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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 September 6, 2013
|
|
common stock, $0.01 par value
|
|
103,142,108
|
|
|
PAGE
NUMBER
|
|
|
|
|
|
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
||||||||
|
Revenue:
|
|
|
|
|
|
|
|
||||||||
|
Products
|
$
|
373,418
|
|
|
$
|
437,442
|
|
|
$
|
1,091,817
|
|
|
$
|
1,203,716
|
|
|
Services
|
100,672
|
|
|
100,914
|
|
|
276,575
|
|
|
295,445
|
|
||||
|
Total revenue
|
474,090
|
|
|
538,356
|
|
|
1,368,392
|
|
|
1,499,161
|
|
||||
|
Cost of goods sold:
|
|
|
|
|
|
|
|
||||||||
|
Products
|
225,238
|
|
|
247,768
|
|
|
657,362
|
|
|
683,730
|
|
||||
|
Services
|
67,531
|
|
|
62,367
|
|
|
179,012
|
|
|
181,902
|
|
||||
|
Total cost of goods sold
|
292,769
|
|
|
310,135
|
|
|
836,374
|
|
|
865,632
|
|
||||
|
Gross profit
|
181,321
|
|
|
228,221
|
|
|
532,018
|
|
|
633,529
|
|
||||
|
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
|
Research and development
|
88,315
|
|
|
93,069
|
|
|
268,378
|
|
|
282,981
|
|
||||
|
Selling and marketing
|
65,397
|
|
|
75,613
|
|
|
192,325
|
|
|
216,676
|
|
||||
|
General and administrative
|
27,876
|
|
|
32,066
|
|
|
84,210
|
|
|
91,157
|
|
||||
|
Amortization of intangible assets
|
12,714
|
|
|
12,440
|
|
|
39,152
|
|
|
37,332
|
|
||||
|
Restructuring costs
|
2,291
|
|
|
202
|
|
|
5,864
|
|
|
6,741
|
|
||||
|
Total operating expenses
|
196,593
|
|
|
213,390
|
|
|
589,929
|
|
|
634,887
|
|
||||
|
Income (loss) from operations
|
(15,272
|
)
|
|
14,831
|
|
|
(57,911
|
)
|
|
(1,358
|
)
|
||||
|
Interest and other income (loss), net
|
(2,458
|
)
|
|
(3,167
|
)
|
|
(11,732
|
)
|
|
(6,020
|
)
|
||||
|
Interest expense
|
(9,597
|
)
|
|
(10,972
|
)
|
|
(28,813
|
)
|
|
(33,096
|
)
|
||||
|
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,630
|
)
|
||||
|
Income (loss) before income taxes
|
(27,327
|
)
|
|
692
|
|
|
(98,456
|
)
|
|
(69,104
|
)
|
||||
|
Provision for income taxes
|
2,490
|
|
|
1,923
|
|
|
6,794
|
|
|
6,530
|
|
||||
|
Net loss
|
$
|
(29,817
|
)
|
|
$
|
(1,231
|
)
|
|
$
|
(105,250
|
)
|
|
$
|
(75,634
|
)
|
|
Basic net loss per common share
|
$
|
(0.30
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(1.06
|
)
|
|
$
|
(0.74
|
)
|
|
Diluted net loss per potential common share
|
$
|
(0.30
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(1.06
|
)
|
|
$
|
(0.74
|
)
|
|
Weighted average basic common shares outstanding
|
99,530
|
|
|
102,713
|
|
|
98,922
|
|
|
101,951
|
|
||||
|
Weighted average dilutive potential common shares outstanding
|
99,530
|
|
|
102,713
|
|
|
98,922
|
|
|
101,951
|
|
||||
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
||||||||
|
Net loss
|
$
|
(29,817
|
)
|
|
$
|
(1,231
|
)
|
|
$
|
(105,250
|
)
|
|
$
|
(75,634
|
)
|
|
Change in unrealized gain (loss) on available-for-sale securities, net of tax
|
(40
|
)
|
|
14
|
|
|
(119
|
)
|
|
(17
|
)
|
||||
|
Change in unrealized gain (loss) on foreign currency forward contracts, net of tax
|
(214
|
)
|
|
(508
|
)
|
|
22
|
|
|
(625
|
)
|
||||
|
Change in accumulated translation adjustments
|
(2,250
|
)
|
|
(1,498
|
)
|
|
(4,462
|
)
|
|
(2,542
|
)
|
||||
|
Total comprehensive loss
|
$
|
(32,321
|
)
|
|
$
|
(3,223
|
)
|
|
$
|
(109,809
|
)
|
|
$
|
(78,818
|
)
|
|
|
October 31,
2012 |
|
July 31,
2013 |
||||
|
ASSETS
|
|
|
|
||||
|
Current assets:
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
642,444
|
|
|
$
|
378,179
|
|
|
Short-term investments
|
50,057
|
|
|
99,981
|
|
||
|
Accounts receivable, net
|
345,496
|
|
|
430,424
|
|
||
|
Inventories
|
260,098
|
|
|
235,530
|
|
||
|
Prepaid expenses and other
|
117,595
|
|
|
160,363
|
|
||
|
Total current assets
|
1,415,690
|
|
|
1,304,477
|
|
||
|
Long-term investments
|
—
|
|
|
15,022
|
|
||
|
Equipment, furniture and fixtures, net
|
123,580
|
|
|
114,041
|
|
||
|
Other intangible assets, net
|
257,137
|
|
|
203,652
|
|
||
|
Other long-term assets
|
84,736
|
|
|
90,163
|
|
||
|
Total assets
|
$
|
1,881,143
|
|
|
$
|
1,727,355
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
||||
|
Current liabilities:
|
|
|
|
||||
|
Accounts payable
|
$
|
179,704
|
|
|
$
|
208,707
|
|
|
Accrued liabilities
|
209,540
|
|
|
240,140
|
|
||
|
Deferred revenue
|
79,516
|
|
|
92,277
|
|
||
|
Convertible notes payable
|
216,210
|
|
|
—
|
|
||
|
Total current liabilities
|
684,970
|
|
|
541,124
|
|
||
|
Long-term deferred revenue
|
27,560
|
|
|
25,213
|
|
||
|
Other long-term obligations
|
31,779
|
|
|
33,279
|
|
||
|
Long-term convertible notes payable
|
1,225,806
|
|
|
1,210,907
|
|
||
|
Total liabilities
|
1,970,115
|
|
|
1,810,523
|
|
||
|
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; 100,601,792 and 103,121,807 shares issued and outstanding
|
1,006
|
|
|
1,031
|
|
||
|
Additional paid-in capital
|
5,797,765
|
|
|
5,882,360
|
|
||
|
Accumulated other comprehensive loss
|
(3,354
|
)
|
|
(6,536
|
)
|
||
|
Accumulated deficit
|
(5,884,389
|
)
|
|
(5,960,023
|
)
|
||
|
Total stockholders’ equity (deficit)
|
(88,972
|
)
|
|
(83,168
|
)
|
||
|
Total liabilities and stockholders’ equity (deficit)
|
$
|
1,881,143
|
|
|
$
|
1,727,355
|
|
|
|
Nine Months Ended July 31,
|
||||||
|
|
2012
|
|
2013
|
||||
|
Cash flows from operating activities:
|
|
|
|
||||
|
Net loss
|
$
|
(105,250
|
)
|
|
$
|
(75,634
|
)
|
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
|
Loss on extinguishment of debt
|
—
|
|
|
28,630
|
|
||
|
Depreciation of equipment, furniture and fixtures, and amortization of leasehold improvements
|
43,514
|
|
|
42,613
|
|
||
|
Share-based compensation costs
|
23,656
|
|
|
28,032
|
|
||
|
Amortization of intangible assets
|
55,965
|
|
|
53,485
|
|
||
|
Provision for inventory excess and obsolescence
|
19,071
|
|
|
15,301
|
|
||
|
Provision for warranty
|
23,495
|
|
|
15,148
|
|
||
|
Other
|
8,414
|
|
|
8,384
|
|
||
|
Changes in assets and liabilities:
|
|
|
|
||||
|
Accounts receivable
|
37,223
|
|
|
(86,808
|
)
|
||
|
Inventories
|
(34,038
|
)
|
|
9,267
|
|
||
|
Prepaid expenses and other
|
10,890
|
|
|
(56,958
|
)
|
||
|
Accounts payable, accruals and other obligations
|
35,632
|
|
|
49,253
|
|
||
|
Deferred revenue
|
(22,071
|
)
|
|
10,414
|
|
||
|
Net cash provided by operating activities
|
96,501
|
|
|
41,127
|
|
||
|
Cash flows used in investing activities:
|
|
|
|
||||
|
Payments for equipment, furniture, fixtures and intellectual property
|
(33,000
|
)
|
|
(31,884
|
)
|
||
|
Restricted cash
|
3,546
|
|
|
1,921
|
|
||
|
Purchase of available for sale securities
|
—
|
|
|
(144,893
|
)
|
||
|
Proceeds from maturities of available for sale securities
|
—
|
|
|
80,062
|
|
||
|
Proceeds from sale of cost method investment
|
524
|
|
|
—
|
|
||
|
Net cash used in investing activities
|
(28,930
|
)
|
|
(94,794
|
)
|
||
|
Cash flows from financing activities:
|
|
|
|
||||
|
Payment of long term debt
|
—
|
|
|
(216,210
|
)
|
||
|
Payment for debt and equity issuance costs
|
—
|
|
|
(3,670
|
)
|
||
|
Payment of capital lease obligations
|
(1,231
|
)
|
|
(2,370
|
)
|
||
|
Proceeds from issuance of common stock
|
12,022
|
|
|
14,060
|
|
||
|
Net cash provided by (used in) financing activities
|
10,791
|
|
|
(208,190
|
)
|
||
|
Effect of exchange rate changes on cash and cash equivalents
|
(3,026
|
)
|
|
(2,408
|
)
|
||
|
Net increase (decrease) in cash and cash equivalents
|
78,362
|
|
|
(261,857
|
)
|
||
|
Cash and cash equivalents at beginning of period
|
541,896
|
|
|
642,444
|
|
||
|
Cash and cash equivalents at end of period
|
$
|
617,232
|
|
|
$
|
378,179
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
||||
|
Cash paid during the period for interest
|
$
|
18,978
|
|
|
$
|
21,674
|
|
|
Cash paid during the period for income taxes, net
|
$
|
7,807
|
|
|
$
|
7,117
|
|
|
Non-cash investing and financing activities
|
|
|
|
||||
|
Purchase of equipment in accounts payable
|
$
|
2,686
|
|
|
$
|
1,222
|
|
|
Fixed assets acquired under capital leases
|
$
|
6,033
|
|
|
$
|
2,538
|
|
|
(1)
|
INTERIM FINANCIAL STATEMENTS
|
|
(2)
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
•
|
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities;
|
|
•
|
Level 2 inputs are quoted prices for identical or similar assets or liabilities in less active markets or model-derived valuations in which significant inputs are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and
|
|
•
|
Level 3 inputs are unobservable inputs based on Ciena's assumptions used to measure assets and liabilities at fair value.
