Price Graph
Price
Yield
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|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Delaware
(State or other jurisdiction of
incorporation or organization)
|
23-2725311
(I.R.S. Employer Identification No.)
|
|
7035 Ridge Road, Hanover, MD
(Address of Principal Executive Offices)
|
21076
(Zip Code)
|
|
Large accelerated filer
þ
|
Accelerated filer
o
|
Non-accelerated filer
o
(do not check if smaller reporting company)
|
Smaller reporting company
o
|
|
Class
|
|
Outstanding at August 24, 2012
|
|
common stock, $.01 par value
|
|
100,202,169
|
|
|
PAGE
NUMBER
|
|
|
|
|
|
|
|
EX-31.1
|
|
|
EX-31.2
|
|
|
EX-32.1
|
|
|
EX-32.2
|
|
|
EX-101 INSTANCE DOCUMENT
|
|
|
EX-101 SCHEMA DOCUMENT
|
|
|
EX-101 CALCULATION LINKBASE DOCUMENT
|
|
|
EX-101 LABELS LINKBASE DOCUMENT
|
|
|
EX-101 PRESENTATION LINKBASE DOCUMENT
|
|
|
EX-101 DEFINITION LINKBASE DOCUMENT
|
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
||||||||
|
Revenue:
|
|
|
|
|
|
|
|
||||||||
|
Products
|
$
|
350,030
|
|
|
$
|
373,418
|
|
|
$
|
1,038,483
|
|
|
$
|
1,091,817
|
|
|
Services
|
85,283
|
|
|
100,672
|
|
|
248,032
|
|
|
276,575
|
|
||||
|
Total revenue
|
435,313
|
|
|
474,090
|
|
|
1,286,515
|
|
|
1,368,392
|
|
||||
|
Cost of goods sold:
|
|
|
|
|
|
|
|
||||||||
|
Products
|
198,217
|
|
|
225,238
|
|
|
615,283
|
|
|
657,362
|
|
||||
|
Services
|
52,199
|
|
|
67,531
|
|
|
151,996
|
|
|
179,012
|
|
||||
|
Total cost of goods sold
|
250,416
|
|
|
292,769
|
|
|
767,279
|
|
|
836,374
|
|
||||
|
Gross profit
|
184,897
|
|
|
181,321
|
|
|
519,236
|
|
|
532,018
|
|
||||
|
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
|
Research and development
|
93,216
|
|
|
88,315
|
|
|
288,630
|
|
|
268,378
|
|
||||
|
Selling and marketing
|
61,895
|
|
|
65,397
|
|
|
180,755
|
|
|
192,325
|
|
||||
|
General and administrative
|
28,172
|
|
|
27,870
|
|
|
98,966
|
|
|
84,350
|
|
||||
|
Acquisition and integration costs
|
4,822
|
|
|
6
|
|
|
39,748
|
|
|
(140
|
)
|
||||
|
Amortization of intangible assets
|
13,673
|
|
|
12,714
|
|
|
56,131
|
|
|
39,152
|
|
||||
|
Restructuring costs
|
504
|
|
|
2,291
|
|
|
5,190
|
|
|
5,864
|
|
||||
|
Change in fair value of contingent consideration
|
—
|
|
|
—
|
|
|
(3,289
|
)
|
|
—
|
|
||||
|
Total operating expenses
|
202,282
|
|
|
196,593
|
|
|
666,131
|
|
|
589,929
|
|
||||
|
Loss from operations
|
(17,385
|
)
|
|
(15,272
|
)
|
|
(146,895
|
)
|
|
(57,911
|
)
|
||||
|
Interest and other income (loss), net
|
(3,160
|
)
|
|
(2,458
|
)
|
|
7,334
|
|
|
(11,732
|
)
|
||||
|
Interest expense
|
(9,470
|
)
|
|
(9,597
|
)
|
|
(28,426
|
)
|
|
(28,813
|
)
|
||||
|
Loss before income taxes
|
(30,015
|
)
|
|
(27,327
|
)
|
|
(167,987
|
)
|
|
(98,456
|
)
|
||||
|
Provision for income taxes
|
1,435
|
|
|
2,490
|
|
|
5,205
|
|
|
6,794
|
|
||||
|
Net loss
|
$
|
(31,450
|
)
|
|
$
|
(29,817
|
)
|
|
$
|
(173,192
|
)
|
|
$
|
(105,250
|
)
|
|
Basic net loss per common share
|
$
|
(0.33
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(1.82
|
)
|
|
$
|
(1.06
|
)
|
|
Diluted net loss per potential common share
|
$
|
(0.33
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(1.82
|
)
|
|
$
|
(1.06
|
)
|
|
Weighted average basic common shares outstanding
|
96,313
|
|
|
99,530
|
|
|
95,389
|
|
|
98,922
|
|
||||
|
Weighted average dilutive potential common shares outstanding
|
96,313
|
|
|
99,530
|
|
|
95,389
|
|
|
98,922
|
|
||||
|
|
October 31,
2011 |
|
July 31,
2012 |
||||
|
ASSETS
|
|
|
|
||||
|
Current assets:
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
541,896
|
|
|
$
|
617,232
|
|
|
Short-term investments
|
—
|
|
|
50,115
|
|
||
|
Accounts receivable, net
|
417,509
|
|
|
379,092
|
|
||
|
Inventories
|
230,076
|
|
|
245,043
|
|
||
|
Prepaid expenses and other
|
143,357
|
|
|
119,039
|
|
||
|
Total current assets
|
1,332,838
|
|
|
1,410,521
|
|
||
|
Long-term investments
|
50,264
|
|
|
—
|
|
||
|
Equipment, furniture and fixtures, net
|
122,558
|
|
|
118,568
|
|
||
|
Other intangible assets, net
|
331,635
|
|
|
275,670
|
|
||
|
Other long-term assets
|
114,123
|
|
|
110,502
|
|
||
|
Total assets
|
$
|
1,951,418
|
|
|
$
|
1,915,261
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
|
Current liabilities:
|
|
|
|
||||
|
Accounts payable
|
$
|
157,116
|
|
|
$
|
205,662
|
|
|
Accrued liabilities
|
197,004
|
|
|
199,970
|
|
||
|
Deferred revenue
|
99,373
|
|
|
78,319
|
|
||
|
Convertible notes payable
|
—
|
|
|
216,210
|
|
||
|
Total current liabilities
|
453,493
|
|
|
700,161
|
|
||
|
Long-term deferred revenue
|
24,425
|
|
|
23,408
|
|
||
|
Other long-term obligations
|
17,263
|
|
|
26,052
|
|
||
|
Long-term convertible notes payable
|
1,442,364
|
|
|
1,225,898
|
|
||
|
Total liabilities
|
1,937,545
|
|
|
1,975,519
|
|
||
|
Commitments and contingencies
|
|
|
|
||||
|
Stockholders’ equity (deficit):
|
|
|
|
||||
|
Preferred stock – par value $0.01; 20,000,000 shares authorized; zero shares issued and outstanding
|
—
|
|
|
—
|
|
||
|
Common stock – par value $0.01; 290,000,000 shares authorized; 97,440,436 and 100,192,289 shares issued and outstanding
|
974
|
|
|
1,002
|
|
||
|
Additional paid-in capital
|
5,753,236
|
|
|
5,788,887
|
|
||
|
Accumulated other comprehensive income (loss)
|
31
|
|
|
(4,529
|
)
|
||
|
Accumulated deficit
|
(5,740,368
|
)
|
|
(5,845,618
|
)
|
||
|
Total stockholders’ equity (deficit)
|
13,873
|
|
|
(60,258
|
)
|
||
|
Total liabilities and stockholders’ equity (deficit)
|
$
|
1,951,418
|
|
|
$
|
1,915,261
|
|
|
|
Nine Months Ended July 31,
|
||||||
|
|
2011
|
|
2012
|
||||
|
Cash flows from operating activities:
|
|
|
|
||||
|
Net loss
|
$
|
(173,192
|
)
|
|
$
|
(105,250
|
)
|
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
|
Amortization of discount on marketable securities
|
(25
|
)
|
|
(39
|
)
|
||
|
Change in fair value of embedded redemption feature
|
(3,380
|
)
|
|
3,160
|
|
||
|
Depreciation of equipment, furniture and fixtures, and amortization of leasehold improvements
|
44,765
|
|
|
43,514
|
|
||
|
Share-based compensation costs
|
27,919
|
|
|
23,656
|
|
||
|
Amortization of intangible assets
|
76,567
|
|
|
55,965
|
|
||
|
Deferred tax provision (benefit)
|
—
|
|
|
(148
|
)
|
||
|
Provision for inventory excess and obsolescence
|
11,461
|
|
|
19,071
|
|
||
|
Provision for warranty
|
10,538
|
|
|
23,495
|
|
||
|
Other
|
2,170
|
|
|
5,441
|
|
||
|
Changes in assets and liabilities, net of effect of acquisition:
|
|
|
|
||||
|
Accounts receivable
|
(72,030
|
)
|
|
37,223
|
|
||
|
Inventories
|
6,331
|
|
|
(34,038
|
)
|
||
|
Prepaid expenses and other
|
(4,462
|
)
|
|
10,890
|
|
||
|
Accounts payable, accruals and other obligations
|
(81,388
|
)
|
|
35,632
|
|
||
|
Deferred revenue
|
22,241
|
|
|
(22,071
|
)
|
||
|
Net cash provided by (used in) operating activities
|
(132,485
|
)
|
|
96,501
|
|
||
|
Cash flows used in investing activities:
|
|
|
|
||||
|
Payments for equipment, furniture, fixtures and intellectual property
|
(41,138
|
)
|
|
(33,000
|
)
|
||
|
Restricted cash
|
(8,727
|
)
|
|
3,546
|
|
||
|
Purchase of available for sale securities
|
(49,894
|
)
|
|
—
|
|
||
|
Proceeds from sale of cost method investment
|
—
|
|
|
524
|
|
||
|
Receipt of contingent consideration related to business acquisition
|
16,394
|
|
|
—
|
|
||
|
Net cash used in investing activities
|
(83,365
|
)
|
|
(28,930
|
)
|
||
|
Cash flows from financing activities:
|
|
|
|
||||
|
Repayment of capital lease obligations
|
—
|
|
|
(1,231
|
)
|
||
|
Proceeds from issuance of common stock
|
13,183
|
|
|
12,022
|
|
||
|
Net cash provided by financing activities
|
13,183
|
|
|
10,791
|
|
||
|
Effect of exchange rate changes on cash and cash equivalents
|
312
|
|
|
(3,026
|
)
|
||
|
Net increase (decrease) in cash and cash equivalents
|
(202,667
|
)
|
|
78,362
|
|
||
|
Cash and cash equivalents at beginning of period
|
688,687
|
|
|
541,896
|
|
||
|
Cash and cash equivalents at end of period
|
$
|
486,332
|
|
|
$
|
617,232
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
||||
|
Cash paid during the period for interest
|
$
|
18,869
|
|
|
$
|
18,978
|
|
|
Cash paid during the period for income taxes, net
|
$
|
1,781
|
|
|
$
|
7,807
|
|
|
Non-cash investing and financing activities
|
|
|
|
||||
|
Purchase of equipment in accounts payable
|
$
|
5,186
|
|
|
$
|
2,686
|
|
|
Fixed assets acquired under capital leases
|
$
|
1,268
|
|
|
$
|
6,033
|
|
|
(1)
|
INTERIM FINANCIAL STATEMENTS
|
|
(2)
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
•
|
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities;
|
|
•
|
Level 2 inputs are quoted prices for identical or similar assets or liabilities in less active markets or model-derived valuations in which significant inputs are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument;
|
|
•
|
Level 3 inputs are unobservable inputs based on Ciena's assumptions used to measure assets and liabilities at fair value.
