UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): September 1, 2022
Ciena Corporation
(Exact name of registrant as specified in its charter)
Commission File Number: 001-36250
Delaware
(State or other jurisdiction of incorporation)
7035 Ridge Road, Hanover, MD
(Address of principal executive offices)
23-2725311
(IRS Employer Identification No.)
21076
(Zip Code)
Registrant's telephone number, including area code: (410) 694-5700
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): | |||||||||||
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||||||||
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||||||||
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||||||||
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||||||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common stock, $0.01 par value | CIEN | New York Stock Exchange | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02 – RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On September 1, 2022, Ciena Corporation ("Ciena") issued a press release announcing its financial results for its third fiscal quarter ended July 30, 2022. The text of the press release is furnished as Exhibit 99.1 to this report. As discussed in this press release, Ciena will be hosting an investor call to discuss its results of operations for its third fiscal quarter ended July 30, 2022.
In conjunction with the issuance of this press release, Ciena posted to the quarterly results page of the Investors section of www.ciena.com an accompanying investor presentation. The investor presentation is furnished as Exhibit 99.2 to this Report.
The information in Exhibits 99.1 and 99.2, as well as Item 2.02 of this Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended. Investors are encouraged to review the “Investors” page of our website at www.ciena.com because, as with the other disclosure channels that we use, from time to time we may post material information exclusively on that site.
ITEM 9.01 – FINANCIAL STATEMENTS AND EXHIBITS
(d) | The following exhibits are being filed herewith: | |||||||||||||
Exhibit Number | Description of Document | |||||||||||||
Exhibit 99.1 | ||||||||||||||
Exhibit 99.2 | ||||||||||||||
Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. | ||
Ciena Corporation | ||||||||
Date: September 1, 2022 | By: | /S/ David M. Rothenstein | ||||||
David M. Rothenstein | ||||||||
Senior Vice President, General Counsel and Secretary | ||||||||
FOR IMMEDIATE RELEASE
Ciena Reports Fiscal Third Quarter 2022 Financial Results
HANOVER, Md. - September 1, 2022 - Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal third quarter ended July 30, 2022.
•Q3 Revenue: $868.0 million
•Q3 Net Income per Share: $0.07 GAAP; $0.33 adjusted (non-GAAP)
•Share Repurchases: Repurchased approximately 3.2 million shares of common stock for an aggregate price of $155.0 million during the quarter.
"Despite continued strong customer demand, our fiscal third quarter financial results were negatively impacted by late delivery and substantially lower-than-committed volume from a small number of suppliers for specific components that are essential for delivering finished goods to our customers," said Gary Smith, president and CEO of Ciena. "While these dynamics will continue in our fiscal fourth quarter, we expect improvement as we move into fiscal 2023, providing us increased ability to service this unprecedented demand and continue to gain market share.”
For the fiscal third quarter 2022, Ciena reported revenue of $868.0 million as compared to $988.1 million for the fiscal third quarter 2021.
Ciena's GAAP net income for the fiscal third quarter 2022 was $10.5 million, or $0.07 per diluted common share, which compares to a GAAP net income of $238.2 million, or $1.52 per diluted common share, for the fiscal third quarter 2021. Ciena's GAAP net income for the fiscal third quarter of 2021 benefited from the recording $124.2 million tax benefit related to an internal transfer of non-U.S. intangible assets. See APPENDIX A - Reconciliation of Adjusted (non-GAAP) Quarterly Measures for more information and a reconciliation of our adjusted (non-GAAP) net income which excludes the effect of these amounts.
Ciena's adjusted (non-GAAP) net income for the fiscal third quarter 2022 was $49.0 million, or $0.33 per diluted common share, which compares to an adjusted (non-GAAP) net income of $144.9 million, or $0.92 per diluted common share, for the fiscal third quarter 2021.
Fiscal Third Quarter 2022 Performance Summary
The tables below (in millions, except percentage data) provide comparisons of certain quarterly results to the prior year. Appendices A and B set forth reconciliations between the GAAP and adjusted (non-GAAP) measures contained in this release.
