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Ciena Reports Fiscal Fourth Quarter 2020 and Year-End Financial Results

December 10, 2020

HANOVER, Md.--(BUSINESS WIRE)-- Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal fourth quarter and year ended October 31, 2020.

  • Q4 Revenue : $828.5 million
  • Q4 Net Income per Share: $0.42 GAAP; $0.60 adjusted (non-GAAP), increasing 3.4% year over year
  • Share Repurchases: Reinstituting share repurchase program with the intent to resume purchases in the first quarter of 2021

"Our fiscal fourth quarter and full-year 2020 performance reported today demonstrates that we have the innovation, diversification and global scale to perform well in a challenging environment," said Gary Smith, President and CEO, Ciena. "While we expect current market conditions to persist in the near-term, we are confident in strong secular demand dynamics and our ability to continue to outperform the market."

For the fiscal fourth quarter 2020, Ciena reported revenue of $828.5 million as compared to $968.0 million for the fiscal fourth quarter 2019. For fiscal year 2020, Ciena reported revenue of $3.53 billion, as compared to $3.57 billion for fiscal year 2019.

Ciena's GAAP net income for the fiscal fourth quarter 2020 was $65.0 million or $0.42 per diluted common share, which compares to a GAAP net income of $80.3 million, or $0.51 per diluted common share, for the fiscal fourth quarter 2019. For fiscal year 2020, Ciena's GAAP net income was $361.3 million, or $2.32 per diluted common share, as compared to a GAAP net income of $253.4 million, or $1.61 per diluted common share for fiscal year 2019.

Ciena's adjusted (non-GAAP) net income for the fiscal fourth quarter 2020 was $94.5 million, or $0.60 per diluted common share, which compares to an adjusted (non-GAAP) net income of $90.4 million, or $0.58 per diluted common share, for the fiscal fourth quarter 2019. For fiscal year 2020, Ciena's adjusted (non-GAAP) net income was $460.1 million, or $2.95 per diluted common share, as compared to an adjusted (non-GAAP) net income of $331.8 million, or $2.11 per diluted common share for fiscal year 2019.

Performance Summary for the Fiscal Fourth Quarter and the Year Ended October 31, 2020

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

 

 

GAAP Results (unaudited)

 

 

Quarter Ended

 

Period
Change

 

Year Ended

 

Period
Change

 

 

October 31,
2020

 

November 2,
2019

 

Y-T-Y*

 

October 31,
2020

 

November 2,
2019

 

Y-T-Y*

Revenue

 

$

828.5

 

 

$

968.0

 

 

(14.4

)%

 

$

3,532.2

 

 

$

3,572.1

 

 

(1.1

)%

Gross margin

 

48.8

%

 

43.4

%

 

5.4

%

 

46.8

%

 

43.2

%

 

3.6

%

Operating expense

 

$

310.9

 

 

$

326.5

 

 

(4.8

)%

 

$

1,165.9

 

 

$

1,195.3

 

 

(2.5

)%

Operating margin

 

11.3

%

 

9.6

%

 

1.7

%

 

13.8

%

 

9.7

%

 

4.1

%

 

 

 

Non-GAAP Results (unaudited)

 

 

Quarter Ended

 

Period
Change

 

Year Ended

 

Period
Change

 

 

October 31,
2020

 

November 2,
2019

 

Y-T-Y*

 

October 31,
2020

 

November 2,
2019

 

Y-T-Y*

Revenue

 

$

828.5

 

 

$

968.0

 

 

(14.4

)%

 

$

3,532.2

 

 

$

3,572.1

 

 

(1.1

)%

Adj. gross margin

 

49.5

%

 

43.8

%

 

5.7

%

 

47.4

%

 

43.7

%

 

3.7

%

Adj. operating expense

 

$

278.9

 

 

$

295.3

 

 

(5.6

)%

 

$

1,055.3

 

 

$

1,091.8

 

 

(3.3

)%

Adj. operating margin

 

15.8

%

 

13.3

%

 

2.5

%

 

17.6

%

 

13.1

%

 

4.5

%

Adj. EBITDA

 

$

154.5

 

 

$

151.6

 

 

1.9

%

 

$

713.9

 

 

$

557.3

 

 

28.1

%

 

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

 