|
|
(3)
|
RESTRUCTURING COSTS
|
|
|
Workforce
reduction
|
|
Consolidation
of excess
facilities
|
|
Total
|
||||||
|
Balance at October 31, 2011
|
$
|
160
|
|
|
$
|
3,293
|
|
|
$
|
3,453
|
|
|
Additional liability recorded
|
3,934
|
|
|
1,930
|
|
|
5,864
|
|
|||
|
Cash payments
|
(3,262
|
)
|
|
(1,306
|
)
|
|
(4,568
|
)
|
|||
|
Balance at July 31, 2012
|
$
|
832
|
|
|
$
|
3,917
|
|
|
$
|
4,749
|
|
|
Current restructuring liabilities
|
$
|
832
|
|
|
$
|
2,175
|
|
|
$
|
3,007
|
|
|
Non-current restructuring liabilities
|
$
|
—
|
|
|
$
|
1,742
|
|
|
$
|
1,742
|
|
|
|
Workforce
reduction
|
|
Consolidation
of excess
facilities
|
|
Total
|
||||||
|
Balance at October 31, 2010
|
$
|
1,576
|
|
|
$
|
6,392
|
|
|
$
|
7,968
|
|
|
Additional liability recorded
|
5,941
|
|
|
—
|
|
|
5,941
|
|
|||
|
Adjustment to previous estimates
|
—
|
|
|
(751
|
)
|
|
(751
|
)
|
|||
|
Cash payments
|
(5,800
|
)
|
|
(1,723
|
)
|
|
(7,523
|
)
|
|||
|
Balance at July 31, 2011
|
$
|
1,717
|
|
|
$
|
3,918
|
|
|
$
|
5,635
|
|
|
Current restructuring liabilities
|
$
|
1,717
|
|
|
$
|
975
|
|
|
$
|
2,692
|
|
|
Non-current restructuring liabilities
|
$
|
—
|
|
|
$
|
2,943
|
|
|
$
|
2,943
|
|
|
(4)
|
MARKETABLE SECURITIES
|
|
|
July 31, 2012
|
||||||||||||||
|
|
Amortized Cost
|
|
Gross Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated Fair
Value
|
||||||||
|
U.S. government obligations
|
$
|
49,973
|
|
|
$
|
142
|
|
|
$
|
—
|
|
|
$
|
50,115
|
|
|
Included in short-term investments
|
$
|
49,973
|
|
|
$
|
142
|
|
|
$
|
—
|
|
|
$
|
50,115
|
|
|
|
October 31, 2011
|
||||||||||||||
|
|
Amortized Cost
|
|
Gross Unrealized
Gains
|
|
Gross Unrealized
Losses
|
|
Estimated Fair
Value
|
||||||||
|
U.S. government obligations
|
$
|
49,933
|
|
|
$
|
331
|
|
|
$
|
—
|
|
|
$
|
50,264
|
|
|
Included in long-term investments
|
$
|
49,933
|
|
|
$
|
331
|
|
|
$
|
—
|
|
|
$
|
50,264
|
|
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
|
Less than one year
|
$
|
49,973
|
|
|
$
|
50,115
|
|
|
Due in 1-2 years
|
—
|
|
|
—
|
|
||
|
|
$
|
49,973
|
|
|
$
|
50,115
|
|
|
(5)
|
FAIR VALUE MEASUREMENTS
|
|
|
July 31, 2012
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
Assets:
|
|
|
|
|
|
|
|
||||||||
|
U.S. government obligations
|
$
|
50,115
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50,115
|
|
|
Foreign currency forward contracts
|
—
|
|
|
34
|
|
|
—
|
|
|
34
|
|
||||
|
Embedded redemption feature
|
—
|
|
|
—
|
|
|
3,860
|
|
|
3,860
|
|
||||
|
Total assets measured at fair value
|
$
|
50,115
|
|
|
$
|
34
|
|
|
$
|
3,860
|
|
|
$
|
54,009
|
|
|
|
July 31, 2012
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
Assets:
|
|
|
|
|
|
|
|
||||||||
|
Short-term investments
|
$
|
50,115
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50,115
|
|
|
Prepaid expenses and other
|
—
|
|
|
34
|
|
|
—
|
|
|
34
|
|
||||
|
Other long-term assets
|
—
|
|
|
—
|
|
|
3,860
|
|
|
3,860
|
|
||||
|
Total assets measured at fair value
|
$
|
50,115
|
|
|
$
|
34
|
|
|
$
|
3,860
|
|
|
$
|
54,009
|
|
|
|
Level 3
|
||
|
Balance at October 31, 2011
|
$
|
7,020
|
|
|
Issuances
|
—
|
|
|
|
Settlements
|
—
|
|
|
|
Changes in unrealized gain (loss)
|
(3,160
|
)
|
|
|
Transfers into Level 3
|
—
|
|
|
|
Transfers out of Level 3
|
—
|
|
|
|
Balance at July 31, 2012
|
$
|
3,860
|
|
|
(6)
|
ACCOUNTS RECEIVABLE
|
|
(7)
|
INVENTORIES
|
|
|
October 31,
2011 |
|
July 31,
2012 |
||||
|
Raw materials
|
$
|
45,333
|
|
|
$
|
37,976
|
|
|
Work-in-process
|
13,851
|
|
|
12,622
|
|
||
|
Finished goods
|
134,998
|
|
|
185,679
|
|
||
|
Deferred cost of goods sold
|
67,665
|
|
|
46,113
|
|
||
|
|
261,847
|
|
|
282,390
|
|
||
|
Provision for excess and obsolescence
|
(31,771
|
)
|
|
(37,347
|
)
|
||
|
|
$
|
230,076
|
|
|
$
|
245,043
|
|
|
(8)
|
PREPAID EXPENSES AND OTHER
|
|
|
October 31,
2011 |
|
July 31,
2012 |
||||
|
Prepaid VAT and other taxes
|
$
|
44,969
|
|
|
$
|
35,320
|
|
|
Deferred deployment expense
|
17,839
|
|
|
15,586
|
|
||
|
Product demonstration equipment, net
|
46,996
|
|
|
32,552
|
|
||
|
Prepaid expenses
|
14,769
|
|
|
15,115
|
|
||
|
Restricted cash
|
12,533
|
|
|
7,974
|
|
||
|
Other non-trade receivables
|
6,251
|
|
|
12,492
|
|
||
|
|
$
|
143,357
|
|
|
$
|
119,039
|
|
|
(9)
|
EQUIPMENT, FURNITURE AND FIXTURES
|
|
|
October 31,
2011 |
|
July 31,
2012 |
||||
|
Equipment, furniture and fixtures
|
$
|
396,310
|
|
|
$
|
413,881
|
|
|
Leasehold improvements
|
50,380
|
|
|
56,107
|
|
||
|
|
446,690
|
|
|
469,988
|
|
||
|
Accumulated depreciation and amortization
|
(324,132
|
)
|
|
(351,420
|
)
|
||
|
|
$
|
122,558
|
|
|
$
|
118,568
|
|
|
(10)
|
OTHER INTANGIBLE ASSETS
|
|
|
October 31, 2011
|
|
July 31, 2012
|
||||||||||||||||||||
|
|
Gross
Intangible
|
|
Accumulated
Amortization
|
|
Net
Intangible
|
|
Gross
Intangible
|
|
Accumulated
Amortization
|
|
Net
Intangible
|
||||||||||||
|
Developed technology
|
$
|
417,833
|
|
|
$
|
(234,393
|
)
|
|
$
|
183,440
|
|
|
$
|
417,833
|
|
|
$
|
(268,498
|
)
|
|
$
|
149,335
|
|
|
Patents and licenses
|
46,538
|
|
|
(45,320
|
)
|
|
1,218
|
|
|
46,538
|
|
|
(45,504
|
)
|
|
1,034
|
|
||||||
|
Customer relationships, covenants not to compete, outstanding purchase orders and contracts
|
323,573
|
|
|
(176,596
|
)
|
|
146,977
|
|
|
323,573
|
|
|
(198,272
|
)
|
|
125,301
|
|
||||||
|
Total other intangible assets
|
$
|
787,944
|
|
|
$
|
(456,309
|
)
|
|
$
|
331,635
|
|
|
$
|
787,944
|
|
|
$
|
(512,274
|
)
|
|
$
|
275,670
|
|
|
Period ended October 31,
|
|
||
|
2012 (remaining three months)
|
$
|
18,532
|
|
|
2013
|
71,309
|
|
|
|
2014
|
57,151
|
|
|
|
2015
|
52,879
|
|
|
|
2016
|
52,879
|
|
|
|
Thereafter
|
22,920
|
|
|
|
|
$
|
275,670
|
|
|
(11)
|
OTHER BALANCE SHEET DETAILS
|
|
|
October 31,
2011 |
|
July 31,
2012 |
||||
|
Maintenance spares inventory, net
|
$
|
50,442
|
|
|
$
|
53,764
|
|
|
Deferred debt issuance costs, net
|
23,481
|
|
|
19,529
|
|
||
|
Embedded redemption feature
|
7,020
|
|
|
3,860
|
|
||
|
Restricted cash
|
27,507
|
|
|
28,519
|
|
||
|
Other
|
5,673
|
|
|
4,830
|
|
||
|
|
$
|
114,123
|
|
|
$
|
110,502
|
|
|
|
October 31,
2011 |
|
July 31,
2012 |
||||
|
Warranty
|
$
|
47,282
|
|
|
$
|
51,633
|
|
|
Compensation, payroll related tax and benefits
|
51,808
|
|
|
41,719
|
|
||
|
Vacation
|
27,808
|
|
|
30,412
|
|
||
|
Current restructuring liabilities
|
664
|
|
|
3,007
|
|
||
|
Interest payable
|
4,248
|
|
|
9,916
|
|
||
|
Other
|
65,194
|
|
|
63,283
|
|
||
|
|
$
|
197,004
|
|
|
$
|
199,970
|
|
|
|
|
|
|
|
|
|
Balance at
|
||||||
|
Nine months ended
|
Beginning
|
|
|
|
|
|
end of
|
||||||
|
July 31,
|
Balance
|
|
Provisions
|
|
Settlements
|
|
period
|
||||||
|
2011
|
$
|
54,372
|
|
|
10,538
|
|
|
(19,205
|
)
|
|
$
|
45,705
|
|
|
2012
|
$
|
47,282
|
|
|
23,495
|
|
|
(19,144
|
)
|
|
$
|
51,633
|
|
|
|
October 31,
2011 |
|
July 31,
2012 |
||||
|
Products
|
$
|
42,915
|
|
|
$
|
23,081
|
|
|
Services
|
80,883
|
|
|
78,646
|
|
||
|
|
123,798
|
|
|
101,727
|
|
||
|
Less current portion
|
(99,373
|
)
|
|
(78,319
|
)
|
||
|
Long-term deferred revenue
|
$
|
24,425
|
|
|
$
|
23,408
|
|
|
(12)
|
FOREIGN CURRENCY FORWARD CONTRACTS
|
|
(13)
|
CONVERTIBLE NOTES PAYABLE
|
|
|
July 31, 2012
|
||||||
|
Description
|
Carrying Value
|
|
Fair Value
(2)
|
||||
|
0.25% Convertible Senior Notes due May 1, 2013
|
$
|
216,210
|
|
|
$
|
212,967
|
|
|
4.0% Convertible Senior Notes due March 15, 2015
(1)
|
375,898
|
|
|
422,415
|
|
||
|
0.875% Convertible Senior Notes due June 15, 2017
|
500,000
|
|
|
428,750
|
|
||
|
3.75% Convertible Senior Notes due October 15, 2018
|
350,000
|
|
|
391,563
|
|
||
|
|
$
|
1,442,108
|
|
|
$
|
1,455,695
|
|
|
(1)
|
Includes unamortized bond premium related to embedded redemption feature
|
|
(2)
|
The fair value reported above is based on the quoted prices for the notes on the date above.
