Document
P3YP6MP10YP12Mfalse--10-31FY201900009363950.010.012900000002900000001543185311544038501543185311544038509197943303820815851400.040.03750.040.008750.03750.010.0120000000200000000000P4YP3YP1YP4Y00 0000936395 2018-11-01 2019-10-31 0000936395 2019-05-03 0000936395 2019-12-16 0000936395 2019-10-31 0000936395 2018-10-31 0000936395 us-gaap:ServiceMember 2018-11-01 2019-10-31 0000936395 2016-11-01 2017-10-31 0000936395 2017-11-01 2018-10-31 0000936395 us-gaap:ProductMember 2017-11-01 2018-10-31 0000936395 us-gaap:ServiceMember 2017-11-01 2018-10-31 0000936395 us-gaap:ProductMember 2016-11-01 2017-10-31 0000936395 us-gaap:ProductMember 2018-11-01 2019-10-31 0000936395 us-gaap:ServiceMember 2016-11-01 2017-10-31 0000936395 us-gaap:InterestRateSwapMember 2018-11-01 2019-10-31 0000936395 us-gaap:InterestRateSwapMember 2017-11-01 2018-10-31 0000936395 us-gaap:ForeignExchangeForwardMember 2018-11-01 2019-10-31 0000936395 us-gaap:ForeignExchangeForwardMember 2017-11-01 2018-10-31 0000936395 us-gaap:InterestRateSwapMember 2016-11-01 2017-10-31 0000936395 us-gaap:ForeignExchangeForwardMember 2016-11-01 2017-10-31 0000936395 us-gaap:CommonStockMember 2018-11-01 2019-10-31 0000936395 us-gaap:CommonStockMember 2016-10-31 0000936395 us-gaap:RetainedEarningsMember 2017-10-31 0000936395 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-10-31 0000936395 us-gaap:CommonStockMember 2019-10-31 0000936395 us-gaap:AdditionalPaidInCapitalMember 2017-11-01 2018-10-31 0000936395 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2016-11-01 2017-10-31 0000936395 2017-10-31 0000936395 us-gaap:CommonStockMember 2017-11-01 2018-10-31 0000936395 us-gaap:RetainedEarningsMember 2017-11-01 2018-10-31 0000936395 us-gaap:RetainedEarningsMember 2016-11-01 2017-10-31 0000936395 us-gaap:CommonStockMember 2017-10-31 0000936395 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-11-01 2019-10-31 0000936395 us-gaap:AdditionalPaidInCapitalMember 2018-11-01 2019-10-31 0000936395 us-gaap:CommonStockMember 2018-10-31 0000936395 2017-11-01 0000936395 us-gaap:RetainedEarningsMember 2019-10-31 0000936395 us-gaap:AdditionalPaidInCapitalMember 2017-10-31 0000936395 us-gaap:CommonStockMember 2016-11-01 2017-10-31 0000936395 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-10-31 0000936395 us-gaap:RetainedEarningsMember 2018-11-01 0000936395 us-gaap:RetainedEarningsMember 2018-11-01 2019-10-31 0000936395 us-gaap:AdditionalPaidInCapitalMember 2019-10-31 0000936395 us-gaap:AdditionalPaidInCapitalMember 2017-11-01 0000936395 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-10-31 0000936395 2018-11-01 0000936395 2016-10-31 0000936395 us-gaap:RetainedEarningsMember 2017-11-01 0000936395 us-gaap:RetainedEarningsMember 2018-10-31 0000936395 us-gaap:RetainedEarningsMember 2016-10-31 0000936395 us-gaap:AdditionalPaidInCapitalMember 2016-11-01 2017-10-31 0000936395 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-11-01 2018-10-31 0000936395 us-gaap:AdditionalPaidInCapitalMember 2016-10-31 0000936395 us-gaap:AdditionalPaidInCapitalMember 2018-10-31 0000936395 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2016-10-31 0000936395 cien:NewNotesThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2016-11-01 2017-10-31 0000936395 cien:ThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2016-11-01 2017-10-31 0000936395 cien:FourPercentConvertibleSeniorNotesDue2015Member 2016-11-01 2017-10-31 0000936395 cien:FourPercentConvertibleSeniorNotesDue2015Member 2018-11-01 2019-10-31 0000936395 cien:ThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2018-11-01 2019-10-31 0000936395 cien:ThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2017-11-01 2018-10-31 0000936395 cien:NewNotesThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2018-11-01 2019-10-31 0000936395 cien:NewNotesThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2017-11-01 2018-10-31 0000936395 cien:FourPercentConvertibleSeniorNotesDue2015Member 2017-11-01 2018-10-31 0000936395 cien:NewNotesThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2018-11-01 2019-10-31 0000936395 cien:FourPercentConvertibleSeniorNotesDue2015Member 2018-10-31 0000936395 cien:ThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2018-10-31 0000936395 cien:FourPercentConvertibleSeniorNotesDue2015Member 2017-11-01 2018-10-31 0000936395 cien:ThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2017-11-01 2018-10-31 0000936395 us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2018-11-01 0000936395 us-gaap:AccountingStandardsUpdate201409Member cien:PrepaidCostsofGoodsandServicesMember us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2018-11-01 0000936395 srt:MinimumMember cien:SoftwareAndWebsiteDevelopmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:AccountingStandardsUpdate201609Member us-gaap:RetainedEarningsMember 2017-11-01 0000936395 srt:MaximumMember cien:SoftwareAndWebsiteDevelopmentMember 2018-11-01 2019-10-31 0000936395 srt:MinimumMember cien:EquipmentFurnitureAndFixturesMember 2018-11-01 2019-10-31 0000936395 cien:ProductSalesOtherThanMultipleElementSoftwareArrangementsMember us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2018-11-01 0000936395 cien:MaintenanceServicesOtherThanMultipleElementSoftwareArrangementsMember us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2018-11-01 0000936395 cien:MultipleElementSoftwareArrangementsMember us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2018-11-01 0000936395 cien:PlatformandBluePlanetAutomationSoftwareandServicesSegmentsMember 2018-11-01 2019-10-31 0000936395 srt:MaximumMember cien:EquipmentFurnitureAndFixturesMember 2018-11-01 2019-10-31 0000936395 cien:NewNotesThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2019-10-31 0000936395 us-gaap:AccountingStandardsUpdate201409Member cien:CapitalizedContractAcquisitionCostsMember us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2018-11-01 0000936395 cien:ProductsandServicesWithUnpaidInvoicesMember us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2018-11-01 0000936395 srt:MaximumMember 2018-11-01 2019-10-31 0000936395 cien:InstallationAndDeploymentMember us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2018-11-01 0000936395 srt:MinimumMember 2018-11-01 2019-10-31 0000936395 us-gaap:ProductMember us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2018-11-01 0000936395 us-gaap:AccountingStandardsUpdate201409Member us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member 2018-11-01 2019-10-31 0000936395 us-gaap:CalculatedUnderRevenueGuidanceInEffectBeforeTopic606Member 2018-11-01 2019-10-31 0000936395 2019-11-01 2019-10-31 0000936395 srt:NorthAmericaMember 2018-11-01 2019-10-31 0000936395 srt:AsiaPacificMember 2018-11-01 2019-10-31 0000936395 us-gaap:EMEAMember 2018-11-01 2019-10-31 0000936395 cien:CentralAndLatinAmericaMember 2018-11-01 2019-10-31 0000936395 cien:MaintenanceSupportAndTrainingMember 2018-11-01 2019-10-31 0000936395 cien:InstallationAndDeploymentMember 2018-11-01 2019-10-31 0000936395 us-gaap:TransferredAtPointInTimeMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:MaintenanceSupportAndTrainingMember cien:NetworkingPlatformsSegmentMember 2018-11-01 2019-10-31 0000936395 cien:NetworkingPlatformsSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:ConsultingAndNetworkDesignMember cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PacketNetworkingMember cien:NetworkingPlatformsSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:ConvergedPacketOpticalMember cien:NetworkingPlatformsSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:InstallationAndDeploymentMember cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PlatformSoftwareandServicesMember cien:NetworkingPlatformsSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PlatformSoftwareandServicesMember cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:InstallationAndDeploymentMember cien:NetworkingPlatformsSegmentMember 2018-11-01 2019-10-31 0000936395 cien:PacketNetworkingMember 2018-11-01 2019-10-31 0000936395 cien:PlatformSoftwareandServicesSegmentMember us-gaap:TransferredOverTimeMember 2018-11-01 2019-10-31 0000936395 cien:ConsultingAndNetworkDesignMember 2018-11-01 2019-10-31 0000936395 cien:PlatformSoftwareandServicesMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:ConvergedPacketOpticalMember cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:BluePlanetAutomationSoftwareandServicesMember cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 cien:BluePlanetAutomationSoftwareandServicesSegmentMember us-gaap:TransferredAtPointInTimeMember 2018-11-01 2019-10-31 0000936395 cien:BluePlanetAutomationSoftwareandServicesSegmentMember us-gaap:TransferredOverTimeMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:ConsultingAndNetworkDesignMember cien:GlobalServicesMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 cien:GlobalServicesMember us-gaap:TransferredOverTimeMember 2018-11-01 2019-10-31 0000936395 cien:PlatformSoftwareandServicesSegmentMember us-gaap:TransferredAtPointInTimeMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:ConvergedPacketOpticalMember cien:PlatformSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 cien:PlatformSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:GlobalServicesMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PacketNetworkingMember cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PlatformSoftwareandServicesMember cien:GlobalServicesMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:ConsultingAndNetworkDesignMember cien:PlatformSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 cien:NetworkingPlatformsSegmentMember us-gaap:TransferredOverTimeMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:MaintenanceSupportAndTrainingMember cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 cien:GlobalServicesMember us-gaap:TransferredAtPointInTimeMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:MaintenanceSupportAndTrainingMember cien:GlobalServicesMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:BluePlanetAutomationSoftwareandServicesMember cien:PlatformSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:ConvergedPacketOpticalMember cien:GlobalServicesMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:NetworkingPlatformsSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PlatformSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 cien:NetworkingPlatformsSegmentMember us-gaap:TransferredAtPointInTimeMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:MaintenanceSupportAndTrainingMember cien:PlatformSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 cien:ConvergedPacketOpticalMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PlatformSoftwareandServicesMember cien:PlatformSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:BluePlanetAutomationSoftwareandServicesMember cien:NetworkingPlatformsSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:InstallationAndDeploymentMember cien:GlobalServicesMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PacketNetworkingMember cien:GlobalServicesMember 2018-11-01 2019-10-31 0000936395 us-gaap:TransferredOverTimeMember 2018-11-01 2019-10-31 0000936395 cien:BluePlanetAutomationSoftwareandServicesMember 2018-11-01 2019-10-31 0000936395 cien:GlobalServicesMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:InstallationAndDeploymentMember cien:PlatformSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PacketNetworkingMember cien:PlatformSoftwareandServicesSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:ConsultingAndNetworkDesignMember cien:NetworkingPlatformsSegmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:BluePlanetAutomationSoftwareandServicesMember cien:GlobalServicesMember 2018-11-01 2019-10-31 0000936395 cien:DonRiverHoldingsLLCMember cien:CustomerRelationshipsAndContractsMember 2018-10-01 2018-10-01 0000936395 cien:PacketDesignLLCMember us-gaap:DevelopedTechnologyRightsMember 2018-07-02 2018-07-02 0000936395 cien:DonRiverHoldingsLLCMember 2018-11-01 2019-10-31 0000936395 cien:PacketDesignLLCMember cien:CustomerRelationshipsAndContractsMember 2018-07-02 2018-07-02 0000936395 cien:DonRiverHoldingsLLCMember cien:ContingentCompensationMember 2018-10-01 0000936395 cien:DonRiverHoldingsLLCMember 2019-10-31 0000936395 cien:DonRiverHoldingsLLCMember 2018-10-01 2018-10-01 0000936395 cien:DonRiverHoldingsLLCMember 2018-10-01 0000936395 cien:DonRiverHoldingsLLCMember cien:ContingentCompensationMember 2017-11-01 2018-10-31 0000936395 cien:DonRiverHoldingsLLCMember us-gaap:DevelopedTechnologyRightsMember 2018-10-01 2018-10-01 0000936395 cien:DonRiverHoldingsLLCMember cien:ContingentConsiderationMember 2018-10-01 0000936395 cien:DonRiverHoldingsLLCMember cien:ContingentCompensationMember 2018-11-01 2019-10-31 0000936395 cien:DonRiverHoldingsLLCMember 2018-10-01 2019-10-31 0000936395 cien:PacketDesignLLCMember 2017-11-01 2018-10-31 0000936395 cien:DonRiverHoldingsLLCMember 2017-11-01 2018-10-31 0000936395 cien:PacketDesignLLCMember 2018-07-02 2018-07-02 0000936395 cien:PacketDesignLLCMember 2018-07-02 0000936395 cien:PacketDesignLLCMember cien:CustomerRelationshipsAndContractsMember 2018-07-02 0000936395 cien:PacketDesignLLCMember us-gaap:DevelopedTechnologyRightsMember 2018-07-02 0000936395 cien:DonRiverHoldingsLLCMember cien:CustomerRelationshipsAndContractsMember 2018-10-01 0000936395 cien:DonRiverHoldingsLLCMember us-gaap:DevelopedTechnologyRightsMember 2018-10-01 0000936395 us-gaap:EmployeeSeveranceMember 2019-10-31 0000936395 us-gaap:FacilityClosingMember 2017-10-31 0000936395 us-gaap:EmployeeSeveranceMember 2016-10-31 0000936395 us-gaap:FacilityClosingMember 2016-11-01 2017-10-31 0000936395 us-gaap:EmployeeSeveranceMember 2016-11-01 2017-10-31 0000936395 us-gaap:FacilityClosingMember 2017-11-01 2018-10-31 0000936395 us-gaap:FacilityClosingMember 2018-11-01 2019-10-31 0000936395 us-gaap:EmployeeSeveranceMember 2017-10-31 0000936395 us-gaap:FacilityClosingMember 2019-10-31 0000936395 us-gaap:EmployeeSeveranceMember 2018-11-01 2019-10-31 0000936395 us-gaap:EmployeeSeveranceMember 2017-11-01 2018-10-31 0000936395 us-gaap:EmployeeSeveranceMember 2018-10-31 0000936395 us-gaap:FacilityClosingMember 2018-10-31 0000936395 us-gaap:FacilityClosingMember 2016-10-31 0000936395 us-gaap:USTreasuryAndGovernmentMember us-gaap:OtherLongTermInvestmentsMember 2018-10-31 0000936395 us-gaap:USTreasuryAndGovernmentMember 2018-10-31 0000936395 us-gaap:USTreasuryAndGovernmentMember us-gaap:ShortTermInvestmentsMember 2018-10-31 0000936395 us-gaap:CommercialPaperMember 2018-10-31 0000936395 us-gaap:CommercialPaperMember us-gaap:ShortTermInvestmentsMember 2018-10-31 0000936395 us-gaap:USTreasuryAndGovernmentMember 2019-10-31 0000936395 us-gaap:USTreasuryAndGovernmentMember us-gaap:OtherLongTermInvestmentsMember 2019-10-31 0000936395 us-gaap:USTreasuryAndGovernmentMember us-gaap:ShortTermInvestmentsMember 2019-10-31 0000936395 us-gaap:CashAndCashEquivalentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 cien:OtherLongTermLiabilitiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:AccruedLiabilitiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 cien:MarketableSecuritiesNoncurrentMember us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 cien:OtherLongTermLiabilitiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:AccruedLiabilitiesMember us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 cien:MarketableSecuritiesNoncurrentMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 cien:OtherLongTermLiabilitiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 cien:OtherLongTermLiabilitiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:CashAndCashEquivalentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:CashAndCashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:CashAndCashEquivalentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 cien:MarketableSecuritiesNoncurrentMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:AccruedLiabilitiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 cien:MarketableSecuritiesNoncurrentMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:AccruedLiabilitiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:AccruedLiabilitiesMember us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:OtherLongTermAssetMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:CashAndCashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:AccruedLiabilitiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:OtherLongTermAssetMember us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:OtherLongTermLiabilitiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:MarketableSecuritiesNoncurrentMember us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:OtherLongTermLiabilitiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:AccruedLiabilitiesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:CashAndCashEquivalentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:EmbeddedDerivativeFairValueofEmbeddedDerivativeLiabilityMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:MarketableSecuritiesNoncurrentMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:OtherLongTermAssetMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:EmbeddedDerivativeFairValueofEmbeddedDerivativeLiabilityMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:OtherLongTermLiabilitiesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:OtherLongTermAssetMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:AccruedLiabilitiesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:ShortTermInvestmentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:CashAndCashEquivalentsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:EmbeddedDerivativeFairValueofEmbeddedDerivativeLiabilityMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:CashAndCashEquivalentsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:MarketableSecuritiesNoncurrentMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:OtherLongTermLiabilitiesMember us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:EmbeddedDerivativeFairValueofEmbeddedDerivativeLiabilityMember us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 cien:MarketableSecuritiesNoncurrentMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-10-31 0000936395 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:InterestRateSwapMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:InterestRateSwapMember us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-10-31 0000936395 cien:APCRegionCustomerMember 2016-11-01 2017-10-31 0000936395 cien:TwoUnidentifiedCustomersMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2017-11-01 2018-10-31 0000936395 cien:UnidentifiedCustomerOneMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2018-11-01 2019-10-31 0000936395 cien:EquipmentFurnitureFixturesAndLeaseholdImprovementsMember 2017-11-01 2018-10-31 0000936395 cien:EquipmentFurnitureFixturesAndLeaseholdImprovementsMember 2018-11-01 2019-10-31 0000936395 cien:EquipmentFurnitureFixturesAndLeaseholdImprovementsMember 2016-11-01 2017-10-31 