 

Revenue by Segment (unaudited)

 

 

Quarter Ended

 

 

October 31, 2020

 

November 2, 2019

 

 

Revenue

 

%**

 

Revenue

 

% **

Networking Platforms

 

 

 

 

 

 

 

 

Converged Packet Optical

 

$

579.3

 

 

69.9

 

 

$

665.8

 

 

68.8

 

Packet Networking

 

$

56.0

 

 

6.8

 

 

131.9

 

 

13.6

 

Total Networking Platforms

 

$

635.3

 

 

76.7

 

 

797.7

 

 

82.4

 

 

 

 

 

 

 

 

 

 

Platform Software and Services

 

$

54.5

 

 

6.6

 

 

41.2

 

 

4.3

 

 

 

 

 

 

 

 

 

 

Blue Planet Automation Software and Services

 

$

20.9

 

 

2.5

 

 

16.6

 

 

1.7

 

 

 

 

 

 

 

 

 

 

Global Services

 

 

 

 

 

 

 

 

Maintenance Support and Training

 

$

67.0

 

 

8.1

 

 

65.3

 

 

6.7

 

Installation and Deployment

 

$

43.0

 

 

5.2

 

 

36.5

 

 

3.8

 

Consulting and Network Design

 

$

7.8

 

 

0.9

 

 

10.7

 

 

1.1

 

Total Global Services

 

$

117.8

 

 

14.2

 

 

112.5

 

 

11.6

 

 

 

 

 

 

 

 

 

 

Total

 

$

828.5

 

 

100.0

 

 

$

968.0

 

 

100.0

 

 

 

 

Revenue by Segment (unaudited)

 

 

Year Ended

 

 

October 31, 2020

 

November 2, 2019

 

 

Revenue

 

%**

 

Revenue

 

% **

Networking Platforms

 

 

 

 

 

 

 

 

Converged Packet Optical

 

$

2,547.6

 

 

72.1

 

 

$

2,562.8

 

 

71.8

 

Packet Networking

 

267.5

 

 

7.6

 

 

348.5

 

 

9.8

 

Total Networking Platforms

 

2,815.1

 

 

79.7

 

 

2,911.3

 

 

81.6

 

 

 

 

 

 

 

 

 

 

Platform Software and Services

 

197.8

 

 

5.6

 

 

155.3

 

 

4.3

 

 

 

 

 

 

 

 

 

 

Blue Planet Automation Software and Services

 

62.6

 

 

1.8

 

 

54.6

 

 

1.5

 

 

 

 

 

 

 

 

 

 

Global Services

 

 

 

 

 

 

 

 

Maintenance Support and Training

 

269.4

 

 

7.6

 

 

261.3

 

 

7.3

 

Installation and Deployment

 

152.0

 

 

4.3

 

 

148.2

 

 

4.1

 

Consulting and Network Design

 

35.3

 

 

1.0

 

 

41.4

 

 

1.2

 

Total Global Services

 

456.7

 

 

12.9

 

 

450.9

 

 

12.6

 

 

 

 

 

 

 

 

 

 

Total

 

$

3,532.2

 

 

100.0

 

 

$

3,572.1

 

 

100.0

 

Additional Performance Metrics for Fiscal Fourth Quarter and Year Ended October 31, 2020

 

 

Revenue by Geographic Region (unaudited)

 

 

Quarter Ended

 

 

October 31, 2020

 

November 2, 2019

 

 

Revenue

 

% **

 

Revenue

 

% **

Americas

 

$

531.6

 

 

64.2

 

 

$

715.7

 

 

73.9

 

Europe, Middle East and Africa

 

157.6

 

 

19.0

 

 

153.0

 

 

15.8

 

Asia Pacific

 

139.3

 

 

16.8

 

 

99.3

 

 

10.3

 

Total

 

$

828.5

 

 

100.0

 

 

$

968.0

 

 

100.0

 

 

 

Revenue by Geographic Region (unaudited)

 

 

Year Ended

 

 

October 31, 2020

 

November 2, 2019

 

 

Revenue

 

% **

 

Revenue

 

% **

Americas

 

$

2,469.3

 

 

69.9

 

 

$

2,503.9

 

 

70.1

 

Europe, Middle East and Africa

 