|
|
(3)
|
RESTRUCTURING COSTS
|
|
|
Workforce
reduction
|
|
Consolidation
of excess
facilities
|
|
Total
|
||||||
|
Balance at October 31, 2012
|
$
|
1,449
|
|
|
$
|
3,600
|
|
|
$
|
5,049
|
|
|
Additional liability recorded
|
5,003
|
|
|
1,738
|
|
|
6,741
|
|
|||
|
Non-cash disposal
|
—
|
|
|
(747
|
)
|
|
(747
|
)
|
|||
|
Cash payments
|
(6,107
|
)
|
|
(2,999
|
)
|
|
(9,106
|
)
|
|||
|
Balance at July 31, 2013
|
$
|
345
|
|
|
$
|
1,592
|
|
|
$
|
1,937
|
|
|
Current restructuring liabilities
|
$
|
345
|
|
|
$
|
453
|
|
|
$
|
798
|
|
|
Non-current restructuring liabilities
|
$
|
—
|
|
|
$
|
1,139
|
|
|
$
|
1,139
|
|
|
|
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
|
|
|
(4)
|
MARKETABLE SECURITIES
|
|
|
July 31, 2013
|
||||||||||||||
|
|
Amortized Cost
|
|
Gross Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated Fair
Value
|
||||||||
|
U.S. government obligations
|
$
|
114,960
|
|
|
43
|
|
|
$
|
—
|
|
|
$
|
115,003
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Included in short-term investments
|
$
|
99,964
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
99,981
|
|
|
Included in long-term investments
|
14,996
|
|
|
26
|
|
|
—
|
|
|
15,022
|
|
||||
|
|
$
|
114,960
|
|
|
$
|
43
|
|
|
$
|
—
|
|
|
$
|
115,003
|
|
|
|
October 31, 2012
|
||||||||||||||
|
|
Amortized Cost
|
|
Gross Unrealized
Gains
|
|
Gross Unrealized
Losses
|
|
Estimated Fair
Value
|
||||||||
|
U.S. government obligations
|
$
|
49,987
|
|
|
$
|
70
|
|
|
$
|
—
|
|
|
$
|
50,057
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Included in short-term investments
|
$
|
49,987
|
|
|
$
|
70
|
|
|
$
|
—
|
|
|
$
|
50,057
|
|
|
Included in long-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
|
$
|
49,987
|
|
|
$
|
70
|
|
|
$
|
—
|
|
|
$
|
50,057
|
|
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
|
Less than one year
|
$
|
99,964
|
|
|
$
|
99,981
|
|
|
Due in 1-2 years
|
14,996
|
|
|
15,022
|
|
||
|
|
$
|
114,960
|
|
|
$
|
115,003
|
|
|
(5)
|
FAIR VALUE MEASUREMENTS
|
|
|
July 31, 2013
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
Assets:
|
|
|
|
|
|
|
|
||||||||
|
U.S. government obligations
|
$
|
115,003
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
115,003
|
|
|
Foreign currency forward contracts
|
—
|
|
|
261
|
|
|
—
|
|
|
261
|
|
||||
|
Embedded redemption feature
|
—
|
|
|
—
|
|
|
2,510
|
|
|
2,510
|
|
||||
|
Total assets measured at fair value
|
$
|
115,003
|
|
|
$
|
261
|
|
|
$
|
2,510
|
|
|
$
|
117,774
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
|
Foreign currency forward contracts
|
$
|
—
|
|
|
$
|
575
|
|
|
$
|
—
|
|
|
$
|
575
|
|
|
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
575
|
|
|
$
|
—
|
|
|
$
|
575
|
|
|
|
July 31, 2013
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
Assets:
|
|
|
|
|
|
|
|
||||||||
|
Short-term investments
|
$
|
99,981
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
99,981
|
|
|
Prepaid expenses and other
|
—
|
|
|
261
|
|
|
—
|
|
|
261
|
|
||||
|
Long-term investments
|
15,022
|
|
|
—
|
|
|
—
|
|
|
15,022
|
|
||||
|
Other long-term assets
|
—
|
|
|
—
|
|
|
2,510
|
|
|
2,510
|
|
||||
|
Total assets measured at fair value
|
$
|
115,003
|
|
|
$
|
261
|
|
|
$
|
2,510
|
|
|
$
|
117,774
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
|
Accrued liabilities
|
$
|
—
|
|
|
$
|
575
|
|
|
$
|
—
|
|
|
$
|
575
|
|
|
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
575
|
|
|
$
|
—
|
|
|
$
|
575
|
|
|
|
Level 3
|
||
|
Balance at October 31, 2012
|
$
|
420
|
|
|
Issuances
|
—
|
|
|
|
Settlements
|
(630
|
)
|
|
|
Changes in unrealized gain (loss)
|
2,720
|
|
|
|
Transfers into Level 3
|
—
|
|
|
|
Transfers out of Level 3
|
—
|
|
|
|
Balance at July 31, 2013
|
$
|
2,510
|
|
|
(6)
|
ACCOUNTS RECEIVABLE
|
|
(7)
|
INVENTORIES
|
|
|
October 31,
2012 |
|
July 31,
2013 |
||||
|
Raw materials
|
$
|
39,678
|
|
|
$
|
51,549
|
|
|
Work-in-process
|
10,736
|
|
|
7,931
|
|
||
|
Finished goods
|
178,210
|
|
|
147,757
|
|
||
|
Deferred cost of goods sold
|
71,484
|
|
|
70,955
|
|
||
|
|
300,108
|
|
|
278,192
|
|
||
|
Provision for excess and obsolescence
|
(40,010
|
)
|
|
(42,662
|
)
|
||
|
|
$
|
260,098
|
|
|
$
|
235,530
|
|
|
(8)
|
PREPAID EXPENSES AND OTHER
|
|
|
October 31,
2012 |
|
July 31,
2013 |
||||
|
Prepaid VAT and other taxes
|
$
|
37,806
|
|
|
$
|
69,706
|
|
|
Deferred deployment expense
|
19,449
|
|
|
24,035
|
|
||
|
Product demonstration equipment, net
|
33,144
|
|
|
39,722
|
|
||
|
Prepaid expenses
|
16,477
|
|
|
18,029
|
|
||
|
Restricted cash
|
2,030
|
|
|
107
|
|
||
|
Other non-trade receivables
|
8,689
|
|
|
8,764
|
|
||
|
|
$
|
117,595
|
|
|
$
|
160,363
|
|
|
(9)
|
EQUIPMENT, FURNITURE AND FIXTURES
|
|
|
October 31,
2012 |
|
July 31,
2013 |
||||
|
Equipment, furniture and fixtures
|
$
|
422,118
|
|
|
$
|
372,719
|
|
|
Leasehold improvements
|
61,493
|
|
|
42,968
|
|
||
|
|
483,611
|
|
|
415,687
|
|
||
|
Accumulated depreciation and amortization
|
(360,031
|
)
|
|
(301,646
|
)
|
||
|
|
$
|
123,580
|
|
|
$
|
114,041
|
|
|
(10)
|
OTHER INTANGIBLE ASSETS
|
|
|
October 31, 2012
|
|
July 31, 2013
|
||||||||||||||||||||
|
|
Gross
Intangible
|
|
Accumulated
Amortization
|
|
Net
Intangible
|
|
Gross
Intangible
|
|
Accumulated
Amortization
|
|
Net
Intangible
|
||||||||||||
|
Developed technology
|
$
|
417,833
|
|
|
$
|
(279,195
|
)
|
|
$
|
138,638
|
|
|
$
|
417,833
|
|
|
$
|
(311,032
|
)
|
|
$
|
106,801
|
|
|
Patents and licenses
|
46,538
|
|
|
(45,566
|
)
|
|
972
|
|
|
46,538
|
|
|
(45,703
|
)
|
|
835
|
|
||||||
|
Customer relationships, covenants not to compete, outstanding purchase orders and contracts
|
323,573
|
|
|
(206,046
|
)
|
|
117,527
|
|
|
323,573
|
|
|
(227,557
|
)
|
|
96,016
|
|
||||||
|
Total other intangible assets
|
$
|
787,944
|
|
|
$
|
(530,807
|
)
|
|
$
|
257,137
|
|
|
$
|
787,944
|
|
|
$
|
(584,292
|
)
|
|
$
|
203,652
|
|
|
Period ended October 31,
|
|
||
|
2013 (remaining three months)
|
$
|
17,823
|
|
|
2014
|
57,151
|
|
|
|
2015
|
52,879
|
|
|
|
2016
|
52,879
|
|
|
|
2017
|
22,783
|
|
|
|
Thereafter
|
137
|
|
|
|
|
$
|
203,652
|
|
|
(11)
|
OTHER BALANCE SHEET DETAILS
|
|
|
October 31,
2012 |
|
July 31,
2013 |
||||
|
Maintenance spares inventory, net
|
$
|
57,548
|
|
|
$
|
64,195
|
|
|
Deferred debt issuance costs, net
|
20,575
|
|
|
16,845
|
|
||
|
Embedded redemption feature
|
420
|
|
|
2,510
|
|
||
|
Restricted cash
|
2,413
|
|
|
2,415
|
|
||
|
Other
|
3,780
|
|
|
4,198
|
|
||
|
|
$
|
84,736
|
|
|
$
|
90,163
|
|
|
|
October 31,
2012 |
|
July 31,
2013 |
||||
|
Warranty
|
$
|
55,132
|
|
|
$
|
53,376
|
|
|
Compensation, payroll related tax and benefits
|
48,885
|
|
|
78,340
|
|
||
|
Vacation
|
29,581
|
|
|
30,934
|
|
||
|
Current restructuring liabilities
|
3,516
|
|
|
798
|
|
||
|
Interest payable
|
4,404
|
|
|
8,408
|
|
||
|
Other
|
68,022
|
|
|
68,284
|
|
||
|
|
$
|
209,540
|
|
|
$
|
240,140
|
|
|
|
|
|
|
|
|
|
Balance at
|
||||||
|
Nine months ended
|
Beginning
|
|
|
|
|
|
end of
|
||||||
|
July 31,
|
Balance
|
|
Provisions
|
|
Settlements
|
|
period
|
||||||
|
2012
|