0000936395 cien:EquipmentFurnitureAndFixturesMember 2019-10-31 0000936395 us-gaap:LeaseholdImprovementsMember 2018-10-31 0000936395 cien:BuildingSubjectToCapitalLeaseMember 2019-10-31 0000936395 us-gaap:LeaseholdImprovementsMember 2019-10-31 0000936395 cien:EquipmentFurnitureAndFixturesMember 2018-10-31 0000936395 cien:BuildingSubjectToCapitalLeaseMember 2018-10-31 0000936395 us-gaap:DevelopedTechnologyRightsMember 2018-10-31 0000936395 us-gaap:DevelopedTechnologyRightsMember 2019-10-31 0000936395 cien:PatentsAndLicensesMember 2019-10-31 0000936395 cien:CustomerRelationshipsCovenantsNotToCompeteOutstandingPurchaseOrdersAndContractsMember 2018-10-31 0000936395 cien:CustomerRelationshipsCovenantsNotToCompeteOutstandingPurchaseOrdersAndContractsMember 2019-10-31 0000936395 cien:PatentsAndLicensesMember 2018-10-31 0000936395 cien:SoftwareandSoftwareRelatedServicesMember 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PlatformSoftwareandServicesSegmentMember 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:NetworkingPlatformsSegmentMember 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:NetworkingPlatformsSegmentMember 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:SoftwareandSoftwareRelatedServicesMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:SoftwareandSoftwareRelatedServicesMember 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PlatformSoftwareandServicesSegmentMember 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:SoftwareandSoftwareRelatedServicesMember 2018-10-31 0000936395 us-gaap:ProductMember 2019-10-31 0000936395 cien:ServicesMember 2018-10-31 0000936395 cien:ServicesMember 2019-10-31 0000936395 us-gaap:ProductMember 2018-10-31 0000936395 us-gaap:RevolvingCreditFacilityMember 2017-11-01 2018-10-31 0000936395 us-gaap:RevolvingCreditFacilityMember 2018-11-01 2019-10-31 0000936395 us-gaap:RevolvingCreditFacilityMember 2016-11-01 2017-10-31 0000936395 srt:MaximumMember us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2018-11-01 2019-10-31 0000936395 cien:TermLoan2025Member us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:SecuredDebtMember 2019-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-10-31 0000936395 cien:NewNotesThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member us-gaap:ConvertibleNotesPayableMember 2018-11-15 2018-11-15 0000936395 2018-08-30 2018-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2018-10-31 0000936395 cien:NewNotesThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member us-gaap:ConvertibleNotesPayableMember 2018-08-30 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-10-31 0000936395 cien:TermLoan2025Member us-gaap:SecuredDebtMember 2019-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2019-10-31 0000936395 cien:TermLoan2022Member us-gaap:SecuredDebtMember 2018-09-28 0000936395 srt:MaximumMember us-gaap:ForeignExchangeForwardMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-11-01 2019-10-31 0000936395 2018-08-30 0000936395 cien:TermLoan2022Member us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:SecuredDebtMember 2019-08-01 2019-10-31 0000936395 us-gaap:InterestRateSwapMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2016-10-31 0000936395 us-gaap:AccumulatedTranslationAdjustmentMember 2018-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2017-11-01 2018-10-31 0000936395 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-10-31 0000936395 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2017-11-01 2018-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-10-31 0000936395 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-11-01 2019-10-31 0000936395 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-10-31 0000936395 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2016-11-01 2017-10-31 0000936395 us-gaap:InterestRateSwapMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-10-31 0000936395 us-gaap:InterestRateSwapMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-11-01 2019-10-31 0000936395 us-gaap:AccumulatedTranslationAdjustmentMember 2017-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-11-01 2019-10-31 0000936395 us-gaap:AccumulatedTranslationAdjustmentMember 2017-11-01 2018-10-31 0000936395 us-gaap:AccumulatedTranslationAdjustmentMember 2019-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2016-11-01 2017-10-31 0000936395 us-gaap:InterestRateSwapMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2017-10-31 0000936395 us-gaap:InterestRateSwapMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2017-11-01 2018-10-31 0000936395 us-gaap:InterestRateSwapMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2018-10-31 0000936395 us-gaap:InterestRateSwapMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2016-11-01 2017-10-31 0000936395 us-gaap:AccumulatedTranslationAdjustmentMember 2016-11-01 2017-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2019-10-31 0000936395 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2016-10-31 0000936395 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2017-10-31 0000936395 us-gaap:AccumulatedTranslationAdjustmentMember 2016-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2017-10-31 0000936395 us-gaap:AccumulatedTranslationAdjustmentMember 2018-11-01 2019-10-31 0000936395 us-gaap:ForeignExchangeForwardMember us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember 2016-10-31 0000936395 cien:TermLoan2025Member us-gaap:SecuredDebtMember 2018-10-31 0000936395 cien:TermLoan2025Member us-gaap:SecuredDebtMember 2017-11-01 2018-10-31 0000936395 cien:TermLoan2025Member us-gaap:SecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-09-28 2018-09-28 0000936395 cien:TermLoan2025Member us-gaap:SecuredDebtMember 2018-09-28 0000936395 cien:TermLoan2025Member us-gaap:SecuredDebtMember 2018-09-28 2018-09-28 0000936395 cien:TermLoan2022Member us-gaap:SecuredDebtMember 2018-09-28 2018-09-28 0000936395 cien:TermLoan2025Member us-gaap:SecuredDebtMember 2018-11-01 2019-10-31 0000936395 cien:TermLoan2025Member us-gaap:SecuredDebtMember us-gaap:BaseRateMember 2018-09-28 2018-09-28 0000936395 cien:TermLoan2025Member us-gaap:SecuredDebtMember us-gaap:LondonInterbankOfferedRateLIBORMember 2018-09-28 0000936395 us-gaap:RevolvingCreditFacilityMember 2019-10-31 0000936395 us-gaap:LetterOfCreditMember 2019-10-31 0000936395 cien:FourPercentConvertibleSeniorNotesDue2020Member 2016-11-01 2017-10-31 0000936395 cien:ThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2016-11-01 2017-10-31 0000936395 cien:PointEightSevenFivePercentConvertibleSeniorNotesDue2017Member 2018-11-01 2019-10-31 0000936395 cien:NewNotesThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2017-11-01 2018-10-31 0000936395 cien:PointEightSevenFivePercentConvertibleSeniorNotesDue2017Member 2017-11-01 2018-10-31 0000936395 cien:NewNotesThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2016-11-01 2017-10-31 0000936395 cien:ThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2018-11-01 2019-10-31 0000936395 cien:PointEightSevenFivePercentConvertibleSeniorNotesDue2017Member 2016-11-01 2017-10-31 0000936395 cien:FourPercentConvertibleSeniorNotesDue2020Member 2018-11-01 2019-10-31 0000936395 cien:FourPercentConvertibleSeniorNotesDue2020Member 2017-11-01 2018-10-31 0000936395 us-gaap:ConvertibleDebtSecuritiesMember cien:FourPercentConvertibleSeniorNotesDue2020Member 2016-11-01 2017-10-31 0000936395 us-gaap:ConvertibleDebtSecuritiesMember cien:ThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2017-11-01 2018-10-31 0000936395 us-gaap:ConvertibleDebtSecuritiesMember cien:ThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2016-11-01 2017-10-31 0000936395 cien:SharesUnderlyingStockOptionsRestrictedStockUnitsAndWarrantsMember 2016-11-01 2017-10-31 0000936395 us-gaap:ConvertibleDebtSecuritiesMember cien:NewNotesThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2018-11-01 2019-10-31 0000936395 us-gaap:ConvertibleDebtSecuritiesMember cien:NewNotesThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2016-11-01 2017-10-31 0000936395 us-gaap:ConvertibleDebtSecuritiesMember cien:NewNotesThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2017-11-01 2018-10-31 0000936395 us-gaap:ConvertibleDebtSecuritiesMember cien:ThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2018-11-01 2019-10-31 0000936395 cien:SharesUnderlyingStockOptionsRestrictedStockUnitsAndWarrantsMember 2018-11-01 2019-10-31 0000936395 cien:SharesUnderlyingStockOptionsRestrictedStockUnitsAndWarrantsMember 2017-11-01 2018-10-31 0000936395 us-gaap:ConvertibleDebtSecuritiesMember cien:FourPercentConvertibleSeniorNotesDue2020Member 2017-11-01 2018-10-31 0000936395 us-gaap:ConvertibleDebtSecuritiesMember cien:FourPercentConvertibleSeniorNotesDue2020Member 2018-11-01 2019-10-31 0000936395 cien:ThreePointSevenFivePercentConvertibleSeniorNotesDue2018Member 2019-10-31 0000936395 cien:PointEightSevenFivePercentConvertibleSeniorNotesDue2017Member 2019-10-31 0000936395 cien:FourPercentConvertibleSeniorNotesDue2020Member 2019-10-31 0000936395 2018-12-13 0000936395 us-gaap:OperatingExpenseMember 2017-11-01 2018-10-31 0000936395 us-gaap:CostOfSalesMember 2018-11-01 2019-10-31 0000936395 cien:ServiceCostsMember 2017-11-01 2018-10-31 0000936395 us-gaap:SellingAndMarketingExpenseMember 2016-11-01 2017-10-31 0000936395 us-gaap:SellingAndMarketingExpenseMember 2018-11-01 2019-10-31 0000936395 cien:ProductCostsMember 2017-11-01 2018-10-31 0000936395 cien:ServiceCostsMember 2016-11-01 2017-10-31 0000936395 cien:ServiceCostsMember 2018-11-01 2019-10-31 0000936395 us-gaap:GeneralAndAdministrativeExpenseMember 2017-11-01 2018-10-31 0000936395 us-gaap:GeneralAndAdministrativeExpenseMember 2018-11-01 2019-10-31 0000936395 us-gaap:SellingAndMarketingExpenseMember 2017-11-01 2018-10-31 0000936395 us-gaap:ResearchAndDevelopmentExpenseMember 2016-11-01 2017-10-31 0000936395 us-gaap:CostOfSalesMember 2016-11-01 2017-10-31 0000936395 cien:ProductCostsMember 2016-11-01 2017-10-31 0000936395 us-gaap:OperatingExpenseMember 2018-11-01 2019-10-31 0000936395 us-gaap:GeneralAndAdministrativeExpenseMember 2016-11-01 2017-10-31 0000936395 us-gaap:ResearchAndDevelopmentExpenseMember 2017-11-01 2018-10-31 0000936395 us-gaap:OperatingExpenseMember 2016-11-01 2017-10-31 0000936395 us-gaap:CostOfSalesMember 2017-11-01 2018-10-31 0000936395 cien:ProductCostsMember 2018-11-01 2019-10-31 0000936395 us-gaap:ResearchAndDevelopmentExpenseMember 2018-11-01 2019-10-31 0000936395 cien:RangeOfExercisePriceRangeSixMember 2018-11-01 2019-10-31 0000936395 cien:RangeOfExercisePriceRangeFourMember 2018-11-01 2019-10-31 0000936395 cien:RangeOfExercisePriceRangeThreeMember 2018-11-01 2019-10-31 0000936395 cien:RangeOfExercisePriceRangeFiveMember 2019-10-31 0000936395 cien:RangeOfExercisePriceRangeTwoMember 2018-11-01 2019-10-31 0000936395 cien:RangeOfExercisePriceRangeFiveMember 2018-11-01 2019-10-31 0000936395 cien:RangeOfExercisePriceRangeTwoMember 2019-10-31 0000936395 cien:RangeOfExercisePriceRangeSixMember 2019-10-31 0000936395 cien:RangeOfExercisePriceRangeThreeMember 2019-10-31 0000936395 cien:RangeOfExercisePriceRangeOneMember 2019-10-31 0000936395 cien:RangeOfExercisePriceRangeFourMember 2019-10-31 0000936395 cien:RangeOfExercisePriceRangeOneMember 2018-11-01 2019-10-31 0000936395 us-gaap:PerformanceSharesMember 2018-11-01 2019-10-31 0000936395 us-gaap:PerformanceSharesMember 2017-11-01 2018-10-31 0000936395 us-gaap:RestrictedStockUnitsRSUMember 2018-11-01 2019-10-31 0000936395 us-gaap:EmployeeStockMember cien:TwoThousandThreePlanMember 2019-10-31 0000936395 us-gaap:EmployeeStockMember cien:TwoThousandThreePlanMember 2018-11-01 2019-10-31 0000936395 cien:TwoThousandSeventeenPlanMember 2019-10-31 0000936395 us-gaap:EmployeeStockOptionMember 2017-11-01 2018-10-31 0000936395 us-gaap:RestrictedStockUnitsRSUMember 2016-11-01 2017-10-31 0000936395 us-gaap:EmployeeStockMember cien:TwoThousandThreePlanMember 2017-11-01 2018-10-31 0000936395 us-gaap:EmployeeStockMember cien:TwoThousandThreePlanMember 2016-11-01 2017-10-31 0000936395 us-gaap:PerformanceSharesMember 2019-10-31 0000936395 us-gaap:EmployeeStockOptionMember 2018-11-01 2019-10-31 0000936395 us-gaap:PerformanceSharesMember 2018-10-31 0000936395 us-gaap:EmployeeStockOptionMember 2016-11-01 2017-10-31 0000936395 cien:EmployeeStockOptionsandStockAppreciationRightsMember cien:TwoThousandSeventeenPlanMember 2018-11-01 2019-10-31 0000936395 srt:MaximumMember us-gaap:EmployeeStockMember cien:TwoThousandThreePlanMember 2019-10-31 0000936395 us-gaap:RestrictedStockUnitsRSUMember 2017-11-01 2018-10-31 0000936395 us-gaap:RestrictedStockUnitsRSUMember 2019-10-31 0000936395 us-gaap:RestrictedStockUnitsRSUMember 2018-10-31 0000936395 srt:MinimumMember us-gaap:RestrictedStockUnitsRSUMember 2018-11-01 2019-10-31 0000936395 srt:MinimumMember us-gaap:RestrictedStockUnitsRSUMember cien:TwoThousandSeventeenPlanMember 2018-11-01 2019-10-31 0000936395 cien:TwoThousandSeventeenPlanMember 2018-11-01 2019-10-31 0000936395 srt:MaximumMember us-gaap:RestrictedStockUnitsRSUMember 2018-11-01 2019-10-31 0000936395 us-gaap:SalesRevenueNetMember 2018-11-01 2019-10-31 0000936395 us-gaap:SalesRevenueNetMember 2017-11-01 2018-10-31 0000936395 country:US 2018-11-01 2019-10-31 0000936395 country:US 2016-11-01 2017-10-31 0000936395 country:US 2017-11-01 2018-10-31 0000936395 us-gaap:SalesRevenueNetMember 2016-11-01 2017-10-31 0000936395 us-gaap:OperatingSegmentsMember 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:MaintenanceSupportAndTrainingMember cien:GlobalServicesMember 2017-11-01 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:ConvergedPacketOpticalMember cien:NetworkingPlatformsSegmentMember 2017-11-01 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:ConsultingAndNetworkDesignMember cien:GlobalServicesMember 2016-11-01 2017-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PlatformSoftwareandServicesMember cien:PlatformSoftwareandServicesSegmentMember 2016-11-01 2017-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:BluePlanetAutomationSoftwareandServicesMember cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2016-11-01 2017-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PlatformSoftwareandServicesMember cien:PlatformSoftwareandServicesSegmentMember 2017-11-01 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:InstallationAndDeploymentMember cien:GlobalServicesMember 2016-11-01 2017-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:InstallationAndDeploymentMember cien:GlobalServicesMember 2017-11-01 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:BluePlanetAutomationSoftwareandServicesMember cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2017-11-01 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:ConsultingAndNetworkDesignMember cien:GlobalServicesMember 2017-11-01 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:GlobalServicesMember 2017-11-01 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember 2017-11-01 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember 2016-11-01 2017-10-31 0000936395 us-gaap:OperatingSegmentsMember 2018-11-01 2019-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:NetworkingPlatformsSegmentMember 2017-11-01 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:ConvergedPacketOpticalMember cien:NetworkingPlatformsSegmentMember 2016-11-01 2017-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PacketNetworkingMember cien:NetworkingPlatformsSegmentMember 2016-11-01 2017-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:GlobalServicesMember 2016-11-01 2017-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:NetworkingPlatformsSegmentMember 2016-11-01 2017-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:MaintenanceSupportAndTrainingMember cien:GlobalServicesMember 2016-11-01 2017-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PacketNetworkingMember cien:NetworkingPlatformsSegmentMember 2017-11-01 2018-10-31 0000936395 us-gaap:EMEAMember 2017-11-01 2018-10-31 0000936395 srt:NorthAmericaMember 2016-11-01 2017-10-31 0000936395 srt:AsiaPacificMember 2017-11-01 2018-10-31 0000936395 cien:CentralAndLatinAmericaMember 2017-11-01 2018-10-31 0000936395 us-gaap:EMEAMember 2016-11-01 2017-10-31 0000936395 srt:NorthAmericaMember 2017-11-01 2018-10-31 0000936395 cien:CentralAndLatinAmericaMember 2016-11-01 2017-10-31 0000936395 srt:AsiaPacificMember 2016-11-01 2017-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2016-11-01 2017-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:BluePlanetAutomationSoftwareandServicesSegmentMember 2017-11-01 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PlatformSoftwareandServicesSegmentMember 2017-11-01 2018-10-31 0000936395 us-gaap:OperatingSegmentsMember cien:PlatformSoftwareandServicesSegmentMember 2016-11-01 2017-10-31 0000936395 cien:AttMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2016-11-01 2017-10-31 0000936395 cien:VerizonMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2018-11-01 2019-10-31 0000936395 cien:WebscaleProviderMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2018-11-01 2019-10-31 0000936395 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2018-11-01 2019-10-31 0000936395 cien:VerizonMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2017-11-01 2018-10-31 0000936395 cien:VerizonMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2016-11-01 2017-10-31 0000936395 cien:AttMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2018-11-01 2019-10-31 0000936395 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2017-11-01 2018-10-31 0000936395 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2016-11-01 2017-10-31 0000936395 cien:AttMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2017-11-01 2018-10-31 0000936395 country:US 2019-10-31 0000936395 country:US 2018-10-31 0000936395 country:CA 2019-10-31 0000936395 cien:OtherInternationalMember 2018-10-31 0000936395 country:CA 2018-10-31 0000936395 cien:OtherInternationalMember 2019-10-31 0000936395 cien:DefinedContributionPensionPlanCanadaMember 2016-11-01 2017-10-31 0000936395 cien:DefinedContributionPensionPlanCanadaMember 2018-11-01 2019-10-31 0000936395 cien:DefinedContributionPensionPlanCanadaMember 2017-11-01 2018-10-31 0000936395 cien:DefinedContributionProfitSharingPlanMember 2018-11-01 2019-10-31 0000936395 cien:DefinedContributionProfitSharingPlanMember 2017-11-01 2018-10-31 0000936395 cien:DefinedContributionProfitSharingPlanMember 2016-11-01 2017-10-31 0000936395 us-gaap:GrantMember 2017-02-20 2019-10-31 0000936395 cien:RestructuredFacilitiesAndUnfavorableLeaseMember 2018-11-01 2019-10-31 0000936395 cien:RestructuredFacilitiesAndUnfavorableLeaseMember 2017-11-01 2018-10-31 0000936395 cien:RestructuredFacilitiesAndUnfavorableLeaseMember 2016-11-01 2017-10-31 0000936395 us-gaap:GrantMember 2018-11-01 2019-10-31 0000936395 us-gaap:SubsequentEventMember 2019-12-16 0000936395 us-gaap:SubsequentEventMember 2019-11-01 2019-12-16 xbrli:shares iso4217:USD xbrli:shares iso4217:USD cien:segment xbrli:pure cien:employee cien:period iso4217:CAD cien:government_entity cien:region