|
|
(14)
|
EARNINGS (LOSS) PER SHARE CALCULATION
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
Numerator
|
2011
|
|
2012
|
|
2011
|
|
2012
|
||||||||
|
Net loss
|
$
|
(31,450
|
)
|
|
$
|
(29,817
|
)
|
|
$
|
(173,192
|
)
|
|
$
|
(105,250
|
)
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||
|
Denominator
|
2011
|
|
2012
|
|
2011
|
|
2012
|
||||
|
Basic weighted average shares outstanding
|
96,313
|
|
|
99,530
|
|
|
95,389
|
|
|
98,922
|
|
|
Dilutive weighted average shares outstanding
|
96,313
|
|
|
99,530
|
|
|
95,389
|
|
|
98,922
|
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
EPS
|
2011
|
|
2012
|
|
2011
|
|
2012
|
||||||||
|
Basic EPS
|
$
|
(0.33
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(1.82
|
)
|
|
$
|
(1.06
|
)
|
|
Diluted EPS
|
$
|
(0.33
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(1.82
|
)
|
|
$
|
(1.06
|
)
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
||||
|
Shares underlying stock options, restricted stock units and warrants
|
6,032
|
|
|
5,294
|
|
|
6,295
|
|
|
5,681
|
|
|
0.25% Convertible Senior Notes due May 1, 2013
|
5,470
|
|
|
5,470
|
|
|
5,470
|
|
|
5,470
|
|
|
4.00% Convertible Senior Notes due March 15, 2015
|
18,396
|
|
|
18,396
|
|
|
18,396
|
|
|
18,396
|
|
|
0.875% Convertible Senior Notes due June 15, 2017
|
13,108
|
|
|
13,108
|
|
|
13,108
|
|
|
13,108
|
|
|
3.75% Convertible Senior Notes due October 15, 2018
|
17,355
|
|
|
17,356
|
|
|
17,355
|
|
|
17,356
|
|
|
Total excluded due to anti-dilutive effect
|
60,361
|
|
|
59,624
|
|
|
60,624
|
|
|
60,011
|
|
|
(15)
|
SHARE-BASED COMPENSATION EXPENSE
|
|
|
Shares Underlying
Options
Outstanding
|
|
Weighted
Average
Exercise Price
|
|||
|
Balance at October 31, 2011
|
3,690
|
|
|
$
|
30.01
|
|
|
Granted
|
—
|
|
|
—
|
|
|
|
Exercised
|
(40
|
)
|
|
5.78
|
|
|
|
Canceled
|
(329
|
)
|
|
56.67
|
|
|
|
Balance at July 31, 2012
|
3,321
|
|
|
$
|
27.66
|
|
|
|
|
|
|
|
|
Options Outstanding at
|
|
Vested Options at
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
July 31, 2012
|
|
July 31, 2012
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
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
|
|||||||||||||||||||||
|
$
|
0.94
|
|
|
—
|
|
|
$
|
16.31
|
|
|
334
|
|
|
5.36
|
|
|
$
|
8.45
|
|
|
$
|
2,519
|
|
|
283
|
|
|
5.07
|
|
|
$
|
8.06
|
|
|
$
|
2,246
|
|
|
$
|
16.52
|
|
|
—
|
|
|
$
|
17.29
|
|
|
393
|
|
|
2.95
|
|
|
16.68
|
|
|
—
|
|
|
391
|
|
|
2.94
|
|
|
16.68
|
|
|
—
|
|
||||
|
$
|
17.43
|
|
|
—
|
|
|
$
|
24.50
|
|
|
534
|
|
|
2.79
|
|
|
20.47
|
|
|
—
|
|
|
533
|
|
|
2.79
|
|
|
20.47
|
|
|
—
|
|
||||
|
$
|
24.69
|
|
|
—
|
|
|
$
|
28.28
|
|
|
409
|
|
|
4.24
|
|
|
26.99
|
|
|
—
|
|
|
409
|
|
|
4.24
|
|
|
26.99
|
|
|
—
|
|
||||
|
$
|
28.61
|
|
|
—
|
|
|
$
|
31.43
|
|
|
269
|
|
|
2.84
|
|
|
29.75
|
|
|
—
|
|
|
269
|
|
|
2.84
|
|
|
29.75
|
|
|
—
|
|
||||
|
$
|
31.71
|
|
|
—
|
|
|
$
|
32.55
|
|
|
512
|
|
|
0.57
|
|
|
31.72
|
|
|
—
|
|
|
512
|
|
|
0.57
|
|
|
31.72
|
|
|
—
|
|
||||
|
$
|
33.00
|
|
|
—
|
|
|
$
|
37.10
|
|
|
347
|
|
|
4.75
|
|
|
35.17
|
|
|
—
|
|
|
347
|
|
|
4.75
|
|
|
35.17
|
|
|
—
|
|
||||
|
$
|
37.31
|
|
|
—
|
|
|
$
|
47.32
|
|
|
489
|
|
|
2.20
|
|
|
44.83
|
|
|
—
|
|
|
489
|
|
|
2.2
|
|
|
44.83
|
|
|
—
|
|
||||
|
$
|
47.53
|
|
|
—
|
|
|
$
|
55.79
|
|
|
32
|
|
|
1.07
|
|
|
49.35
|
|
|
—
|
|
|
32
|
|
|
1.07
|
|
|
49.35
|
|
|
—
|
|
||||
|
$
|
267.52
|
|
|
—
|
|
|
$
|
267.52
|
|
|
2
|
|
|
0.15
|
|
|
267.52
|
|
|
—
|
|
|
2
|
|
|
0.15
|
|
|
267.52
|
|
|
—
|
|
||||
|
$
|
0.94
|
|
|
—
|
|
|
$
|
267.52
|
|
|
3,321
|
|
|
3.01
|
|
|
$
|
27.66
|
|
|
$
|
2,519
|
|
|
3,267
|
|
|
2.95
|
|
|
$
|
27.93
|
|
|
$
|
2,246
|
|
|
|
Restricted
Stock Units
Outstanding
|
|
Weighted
Average Grant
Date Fair Value
Per Share
|
|
Aggregate
Fair Value
|
|||||
|
Balance at October 31, 2011
|
4,298
|
|
|
$
|
16.28
|
|
|
$
|
59,399
|
|
|
Granted
|
2,250
|
|
|
|
|
|
||||
|
Vested
|
(1,518
|
)
|
|
|
|
|
||||
|
Canceled or forfeited
|
(254
|
)
|
|
|
|
|
||||
|
Balance at July 31, 2012
|
4,776
|
|
|
$
|
14.21
|
|
|
$
|
76,365
|
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
||||||||
|
Product costs
|
$
|
579
|
|
|
$
|
564
|
|
|
$
|
1,658
|
|
|
$
|
1,509
|
|
|
Service costs
|
511
|
|
|
332
|
|
|
1,516
|
|
|
1,136
|
|
||||
|
Share-based compensation expense included in cost of sales
|
1,090
|
|
|
896
|
|
|
3,174
|
|
|
2,645
|
|
||||
|
Research and development
|
2,423
|
|
|
1,841
|
|
|
7,591
|
|
|
6,067
|
|
||||
|
Sales and marketing
|
2,736
|
|
|
2,589
|
|
|
8,871
|
|
|
8,510
|
|
||||
|
General and administrative
|
2,882
|
|
|
1,547
|
|
|
8,023
|
|
|
6,485
|
|
||||
|
Acquisition and integration costs
|
54
|
|
|
—
|
|
|
288
|
|
|
7
|
|
||||
|
Share-based compensation expense included in operating expense
|
8,095
|
|
|
5,977
|
|
|
24,773
|
|
|
21,069
|
|
||||
|
Share-based compensation expense capitalized in inventory, net
|
(152
|
)
|
|
(48
|
)
|
|
(28
|
)
|
|
(58
|
)
|
||||
|
Total share-based compensation
|
$
|
9,033
|
|
|
$
|
6,825
|
|
|
$
|
27,919
|
|
|
$
|
23,656
|
|
|
(16)
|
COMPREHENSIVE LOSS
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
||||||||
|
Net loss
|
$
|
(31,450
|
)
|
|
$
|
(29,817
|
)
|
|
$
|
(173,192
|
)
|
|
$
|
(105,250
|
)
|
|
Change in unrealized gain (loss) on available-for-sale securities, net of tax
|
3
|
|
|
(40
|
)
|
|
378
|
|
|
(119
|
)
|
||||
|
Change in unrealized gain (loss) on foreign currency forward contracts, net of tax
|
(88
|
)
|
|
(214
|
)
|
|
87
|
|
|
22
|
|
||||
|
Change in accumulated translation adjustments
|
(4,290
|
)
|
|
(2,250
|
)
|
|
903
|
|
|
(4,462
|
)
|
||||
|
Total comprehensive loss
|
$
|
(35,825
|
)
|
|
$
|
(32,321
|
)
|
|
$
|
(171,824
|
)
|
|
$
|
(109,809
|
)
|
|
(17)
|
SEGMENT AND ENTITY WIDE DISCLOSURES
|
|
•
|
Packet-Optical Transport
— includes optical transport solutions that increase network capacity and enable more rapid delivery of a broader mix of high-bandwidth services. These products are used by network operators to facilitate the cost effective and efficient transport of voice, video and data traffic in core, regional, metro and access networks. Ciena's Packet-Optical Transport products support the efficient delivery of a wide variety of consumer-oriented network services, as well as key managed service and enterprise applications. Ciena's principal products in this segment include the 6500 Packet-Optical Platform, 4200 Advanced Services Platform, Corestream® Agility Optical Transport System, 5100/5200 Advanced Services Platform, Common Photonic Layer (CPL), and 6100 Multiservice Optical Platform. This segment also includes sales from legacy SONET/SDH, transport and data networking products, as well as certain enterprise-oriented transport solutions that support storage and LAN extension, interconnection of data centers, and virtual private networks. This segment also includes operating system software and enhanced software features embedded in each of these products. Revenue from this segment is included in product revenue on the Consolidated Statement of Operations.
