 31, 2014 |
Accrued liabilities | ||||
Compensation, payroll related tax and benefits | $ 75,444 | $ 109,466 | ||
Warranty | 56,021 | 56,654 | $ 53,959 | $ 55,997 |
Vacation | 38,285 | 34,189 | ||
Capital lease obligations | 3,135 | 4,923 | ||
Interest payable | 5,265 | 5,389 | ||
Other | 104,946 | 105,662 | ||
Total accrued liabilities | $ 283,096 | $ 316,283 |
OTHER BALANCE SHEET DETAILS (64
OTHER BALANCE SHEET DETAILS (Details 3) - USD ($) $ in Thousands | 6 Months Ended | |
Apr. 30, 2016 | Apr. 30, 2015 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance | $ 56,654 | $ 55,997 |
Provisions | 9,563 | 7,658 |
Settlements | (10,196) | (9,696) |
Balance at end of period | $ 56,021 | $ 53,959 |
OTHER BALANCE SHEET DETAILS (65
OTHER BALANCE SHEET DETAILS (Details 4) - USD ($) $ in Thousands | Apr. 30, 2016 | Oct. 31, 2015 |
Deferred revenue | ||
Deferred revenue | $ 187,032 | $ 189,073 |
Less current portion | (116,799) | (126,111) |
Long-term deferred revenue | 70,233 | 62,962 |
Products | ||
Deferred revenue | ||
Deferred revenue | 49,191 | 66,527 |
Services | ||
Deferred revenue | ||
Deferred revenue | $ 137,841 | $ 122,546 |
OTHER BALANCE SHEET DETAILS (66
OTHER BALANCE SHEET DETAILS (Details 5) - USD ($) $ in Thousands | Apr. 30, 2016 | Oct. 31, 2015 |
Balance Sheet Related Disclosures [Abstract] | ||
Construction liability | $ 42,337 | $ 18,663 |
Capital lease obligations | 25,070 | 13,794 |
Income tax liability | 12,244 | 13,308 |
Deferred tenant allowance | 9,553 | 9,807 |
Straight-line rent | 6,749 | 6,237 |
Forward starting interest rate swap | 5,428 | 5,522 |
Other | 5,436 | 5,209 |
Total other long-term obligations | $ 106,817 | $ 72,540 |
OTHER BALANCE SHEET DETAILS (67
OTHER BALANCE SHEET DETAILS (Details 6) - USD ($) $ in Thousands | Apr. 30, 2016 | Oct. 31, 2015 |
Balance Sheet Related Disclosures [Abstract] | ||
2016 (remaining six months) | $ 3,196 | |
2,017 | 3,446 | |
2,018 | 3,108 | |
2,019 | 2,896 | |
2,020 | 2,550 | |
Thereafter | 32,002 | |
Net minimum capital lease payments | 47,198 | |
Less: Amount representing interest | (18,993) | |
Present value of minimum lease payments | 28,205 | |
Less: Current portion of present value of minimum lease payments | (3,135) | $ (4,923) |
Long-term portion of present value of minimum lease payments | $ 25,070 | $ 13,794 |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Millions | 6 Months Ended | |||
Apr. 30, 2016 | May. 31, 2016 | Oct. 31, 2015 | Oct. 31, 2014 | |
Maximum | ||||
Derivative [Line Items] | ||||
Derivative maturity (in months) | 12 months | |||
Foreign Exchange Forward | Designated as Hedging Instrument | Cash Flow Hedging | ||||
Derivative [Line Items] | ||||
Derivative asset, notional amount | $ 32.4 | $ 68.1 | ||
Derivative maturity (in months) | 12 months | |||
Foreign Exchange Forward | Not Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Derivative asset, notional amount | $ 112.5 | 146.5 | ||
Foreign Exchange Forward | Not Designated as Hedging Instrument | Cash Flow Hedging | ||||
Derivative [Line Items] | ||||
Derivative maturity (in months) | 12 months | |||
Interest Rate Swap | Designated as Hedging Instrument | Cash Flow Hedging | ||||
Derivative [Line Items] | ||||
Derivative asset, notional amount | $ 245.6 | $ 246.9 | ||
Interest Rate Swap | Designated as Hedging Instrument | Cash Flow Hedging | Secured Debt | Term Loan 2019 | ||||
Derivative [Line Items] | ||||
Derivative, swaption interest rate | 5.004% | |||
Interest Rate Swap | Designated as Hedging Instrument | Cash Flow Hedging | Secured Debt | Term Loan 2021 | Subsequent Event | Minimum | ||||
Derivative [Line Items] | ||||
Derivative, swaption interest rate | 4.62% | |||
Interest Rate Swap | Designated as Hedging Instrument | Cash Flow Hedging | Secured Debt | Term Loan 2021 | Subsequent Event | Maximum | ||||
Derivative [Line Items] | ||||
