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Ciena Reports Fiscal Third Quarter 2018 Financial Results

August 30, 2018

Year-over-year revenue growth of 12% reflects strong execution and another quarter of consistent performance

HANOVER, Md.--(BUSINESS WIRE)-- Ciena® Corporation (NYSE: CIEN)

  • Q3 Revenue: $818.8 million, increasing 12.4% year over year
  • Q3 Net Income per Share: $0.34 GAAP; $0.48 adjusted (non-GAAP)
  • Share Repurchases: Repurchased approximately 1.4 million shares of common stock for an aggregate price of $35.6 million during the quarter

Ciena today announced unaudited financial results for its fiscal third quarter ended July 31, 2018.

"The combination of continued execution against our strategy and robust, broad-based customer demand resulted in outstanding fiscal third quarter performance," said Gary B. Smith, president and CEO of Ciena. "With our diversification, global scale and innovation leadership, we remain confident in our business model and our ability to achieve our three-year financial targets.”

For the fiscal third quarter 2018, Ciena reported revenue of $818.8 million as compared to $728.7 million for the fiscal third quarter 2017.

Ciena's GAAP net income for the fiscal third quarter 2018 was $50.8 million, or $0.34 per diluted common share, which compares to a GAAP net income of $60.0 million, or $0.39 per diluted common share, for the fiscal third quarter 2017.

Ciena's adjusted (non-GAAP) net income for the fiscal third quarter 2018 was $74.3 million, or $0.48 per diluted common share, which compares to an adjusted (non-GAAP) net income of $56.4 million, or $0.35 per diluted common share, for the fiscal third quarter 2017.

Fiscal Third Quarter 2018 Performance Summary

The tables below (in millions, except percentage data) provide comparisons of certain quarterly results to the prior year. Appendix A and B set forth reconciliations between the GAAP and adjusted (non-GAAP) measures contained in this release.


   



GAAP Results



Q3     Q3     Period Change



FY 2018

FY 2017

Y-T-Y*
Revenue

$ 818.8


$ 728.7


12.4 %
Gross margin


42.9 %


45.0 %

(2.1 )%
Operating expense

$ 266.3


$ 246.1


8.2 %
Operating margin


10.4 %


11.3 %

(0.9 )%



 



Non-GAAP Results



Q3

Q3

Period Change



FY 2018

FY 2017

Y-T-Y*
Revenue

$ 818.8


$ 728.7


12.4 %
Adj. gross margin


43.4 %


45.5 %

(2.1 )%
Adj. operating expense

$ 241.0


$ 229.3


5.1 %
Adj. operating margin


14.0 %


14.1 %

(0.1 )%
Adj. EBITDA

$ 136.1


$ 122.8


10.8 %














 

* Denotes % change, or in the case of margin, absolute change

 

   



Revenue by Segment



Q3 FY 2018     Q3 FY 2017



Revenue     %**

Revenue     %**
Networking Platforms











Converged Packet Optical

$ 592.8

72.5

$ 510.2

70.0
Packet Networking

  84.6

10.3

  82.1

11.3
Total Networking Platforms


677.4

82.8


592.3

81.3












 
Software and Software-Related Services











Software Platforms


14.3

1.7


18.4

2.5
Software-Related Services

  26.9

3.3

  23.9

3.3
Total Software and Software-Related Services


41.2

5.0


42.3

5.8












 
Global Services











Maintenance Support and Training


60.9

7.4


57.9

7.9
Installation and Deployment


31.3

3.8


27.4

3.8
Consulting and Network Design

  8.0

1.0

  8.8

1.2
Total Global Services


100.2

12.2


94.1

12.9



 

 

 

 
Total

$ 818.8

100.0

$ 728.7

100.0












 

Additional Performance Metrics for Fiscal Third Quarter 2018


   