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| GAAP Results | ||||||||||||||||||||
| Q3 | Q3 | Period Change | ||||||||||||||||||
| FY 2022 | FY 2021 | Y-T-Y* | ||||||||||||||||||
| Revenue | $ | 868.0 | $ | 988.1 | (12.2) | % | ||||||||||||||
| Gross margin | 39.3 | % | 48.0 | % | (8.7) | % | ||||||||||||||
| Operating expense | $ | 313.7 | $ | 326.0 | (3.8) | % | ||||||||||||||
| Operating margin | 3.1 | % | 15.0 | % | (11.9) | % | ||||||||||||||
| Non-GAAP Results | ||||||||||||||||||||
| Q3 | Q3 | Period Change | ||||||||||||||||||
| FY 2022 | FY 2021 | Y-T-Y* | ||||||||||||||||||
| Revenue | $ | 868.0 | $ | 988.1 | (12.2) | % | ||||||||||||||
| Adj. gross margin | 40.0 | % | 48.5 | % | (8.5) | % | ||||||||||||||
| Adj. operating expense | $ | 273.1 | $ | 290.4 | (6.0) | % | ||||||||||||||
| Adj. operating margin | 8.5 | % | 19.1 | % | (10.6) | % | ||||||||||||||
| Adj. EBITDA | $ | 96.0 | $ | 213.7 | (55.1) | % | ||||||||||||||
* Denotes % change, or in the case of margin, absolute change
| Revenue by Segment | ||||||||||||||||||||||||||
| Q3 FY 2022 | Q3 FY 2021 | |||||||||||||||||||||||||
| Revenue | %** | Revenue | %** | |||||||||||||||||||||||
| Networking Platforms | ||||||||||||||||||||||||||
| Converged Packet Optical | $ | 563.9 | 65.0 | $ | 712.9 | 72.1 | ||||||||||||||||||||
| Routing and Switching | 100.7 | 11.6 | 69.7 | 7.1 | ||||||||||||||||||||||
| Total Networking Platforms | 664.6 | 76.6 | 782.6 | 79.2 | ||||||||||||||||||||||
| Platform Software and Services | 63.5 | 7.3 | $ | 56.9 | 5.8 | |||||||||||||||||||||
| Blue Planet Automation Software and Services | 17.3 | 2.0 | 16.6 | 1.7 | ||||||||||||||||||||||
| Global Services | ||||||||||||||||||||||||||
| Maintenance Support and Training | 72.8 | 8.4 | 74.0 | 7.5 | ||||||||||||||||||||||
| Installation and Deployment | 38.7 | 4.4 | 46.7 | 4.7 | ||||||||||||||||||||||
| Consulting and Network Design | 11.1 | 1.3 | 11.3 | 1.1 | ||||||||||||||||||||||
| Total Global Services | 122.6 | 14.1 | 132.0 | 13.3 | ||||||||||||||||||||||
| Total | $ | 868.0 | 100.0 | $ | 988.1 | 100.0 | ||||||||||||||||||||
** Denotes % of total revenue
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Additional Performance Metrics for Fiscal Third Quarter 2022
| Revenue by Geographic Region | ||||||||||||||||||||||||||
| Q3 FY 2022 | Q3 FY 2021 | |||||||||||||||||||||||||
| Revenue | % ** | Revenue | % ** | |||||||||||||||||||||||
| Americas | $ | 617.4 | 71.1 | $ | 692.8 | 70.1 | ||||||||||||||||||||
| Europe, Middle East and Africa | 124.2 | 14.3 | 189.2 | 19.2 | ||||||||||||||||||||||
| Asia Pacific | 126.4 | 14.6 | 106.1 | 10.7 | ||||||||||||||||||||||
| Total | $ | 868.0 | 100.0 | $ | 988.1 | 100.0 | ||||||||||||||||||||
** Denotes % of total revenue
•Two 10%-plus customers represented a total of 24.1% of revenue
•Cash and investments totaled $1.3 billion
•Cash flow used in operations totaled $205.4 million
•Average days' sales outstanding (DSOs) were 100
•Accounts receivable, net balance was $802.5 million
•Unbilled contract asset, net balance was $157.4 million
•Inventories totaled $826.7 million, including:
◦Raw materials: $621.8 million
◦Work in process: $19.5 million
◦Finished goods: $187.0 million
◦Deferred cost of sales: $33.8 million
◦Reserve for excess and obsolescence: $(35.4) million
•Product inventory turns were 2.1
•Headcount totaled 8,013
Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Third Quarter 2022 Results
Today, Thursday, September 1, 2022, 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 third quarter 2022 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, Securities and Exchange Commission ("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:
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"Despite continued strong customer demand, our fiscal third quarter financial results were negatively impacted by late delivery and substantially lower-than-committed volume from a small number of suppliers for specific components that are essential for delivering finished goods to our customers. While these dynamics will continue in our fiscal fourth quarter, we expect improvement as we move into fiscal 2023, providing us increased ability to service this unprecedented demand and continue to gain market share.”
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 impact of supply chain constraints or disruptions; the duration and severity of the COVID-19 pandemic and the impact of countermeasures taken to mitigate its spread on macroeconomic conditions, economic activity, demand for our technology solutions, short- and long-term changes in customer or end user needs, continuity of supply chain, our business operations, liquidity and financial results; changes in network spending or network strategy by our 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; changes in foreign currency exchange rates; factors beyond our control such as natural disasters, climate change, acts of war or terrorism, geopolitical events, including but not limited to the ongoing conflict between Ukraine and Russia, and public health emergencies; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; and the other risk factors disclosed in Ciena’s periodic reports filed with the Securities and Exchange Commission (SEC) including Ciena’s Annual Report on Form 10-K filed with the SEC on December 17, 2021 and included in its Quarterly Report on Form 10-Q for the third quarter of fiscal 2022 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, Appendices 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 customers 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.