Derivative, swaption interest rate | 4.87% |
ACCUMULATED OTHER COMPREHENSI69
ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Apr. 30, 2016 | Apr. 30, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Accumulated other comprehensive income - beginning balance | $ (22,126) | $ (14,668) |
Other comprehensive income (loss) before reclassifications | 4,231 | (9,886) |
Amounts reclassified from AOCI | 2,276 | 2,761 |
Accumulated other comprehensive income -ending balance | (15,619) | (21,793) |
Accumulated Net Unrealized Investment Gain (Loss) | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Accumulated other comprehensive income - beginning balance | (78) | 71 |
Other comprehensive income (loss) before reclassifications | 256 | (24) |
Amounts reclassified from AOCI | 0 | 0 |
Accumulated other comprehensive income -ending balance | 178 | 47 |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Foreign Exchange Forward | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Accumulated other comprehensive income - beginning balance | (268) | (173) |
Other comprehensive income (loss) before reclassifications | 760 | (4,233) |
Amounts reclassified from AOCI | 704 | 2,761 |
Accumulated other comprehensive income -ending balance | 1,196 | (1,645) |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Interest Rate Swap | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Accumulated other comprehensive income - beginning balance | (5,522) | (2,083) |
Other comprehensive income (loss) before reclassifications | (1,478) | (2,218) |
Amounts reclassified from AOCI | 1,572 | 0 |
Accumulated other comprehensive income -ending balance | (5,428) | (4,301) |
Accumulated Translation Adjustment | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Accumulated other comprehensive income - beginning balance | (16,258) | (12,483) |
Other comprehensive income (loss) before reclassifications | 4,693 | (3,411) |
Amounts reclassified from AOCI | 0 | 0 |
Accumulated other comprehensive income -ending balance | $ (11,565) | $ (15,894) |
SHORT-TERM AND LONG-TERM DEBT70
SHORT-TERM AND LONG-TERM DEBT (Details) - Secured Debt - USD ($) | Apr. 25, 2016 | Apr. 30, 2016 | Jul. 15, 2014 | |
Term Loan 2021 | ||||
Debt Instrument [Line Items] | ||||
Term loan principal amount | $ 250,000,000 | $ 250,000,000 | ||
Proceeds from issuance of debt | $ 246,100,000 | |||
Repayments of notes payable | $ 600,000 | |||
Payment, percent of original principal | 0.25% | |||
Prepayment premium, percent of principal | 1.00% | |||
Term loan unamortized discount | $ 1,247,000 | |||
Term loan, net carrying amount | [1] | 248,753,000 | ||
Term loan fair value | [1],[2] | 250,938,000 | ||
Term Loan 2021 | London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Interest rate floor | 0.75% | |||
Term Loan 2021 | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Interest rate floor | 1.75% | |||
Term Loan 2021 | Minimum | London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 3.25% | |||
Term Loan 2021 | Minimum | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 2.25% | |||
Term Loan 2021 | Maximum | London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 3.50% | |||
Term Loan 2021 | Maximum | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 2.50% | |||
Term Loan 2019 | ||||
Debt Instrument [Line Items] | ||||
Term loan principal amount | 245,625,000 | $ 250,000,000 | ||
Repayments of notes payable | 600,000 | |||
Term loan unamortized discount | 929,000 | |||
Term loan, net carrying amount | [1] | 244,696,000 | ||
Term loan fair value | [1],[3] | $ 245,011,000 | ||
[1] | Includes unamortized bond discount. | |||
[2] | The 2021 Term Loan is categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its 2021 Term Loan using a market approach based upon observable inputs, such as current market transactions involving comparable securities. | |||