Revenue by Geographic Region



Q3 FY 2018     Q3 FY 2017



Revenue     % **

Revenue     % **
North America

$ 497.0

60.7

$ 465.2

63.8
Europe, Middle East and Africa


122.2

14.9


96.1

13.2
Caribbean and Latin America


27.5

3.4


51.7

7.1
Asia Pacific

  172.1

21.0

  115.7

15.9
Total

$ 818.8

100.0

$ 728.7

100.0
 

** Denotes % of total revenue

 
  • U.S. customers contributed 57.3% of total revenue
  • Three customers accounted for greater than 10% of revenue and represented 33% of total revenue
  • Cash and investments totaled $984.6 million
  • Cash flow from operations totaled $88.1 million
  • Free cash flow totaled $69.7 million
  • Average days' sales outstanding (DSOs) were 80
  • Accounts receivable balance was $728.9 million
  • Inventories totaled $227.9 million, including:
    • Raw materials: $54.0 million
    • Work in process: $11.1 million
    • Finished goods: $173.4 million
    • Deferred cost of sales: $38.5 million
    • Reserve for excess and obsolescence: $(49.1) million
  • Product inventory turns were 7.0
  • Headcount totaled 5,889

Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Third Quarter 2018 Results

Today, Thursday, August 30, 2018, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website supporting materials for its unaudited fiscal third quarter 2018 results.

Ciena's management will also host a discussion today with investors and financial analysts that will include the Company's fiscal third quarter outlook. The live audio web broadcast beginning at 8:30 a.m. Eastern will be accessible via www.ciena.com. An archived replay of the live broadcast will be available shortly following its conclusion on the Investor Relations page of Ciena's website.

Notes to Investors

Forward-Looking Statements. You are encouraged to review the Investors section of our website, where we routinely post press releases, SEC filings, recent news, financial results, supplemental financial information, and other announcements. From time to time we exclusively post material information to this website along with other disclosure channels that we use. This press release contains certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts, assumptions and other information available to the Company as of the date hereof. Forward-looking statements include statements regarding Ciena's expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. Forward-looking statements in this release include: "The combination of continued execution against our strategy and robust, broad-based customer demand resulted in outstanding fiscal third quarter performance."; "With our diversification, global scale and innovation leadership, we remain confident in our business model and our ability to achieve our three-year financial targets."

Ciena's actual results, performance or events may differ materially from these forward-looking statements made or implied due to a number of risks and uncertainties relating to Ciena's business, including: the effect of broader economic and market conditions on our customers and their business; changes in network spending or network strategy by customers; seasonality and the timing and size of customer orders, including our ability to recognize revenue relating to such sales; the level of competitive pressure we encounter; the product, customer and geographic mix of sales within the period; supply chain disruptions and the level of success relating to efforts to optimize Ciena's operations; changes in foreign currency exchange rates affecting revenue and operating expense; the impact of the Tax Cuts and Jobs Act, changes in estimates of prospective income tax rates and any adjustments to Ciena's provisional estimates whether related to further guidance, analysis or otherwise, and the other risk factors disclosed in Ciena's periodic reports filed with the Securities and Exchange Commission, including its Quarterly Report on Form 10-Q filed with the SEC on June 6, 2018 and its Annual Report on Form 10-K filed with the SEC on December 22, 2017. Ciena assumes no obligation to update any forward-looking information included in this press release.

Non-GAAP Presentation of Quarterly and Annual Results. This release includes non-GAAP measures of Ciena's gross profit, operating expense, income from operations, earnings before interest, tax, depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of net income and net income per share. In evaluating the operating performance of Ciena's business, management excludes certain charges and credits that are required by GAAP. These items share one or more of the following characteristics: they are unusual and Ciena does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of Ciena's control. Management believes that the non-GAAP measures below provide management and investors useful information and meaningful insight to the operating performance of the business. The presentation of these non-GAAP financial measures should be considered in addition to Ciena's GAAP results and these measures are not intended to be a substitute for the financial information prepared and presented in accordance with GAAP. Ciena's non-GAAP measures and the related adjustments may differ from non-GAAP measures used by other companies and should only be used to evaluate Ciena's results of operations in conjunction with our corresponding GAAP results. To the extent not previously disclosed in a prior Ciena financial results press release, Appendix A and B to this press release set forth a complete GAAP to non-GAAP reconciliation of the non-GAAP measures contained in this release.

About Ciena. Ciena (NYSE: CIEN) is a networking systems, services, and software company. We provide solutions that help our clients create more adaptive networks in response to the constantly changing demands of their users. By delivering best-in-class networking technology through high-touch consultative relationships, we build the world’s most sophisticated networks with automation and scale. For updates on Ciena, follow us on Twitter @Ciena, LinkedIn, the Ciena Insights blog, or visit www.ciena.com.