591.5

 

 

16.8

 

 

566.7

 

 

15.9

 

Asia Pacific

 

471.4

 

 

13.3

 

 

501.5

 

 

14.0

 

Total

 

$

3,532.2

 

 

100.0

 

 

$

3,572.1

 

 

100.0

 

 

** Denotes % of total revenue

  • No customer represented more than 10% of revenue for the fiscal quarter
  • One 10%-plus customer represented a total of 10.6% of revenue for the fiscal year
  • Cash and investments totaled $1.3 billion
  • Cash flow from operations totaled $187.3 million and $493.7 million for the fiscal quarter and year, respectively
  • Average days' sales outstanding (DSOs) were 88 and 82 for the fiscal quarter and year, respectively
  • Accounts receivable, net balance was $719.4 million
  • Unbilled contract asset balance was $85.8 million
  • Inventories totaled $344.4 million, including:
    • Raw materials: $119.5 million
    • Work in process: $13.7 million
    • Finished goods: $210.1 million
    • Deferred cost of sales: $40.7 million
    • Reserve for excess and obsolescence: $(39.6) million
  • Product inventory turns were 4.0 and 4.6 for the fiscal quarter and year, respectively
  • Headcount totaled 7,032

Share Repurchase Program

After temporarily suspending repurchases of our common stock during fiscal 2020, we will be reinstituting this program in first quarter of 2021 and are currently targeting repurchases in the range of $150 million during fiscal 2021. Ciena may purchase shares at management's discretion in the open market, in privately negotiated transactions, in transactions structured through investment banking institutions, or a combination of the foregoing. Ciena may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of its shares under this authorization. The amount and timing of repurchases are subject to a variety of factors including liquidity, cash flow, stock price, and general business and market conditions. The program may be modified, suspended or discontinued at any time. During fiscal year 2020, Ciena repurchased approximately 1.9 million shares of its common stock at an average price of $39.81 per share for an aggregate purchase price of $74.5 million.

Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Fourth Quarter 2020 Results

Today, Thursday, December 10, 2020, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website certain related supporting materials for its unaudited fiscal fourth quarter and fiscal 2020 results.

Ciena's management will also host a discussion today with investors and financial analysts that will include the Company's 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: "Our fiscal fourth quarter and full-year year 2020 performance reported today demonstrates that we have the innovation, diversification and global scale to perform well in a challenging environment." "While we expect current market conditions to persist in the near-term, we are confident in strong secular demand dynamics and our ability to continue to outperform the market."

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; our ability to execute our business and growth strategies; the duration and severity of the COVID-19 pandemic and the impact of countermeasures taken to mitigate its spread; the impact of COVID-19 on macroeconomic conditions, the level of economic activity, demand for our technology solutions, short- and long-term customer or end user needs and changes thereto, continuity of supply chain, logistics and business operations, liquidity and financial results; 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 September 9, 2020 and its Annual Report on Form 10-K to be filed with the SEC. 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 for the relevant period, 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 the Adaptive Network™ 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 agile networks with automation, openness and scale. For updates on Ciena, follow us on Twitter @Ciena, LinkedIn, the Ciena Insights blog, or visit www.ciena.com.

CIENA CORPORATION

CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

 

 

Quarter Ended

 

Year Ended

 

 

October 31,
2020

 

November 2,
2019

 

October 31,
2020

 

November 2,
2019

Revenue:

 

 

 

 

 

 

 

 

Products

 

$

668,661

 

 

$

820,007

 

 

$

2,914,790

 

 

$

2,983,815

 

Services

 

159,819

 

 

147,980

 

 

617,367

 

 

588,316

 

Total revenue

 

828,480

 

 

967,987

 

 

3,532,157

 

 

3,572,131

 

Cost of goods sold:

 

 

 

 

 

 

 

 

Products

 

343,413

 

 

469,945

 

 

1,573,791

 

 

1,716,358

 

Services

 

80,718

 

 

78,346

 

 

305,475

 

 

313,707

 

Total cost of goods sold

 

424,131

 

 

548,291

 

 

1,879,266

 

 

2,030,065

 

Gross profit

 

404,349

 

 

419,696

 

 

1,652,891

 

 

1,542,066

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

137,237

 

 

141,657

 