|
|
•
|
Packet-Optical Switching
— includes optical switching platforms that enable automated optical infrastructures for the
|
|
•
|
Carrier-Ethernet Solutions
— principally includes Ciena's 3000 family of service delivery switches and service aggregation switches, the 5000 series of service aggregation switches, and its Carrier Ethernet packet configuration for the 5410 Service Aggregation Switch. These products support the access and aggregation tiers of communications networks and have principally been deployed to support wireless backhaul infrastructures and business data services. Employing sophisticated Carrier Ethernet switching technology, these products deliver quality of service capabilities, virtual local area networking and switching functions, and carrier-grade operations, administration, and maintenance features. This segment also includes legacy broadband products, including the CNX-5 Broadband DSL System (CNX-5), that transitions legacy voice networks to support Internet-based (IP) telephony, video services and DSL. This segment also includes sales of operating system software and enhanced software features embedded in each of these products. Revenue from this segment is included in product revenue on the Consolidated Statement of Operations.
|
|
•
|
Software and Services
— includes the Ciena One software suite, including OneControl, the integrated network and service management software designed to automate and simplify network management, operation and service delivery. These software solutions can track individual services across multiple product suites, facilitating planned network maintenance, outage detection and identification of customers or services affected by network troubles. In addition to Ciena One, this segment includes the ON-Center® Network & Service Management Suite, and the OMEA and Preside platforms from the MEN Business. This segment also includes a broad range of consulting and support services, including installation and deployment, maintenance support, consulting, network design and training activities. Except for revenue from the software portion of this segment, which is included in product revenue, revenue from this segment is included in services revenue on the Consolidated Statement of Operations.
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
||||||||
|
Revenue:
|
|
|
|
|
|
|
|
||||||||
|
Packet-Optical Transport
|
$
|
266,551
|
|
|
$
|
298,477
|
|
|
$
|
825,667
|
|
|
$
|
882,772
|
|
|
Packet-Optical Switching
|
40,682
|
|
|
37,786
|
|
|
107,223
|
|
|
112,221
|
|
||||
|
Carrier-Ethernet Solutions
|
40,475
|
|
|
31,275
|
|
|
99,034
|
|
|
83,828
|
|
||||
|
Software and Services
|
87,605
|
|
|
106,552
|
|
|
254,591
|
|
|
289,571
|
|
||||
|
Consolidated revenue
|
$
|
435,313
|
|
|
$
|
474,090
|
|
|
$
|
1,286,515
|
|
|
$
|
1,368,392
|
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
||||||||
|
Segment profit (loss):
|
|
|
|
|
|
|
|
||||||||
|
Packet-Optical Transport
|
$
|
51,827
|
|
|
$
|
65,762
|
|
|
$
|
127,359
|
|
|
$
|
180,908
|
|
|
Packet-Optical Switching
|
12,783
|
|
|
2,732
|
|
|
34,147
|
|
|
26,255
|
|
||||
|
Carrier-Ethernet Solutions
|
6,519
|
|
|
(201
|
)
|
|
12,409
|
|
|
(11,235
|
)
|
||||
|
Software and Services
|
20,552
|
|
|
24,713
|
|
|
56,691
|
|
|
67,712
|
|
||||
|
Total segment profit
|
91,681
|
|
|
93,006
|
|
|
230,606
|
|
|
263,640
|
|
||||
|
Less: non-performance operating expenses
|
|
|
|
|
|
|
|
||||||||
|
Selling and marketing
|
61,895
|
|
|
65,397
|
|
|
180,755
|
|
|
192,325
|
|
||||
|
General and administrative
|
28,172
|
|
|
27,870
|
|
|
98,966
|
|
|
84,350
|
|
||||
|
Acquisition and integration costs
|
4,822
|
|
|
6
|
|
|
39,748
|
|
|
(140
|
)
|
||||
|
Amortization of intangible assets
|
13,673
|
|
|
12,714
|
|
|
56,131
|
|
|
39,152
|
|
||||
|
Restructuring costs
|
504
|
|
|
2,291
|
|
|
5,190
|
|
|
5,864
|
|
||||
|
Change in fair value of contingent consideration
|
—
|
|
|
—
|
|
|
(3,289
|
)
|
|
—
|
|
||||
|
Add: other non-performance financial items
|
|
|
|
|
|
|
|
||||||||
|
Interest expense and other income (loss), net
|
(12,630
|
)
|
|
(12,055
|
)
|
|
(21,092
|
)
|
|
(40,545
|
)
|
||||
|
Less: Provision for income taxes
|
1,435
|
|
|
2,490
|
|
|
5,205
|
|
|
6,794
|
|
||||
|
Consolidated net loss
|
$
|
(31,450
|
)
|
|
$
|
(29,817
|
)
|
|
$
|
(173,192
|
)
|
|
$
|
(105,250
|
)
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
||||||||
|
United States
|
$
|
227,524
|
|
|
$
|
237,288
|
|
|
$
|
678,674
|
|
|
$
|
723,034
|
|
|
Canada
|
43,815
|
|
|
49,042
|
|
|
128,770
|
|
|
137,129
|
|
||||
|
Other International
|
163,974
|
|
|
187,760
|
|
|
479,071
|
|
|
508,229
|
|
||||
|
Total
|
$
|
435,313
|
|
|
$
|
474,090
|
|
|
$
|
1,286,515
|
|
|
$
|
1,368,392
|
|
|
|
October 31,
2011 |
|
July 31,
2012 |
||||
|
United States
|
$
|
60,848
|
|
|
$
|
60,331
|
|
|
Canada
|
47,424
|
|
|
47,647
|
|
||
|
Other International
|
14,286
|
|
|
10,590
|
|
||
|
Total
|
$
|
122,558
|
|
|
$
|
118,568
|
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
||||||||
|
Company A
|
$
|
75,068
|
|
|
n/a
|
|
|
$
|
202,009
|
|
|
$
|
195,308
|
|
|
|
Company B
|
n/a
|
|
|
n/a
|
|
|
131,721
|
|
|
n/a
|
|
||||
|
Total
|
$
|
75,068
|
|
|
$
|
—
|
|
|
$
|
333,730
|
|
|
$
|
195,308
|
|
|
n/a
|
Denotes revenue representing less than 10% of total revenue for the period
|
|
(18)
|
COMMITMENTS AND CONTINGENCIES
|
|
(19)
|
SUBSEQUENT EVENTS
|
|
•
|
Product revenue for the
third
quarter of fiscal
2012
decreased
by
$11.3 million
, primarily reflecting a decrease of $19.5 million in Packet-Optical Transport revenue in the United States and Europe. This decrease was partially offset by an increase of $6.8 million in Packet-Optical Switching revenue, reflecting the completion of an international,
|
|
•
|
Service revenue for the
third
quarter of fiscal
2012
increased
by
$7.8 million
, primarily reflecting increases in deployment activities and consulting services.
|
|
•
|
Revenue from the United States for the
third
quarter of fiscal
2012
was
$237.3 million
,
a decrease
from
$252.7 million
in the
second
quarter of fiscal
2012
.
|
|
•
|
International revenue for the
third
quarter of fiscal
2012
was
$236.8 million
,
an increase
from
$224.9 million
in the
second
quarter of fiscal
2012
.
|
|
•
|
As a percentage of revenue, international revenue was
49.9%
during the
third
quarter of fiscal
2012
,
an increase
from
47.1%
during the
second
quarter of fiscal
2012
.
|
|
•
|
For the
third
quarter of fiscal
2012
,
no
customer
accounted for greater than 10% of revenue. This compares to two customers that accounted for greater than 10% of revenue and represented
26.9%
of total revenue in the
second
quarter of fiscal
2012
.
|
|
•
|
Packet-Optical Transport
— includes optical transport solutions that increase network capacity and enable more rapid delivery of a broader mix of high-bandwidth services. These products are used by network operators to facilitate the cost effective and efficient transport of voice, video and data traffic in core, regional, metro and access networks. Ciena's Packet-Optical Transport products support the efficient delivery of a wide variety of consumer-oriented network services, as well as key managed service and enterprise applications. Ciena's principal products in this segment include the 6500 Packet-Optical Platform, 4200 Advanced Services Platform; Corestream® Agility Optical Transport System, 5100/5200 Advanced Services Platform, Common Photonic Layer (CPL), and 6100 Multiservice Optical Platform. This segment also includes sales from legacy SONET/SDH, transport and data networking products, as well as certain enterprise-oriented transport solutions that support storage and LAN extension, interconnection of
|
|
•
|
Packet-Optical Switching
— includes optical switching platforms that enable automated optical infrastructures for the delivery of a wide variety of enterprise and consumer-oriented network services. Ciena's principal products in this segment include its family of CoreDirector® Multiservice Optical Switches, its 5430 Reconfigurable Switching System and its OTN configuration for the 5410 Reconfigurable Switching System. These products include multiservice, multi-protocol switching systems that consolidate the functionality of an add/drop multiplexer, digital cross-connect and packet switch into a single, high-capacity intelligent switching system. These products address both the core and metro segments of communications networks and support key managed services, Ethernet/TDM Private Line, Triple Play and IP services. This segment also includes sales of operating system software and enhanced software features embedded in each of these products. Revenue from this segment is included in product revenue on the Consolidated Statement of Operations.