 
CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 

    Quarter Ended July 31,     Nine Months Ended July 31,



2018     2017

2018     2017
Revenue:











Products

$ 691,758


$ 610,742


$ 1,821,593


$ 1,702,365
Services

  127,059  

  117,977  

  373,337  

  354,873  
Total revenue

  818,817  

  728,719  

  2,194,930  

  2,057,238  
Cost of goods sold:











Products


399,886



341,197



1,085,574



955,303
Services

  67,388  

  59,446  

  192,741  

  181,834  
Total cost of goods sold

  467,274  

  400,643  

  1,278,315  

  1,137,137  
Gross profit

  351,543  

  328,076  

  916,615  

  920,101  
Operating expenses:











Research and development


121,133



117,729



356,581



356,221
Selling and marketing


95,395



86,739



281,269



260,292
General and administrative


38,212



35,569



115,594



106,423
Significant asset impairments and restructuring costs


6,359



2,203



16,679



8,874
Amortization of intangible assets


3,837



3,837



11,083



29,368
Acquisition and integration costs

  1,333  

   

  1,333  

   
Total operating expenses

  266,269  

  246,077  

  782,539  

  761,178  
Income from operations


85,274



81,999



134,076



158,923
Interest and other income (loss), net


(1,543 )


(848 )


1,328



(3,396 )
Interest expense

  (13,611 )

  (13,415 )

  (40,376 )

  (41,926 )
Income before income taxes


70,120



67,736



95,028



113,601
Provision for income taxes 1

  19,280  

  7,726  

  503,695  

  11,704  
Net income (loss)

$ 50,840  

$ 60,010  

$ (408,667 )

$ 101,897  












 
Net Income(loss) per Common Share











Basic net income (loss) per common share

$ 0.35  

$ 0.42  

$ (2.84 )

$ 0.72  
Diluted net income (loss) per potential common share 2

$ 0.34  

$ 0.39  

$ (2.84 )

$ 0.69  












 
Weighted average basic common shares outstanding

  143,400  

  142,464  

  143,766  

  141,631  
Weighted average dilutive potential common shares outstanding 3

  159,998  

  172,112  

  143,766  

  164,431  




















 
1. The provision for income taxes for fiscal 2018 is primarily related to the enactment of the Tax Cuts and Jobs Act. These amounts are provisional and reflect management’s current estimates and current interpretations of the Tax Cuts and Jobs Act. These amounts may require adjustment in future periods as additional guidance under the Tax Cuts and Jobs Act becomes available and analysis of its provisions is completed. As of July 31, 2018, Ciena has net deferred tax assets of approximately $724.1 million, and consequently, over the near term, Ciena's cash taxes will continue to be primarily related to state taxes and tax expense of Ciena's foreign subsidiaries, which amounts have not historically been significant. Ciena's foreign and domestic income tax expense for the third quarter of fiscal 2018 and 2017 expected to be paid using cash was $8.8 million and $7.7 million, respectively. Ciena's foreign and domestic income tax expense for the nine months ended July 31, 2018 and 2017 expected to be paid using cash was $11.8 million and $11.7 million, respectively.
 
2. The calculation of GAAP diluted net income per common share for the third quarter of fiscal 2018 requires adding back interest expense of approximately $0.5 million associated with Ciena's "Original" 3.75% convertible senior notes, due October 15, 2018, and approximately $2.6 million associated with Ciena's 4.0% convertible senior notes, due December 15, 2020 to the GAAP net income in order to derive the numerator for the diluted earnings per common share calculation.
 
The calculation of GAAP diluted net income per common share for the third quarter of fiscal 2017 requires adding back interest expense of approximately $0.2 million associated with Ciena's 0.875% convertible senior notes, which were paid at maturity during the third quarter of fiscal 2017, approximately $3.6 million associated with Ciena's "Original" 3.75% convertible senior notes, due October 15, 2018, and approximately $3.3 million associated with Ciena's 4.0% convertible senior notes, due December 15, 2020 to the GAAP net income in order to derive the numerator for the diluted earnings per common share calculation.
 