[3] | The 2019 Term Loan is categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its 2019 Term Loan using a market approach based upon observable inputs, such as current market transactions involving comparable securities. |
SHORT-TERM AND LONG-TERM DEBT71
SHORT-TERM AND LONG-TERM DEBT (Details 2) $ in Thousands | Apr. 30, 2016USD ($) |
0.875% Convertible Senior Notes due June 15, 2017 | |
Debt Instrument [Line Items] | |
Repurchased face amount | $ 14,100 |
Convertible Notes Payable | 4.0% Convertible Senior Notes due December 15, 2020 | |
Debt Instrument [Line Items] | |
Liability component, Principal balance | 199,400 |
Liability component, Unamortized discount | 12,446 |
Liability component, Net carrying amount | 186,954 |
Equity component, Net carrying amount | $ 43,131 |
SHORT-TERM AND LONG-TERM DEBT72
SHORT-TERM AND LONG-TERM DEBT (Details 3) $ in Thousands | Apr. 30, 2016USD ($) | |
Carrying value and estimated current fair value of outstanding convertible notes | ||
Carrying value | $ 1,016,939 | |
Fair Value | 1,091,414 | [1] |
0.875% Convertible Senior Notes due June 15, 2017 | ||
Carrying value and estimated current fair value of outstanding convertible notes | ||
Carrying value | 479,985 | |
Fair Value | $ 471,585 | [1] |
Interest rate on convertible notes | 0.875% | |
3.75% Convertible Senior Notes due October 15, 2018 | ||
Carrying value and estimated current fair value of outstanding convertible notes | ||
Carrying value | $ 350,000 | |
Fair Value | $ 395,063 | [1] |
Interest rate on convertible notes | 3.75% | |
4.0% Convertible Senior Notes due December 15, 2020 | ||
Carrying value and estimated current fair value of outstanding convertible notes | ||
Carrying value | $ 186,954 | [2] |
Fair Value | $ 224,766 | [1],[2] |
Interest rate on convertible notes | 4.00% | |
[1] | The convertible notes are categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its outstanding convertible notes using a market approach based upon observable inputs, such as current market transactions involving comparable securities. | |
[2] | Includes unamortized discount and accretion of principal. |
ABL CREDIT FACILITY (Details)
ABL CREDIT FACILITY (Details) - USD ($) | Jan. 08, 2016 | Jan. 07, 2016 | Apr. 30, 2016 |
Letter of Credit | |||
Line of Credit Facility [Line Items] | |||
Letters of credit collateralized by the credit facility | $ 66,700,000 | ||
Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Total commitment | $ 250,000,000 | $ 200,000,000 | |
Period prior to maturity for minimum liquidity test | 90 days | ||
Minimum liquidity test, debt measurement threshold | $ 100,000,000 | ||
Minimum aggregate unrestricted cash and cash equivalents | $ 100,000,000 | $ 150,000,000 | |
Decrease in variable rate | 0.25% | ||
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Minimum | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 1.25% | 1.50% | |
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Maximum | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 1.75% | 2.00% | |
Revolving Credit Facility | Base Rate | Minimum | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 0.25% | 0.50% | |
Revolving Credit Facility | Base Rate | Maximum | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 0.75% | 1.00% | |
Revolving Credit Facility | Letter of Credit | |||
Line of Credit Facility [Line Items] | |||
Total commitment | $ 200,000,000 |
EARNINGS (LOSS) PER SHARE CAL74
EARNINGS (LOSS) PER SHARE CALCULATION (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2016 | Apr. 30, 2015 | Apr. 30, 2016 | Apr. 30, 2015 | |
Numerator | ||||
Net income | $ 13,997 | $ 20,653 | $ 2,451 | $ 1,874 |
Add: Interest expense associated with 0.875% Convertible Senior Notes due 2017 | 0 | 1,387 | 0 | 0 |
Net income used to calculate Diluted EPS | $ 13,997 | $ 22,040 | $ 2,451 | $ 1,874 |
Denominator | ||||