|
|
•
|
Carrier-Ethernet Solutions
— principally includes Ciena's 3000 family of service delivery switches and service aggregation switches, the 5000 series of service aggregation switches, and its Carrier Ethernet packet configuration for the 5410 Service Aggregation Switch. These products support the access and aggregation tiers of communications networks and have principally been deployed to support wireless backhaul infrastructures and business data services. Employing sophisticated Carrier Ethernet switching technology, these products deliver quality of service capabilities, virtual local area networking and switching functions, and carrier-grade operations, administration, and maintenance features. This segment also includes legacy broadband products, including the CNX-5 Broadband DSL System (CNX-5), that transitions legacy voice networks to support Internet-based (IP) telephony, video services and DSL. This segment also includes sales of operating system software and enhanced software features embedded in each of these products. Revenue from this segment is included in product revenue on the Consolidated Statement of Operations.
|
|
•
|
Software and Services
— includes the Ciena One software suite, including OneControl, the integrated network and service management software designed to automate and simplify network management, operation and service delivery. These software solutions can track individual services across multiple product suites, facilitating planned network maintenance, outage detection and identification of customers or services affected by network troubles. In addition to Ciena One, this segment includes the ON-Center® Network & Service Management Suite, and the OMEA and Preside platforms from the MEN Business. This segment also includes a broad range of consulting and support services, including installation and deployment, maintenance support, consulting, network design and training activities. Except for revenue from the software portion of this segment, which is included in product revenue, revenue from this segment is included in services revenue on the Consolidated Statement of Operations.
|
|
|
Quarter Ended July 31,
|
|
Increase
|
|
|
|||||||||||||
|
|
2011
|
|
%*
|
|
2012
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Packet-Optical Transport
|
$
|
266,551
|
|
|
61.3
|
|
$
|
298,477
|
|
|
63.0
|
|
$
|
31,926
|
|
|
12.0
|
|
|
Packet-Optical Switching
|
40,682
|
|
|
9.3
|
|
37,786
|
|
|
8.0
|
|
(2,896
|
)
|
|
(7.1
|
)
|
|||
|
Carrier-Ethernet Solutions
|
40,475
|
|
|
9.3
|
|
31,275
|
|
|
6.6
|
|
(9,200
|
)
|
|
(22.7
|
)
|
|||
|
Software and Services
|
87,605
|
|
|
20.1
|
|
106,552
|
|
|
22.4
|
|
18,947
|
|
|
21.6
|
|
|||
|
Consolidated revenue
|
$
|
435,313
|
|
|
100.0
|
|
$
|
474,090
|
|
|
100.0
|
|
$
|
38,777
|
|
|
8.9
|
|
|
•
|
Packet-Optical Transport
revenue
increased
reflecting a $77.5 million increase in sales of our 6500 Packet-Optical
|
|
•
|
Packet-Optical Switching
revenue
decreased
reflecting a $31.1 million decrease in sales of our CoreDirector® Multiservice Optical Switch, partially offset by increases of $22.6 million of our 5430 Reconfigurable Switching System and $5.6 million of the OTN configuration for the 5410 Reconfigurable Switching System, primarily relating to the completion of an international, solutions-based, submarine network deployment. Packet-Optical Switching revenue has historically reflected sales of our CoreDirector platform, which has a concentrated customer base. Our Packet-Optical Switching segment is in the midst of a platform transition to our next-generation 5430 Reconfigurable Switching System and the OTN configuration for the 5410 Reconfigurable Switching System. As a result of these factors, revenue and gross margin for this segment can fluctuate considerably depending upon individual customer purchasing decisions and the level of initial deployments with customers.
|
|
•
|
Carrier-Ethernet Solutions
revenue
decreased
reflecting decreases of $12.3 million in sales of our 3000 and 5000 families of service delivery and aggregation switches and $2.1 million in sales of legacy broadband products, partially offset by a $5.2 million increase in sales of our 5410 Service Aggregation Switch.
|
|
•
|
Software and Services
revenue
increased
primarily due to a $16.1 million increase in installation, deployment and consulting services. Segment revenue also benefited from a $3.6 million increase in software sales.
|
|
|
Quarter Ended July 31,
|
|
Increase
|
|
|
||||||||||||
|
|
2011
|
|
%*
|
|
2012
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
|
United States
|
$
|
227,524
|
|
|
52.3
|
|
$
|
237,288
|
|
|
50.1
|
|
$
|
9,764
|
|
|
4.3
|
|
International
|
207,789
|
|
|
47.7
|
|
236,802
|
|
|
49.9
|
|
29,013
|
|
|
14.0
|
|||
|
Total
|
$
|
435,313
|
|
|
100.0
|
|
$
|
474,090
|
|
|
100.0
|
|
$
|
38,777
|
|
|
8.9
|
|
•
|
United States revenue
increased
primarily due to sales increases of $22.1 million in Packet-Optical Transport products and $10.4 million in Software and Services. These increases were partially offset by decreases of $13.0 million in Packet-Optical Switching products and $9.7 million in Carrier-Ethernet Solutions sales.
|
|
•
|
International revenue
increased
primarily due to sales increases of $10.1 million in Packet-Optical Switching, $9.9 million in Packet-Optical Transport and $8.6 million in Software and Services.
|
|
|
Quarter Ended July 31,
|
|
Increase
|
|
|
|||||||||||||
|
|
2011
|
|
%*
|
|
2012
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
|
Total revenue
|
$
|
435,313
|
|
|
100.0
|
|
$
|
474,090
|
|
|
100.0
|
|
$
|
38,777
|
|
|
8.9
|
|
|
Total cost of goods sold
|
250,416
|
|
|
57.5
|
|
292,769
|
|
|
61.8
|
|
42,353
|
|
|
16.9
|
|
|||
|
Gross profit
|
$
|
184,897
|
|
|
42.5
|
|
$
|
181,321
|
|
|
38.2
|
|
$
|
(3,576
|
)
|
|
(1.9
|
)
|
|
|
Quarter Ended July 31,
|
|
Increase
|
|
|
|||||||||||||
|
|
2011
|
|
%*
|
|
2012
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
|
Product revenue
|
$
|
350,030
|
|
|
100.0
|
|
$
|
373,418
|
|
|
100.0
|
|
$
|
23,388
|
|
|
6.7
|
|
|
Product cost of goods sold
|
198,217
|
|
|
56.6
|
|
225,238
|
|
|
60.3
|
|
27,021
|
|
|
13.6
|
|
|||
|
Product gross profit
|
$
|
151,813
|
|
|
43.4
|
|
$
|
148,180
|
|
|
39.7
|
|
$
|
(3,633
|
)
|
|
(2.4
|
)
|
|
|
Quarter Ended July 31,
|
|
Increase
|
|
|
||||||||||||
|
|
2011
|
|
%*
|
|
2012
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
|
Service revenue
|
$
|
85,283
|
|
|
100.0
|
|
$
|
100,672
|
|
|
100.0
|
|
$
|
15,389
|
|
|
18.0
|
|
Service cost of goods sold
|
52,199
|
|
|
61.2
|
|
67,531
|
|
|
67.1
|
|
15,332
|
|
|
29.4
|
|||
|
Service gross profit
|
$
|
33,084
|
|
|
38.8
|
|
$
|
33,141
|
|
|
32.9
|
|
$
|
57
|
|
|
0.2
|
|
•
|
Gross profit as a percentage of revenue
decreased
as a result of the factors described below.
|
|
•
|
Gross profit on products as a percentage of product revenue
decreased
primarily due to a higher concentration of lower margin product revenue within our Packet-Optical Switching and Packet-Optical Transport segments and geographic mix.
|
|
•
|
Gross profit on services as a percentage of services revenue
decreased
primarily due to a higher concentration of revenue from lower margin installation and deployment services for international solutions-based projects.
|
|
|
Quarter Ended July 31,
|
|
Increase
|
|
|
|||||||||||||
|
|
2011
|
|
%*
|
|
2012
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
|
Research and development
|
$
|
93,216
|
|
|
21.4
|
|
$
|
88,315
|
|
|
18.6
|
|
$
|
(4,901
|
)
|
|
(5.3
|
)
|
|
Selling and marketing
|
61,895
|
|
|
14.2
|
|
65,397
|
|
|
13.8
|
|
3,502
|
|
|
5.7
|
|
|||
|
General and administrative
|
28,172
|
|
|
6.5
|
|
27,870
|
|
|
5.9
|
|
(302
|
)
|
|
(1.1
|
)
|
|||
|
Acquisition and integration costs
|
4,822
|
|
|
1.1
|
|
6
|
|
|
—
|
|
(4,816
|
)
|
|
(99.9
|
)
|
|||
|
Amortization of intangible assets
|
13,673
|
|
|
3.1
|
|
12,714
|
|
|
2.7
|
|
(959
|
)
|
|
(7.0
|
)
|
|||
|
Restructuring costs
|
504
|
|
|
0.1
|
|
2,291
|
|
|
0.5
|
|
1,787
|
|
|
354.6
|
|
|||
|
Total operating expenses
|
$
|
202,282
|
|
|
46.4
|
|
$
|
196,593
|
|
|
41.5
|
|
$
|
(5,689
|
)
|
|
(2.8
|
)
|
|
•
|
Research and development expense
benefited from
$3.4 million
as a result of foreign exchange rates, primarily due to the strengthening of the U.S. dollar in relation to the Canadian dollar and the Indian Rupee. The
$4.9 million
decrease
primarily reflects decreases of $9.5 million in employee compensation and related costs and $1.5 million in depreciation expense, offset by increases of $1.7 million in professional services and $1.2 million in
|
|
•
|
Selling and marketing expense
benefited from
$1.9 million
due to foreign exchange rates, primarily due to the strengthening of the U.S. dollar in relation to the Euro and the Canadian dollar. The
$3.5 million
increase
primarily reflects increases of $1.3 million in facilities and information systems expense, $1.3 million in travel and related expense, and $1.2 million in costs associated with marketing programs.
|
|
•
|
General and administrative expense
remained relatively unchanged. General and administrative expense for fiscal 2012 reflects increases of $2.7 million in facilities and informations systems expense and $1.0 million in professional services, offset by a $3.7 million decrease in employee compensation.