The calculation of GAAP diluted net income per common share for the first nine months of fiscal 2017 requires adding back interest expense of approximately $1.3 million associated with Ciena's 0.875% convertible senior notes, which were paid at maturity during the third quarter of fiscal 2017, and approximately $10.8 million associated with Ciena's "Original" 3.75% convertible senior notes, due October 15, 2018 to the GAAP net income in order to derive the numerator for the diluted earnings per common share calculation.
 
3. Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per common share for the third quarter of fiscal 2018 includes 1.3 million shares underlying certain stock options and restricted stock units, 3.0 million shares underlying Ciena's "New" 3.75% convertible senior notes, due October 15, 2018, 3.0 million shares underlying Ciena's "Original" 3.75% convertible senior notes, due October 15, 2018, and 9.2 million shares underlying Ciena's 4.0% convertible senior notes, due December 15, 2020.
 
Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per common share for the third quarter of fiscal 2017 includes 1.4 million shares underlying certain stock options and restricted stock units, 1.7 million shares underlying Ciena's 0.875% convertible senior notes, which were paid at maturity during the third quarter of fiscal 2017, 17.4 million shares underlying Ciena's "Original" 3.75% convertible senior notes, due October 15, 2018, and 9.2 million shares underlying Ciena's 4.0% convertible senior notes, due December 15, 2020.
 
Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per common share for the first nine months of fiscal 2017 includes 1.4 million shares underlying certain stock options and restricted stock units, 4.0 million shares underlying Ciena's 0.875% convertible senior notes, which were paid at maturity during the third quarter of fiscal 2017 and 17.4 million shares underlying Ciena's "Original" 3.75% convertible senior notes, due October 15, 2018.
 
 
CIENA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
 

    July 31,
2018
    October 31,
2017
ASSETS





Current assets:





Cash and cash equivalents

$ 726,214


$ 640,513
Short-term investments


228,940



279,133
Accounts receivable, net


728,940



622,183
Inventories


227,885



267,143
Prepaid expenses and other

  192,497  

  197,339  
Total current assets


2,104,476



2,006,311
Long-term investments


29,465



49,783
Equipment, building, furniture and fixtures, net


295,863



308,465
Goodwill


287,551



267,458
Other intangible assets, net


108,302



100,997
Deferred tax asset, net


724,087



1,155,104
Other long-term assets

  72,951  

  63,593  
Total assets

$ 3,622,695  

$ 3,951,711  
LIABILITIES AND STOCKHOLDERS’ EQUITY





Current liabilities:





Accounts payable

$ 312,611


$ 260,098
Accrued liabilities and other short-term obligations


297,988



322,934
Deferred revenue


104,170



102,418
Current portion of long-term debt

  353,669  

  352,293  
Total current liabilities


1,068,438



1,037,743
Long-term deferred revenue


79,914



82,589
Other long-term obligations


108,884



111,349
Long-term debt, net

  586,505  

  583,688  
Total liabilities

$ 1,843,741  

$ 1,815,369  
Stockholders’ equity:





Preferred stock – par value $0.01; 20,000,000 shares authorized; zero shares issued and outstanding







Common stock – par value $0.01; 290,000,000 shares authorized; 143,050,180 and 143,043,227 shares issued and outstanding




1,431



1,430
Additional paid-in capital


6,797,857



6,810,182
Accumulated other comprehensive income (loss)


(8,705 )


(11,017 )
Accumulated deficit

  (5,011,629 )

  (4,664,253 )
Total stockholders’ equity

  1,778,954  

  2,136,342  
Total liabilities and stockholders’ equity

$ 3,622,695  

$ 3,951,711  










 
 
CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 

    Nine Months Ended July 31,



2018     2017
Cash flows provided by operating activities:





Net income (loss)

$ (408,667 )

$ 101,897
Adjustments to reconcile net income (loss) to net cash provided by operating activities:





Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements


63,104



55,873
Share-based compensation costs


38,896



36,843
Amortization of intangible assets


18,196



39,721
Deferred taxes


491,863




Provision for inventory excess and obsolescence


19,942



28,727
Provision for warranty


15,715



5,188
Other


18,164



21,076
Changes in assets and liabilities:





Accounts receivable


(112,696 )


(80,652 )
Inventories


17,751



(93,896 )
Prepaid expenses and other


(11,163 )


(26,450 )
Accounts payable, accruals and other obligations


14,840



(5,960 )
Deferred revenue

  (4,710 )