Weighted average basic common shares outstanding (in shares) | 137,950 | 113,555 | 137,313 | 110,578 |
Add: Shares underlying outstanding stock options and restricted stock units and issuable under employee stock purchase plan (in shares) | 939 | 1,354 | 1,380 | 1,184 |
Add: Shares underlying 0.875% Convertible Senior Notes Due 2017 (in shares) | 0 | 13,108 | 0 | 0 |
Weighted average diluted common shares outstanding (in shares) | 138,889 | 128,017 | 138,693 | 111,762 |
EPS | ||||
Basic EPS (in dollars per share) | $ 0.10 | $ 0.18 | $ 0.02 | $ 0.02 |
Diluted EPS (in dollars per share) | $ 0.10 | $ 0.17 | $ 0.02 | $ 0.02 |
EARNINGS (LOSS) PER SHARE CAL75
EARNINGS (LOSS) PER SHARE CALCULATION (Details 2) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2016 | Apr. 30, 2015 | Apr. 30, 2016 | Apr. 30, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total excluded due to anti-dilutive effect (in shares) | 41,576 | 31,861 | 41,394 | 48,357 |
4.0% Convertible Senior Notes due March 15, 2015 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Interest rate on convertible notes | 4.00% | 4.00% | ||
0.875% Convertible Senior Notes due June 15, 2017 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Interest rate on convertible notes | 0.875% | 0.875% | ||
3.75% Convertible Senior Notes due October 15, 2018 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Interest rate on convertible notes | 3.75% | 3.75% | ||
4.0% Convertible Senior Notes due December 15, 2020 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Interest rate on convertible notes | 4.00% | 4.00% | ||
Shares Underlying Stock Options and Restricted Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total excluded due to anti-dilutive effect (in shares) | 2,439 | 961 | 2,092 | 1,923 |
Convertible Senior Notes | 4.0% Convertible Senior Notes due March 15, 2015 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total excluded due to anti-dilutive effect (in shares) | 0 | 4,346 | 0 | 6,772 |
Convertible Senior Notes | 0.875% Convertible Senior Notes due June 15, 2017 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total excluded due to anti-dilutive effect (in shares) | 12,583 | 0 | 12,748 | 13,108 |
Convertible Senior Notes | 3.75% Convertible Senior Notes due October 15, 2018 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total excluded due to anti-dilutive effect (in shares) | 17,356 | 17,356 | 17,356 | 17,356 |
Convertible Senior Notes | 4.0% Convertible Senior Notes due December 15, 2020 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total excluded due to anti-dilutive effect (in shares) | 9,198 | 9,198 | 9,198 | 9,198 |
SHARE-BASED COMPENSATION EXPE76
SHARE-BASED COMPENSATION EXPENSE (Details) shares in Thousands | 6 Months Ended |
Apr. 30, 2016$ / sharesshares | |
Summary of stock option activity [Roll Forward] | |
Shares Underlying Options Outstanding, Beginning Balance (in shares) | shares | 2,293 |
Shares Underlying Options Outstanding, Exercised (in shares) | shares | (234) |
Shares Underlying Options Outstanding, Canceled (in shares) | shares | (276) |
Shares Underlying Options Outstanding, Ending Balance (in shares) | shares | 1,783 |
Weighted average exercise price [Roll Forward] | |
Weighted Average Exercise Price, Beginning Balance (in dollars per share) | $ / shares | $ 24.45 |
Weighted Average Exercise Price, Exercised (in dollars per share) | $ / shares | 9.73 |
Weighted Average Exercise Price, Canceled (in dollars per share) | $ / shares | 39.06 |
Weighted Average Exercise Price, Ending Balance (in dollars per share) | $ / shares | $ 24.13 |
SHARE-BASED COMPENSATION EXPE77
SHARE-BASED COMPENSATION EXPENSE (Details 2) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | |
Apr. 30, 2016 | Oct. 31, 2015 | |
Summarizes information with respect to stock options outstanding | ||
Range of Exercise Price, Lower (in dollars per share) | $ 0.05 | |