|
|
•
|
Acquisition and integration costs
principally consist of transaction, consulting and third party service fees related to the acquisition and integration of the MEN Business. This integration activity was substantially completed in the first half of fiscal 2011.
|
|
•
|
Amortization of intangible assets
decreased
slightly due to certain intangible assets acquired from the MEN Business having reached the end of their economic lives during fiscal 2011.
|
|
•
|
Restructuring costs
for the third quarter of 2012 primarily reflect the consolidation of certain facilities associated with our operations in Maryland and the transition to our new headquarters facility.
|
|
|
Quarter Ended July 31,
|
|
Increase
|
|
|
|||||||||||||||
|
|
2011
|
|
%*
|
|
2012
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||||
|
Interest and other income (loss), net
|
$
|
(3,160
|
)
|
|
(0.7
|
)
|
|
$
|
(2,458
|
)
|
|
(0.5
|
)
|
|
$
|
702
|
|
|
(22.2
|
)
|
|
Interest expense
|
$
|
9,470
|
|
|
2.2
|
|
|
$
|
9,597
|
|
|
2.0
|
|
|
$
|
127
|
|
|
1.3
|
|
|
Provision for income taxes
|
$
|
1,435
|
|
|
0.3
|
|
|
$
|
2,490
|
|
|
0.5
|
|
|
$
|
1,055
|
|
|
73.5
|
|
|
•
|
Interest and other income (loss), net
decreased
due to a $7.4 million in non-cash gains related to the change in fair value of the embedded redemption feature associated with our 4.0% convertible senior notes due March 15, 2015, partially offset by a $6.9 million expense related to the effect of foreign exchange rates on assets and liabilities denominated in a currency other than the relevant functional currency.
|
|
•
|
Interest expense
remained relatively unchanged.
|
|
•
|
Provision for income taxes
increased
primarily due to increased foreign taxes.
|
|
|
Nine Months Ended July 31,
|
|
Increase
|
|
|
|||||||||||||
|
|
2011
|
|
%*
|
|
2012
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Packet-Optical Transport
|
$
|
825,667
|
|
|
64.2
|
|
$
|
882,772
|
|
|
64.5
|
|
$
|
57,105
|
|
|
6.9
|
|
|
Packet-Optical Switching
|
107,223
|
|
|
8.3
|
|
112,221
|
|
|
8.2
|
|
4,998
|
|
|
4.7
|
|
|||
|
Carrier-Ethernet Solutions
|
99,034
|
|
|
7.7
|
|
83,828
|
|
|
6.1
|
|
(15,206
|
)
|
|
(15.4
|
)
|
|||
|
Software and Services
|
254,591
|
|
|
19.8
|
|
289,571
|
|
|
21.2
|
|
34,980
|
|
|
13.7
|
|
|||
|
Consolidated revenue
|
$
|
1,286,515
|
|
|
100.0
|
|
$
|
1,368,392
|
|
|
100.0
|
|
$
|
81,877
|
|
|
6.4
|
|
|
•
|
Packet-Optical Transport
revenue
increased
reflecting a $174.1 million increase in sales of our 6500 Packet-Optical Platform, largely driven by service provider demand for high-capacity, optical transport, including coherent 40G and 100G network infrastructures. This increase was partially offset by sales decreases of $45.0 million in our 4200 Advanced Services Platform, $27.8 million of 5100/5200 Advanced Services Platform, $14.4 million of CPL, $16.1 million in 6100 Multiservice Optical Platform and $13.7 million in legacy transport products.
|
|
•
|
Packet-Optical Switching
revenue
increased
reflecting a $29.1 million increase in sales of our 5430 Reconfigurable Switching System and a $9.5 million increase in sales of the OTN configuration for the 5410 Reconfigurable Switching System. These increases were partially offset by a decrease of $33.6 million in sales of our CoreDirector® Multiservice Optical Switches.
|
|
•
|
Carrier-Ethernet Solutions
revenue
decreased
reflecting decreases of $11.6 million in sales of legacy broadband products and $4.3 million in sales of our 3000 and 5000 families of service delivery and aggregation switches. These decreases were partially offset by a $0.7 million increase in sales of our 5410 Service Aggregation Switch to support wireless backhaul, Ethernet business services and residential broadband applications.
|
|
•
|
Software and Services
revenue
increased
primarily due to increases of $24.0 million in installation, deployment and consulting services, $4.6 million in maintenance support revenue and $6.4 million in software sales.
|
|
|
Nine Months Ended July 31,
|
|
Increase
|
|
|
||||||||||||
|
|
2011
|
|
%*
|
|
2012
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
|
United States
|
$
|
678,674
|
|
|
52.8
|
|
$
|
723,034
|
|
|
52.8
|
|
$
|
44,360
|
|
|
6.5
|
|
International
|
607,841
|
|
|
47.2
|
|
645,358
|
|
|
47.2
|
|
37,517
|
|
|
6.2
|
|||
|
Total
|
$
|
1,286,515
|
|
|
100.0
|
|
$
|
1,368,392
|
|
|
100.0
|
|
$
|
81,877
|
|
|
6.4
|
|
•
|
United States revenue
increased
primarily due to increases of $41.2 million in Packet-Optical Transport sales and $22.6 million in Software and Services revenue. These increases were partially offset by decreases of $18.8 million in Carrier-Ethernet Solutions sales and $0.6 million in Packet-Optical Switching sales.
|
|
•
|
International revenue
increased
primarily due to increases of $15.9 million in Packet-Optical Transport sales, $12.4 million in Software and Services revenue, $5.7 million in Packet-Optical Switching sales, and $3.6 million in Carrier-Ethernet Solutions sales.
|
|
|
Nine Months Ended July 31,
|
|
Increase
|
|
|
||||||||||||
|
|
2011
|
|
%*
|
|
2012
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
|
Total revenue
|
$
|
1,286,515
|
|
|
100.0
|
|
$
|
1,368,392
|
|
|
100.0
|
|
$
|
81,877
|
|
|
6.4
|
|
Total cost of goods sold
|
767,279
|
|
|
59.6
|
|
836,374
|
|
|
61.1
|
|
69,095
|
|
|
9.0
|
|||
|
Gross profit
|
$
|
519,236
|
|
|
40.4
|
|
$
|
532,018
|
|
|
38.9
|
|
$
|
12,782
|
|
|
2.5
|
|
|
Nine Months Ended July 31,
|
|
Increase
|
|
|
||||||||||||
|
|
2011
|
|
%*
|
|
2012
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
|
Product revenue
|
$
|
1,038,483
|
|
|
100.0
|
|
$
|
1,091,817
|
|
|
100.0
|
|
$
|
53,334
|
|
|
5.1
|
|
Product cost of goods sold
|
615,283
|
|
|
59.2
|
|
657,362
|
|
|
60.2
|
|
42,079
|
|
|
6.8
|
|||
|
Product gross profit
|
$
|
423,200
|
|
|
40.8
|
|
$
|
434,455
|
|
|
39.8
|
|
$
|
11,255
|
|
|
2.7
|
|
|
Nine Months Ended July 31,
|
|
Increase
|
|
|
||||||||||||
|
|
2011
|
|
%*
|
|
2012
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
|
Service revenue
|
$
|
248,032
|
|
|
100.0
|
|
$
|
276,575
|
|
|
100.0
|
|
$
|
28,543
|
|
|
11.5
|
|
Service cost of goods sold
|
151,996
|
|
|
61.3
|
|
179,012
|
|
|
64.7
|
|
27,016
|
|
|
17.8
|
|||
|
Service gross profit
|
$
|
96,036
|
|
|
38.7
|
|
$
|
97,563
|
|
|
35.3
|
|
$
|
1,527
|
|
|
1.6
|
|
•
|
Gross profit as a percentage of revenue
decreased
as a result of the factors described below.
|
|
•
|
Gross profit on products as a percentage of product revenue
decreased
primarily due to a higher concentration of lower margin product revenue within our Packet-Optical Switching and increased warranty expense and provisions for inventory excess and obsolescence, partially offset by higher margin on our Packet-Optical Transport products. Gross profit for the first nine months of fiscal 2011 also benefited from a $6.9 million reduction in warranty provision due to our consolidation of certain support operations and processes that resulted in lower costs to service future warranty obligations. The reduction was partially offset by a higher cost of goods sold of $5.7 million in fiscal 2011 due to the required revaluation of acquired finished goods inventory of the MEN Business to fair value.
|
|
•
|
Gross profit on services as a percentage of services revenue
decreased
due to a higher concentration of lower margin installation and deployment services for international solutions-based projects.
|
|
|
Nine Months Ended July 31,
|
|
Increase
|
|
|
|||||||||||||||
|
|
2011
|
|
%*
|
|
2012
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||||
|
Research and development
|
$
|
288,630
|
|
|
22.4
|
|
|
$
|
268,378
|
|
|
19.6
|
|
|
$
|
(20,252
|
)
|
|
(7.0
|
)
|
|
Selling and marketing
|
180,755
|
|
|
14.0
|
|
|
192,325
|
|
|
14.1
|
|
|
11,570
|
|
|
6.4
|
|
|||
|
General and administrative
|
98,966
|
|
|
7.7
|
|
|
84,350
|
|
|
6.2
|
|
|
(14,616
|
)
|
|
(14.8
|
)
|
|||
|
Acquisition and integration costs
|
39,748
|
|
|
3.1
|
|
|
(140
|
)
|
|
0.0
|
|
|
(39,888
|
)
|
|
(100.4
|
)
|
|||
|
Amortization of intangible assets
|
56,131
|
|
|
4.4
|
|
|
39,152
|
|
|
2.9
|
|
|
(16,979
|
)
|
|
(30.2
|
)
|
|||
|
Restructuring costs
|
5,190
|
|
|
0.4
|
|
|
5,864
|
|
|
0.4
|
|
|
674
|
|
|
13.0
|
|
|||
|
Change in fair value of contingent consideration
|
(3,289
|
)
|
|
(0.3
|
)
|
|
—
|
|
|
0.0
|
|
|
3,289
|
|
|
(100.0
|
)
|
|||
|
Total operating expenses
|
$
|
666,131
|
|
|
51.7
|
|
|
$
|
589,929
|
|
|
43.2
|
|
|
$
|
(76,202
|
)
|
|
(11.4
|
)
|
|
•
|
Research and development expense
benefited from
$7.4 million
as a result of foreign exchange rates, primarily due to the strengthening of the U.S. dollar in relation to the Canadian dollar and the Indian Rupee. The
$20.3 million
decrease
primarily reflects decreases of $15.2 million in employee compensation and related costs, $3.5 million in prototype expense, and $3.2 million in depreciation expense.