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CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| Quarter Ended | Nine Months Ended | ||||||||||||||||||||||
| July 30 | July 31 | July 30 | July 31 | ||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Products | $ | 684,284 | $ | 804,414 | $ | 2,109,239 | $ | 2,071,677 | |||||||||||||||
| Services | 183,697 | 183,727 | 552,412 | 507,521 | |||||||||||||||||||
| Total revenue | 867,981 | 988,141 | 2,661,651 | 2,579,198 | |||||||||||||||||||
| Cost of goods sold: | |||||||||||||||||||||||
| Products | 434,756 | 420,236 | 1,259,378 | 1,074,935 | |||||||||||||||||||
| Services | 92,446 | 93,355 | 275,526 | 259,403 | |||||||||||||||||||
| Total cost of goods sold | 527,202 | 513,591 | 1,534,904 | 1,334,338 | |||||||||||||||||||
| Gross profit | 340,779 | 474,550 | 1,126,747 | 1,244,860 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 150,025 | 146,225 | 457,758 | 389,212 | |||||||||||||||||||
| Selling and marketing | 105,880 | 114,924 | 344,700 | 322,589 | |||||||||||||||||||
| General and administrative | 41,121 | 48,863 | 131,191 | 132,491 | |||||||||||||||||||
| Significant asset impairments and restructuring costs | 7,692 | 9,789 | 20,203 | 23,865 | |||||||||||||||||||
| Amortization of intangible assets | 8,919 | 5,967 | 26,757 | 17,896 | |||||||||||||||||||
| Acquisition and integration costs | 35 | 259 | 598 | 860 | |||||||||||||||||||
| Total operating expenses | 313,672 | 326,027 | 981,207 | 886,913 | |||||||||||||||||||
| Income from operations | 27,107 | 148,523 | 145,540 | 357,947 | |||||||||||||||||||
| Interest and other income (loss), net | 366 | 795 | 4,860 | (1,600) | |||||||||||||||||||
| Interest expense | (12,642) | (7,776) | (33,275) | (22,921) | |||||||||||||||||||
| Income before income taxes | 14,831 | 141,542 | 117,125 | 333,426 | |||||||||||||||||||
| Provision (benefit) for income taxes | 4,319 | (96,690) | 21,868 | (63,271) | |||||||||||||||||||
| Net income | $ | 10,512 | $ | 238,232 | $ | 95,257 | $ | 396,697 | |||||||||||||||
| Net Income per Common Share | |||||||||||||||||||||||
| Basic net income per common share | $ | 0.07 | $ | 1.53 | $ | 0.63 | $ | 2.55 | |||||||||||||||
| Diluted net income per potential common share | $ | 0.07 | $ | 1.52 | $ | 0.62 | $ | 2.53 | |||||||||||||||
| Weighted average basic common shares outstanding | 149,862 | 155,271 | 152,083 | 155,277 | |||||||||||||||||||
Weighted average dilutive potential common shares outstanding 1 | 150,463 | 156,744 | 153,209 | 156,742 | |||||||||||||||||||
1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 0.6 million and 1.1 million for the third quarter and first nine months of fiscal 2022, respectively; and (ii) 1.5 million shares for each of the third quarter and first nine months of fiscal 2021.
5
CIENA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
| July 30, 2022 | October 30, 2021 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 859,687 | $ | 1,422,546 | |||||||
| Short-term investments | 321,823 | 181,483 | |||||||||
| Accounts receivable, net | 802,484 | 884,958 | |||||||||
| Inventories | 826,673 | 374,265 | |||||||||
| Prepaid expenses and other | 377,709 | 325,654 | |||||||||
| Total current assets | 3,188,376 | 3,188,906 | |||||||||
| Long-term investments | 77,723 | 70,038 | |||||||||
| Equipment, building, furniture and fixtures, net | 281,690 | 284,968 | |||||||||
| Operating lease right-of-use assets | 45,452 | 44,285 | |||||||||
| Goodwill | 328,978 | 311,645 | |||||||||
| Other intangible assets, net | 76,918 | 65,314 | |||||||||
| Deferred tax asset, net | 797,924 | 800,180 | |||||||||
| Other long-term assets | 103,721 | 99,891 | |||||||||
| Total assets | $ | 4,900,782 | $ | 4,865,227 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 439,229 | $ | 356,176 | |||||||
| Accrued liabilities and other short-term obligations | 301,589 | 409,285 | |||||||||
| Deferred revenue | 147,808 | 118,007 | |||||||||
| Operating lease liabilities | 19,786 | 18,632 | |||||||||
| Current portion of long-term debt | 6,930 | 6,930 | |||||||||
| Total current liabilities | 915,342 | 909,030 | |||||||||
| Long-term deferred revenue | 61,845 | 57,457 | |||||||||
| Other long-term obligations | 150,767 | 166,803 | |||||||||
| Long-term operating lease liabilities | 42,639 | 41,564 | |||||||||
| Long-term debt, net | 1,062,453 | 670,355 | |||||||||
| Total liabilities | $ | 2,233,046 | $ | 1,845,209 | |||||||
| 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; 148,293,357 and 154,858,981 shares issued and outstanding | 1,483 | 1,549 | |||||||||
| Additional paid-in capital | 6,378,007 | 6,803,162 | |||||||||
| Accumulated other comprehensive income (loss) | (21,879) | 439 | |||||||||
| Accumulated deficit | (3,689,875) | (3,785,132) | |||||||||