 

529,888

 

 

548,139

 

Selling and marketing

 

113,382

 

 

117,201

 

 

416,425

 

 

423,046

 

General and administrative

 

43,415

 

 

50,307

 

 

169,548

 

 

174,399

 

Amortization of intangible assets

 

5,851

 

 

5,222

 

 

23,383

 

 

21,808

 

Acquisition and integration costs (recoveries)

 

3,127

 

 

(735

)

 

4,031

 

 

3,370

 

Significant asset impairments and restructuring costs

 

7,854

 

 

12,842

 

 

22,652

 

 

24,538

 

Total operating expenses

 

310,866

 

 

326,494

 

 

1,165,927

 

 

1,195,300

 

Income from operations

 

93,483

 

 

93,202

 

 

486,964

 

 

346,766

 

Interest and other income (loss), net

 

(249

)

 

(1,183

)

 

964

 

 

3,876

 

Interest expense

 

(7,395

)

 

(9,136

)

 

(31,321

)

 

(37,452

)

Loss on extinguishment and modification of debt

 

 

 

 

 

(646

)

 

 

Income before income taxes

 

85,839

 

 

82,883

 

 

455,961

 

 

313,190

 

Provision for income taxes

 

20,798

 

 

2,552

 

 

94,670

 

 

59,756

 

Net income

 

$

65,041

 

 

$

80,331

 

 

$

361,291

 

 

$

253,434

 

 

 

 

 

 

 

 

 

 

Net Income per Common Share

 

 

 

 

 

 

 

 

Basic net income per common share

 

$

0.42

 

 

$

0.52

 

 

$

2.34

 

 

$

1.63

 

Diluted net income per potential common share

 

$

0.42

 

 

$

0.51

 

 

$

2.32

 

 

$

1.61

 

 

 

 

 

 

 

 

 

 

Weighted average basic common shares outstanding

 

154,706

 

 

154,852

 

 

154,287

 

 

155,720

 

Weighted average diluted potential common shares outstanding(1)

 

156,563

 

 

156,612

 

 

155,955

 

 

157,612

 

(1) Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the fourth quarter of fiscal 2020 includes 1.9 million shares underlying certain stock option and stock unit awards.

 

Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for fiscal 2020 includes 1.7 million shares underlying certain stock option and stock unit awards.

 

Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the fourth quarter of fiscal 2019 includes 1.8 million shares underlying certain stock option and stock unit awards.

 

Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for fiscal 2019 includes 1.9 million shares underlying certain stock option and stock unit awards.

CIENA CORPORATION

CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

 

October 31,
2020

 

November 2,
2019

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

1,088,624

 

 

$

904,045

 

Short-term investments

 

150,667

 

 

109,940

 

Accounts receivable, net

 

719,405

 

 

724,854

 

Inventories

 

344,379

 

 

345,049

 

Prepaid expenses and other

 

308,084

 

 

297,914

 

Total current assets

 

2,611,159

 

 

2,381,802

 

Long-term investments

 

82,226

 

 

10,014

 

Equipment, building, furniture and fixtures, net

 

272,377

 

 

286,884

 

Operating lease right-of-use assets

 

57,026

 

 

 

Goodwill

 

310,847

 

 

297,937

 

Other intangible assets, net

 

96,647

 

 

112,781

 

Deferred tax asset, net

 

647,805

 

 

714,942

 

Other long-term assets

 

102,830

 

 

88,986

 

Total assets

 

$

4,180,917

 

 

$

3,893,346

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

291,904

 

 

$

344,819

 

Accrued liabilities and other short-term obligations

 

334,132

 

 

382,740

 

Deferred revenue

 

108,700

 

 

111,381

 

Operating lease liabilities

 

19,035

 

 

 

Current portion of long-term debt

 

6,930

 

 

7,000

 

Total current liabilities

 

760,701

 

 

845,940

 

Long-term deferred revenue

 

49,663

 

 

45,492

 

Other long-term obligations

 

123,185

 

 

148,747

 

Long-term operating lease liabilities

 

61,415

 

 

 

Long-term debt, net

 

676,356

 

 

680,406

 

Total liabilities

 

$

1,671,320

 

 

$

1,720,585

 

 

 

 

 

 