$
|
47,282
|
|
|
23,495
|
|
|
(19,144
|
)
|
|
$
|
51,633
|
|
|
2013
|
$
|
55,132
|
|
|
15,148
|
|
|
(16,904
|
)
|
|
$
|
53,376
|
|
|
|
October 31,
2012 |
|
July 31,
2013 |
||||
|
Products
|
$
|
29,279
|
|
|
$
|
34,865
|
|
|
Services
|
77,797
|
|
|
82,625
|
|
||
|
|
107,076
|
|
|
117,490
|
|
||
|
Less current portion
|
(79,516
|
)
|
|
(92,277
|
)
|
||
|
Long-term deferred revenue
|
$
|
27,560
|
|
|
$
|
25,213
|
|
|
(12)
|
FOREIGN CURRENCY FORWARD CONTRACTS
|
|
(13)
|
CONVERTIBLE NOTES PAYABLE
|
|
|
Liability Component
|
|
Equity Component
|
||||||||||||
|
|
Principal Balance
|
|
Unamortized Discount
|
|
Net Carrying Amount
|
|
Net Carrying Amount
|
||||||||
|
4.0% Convertible Senior Notes due December 15, 2020
|
$
|
189,587
|
|
|
$
|
16,455
|
|
|
$
|
173,132
|
|
|
$
|
43,131
|
|
|
|
July 31, 2013
|
||||||
|
Description
|
Carrying Value
|
|
Fair Value
(2)
|
||||
|
4.0% Convertible Senior Notes, due March 15, 2015
(1)
|
187,775
|
|
|
240,352
|
|
||
|
0.875% Convertible Senior Notes due June 15, 2017
|
500,000
|
|
|
491,250
|
|
||
|
3.75% Convertible Senior Notes due October 15, 2018
|
350,000
|
|
|
482,563
|
|
||
|
4.0% Convertible Senior Notes due December 15, 2020
(3)
|
173,132
|
|
|
264,375
|
|
||
|
|
$
|
1,210,907
|
|
|
$
|
1,478,540
|
|
|
(1)
|
Includes unamortized bond premium related to embedded redemption feature.
|
|
(2)
|
The convertible notes were 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.
|
|
(3)
|
Includes unamortized discount and accretion of principal.
|
|
(14)
|
CREDIT FACILITY
|
|
(15)
|
EARNINGS (LOSS) PER SHARE CALCULATION
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
Numerator
|
2012
|
|
2013
|
|
2012
|
|
2013
|
||||||||
|
Net loss
|
$
|
(29,817
|
)
|
|
$
|
(1,231
|
)
|
|
$
|
(105,250
|
)
|
|
$
|
(75,634
|
)
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||
|
Denominator
|
2012
|
|
2013
|
|
2012
|
|
2013
|
||||
|
Weighted average basic common shares outstanding
|
99,530
|
|
|
102,713
|
|
|
98,922
|
|
|
101,951
|
|
|
Weighted average dilutive potential common shares outstanding
|
99,530
|
|
|
102,713
|
|
|
98,922
|
|
|
101,951
|
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
EPS
|
2012
|
|
2013
|
|
2012
|
|
2013
|
||||||||
|
Basic EPS
|
$
|
(0.30
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(1.06
|
)
|
|
$
|
(0.74
|
)
|
|
Diluted EPS
|
$
|
(0.30
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(1.06
|
)
|
|
$
|
(0.74
|
)
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
||||
|
Shares underlying stock options and restricted stock units
|
5,294
|
|
|
3,599
|
|
|
5,681
|
|
|
3,727
|
|
|
0.25% Convertible Senior Notes due May 1, 2013
|
5,470
|
|
|
—
|
|
|
5,470
|
|
|
3,580
|
|
|
4.0% Convertible Senior Notes due March 15, 2015
|
18,396
|
|
|
9,198
|
|
|
18,396
|
|
|
10,990
|
|
|
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
|
17,356
|
|
|
17,356
|
|
|
17,356
|
|
|
17,356
|
|
|
4.0% Convertible Senior Notes due December 15, 2020
|
—
|
|
|
9,198
|
|
|
—
|
|
|
7,406
|
|
|
Total shares excluded due to anti-dilutive effect
|
59,624
|
|
|
52,459
|
|
|
60,011
|
|
|
56,167
|
|
|
(16)
|
SHARE-BASED COMPENSATION EXPENSE
|
|
|
Shares Underlying
Options
Outstanding
|
|
Weighted
Average
Exercise Price
|
|||
|
Balance at October 31, 2012
|
3,207
|
|
|
$
|
27.58
|
|
|
Granted
|
—
|
|
|
—
|
|
|
|
Exercised
|
(139
|
)
|
|
11.28
|
|
|
|
Canceled
|
(829
|
)
|
|
31.54
|
|
|
|
Balance at July 31, 2013
|
2,239
|
|
|
$
|
27.13
|
|
|
|
|
|
|
|
|
Options Outstanding at
|
|
Vested Options at
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
July 31, 2013
|
|
July 31, 2013
|
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
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
|
|
|
222
|
|
|
4.40
|
|
$
|
8.59
|
|
|
$
|
3,167
|
|
|
217
|
|
|
4.36
|
|
$
|
8.51
|
|
|
$
|
3,117
|
|
|
$
|
16.52
|
|
|
—
|
|
|
$
|
17.29
|
|
|
329
|
|
|
1.92
|
|
16.65
|
|
|
2,039
|
|
|
329
|
|
|
1.92
|
|
16.65
|
|
|
2,039
|
|
||||
|
$
|
17.43
|
|
|
—
|
|
|
$
|
24.50
|
|
|
453
|
|
|
1.74
|
|
20.59
|
|
|
1,077
|
|
|
454
|
|
|
1.74
|
|
20.59
|
|
|
1,077
|
|
||||
|
$
|
24.69
|
|
|
—
|
|
|
$
|
28.28
|
|
|
357
|
|
|
3.24
|
|
26.98
|
|
|
—
|
|
|
357
|
|
|
3.24
|
|
26.98
|
|
|
—
|
|
||||
|
$
|
28.61
|
|
|
—
|
|
|
$
|
31.43
|
|
|
159
|
|
|
3.01
|
|
29.52
|
|
|
—
|
|
|
159
|
|
|
3.01
|
|
29.52
|
|
|
—
|
|
||||
|
$
|
31.71
|
|
|
—
|
|
|
$
|
32.55
|
|
|
21
|
|
|
4.38
|
|
31.92
|
|
|
—
|
|
|
21
|
|
|
4.38
|
|
31.92
|
|
|
—
|
|
||||
|
$
|
33.00
|
|
|
—
|
|
|
$
|
37.10
|
|
|
289
|
|
|
3.78
|
|
35.17
|
|
|
—
|
|
|
289
|
|
|
3.78
|
|
35.17
|
|
|
—
|
|
||||
|
$
|
37.31
|
|
|
—
|
|
|
$
|
47.32
|
|
|
386
|
|
|
1.45
|
|
45.92
|
|
|
—
|
|
|
386
|
|
|
1.45
|
|
45.92
|
|
|
—
|
|
||||
|
$
|
47.53
|
|
|
—
|
|
|
$
|
55.79
|
|
|
23
|
|
|
0.22
|
|
48.98
|
|
|
—
|
|
|
23
|
|
|
0.22
|
|
48.98
|
|
|
—
|
|
||||
|
$
|
0.94
|
|
|
—
|
|
|
$
|
55.79
|
|
|
2,239
|
|
|
2.58
|
|
$
|
27.13
|
|
|
$
|
6,283
|
|
|
2,235
|
|
|
2.57
|
|
$
|
27.16
|
|
|
$
|
6,233
|
|
|
|
Restricted
Stock Units
Outstanding
|
|
Weighted
Average Grant
Date Fair Value
Per Share
|
|
Aggregate
Fair Value
|
|||||
|
Balance at October 31, 2012
|
4,403
|
|
|
$
|
14.16
|
|
|
$
|
56,267
|
|
|
Granted
|
2,381
|
|
|
|
|
|
||||
|
Vested
|
(1,444
|
)
|
|
|
|
|
||||
|
Canceled or forfeited
|
(557
|
)
|
|
|
|
|
||||
|
Balance at July 31, 2013
|
4,783
|
|
|
$
|
15.04
|
|
|
$
|
109,336
|
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
||||||||
|
Product costs
|
$
|
564
|
|
|
$
|
658
|
|
|
$
|
1,509
|
|
|
$
|
1,905
|
|
|
Service costs
|
332
|
|
|
461
|
|
|
1,136
|
|
|
1,323
|
|
||||
|
Share-based compensation expense included in cost of sales
|
896
|
|
|
1,119
|
|
|
2,645
|
|
|
3,228
|
|
||||
|
Research and development
|
1,841
|
|
|
2,054
|
|
|
6,067
|
|
|
6,291
|
|
||||
|
Sales and marketing
|
2,589
|
|
|
3,562
|
|
|
8,510
|
|
|
9,687
|
|
||||
|
General and administrative
|
1,547
|
|
|
3,198
|
|
|
6,485
|
|
|
8,898
|
|
||||
|
Acquisition and integration costs
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
||||
|
Share-based compensation expense included in operating expense
|
5,977
|
|
|
8,814
|
|
|
21,069
|
|
|
24,876
|
|
||||
|
Share-based compensation expense capitalized in inventory, net
|
(48
|
)
|
|
(48
|
)
|
|
(58
|
)
|
|
(72
|
)
|
||||
|
Total share-based compensation
|
$
|
6,825
|
|
|
$
|
9,885
|
|
|
$
|
23,656
|
|
|
$
|
28,032
|
|
|
(17)
|
SEGMENTS AND ENTITY WIDE DISCLOSURES
|
|
•
|
Converged Packet Optical —
includes networking solutions optimized for the convergence of coherent optical transport, OTN switching and packet switching. These platforms enable automated packet-optical infrastructures that create and efficiently allocate high-capacity bandwidth for the delivery of a wide variety of enterprise and consumer-oriented network services. Products in this segment include the 6500 Packet-Optical Platform featuring Ciena's WaveLogic coherent optical processors. Products also include Ciena's 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 Condensed Consolidated Statement of Operations.