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the fiscal year ended
October 31, 2019
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from                    to                    
Commission file number 001-36250
Ciena Corporation
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
7035 Ridge Road, Hanover, MD
(Address of principal executive offices)

 
23-2725311
(I.R.S. Employer
Identification No.)
21076
(Zip Code)
Registrant’s telephone number, including area code: (410) 694-5700
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
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer


Smaller reporting company
 
 
 
 
 
 
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) YES NO þ
The aggregate market value of the registrant’s Common Stock held by non-affiliates of the registrant was approximately $6.0 billion based on the closing price of the Common Stock on the New York Stock Exchange on May 3, 2019.
The number of shares of registrant’s Common Stock outstanding as of December 16, 2019 was 154,054,072.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of the Form 10-K incorporates by reference certain portions of the registrant’s definitive proxy statement for its 2020 Annual Meeting of Stockholders to be filed with the Commission not later than 120 days after the end of the fiscal year covered by this report.



CIENA CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED OCTOBER 31, 2019
TABLE OF CONTENTS
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




2


PART I
Cautionary Note Regarding Forward-Looking Statements

This annual report contains statements that discuss future events or expectations, projections of results of operations or financial condition, changes in the markets for our products and services, trends in our business, business prospects and strategies and other “forward-looking” information. In some cases, you can identify “forward-looking statements” by words like “may,” “will,” “can,” “should,” “could,” “expects,” “future,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “projects,” “targets,” or “continue” or the negative of those words and other comparable words. These statements may relate to, among other things, our competitive landscape; market conditions and growth opportunities; factors impacting our industry and markets; factors impacting the businesses of network operators and their network architectures; adoption of next-generation infrastructures that are more open, programmable and automated; our strategy, including our research and development, supply chain and go-to-market initiatives; efforts to increase application of our solutions in customer networks and to increase the reach of our business into new or growing customer and geographic markets; our backlog and seasonality in our business; expectations for our financial results, revenue, gross margin, operating expense and key operating measures in future periods; the adequacy of our sources of liquidity to satisfy our working capital needs, capital expenditures and other liquidity requirements; business initiatives including information technology (“IT”) transitions or initiatives; the impact of the Tax Cuts and Jobs Act (the “Tax Act”) and changes in our effective tax rates; and market risks associated with financial instruments and foreign currency exchange rates. These statements are subject to known and unknown risks, uncertainties and other factors, and actual events or results may differ materially due to factors such as: 
    
our ability to execute our business and growth strategies;
fluctuations in our revenue, gross margin and operating results and our financial results generally;
the loss of any of our large customers, a significant reduction in their spending, or a material change in their networking or procurement strategies;
the competitive environment in which we operate; 
market acceptance of products and services currently under development and delays in product or software development;
lengthy sales cycles and onerous contract terms with communications service providers, Web-scale providers and other large customers;
product performance or security problems and undetected errors;
our ability to diversify our customer base and to broaden the application for our solutions in communications networks;
the level of growth in network traffic and bandwidth consumption and the corresponding level of investment in network infrastructures by network operators;
the international scale of our operations;
fluctuations in currency exchange rates;
our ability to forecast accurately demand for our products for purposes of inventory purchase practices;
the impact of pricing pressure and price erosion that we regularly encounter in our markets; 
our ability to enforce our intellectual property rights, and costs we may incur in response to intellectual property right infringement claims made against us;
the continued availability, on commercially reasonable terms, of software and other technology under third-party licenses;
the potential failure to maintain the security of confidential, proprietary or otherwise sensitive business information or systems or to protect against cyber attacks;
the performance of our third-party contract manufacturers;
changes or disruption in components or supplies provided by third parties, including sole and limited source suppliers;
our ability to manage effectively our relationships with third-party service partners and distributors;
unanticipated risks and additional obligations in connection with our resale of complementary products or technology of other companies;
our exposure to the credit risks of our customers and our ability to collect receivables;
modification or disruption of our internal business processes and information systems;
the effect of our outstanding indebtedness on our liquidity and business;
volatility and uncertainty in our stock price, the capital markets and our ability to access the capital markets to raise capital;
unanticipated expenses or disruptions to our operations caused by restructuring activities;
our ability to attract and retain experienced and qualified personnel;

3


disruptions to our operations caused by strategic acquisitions and investments or the inability to achieve the expected benefits and synergies of newly-acquired businesses;
our ability to commercialize and grow our software business and address networking strategies including software-defined networking and network function virtualization;
changes in, and the impact of, government regulations, including with respect to: the communications industry generally; the business of our customers; the use, import or export of products; and the environment, potential climate change, and other social initiatives;
future legislation or executive action in the U.S. or foreign countries relating to trade regulation, including the imposition of tariffs and duties;
the impact of the Tax Act, changes in tax regulations and related accounting, and changes in our effective tax rates;
the write-down of goodwill, long-lived assets, or our deferred tax assets;
our ability to maintain effective internal controls over financial reporting and liabilities that result from the inability to comply with corporate governance requirements; and
adverse results in litigation matters.    

These are only some of the factors that may affect the forward-looking statements contained in this annual report. For a discussion identifying additional important factors that could cause actual results to vary materially from those anticipated in the forward-looking statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in this annual report. You should review these risk factors for a more complete understanding of the risks associated with an investment in our securities. However, we operate in a very competitive and rapidly changing environment and new risks and uncertainties emerge, are identified or become apparent from time to time. We cannot predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this annual report. You should be aware that the forward-looking statements contained in this annual report are based on our current views and assumptions. We undertake no obligation to revise or update any forward-looking statements made in this annual report to reflect events or circumstances after the date hereof or to reflect new information or the occurrence of unanticipated events, except as required by law. The forward-looking statements in this annual report are intended to be subject to protection afforded by the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Unless the context requires otherwise, references in this annual report to “Ciena,” the “Company,” “we,” “us” and “our” refer to Ciena Corporation.