|
|
•
|
Selling and marketing expense
benefited from
$3.5 million
due to foreign exchange rates, primarily due to the strengthening of the U.S. dollar in relation to the Euro and the Canadian dollar. The
$11.6 million
increase
primarily reflects increases of $7.2 million in employee compensation, $2.4 million in facilities and information systems expense and $1.6 million of travel and related costs.
|
|
•
|
General and administrative expense
decreased
by $6.8 million in professional services, $4.5 million in employee compensation and related costs, and $3.6 million in facilities and information systems expense.
|
|
•
|
Acquisition and integration costs
principally consist of transaction, consulting and third party service fees related to the acquisition and integration of the MEN Business into the combined operations. This integration activity was substantially completed in the first half of fiscal 2011.
|
|
•
|
Amortization of intangible assets
decreased
due to certain intangible assets from the MEN Business reaching the end of their economic lives during fiscal 2011.
|
|
•
|
Restructuring costs
primarily reflect certain severance and related expense associated with headcount reductions and restructuring activities to align our workforce and resources with market opportunities for fiscal 2011 and 2012. In addition, restructuring costs for fiscal 2102 include the consolidation of certain facilities located within Maryland.
|
|
•
|
Change in fair value of contingent consideration
relates to the contingent refund right we received as part of the acquisition of the MEN Business associated with the early termination of the Carling lease. During the first quarter of fiscal 2011, Ciena received both notice of early termination from Nortel shortening the Carling lease to five years and the corresponding $33.5 million early termination payment.
|
|
|
Nine Months Ended July 31,
|
|
Increase
|
|
|
||||||||||||||
|
|
2011
|
|
%*
|
|
2012
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||||
|
Interest and other income (loss), net
|
$
|
7,334
|
|
|
0.6
|
|
$
|
(11,732
|
)
|
|
(0.9
|
)
|
|
$
|
(19,066
|
)
|
|
(260.0
|
)
|
|
Interest expense
|
$
|
28,426
|
|
|
2.2
|
|
$
|
28,813
|
|
|
2.1
|
|
|
$
|
387
|
|
|
1.4
|
|
|
Provision for income taxes
|
$
|
5,205
|
|
|
0.4
|
|
$
|
6,794
|
|
|
0.5
|
|
|
$
|
1,589
|
|
|
30.5
|
|
|
•
|
Interest and other income (loss), net
decreased
due to a $3.2 million non-cash loss in fiscal 2012 related to the change in fair value of the embedded redemption feature associated with our 4.0% convertible senior notes due March 15, 2015 as compared to a $3.4 million non-cash gain in fiscal 2011. Interest and other income (loss), net was also reduced by $12.5 million related to the effect of foreign exchange rates on assets and liabilities denominated in a currency other than the relevant functional currency.
|
|
•
|
Interest expense
remained relatively unchanged.
|
|
•
|
Provision for income taxes
increased
primarily due to increased foreign taxes.
|
|
|
Quarter Ended July 31,
|
|
|
|
||||||||||
|
|
2011
|
|
2012
|
|
Increase (decrease)
|
|
%*
|
|||||||
|
Segment profit (loss):
|
|
|
|
|
|
|
|
|||||||
|
Packet-Optical Transport
|
$
|
51,827
|
|
|
$
|
65,762
|
|
|
$
|
13,935
|
|
|
26.9
|
|
|
Packet-Optical Switching
|
$
|
12,783
|
|
|
$
|
2,732
|
|
|
$
|
(10,051
|
)
|
|
(78.6
|
)
|
|
Carrier-Ethernet Solutions
|
$
|
6,519
|
|
|
$
|
(201
|
)
|
|
$
|
(6,720
|
)
|
|
(103.1
|
)
|
|
Software and Services
|
$
|
20,552
|
|
|
$
|
24,713
|
|
|
$
|
4,161
|
|
|
20.2
|
|
|
•
|
Packet-Optical Transport
segment
profit
increased
primarily due to increased sales volume and decreased research and development costs, partially offset by decreased gross margin.
|
|
•
|
Packet-Optical Switching
segment
profit
decreased
primarily due to lower gross margin from a change in product mix as described in our operating segment revenue discussion above.
|
|
•
|
Carrier-Ethernet Solutions
segment
profit
decreased
primarily due to reduced sales volume and increased research and development costs.
|
|
•
|
Software and Services
segment
profit
increased
primarily due to increased sales volume and decreased research and development costs, partially offset by a higher concentration of revenue from lower margin installation and deployment services for international solutions-based projects.
|
|
|
Nine Months Ended July 31,
|
|
|
|
||||||||||
|
|
2011
|
|
2012
|
|
Increase (decrease)
|
|
%*
|
|||||||
|
Segment profit (loss):
|
|
|
|
|
|
|
|
|||||||
|
Packet-Optical Transport
|
$
|
127,359
|
|
|
$
|
180,908
|
|
|
$
|
53,549
|
|
|
42.0
|
|
|
Packet-Optical Switching
|
$
|
34,147
|
|
|
$
|
26,255
|
|
|
$
|
(7,892
|
)
|
|
(23.1
|
)
|
|
Carrier-Ethernet Solutions
|
$
|
12,409
|
|
|
$
|
(11,235
|
)
|
|
$
|
(23,644
|
)
|
|
(190.5
|
)
|
|
Software and Services
|
$
|
56,691
|
|
|
$
|
67,712
|
|
|
$
|
11,021
|
|
|
19.4
|
|
|
•
|
Packet-Optical Transport
segment
profit
increased
primarily due to lower research and development costs and increased sales volume and gross margin.
|
|
•
|
Packet-Optical Switching
segment
profit
decreased
primarily due to lower gross margin from a change in product mix as described in our operating segment revenue discussion above. The decrease was partially offset by lower research and development costs.
|
|
•
|
Carrier-Ethernet Solutions
segment
profit
decreased
primarily due to reduced sales volume, lower gross margin and increased research and development costs.
|
|
•
|
Software and Services
segment
profit
increased
primarily due to increased sales volume and decreased research and development costs, partially offset by a higher concentration of revenue from lower margin installation and deployment services for international solutions-based projects.
|
|
|
October 31,
2011 |
|
July 31,
2012 |
|
Increase
(decrease)
|
||||||
|
Cash and cash equivalents
|
$
|
541,896
|
|
|
$
|
617,232
|
|
|
$
|
75,336
|
|
|
Short-term investments in marketable debt securities
|
—
|
|
|
50,115
|
|
|
50,115
|
|
|||
|
Long-term investments in marketable debt securities
|
50,264
|
|
|
—
|
|
|
(50,264
|
)
|
|||
|
Total cash and cash equivalents and investments in marketable debt securities
|
$
|
592,160
|
|
|
$
|
667,347
|
|
|
$
|
75,187
|
|
|
•
|
$96.5 million
cash
generated
from operations, consisting of
$68.9 million
provided by
net losses (adjusted for non-cash charges) and
$27.6 million
provided by
working capital;
|
|
•
|
$12.0 million
from stock issuances under our employee stock purchase plan and the exercise of employee stock options; and
|
|
•
|
$33.0 million
used for purchases of equipment, furniture, fixtures and intellectual property, partially offset by
$3.5 million
transferred from restricted cash due to a decrease in the amount of collateral required to support our standby letters of credit.
|
|
|
Nine months ended
|
||
|
|
July 31, 2012
|
||
|
Net loss
|
$
|
(105,250
|
)
|
|
Adjustments for non-cash charges:
|
|
||
|
Amortization of premium on marketable securities
|
(39
|
)
|
|
|
Change in fair value of embedded redemption feature
|
3,160
|
|
|
|
Depreciation of equipment, furniture and fixtures, and amortization of leasehold improvements
|
43,514
|
|
|
|
Share-based compensation costs
|
23,656
|
|
|
|
Amortization of intangible assets
|
55,965
|
|
|
|
Deferred tax benefit
|
(148
|
)
|
|
|
Provision for inventory excess and obsolescence
|
19,071
|
|
|
|
Provision for warranty
|
23,495
|
|
|
|
Other
|
5,441
|
|
|
|
Net losses (adjusted for non-cash charges)
|
$
|
68,865
|
|
|
|
October 31,
2011 |
|
July 31,
2012 |
|
Increase
(decrease)
|
||||||
|
Accounts receivable, net
|
$
|
417,509
|
|
|
$
|
379,092
|
|
|
$
|
(38,417
|
)
|
|
|
October 31,
2011 |
|
July 31,
2012 |
|
Increase
(decrease)
|
||||||
|
Raw materials
|
$
|
45,333
|
|
|
$
|
37,976
|
|
|
$
|
(7,357
|
)
|
|
Work-in-process
|
13,851
|
|
|
12,622
|
|
|
(1,229
|
)
|
|||
|
Finished goods
|
134,998
|
|
|
185,679
|
|
|
50,681
|
|
|||
|
Deferred cost of goods sold
|
67,665
|
|
|
46,113
|
|
|
(21,552
|
)
|
|||
|
Gross inventory
|
261,847
|
|
|
282,390
|
|
|
20,543
|
|
|||
|
Provision for inventory excess and obsolescence
|
(31,771
|
)
|
|
(37,347
|
)
|
|
(5,576
|
)
|
|||
|
Inventory
|
$
|
230,076
|
|
|
$
|
245,043
|
|
|
$
|
14,967
|
|
|
|
October 31,
2011 |
|
July 31,
2012 |
|
Increase
(decrease)
|
||||||
|
Accounts payable
|
$
|
157,116
|
|
|
$
|
205,662
|
|
|
$
|
48,546
|
|
|
Accrued liabilities
|
197,004
|
|
|
199,970
|
|
|
2,966
|
|
|||
|
Other long-term obligations
|
17,263
|
|
|
26,052
|
|
|
8,789
|
|
|||
|
Accounts payable, accruals and other obligations
|
$
|
371,383
|
|
|
$
|
431,684
|
|
|
$
|
60,301
|
|
|
|
October 31,
2011 |
|
July 31,
2012 |
|
Increase
(decrease)
|
||||||
|
Products
|
$
|
42,915
|
|
|
$
|
23,081
|
|
|
$
|
(19,834
|
)
|
|
Services
|
80,883
|
|
|
78,646
|
|
|
(2,237
|
)
|
|||
|
Total deferred revenue
|
$
|
123,798
|
|
|
$
|
101,727
|
|
|
$
|
(22,071
|
)
|
|
|
Total
|
|
Less than one year
|
|
One to three years
|
|
Three to five years
|
|
Thereafter
|
||||||||||
|
Interest due on convertible notes
|
$
|
152,729
|
|
|
$
|
33,041
|
|
|
$
|
65,000
|
|
|
$
|
35,000
|
|
|
$
|
19,688
|
|
|
Principal due at maturity on convertible notes
|
1,441,210
|
|
|
216,210
|
|
|
375,000
|
|
|
500,000
|
|
|
350,000
|
|
|||||
|
Operating leases (1)
|
149,024
|
|
|
30,927
|
|
|
47,809
|
|
|
22,996
|
|
|
47,292
|
|
|||||
|
Capital leases
|
6,422
|
|
|
2,774
|
|
|
3,648
|
|
|
—
|
|
|
—
|
|
|||||
|
Other obligations
|
1,944
|
|
|
924
|
|
|
1,020
|
|
|
—
|
|
|
—
|
|
|||||
|
Purchase obligations (2)
|
166,133
|
|
|
166,133
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Total (3)
|
$
|
1,917,462
|
|
|
$
|
450,009
|
|
|
$
|
492,477
|
|
|
$
|
557,996
|
|
|
$
|
416,980
|
|
|
(1)
|
The amount for operating leases above does not include insurance, taxes, maintenance and other costs required by the applicable operating lease. These costs are variable and are not expected to have a material impact.