| Total stockholders’ equity | 2,667,736 | 3,020,018 | |||||||||
| Total liabilities and stockholders’ equity | $ | 4,900,782 | $ | 4,865,227 | |||||||
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CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
| Nine Months Ended | |||||||||||
| July 30 | July 31 | ||||||||||
| 2022 | 2021 | ||||||||||
| Cash flows provided by (used in) operating activities: | |||||||||||
| Net income | $ | 95,257 | $ | 396,697 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements | 68,280 | 71,918 | |||||||||
| Share-based compensation expense | 77,827 | 62,970 | |||||||||
| Amortization of intangible assets | 36,521 | 27,341 | |||||||||
| Deferred taxes | (19,824) | (139,543) | |||||||||
| Provision for inventory excess and obsolescence | 12,038 | 13,460 | |||||||||
| Provision for warranty | 12,416 | 12,726 | |||||||||
| Other | (442) | 6,350 | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | 74,478 | (163,149) | |||||||||
| Inventories | (464,664) | (38,821) | |||||||||
| Prepaid expenses and other | (39,805) | (17,272) | |||||||||
| Operating lease right-of-use assets | 12,504 | 12,340 | |||||||||
| Accounts payable, accruals and other obligations | (37,587) | 31,388 | |||||||||
| Deferred revenue | 34,949 | 24,969 | |||||||||
| Short and long-term operating lease liabilities | (15,197) | (14,618) | |||||||||
| Net cash provided by (used in) operating activities | (153,249) | 286,756 | |||||||||
| Cash flows used in investing activities: | |||||||||||
| Payments for equipment, furniture, fixtures and intellectual property | (66,908) | (67,290) | |||||||||
| Purchase of available-for-sale securities | (614,333) | (132,895) | |||||||||
| Proceeds from maturities of available-for-sale securities | 460,000 | 122,063 | |||||||||
| Settlement of foreign currency forward contracts, net | 4,450 | 7,326 | |||||||||
| Acquisition of business, net of cash acquired | (62,043) | — | |||||||||
| Purchase of cost method equity investments | (8,000) | — | |||||||||
| Proceeds from sale of cost method equity investments | — | 4,678 | |||||||||
| Net cash used in investing activities | (286,834) | (66,118) | |||||||||
| Cash flows used in financing activities: | |||||||||||
| Proceeds from issuance of senior notes | 400,000 | — | |||||||||
| Payment of long term debt | (3,465) | (5,197) | |||||||||
| Payment of debt issuance costs | (5,159) | — | |||||||||
| Payment of finance lease obligations | (2,555) | (2,243) | |||||||||
| Shares repurchased for tax withholdings on vesting of stock unit awards | (41,280) | (36,484) | |||||||||
| Repurchases of common stock - repurchase program | (487,792) | (64,555) | |||||||||
| Proceeds from issuance of common stock | 30,224 | 28,289 | |||||||||
| Net cash used in financing activities | (110,027) | (80,190) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (12,780) | 1,344 | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (562,890) | 141,792 | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 1,422,604 | 1,088,708 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 859,714 | $ | 1,230,500 | |||||||
| Supplemental disclosure of cash flow information | |||||||||||
| Cash paid during the period for interest | $ | 24,823 | $ | 22,392 | |||||||
| Cash paid during the period for income taxes, net | $ | 28,593 | $ | 46,165 | |||||||
| Operating lease payments | $ | 16,342 | $ | 16,162 | |||||||
| Non-cash investing and financing activities | |||||||||||
| Purchase of equipment in accounts payable | $ | 9,320 | $ | 5,517 | |||||||
| Repurchase of common stock in accrued liabilities from repurchase program | $ | 5,000 | $ | 800 | |||||||
| Operating right-of-use assets subject to lease liability | $ | 8,226 | $ | 4,182 | |||||||
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| APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures | ||||||||||||||
| (in thousands, except per share data) (unaudited) | ||||||||||||||
| Quarter Ended | ||||||||||||||
| July 30 | July 31 | |||||||||||||
| 2022 | 2021 | |||||||||||||
| Gross Profit Reconciliation (GAAP/non-GAAP) | ||||||||||||||
| GAAP gross profit | $ | 340,779 | $ | 474,550 | ||||||||||
| Share-based compensation-products | 1,002 | 1,037 | ||||||||||||
| Share-based compensation-services | 1,940 | 1,315 | ||||||||||||
| Canadian Emergency Wage Subsidy-products | — | (94) | ||||||||||||
| Canadian Emergency Wage Subsidy-services | — | (47) | ||||||||||||
| Amortization of intangible assets | 3,140 | 2,857 | ||||||||||||
| Total adjustments related to gross profit | 6,082 | 5,068 | ||||||||||||
| Adjusted (non-GAAP) gross profit | $ | 346,861 | $ | 479,618 | ||||||||||
| Adjusted (non-GAAP) gross profit percentage | 40.0 | % | 48.5 | % | ||||||||||