Item 1. Business
Overview
We are a networking systems, services and software company, providing solutions that enable a wide range of network operators to deploy and manage next-generation networks that deliver services to businesses and consumers. We provide hardware, software and services that support the transport, switching, aggregation, service delivery and management of video, data and voice traffic on communications networks. Our solutions are used by communications service providers, cable and multiservice operators, Web-scale providers, submarine network operators, governments, enterprises, research and education institutions and other emerging network operators.
Our solutions include our portfolio of Networking Platforms, including our Converged Packet Optical and Packet Networking products, that can be applied from the network core to end user access points, and that allow network operators to scale capacity, increase transmission speeds, allocate traffic and adapt dynamically to changing end-user service demands. We offer Platform Software that provides management and domain control of our hardware solutions and automates network lifecycle operations, including provisioning equipment and services. Through our Blue Planet® Automation Software, we enable network providers to use network data, analytics and policy-based assurance to achieve closed loop automation across multi-vendor and multi-domain network environments, streamlining key business and network processes. To complement our hardware and software products, we offer a broad range of services that help our customers build, operate and improve their networks and associated operational environments.
We refer to our complete portfolio vision as the Adaptive Network™. The Adaptive Network emphasizes a programmable network infrastructure, software control and automation capabilities, and network analytics and intelligence. By transforming network infrastructures into a dynamic, programmable environment driven by automation and analytics, network operators can realize greater business agility, dynamically adapt to changing end user service demands and rapidly introduce new revenue-generating services. They can also gain valuable real-time network insights, allowing them to optimize network operation and maximize the return on their network infrastructure investment.

4


Corporate Information and Access to SEC Reports
We were incorporated in Delaware in November 1992 and completed our initial public offering on February 7, 1997. Our principal executive offices are located at 7035 Ridge Road, Hanover, Maryland 21076. Our telephone number is (410) 694-5700, and our website address is www.ciena.com. We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, available free of charge in the “Investors” section of our website as soon as reasonably practicable after we file these reports with the Securities and Exchange Commission (the “SEC”). We routinely post these reports, recent news and announcements, financial results and other important information about our business on our website at www.ciena.com. Information contained on our website is not a part of this annual report.
Industry Background
Network Traffic Growth and Increased Capacity Requirements
The markets in which we sell have seen significant changes in recent years. Optical networks – which carry video, data and voice traffic by encoding digital information on multiple wavelengths of light traveling across fiber optic cables – have experienced strong traffic growth. This network traffic growth is being driven by a diverse set of communications services that often require on-demand service levels by their enterprise and consumer end users:
Cloud-Based Services. Enterprises and consumers continue to replace locally-housed computing and storage by adopting a broad array of innovative cloud-based models – including Platform as a Service (PaaS), Software as a Service (SaaS) and Infrastructure as a Service (IaaS) – and an expanding range of cloud-based services that host key applications, store data, enable the viewing and downloading of content and utilize on-demand computing resources.
Over-the-Top (“OTT”) Services and Video Streaming. OTT content refers to video, multimedia and other applications provided directly from the content source to the viewer or end user across a third-party network. Traffic from streaming and OTT services, including high definition and ultra-high definition video, has expanded with the increased availability of, and end-user demand for, video content accessible through a variety of devices and media.
Mobile Traffic and Applications. Traffic from mobile web applications, including video, internet and data services, has expanded with the proliferation of smartphones and other wireless devices. Because much of wireless traffic ultimately travels across a wireline network to reach its destination, growth in mobile communications continues to place demands upon wireline networks, including the backhaul and fronthaul portions of networks emanating from cell sites.
Emerging services and applications are further impacting or expected to impact network infrastructures, particularly at the edge of networks, where increased computing power and automation are required to meet the quality of experience required by end users. These include:
5G Mobile Networks. Fifth-generation wireless broadband (“5G”) technology is expected to drive meaningful increases in bandwidth and performance, enabling emerging applications and services that 4G/LTE networks cannot support. To fully capitalize on these opportunities, network operators will need to consider the demands 5G technology will place on their wireline infrastructures.
Fiber Deep. Fiber deep is a network densification initiative by cable and multiservice operators that seeks to push more digital fiber-closer to the end-user and to increase potential bandwidth, computing capability and data speeds to homes and enterprises, while at the same time decreasing power, space and operating costs.
Internet of Things (“IoT”). As networked connections between devices and servers grow, machine-to-machine-related traffic (“M2M”) is expected to represent an increasing portion of traffic. These connections allow sharing of data that can be monitored and analyzed, including in smart grid applications, health care and safety monitoring, resource and inventory management, home entertainment, consumer appliances, connected transportation and other M2M data applications.
Ultra-High Definition Video (“UHD”) and Virtual Reality (“VR”) and Augmented Reality (“AR”). UHD video and the advent of immersive technologies like VR, AR and 360° video are likely to place further capacity and capability demands on networks as adoption of these technologies grows. Consumer electronics industries are rapidly advancing these technologies and making them more widely available and affordable to consumers.
Edge Computing. Immersive cloud services and gaming using AR and VR technologies require a low latency environment to provide the required user experience. We expect network operators to increase the number and

5


capabilities of edge computing locations to allow these latency-sensitive workloads to be processed closer to users, which may effect network topologies and traffic patterns.
Machine Learning (“ML”) and Artificial Intelligence (“AI”). As broad foundational technologies that increase network intelligence and improve automation, ML and AI enable improvements in network planning, operations, user experience and trouble resolution. Adoption of these technologies, expected to continue to increase as the IoT expands and additional services are created, can be expected to be a driver of further network traffic and solutions innovation.
We believe that increased adoption of these services and applications and their performance requirements will further increase network traffic and place additional service challenges on network infrastructures.
Transition to Programmable Automated Networks
Many networks are still predominately fixed in nature and are generally managed through legacy provisioning, inventory management, planning and fulfillment systems. To address growing service demands and better manage network costs, network operators are looking to adopt next-generation infrastructures that are programmable in real-time, can be accessed and configured via common open interfaces, and are better capable of leveraging data for automation.  To bridge the gap between the operational realities of today and the more responsive and adaptive network infrastructures of the future, we expect network operators to pursue strategies that include additional hardware programmability and software-centric strategies that emphasize one or more of the following:
Closed Loop Automation. Network operators are seeking to reduce network operating costs and better leverage analytics, automation and control capabilities to automate end-to-end service creation and delivery. Closed loop automation is a continuous cycle of communications between the network hardware infrastructure and software elements to analyze network conditions, traffic demands, and resource availability and to determine the best placement of traffic for optimal service quality and resource utilization.
Software-Defined Networking (“SDN”). SDN seeks to simplify networks to create more open environments that ease management, support automation and quickly deliver customized services to end users, by enabling individual network elements to be directly programmable by standards-based software control. This results in end-to-end visibility of network flows, enabling the optimization of traffic paths and the control of data flows through a network.
Network Function Virtualization (“NFV”). NFV is the separation of network services or capabilities from the physical network assets that traditionally provide these services or capabilities to end users. Network operators are increasingly looking for solutions like NFV, which enables network functions through software that runs on industry-standard servers and network and storage platforms, in order to reduce their dependence on single-purpose hardware and accelerate the time to market for new revenue-generating services.
We believe that adoption of these strategies will require network operators and their network solutions vendors to increasingly look to utilize an ecosystem of physical and virtual network resources. We expect that these network architectural approaches, in turn, will drive increased openness and interoperability of multi-vendor, multi-domain network environments, requiring an increased degree of cooperation, collaboration and interoperability among solutions providers.
Industry Consolidation
Our industry has experienced significant consolidation in recent years among our competitors, customers and suppliers alike. To drive scale and market share gains and meet the intense investment capacity required to keep pace with technology innovation, acquisition activity among competing vendors of networking solutions has increased. Among our customers, there have been significant horizontal and vertical consolidation activities by service providers and cable operators, with several such operators acquiring media and content companies. Customer consolidation can increase purchasing power and has in the past resulted in delays or reductions in network spending due to changes in strategy or leadership, the timing of regulatory approvals and debt burdens associated with such transactions. Further, significant consolidation among component suppliers may reduce the number of independent suppliers and could disrupt our supply chain and adversely impact pricing. Consolidation activity across our industry can create opportunities and challenges for our business. We expect this trend to continue and it may have a significant impact on the entire industry, including the competitive landscape, the range of sales opportunities for vendors and their supply chains.
Different Approaches to Design and Procure Network Infrastructure Solutions
Traditionally, network operators looked to purchase fully integrated network solutions including hardware, software and services from the same vendor. Today, network operators are pursuing a diverse range of approaches, or “consumption models,”

6


in their design and procurement of network infrastructure solutions. In addition to the traditional approach, new consumption models include the procurement or use of:
a fully integrated hardware solution from one vendor with the separate use of a network operator’s own software or another vendor’s SDN-based control;
integrated photonic line systems with open interfaces from one vendor and the separate or “disaggregated” procurement of modem technology from a different vendor; and
open source software in concert with or as an alternative to integrated, proprietary third-party software solutions.
Network operators, including certain of our largest customers, are also pursuing the development and use of published reference designs and open source specifications for the procurement of off-the-shelf or commoditized hardware (often referred to as “white box” hardware). This commoditized hardware could be used with in-house developed data path and control software or third-party developed network operating software. Further, a number of network operators are pursuing network strategies that emphasize the deployment of smaller form factor, pluggable modem technology, typically in a switch or router platform, as an alternative to integrated optical platforms.
The consumption models that ultimately emerge and their level of adoption will depend in significant part on the circumstances and strategies of certain network operators. We expect that continued customer consideration of a variety of consumption models will require network operators and vendors alike to assess, and possibly broaden, their offerings and commercial models over time, thereby placing a premium on a vendor’s ability to provide robust network solutions with the maximum amount of flexibility and choice.
Strategy
Our strategy is to leverage our technology leadership, diversify our business, expand our addressable markets, and drive the profitable growth of our business. Key elements of this strategy include:
Extend Innovation Leadership and Grow our Core Business. We are focused on using our significant research and development investment capacity to push the pace of innovation in our markets and provide market-leading offerings that promote our Adaptive Network vision through further advances in programmable hardware, analytics, and control and automation. In fiscal 2020, we expect to bring to market our fifth-generation coherent modem technology capable of delivering 800 gigabits of capacity per second over a single wavelength and to make this technology available in certain Converged Packet Optical platforms. We are focused on growing our optical and packet infrastructure business by addressing fast-growing markets and applications, including data center interconnection, packet aggregation and switching, network densification including 5G and fiber deep, and access networks and submarine networks. We are introducing Packet Networking solutions with enhanced IP/Ethernet capabilities that enable our Adaptive Network vision and expand our addressable market into additional applications and layers of the network. We are also focused on growing our attached services business to include broader service offerings and engagements involving network migration and optimization and multivendor network integration.
Increase Adoption of Blue Planet Automation Software Platform for Intelligent, Closed Loop Automated Networks. We seek to promote broader adoption of our Blue Planet Automation Software, highlighting its ability to transform network operations and management, reduce the need for manual intervention in key operational processes, and enable closed loop automation of networks as part of our Adaptive Network vision. In so doing, we believe that Blue Planet can help transform legacy networks into “service ready” networks, accelerating the creation, delivery and lifecycle management of new, cloud-based services. We are also investing in Blue Planet-related services and seek to use insights from common business, operational and networking challenges to position Blue Planet as the means by which to achieve the digital network transformation sought by our customers.
Embrace Multiple Consumption Models and Promote Choice. As network operators pursue diverging consumption models, our strategy is to offer a range of networking solutions across those models to drive the evolution of next-generation network infrastructures and to promote choice in our markets. We are currently seeking to make our technology available in both integrated systems and pluggable form factors that address the range of technical and economic requirements of network operators pursuing differing consumption models. Specifically, we are currently pursuing two distinct product development paths for our next-generation coherent optical chipset to enable this range of solutions. Separately, through our Optical Microsystems business we are pursuing sales opportunities that leverage our WaveLogic® technology as a “merchant modem” – the combination of an optical chipset or application-specific integrated circuit (ASIC) with other key optical components and sold independently of integrated systems. Merchant modem vendors often sell their modem technology in the form of an optical module or pluggable to a variety of market participants, including other original equipment manufacturers with whom we compete. By addressing multiple consumption models, we seek to secure a larger portion of the world’s optical network wavelengths, expand our addressable market and access new customer verticals and applications. We expect this may require us

7


to continue to broaden our existing product offering beyond traditional hardware systems and to expand our commercial models over time.
Focus Diversification on High-Growth Applications and Customer Segments. We believe that the continued diversification of our business is important to address the dynamic industry environment in which we operate, to continue to grow our business, and to better withstand potential slowdowns adversely affecting particular geographies, markets or customer segments. Our strategy is to continue to diversify our solutions offerings, customer base and geographic reach to address fast-growing applications and markets. Our go-to-market strategy seeks to capture additional market share with existing customers and emerging network operators, and to displace competitors, particularly in international markets.
Customers and Markets
We sell our product and service solutions through direct and indirect sales channels to network operators in the following customer and market segments:
Communications Service Providers. Our communications service provider customers, including regional, national and international wireline and wireless carriers, form our historical customer base and represent a majority of our revenue.
Web-scale Providers. Our “Web-scale” provider customers – also often referred to in the market as hyper-scale providers – include internet content providers and providers of internet services and infrastructure including data centers, cloud networking, storage infrastructure and web hosting services. These providers are focused on applications such as search, social media, video, real-time communications and cloud-based service offerings, as well as other emerging network services. As significant purchasers of capacity on submarine networks and from communications service providers on a global basis, these customers can also influence networking solution alternatives by those network operators.
Cable and Multiservice Operators (MSO). Our customers include regional, national and international cable and multiservice operators.
Submarine Network Operators. Our customers include service providers, Web-scale providers and consortia operators of submarine communications networks across the globe.
Enterprises. Our enterprise customers include large, multi-site commercial organizations, including participants in the financial, health care, transportation, utilities, energy and retail industries.
Government, Research and Education. Our government customers include federal and state agencies in the United States as well as international government entities. Our research and education customers include research and education institutions around the world, as well as communities or consortia, including leaders in research, academia, industry and government.
A significant portion of our revenue is concentrated among a small number of customers. See the related discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Consolidated Results of Operations – Fiscal 2019 Compared to Fiscal 2018 – Revenue” in Item 7 of this annual report, which discussion is incorporated herein by reference.
Products and Services
Networking Platforms
Our Networking Platforms segment consists of our Converged Packet Optical and Packet Networking portfolios.
Converged Packet Optical. Our Converged Packet Optical portfolio includes a range of hardware networking solutions that use our WaveLogic coherent optical technology and are optimized for the convergence of coherent optical transport, Optical Transport Network (“OTN”) switching and packet switching.
Our 6500 Packet-Optical Platform provides a flexible and scalable dense wavelength division multiplexing (“DWDM”) solution that adds capacity to core, regional, metro and submarine networks and enables efficient transport at high transmission speeds. This platform provides leading coherent wavelength capacities, from 40G to 400G, along with multi-layer control plane capabilities for scale and service differentiation. This platform, which includes several chassis sizes and a comprehensive set of line cards optimized for individual services or applications, can be used throughout the network, from customer premises to metropolitan networks, regional and core networks, and submarine cable landing sites.