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; 154,563,005 and 154,403,850 shares issued and outstanding

 

1,546

 

 

1,544

 

Additional paid-in capital

 

6,826,531

 

 

6,837,714

 

Accumulated other comprehensive loss

 

(35,358

)

 

(22,084

)

Accumulated deficit

 

(4,283,122

)

 

(4,644,413

)

Total stockholders’ equity

 

2,509,597

 

 

2,172,761

 

Total liabilities and stockholders’ equity

 

$

4,180,917

 

 

$

3,893,346

 

CIENA CORPORATION

CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

Year Ended

 

 

October 31,
2020

 

November 2,
2019

Cash flows from operating activities:

 

 

 

 

Net income

 

$

361,291

 

 

$

253,434

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

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

 

93,908

 

 

87,576

 

Share-based compensation costs

 

67,758

 

 

59,736

 

Amortization of intangible assets

 

38,619

 

 

35,136

 

Deferred taxes

 

64,339

 

 

19,865

 

Provision for doubtful accounts

 

8,855

 

 

6,740

 

Provision for inventory excess and obsolescence

 

24,701

 

 

28,085

 

Provision for warranty

 

22,417

 

 

23,105

 

Other

 

11,628

 

 

(910

)

Changes in assets and liabilities:

 

 

 

 

Accounts receivable

 

(17,299

)

 

65,712

 

Inventories

 

(25,044

)

 

(112,941

)

Prepaid expenses and other

 

(38,998

)

 

(96,618

)

Operating lease right-of-use assets

 

16,787

 

 

 

Accounts payable, accruals and other obligations

 

(117,931

)

 

27,740

 

Deferred revenue

 

2,519

 

 

16,480

 

Short and long-term operating lease liabilities

 

(19,896

)

 

 

Net cash provided by operating activities

 

493,654

 

 

413,140

 

Cash flows provided by (used in) investing activities:

 

 

 

 

Payments for equipment, furniture, fixtures and intellectual property

 

(82,667

)

 

(62,579

)

Purchase of available for sale securities

 

(223,196

)

 

(158,074

)

Proceeds from maturities of available for sale securities

 

110,390

 

 

248,748

 

Settlement of foreign currency forward contracts, net

 

3,531

 

 

(1,351

)

Purchase of equity investment

 

 

 

(2,667

)

Acquisition of businesses, net of cash acquired

 

(28,300

)

 

 

Net cash provided by (used in) investing activities

 

(220,242

)

 

24,077

 

Cash flows from financing activities:

 

 

 

 

Payment of long-term debt

 

(5,198

)

 

(7,000

)

Payment for debt conversion liability

 

 

 

(111,268

)

Payment of debt issuance costs

 

(382

)

 

(1,191

)

Payment of finance lease obligations

 

(2,703

)

 

(3,319

)

Shares repurchased for tax withholdings on vesting of restricted stock units

 

(32,472

)

 

(29,059

)

Repurchases of common stock - repurchase program

 

(74,535

)

 

(150,076

)

Proceeds from issuance of common stock

 

28,068

 

 

22,947

 

Net cash used in financing activities

 

(87,222

)

 

(278,966

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(1,643

)

 

476

 

Net increase in cash, cash equivalents and restricted cash

 

184,547

 

 

158,727

 

Cash, cash equivalents and restricted cash at beginning of fiscal year

 

904,161

 

 

745,434

 

Cash, cash equivalents and restricted cash at end of fiscal year

 

$

1,088,708

 

 

$

904,161

 

Supplemental disclosure of cash flow information

 

 

 

 

Cash paid during the fiscal year for interest

 

$

32,837

 

 

$

39,579

 

Cash paid during the fiscal year for income taxes, net

 

$

53,076

 

 

$

33,570

 

Operating lease payments

 

$

22,089

 

 

$

 

Non-cash investing and financing activities

 

 

 

 

Purchase of equipment in accounts payable

 

$

7,854

 

 

$

16,549

 

Conversion of debt conversion liability into 1,585,140 shares of common stock

 

$

 

 

$

52,944

 

Operating lease right-of-use assets subject to lease liability

 

$

24,160

 

 

$

 

Unrealized gain on equity investment

 

$

2,681

 

 

$

 