|
|
•
|
Packet Networking —
principally includes Ciena's 3000 family of service delivery switches and service aggregation switches, the 5000 series of service aggregation switches, and its 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-grade 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 includes stand-alone broadband products that transition 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 Condensed Consolidated Statement of Operations.
|
|
•
|
Optical Transport —
includes optical transport solutions that add capacity to core, regional and metro networks and enable cost-effective and efficient transport of voice, video and data traffic at high transmission speeds. Ciena's principal products in this segment include the 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 includes sales from 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 Condensed Consolidated Statement of Operations.
|
|
•
|
Software and Services —
includes Ciena's network software suite, including the OneControl Unified Management System, an 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 performance. This segment includes the ON-Center® Network & Service Management Suite, Ethernet Services Manger, Optical Suite Release and network level applications. This segment includes a broad range of consulting, network design and support services from Ciena's Network Transformation Solutions offering. This segment also includes installation and deployment, maintenance support 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 Condensed Consolidated Statement of Operations.
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
||||||||
|
Revenue:
|
|
|
|
|
|
|
|
||||||||
|
Converged Packet Optical
|
$
|
246,485
|
|
|
$
|
302,018
|
|
|
$
|
713,175
|
|
|
$
|
836,303
|
|
|
Packet Networking
|
30,215
|
|
|
61,631
|
|
|
81,638
|
|
|
161,658
|
|
||||
|
Optical Transport
|
89,779
|
|
|
66,218
|
|
|
281,819
|
|
|
181,186
|
|
||||
|
Software and Services
|
107,611
|
|
|
108,489
|
|
|
291,760
|
|
|
320,014
|
|
||||
|
Consolidated revenue
|
$
|
474,090
|
|
|
$
|
538,356
|
|
|
$
|
1,368,392
|
|
|
$
|
1,499,161
|
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
||||||||
|
Segment profit (loss):
|
|
|
|
|
|
|
|
||||||||
|
Converged Packet Optical
|
$
|
37,086
|
|
|
$
|
66,952
|
|
|
$
|
112,574
|
|
|
$
|
171,598
|
|
|
Packet Networking
|
906
|
|
|
7,620
|
|
|
(6,496
|
)
|
|
15,259
|
|
||||
|
Optical Transport
|
31,410
|
|
|
29,459
|
|
|
94,591
|
|
|
71,459
|
|
||||
|
Software and Services
|
23,604
|
|
|
31,121
|
|
|
62,971
|
|
|
92,232
|
|
||||
|
Total segment profit
|
93,006
|
|
|
135,152
|
|
|
263,640
|
|
|
350,548
|
|
||||
|
Less: non-performance operating expenses
|
|
|
|
|
|
|
|
||||||||
|
Selling and marketing
|
65,397
|
|
|
75,613
|
|
|
192,325
|
|
|
216,676
|
|
||||
|
General and administrative
|
27,876
|
|
|
32,066
|
|
|
84,210
|
|
|
91,157
|
|
||||
|
Amortization of intangible assets
|
12,714
|
|
|
12,440
|
|
|
39,152
|
|
|
37,332
|
|
||||
|
Restructuring costs
|
2,291
|
|
|
202
|
|
|
5,864
|
|
|
6,741
|
|
||||
|
Add: other non-performance financial items
|
|
|
|
|
|
|
|
||||||||
|
Interest expense and other income (loss), net
|
(12,055
|
)
|
|
(14,139
|
)
|
|
(40,545
|
)
|
|
(39,116
|
)
|
||||
|
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,630
|
)
|
||||
|
Less: Provision for income taxes
|
2,490
|
|
|
1,923
|
|
|
6,794
|
|
|
6,530
|
|
||||
|
Consolidated net loss
|
$
|
(29,817
|
)
|
|
$
|
(1,231
|
)
|
|
$
|
(105,250
|
)
|
|
$
|
(75,634
|
)
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
||||||||
|
United States
|
$
|
237,288
|
|
|
$
|
339,426
|
|
|
$
|
723,034
|
|
|
$
|
891,233
|
|
|
Canada
|
49,042
|
|
|
n/a
|
|
|
137,129
|
|
|
n/a
|
|
||||
|
Other International
|
187,760
|
|
|
198,930
|
|
|
508,229
|
|
|
607,928
|
|
||||
|
Total
|
$
|
474,090
|
|
|
$
|
538,356
|
|
|
$
|
1,368,392
|
|
|
$
|
1,499,161
|
|
|
n/a
|
Denotes revenue representing less than 10% of total revenue for the period
|
|
|
October 31,
2012 |
|
July 31,
2013 |
||||
|
United States
|
$
|
64,653
|
|
|
$
|
61,224
|
|
|
Canada
|
48,376
|
|
|
41,900
|
|
||
|
Other International
|
10,551
|
|
|
10,917
|
|
||
|
Total
|
$
|
123,580
|
|
|
$
|
114,041
|
|
|
|
Quarter Ended July 31,
|
|
Nine Months Ended July 31,
|
||||||||||||
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
||||||||
|
Company A
|
n/a
|
|
|
$
|
104,070
|
|
|
$
|
195,308
|
|
|
$
|
277,280
|
|
|
|
Company B
|
n/a
|
|
|
67,051
|
|
|
n/a
|
|
|
172,407
|
|
||||
|
Total
|
$
|
—
|
|
|
$
|
171,121
|
|
|
$
|
195,308
|
|
|
$
|
449,687
|
|
|
n/a
|
Denotes revenue representing less than 10% of total revenue for the period
|
|
(18)
|
COMMITMENTS AND CONTINGENCIES
|
|
•
|
Product revenue for the
third
quarter of fiscal
2013
increased
by
$24.2 million
, reflecting increased sales across our segments including increases of $8.8 million in Optical Transport, $7.7 million in Converged Packet Optical and $7.4 million in Packet Networking.
|
|
•
|
Service revenue for the
third
quarter of fiscal
2013
increased
by
$6.4 million
.
|
|
•
|
Revenue from the United States for the
third
quarter of fiscal
2013
was
$339.5 million
,
an increase
from
$287.6 million
in the
second
quarter of fiscal
2013
.
|
|
•
|
International revenue for the
third
quarter of fiscal
2013
was
$198.9 million
,
a decrease
from
$220.1 million
in the
second
quarter of fiscal
2013
.
|
|
•
|
As a percentage of revenue, international revenue was
37.0%
during the
third
quarter of fiscal
2013
,
a decrease
from
43.4%
during the
second
quarter of fiscal
2013
.
|
|
•
|
For the
third
quarter of fiscal
2013
,
two
customers
accounted for greater than 10% of revenue and represented
31.8%
of total revenue in the aggregate. This compares to
two
customers that accounted for greater than 10% of revenue and represented an aggregate of
31.3%
of total revenue in the
second
quarter of fiscal
2013
.
|
|
•
|
Converged Packet Optical —
includes networking solutions optimized for the convergence of coherent optical transport, OTN switching and packet switching. These platforms enable automated packet-optical infrastructures that create and efficiently allocate high-capacity bandwidth for the delivery of a wide variety of enterprise and consumer-oriented network services. Products in this segment include the 6500 Packet-Optical Platform featuring Ciena's WaveLogic coherent optical processors. Products also include Ciena's 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
|
|
•
|
Packet Networking —
principally includes Ciena's 3000 family of service delivery switches and service aggregation switches, the 5000 series of service aggregation switches, and its 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-grade 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 stand-alone broadband products that transition 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 Condensed Consolidated Statement of Operations.