8


Our Waveserver® family of products consists of stackable interconnect platforms that allow network operators to scale bandwidth and support high-bandwidth interconnect applications, such as high-speed data transfer, content delivery, virtual machine migration and disaster recovery/backup between data centers. Waveserver is a specialized, compact platform that is purpose-built for addressing data center and other space-constrained environments using a small footprint and low power design. With its management interfaces and open APIs, Waveserver is easy to operate and integrate into existing networks and facilitates deployment of on-demand cloud and high-capacity connectivity services.
Our 6500 Reconfigurable Line System (RLS) is a compact, simple-to-deploy, photonic layer solution that improves scalability, reduces footprint, and offers more flexibility and programmability. Its applications include long-haul and metro data center interconnection and metro and access network modernization and simplification. It provides highly dense remote optical add drop multiplexing features and amplifier configurations enabling network operators to react to unpredictable traffic requirements by scaling connectivity and capacity.
Our 5400 family of Packet-Optical Platforms consist of multi-terabit reconfigurable switching systems that consolidate the functionality of an add/drop multiplexer and a digital cross-connect into a single, high-capacity intelligent switching system. These products address both core and metro segments of communications networks and support key managed services, including Ethernet/TDM Private Line and IP services. These products provide for optical transport, traffic aggregation at the network edge and switching that are optimized for handoff at the network core.
Our entrance into the market for merchant modem opportunities is in the early stages and, as such, revenue has not been significant to date. Sales of our Optical Microsystems products are reflected within the Converged Packet Optical product line of our Networking Platforms segment.
Packet Networking. Our Packet Networking products allow customers to simplify their network designs while delivering new, revenue-generating services. These products target applications primarily from the access to metro networks, where they aggregate and switch packet-based traffic to support such applications as Ethernet business services, mobile backhaul services, and fiber deep, as well as ongoing network infrastructure scaling. Our Packet Networking products form a key element of our Adaptive IP solution, which leverages the Adaptive Network vision and our Blue Planet Automation Software to deliver end-to-end IP-based services in a more simplified and modular manner than traditional router-based IP network designs. Adaptive IP at the programmable infrastructure layer is built upon the latest generation of our Service Aware Operating System (SAOS) within our Packet Networking platforms, which adds IP capabilities targeted towards 5G, IP VPN services and fiber deep applications. Our Packet Networking products enable operators to achieve improved network cost effectiveness, including reduced costs associated with power and space, as compared to more complex, traditional IP routing network designs.
Our 3900 family of Service Delivery Platforms and our 5000 family of Service Aggregation Platforms support network access and aggregation and have been principally deployed to support business services and wireless backhaul applications. Our 3900 family of platforms are purpose-built to fit small, medium and large customer sites as well as multi-tenant office and residential buildings and allow customers to migrate toward software-based networking and services based on Network Function Virtualization. Our 5100 family provides aggregation to fill higher capacity links within both the metro access and aggregation tiers of networks, allowing operators to reduce the number of router assets required in the core.
Our 6500 Packet Transport System (“PTS”) combines packet switching, control plane operation and integrated optics. Together with our 3900 platforms, PTS enables our service provider customers to migrate their legacy TDM (SONET/SDH/PDH) services to a scalable, lower operational cost packet solution.
Our Packet Networking portfolio also includes our 8700 Packetwave Platform, a multi-terabit packet switching platform for high-density metro networks and inter-data center wide area networks. The 8700 combines packet switching and coherent WaveLogic DWDM optical transport technologies for both data center networks and metro networks.
Blue Planet Automation Software and Services
Our Blue Planet Automation Software is a comprehensive, micro-services, standards-based open software suite that allows service providers to drive optimization and increased automation of their network and IT infrastructures, accelerating delivery of services, reducing costs and enabling a more predictive, autonomous network. A number of applications can be deployed on this software platform, either individually or in any combination, including:
Multi-Domain Service Orchestration (MDSO). Network infrastructures are comprised of multiple technology layers and domains – such as the data center, cloud, metro, access and core networks – and it is often complex for network operators to offer end-to-end services in this environment. Blue Planet enables service orchestration across multiple

9


physical and virtual network domains, multiple layers (Optical, Ethernet, IP and Mobile) and multiple hardware and software vendors.
Inventory (“BPI”). By integrating or “federating” data from multiple inventory systems and presenting it in a single dynamic view, BPI allows real-time visibility into the topology and status of network and service resources from end to end. Integrating with legacy operation support systems (“OSS”), BPI helps network providers simplify key operational processes such as service fulfillment, network planning and service assurance.
Route Optimization and Analysis (“BP ROA”). BP ROA combines routing, traffic and performance analytics for real-time monitoring of IP services across the cloud. These capabilities enable troubleshooting of latent or transient network problems and modeling to predict the impact of network infrastructure, service and workload changes to build more resilient networks.
NFV Orchestration (“NFVO”). Blue Planet provides NFV management and orchestration capabilities for creating and managing virtualized network functions and data center resources. NFVO uses an open, vendor-agnostic approach that allows network operators to select and scale those virtual network functions (VNFs) they wish to offer to customers.
Unified Assurance & Analytics (“UAA”). UAA leverages multi-layer/multi-domain assurance and AI-powered analytics to provide insights into the health and performance of network resources and services, ensuring an end customer quality-of-experience and availability to meet dynamic service demands.
Blue Planet Services. To complement our software portfolio, we offer a range of related services that include professional services for solution customization and OSS integration, software and solution support services, consulting and design, and technical support relating to our software offerings. These services are focused on enhancing network automation and network analytics, enabling multi-vendor integration and support, and implementing programmable multi-domain next-generation networks.
The Blue Planet portfolio when used together allows operators to fulfill services rapidly and to meet end-customer quality-of-experience expectations via entire services lifecycle approach, thus accelerating network operators towards their vision of self-healing and self-optimizing closed loop automation. Our entrance into the market relating to these software automation capabilities is in the early stages and, as such, revenue from our Blue Planet Automation Software and Services segment remains a small portion of our total revenue.
Platform Software and Services
Our software offerings also include our Platform Software, which provides domain control management, analytics, data and planning tools to assist customers in managing our Networking Platforms products in their networks. Our Platform Software includes:
Manage, Control and Plan (“MCP”). MCP software provides SDN-based domain control of our next-generation packet and optical networks, unifying fault, configuration, accounting, performance and security (FCAPS) management of our multi-layer network infrastructure, with service management and online network planning. MCP integrates with and simplifies network operators’ business processes and lifecycle operations – including equipment commissioning, service provisioning, assurance and performance monitoring.
OneControl Unified Management System. OneControl is an integrated network and service management solution that supports certain of our Networking Platform products. OneControl offers end-to-end service creation, activation and assurance, and visualization of performance information for network health status. OneControl enables management functions, including network inventory, network element configuration backup, software delivery and security administration.
Platform Software Services. To complement our Platform Software portfolio, we offer a range of related services that include software subscription services, consulting, network migration and integration, installation and upgrade support services, and technical support relating to our Platform Software offerings. These services are focused on enabling our customers to operate their Ciena networks most efficiently, and to modernize their operations.
Our Platform Software offering also includes planning tools and a number of legacy software solutions that support our installed base of network solutions. As we achieve further customer adoption of our MCP software platform and we transition features, functionality and customers to this platform, we expect revenue to decline for our legacy Platform Software solutions.

10


Global Services
To complement our Networking Platforms portfolio, we offer a broad suite of value-added services that help our customers to build, improve and operate their networks. We believe that our broad set of services offerings is a significant differentiator from our competitors. We believe that our services offerings and our close collaboration with our customers provide us with valuable insight into the network and business challenges they face, allowing us to provide services to meet their desired business outcomes. We have undertaken a multi-year transformation process to enhance our service delivery capability, streamline our services cost structure and portfolio, and include additional advanced networking services and multivendor service capabilities. Through these transformation initiatives, we believe we can improve the cost model of our services and drive greater business value for our customers.
Our Global Services portfolio includes a range of offerings to meet customer needs and maximize their network infrastructure investment throughout the network lifecycle. These include:
Build. Services that ensure proper planning, design, installation, deployment and implementation of communications networks;
Improve. Services that maintain and support network infrastructures and consulting and network design services to enhance network performance or migrate to next generation infrastructures; and
Operate. Services that maintain or monitor network infrastructure operations.
We also provide a portfolio of training services and provide these and the services above using a combination of our internal services resources, technical support engineers, and qualified and authorized third-party service partners.
Product Development
To remain competitive, we must continually invest in and enhance our solutions offerings, adding new features and functionality and ensuring alignment with market demand. Our product development efforts seek to design and bring to market solutions that promote our Adaptive Network vision through further advances in programmable hardware, analytics, and control and automation. Through our development efforts, we seek to enable network operators to achieve improved economics and return on their network infrastructure investment, including with respect to price for performance, power consumption, space requirements and lifecycle operating costs. Our approach is also focused on designing products that address a range of emerging consumption models for networking solutions. Our current development efforts are focused upon:
Reinforcing our coherent optical leadership with continued development that advances reach, transmission speed and spectral efficiency, while minimizing power usage, space and network element requirements;
Executing on parallel innovation paths for the next generation of our modem technology – WaveLogic 5 Extreme (WL5e) and WaveLogic 5 Nano (WL5n) – to address customer requirements ranging from integrated systems to pluggable form factors;
IP/Ethernet-based Packet Networking solutions to support mobile network traffic and network densification initiatives, such as 5G and fiber deep;
Converging packet-based IP and optical network infrastructure to improve network economics and scale, and to enable new services;
Pursuing pluggable and optical module development initiatives to support our optical microsystems business;
Migrating legacy services to next-generation packet infrastructures;
Advancing our software-based domain control, automation and analytics with MCP; and
Integrating the organic and acquired elements of our Blue Planet Automation Software to enable closed loop automation.
Our research and development efforts are also geared toward portfolio optimization and engineering changes intended to drive product and manufacturing cost reductions across our platforms.
We regularly review our existing solutions offering and prospective development of new components, features or products, to determine their fit within our portfolio and broader corporate strategy. We also assess the market demand, technology evolution, prospective return on investment and growth opportunities, as well as the costs and resources necessary to develop and support these products. To ensure that our product development investments and solutions offerings are closely aligned with market demand, we continually seek input from customers and promote collaboration among our product development, marketing and sales organizations. In some cases, where we seek to utilize or gain access to complementary or emerging technologies or solutions, we may obtain technology through an acquisition or, alternatively, through initiatives with third

11


parties pursuant to technology licenses, original equipment manufacturer (OEM) arrangements and other strategic technology relationships or investments. In addition, we participate in industry and standards organizations and, where appropriate, incorporate information from these affiliations throughout the product development process.
Sales and Marketing
Our Global Sales and Marketing organization includes a direct sales presence that is organized geographically around the following markets: (i) United States and Canada (“North America”); (ii) Caribbean and Latin America (“CALA”); (iii) Europe, Middle East and Africa (“EMEA”); and (iv) Asia Pacific, Japan and India (“APAC”). Within each geographic area, we maintain specific teams or personnel that focus on a particular region, country, customer or market vertical. These teams include sales management, account salespersons and sales engineers, as well as services professionals and commercial management personnel, who ensure that we maintain a high-touch, consultative relationship with our customers.
We also maintain a global partner program that involves resellers, systems integrators, service providers and other third-party distributors who market and sell our products and services. We utilize these third-party channel partners to market and sell our solutions into specific geographies, applications or customer verticals. We see opportunities to leverage these relationships to expand our addressable market, while at the same time reducing the financial and operational risk of entering additional markets. For third parties in our Ciena Partner Network, we maintain a code of conduct that is available on our website and that sets forth our expectations for the high standards of ethical and legally compliant conduct we require of them in supporting our business.
To support our sales efforts, we engage in marketing activities to generate demand for our products and services. Our marketing strategy is highly focused on building our brand to create customer preference for Ciena, engaging in thought leadership programs to illustrate how our innovations solve customer business problems, and enabling our sales teams to drive customer adoption of our solutions. Our marketing team supports our sales efforts through a variety of activities, including direct customer interaction, account-based marketing campaigns, portfolio marketing, industry events, media relations, industry analyst relations, social media, trade shows, our website and other marketing vehicles for our customers and channel partners.
Operations and Supply Chain Management
Our operations personnel manage the relationships with our third-party manufacturers and global supply chain, addressing component sourcing, manufacturing, product testing and quality, and fulfillment and logistics relating to the distribution and support of our products.
We utilize a sourcing strategy that emphasizes global procurement of materials and product manufacturing in lower cost regions. We rely upon third-party contract manufacturers, with facilities in Canada, Mexico, Thailand and the United States, to manufacture, support and ship our products, and therefore are exposed to risks associated with their businesses, financial condition and the geographies in which they operate, including political risk and changes in tax and trade policy involving such countries. We also rely upon contract manufacturers and other third parties to perform design and prototype development, component procurement, full production, final assembly, testing and distribution operations. Our manufacturers procure components necessary for assembly and manufacture of our products based on our specifications, approved vendor lists, bills of materials and testing and quality standards. Our manufacturers’ activity is based on rolling forecasts that we provide to them to estimate demand for our products. We work closely with our manufacturers and suppliers to manage material, quality, cost and delivery times, and we continually evaluate their services to ensure performance on a reliable and cost-effective basis. Generally, our agreements with our supply chain and contract manufacturers are frame agreements against which we place purchase orders and do not represent long-term commitments.
We currently use distribution partners to fulfill and deliver our products. We believe that our sourcing, manufacturing and distribution strategies allow us to conserve capital, lower costs of product sales, adjust quickly to changes in market demand and operate without dedicating significant resources to manufacturing-related plant and equipment.
As part of our effort to optimize our operations, we continue to focus on driving cost reductions through sourcing, rationalizing our supply chain, outsourcing or virtualizing certain activities, using lower cost geographies, and consolidating distribution sites and service logistics partners. These efforts also include process optimization initiatives, such as vendor-managed inventory, and other operational models and strategies designed to drive improved efficiencies in our sourcing, production, logistics and fulfillment.
We actively work with our third-party vendors and business partners to promote socially responsible business practices within our own business and those within our global supply chain. To that end, we have adopted the principles set forth in the Responsible Business Alliance (“RBA”) Code of Conduct. The RBA Code of Conduct establishes standards to ensure working