Range of Exercise Price, Upper (in dollars per share) | $ 55.63 | |
Number of underlying shares - options (in shares) | 1,783 | |
Weighted average remaining contractual life - options (Years) | 3 years 8 months 12 days | |
Weighted average exercise price - options (in dollars per share) | $ 24.13 | $ 24.45 |
Aggregate intrinsic value - options | $ 4,573 | |
Number of underlying shares - vested options (in shares) | 1,644 | |
Weighted average remaining contractual life - vested options (in years) | 3 years 4 months 24 days | |
Weighted average exercise price - vested options (in dollars per share) | $ 23.70 | |
Aggregate intrinsic value - vested options | $ 4,461 | |
Range of Exercise Price 0.05 to 11.16 | ||
Summarizes information with respect to stock options outstanding | ||
Range of Exercise Price, Lower (in dollars per share) | $ 0.05 | |
Range of Exercise Price, Upper (in dollars per share) | $ 11.16 | |
Number of underlying shares - options (in shares) | 297 | |
Weighted average remaining contractual life - options (Years) | 2 years 11 months 12 days | |
Weighted average exercise price - options (in dollars per share) | $ 6.88 | |
Aggregate intrinsic value - options | $ 2,958 | |
Number of underlying shares - vested options (in shares) | 295 | |
Weighted average remaining contractual life - vested options (in years) | 2 years 10 months 28 days | |
Weighted average exercise price - vested options (in dollars per share) | $ 6.86 | |
Aggregate intrinsic value - vested options | $ 2,947 | |
Range of Exercise Price 11.34 to 17.24 | ||
Summarizes information with respect to stock options outstanding | ||
Range of Exercise Price, Lower (in dollars per share) | $ 11.34 | |
Range of Exercise Price, Upper (in dollars per share) | $ 17.24 | |
Number of underlying shares - options (in shares) | 483 | |
Weighted average remaining contractual life - options (Years) | 5 years 6 months 15 days | |
Weighted average exercise price - options (in dollars per share) | $ 13.49 | |
Aggregate intrinsic value - options | $ 1,615 | |
Number of underlying shares - vested options (in shares) | 438 | |
Weighted average remaining contractual life - vested options (in years) | 5 years 4 months 21 days | |
Weighted average exercise price - vested options (in dollars per share) | $ 13.38 | |
Aggregate intrinsic value - vested options | $ 1,514 | |
Range of Exercise Price 17.50 to 30.52 | ||
Summarizes information with respect to stock options outstanding | ||
Range of Exercise Price, Lower (in dollars per share) | $ 17.50 | |
Range of Exercise Price, Upper (in dollars per share) | $ 30.52 | |
Number of underlying shares - options (in shares) | 410 | |
Weighted average remaining contractual life - options (Years) | 1 year 8 months 19 days | |
Weighted average exercise price - options (in dollars per share) | $ 26.60 | |
Aggregate intrinsic value - options | $ 0 | |
Number of underlying shares - vested options (in shares) | 386 | |
Weighted average remaining contractual life - vested options (in years) | 1 year 3 months 26 days | |
Weighted average exercise price - vested options (in dollars per share) | $ 27.08 | |
Aggregate intrinsic value - vested options | $ 0 | |
Range of Exercise Price 31.93 to 37.10 | ||
Summarizes information with respect to stock options outstanding | ||
Range of Exercise Price, Lower (in dollars per share) | $ 31.93 | |
Range of Exercise Price, Upper (in dollars per share) | $ 37.10 | |
Number of underlying shares - options (in shares) | 339 | |
Weighted average remaining contractual life - options (Years) | 2 years 11 months 5 days | |
Weighted average exercise price - options (in dollars per share) | $ 35.14 | |
Aggregate intrinsic value - options | $ 0 | |
Number of underlying shares - vested options (in shares) | 321 | |
Weighted average remaining contractual life - vested options (in years) | 2 years 8 months 19 days | |