| Operating Expense Reconciliation (GAAP/non-GAAP) | ||||||||||||||
| GAAP operating expense | $ | 313,672 | $ | 326,027 | ||||||||||
| Share-based compensation-research and development | 8,233 | 5,541 | ||||||||||||
| Share-based compensation-sales and marketing | 8,075 | 6,534 | ||||||||||||
| Share-based compensation-general and administrative | 7,579 | 8,237 | ||||||||||||
| Canadian Emergency Wage Subsidy-research and development | — | (596) | ||||||||||||
| Canadian Emergency Wage Subsidy-sales and marketing | — | (53) | ||||||||||||
| Canadian Emergency Wage Subsidy-general and administrative | — | (46) | ||||||||||||
| Significant asset impairments and restructuring costs | 7,692 | 9,789 | ||||||||||||
| Amortization of intangible assets | 8,919 | 5,967 | ||||||||||||
| Acquisition and integration costs | 35 | 259 | ||||||||||||
| Total adjustments related to operating expense | 40,533 | 35,632 | ||||||||||||
| Adjusted (non-GAAP) operating expense | $ | 273,139 | $ | 290,395 | ||||||||||
| Income from Operations Reconciliation (GAAP/non-GAAP) | ||||||||||||||
| GAAP income from operations | $ | 27,107 | $ | 148,523 | ||||||||||
| Total adjustments related to gross profit | 6,082 | 5,068 | ||||||||||||
| Total adjustments related to operating expense | 40,533 | 35,632 | ||||||||||||
| Total adjustments related to income from operations | 46,615 | 40,700 | ||||||||||||
| Adjusted (non-GAAP) income from operations | $ | 73,722 | $ | 189,223 | ||||||||||
| Adjusted (non-GAAP) operating margin percentage | 8.5 | % | 19.1 | % | ||||||||||
| Net Income Reconciliation (GAAP/non-GAAP) | ||||||||||||||
| GAAP net income | $ | 10,512 | $ | 238,232 | ||||||||||
| Exclude GAAP provision (benefit) for income taxes | 4,319 | (96,690) | ||||||||||||
| Income before income taxes | 14,831 | 141,542 | ||||||||||||
| Total adjustments related to income from operations | 46,615 | 40,700 | ||||||||||||
| Adjusted income before income taxes | 61,446 | 182,242 | ||||||||||||
| Non-GAAP tax provision on adjusted income before income taxes | 12,412 | 37,360 | ||||||||||||
| Adjusted (non-GAAP) net income | $ | 49,034 | $ | 144,882 | ||||||||||
| Weighted average basic common shares outstanding | 149,862 | 155,271 | ||||||||||||
Weighted average dilutive potential common shares outstanding 1 | 150,463 | 156,744 | ||||||||||||
| Net Income per Common Share | ||||||||||||||
8
| APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures | ||||||||||||||
| (in thousands, except per share data) (unaudited) | ||||||||||||||
| Quarter Ended | ||||||||||||||
| July 30 | July 31 | |||||||||||||
| 2022 | 2021 | |||||||||||||
| GAAP diluted net income per potential common share | $ | 0.07 | $ | 1.52 | ||||||||||
| Adjusted (non-GAAP) diluted net income per potential common share | $ | 0.33 | $ | 0.92 | ||||||||||
1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 0.6 million for the third quarter of fiscal 2022, and (ii) 1.5 million for the third quarter of fiscal 2021
9
| APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) | ||||||||||||||
| (in thousands) (unaudited) | ||||||||||||||
| Quarter Ended | ||||||||||||||
| July 30 | July 31 | |||||||||||||
| 2022 | 2021 | |||||||||||||
| Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) | ||||||||||||||
| Net income (GAAP) | $ | 10,512 | $ | 238,232 | ||||||||||
| Add: Interest expense | 12,642 | 7,776 | ||||||||||||
| Less: Interest and other income, net | 366 | 795 | ||||||||||||
| Add: Provision (benefit) for income taxes | 4,319 | (96,690) | ||||||||||||
| Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements | 22,250 | 24,623 | ||||||||||||
| Add: Amortization of intangible assets | 12,059 | 8,824 | ||||||||||||
| EBITDA | $ | 61,416 | $ | 181,970 | ||||||||||
| Less: Canadian Emergency Wage Subsidy | — | 836 | ||||||||||||
| Add: Share-based compensation cost | 26,857 | 22,471 | ||||||||||||
| Add: Significant asset impairments and restructuring costs | 7,692 | 9,789 | ||||||||||||
| Add: Acquisition and integration costs | 35 | 259 | ||||||||||||
| Adjusted EBITDA | $ | 96,000 | $ | 213,653 | ||||||||||
* * *
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.
•Canadian Emergency Wage Subsidy - a program introduced by the Government of Canada to offset a portion of employee wages for a limited period in response to COVID-19 outbreak.
•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.
•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 - includes financial, legal and accounting advisor expenses related to our acquisition of Xelic during the second quarter of fiscal 2022. Acquisition and integration costs for the third quarter of fiscal 2021 include costs of acquisition compensation associated with a three-year earn-out arrangement related to the DonRiver acquisition in fiscal 2018.