12


conditions in the electronics industry supply chain are safe, that workers are treated with respect and dignity, and that business operations are environmentally responsible and conducted ethically. We promote these principles and require our suppliers to adhere to these same standards. Our Corporate Social Responsibility Report, which includes more detail about our efforts to promote responsible business practices, is available on our website.
Backlog
Generally, we make sales pursuant to purchase orders placed by customers under framework agreements that govern the general commercial terms and conditions of the sale of our products and services. These agreements do not obligate customers to purchase any minimum or guaranteed order quantities. Moreover, we are periodically awarded business for new network opportunities or network upgrades following a selection process. In calculating backlog, we only include (i) customer purchase orders for products that have not been shipped and for services that have not yet been performed; and (ii) customer orders relating to products that have been delivered and services that have been performed, but are awaiting customer acceptance under the applicable contract terms. Generally, our customers may cancel or change their orders with limited advance notice, or they may decide not to accept our products and services, although instances of both cancellation and non-acceptance are rare. Backlog may be fulfilled several quarters following receipt of a purchase order, or in the case of certain service obligations, may relate to multi-year support period. As a result, backlog should not necessarily be viewed as an accurate indicator of future revenue for any particular period.
Our backlog was $1.21 billion as of October 31, 2019 as compared to $1.26 billion as of October 31, 2018. Backlog includes product and service orders from commercial and government customers combined. Backlog at October 31, 2019 includes approximately $160.2 million primarily related to orders for products and maintenance and support services that are not expected to be filled or performed within fiscal 2020. Because backlog can be defined in different ways by different companies, our presentation of backlog may not be comparable with figures presented by other companies in our industry.
Seasonality
Like other companies in our industry, we experience quarterly fluctuations in customer activity due to seasonal considerations. We typically experience reductions in order volume toward the end of the calendar year, as the procurement cycles of some of our customers slow and network deployment activity by service providers is curtailed. This period coincides with the first quarter of our fiscal year. This seasonality in our order flows has often resulted in weaker revenue results in the first quarter of our fiscal year. These seasonal effects may not apply consistently in future periods and may not be a reliable indicator of our future revenue or results of operations.
Competition
Competition among networking solution vendors remains intense on a global basis. The markets in which we compete are characterized by rapidly advancing technologies, frequent introduction of new solutions and aggressive selling efforts, including using significant pricing pressure to displace incumbent vendors and capture market share. Competition for sales of networking solutions, including our Networking Platforms and Platform Software and Services, is dominated by a small number of very large, multi-national companies. Our competitors include Huawei, Nokia, Cisco, Juniper Networks and ZTE. As compared to us, many of these competitors have substantially greater financial, operational and marketing resources, significantly broader product offerings and more established relationships with service providers and other customer segments. Because of their scale and resources, they may be perceived to be a better fit for the procurement or network strategies of larger network operators. We also continue to compete with several smaller but established companies that offer one or more products that compete directly or indirectly with our offerings or whose products address specific niches within the markets and customer segments we address. These competitors include Infinera, ADVA and ECI, which recently announced an agreement to be acquired by Ribbon Communications. We also compete with a number of smaller companies that provide significant competition for a specific product, application, service, customer segment or geographic market.
Keeping pace with the market’s demands for technology innovation requires considerable research and development investment capacity. As a result, some of our competitors, both large and small, have chosen to rely upon merchant modem technology developed by and procured from third-party providers, including NTT Electronics (NEL), Inphi and Acacia Communications, which has agreed to be acquired by Cisco. We may compete with these providers, either indirectly as a result of their technology being a key enabling technology for our competitors, or directly in merchant modem sales opportunities.
As we promote our corporate strategy and seek increased customer adoption of our Blue Planet Automation Software, we expect to compete more directly with software vendors, IT vendors, and system integrators. Competitors for our Blue Planet Automation Software include Cisco, Nokia, Amdocs, Netcracker and Ericsson.

13


Across our markets and segments, the principal competitive factors can include:
the ability to meet business needs and drive successful outcomes;
functionality, speed, capacity, scalability and performance of network solutions;
price for performance, cost per bit and total cost of ownership of network solutions;
incumbency and strength of existing business relationships;
ability to offer comprehensive networking solutions, consisting of hardware, software and services;
time-to-market in delivering products and features;
technology roadmap and forward innovation capacity;
company stability and financial health;
flexibility and openness of platforms, including ease of integration, interoperability and integrated management;
ability to offer solutions that accommodate a range of different consumption models;
operating costs, space requirements and power consumption of network solutions;
software and network automation capabilities;
manufacturing and lead-time capability; and
services and support capabilities.
As a result of the intense environment in which we compete, winning new opportunities can often require that we agree to unfavorable commercial terms or pricing and other onerous contractual commitments. In so doing, our expectation is that we can recover or improve the economics of such relationships over time. However, these terms can adversely affect our results of operations in any period. These terms can also lengthen our revenue recognition or cash collection cycles, add start-up costs to initial sales or deployment of our solutions, require financial commitments or performance bonds and place a disproportionate allocation of risk upon us.
Our competitive landscape has been and is likely to continue to be impacted by pending trade and related matters between the U.S. and China. For example, in May 2019, the U.S. Department of Commerce amended the Export Administration Regulations by adding Huawei Technologies Co., Ltd. and certain affiliates to the “Entity List,” resulting in significant new restrictions on export, reexport and transfer of U.S. regulated technologies and products to Huawei. The U.S. has also taken steps to restrict federal agencies from doing business with, and U.S. wireless carriers from using federal subsidies to buy equipment from, Huawei and ZTE. The U.S. has also encouraged other governments to consider similar restrictions. These actions have resulted in escalating tensions between the United States and China and introduce a risk that the Chinese government may take additional steps to retaliate against U.S. industries or companies.
We also expect the competition in our industry to continue to broaden and to intensify as network operators pursue a diverse range of network strategies and consumption models. As these changes occur, we expect that our business will overlap more directly with additional networking solution suppliers, including IP router vendors, data center switch providers and other suppliers or integrators of networking technology traditionally geared toward different network applications, layers or functions.  We may also face competition from system and component vendors, including those in our supply chain, who develop pluggable modem technology or other networking products based on off-the-shelf or commoditized hardware technology, referred to as “white box” hardware, particularly where a customer’s network strategy seeks to emphasize deployment of such product offerings or to adopt a disaggregated approach to the procurement of hardware and software.
Patents, Trademarks and Other Intellectual Property Rights
The success of our business and technology leadership is significantly dependent upon our proprietary and internally developed technology. We rely upon the intellectual property protections afforded by patents, copyrights, trademarks and trade secret laws to establish, maintain and enforce rights in our proprietary technologies and product branding. We regularly file applications for patents and have a significant number of patents in the United States and other countries where we do business. As of December 1, 2019, we had more than 2,000 issued patents and more than 350 pending patent applications worldwide.
Enforcing proprietary rights, especially patents, can be costly, and we cannot be certain that the steps that we are taking will detect or prevent all unauthorized use. The industry in which we compete is characterized by rapidly changing technology, a large number of patents, and frequent claims and related litigation regarding patent and other intellectual property rights. We have been subject to several claims related to patent infringement, and we have been requested to indemnify customers pursuant to contractual indemnity obligations relating to infringement claims made by third parties. Intellectual property infringement assertions could cause us to incur substantial costs, including settlement costs and legal fees in the defense of related actions. If we are not successful in defending these claims, our business could be adversely affected.
Our operating system software, Platform Software, Blue Planet Automation Software and other solutions incorporate software and components under licenses from third parties, including software subject to various open source software licenses.

14


Failure to obtain or maintain such licenses or other third-party intellectual property rights could affect our development efforts and market opportunities, or could require us to re-engineer our products or to obtain alternate technologies. Moreover, there is a risk that open source and other technology licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products.
Environmental Matters
Our business and operations are subject to environmental laws in various jurisdictions around the world, including the Waste Electrical and Electronic Equipment (WEEE) and Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (RoHS) regulations adopted by the European Union (the “EU”). We are also subject to disclosure and related requirements that apply to the presence of “conflict minerals” in our products or supply chain. We seek to operate our business in compliance with such laws relating to the materials and content of our products and product takeback and recycling. Environmental regulation is increasing, particularly outside of the United States, and we expect that our domestic and international operations may be subject to additional environmental compliance requirements, which could require us to incur additional costs. To date, our compliance actions and costs relating to environmental regulations have not resulted in a material cost or effect on our business, results of operations or financial condition.
Our innovation efforts and our environmental sustainability initiatives are closely linked. Our product development efforts focus on innovation leadership that allows network operators to continually “do more with less.” We promote environmental sustainability through our efforts to improve the energy efficiency per gigabit of throughput in our high-performance networking solutions, as well as our initiatives to improve power, space and cooling requirements, and to reduce the total number of network elements required to operate a network. We pursue opportunities to minimize the resource impacts in our product design and sourcing, and to assess and improve efficiencies over the life cycle of our products, including packaging and distribution, and end-of-life reuse, refurbishment, and recycling. We participate in CDP climate change and water disclosures and are a member of the Responsible Business Alliance (“RBA”). We have adopted, and seek to ensure that our key direct suppliers adopt, the standards and principles set forth in the RBA Code of Conduct.
Employees and Human Capital Management
We recognize that industry and innovation leadership depend in critical part on our continued ability to recruit, motivate and retain the talented personnel that make up our global workforce. Competition for qualified personnel in our industry is intense and we maintain a progressive set of programs and initiatives designed to attract, develop and engage our human capital.
In support of these efforts, our Board of Directors oversees management’s design and execution of Ciena’s annual “people strategy.” This strategy seeks to ensure that we continue to have the talent necessary to execute on our strategic imperatives and business plans, and that we have well-aligned programs, initiatives, rewards and recognition, and support to promote these goals. Among other things, our people strategy is focused on:
ensuring competitive, fair and transparent compensation and innovative benefits offerings;
supporting the overall well-being of our employees from a physical, emotional, financial and social perspective;
creating opportunities for employee growth, development, recognition, training and education; and
promoting an inclusive and diverse workplace, where all individuals are respected and feel they belong regardless of their age, race, national origin, gender, religion, disability or sexual orientation.
Because technology is ultimately developed, marketed and sold by people, these initiatives are strategic priorities for our business. As of October 31, 2019, we had a global workforce consisting of 6,383 employees. We have not experienced any work stoppages, and we consider the relationships with our employees to be good.

15


Directors and Executive Officers
The table below sets forth certain information concerning our directors and executive officers:
Name
 
Age
 
Position
Patrick H. Nettles, Ph.D.
 
76

 
Executive Chairman of the Board of Directors
Gary B. Smith
 
59

 
President, Chief Executive Officer and Director
Stephen B. Alexander
 
60

 
Senior Vice President and Chief Technology Officer
Rick L. Hamilton
 
48

 
Senior Vice President, Blue Planet Software
Scott A. McFeely
 
56

 
Senior Vice President, Global Products and Services
James E. Moylan, Jr.
 
68

 
Senior Vice President and Chief Financial Officer
Andrew C. Petrik
 
56

 
Vice President and Controller
Jason M. Phipps
 
47

 
Senior Vice President, Global Sales and Marketing
David M. Rothenstein
 
51

 
Senior Vice President, General Counsel and Secretary
Bruce L. Claflin (1)(3)
 
68

 
Director
Lawton W. Fitt (2)
 
66

 
Director
Patrick T. Gallagher (1)(3)
 
64

 
Director
Devinder Kumar (2)
 
64

 
Director
T. Michael Nevens (2)
 
70

 
Director
Judith M. O’Brien (1)(3)
 
69

 
Director
Joanne B. Olsen (1)(3)
 
61

 
Director
_________________________________
(1)
Member of the Compensation Committee
(2)
Member of the Audit Committee
(3)
Member of the Governance and Nominations Committee

Our Directors hold staggered terms of office, expiring as follows: Ms. O’Brien, Ms. Olsen and Mr. Smith in 2020; Mr. Claflin, Mr. Gallagher and Mr. Nevens in 2021; and Ms. Fitt and Dr. Nettles in 2022. In August 2019, Mr. Kumar was appointed to fill a newly created vacancy in Class I of the Board of Directors. Accordingly, he will stand for election at the 2020 Annual Meeting of Stockholders and, if elected by stockholders, his term of office will expire in 2022.
     Patrick H. Nettles, Ph.D. has served as a Director of Ciena since April 1994 and as Executive Chairman of the Board of Directors since May 2001. From October 2000 to May 2001, Dr. Nettles was Chairman of the Board of Directors and Chief Executive Officer of Ciena, and he was President and Chief Executive Officer from April 1994 to October 2000. Dr. Nettles serves as a Trustee for the California Institute of Technology and the Georgia Tech Foundation, Inc. Dr. Nettles also serves on the board of directors of The Progressive Corporation, a publicly traded company. Dr. Nettles previously served on the boards of directors of Axcelis Technologies, Inc., where he was independent chairman of the board, Apptrigger, Inc., which was formerly known as Carrius Technologies, Inc., and Optiwind Corp.
     Gary B. Smith joined Ciena in 1997 and has served as President and Chief Executive Officer since May 2001. Mr. Smith has served on Ciena’s Board of Directors since October 2000. Prior to his current role, his positions with Ciena included Chief Operating Officer and Senior Vice President, Worldwide Sales. Mr. Smith previously served as Vice President of Sales and Marketing for INTELSAT and Cray Communications, Inc. Mr. Smith also serves on the board of directors of CommVault Systems, Inc., a publicly traded company, and previously served on the board of directors of Avaya Inc. Mr. Smith is a member of the President’s National Security Telecommunications Advisory Committee, the Global Information Infrastructure Commission and the Center for Corporate Innovation (CCI).
     Stephen B. Alexander joined Ciena in 1994 and has served as Chief Technology Officer since September 1998 and as a Senior Vice President since January 2000. Mr. Alexander has previously served as General Manager of Products and Technology and General Manager of Transport and Switching and Data Networking.
Rick L. Hamilton joined Ciena in October 2016 and has served as Senior Vice President, Blue Planet Software since February 2017. Mr. Hamilton is responsible for managing Ciena’s Blue Planet Automation Software and Services portfolio. Mr. Hamilton previously served as Senior Vice President, Global Services & Automation. Prior to joining Ciena, he served as