Weighted average exercise price - vested options (in dollars per share) | $ 35.12 | |
Aggregate intrinsic value - vested options | $ 0 | |
Range of Exercise Price 37.82 to 55.63 | ||
Summarizes information with respect to stock options outstanding | ||
Range of Exercise Price, Lower (in dollars per share) | $ 37.82 | |
Range of Exercise Price, Upper (in dollars per share) | $ 55.63 | |
Number of underlying shares - options (in shares) | 254 | |
Weighted average remaining contractual life - options (Years) | 5 years 3 months 22 days | |
Weighted average exercise price - options (in dollars per share) | $ 45.82 | |
Aggregate intrinsic value - options | $ 0 | |
Number of underlying shares - vested options (in shares) | 204 | |
Weighted average remaining contractual life - vested options (in years) | 4 years 10 months 13 days | |
Weighted average exercise price - vested options (in dollars per share) | $ 45.84 | |
Aggregate intrinsic value - vested options | $ 0 |
SHARE-BASED COMPENSATION EXPE78
SHARE-BASED COMPENSATION EXPENSE (Details 3) - Restricted Stock Units (RSUs) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | |
Apr. 30, 2016 | Oct. 31, 2015 | |
Summary of Restricted Stock Unit Activity | ||
Balance at October 31, 2014 (in shares) | 4,886 | |
Granted (in shares) | 2,055 | |
Vested (in shares) | (1,686) | |
Canceled or forfeited (in shares) | (253) | |
Balance at January 31, 2015 (in shares) | 5,002 | |
Weighted Average Grant Date Fair Value [Abstract] | ||
Weighted average grant date fair value (in dollars per share) | $ 19.91 | $ 20.02 |
Aggregate fair value | $ 84,182 | $ 117,951 |
SHARE-BASED COMPENSATION EXPE79
SHARE-BASED COMPENSATION EXPENSE (Details 4) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2016 | Apr. 30, 2015 | Apr. 30, 2016 | Apr. 30, 2015 | |
Share-based compensation expense | ||||
Share-based compensation expense capitalized in inventory, net | $ 32 | $ 4 | $ 37 | $ 60 |
Total share-based compensation | 14,733 | 11,329 | 29,210 | 22,136 |
Cost of Sales | ||||
Share-based compensation expense | ||||
Share-based compensation expense | 1,322 | 1,227 | 2,485 | 2,233 |
Product costs | ||||
Share-based compensation expense | ||||
Share-based compensation expense | 629 | 653 | 1,200 | 1,140 |
Service costs | ||||
Share-based compensation expense | ||||
Share-based compensation expense | 693 | 574 | 1,285 | 1,093 |
Operating Expense | ||||
Share-based compensation expense | ||||
Share-based compensation expense | 13,379 | 10,098 | 26,688 | 19,843 |
Research and development | ||||
Share-based compensation expense | ||||
Share-based compensation expense | 3,791 | 2,534 | 7,219 | 4,701 |
Sales and marketing | ||||
Share-based compensation expense | ||||
Share-based compensation expense | 3,923 | 3,841 | 8,658 | 7,500 |
General and administrative | ||||
Share-based compensation expense | ||||
Share-based compensation expense | 4,968 | 3,723 | 10,097 | 7,642 |
Acquisition and integration costs | ||||
Share-based compensation expense | ||||
Share-based compensation expense | $ 697 | $ 0 | $ 714 | $ 0 |
SHARE-BASED COMPENSATION EXPE80
SHARE-BASED COMPENSATION EXPENSE (Details Textual) $ / shares in Units, $ in Millions | 6 Months Ended | |
Apr. 30, 2016USD ($)period$ / sharesshares | Apr. 30, 2015USD ($)$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted in period, net, acquisitions | 2,400,000 | |
Unrecognized share-based compensation | $ | $ 85.1 | |
2008 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares authorized for issuance under plan (in shares) | 25,100,000 | |
Remaining authorized shares available for issuance (in shares) | 3,900,000 | |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock units granted in period, net, acquisition | 1,000,000 | |
Total fair value of restricted stock units vested and converted into common stock | $ | $ 33 | $ 23 |