  13,978  
Net cash provided by operating activities

  161,235  

  96,345  
Cash flows used in investing activities:





Payments for equipment, furniture, fixtures and intellectual property


(50,386 )


(76,004 )
Purchase of available for sale securities


(217,715 )


(189,802 )
Proceeds from maturities of available for sale securities


290,000



260,003
Settlement of foreign currency forward contracts, net


4,759



(1,619 )
Acquisition of business, net of cash acquired


(40,412 )



Purchase of cost method investment

  (1,433 )

   
Net cash used in investing activities

  (15,187 )

  (7,422 )
Cash flows used in financing activities:





Payment of long term debt


(3,000 )


(232,554 )
Payment for modification of term loans






(93,625 )
Payment of capital lease obligations


(2,811 )


(2,650 )
Repurchases of common stock-repurchase program


(73,512 )



Proceeds from issuance of common stock

  22,735  

  20,395  
Net cash used in financing activities


(56,588 )


(308,434 )
Effect of exchange rate changes on cash and cash equivalents

  (3,759 )

  1,436  
Net increase (decrease) in cash and cash equivalents


85,701



(218,075 )
Cash and cash equivalents at beginning of period

  640,513  

  777,615  
Cash and cash equivalents at end of period

$ 726,214  

$ 559,540  
Supplemental disclosure of cash flow information





Cash paid during the period for interest

$ 31,561


$ 33,861
Cash paid during the period for income taxes, net

$ 20,099


$ 26,793
Non-cash investing activities





Purchase of equipment in accounts payable

$ 5,677


$ 6,012
Building subject to capital lease

$


$ 50,370
Non-cash financing activities





Repurchase of common stock in accrued liabilities from repurchase program

$ 1,275


$










 
 
APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures (unaudited)

   
   



Quarter Ended July 31,



2018

2017
Gross Profit Reconciliation (GAAP/non-GAAP)





GAAP gross profit

$ 351,543    
$ 328,076  
Share-based compensation-products


783



709
Share-based compensation-services


618



619
Amortization of intangible assets

  2,534  

  2,417  
Total adjustments related to gross profit

  3,935  

  3,745  
Adjusted (non-GAAP) gross profit

$ 355,478  

$ 331,821  
Adjusted (non-GAAP) gross profit percentage


43.4 %


45.5 %






 
Operating Expense Reconciliation (GAAP/non-GAAP)





GAAP operating expense

$ 266,269  

$ 246,077  
Share-based compensation-research and development


3,082



3,139
Share-based compensation-sales and marketing


3,417



3,242
Share-based compensation-general and administrative


4,538



4,321
Significant asset impairments and restructuring costs


6,359



2,203
Amortization of intangible assets


3,837



3,837
Acquisition and integration costs


1,333




Legal settlement

  2,753  

   
Total adjustments related to operating expense

  25,319  

  16,742  
Adjusted (non-GAAP) operating expense

$ 240,950  

$ 229,335  






 
Income from Operations Reconciliation (GAAP/non-GAAP)





GAAP income from operations

$ 85,274  

$ 81,999  
Total adjustments related to gross profit


3,935



3,745
Total adjustments related to operating expense

  25,319  

  16,742  
Total adjustments related to income from operations

  29,254  

  20,487  
Adjusted (non-GAAP) income from operations

$ 114,528  

$ 102,486  
Adjusted (non-GAAP) operating margin percentage


14.0 %


14.1 %






 
Net Income Reconciliation (GAAP/non-GAAP)





GAAP net income

$ 50,840


$ 60,010
Exclude GAAP provision for income taxes

  19,280  

  7,726  
Income before income taxes

$ 70,120


$ 67,736
Total adjustments related to income from operations


29,254



20,487
Non-cash interest expense

  793  

  535  
Adjusted income before income taxes

$ 100,167


$ 88,758
Non-GAAP tax provision on adjusted income before income taxes

  25,913  

  32,397  
Adjusted (non-GAAP) net income

$ 74,254  

$ 56,361  






 
Weighted average basic common shares outstanding

  143,400  

  142,464  
Weighted average dilutive potential common shares outstanding 1

  159,998  

  172,112  






 
Net Income per Common Share





GAAP diluted net income per common share

$ 0.34


$ 0.39
Adjusted (non-GAAP) diluted net income per common share 2

$ 0.48


$ 0.35










 
1.   Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per common share for the third quarter of fiscal 2018 includes 1.3 million shares underlying certain stock options and restricted stock units, 3.0 million shares underlying Ciena's "New" 3.75% convertible senior notes, due October 15, 2018, 3.0 million shares underlying Ciena's "Original" 3.75% convertible senior notes, due October 15, 2018, and 9.2 million shares underlying Ciena's 4.0% convertible senior notes, due December 15, 2020.