|
|
(2)
|
Purchase obligations relate to purchase order commitments to our contract manufacturers and component suppliers for inventory. In certain instances, we are permitted to cancel, reschedule or adjust these orders. Consequently, only a portion of the amount reported above relates to firm, non-cancelable and unconditional obligations.
|
|
(3)
|
As of
July 31, 2012
, we also had approximately $9.7 million of other long-term obligations in our Condensed Consolidated Balance Sheet for unrecognized tax positions that are not included in this table because the timing or amount of any cash settlement with the respective tax authority cannot be reasonably estimated.
|
|
|
Total
|
|
Less than one year
|
|
One to three years
|
|
Three to five years
|
Thereafter
|
||||||||||
|
Standby letters of credit
|
$
|
43,869
|
|
|
$
|
36,998
|
|
|
$
|
4,908
|
|
|
$
|
716
|
|
$
|
1,247
|
|
|
•
|
broader macroeconomic conditions, including weakness and volatility in global markets, affecting our customers and their consumer and enterprise end users;
|
|
•
|
changes in capital spending by large communications service providers;
|
|
•
|
sales volume within our Packet-Optical Switching and Carrier-Ethernet Solutions segments;
|
|
•
|
seasonal effects in our business;
|
|
•
|
order flow, the amount of backlog we maintain and our ability to recognize revenue relating to these sales;
|
|
•
|
the mix of revenue by product segment, geography and customer in any particular quarter;
|
|
•
|
the level of competition and pricing pressure we encounter, particularly for our Packet-Optical Transport products which comprise a significant concentration of our revenue;
|
|
•
|
success in selling new, next-generation technology platforms and the level of start-up costs to support initial deployments, gain new customers or enter new markets for such products; and
|
|
•
|
our level of success in optimizing our resources, improving manufacturing efficiencies and achieving cost reductions in our supply chain.
|
|
•
|
significant price competition, particularly for our Packet-Optical Transport platforms;
|
|
•
|
early announcement of product development initiatives and new platform offerings;
|
|
•
|
customer financing assistance provided by other vendors or their sponsors;
|
|
•
|
assumption of onerous or atypical commercial terms that involve a greater assumption of liability or allocation of risk upon the vendor;
|
|
•
|
offers to repurchase our equipment from existing customers; and
|
|
•
|
intellectual property assertions and disputes.
|
|
•
|
reductions in customer capital spending and delay, deferral or cancellation of network initiatives;
|
|
•
|
difficulty forecasting, budgeting and planning;
|
|
•
|
increased competition for fewer network projects and sales opportunities;
|
|
•
|
increased pricing pressure that may adversely affect revenue, gross margin and profitability;
|
|
•
|
higher overhead costs as a percentage of revenue;
|
|
•
|
tightening of credit markets to fund capital expenditures by our customers and us;
|
|
•
|
customer financial difficulty, including longer collection cycles and difficulties collecting accounts receivable or write offs of receivables; and
|
|
•
|
increased risk of charges relating to excess and obsolete inventories and the write-off of other intangible assets.
|
|
•
|
increased costs to remediate software or hardware defects or replace products;
|
|
•
|
payment of liquidated damages, contractual or similar penalties, or other claims for performance failures or delays;
|
|
•
|
increased inventory obsolescence;
|
|
•
|
increased warranty expense or estimates resulting from higher failure rates, additional field service obligations or other rework costs related to defects;
|
|
•
|
costs and claims that may not be covered by liability insurance coverage or recoverable from third parties;
|
|
•
|
delays in recognizing revenue or collecting accounts receivable; and
|
|
•
|
damage to our reputation, declining sales and order cancellations.
|
|
•
|
effects of changes in currency exchange rates;
|
|
•
|
more unfavorable commercial terms;
|
|
•
|
greater difficulty in collecting accounts receivable and longer collection periods;
|
|
•
|
difficulties and costs of staffing and managing foreign operations;
|
|
•
|
the impact of economic conditions in countries outside the United States;
|
|
•
|
less protection for intellectual property rights in some countries;
|
|
•
|
adverse tax and customs consequences, particularly as related to transfer-pricing issues;
|
|
•
|
social, political and economic instability;
|
|
•
|
higher incidence of corruption or unethical business practices that could expose us to liability or damage our reputation;
|
|
•
|
trade protection measures, export compliance, domestic preference procurement requirements, qualification to transact business and additional regulatory requirements; and
|
|
•
|
natural disasters, epidemics and acts of war or terrorism.
|
|
•
|
pay substantial damages or royalties;
|
|
•
|
comply with an injunction or other court order that could prevent us from offering certain of our products;
|
|
•
|
seek a license for the use of certain intellectual property, which may not be available on commercially reasonable terms or at all;
|
|
•
|
develop non-infringing technology, which could require significant effort and expense and ultimately may not be successful; and
|
|
•
|
indemnify our customers pursuant to contractual obligations and pay expense or damages on their behalf.
|
|
•
|
we may suffer delays in recognizing revenue;
|
|
•
|
our services revenue and gross margin may be adversely affected; and
|
|
•
|
our relationship with customers could suffer.
|
|
•
|
increasing our vulnerability to adverse economic and industry conditions;
|
|
•
|
limiting our ability to obtain additional financing, particularly in light of unfavorable conditions in the capital and credit markets;
|
|
•
|
debt service and repayment obligations that reduce the availability of cash resources for other purposes, including capital expenditures;
|
|
•
|
limiting our flexibility in planning for, or reacting to, changes in our business and the markets in which we compete; and
|
|
•
|
placing us at a possible competitive disadvantage to competitors that have better access to capital resources.
|
|
•
|
significant integration costs;
|
|
•
|
disruption due to the integration and rationalization of operations, products, technologies and personnel;
|
|
•
|
diversion of management's attention;
|
|
•
|
difficulty completing projects of the acquired company and costs related to in-process projects;
|
|
•
|
the loss of key employees;
|
|
•
|
ineffective internal controls over financial reporting;
|
|
•
|
dependence on unfamiliar suppliers or manufacturers;
|
|
•
|
exposure to unanticipated liabilities, including intellectual property infringement claims; and
|
|
•
|
adverse tax or accounting effects including amortization expense related to intangible assets and charges associated with impairment of goodwill.
|
|
10.1
|
ABL Credit Agreement, dated August 13, 2012, by and among Ciena Corporation, Ciena Communications, Inc. and Ciena Canada, Inc., as the borrowers, the lenders party thereto, Deutsche Bank AG New York Branch, as administrative agent and collateral agent, Bank of America, N.A., as syndication agent, and Morgan Stanley Senior Funding, Inc. and Wells Fargo Bank, National Association, as co-documentation agents (a)
|
|
|
|
|
10.2
|
Amendment to Credit Agreement, dated August 24, 2012, by and among Ciena Corporation, Ciena Communications, Inc. and Ciena Canada, Inc., as he borrowers, and Deutsche Bank AG New York Branch, as administrative agent (a)
|
|
|
|
|
10.3
|
Security Agreement, dated August 13, 2012, by and among Ciena Corporation and Ciena Communications, Inc., as assignors, and Deutsche Bank AG New York Branch, as collateral agent (a)
|
|
|
|
|
10.4
|
Pledge Agreement, dated August 13, 2012, by and among Ciena Corporation and Ciena Communications, Inc., as pledgers, and Deutsche Bank AG New York Branch, as collateral agent and pledgee (a)
|
|
|
|
|
10.5
|
U.S. Guaranty, dated August 13, 2012, by and among Ciena Corporation and Ciena Communications, Inc., as guarantors, and Deutsche Bank AG New York Branch, as administrative agent (a)
|
|
|
|
|
10.6
|
Canadian Security Agreement, dated August 13, 2012, by and between Ciena Canada, Inc., as assignor, and Deutsche Bank AG New York Branch, as collateral agent (a)
|
|
|
|
|
10.7
|
Canadian Guaranty, dated August 13, 2012, by and between Ciena Canada, Inc., as guarantor, and Deutsche Bank AG New York Branch, as administrative agent (a)
|
|
|
|
|
31.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
31.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
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32.2
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Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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101.INS*
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XBRL Instance Document
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101.SCH*
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XBRL Taxonomy Extension Schema Document
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101.CAL*
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF*
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB*
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE*
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XBRL Taxonomy Extension Presentation Linkbase Document
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(a)
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Representations and warranties included in these agreements, as amended, were made by the parties to one another in connection with a negotiated transaction. These representations and warranties were made as of specific dates, only for purposes of these agreements and for the benefit of the parties thereto. These representations and warranties were subject to important exceptions and limitations agreed upon by the parties, including being qualified by confidential disclosures, made for the purposes of allocating contractual risk between the parties rather than establishing these matters as facts. These agreements are filed with this report only to provide investors with information regarding its terms and conditions, and not to provide any other factual information regarding Ciena or any other party thereto. Accordingly, investors should not rely on the representations and warranties contained in these agreements or any description thereof as characterizations of the actual state of facts or condition of any party, its subsidiaries or affiliates. The information in these agreements should be considered together with Ciena's public reports filed with the SEC.
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Ciena Corporation
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Date:
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September 5, 2012
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By:
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/s/ Gary B. Smith
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Gary B. Smith
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President, Chief Executive Officer
and Director
(Duly Authorized Officer)
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Date:
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September 5, 2012
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By:
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/s/ James E. Moylan, Jr.
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James E. Moylan, Jr.
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Senior Vice President, Finance and
Chief Financial Officer
(Principal Financial Officer)
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No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
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| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
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No information found
No Customers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|