Weighted average fair value of each restricted stock unit granted (per share) | $ / shares | $ 19.73 | $ 18.68 |
Unrecognized share-based compensation | $ | $ 83.9 | |
Weighted-average period for recognition of share-based compensation (in years) | 1 year 6 months | |
Restricted Stock Units (RSUs) | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period of service-based awards | 3 years | |
Restricted Stock Units (RSUs) | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period of service-based awards | 4 years | |
Employee Stock Options and Stock Appreciation Rights | 2008 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Maximum expiration period of incentive awards | 10 years | |
Minimum exercise price, percentage of fair market value on grant date | 100.00% | |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period of service-based awards | 4 years | |
Intrinsic value of option exercised | $ | $ 2.5 | $ 0.8 |
Unrecognized share-based compensation | $ | $ 1.2 | |
Weighted-average period for recognition of share-based compensation (in years) | 1 year 4 months 13 days | |
Employee Stock | 2003 Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Remaining authorized shares available for issuance (in shares) | 6,500,000 | |
Offer period for ESPP | 12 months | |
Number of purchase periods in offer period | period | 2 | |
Length of purchase period | 6 months | |
ESPP discount percentage purchase date | 85.00% | |
Maximum number of shares increase under ESPP (in shares) | 600,000 | |
Shares issued under ESPP (in shares) | 500,000 | |
Employee Stock | 2003 Employee Stock Purchase Plan | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares authorized for issuance under plan (in shares) | 8,200,000 |
SEGMENTS AND ENTITY WIDE DISC81
SEGMENTS AND ENTITY WIDE DISCLOSURES (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2016USD ($) | Apr. 30, 2015USD ($) | Apr. 30, 2016USD ($)segments | Apr. 30, 2015USD ($) | |
Segment Reporting [Abstract] | ||||
Number of operating segments | segments | 3 | |||
Revenue: | ||||
Revenue | $ 640,717 | $ 621,602 | $ 1,213,832 | $ 1,150,764 |
Segment profit (loss) and the reconciliation to consolidated net income (loss) | ||||
Segment profit | 168,490 | 167,209 | 311,894 | 296,743 |
Less: Non-performance operating expenses | ||||
Selling and marketing | 86,668 | 82,471 | 169,146 | 159,183 |
General and administrative | 35,203 | 30,302 | 66,345 | 59,855 |
Acquisition and integration costs | 2,285 | 1,020 | 3,584 | 1,020 |
Amortization of intangible assets | 15,566 | 11,019 | 32,428 | 22,038 |
Restructuring costs | 535 | (17) | 919 | 8,068 |
Add: Other non-performance financial items | ||||
Interest expense and other income (loss), net | (11,641) | (18,496) | (33,127) | (40,390) |
Less: Provision for income taxes | 2,595 | 3,265 | 3,894 | 4,315 |
Net income | 13,997 | 20,653 | 2,451 | 1,874 |
Networking Platforms | ||||
Revenue: | ||||
Revenue | 512,206 | 502,653 | 961,716 | 916,535 |
Segment profit (loss) and the reconciliation to consolidated net income (loss) | ||||
Segment profit | 132,606 | 131,252 | 239,588 | 226,326 |
Networking Platforms | Converged Packet Optical | ||||
Revenue: | ||||
Revenue | 435,173 | 432,911 | 824,341 | 769,471 |
Networking Platforms | Packet Networking | ||||
Revenue: | ||||
Revenue | 68,582 | 53,288 | 116,779 | 108,271 |
Networking Platforms | Optical Transport | ||||
Revenue: | ||||
Revenue | 8,451 | 16,454 | 20,596 | 38,793 |
Software and Software-Related Services | ||||
Revenue: | ||||
Revenue | 30,473 | 23,913 | 55,899 | 47,441 |
Segment profit (loss) and the reconciliation to consolidated net income (loss) | ||||
Segment profit | 192 | 806 | (3,382) | 3,394 |
Software and Software-Related Services | Software Platforms | ||||
Revenue: | ||||
Revenue | 11,772 | 9,227 | 19,851 | 17,660 |