16


Corporate Vice President, Professional Services for Juniper Networks from January to October 2016. From January 2004 to December 2015, Mr. Hamilton served with Cisco Systems in various services leadership positions, including most recently as Vice President, Cloud & Managed Services.
Scott A. McFeely joined Ciena in March 2010 and has served as Senior Vice President, Global Products and Services since May 2018. Mr. McFeely is responsible for all aspects of Ciena’s networking portfolio including research and development activities relating to its Converged Packet Optical and Packet Networking portfolios, Platform Software and Services, product line management, supply chain operations, and Global Services. From November 2015 to May 2018, Mr. McFeely served as Senior Vice President, Networking Platforms and became an executive officer in February 2017. From March 2010 to October 2015, he served as Vice President, Global Portfolio Management and Business Operations. Mr. McFeely joined Ciena in connection with its acquisition of Nortel’s Metro Ethernet Networks business, with which he spent more than 20 years in a variety of technical and management roles.
James E. Moylan, Jr. joined Ciena in 2007 and has served as Senior Vice President and Chief Financial Officer since December 2007.
     Andrew C. Petrik joined Ciena in 1996 and has served as Vice President, Controller since August 1997. He also served as Treasurer from August 1997 to October 2008.
Jason M. Phipps joined Ciena in 2002 and has served as Senior Vice President, Global Sales and Marketing since February 2017. Mr. Phipps is responsible for Ciena’s global sales organization and its marketing and communications functions. From January 2014 to February 2017, Mr. Phipps served as Vice President and General Manager, North America Sales, during which time he also oversaw the Global Partners & Channels practice, and from March 2011 to December 2013 he served as Vice President, Global Sales Operations. Mr. Phipps has also previously held a number of sales and marketing leadership positions with Ciena.
     David M. Rothenstein joined Ciena in January 2001 and has served as Senior Vice President, General Counsel and Secretary since November 2008. Mr. Rothenstein served as Vice President and Associate General Counsel from July 2004 to October 2008 and previously as Assistant General Counsel.
     Bruce L. Claflin has served as a Director of Ciena since August 2006. Mr. Claflin served as President and Chief Executive Officer of 3Com Corporation from January 2001 until his retirement in February 2006. Mr. Claflin joined 3Com as President and Chief Operating Officer in August 1998. Prior to 3Com, Mr. Claflin served as Senior Vice President and General Manager, Sales and Marketing, for Digital Equipment Corporation. Mr. Claflin also worked for 22 years at IBM, where he held various sales, marketing and management positions, including general manager of IBM PC Company’s worldwide research and development, product and brand management, as well as president of IBM PC Company Americas. Mr. Claflin currently serves on the board of directors of IDEXX Laboratories, Inc., a publicly traded company, where he is the Chairman of the Nominating and Governance Committee. Mr. Claflin previously served on the board of directors of Advanced Micro Devices, Inc. (“AMD”).
     Lawton W. Fitt has served as a Director of Ciena since November 2000. From October 2002 to March 2005, Ms. Fitt served as Director of the Royal Academy of Arts in London. From 1979 to October 2002, Ms. Fitt was an investment banker with Goldman Sachs & Co., where she was a partner from 1994 to October 2002. Ms. Fitt currently serves on the boards of directors of Carlyle Group Management L.L.C. (the general partner of publicly traded The Carlyle Group L.P.), and of The Progressive Corporation, where she serves as Chairperson of the Board, and Micro Focus International PLC, both publicly traded companies. Ms. Fitt also serves as a director or trustee of several non-profit organizations. Ms. Fitt previously served on the boards of directors of ARM Holdings PLC and Thomson Reuters Corporation.
     Patrick T. Gallagher has served as a Director of Ciena since May 2009. Since October 2007, Mr. Gallagher has served as Chairman of Harmonic Inc., a publicly traded company and global provider of high-performance video solutions to the broadcast, cable, telecommunications and managed service provider sectors. Mr. Gallagher has served as Chairman of privately held Intercloud SAS, a Paris-headquartered provider of global private cloud connectivity services, since July 2015, and as Chairman of privately held Mirabeau SAS, a French wine producer, since August 2019. From March 2008 until April 2012, Mr. Gallagher was Chairman of Ubiquisys Ltd., a leading developer and supplier of femtocells for the global 3G mobile wireless market. From January 2008 until February 2009, Mr. Gallagher was Chairman of Macro 4 plc, a global software solutions company, and from May 2006 until March 2008, served as Vice Chairman of Golden Telecom Inc., a leading facilities-based provider of integrated communications in Russia and the CIS. From 2003 until 2006, Mr. Gallagher was Executive Vice Chairman and served as Chief Executive Officer of FLAG Telecom Group and, prior to that role, held various senior management positions at British Telecom. Mr. Gallagher also previously served on the board of directors of Sollers JSC.

17


Devinder Kumar has served as a Director of Ciena since August 2019. Mr. Kumar currently serves as Senior Vice President, Chief Financial Officer and Treasurer of AMD, a publicly traded company, in which capacity he is responsible for AMD’s global finance organization as well as global corporate services and facilities. He was appointed Chief Financial Officer in January 2013 and Treasurer in April 2015. Since he joined AMD in 1984, Mr. Kumar has progressed through several leadership positions in corporate accounting and corporate finance, including serving as interim CFO, corporate controller and assistant treasurer. He also spent 10 years in Asia as financial controller for AMD Penang and group finance director for AMD’s Manufacturing Services Group across Singapore, Thailand, China and Malaysia.
T. Michael Nevens has served as a Director of Ciena since February 2014. Since 2006, Mr. Nevens has served as senior adviser to Permira Advisers, LLC, an international private equity fund. From 1980 to 2002, Mr. Nevens held various leadership positions at McKinsey & Co., most recently as a director (senior partner) and as managing partner of the firm’s Global Technology Practice. He also served on the board of the McKinsey Global Institute, which conducts research on economic and policy issues. Mr. Nevens has been an adjunct professor of Corporate Governance and Strategy at the Mendoza College of Business at the University of Notre Dame. Mr. Nevens also serves as the Chairman of the board of directors of NetApp, Inc., a publicly traded company. Mr. Nevens previously served on the board of directors of Altera Corporation.
     Judith M. O’Brien has served as a Director of Ciena since July 2000. Since November 2012, Ms. O’Brien has served as a partner and head or co-head of the Emerging Company Practice Group at the law firm of King & Spalding. Ms. O’Brien served as Executive Vice President and General Counsel of Obopay, Inc., a provider of mobile payment services, from November 2006 through December 2010. From February 2001 until October 2006, Ms. O’Brien served as a Managing Director at Incubic Venture Fund, a venture capital firm. From August 1980 until February 2001, Ms. O’Brien was a lawyer with Wilson Sonsini Goodrich & Rosati, where, from February 1984 to February 2001, she was a partner specializing in corporate finance, mergers and acquisitions, and general corporate matters. Ms. O’Brien serves on the boards of directors of privately held companies Theatro Labs, Inc., Inform, Inc. and MagicCube, Inc. Ms. O’Brien also previously served on the board of directors of Adaptec, Inc.
Joanne B. Olsen has served as a Director of Ciena since October 2018. Ms. Olsen previously served as Executive Vice President of Global Cloud Services and Support at Oracle from 2016 until her retirement in August 2017. In that role, she drove Oracle’s cloud transformation services and support strategy, partnering with leaders across all business units. Ms. Olsen previously served as Senior Vice President and leader of Oracle’s applications sales, alliances, and consulting organizations in North America from 2012 through 2016, and from 2010 through 2012 served in various general management positions at Oracle. Ms. Olsen began her career with IBM, where, between 1979 and 2010, she held a variety of executive management positions across sales, global financing and hardware. Ms. Olsen also serves on the boards of directors of Teradata Corporation and Keysight Technologies, Inc., both publicly traded companies.


18



Item 1A. Risk Factors
Investing in our securities involves a high degree of risk. In addition to the other information contained in this report, you should consider the following risk factors before investing in our securities.
Our revenue, gross margin and operating results can fluctuate significantly and unpredictably from quarter to quarter.
Our revenue, gross margin and results of operations can fluctuate significantly and unpredictably from quarter to quarter. Our budgeted expense levels are based on our visibility into customer spending plans and our projections of future revenue and gross margin. Visibility into customer spending levels can be uncertain, spending patterns are subject to change, and reductions in our expense levels can take significant time to implement. A significant portion of our quarterly revenue is generated from customer orders received during that same quarter (which we refer to as “book to revenue”). Accordingly, our revenue for a particular quarter is difficult to predict, and a shortfall in expected orders in any given quarter can materially adversely affect our revenue and results of operations for that quarter or future quarterly periods. Additional factors that contribute to fluctuations in our revenue, gross margin and operating results include:
changes in spending levels or network deployment plans by customers, particularly with respect to our service provider and Web-scale provider customers;
order timing and volume, including book to revenue orders;
shipment and delivery timing;
backlog levels;
the level of competition and pricing pressure in our industry;
the pace and impact of price erosion that we regularly encounter in our markets;
the impact of commercial concessions or unfavorable commercial terms required to maintain incumbency or secure new opportunities with key customers;
the mix of revenue by product segment, geography and customer in any particular quarter;
our level of success in achieving targeted cost reductions and improved efficiencies in our supply chain;
our incurrence of start-up costs, including lower margin phases of projects required to support initial deployments, gain new customers or enter new markets;
our level of success in accessing new markets and obtaining new customers;
technology-based price compression and our introduction of new platforms with improved price for performance;
changing market, economic and political conditions, including the impact of tariffs and other trade restrictions;
the financial stability of our customers and suppliers;
consolidation activity among our customers, suppliers and competitors;
the timing of revenue recognition on sales, particularly relating to large orders;
installation service availability and readiness of customer sites;
availability of components and manufacturing capacity;
adverse impact of foreign exchange; and
seasonal effects in our business.
As a result of these factors and other conditions affecting our business and operating results, we believe that quarterly comparisons of our operating results are not necessarily a good indication of possible future performance. Quarterly fluctuations from the above factors may cause our revenue, gross margin and results of operations to underperform in relation to our guidance, long-term financial targets or the expectations of financial analysts or investors, which may cause volatility or decreases in our stock price.
A small number of customers account for a significant portion of our revenue. The loss of these customers or a significant reduction in their spending could have a material adverse effect on our business and results of operations.

A significant portion of our revenue is concentrated among a small number of customers. For example, our ten largest customers contributed 59.3% of our fiscal 2019 revenue. Historically, our largest customers by revenue principally consisted of large communications service providers. For example, Verizon and AT&T accounted for approximately 12.9% and 10.9% of fiscal 2019 revenue, respectively. As a result of efforts in recent years to diversify our business, the customer segments and geographies that comprise our customer base and top customers by revenue have changed. During fiscal 2019, three Web-scale providers were among our top ten customers. Web-scale customers have been important contributors to our overall growth through both our direct sales to them, including for data center interconnection, and their indirect impact on purchases by other network operators. Consequently, our financial results and our ability to grow our business are closely correlated with the spending of a relatively small number of customers. Our business and results of operations could be materially adversely

19


impacted by the loss of a large customer within or outside of these customer segments as well as by reductions in spending or capital expenditure budgets, changes in network deployment plans or changes in consumption models for acquiring networking solutions by our largest customers.

Because of our concentration of revenue with communications service providers and Web-scale providers, our business and results of operations can be significantly affected by market, industry or competitive dynamics adversely affecting these customer segments. For example, communications service providers continue to face a rapidly shifting competitive landscape as cloud service operators, “over-the-top” (OTT) providers, and other content providers challenge their traditional business models and network infrastructures. These dynamics have in the past had an adverse effect on network spending levels by certain of our largest service provider customers. Several of these, including AT&T, with whom we experienced declines in annual revenue during fiscal 2017 and fiscal 2018, have announced various initiatives that seek to modify how they purchase networking infrastructure or reduce capital expenditures on network infrastructure in future periods that may adversely affect our results of operations. In addition, a number of our communications service providers and cable operator customers, including AT&T, Verizon and CenturyLink, have either recently announced significant acquisition transactions or are in the process of significant related integration activities, including the acquisition of media or content companies. Such transactions have in the past, and may in the future, result in spending delays or deferrals, or changes in preferred vendors due to changes in strategy or leadership, the timing of regulatory approvals and debt burdens associated with such transactions. Similarly, certain of our largest Web-scale customers have announced an intention to reduce capital spending in future periods and we expect our revenue from this customer segment to moderate from the level achieved in fiscal 2019. Web-scale providers are also under consumer and government scrutiny and have been the subject of regulatory and other government actions, including antitrust investigations. There can be no assurance that these government actions will not adversely impact the network spending, procurement strategies, or business practices of our Web-scale customers in a manner adverse to us. Our business and results of operations could be materially adversely affected by these factors and other market, industry or competitive dynamics adversely impacting our customers.

We face intense competition that could hurt our sales and results of operations, and we expect the competitive landscape in which we operate to continue to broaden to include additional solutions providers.
We face an intense competitive market for sales of communications networking equipment, software and services. Competition is intense on a global basis, as we and our competitors aggressively seek to capture market share and displace incumbent equipment vendors. Our industry has historically been dominated by a small number of very large vendors, some of which have substantially greater financial and marketing resources, broader product offerings and more established relationships with service providers and other customer segments than we do. In addition, to drive scale and market share gains and meet the intense investment capacity required to keep pace with technology innovation, acquisition activity among vendors of networking solutions has increased. Consolidation in our industry may result in competitors with greater resources, pricing flexibility, or other synergies, which may provide them with a competitive advantage.
Certain of our customers are adopting procurement strategies that seek to purchase a broader set of networking solutions from a single or small number of vendors. Because of their scale, resources, and a more diverse set of solution offerings, certain of our larger competitors may be perceived to be a better fit for the procurement or network operating and management strategies of these customers. We also compete with a number of smaller companies that provide significant competition for specific products, applications, customer segments or geographic markets. Due to the narrower focus of their efforts, these competitors may achieve commercial availability of their products more quickly or may be more attractive to customers in a particular product niche.
Generally, competition in our markets is based on any one or a combination of the following factors:
the ability to meet customer business needs and drive successful outcomes;
functionality, speed, capacity, scalability, performance, quality and reliability of solutions;
price for performance, cost per bit and total cost of ownership of solutions;
incumbency and strength of existing business relationships;
ability to offer comprehensive networking solutions, consisting of hardware, software and services;
time-to-market in delivering products and features;
technology roadmap and forward innovation capacity and ability to deliver on network innovation;
company stability and financial health;
flexibility and openness of platforms, including ease of integration, interoperability and integrated management;
ability to offer solutions that accommodate a range of emerging customer consumption models for network solutions;
operating costs, space requirements and power consumption of network solutions;
software and network automation and analytics capabilities;

20


manufacturing and lead-time capability; and
services and support capabilities.