|
|
•
|
Optical Transport —
includes optical transport solutions that add capacity to core, regional and metro networks and enable cost-effective and efficient transport of voice, video and data traffic at high transmission speeds. Ciena's principal products in this segment include the 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 includes sales from 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 Condensed Consolidated Statement of Operations.
|
|
•
|
Software and Services —
includes Ciena's network software suite, including the OneControl Unified Management System, an 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 performance. This segment includes the ON-Center® Network & Service Management Suite, Ethernet Services Manager, Optical Suite Release and network level applications. This segment includes a broad range of consulting, network design and support services from Ciena's Network Transformation Solutions offering. This segment also includes installation and deployment, maintenance support 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 Condensed Consolidated Statement of Operations.
|
|
|
Quarter Ended July 31,
|
|
Increase
|
|
|
|||||||||||||
|
|
2012
|
|
%*
|
|
2013
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Converged Packet Optical
|
$
|
246,485
|
|
|
52.0
|
|
$
|
302,018
|
|
|
56.1
|
|
$
|
55,533
|
|
|
22.5
|
|
|
Packet Networking
|
30,215
|
|
|
6.4
|
|
61,631
|
|
|
11.4
|
|
31,416
|
|
|
104.0
|
|
|||
|
Optical Transport
|
89,779
|
|
|
18.9
|
|
66,218
|
|
|
12.3
|
|
(23,561
|
)
|
|
(26.2
|
)
|
|||
|
Software and Services
|
107,611
|
|
|
22.7
|
|
108,489
|
|
|
20.2
|
|
878
|
|
|
0.8
|
|
|||
|
Consolidated revenue
|
$
|
474,090
|
|
|
100.0
|
|
$
|
538,356
|
|
|
100.0
|
|
$
|
64,266
|
|
|
13.6
|
|
|
•
|
Converged Packet Optical
revenue
increased
reflecting a $55.5 million increase in sales of our 6500 Packet-Optical Platform largely driven by service provider demand for high-capacity, optical transport for coherent 40G and 100G network infrastructures. In addition, sales of our CoreDirector® Multiservice Optical Switches increased by $9.2 million. These increases were partially offset by $7.5 million and $1.7 million decreases in sales of the 5430 Reconfigurable Switching System and the OTN configuration for the 5410 Reconfigurable Switching System, respectively. The strong performance of this segment, particularly as compared to the expected annual revenue declines in Optical Transport segment revenue, reflects the preference of network operators to adopt next-generation architectures that enable the convergence of high-capacity, coherent optical transport with integrated OTN switching, packet switching and control plane functionality.
|
|
•
|
Packet Networking
revenue
increased
reflecting a $35.8 million increase in sales of our 3000 and 5000 families of service delivery and aggregation switches to support wireless backhaul, Ethernet business services and residential broadband applications. This increase was partially offset by a $4.0 million decrease in sales of our 5410 service aggregation switches. Segment revenue benefited from the expansion of Ethernet business services by our North American service provider customers and sales of service delivery and aggregation products in support of their related network initiatives.
|
|
•
|
Optical Transport
revenue
decreased
reflecting sales decreases of $11.2 million in our 4200 Advanced Services Platform, $9.8 million in other stand-alone transport products, $1.9 million of CPL and $1.0 million in our 6100 Multiservice Optical Platform. Revenue for our Optical Transport segment, which currently consists principally of stand-alone WDM and SONET/SDH-based transport platforms, has experienced meaningful declines in annual revenue in recent years, reflecting network operators' transition toward next-generation network architectures as described above.
|
|
•
|
Software and Services
revenue
increased
reflecting sales increases of $1.7 million in installation and deployment services and $0.6 million in software. These increases were partially offset by a $1.4 million decrease in sales of network transformation consulting services.
|
|
|
Quarter Ended July 31,
|
|
Increase
|
|
|
|||||||||||||
|
|
2012
|
|
%*
|
|
2013
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
|
United States
|
$
|
237,288
|
|
|
50.1
|
|
$
|
339,426
|
|
|
63.0
|
|
$
|
102,138
|
|
|
43.0
|
|
|
International
|
236,802
|
|
|
49.9
|
|
198,930
|
|
|
37.0
|
|
(37,872
|
)
|
|
(16.0
|
)
|
|||
|
Total
|
$
|
474,090
|
|
|
100.0
|
|
$
|
538,356
|
|
|
100.0
|
|
$
|
64,266
|
|
|
13.6
|
|
|
•
|
United States revenue
reflects
increases
of $64.8 million in Converged Packet Optical sales, $32.5 million in Packet Networking sales, and $6.6 million in Software and Services revenue. These increases were partially offset by a $1.8 million decrease in Optical Transport sales.
|
|
•
|
International revenue reflects
decreases
of $21.8 million in Optical Transport sales, $9.3 million in Converged Packet Optical sales, $5.7 million in Software and Services revenue and $1.1 million in Packet Networking sales.
|
|
|
Quarter Ended July 31,
|
|
Increase
|
|
|
||||||||||||
|
|
2012
|
|
%*
|
|
2013
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
|
Total revenue
|
$
|
474,090
|
|
|
100.0
|
|
$
|
538,356
|
|
|
100.0
|
|
$
|
64,266
|
|
|
13.6
|
|
Total cost of goods sold
|
292,769
|
|
|
61.8
|
|
310,135
|
|
|
57.6
|
|
17,366
|
|
|
5.9
|
|||
|
Gross profit
|
$
|
181,321
|
|
|
38.2
|
|
$
|
228,221
|
|
|
42.4
|
|
$
|
46,900
|
|
|
25.9
|
|
|
Quarter Ended July 31,
|
|
Increase
|
|
|
||||||||||||
|
|
2012
|
|
%*
|
|
2013
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
|
Product revenue
|
$
|
373,418
|
|
|
100.0
|
|
$
|
437,442
|
|
|
100.0
|
|
$
|
64,024
|
|
|
17.1
|
|
Product cost of goods sold
|
225,238
|
|
|
60.3
|
|
247,768
|
|
|
56.6
|
|
22,530
|
|
|
10.0
|
|||
|
Product gross profit
|
$
|
148,180
|
|
|
39.7
|
|
$
|
189,674
|
|
|
43.4
|
|
$
|
41,494
|
|
|
28.0
|
|
|
Quarter Ended July 31,
|
|
Increase
|
|
|
|||||||||||||
|
|
2012
|
|
%*
|
|
2013
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
|
Service revenue
|
$
|
100,672
|
|
|
100.0
|
|
$
|
100,914
|
|
|
100.0
|
|
$
|
242
|
|
|
0.2
|
|
|
Service cost of goods sold
|
67,531
|
|
|
67.1
|
|
62,367
|
|
|
61.8
|
|
(5,164
|
)
|
|
(7.6
|
)
|
|||
|
Service gross profit
|
$
|
33,141
|
|
|
32.9
|
|
$
|
38,547
|
|
|
38.2
|
|
$
|
5,406
|
|
|
16.3
|
|
|
•
|
Gross profit as a percentage of revenue
increased
as a result of the factors described below.
|
|
•
|
Gross profit on products as a percentage of product revenue
increased
primarily due to a greater mix of higher margin channel card revenue, lower warranty costs and higher manufacturing efficiencies. Gross margin for the
third
quarter of fiscal
2013
also benefited from the geographic mix of revenue during the quarter.
|
|
•
|
Gross profit on services as a percentage of services revenue
increased
primarily due to improved margins on installation and deployment services revenue due to improved operational efficiencies.
|
|
|
Quarter Ended July 31,
|
|
Increase
|
|
|
|||||||||||||
|
|
2012
|
|
%*
|
|
2013
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
|
Research and development
|
$
|
88,315
|
|
|
18.6
|
|
$
|
93,069
|
|
|
17.3
|
|
$
|
4,754
|
|
|
5.4
|
|
|
Selling and marketing
|
65,397
|
|
|
13.8
|
|
75,613
|
|
|
14.0
|
|
10,216
|
|
|
15.6
|
|
|||
|
General and administrative
|
27,876
|
|
|
5.9
|
|
32,066
|
|
|
6.0
|
|
4,190
|
|
|
15.0
|
|
|||
|
Amortization of intangible assets
|
12,714
|
|
|
2.7
|
|
12,440
|
|
|
2.3
|
|
(274
|
)
|
|
(2.2
|
)
|
|||
|
Restructuring costs
|
2,291
|
|
|
0.5
|
|
202
|
|
|
—
|
|
(2,089
|
)
|
|
(91.2
|
)
|
|||
|
Total operating expenses
|
$
|
196,593
|
|
|
41.5
|
|
$
|
213,390
|
|
|
39.6
|
|
$
|
16,797
|
|
|
8.5
|
|
|
•
|
Research and development expense
benefited
$1.4 million
as a result of foreign exchange rates, primarily due to strengthening of the U.S. dollar in relation to the Canadian dollar. The
$4.8 million
increase
consisted of an $8.0 million increase in employee compensation and related costs and a $1.0 million increase in prototypes. These increases were partially offset by a $4.7 million decrease in professional services. Our prioritization of expense reflects the research and development strategy described above and our focused transition from traditional optical transport platforms toward converged packet networking platforms that promote our OP
n
Architecture vision.
|
|
•
|
Selling and marketing expense
increased
by
$10.2 million
, primarily reflecting increases of $9.4 million in employee compensation and related costs, $1.2 million in facilities and information systems expense and $1.2 million in travel and related expense. These increases were partially offset by a decrease of $1.5 million of freight and logistic costs for demonstration equipment.