•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 20.2% for the third fiscal quarter of 2022 and 20.5% for the third fiscal quarter of 2021. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy. Ciena's GAAP tax provision for the third quarter of 2021 benefited from recording a $124.2 million tax benefit related to an internal transfer of non-U.S. intangible assets that was recognized as a result of the step-up in basis of such rights for tax purposes. The Non-GAAP tax provision for the periods presented do not include this tax benefit or the corresponding deferred tax asset.
10
Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Ciena Corporation Period ended July 30, 2022 September 1, 2022 Earnings Presentation
2Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Forward-looking statements and non-GAAP measures Information in this presentation and related comments of presenters contain a number of forward-looking statements. 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 Ciena’s prospective financial results, return of capital plans, business strategies, expectations about its addressable markets and market share, and business outlook for future periods, as well as statements regarding Ciena’s expectations, beliefs, intentions or strategies regarding the future. Often, these can be identified by forward-looking words such as “target” “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” “plan,” “predict,” “potential,” “project, “continue,” and “would” or similar words. 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 impact of supply chain constraints or disruptions; the duration and severity of the COVID-19 pandemic and the impact of countermeasures taken to mitigate its spread on macroeconomic conditions, economic activity, demand for our technology solutions, short- and long-term changes in customer or end user needs, continuity of supply chain, our business operations, liquidity and financial results; changes in network spending or network strategy by our 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; changes in foreign currency exchange rates; factors beyond our control such as natural disasters, climate change, acts of war or terrorism, geopolitical events, including but not limited to the ongoing conflict between Ukraine and Russia, and public health emergencies; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; and the other risk factors disclosed in Ciena’s periodic reports filed with the Securities and Exchange Commission (SEC) including Ciena’s Annual Report on Form 10-K filed with the SEC on December 17, 2021 and Ciena’s Quarterly Report on Form 10-Q for the third quarter of fiscal 2022 to be filed with the SEC. All information, statements, and projections in this presentation and the related earnings call speak only as of the date of this presentation and related earnings call. Ciena assumes no obligation to update any forward-looking or other information included in this presentation or related earnings calls, whether as a result of new information, future events or otherwise. In addition, this presentation includes historical, and may include prospective, non-GAAP measures of Ciena’s gross margin, operating expense, operating profit, EBITDA, net income, and net income per share. These measures are not intended to be a substitute for financial information presented in accordance with GAAP. A reconciliation of non- GAAP measures used in this presentation to Ciena’s GAAP results for the relevant period can be found in the Appendix to this presentation. Additional information can also be found in our press release filed this morning and in our reports on Form 10-Q filed with the Securities and Exchange Commission.
3Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Table of Contents 1 Overview & recent achievements 2 Market context and our portfolio 3 Q3 FY 2022 results 4 Appendix
4Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Overview & recent achievements
5Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Ciena is an industry-leading global networking systems, services, and software company ….. Leading technology and innovation … with a strong track record of creating shareholder value Diversification and scale of business Leader in Optical markets and disruptor in emerging opportunities Demonstrated track record of financial performance Flexibility with strong balance sheet
6Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Recent key achievements • Delivering industry-leading coherent technology including 107GBd WaveLogic™ 5 Extreme (WL5e) and the widest range of interoperable and performance pluggables ▪ Growing revenue with MCP multi- layer visualization service across multi-vendor IP/Optical infrastructure ▪ Addition of 8110, 8112 & 8114 to the 81xx portfolio has extended our RSP reach well into the high scale aggregation & Metro space We are driving the pace of innovation We are committed to our people and communities We have a durable business and financial model ▪ Despite the challenging environment, we have grown our backlog and returned cash to shareholders ▪ Our balance sheet represents a competitive advantage • Ended the quarter with approximately $1.3B in cash and investments • Leverage remains in line with our target level after a successful $400M Senior Notes offering • Published ESG Investor Presentation and conducted stockholder outreach • Established our Sustainability Governance model which includes board oversight and strategic executive leadership • Communicated FY22 compensation goals that address climate, diversity & inclusion and community impact • Earned Verizon's 2022 Supplier Environmental Excellence Award
7Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Market context and our portfolio
8Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Six mega trends and the innovations that will enable them Digital Transformation & Automation Cloud & Edge Data Center Mobility & 5G IoT & Connected Objects Virtual & Hybrid Lifestyles
9Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Technical and professional services that help customers build, operate, and optimize their networks Predictive analytics and machine learning based on both big data and small data Dynamic pool of virtual and physical network resources; instrumented, open, scalable, and secure Federated inventory, open domain control, and multi-layer orchestration Our vision for a new network end-state How it works
10Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Our market leadership Optical Transport Report, 2Q22Optical Networking Report, 1Q22 Data Center Interconnect Market Share Report, 1Q22 Service Provider Switching & Routing Report, 1Q22 Transport Hardware Report, 2Q22 Transport Customer Markets Report, 1Q22 Transport Applications Report, 1Q22 #1 GLOBALLY ◦ DATA CENTER INTERCONNECT ◦ PURPOSE-BUILT/COMPACT MODULAR DCI ◦ OPTICAL FOR INTERNET CONTENT PROVIDER CUSTOMERS #1 N. AMERICA ◦ DATA CENTER INTERCONNECT ◦ TOTAL OPTICAL NETWORKING ◦ OPTICAL PACKET #2 GLOBALLY ◦ TOTAL OPTICAL NETWORKING ◦ OPTICAL PACKET ◦ OPTICAL FOR CABLE MSO CUSTOMERS #1 GLOBALLY ◦ DATA CENTER INTERCONNECT FOR ICP/CNPs ◦ SLTE WDM #1 N. AMERICA ◦ TOTAL OPTICAL NETWORKING ◦ DATA CENTER INTERCONNECT ◦ ACCESS SWITCHING #2 GLOBALLY ◦ TOTAL OPTICAL NETWORKING ◦ ACCESS SWITCHING #1 GLOBALLY ◦ PURPOSE-BUILT/COMPACT MODULAR DCI ◦ OPTICAL FOR CLOUD & COLO ◦ SLTE WDM ◦ PACKET ACCESS #1 N. AMERICA ◦ TOTAL OPTICAL NETWORKING ◦ PURPOSE-BUILT/COMPACT MODULAR DCI ◦ OPTICAL FOR CLOUD & COLO ◦ PACKET ACCESS #2 GLOBALLY ◦ TOTAL OPTICAL NETWORKING ◦ OPTICAL FOR SERVICE PROVIDER ◦ OPTICAL FOR ENTERPRISE & GOVERNMENT
11Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q3 FY 2022 results
12Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q3 FY 2022 key highlights ▪ Non-telco represented approximately 38% of total revenue ▪ APAC region represented 15% of total revenue ▪ Routing and Switching revenue increased 45% YoY, in part reflecting strong contribution from the recently added Vyatta platform ▪ Platform Software and Services increased 11% YoY, representing 7% of total revenue ▪ GAAP R&D investment was approximately 17% of total revenue ▪ 754 100G+ total customers, which includes 13 new wins on WaveLogic Ai and 14 new wins on WaveLogic 5 Extreme ▪ Gaining business momentum with our Universal Aggregation and XGS-PON solution ▪ Added 25 new Adaptive IP customers in Q3 bringing the total to nearly 200 ▪ IP/Optical convergence leveraging WL5n ramping both 51xx and 81xx platforms over ELS & RLS ▪ Total shareholder return five year CAGR of 19%1 ▪ As part of our $1 billion stock repurchase program, we repurchased approximately 3.2 million shares during the quarter for $155 million 1 Based on closing share price between 8/17/2017 to 8/16/2022 Achieving balanced growth Prioritizing long term shareholder value Driving the pace of innovation
13Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q3 FY 2022comparisons (year-over-year) * A reconciliation of these non-GAAP measures to our GAAP results is included in the appendix to this presentation. Revenue (in millions) Adj. Gross Margin* Adj. Operating Margin* Adj. OpEx* (in millions) Adj. EBITDA* (in millions) Adj. EPS*
14Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q3 FY 2022 comparative operating metrics Q3 FY 2022 Q3 FY 2021 Cash and Investments $1.3B $1.5B Cash Flow from (used in) Operations $(205)M $69M DSO 100 89 Inventory Turns 2.1 4.5 Gross Leverage 2.07x 1.10x Net Cash $122M $724M
15Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q3 FY 2022 comparative financial highlights * A reconciliation of these non-GAAP measures to our GAAP results is included in the press release for the relative period. Q3 FY 2022 Q3 FY 2021 Revenue $868.0M $988.1M Adjusted Gross Margin* 40.0% 48.5% Adjusted Operating Expense* $273.1M $290.4M Adjusted Operating Margin* 8.5% 19.1% Adjusted EBITDA* $96.0M $213.7M Adjusted EPS* $0.33 $0.92
16Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Revenue by segment (Amounts in millions) Q3 FY 2022 Q3 FY 2021 Revenue %** Revenue %** Networking Platforms Converged Packet Optical $563.9 65.0 $712.9 72.1 Routing and Switching 100.7 11.6 69.7 7.1 Total Networking Platforms 664.6 76.6 782.6 79.2 Platform Software and Services 63.5 7.3 56.9 5.8 Blue Planet Automation Software and Services 17.3 2.0 16.6 1.7 Global Services Maintenance Support and Training 72.8 8.4 74.0 7.5 Installation and Deployment 38.7 4.4 46.7 4.7 Consulting and Network Design 11.1 1.3 11.3 1.1 Total Global Services 122.6 14.1 132.0 13.3 Total $868.0 100.0 % $988.1 100.0 % * A reconciliation of these non-GAAP measures to GAAP results is included in the appendix to this presentation. ** Denotes % of total revenue
17Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Non-telco revenue
18Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Revenue by geographic region 12% 12% 15% 11% 16% 18% 14% 70% 72% 70% 74% 71% 19% 15% 11%
19Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q3 FY 2022 appendix
20Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q3 FY 2022 Q2 FY 2022 Q1 FY 2022 Q4 FY 2021 Q3 FY 2021 GAAP gross profit $340,779 $401,781 $384,187 $477,119 $474,550 Share-based compensation-products 1,002 1,058 900 920 1,037 Share-based compensation-services 1,940 1,943 1,584 1,240 1,315 Canadian Emergency Wage Subsidy - products — — — — (94) Canadian Emergency Wage Subsidy - services — — — — (47) Amortization of intangible assets 3,140 3,313 3,312 2,856 2,857 Total adjustments related to gross profit 6,082 6,314 5,796 5,016 5,068 Adjusted (non-GAAP) gross profit $346,861 $408,095 $389,983 $482,135 $479,618 Adjusted (non-GAAP) gross profit percentage 40.0 % 43.0 % 46.2 % 46.3 % 48.5 % Gross Profit Reconciliation (Amounts in thousands)
21Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q3 FY 2022 Q2 FY 2022 Q1 FY 2022 Q4 FY 2021 Q3 FY 2021 GAAP operating expense $313,672 $343,352 $324,183 $339,710 $326,027 Share-based compensation-research and development 8,233 8,309 6,830 5,684 5,541 Share-based compensation-sales and marketing 8,075 8,061 7,060 6,192 6,534 Share-based compensation-general and administrative 7,579 7,334 7,912 7,466 8,237 Canadian Emergency Wage Subsidy-research and development — — — — (596) Canadian Emergency Wage Subsidy-sales and marketing — — — — (53) Canadian Emergency Wage Subsidy-general and administrative — — — — (46) Significant asset impairments and restructuring costs 7,692 9,102 3,409 5,700 9,789 Amortization of intangible assets 8,919 8,920 8,918 5,836 5,967 Acquisition and integration costs 35 495 68 1,712 259 Total adjustments related to operating expense 40,533 42,221 34,197 32,590 35,632 Adjusted (non-GAAP) operating expense $273,139 $301,131 $289,986 $307,120 $290,395 Q3 FY 2022 Q2 FY 2022 Q1 FY 2022 Q4 FY 2021 Q3 FY 2021 GAAP income from operations $27,107 $58,429 $60,004 $137,409 $148,523 Total adjustments related to gross profit 6,082 6,314 5,796 5,016 5,068 Total adjustments related to operating expense 40,533 42,221 34,197 32,590 35,632 Total adjustments related to income from operations 46,615 48,535 39,993 37,606 40,700 Adjusted (non-GAAP) income from operations $73,722 $106,964 $99,997 $175,015 $189,223 Adjusted (non-GAAP) operating margin percentage 8.5 % 11.3 % 11.8 % 16.8 % 19.1 % Operating Expense Reconciliation (Amounts in thousands) Income from Operations Reconciliation (Amounts in thousands)
22Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q3 FY 2022 Q2 FY 2022 Q1 FY 2022 Q4 FY 2021 Q3 FY 2021 GAAP net income $10,512 $38,922 $45,823 $103,499 $238,232 Exclude GAAP provision (benefit) for income taxes 4,319 8,330 9,219 25,826 (96,690) Income before income taxes 14,831 47,252 55,042 129,325 141,542 Total adjustments related to income from operations 46,615 48,535 39,993 37,606 40,700 Unrealized gain on cost method equity investment — — (4,120) — — Adjusted income before income taxes 61,446 95,787 90,915 166,931 182,242 Non-GAAP tax provision on adjusted income before income taxes 12,412 19,349 18,365 34,221 37,360 Adjusted (non-GAAP) net income $49,034 $76,438 $72,550 $132,710 $144,882 Weighted average basic common shares outstanding 149,862 152,197 154,151 155,232 155,271 Weighted average diluted potential common shares outstanding(1) 150,463 153,344 155,807 156,689 156,744 Q3 FY 2022 Q2 FY 2022 Q1 FY 2022 Q4 FY 2021 Q3 FY 2021 GAAP diluted net income per potential common share $ 0.07 $ 0.25 $ 0.29 $ 0.66 $ 1.52 Adjusted (non-GAAP) diluted net income per potential common share $ 0.33 $ 0.50 $ 0.47 $ 0.85 $ 0.92 1. Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the third quarter of fiscal 2022 includes 0.6 million shares underlying certain stock option and stock unit awards. Net Income Reconciliation (Amounts in thousands) Net Income per Common Share
23Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Q3 FY 2022 Q2 FY 2022 Q1 FY 2022 Q4 FY 2021 Q3 FY 2021 Net income (GAAP) $10,512 $38,922 $45,823 $103,499 $238,232 Add: Interest expense 12,642 11,985 8,648 7,916 7,776 Less: Interest and other income (loss), net 366 808 3,686 (168) 795 Add: Provision (benefit) for income taxes 4,319 8,330 9,219 25,826 (96,690) Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 22,250 22,377 23,653 24,315 24,623 Add: Amortization of intangible assets 12,059 12,233 12,230 8,692 8,824 EBITDA $61,416 $93,039 $95,887 $170,416 $181,970 Less: Canadian Emergency Wage Subsidy — — — — 836 Add: Share-based compensation cost 26,857 26,673 24,297 21,366 22,471 Add: Significant asset impairments and restructuring costs 7,692 9,102 3,409 5,700 9,789 Add: Acquisition and integration costs 35 495 68 1,712 259 Adjusted EBITDA $96,000 $129,309 $123,661 $199,194 $213,653 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) (Amounts in thousands)