APPENDIX A - Reconciliation of Adjusted (Non-GAAP) Measurements (unaudited)

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Year Ended

 

 

October 31,
2020

 

November 2,
2019

 

October 31,
2020

 

November 2,
2019

Gross Profit Reconciliation (GAAP/non-GAAP)

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

404,349

 

 

$

419,696

 

 

$

1,652,891

 

 

$

1,542,066

 

Share-based compensation-products

 

724

 

 

748

 

 

3,182

 

 

2,868

 

Share-based compensation-services

 

968

 

 

715

 

 

3,853

 

 

3,175

 

Amortization of intangible assets

 

3,732

 

 

3,303

 

 

15,235

 

 

13,327

 

Total adjustments related to gross profit

 

5,424

 

 

4,766

 

 

22,270

 

 

19,370

 

Adjusted (non-GAAP) gross profit

 

$

409,773

 

 

$

424,462

 

 

$

1,675,161

 

 

$

1,561,436

 

Adjusted (non-GAAP) gross profit percentage

 

49.5

%

 

43.8

%

 

47.4

%

 

43.7

%

 

 

 

 

 

 

 

 

 

Operating Expense Reconciliation (GAAP/non-GAAP)

 

 

 

 

 

 

 

 

GAAP operating expense

 

$

310,866

 

 

$

326,494

 

 

$

1,165,927

 

 

$

1,195,300

 

Share-based compensation-research and development

 

4,030

 

 

3,287

 

 

16,987

 

 

14,321

 

Share-based compensation-sales and marketing

 

5,137

 

 

4,151

 

 

20,194

 

 

16,474

 

Share-based compensation-general and administrative

 

5,982

 

 

6,425

 

 

23,424

 

 

22,841

 

Amortization of intangible assets

 

5,851

 

 

5,222

 

 

23,383

 

 

21,808

 

Acquisition and integration costs (recoveries)

 

3,127

 

 

(735

)

 

4,031

 

 

3,370

 

Significant asset impairments and restructuring costs

 

7,854

 

 

12,842

 

 

22,652

 

 

24,538

 

Legal settlements

 

 

 

 

 

 

 

137

 

Total adjustments related to operating expense

 

$

31,981

 

 

$

31,192

 

 

$

110,671

 

 

$

103,489

 

Adjusted (non-GAAP) operating expense

 

$

278,885

 

 

$

295,302

 

 

$

1,055,256

 

 

$

1,091,811

 

 

 

 

 

 

 

 

 

 

Income from Operations Reconciliation (GAAP/non-GAAP)

 

 

 

 

 

 

 

 

GAAP income from operations

 

$

93,483

 

 

$

93,202

 

 

$

486,964

 

 

$

346,766

 

Total adjustments related to gross profit

 

5,424

 

 

4,766

 

 

22,270

 

 

19,370

 

Total adjustments related to operating expense

 

31,981

 

 

31,192

 

 

110,671

 

 

103,489

 

Total adjustments related to income from operations

 

37,405

 

 

35,958

 

 

132,941

 

 

122,859

 

Adjusted (non-GAAP) income from operations

 

$

130,888

 

 

$

129,160

 

 

$

619,905

 

 

$

469,625

 

Adjusted (non-GAAP) operating margin percentage

 

15.8

%

 

13.3

%

 

17.6

%

 

13.1

%

Net Income Reconciliation (GAAP/non-GAAP)

 

 

 

 

 

 

 

 

GAAP net income

 

$

65,041

 

 

$

80,331

 

 

$

361,291

 

 

$

253,434

 

Exclude GAAP provision for income taxes

 

20,798

 

 

2,552

 

 

94,670

 

 

59,756

 

Income before income taxes

 

85,839

 

 

82,883

 

 

455,961

 

 

313,190

 

Total adjustments related to income from operations

 

37,405

 

 

35,958

 

 

132,941

 

 

122,859

 

Loss on extinguishment and modification of debt

 

 

 

 

 

646

 

 

 

Unrealized gain on equity investment

 

(2,681

)

 

 

 

(2,681

)

 

 

Adjusted income before income taxes

 

120,563

 

 

118,841

 

 

586,867

 

 

436,049

 

Non-GAAP tax provision on adjusted income before income taxes

 

26,042

 

 