|
|
•
|
General and administrative expense
increased
by
$4.2 million
reflecting an increase in employee compensation and related costs.
|
|
•
|
Amortization of intangible assets
decreased
slightly due to certain intangible assets having reached the end of their economic lives.
|
|
•
|
Restructuring costs
primarily reflect certain severance and related expense associated with headcount reductions and initiatives to improve efficiency. In an effort to manage operating expense and execute on our strategy to drive additional operating leverage from our business, we have undertaken a number of restructuring activities intended to better align our workforce and operating costs with market opportunities and product development strategies. Restructuring costs for the third quarter of fiscal 2013 reflect costs associated with the initiative previously announced in the first quarter of fiscal 2013 to consolidate and reallocate certain engineering resources. As we look to manage operating expense and drive further efficiency and leverage from our operations, we will continue to assess allocation of headcount, facilities and other resources to ensure that they are optimized toward key growth opportunities.
|
|
|
Quarter Ended July 31,
|
|
Increase
|
|
|
|||||||||||||||
|
|
2012
|
|
%*
|
|
2013
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||||
|
Interest and other income (loss), net
|
$
|
(2,458
|
)
|
|
(0.5
|
)
|
|
$
|
(3,167
|
)
|
|
(0.6
|
)
|
|
$
|
(709
|
)
|
|
28.8
|
|
|
Interest expense
|
$
|
9,597
|
|
|
2.0
|
|
|
$
|
10,972
|
|
|
2.0
|
|
|
$
|
1,375
|
|
|
14.3
|
|
|
Provision for income taxes
|
$
|
2,490
|
|
|
0.5
|
|
|
$
|
1,923
|
|
|
0.4
|
|
|
$
|
(567
|
)
|
|
(22.8
|
)
|
|
•
|
Interest and other income (loss), net decreased
reflecting a $1.5 million loss in foreign exchange rates on assets and liabilities denominated in a currency other than the relevant functional currency. This was partially offset by a $0.7 million non-cash gain related to the change in fair value of the embedded redemption feature associated with our 2015 Notes.
|
|
•
|
Interest expense
increased
reflecting a $0.7 million increase relating to interest on our convertible notes as described in Note
13
to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report, and $0.7 million in expense relating to our asset-backed loan facility entered into during the fourth quarter of fiscal 2012.
|
|
•
|
Provision for income taxes
decreased primarily due to decreased foreign taxes.
|
|
|
Nine Months Ended July 31,
|
|
Increase
|
|
|
|||||||||||||
|
|
2012
|
|
%*
|
|
2013
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Converged Packet Optical
|
$
|
713,175
|
|
|
52.1
|
|
$
|
836,303
|
|
|
55.8
|
|
$
|
123,128
|
|
|
17.3
|
|
|
Packet Networking
|
81,638
|
|
|
6.0
|
|
161,658
|
|
|
10.8
|
|
80,020
|
|
|
98.0
|
|
|||
|
Optical Transport
|
281,819
|
|
|
20.6
|
|
181,186
|
|
|
12.1
|
|
(100,633
|
)
|
|
(35.7
|
)
|
|||
|
Software and Services
|
291,760
|
|
|
21.3
|
|
320,014
|
|
|
21.3
|
|
28,254
|
|
|
9.7
|
|
|||
|
Consolidated revenue
|
$
|
1,368,392
|
|
|
100.0
|
|
$
|
1,499,161
|
|
|
100.0
|
|
$
|
130,769
|
|
|
9.6
|
|
|
•
|
Converged Packet Optical
revenue
increased
reflecting a $113.2 million increase in sales of our 6500 Packet-Optical Platform, largely driven by service provider demand for high-capacity, optical transport for coherent 40G and 100G network infrastructures. In addition, sales of our 5430 reconfigurable switching system and the OTN configuration for the 5410 Reconfigurable Switching System increased by $26.5 million and $6.2 million respectively. These increases were partially offset by a $22.7 million decrease in sales of our CoreDirector® Multiservice Optical Switches. The strong performance of this segment, particularly as compared to the expected annual revenue declines in Optical Transport segment revenue, reflects the preference of network operators to adopt next-generation architectures that enable the convergence of high-capacity, coherent optical transport with integrated OTN switching and control plane functionality.
|
|
•
|
Packet Networking
revenue
increased
significantly reflecting increases of $77.7 million in sales of our 3000 and 5000 families of service delivery and aggregation switches and a $3.0 million increase in sales of our 5410 Service Aggregation Switch to support wireless backhaul, Ethernet business services and residential broadband applications. Segment revenue benefited from the expansion of Ethernet business services by our North American service provider customers and sales of service delivery and aggregation products in support of their related network initiatives.
|
|
•
|
Optical Transport
revenue
decreased
reflecting sales decreases of $42.0 million in our 4200 Advanced Services Platform, $29.9 million in other stand-alone transport products, $15.4 million of 5100/5200 Advanced Services Platform, $7.9 million of CPL and $5.5 million in our 6100 Multiservice Optical Platform. Revenue for our Optical Transport segment, which currently consists principally of stand-alone WDM and SONET/SDH-based transport platforms, has experienced meaningful declines in annual revenue in recent years, reflecting network operators' transition toward next-generation network architectures as described above.
|
|
•
|
Software and Services
revenue
increased
reflecting increases of $12.7 million in installation and deployment, $9.4 million in software sales, $3.1 million in network transformation consulting and $3.0 million in maintenance and support services revenue.
|
|
|
Nine Months Ended July 31,
|
|
Increase
|
|
|
|||||||||||||
|
|
2012
|
|
%*
|
|
2013
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
|
United States
|
$
|
723,034
|
|
|
52.8
|
|
$
|
891,233
|
|
|
59.4
|
|
$
|
168,199
|
|
|
23.3
|
|
|
International
|
645,358
|
|
|
47.2
|
|
607,928
|
|
|
40.6
|
|
(37,430
|
)
|
|
(5.8
|
)
|
|||
|
Total
|
$
|
1,368,392
|
|
|
100.0
|
|
$
|
1,499,161
|
|
|
100.0
|
|
$
|
130,769
|
|
|
9.6
|
|
|
•
|
United States revenue
reflects
increases
of $85.6 million in Converged Packet Optical sales, $83.4 million in Packet Networking sales, and $19.5 million in Software and Services revenue. These increases were partially offset by a $20.3 million decrease in Optical Transport sales.
|
|
•
|
International revenue
reflects
decreases
of $80.3 million in Optical Transport sales and $3.4 million in Packet Networking sales. These decreases were offset by a $37.5 million increase in Converged Packet Optical sales and $8.8 million increase in Software and Services revenue.
|
|
|
Nine Months Ended July 31,
|
|
Increase
|
|
|
||||||||||||
|
|
2012
|
|
%*
|
|
2013
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
|
Total revenue
|
$
|
1,368,392
|
|
|
100.0
|
|
$
|
1,499,161
|
|
|
100.0
|
|
$
|
130,769
|
|
|
9.6
|
|
Total cost of goods sold
|
836,374
|
|
|
61.1
|
|
865,632
|
|
|
57.7
|
|
29,258
|
|
|
3.5
|
|||
|
Gross profit
|
$
|
532,018
|
|
|
38.9
|
|
$
|
633,529
|
|
|
42.3
|
|
$
|
101,511
|
|
|
19.1
|
|
|
Nine Months Ended July 31,
|
|
Increase
|
|
|
||||||||||||
|
|
2012
|
|
%*
|
|
2013
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
|
Product revenue
|
$
|
1,091,817
|
|
|
100.0
|
|
$
|
1,203,716
|
|
|
100.0
|
|
$
|
111,899
|
|
|
10.2
|
|
Product cost of goods sold
|
657,362
|
|
|
60.2
|
|
683,730
|
|
|
56.8
|
|
26,368
|
|
|
4.0
|
|||
|
Product gross profit
|
$
|
434,455
|
|
|
39.8
|
|
$
|
519,986
|
|
|
43.2
|
|
$
|
85,531
|
|
|
19.7
|
|
|
Nine Months Ended July 31,
|
|
Increase
|
|
|
||||||||||||
|
|
2012
|
|
%*
|
|
2013
|
|
%*
|
|
(decrease)
|
|
%**
|
||||||
|
Service revenue
|
$
|
276,575
|
|
|
100.0
|
|
$
|
295,445
|
|
|
100.0
|
|
$
|
18,870
|
|
|
6.8
|
|
Service cost of goods sold
|
179,012
|
|
|
64.7
|
|
181,902
|
|
|
61.6
|
|
2,890
|
|
|
1.6
|
|||
|
Service gross profit
|
$
|
97,563
|
|
|
35.3
|
|
$
|
113,543
|
|
|
38.4
|
|
$
|
15,980
|
|
|
16.4
|
|
•
|
Gross profit as a percentage of revenue
increased
as a result of the factors described below.
|
|
•
|
Gross profit on products as a percentage of product revenue
increased
primarily due to improved mix of higher-margin packet platforms with software content, including within our Packet Networking and Converged Packet Optical segments, higher sales of integrated network service management software, lower warranty costs, and greater leverage from efforts to streamline and optimize our supply chain activities.
|
|
•
|
Gross profit on services as a percentage of services revenue
increased
primarily due to improved margins on installation and deployment services due to improved operational efficiencies, and increased consulting service revenue, from our Network Transformation Solutions offering.