Software and Software-Related Services | Software-Related Services | ||||
Revenue: | ||||
Revenue | 18,701 | 14,686 | 36,048 | 29,781 |
Global Services | ||||
Revenue: | ||||
Revenue | 98,038 | 95,036 | 196,217 | 186,788 |
Segment profit (loss) and the reconciliation to consolidated net income (loss) | ||||
Segment profit | 35,692 | 35,151 | 75,688 | 67,023 |
Global Services | Maintenance Support and Training | ||||
Revenue: | ||||
Revenue | 57,069 | 53,085 | 113,127 | 106,986 |
Global Services | Installation and Deployment | ||||
Revenue: | ||||
Revenue | 30,232 | 30,703 | 61,072 | 56,884 |
Global Services | Consulting and Network Design | ||||
Revenue: | ||||
Revenue | $ 10,737 | $ 11,248 | $ 22,018 | $ 22,918 |
SEGMENTS AND ENTITY WIDE DISC82
SEGMENTS AND ENTITY WIDE DISCLOSURES (Details 2) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Apr. 30, 2016USD ($) | Apr. 30, 2015USD ($) | Apr. 30, 2016USD ($)region | Apr. 30, 2015USD ($) | Oct. 31, 2015USD ($) | |
Segment Reporting [Abstract] | |||||
Number of geographic regions in which entity operates | region | 4 | ||||
Ciena's geographic distribution of revenue | |||||
Revenue | $ 640,717 | $ 621,602 | $ 1,213,832 | $ 1,150,764 | |
Ciena's geographic distribution of equipment, furniture and fixtures | |||||
Equipment, building, furniture and fixtures, net | 248,649 | 248,649 | $ 191,973 | ||
North America | |||||
Ciena's geographic distribution of revenue | |||||
Revenue | 395,505 | 397,181 | 788,209 | 728,716 | |
EMEA | |||||
Ciena's geographic distribution of revenue | |||||
Revenue | 96,175 | 102,194 | 176,897 | 213,200 | |
CALA | |||||
Ciena's geographic distribution of revenue | |||||
Revenue | 57,896 | 47,891 | 101,706 | 90,633 | |
APAC | |||||
Ciena's geographic distribution of revenue | |||||
Revenue | 91,141 | 74,336 | 147,020 | 118,215 | |
United States | |||||
Ciena's geographic distribution of revenue | |||||
Revenue | 367,100 | $ 367,600 | 732,300 | $ 665,300 | |
Ciena's geographic distribution of equipment, furniture and fixtures | |||||
Equipment, building, furniture and fixtures, net | 97,327 | 97,327 | 96,292 | ||
Canada | |||||
Ciena's geographic distribution of equipment, furniture and fixtures | |||||
Equipment, building, furniture and fixtures, net | 140,056 | 140,056 | 84,318 | ||
Other International | |||||
Ciena's geographic distribution of equipment, furniture and fixtures | |||||
Equipment, building, furniture and fixtures, net | $ 11,266 | $ 11,266 | $ 11,363 |
SEGMENTS AND ENTITY WIDE DISC83
SEGMENTS AND ENTITY WIDE DISCLOSURES (Details 3) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2016 | Apr. 30, 2015 | Apr. 30, 2016 | Apr. 30, 2015 | |
ATT | Customer Concentration Risk | Sales Revenue, Goods, Net | ||||
Revenue, Major Customer [Line Items] | ||||
Revenue | $ 116 | $ 117.4 | $ 242.6 | $ 234 |
SEGMENTS AND ENTITY WIDE DISC84
SEGMENTS AND ENTITY WIDE DISCLOSURES (Details Textual) - USD ($) $ in Thousands | Apr. 30, 2016 | Oct. 31, 2015 | |
Segment Reporting [Abstract] | |||
Equipment, furniture and fixtures, net | $ 248,649 | $ 191,973 | |
Segment Reporting Information [Line Items] | |||
Other intangible assets, net | [1] | 180,515 | |
Maintenance spares, net | 54,441 | $ 55,259 | |
Networking Platforms | |||
Segment Reporting Information [Line Items] | |||
Other intangible assets, net | 100,700 | ||
Software and Software-Related Services | |||
Segment Reporting Information [Line Items] | |||
Other intangible assets, net | $ 84,200 | ||
[1] | Does not include amortization of in-process research and development, as estimation of the timing of future amortization expense would be impractical. |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - Patent '673 | May. 29, 2008defendant | Mar. 16, 2012claim |
Loss Contingencies [Line Items] | ||
Number of other defendants | defendant | 4 | |
Number of putative class action lawsuits | claim | 2 |