28,403

 

 

126,763

 

 

104,216

 

Adjusted (non-GAAP) net income

 

$

94,521

 

 

$

90,438

 

 

$

460,104

 

 

$

331,833

 

 

 

 

 

 

 

 

 

 

Weighted average basic common shares outstanding

 

154,706

 

 

154,852

 

 

154,287

 

 

155,720

 

Weighted average diluted potential common shares outstanding(1)

 

156,563

 

 

156,612

 

 

155,955

 

 

157,612

 

 

 

 

 

 

 

 

 

 

Net Income per Common Share

 

 

 

 

 

 

 

 

GAAP diluted net income per potential common share

 

$

0.42

 

 

$

0.51

 

 

$

2.32

 

 

$

1.61

 

Adjusted (non-GAAP) diluted net income per potential common share

 

$

0.60

 

 

$

0.58

 

 

$

2.95

 

 

$

2.11

 

 

 

 

 

 

 

 

 

 

(1) Weighted average diluted potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the fourth quarter of fiscal 2020 includes 1.9 million shares underlying certain stock option and stock unit awards.

 

Weighted average diluted potential common shares outstanding used in calculating adjusted (non-GAAP) diluted net income per potential common share for fiscal 2020 includes 1.7 million shares underlying certain stock option and stock unit awards.

 

Weighted average diluted potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the fourth quarter of fiscal 2019 includes 1.8 million shares underlying certain stock option and stock unit awards.

 

Weighted average diluted potential common shares outstanding used in calculating adjusted (non-GAAP) diluted net income per potential common share for fiscal 2019 includes 1.9 million shares underlying certain stock option and stock unit awards.

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

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Year Ended

 

 

October 31,
2020

 

November 2,
2019

 

October 31,
2020

 

November 2,
2019

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

 

 

 

 

 

 

 

 

Net income (GAAP)

 

$

65,041

 

 

$

80,331

 

 

$

361,291

 

 

$

253,434

 

Add: Interest expense

 

7,395

 

 

9,136

 

 

31,321

 

 

37,452

 

Less: Interest and other income (loss), net

 

(249

)

 

(1,183

)

 

964

 

 

3,876

 

Add: Loss on extinguishment and modification of debt

 

 

 

 

 

(646

)

 

 

Add: Provision for income taxes

 

20,798

 

 

2,552

 

 

94,670

 

 

59,756

 

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

 

23,538

 

 

22,505

 

 

93,908

 

 

87,576

 

Add: Amortization of intangible assets

 

9,584

 

 

8,525

 

 

38,619

 

 

35,136

 

EBITDA

 

$

126,605

 

 

$

124,232

 

 

$

619,491

 

 

$

469,478

 

Add: Share-based compensation cost

 

16,920

 

 

15,290

 

 

67,758

 

 

59,736

 

Add: Significant asset impairments and restructuring costs

 

7,854

 

 

12,842

 

 

22,652

 

 

24,538

 

Add: Acquisition and integration costs (recoveries)

 

3,127

 

 

(735

)

 

4,031

 

 

3,370

 

Add: Legal settlement

 

 

 

 

 

 

 

137

 

Adjusted EBITDA

 

$

154,506

 

 

$

151,629

 

 

$

713,932

 

 

$

557,259

 

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.
  • 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 (recoveries) -consist of expenses for financial, legal and accounting advisors, severance and other employee-related costs associated with our acquisitions of DonRiver and Centina, including costs and recoveries of acquisition consideration associated with a three-year earn-out arrangement related to the DonRiver acquisition in fiscal 2018. Ciena does not believe that these costs are reflective of its ongoing operating expense following its completion of these integration activities.
  • Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities and the redesign of business processes.
  • Legal settlements - costs incurred as a result of settlements, during the first quarter of fiscal 2019.
  • Unrealized gain on equity investment - reflects a change in the carrying value of a certain cost method equity investment.
  • 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 21.6% for fiscal 2020, and 23.9% for fiscal 2019. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy.

Press:
Nicole Anderson
Ciena Corporation
+1 (410) 694-5761 
pr@ciena.com

Investors:
Gregg Lampf
Ciena Corporation
+1 (410) 694-5700
ir@ciena.com

Source: Ciena Corporation

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