|
|
|
Nine Months Ended July 31,
|
|
Increase
|
|
|
|||||||||||||
|
|
2012
|
|
%*
|
|
2013
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||
|
Research and development
|
$
|
268,378
|
|
|
19.6
|
|
$
|
282,981
|
|
|
18.9
|
|
$
|
14,603
|
|
|
5.4
|
|
|
Selling and marketing
|
192,325
|
|
|
14.1
|
|
216,676
|
|
|
14.4
|
|
24,351
|
|
|
12.7
|
|
|||
|
General and administrative
|
84,210
|
|
|
6.2
|
|
91,157
|
|
|
6.1
|
|
6,947
|
|
|
8.2
|
|
|||
|
Amortization of intangible assets
|
39,152
|
|
|
2.9
|
|
37,332
|
|
|
2.5
|
|
(1,820
|
)
|
|
(4.6
|
)
|
|||
|
Restructuring costs
|
5,864
|
|
|
0.4
|
|
6,741
|
|
|
0.4
|
|
877
|
|
|
15.0
|
|
|||
|
Total operating expenses
|
$
|
589,929
|
|
|
43.2
|
|
$
|
634,887
|
|
|
42.3
|
|
$
|
44,958
|
|
|
7.6
|
|
|
•
|
Research and development expense
benefited
$2.0 million
, as a result of foreign exchange rates, primarily due to strengthening of the U.S. dollar in relation to the Canadian dollar. The
increase
of
$14.6 million
primarily reflects increases of $13.3 million in employee compensation and related costs, $7.6 million in prototype expense, and $2.8 million in facilities and information systems expense. These increases were partially offset by a $10.0 million decrease in professional services and a $1.0 million decrease in depreciation expense.
|
|
•
|
Selling and marketing expense
increased
$24.4 million
, primarily reflecting increases of $15.3 million in employee compensation and related costs, $5.2 million in facilities and information systems expense, $3.8 million of travel and related costs, $1.0 million in trade show and demonstration equipment expense and $1.0 million in professional services. These increases were partially offset by a decrease of $1.7 million of freight and logistic costs for demonstration equipment.
|
|
•
|
General and administrative expense
increased
$6.9 million
, primarily reflecting increases of $7.7 million in employee compensation and related costs and $1.3 million in professional services. These increases were partially offset by a $2.5 million decrease in facilities and information systems expense,
|
|
•
|
Amortization of intangible assets
decreased
due to certain intangible assets having reached the end of their economic lives.
|
|
•
|
Restructuring costs
primarily reflect certain severance and related expense associated with headcount reductions and initiatives to improve efficiency. During the first quarter of fiscal
2013
, we announced an initiative to achieve greater research and engineering efficiencies by consolidating and reallocating certain engineering resources to ensure alignment with development priorities. These activities resulted in a headcount reduction affecting approximately
85
employees, principally in our global products group in North America. We believe these actions will facilitate synergies across our engineering teams and further clarify the mandate of each of our remaining research and development centers. In addition, we implemented a headcount reduction of a small number of sales and services resources in EMEA in order to free up investment capacity and reallocate global resources to better support our evolving go-to-market sales coverage model described above. In the second quarter of fiscal
2013
, we reorganized certain supply chain and administrative activities primarily in the APAC region. During fiscal
2013
, we have incurred approximately
$6.7 million
in restructuring costs, including expense related to the actions above. As we look to manage operating expense and drive further efficiency and leverage from our operations, we will continue to assess allocation of headcount, facilities and other resources to ensure that they are optimized toward key growth opportunities.
|
|
|
Nine Months Ended July 31,
|
|
Increase
|
|
|
|||||||||||||||
|
|
2012
|
|
%*
|
|
2013
|
|
%*
|
|
(decrease)
|
|
%**
|
|||||||||
|
Interest and other income (loss), net
|
$
|
(11,732
|
)
|
|
(0.9
|
)
|
|
$
|
(6,020
|
)
|
|
(0.4
|
)
|
|
$
|
5,712
|
|
|
(48.7
|
)
|
|
Interest expense
|
$
|
28,813
|
|
|
2.1
|
|
|
$
|
33,096
|
|
|
2.2
|
|
|
$
|
4,283
|
|
|
14.9
|
|
|
Loss on extinguishment of debt
|
$
|
—
|
|
|
0.0
|
|
|
$
|
28,630
|
|
|
1.9
|
|
|
$
|
28,630
|
|
|
—
|
|
|
Provision for income taxes
|
$
|
6,794
|
|
|
0.5
|
|
|
$
|
6,530
|
|
|
0.4
|
|
|
$
|
(264
|
)
|
|
(3.9
|
)
|
|
•
|
Interest and other income (loss), net
improved primarily reflecting a $5.9 million non-cash gain related to the change in fair value of the embedded redemption feature associated with our 2015 Notes.
|
|
•
|
Interest expense
increased
reflecting increases of $2.9 million relating to our convertible note exchange transactions during the first quarter of fiscal 2013 as described in Note
13
to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report, and $2.0 million in expense relating to our asset-backed loan facility entered into during the fourth quarter of fiscal 2012. These increases were partially offset by a decrease of interest paid in the first nine months of fiscal 2013 of $0.6 million, principally due to the repayment of our 0.25% convertible senior notes at maturity in the second quarter of fiscal 2013.
|
|
•
|
Loss on extinguishment of debt
reflects a non-cash loss of $28.6 million relating to the exchange transactions described in "Overview" above during the first quarter of fiscal 2013. Upon issuance, the 2020 Notes were recorded at a fair value of $213.6 million. The exchange transactions resulted in the retirement of outstanding 2015 Notes with a carrying value of $187.9 million and the write-off of unamortized debt issuance costs of $2.3 million and $0.6 million relating to the redemption feature on the 2015 Notes accounted for as a separate embedded derivative.
|
|
•
|
Provision for income taxes
remained relatively unchanged.
|
|
|
Quarter Ended July 31,
|
|
|
|
||||||||||
|
|
2012
|
|
2013
|
|
Increase (decrease)
|
|
%*
|
|||||||
|
Segment profit (loss):
|
|
|
|
|
|
|
|
|||||||
|
Converged Packet Optical
|
$
|
37,086
|
|
|
$
|
66,952
|
|
|
$
|
29,866
|
|
|
80.5
|
|
|
Packet Networking
|
$
|
906
|
|
|
$
|
7,620
|
|
|
$
|
6,714
|
|
|
741.1
|
|
|
Optical Transport
|
$
|
31,410
|
|
|
$
|
29,459
|
|
|
$
|
(1,951
|
)
|
|
(6.2
|
)
|
|
Software and Services
|
$
|
23,604
|
|
|
$
|
31,121
|
|
|
$
|
7,517
|
|
|
31.8
|
|
|
•
|
Converged Packet Optical
segment
profit
increased
primarily due to increased sales volume and improved gross margin, partially offset by increased research and development costs.
|
|
•
|
Packet Networking
segment
profit
improvement was primarily due to increased sales volume, partially offset by increased research and development costs.
|
|
•
|
Optical Transport
segment
profit
decreased
primarily due to reduced sales volume, partially offset by improved gross margin and lower research and development costs.
|
|
•
|
Software and Services
segment
profit
increased
primarily due to increased sales volume and improved gross margin.
|
|
|
Nine Months Ended July 31,
|
|
|
|
||||||||||
|
|
2012
|
|
2013
|
|
Increase (decrease)
|
|
%*
|
|||||||
|
Segment profit (loss):
|
|
|
|
|
|
|
|
|||||||
|
Converged Packet Optical
|
$
|
112,574
|
|
|
$
|
171,598
|
|
|
$
|
59,024
|
|
|
52.4
|
|
|
Packet Networking
|
$
|
(6,496
|
)
|
|
$
|
15,259
|
|
|
$
|
21,755
|
|
|
334.9
|
|
|
Optical Transport
|
$
|
94,591
|
|
|
$
|
71,459
|
|
|
$
|
(23,132
|
)
|
|
(24.5
|
)
|
|
Software and Services
|
$
|
62,971
|
|
|
$
|
92,232
|
|
|
$
|
29,261
|
|
|
46.5
|
|
|
•
|
Converged Packet Optical
segment
profit
increased
primarily due to increased sales volume and improved gross margin, partially offset by increased research and development costs.
|
|
•
|
Packet Networking
segment
profit
improvement was due to increased sales volume and improved gross margin, partially offset by increased research and development costs.
|
|
•
|
Optical Transport
segment
profit
decreased
primarily due to reduced sales volume, partially offset by improved gross margin and lower research and development costs.
|
|
•
|
Software and Services
segment
profit
increased
primarily due to increased sales volume and improved gross margin.
|
|
|
October 31,
2012 |
|
July 31,
2013 |
|
Increase
(decrease)
|
||||||
|
Cash and cash equivalents
|
$
|
642,444
|
|
|
$
|
378,179
|
|
|
$
|
(264,265
|
)
|
|
Short-term investments in marketable debt securities
|
50,057
|
|
|
99,981
|
|
|
49,924
|
|
|||
|
Long-term investments in marketable debt securities
|
—
|
|
|
15,022
|
|
|
15,022
|
|
|||
|
Total cash and cash equivalents and investments in marketable debt securities
|
$
|
692,501
|
|
|
$
|
493,182
|
|
|
$
|
(199,319
|
)
|
|
•
|
$41.1 million
cash
generated
from operations, consisting of
$116.0 million
provided by
net loss (adjusted for non-cash charges) and
$74.8 million
used in
working capital;
|
|
•
|
$31.9 million
used for purchases of equipment, furniture, fixtures and intellectual property, partially offset by
$1.9 million
transferred from restricted cash due to a decrease in the amount of collateral required to support our standby letters of credit;
|
|
•
|
$216.2 million
used to pay our 0.25% convertible senior notes at maturity;
|
|
•
|
$3.7 million
used for transaction costs for the private exchange offers relating to our 2015 Notes completed during the first quarter of fiscal 2013 as described in "Overview" above;
|
|
•
|
$2.4 million
used relating to payment of capital lease obligations; and
|
|
•
|
$14.1 million
primarily from stock issuances under our employee stock purchase plan.