 


Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per common share for the third quarter of fiscal 2017 includes 1.4 million shares underlying certain stock options and restricted stock units, 1.7 million shares underlying Ciena's 0.875% convertible senior notes, which were paid at maturity during the third quarter of fiscal 2017, 17.4 million shares underlying Ciena's "Original" 3.75% convertible senior notes, due October 15, 2018 and 9.2 million shares underlying Ciena's 4.0% convertible senior notes, due December 15, 2020.


 
2.
The calculation of Adjusted (non-GAAP) diluted net income per common share for the third quarter of fiscal 2018 requires adding back interest expense of approximately $0.5 million associated with Ciena's "Original" 3.75% convertible senior notes, due October 15, 2018 and approximately $2.1 million associated with Ciena's 4.0% convertible senior notes, due December 15, 2020 to the Adjusted (non-GAAP) net income in order to derive the numerator for the Adjusted earnings per common share calculation.


 


The calculation of Adjusted (non-GAAP) diluted net income per common share for the third quarter of fiscal 2017 requires adding back interest expense of approximately $0.2 million associated with Ciena's 0.875% convertible senior notes, which were paid at maturity during the third quarter of fiscal 2017, approximately $2.2 million associated with Ciena's "Original" 3.75% convertible senior notes, due October 15, 2018 and approximately $1.8 million associated with Ciena's 4.0% convertible senior notes, due December 15, 2020 to the Adjusted (non-GAAP) net income in order to derive the numerator for the Adjusted earnings per common share calculation.


 
 
APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited)
 

    Quarter Ended July 31,



2018     2017
Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)





Net income (GAAP)

$ 50,840


$ 60,010
Add: Interest expense


13,611



13,415
Less: Interest and other income (loss), net


(1,543 )


(848 )
Add: Provision for income taxes


19,280



7,726
Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements


21,704



20,325
Add: Amortization of intangible assets

  6,371  

  6,254  
EBITDA

$ 113,349  

$ 108,578  
Add: Shared-based compensation cost


12,337



12,013
Add: Significant asset impairments and restructuring costs


6,359



2,203
Add: Acquisition and integration costs


1,333




Add: Legal settlement

  2,753  

   
Adjusted EBITDA

$ 136,131  

$ 122,794  






 

The adjusted (non-GAAP) measures above and their reconciliation to Ciena's GAAP results for the periods presented reflect adjustments relating to the following items:

  • Share-based compensation - a non-cash expense incurred in accordance with share-based compensation accounting guidance.
  • Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities.
  • Amortization of intangible assets - a non-cash expense arising from the acquisition of intangible assets, principally developed technologies and customer-related intangibles, that Ciena is required to amortize over its expected useful life.
  • Acquisition and integration costs -consist of financial, legal and accounting advisors’ costs and severance and other employment-related costs related to Ciena's recent acquisition of Packet Design. Ciena does not believe that these costs are reflective of its ongoing operating expense following its completion of these integration activities.
  • Legal settlement - costs incurred as a result of a settlement associated with a commercial dispute with a former vendor.
  • Non-cash interest expense - a non-cash debt discount expense amortized as interest expense during the term of Ciena's 4.0% senior convertible notes due December 15, 2020 relating to the required separate accounting of the equity component of these convertible notes.
  • Non-GAAP tax provision - consists of current and deferred income tax expense commensurate with the level of adjusted income before income taxes and utilizes a current, blended U.S. and foreign statutory annual tax rate of 25.87% for the third fiscal quarter of 2018, and 36.5% for the third fiscal quarter of 2017. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy.

Ciena Corporation
Press Contact:
Nicole Anderson, 877-857-7377
pr@ciena.com
or
Investor Contact:
Gregg Lampf, 877-243-6273
ir@ciena.com

Source: Ciena Corporation

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