|
|
|
Nine months ended
|
||
|
|
July 31, 2013
|
||
|
Net loss
|
$
|
(75,634
|
)
|
|
Adjustments for non-cash charges:
|
|
||
|
Loss on extinguishment of debt
|
28,630
|
|
|
|
Depreciation of equipment, furniture and fixtures, and amortization of leasehold improvements
|
42,613
|
|
|
|
Share-based compensation costs
|
28,032
|
|
|
|
Amortization of intangible assets
|
53,485
|
|
|
|
Provision for inventory excess and obsolescence
|
15,301
|
|
|
|
Provision for warranty
|
15,148
|
|
|
|
Other
|
8,384
|
|
|
|
Net loss (adjusted for non-cash charges)
|
$
|
115,959
|
|
|
|
October 31,
2012 |
|
July 31,
2013 |
|
Increase
(decrease)
|
||||||
|
Accounts receivable, net
|
$
|
345,496
|
|
|
$
|
430,424
|
|
|
$
|
84,928
|
|
|
|
October 31,
2012 |
|
July 31,
2013 |
|
Increase
(decrease)
|
||||||
|
Raw materials
|
$
|
39,678
|
|
|
$
|
51,549
|
|
|
$
|
11,871
|
|
|
Work-in-process
|
10,736
|
|
|
7,931
|
|
|
(2,805
|
)
|
|||
|
Finished goods
|
178,210
|
|
|
147,757
|
|
|
(30,453
|
)
|
|||
|
Deferred cost of goods sold
|
71,484
|
|
|
70,955
|
|
|
(529
|
)
|
|||
|
Gross inventory
|
300,108
|
|
|
278,192
|
|
|
(21,916
|
)
|
|||
|
Provision for inventory excess and obsolescence
|
(40,010
|
)
|
|
(42,662
|
)
|
|
(2,652
|
)
|
|||
|
Inventory
|
$
|
260,098
|
|
|
$
|
235,530
|
|
|
$
|
(24,568
|
)
|
|
|
October 31,
2012 |
|
July 31,
2013 |
|
Increase
(decrease)
|
||||||
|
Accounts payable
|
$
|
179,704
|
|
|
$
|
208,707
|
|
|
$
|
29,003
|
|
|
Accrued liabilities
|
209,540
|
|
|
240,140
|
|
|
30,600
|
|
|||
|
Other long-term obligations
|
31,779
|
|
|
33,279
|
|
|
1,500
|
|
|||
|
Accounts payable, accruals and other obligations
|
$
|
421,023
|
|
|
$
|
482,126
|
|
|
$
|
61,103
|
|
|
|
October 31,
2012 |
|
July 31,
2013 |
|
Increase
(decrease)
|
||||||
|
Products
|
$
|
29,279
|
|
|
$
|
34,865
|
|
|
$
|
5,586
|
|
|
Services
|
77,797
|
|
|
82,625
|
|
|
4,828
|
|
|||
|
Total deferred revenue
|
$
|
107,076
|
|
|
$
|
117,490
|
|
|
$
|
10,414
|
|
|
|
Total
|
|
Less than one year
|
|
One to three years
|
|
Three to five years
|
|
Thereafter
|
||||||||||
|
Principal due at maturity on convertible notes (1)
|
$
|
1,254,627
|
|
|
$
|
—
|
|
|
$
|
187,500
|
|
|
$
|
500,000
|
|
|
$
|
567,127
|
|
|
Interest due on convertible notes
|
160,938
|
|
|
32,500
|
|
|
57,500
|
|
|
45,625
|
|
|
25,313
|
|
|||||
|
Operating leases (2)
|
151,657
|
|
|
30,586
|
|
|
48,450
|
|
|
19,749
|
|
|
52,872
|
|
|||||
|
Purchase obligations (3)
|
158,595
|
|
|
158,595
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Capital leases
|
6,469
|
|
|
3,578
|
|
|
2,691
|
|
|
200
|
|
|
—
|
|
|||||
|
Other obligations
|
2,040
|
|
|
1,083
|
|
|
943
|
|
|
14
|
|
|
—
|
|
|||||
|
Total (4)
|
$
|
1,734,326
|
|
|
$
|
226,342
|
|
|
$
|
297,084
|
|
|
$
|
565,588
|
|
|
$
|
645,312
|
|
|
(1)
|
Includes the accretion of the principal amount on the 2020 Notes payable at maturity at a rate of 1.85% per year compounded semi-annually, commencing December 27, 2012.
|
|
(2)
|
Does not include variable insurance, taxes, maintenance and other costs required by the applicable operating lease. These costs are not expected to have a material future impact.
|
|
(3)
|
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.
|
|
(4)
|
As of
July 31, 2013
, we also had approximately
$11.8 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
|
$
|
46,038
|
|
|
$
|
18,633
|
|
|
$
|
15,554
|
|
|
$
|
2,158
|
|
$
|
9,693
|
|
|
•
|
broader macroeconomic conditions, including weakness and volatility in global markets, affecting our customers;
|
|
•
|
changes in capital spending by large communications service providers;
|
|
•
|
order flow and backlog levels;
|
|
•
|
the timing of our ability to recognize revenue on sales;
|
|
•
|
the mix of revenue by product segment, geography and customer in any particular quarter;
|
|
•
|
the level of competition and pricing pressure we encounter;
|
|
•
|
seasonal effects in our business;
|
|
•
|
the level of start-up costs we incur to support initial deployments, gain new customers or enter new markets; and
|
|
•
|
our level of success in improving manufacturing efficiencies and achieving cost reductions in our supply chain.
|
|
•
|
reductions in customer spending and delay, deferral or cancellation of network infrastructure initiatives;
|
|
•
|
increased competition for fewer network projects and sales opportunities;
|
|
•
|
increased pricing pressure that may adversely affect revenue, gross margin and profitability;
|
|
•
|
difficulty forecasting, budgeting and planning;
|
|
•
|
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.
|
|
•
|
damage to our reputation, declining sales and order cancellations;
|
|
•
|
increased costs to remediate defects or replace products;
|
|
•
|
payment of liquidated damages, contractual or similar penalties, or other claims for performance failures or delays;
|
|
•
|
increased warranty expense or estimates resulting from higher failure rates, additional field service obligations or other rework costs related to defects;
|
|
•
|
increased inventory obsolescence;
|
|
•
|
costs and claims that may not be covered by liability insurance coverage or recoverable from third parties; and
|
|
•
|
delays in recognizing revenue or collecting accounts receivable.
|
|
•
|
the impact of economic conditions in countries outside the United States;
|
|
•
|
effects of changes in currency exchange rates;
|
|
•
|
greater difficulty in collecting accounts receivable and longer collection periods;
|
|
•
|
difficulty and cost of staffing and managing foreign operations;
|
|
•
|
less protection for intellectual property rights in some countries;
|
|
•
|
adverse tax and customs consequences, particularly as related to transfer-pricing issues;
|
|
•
|
social, political and economic instability;
|
|
•
|
higher incidence of corruption or unethical business practices that could expose us to liability or damage our reputation;
|
|
•
|
trade protection measures, export compliance, domestic preference procurement requirements, qualification to transact business and additional regulatory requirements; and
|
|
•
|
natural disasters, epidemics and acts of war or terrorism.
|
|
•
|
pay substantial damages or royalties;
|
|
•
|
comply with an injunction or other court order that could prevent us from offering certain of our products;
|
|
•
|
seek a license for the use of certain intellectual property, which may not be available on commercially reasonable terms or at all;
|
|
•
|
develop non-infringing technology, which could require significant effort and expense and ultimately may not be successful; and
|
|
•
|
indemnify our customers or other third parties pursuant to contractual obligations to hold them harmless or pay expenses or damages on their behalf.
|
|
•
|
we may suffer delays in recognizing revenue;
|
|
•
|
we may be exposed to liability for injuries to persons, damage to property or other claims relating to the actions or omissions of our support partners;
|
|
•
|
our services revenue and gross margin may be adversely affected; and
|
|
•
|
our relationships with customers could suffer.
|
|
•
|
increasing our vulnerability to adverse economic and industry conditions;
|
|
•
|
limiting our ability to obtain additional financing, particularly in unfavorable capital and credit market conditions;
|
|
•
|
incurrence of debt service and repayment obligations that reduce the availability of cash resources for other business purposes;
|
|
•
|
limiting our flexibility in planning for, or reacting to, changes in our business and the markets; and
|
|
•
|
placing us at a possible competitive disadvantage to competitors that have better access to capital resources.
|
|
•
|
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
|
Second Lease Amending Agreement dated August 29, 2013 by and between Her Majesty the Queen in Right of Canada, as Represented by the Minister of Public Works and Government Services, as landlord, and Ciena Canada, Inc., as tenant (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
|
|
|
|
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
101.INS*
|
XBRL Instance Document
|
|
|
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
(a)
|
Incorporated herein by reference to Ciena's Current Report on Form 8-K filed on August 29, 2013
|
|
|
|
Ciena Corporation
|
||
|
Date:
|
September 11, 2013
|
By:
|
/s/ Gary B. Smith
|
|
|
|
|
|
Gary B. Smith
|
|
|
|
|
|
President, Chief Executive Officer
and Director
(Duly Authorized Officer)
|
|
|
|
|
|
||
|
Date:
|
September 11, 2013
|
By:
|
/s/ James E. Moylan, Jr.
|
|
|
|
|
|
James E. Moylan, Jr.
|
|
|
|
|
|
Senior Vice President, Finance and
Chief Financial Officer
(Principal Financial Officer)
|
|
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 |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|