Part of our strategy is to leverage our technology leadership and to aggressively capture additional market share and displace competitors, particularly with communications service providers internationally. In an effort to maintain our incumbency or to secure new customer opportunities, we have in the past, and may in the future, agree to aggressive pricing, commercial concessions and other unfavorable terms that result in low or negative gross margins on a particular order or group of orders. Competition can also result in onerous commercial and legal terms and conditions that place a disproportionate amount of risk on us.
We expect the competition in our industry to continue to broaden and to intensify, as network operators pursue a diverse range of network strategies and consumption models. As these changes occur, we expect that our business will compete more directly with additional networking solution suppliers, including IP router vendors, data center switch providers and other suppliers or integrators of networking technology. In addition, as we seek increased customer adoption of our Blue Planet Automation Software and Services, and as network operator demands for programmability, automation and analytics increase, we expect to compete more directly with software vendors and IT vendors or integrators of these solutions. We may also face competition from system and component vendors, including those in our supply chain, that develop networking products based on off-the-shelf or commoditized hardware technology, referred to as “white box” hardware, particularly where a customer’s network strategy seeks to emphasize deployment of such product offerings or adopt a disaggregated approach to the procurement of hardware and software. An increase in competitive intensity, the adoption of new consumption models, or the entry of new competitors into our markets, may adversely impact our business and results of operations. If competitive pressures increase, or if we fail to compete successfully in our markets, our business and results of operations could suffer.
Our business and operating results could be adversely affected by unfavorable changes in macroeconomic and market conditions and reductions in the level of spending by customers in response to these conditions.
Our business and operating results depend significantly on general market and economic conditions. Market volatility and weakness in the regions in which we operate have previously resulted in sustained periods of decreased demand for our products and services, which has adversely affected our operating results. Macroeconomic and market conditions could be adversely affected by a variety of political, economic or other factors in the United States and international markets, which could in turn adversely affect spending levels of our customers and their end users, and could create volatility or deteriorating conditions in the markets in which we operate. Due to our concentration of revenue in the United States, we would expect to incur a more significant impact from any adverse change in the capital spending environment or macroeconomic or market weakness in the United States. Macroeconomic uncertainty or weakness could result in:
reductions in customer spending and delay, deferral or cancellation of network infrastructure initiatives;
increased competition for fewer network projects and sales opportunities;
increased pricing pressure that may adversely affect revenue, gross margin and profitability;
decreased ability to forecast operating results and make decisions about budgeting, planning and future investments;
increased overhead and production costs as a percentage of revenue;
tightening of credit markets needed to fund capital expenditures by us or our customers;
customer financial difficulty, including longer collection cycles and difficulties collecting accounts receivable or write-offs of receivables; and
increased risk of charges relating to excess and obsolete inventories and the write-off of other intangible assets.
Reductions in customer spending in response to unfavorable or uncertain macroeconomic and market conditions, globally or in a particular region where we operate, would adversely affect our business, results of operations and financial condition.
Investment of research and development resources in communications networking technologies for which there is not an adequate market demand, or failure to sufficiently or timely invest in technologies for which there is market demand, would adversely affect our revenue and profitability.
The market for communications networking hardware and software solutions is characterized by rapidly evolving technologies, changes in market demand and increasing adoption of software-based networking solutions. We continually invest in research and development to sustain or enhance our existing hardware and software solutions and to develop or acquire new technologies including new software platforms. There is often a lengthy period between commencing these development initiatives and bringing new or improved solutions to market. During this time, technology preferences, customer demand and the markets for our solutions may move in directions that we had not anticipated. There is no guarantee that our new products, including our Blue Planet Automation Software and Services, or enhancements to other solutions, will achieve market acceptance or that the timing of market adoption will be as predicted. As a result, there is a significant possibility that some of

21


our development decisions, including significant expenditures on acquisitions, research and development, or investments in technologies, will not meet our expectations, and that our investment in some projects will be unprofitable. There is also a possibility that we may miss a market opportunity because we failed to invest or invested too late in a technology, product or enhancement sought by our customers or the markets into which we sell. Changes in market demand or investment priorities may also cause us to discontinue existing or planned development for new products or features, which can have a disruptive effect on our relationships with customers. If we fail to make the right investments or fail to make them at the right time, competing solutions may be more attractive in the market. As a result, our competitive position may suffer, and our revenue and profitability could be adversely affected.
We have no guaranteed purchases and regularly have to re-win business for existing customers.

Generally, our customer contracts do not require customers to purchase any minimum or guaranteed volumes, and we conduct sales through framework contracts under which customers place purchase orders for which they often have the right to modify or cancel. We must regularly compete for and win business with existing customers across all of our customer segments. In addition, Web-scale providers tend to operate on shorter procurement cycles than some of our traditional customers, which can require us to compete to re-win business with these customers more frequently than required with other customers segments. As such, there is no assurance that our incumbency will be maintained at any given customer or that our revenue levels from a customer in a particular period can be achieved in future periods. Customer spending levels can be unpredictable, and our sales to any customer could significantly decrease or cease at any time.

Network equipment sales often involve lengthy sales cycles and protracted contract negotiations that may require us to agree to commercial terms or conditions that negatively affect pricing, risk allocation, payment and the timing of revenue recognition.

Our sales efforts, particularly with communications service providers, Web-scale providers and other large customers, often involve lengthy sales cycles. These selling efforts often involve a significant commitment of time and resources that may include extensive product testing, laboratory or network certification, network or region-specific product certification and homologation requirements for deployment in networks. Even after a customer awards its business to us or decides to purchase our solutions, the length of time before deployment can vary depending on the customer’s schedule, site readiness, the size of the network deployment, the degree of custom configuration required and other factors. Additionally, these sales also often involve protracted and sometimes difficult contract negotiations in which we may deem it necessary to agree to unfavorable contractual or commercial terms that adversely affect pricing, expose us to penalties for delays or non-performance and require us to assume a disproportionate amount of risk. To maintain incumbency with key customers, we may be required to offer discounted pricing, make commercial concessions or offer less favorable terms as compared to our historical business arrangements with these customers. We may also be requested to provide deferred payment terms, vendor or third-party financing or other alternative purchase structures that extend the timing of payment. Alternatively, customers may insist on terms and conditions that we deem too onerous or not in our best interest, and we may be unable to reach a commercial agreement. As a result, we may incur substantial expense and devote time and resources to potential sales opportunities that never materialize or result in lower than anticipated sales and gross margin.
If the market for network software does not evolve in the way we anticipate or if customers do not adopt our Blue Planet Automation Software and Services, we may not be able to monetize these software assets and realize a key part of our business strategy.
A key part of our business strategy is to increase customer adoption of our Blue Planet Automation Software Platform for intelligent, closed loop automated networks. This strategy depends in significant part on our ability to commercialize and gain market adoption for our Blue Planet Automation Software and Services. If the markets relating to software solutions for network automation, including service orchestration, route optimization, analytics and assurance, and SDN or NFV, do not develop as we anticipate, or if we are unable to increase market awareness and adoption of our Blue Planet Automation Software and Services within those markets, revenue from our Blue Planet Automation Software and Services may not grow. We have a limited history in commercializing and selling these software solutions and have only recently acquired certain elements of our Blue Planet portfolio. Moreover, the market and competitive landscape for these solutions is dynamic, and it is difficult to predict important trends, including the potential growth, if any, of this market. If the market for these software solutions does not evolve in the way we anticipate or if customers do not adopt our Blue Planet Automation Software and Services, a key part of our strategy for growth would be adversely affected and our financial results may suffer.

22


If we are unable to adapt our business to the consumption models for networking solutions adopted by our customers and to offer attractive solutions across these consumption models, our business, competitive position and results of operations could be adversely affected.
Growing bandwidth demands and network operator efforts to reduce costs are resulting in a diverse range of approaches to the design and procurement of network infrastructure. We refer to these different approaches as “consumption models.” These consumption models can include: the traditional systems procurement of fully integrated solutions including hardware, software and services from the same vendor; the procurement of a fully integrated hardware solution from one vendor with the separate use of a network operator’s own SDN-based controller; the procurement of an integrated photonic line system with open interfaces from one vendor and the separate or “disaggregated” procurement of modem technology from a different vendor; or the development and use of published reference designs and open source specifications for the procurement of “white box” hardware to be used with open source software. In parallel, network operators are also exploring procurement alternatives for software solutions, ranging from integrated and proprietary software platforms to fully open source software.
We believe that network operators will continue to consider a variety of different consumption models. Many of these approaches are in their very early stages of development and evaluation, and the types of models and their levels of adoption will depend in significant part on the nature of the circumstances and strategies of particular network operators. Among our customers, AT&T and others are pursuing network strategies that emphasize enhanced software programmability, management and control of networks, and deployment of “white box” hardware. A number of network operators are pursuing the deployment of smaller form factor, pluggable modem technology, particularly within switching and routing solutions, as an alternative to integrated optical networking platforms. Other network operators, including certain of our Web-scale customers, are playing a leading role in the transition to software-defined networking or the standardization of communications network solutions. We believe that the potential for different approaches to the procurement of networking infrastructure will require network operators and vendors to evolve and broaden their existing solutions and commercial models over time. Adoption of a range of consumption models may also alter and broaden our competitive landscape to include other technology vendors, including routing vendors, component vendors and IT software vendors. If we are unable to adapt our business to these new consumption models and offer attractive solutions and commercial models that accommodate the range of consumption models ultimately adopted by our customers or within our markets, our business, competitive position and results of operations could be adversely affected.
We may experience delays in the development and production of our products that may negatively affect our competitive position and business.
Our hardware and software networking solutions, including our coherent optical chipset, our WaveLogic modem technology and the components thereof, are based on complex technology, and we can experience unanticipated delays in developing, manufacturing and introducing these solutions to market. Delays in product development efforts by us or our supply chain may affect our reputation with customers, affect our ability to capture market opportunities and impact the timing and level of demand for our products. Among other things, we are currently introducing our fifth generation of our coherent optical modem technology, extending our Packet Networking portfolio with additional IP features, and introducing new solutions within our Platform Software and Services and Blue Planet Automation Software and Services segments. Each step in the development cycle of our products presents serious risks of failure, rework or delay, any one of which could adversely affect the cost-effectiveness and timely development of our products. We may encounter delays relating to engineering development activities and software, design, sourcing and manufacture of critical components, and the development of prototypes. The development of new technologies may increase the complexity of supply chain management or require the acquisition, licensing or interworking with the technology of third parties. In addition, intellectual property disputes, failure of critical design elements and other execution risks may delay or even prevent the release of these products. If we do not successfully develop or produce products in a timely manner, our competitive position may suffer, and our business, financial condition and results of operations could be harmed.
We rely on third-party contract manufacturers and our business and results of operations may be adversely affected by risks associated with their businesses, financial condition and the geographies in which they operate.
We rely on third-party contract manufacturers with facilities in Canada, Mexico, Thailand and the United States to perform a substantial portion of our supply chain activities, including component sourcing, manufacturing, product testing and quality, and fulfillment and logistics relating to the distribution and support of our products. There are a number of risks associated with our dependence on contract manufacturers, including:
reduced control over delivery schedules and planning;
reliance on the quality assurance procedures of third parties;
potential uncertainty regarding manufacturing yields and costs;

23


availability of manufacturing capability and capacity, particularly during periods of high demand;
risks and uncertainties associated with the locations or countries where our products are manufactured, including potential manufacturing disruptions caused by social, geopolitical or environmental factors;
changes in U.S. law or policy governing tax, trade, manufacturing, development and investment in the countries where we currently manufacture our products, including the World Trade Organization Information Technology Agreement or other free trade agreements;
inventory liability for excess and obsolete supply;
limited warranties provided to us; and
potential misappropriation of our intellectual property.
These and other risks could impair our ability to fulfill orders, harm our sales and impact our reputation with customers. If our contract manufacturers are unable or unwilling to continue manufacturing our products or components of our products, or if we experience a disruption of manufacturing or our contract manufacturers discontinue operations, we may be required to identify and qualify alternative manufacturers, which could cause us to be delayed in or unable to meet our supply requirements to our customers and result in the breach of our customer agreements. The process of qualifying a new contract manufacturer and commencing volume production is expensive and time-consuming, and if we are required to change or qualify a new contract manufacturer, we would likely experience significant business disruption and could lose revenue and damage our existing customer relationships.
Our reliance on third-party component suppliers, including sole and limited source suppliers, exposes our business to additional risk and could limit our sales, increase our costs and harm our customer relationships.
We maintain a global sourcing strategy and depend on a diverse set of third-party suppliers in international markets that comprise our supply chain. We rely on these third parties for activities relating to product design, development and support, and in the sourcing of products, components, subcomponents and related raw materials. Our products include optical and electronic components for which reliable, high-volume supply is often available only from sole or limited sources. We do not have any guarantees of supply from our third-party suppliers, and in certain cases we have limited contractual arrangements or are relying on standard purchase orders. As a result, there is no assurance that we will be able to secure the components or subsystems that we require, in sufficient quantity and quality, and on reasonable terms.

The loss of a source of supply, or lack of sufficient availability of key components, could require that we locate an alternate source or redesign our products, either of which could result in business interruption and increased costs and could negatively affect our product gross margin and results of operations. There are a number of significant technology trends or developments underway or emerging – including the Internet of Things, autonomous vehicles, and advances in mobile communications such as the emergence of 5G – that have previously resulted in, and can be expected in the future to result in, increased market demand for key raw materials or components upon which we rely. Increases in market demand or scarcity of raw materials for components have resulted, and may in the future result, in shortages in availability of important components for our solutions, product allocation challenges, deployment delays and increased cost, lead times and delivery cycle time lines.

We have experienced, and may experience in the future, consolidation among suppliers of our components. Consolidation in the optical components and semiconductor industry can result in a reduction in the number of suppliers available to us, which can negatively impact our ability to access components or the price we have to pay for such components. Moreover, our access to necessary components could be adversely impacted by evolving competitive landscapes, converging solutions offerings and competition from component vendors, including those in our supply chain, who develop competing networking products for emerging consumptions models, including pluggable modem technology or offerings based on “white box” hardware.

These and other industry, market and regulatory disruptions and challenges affecting our suppliers could expose our business to increased costs, loss or lack of supply, or discontinuation of components that can result in lost revenue, additional product costs, increased lead times and deployment delays that could harm our business and customer relationships.

The international scale of our sales and operations exposes us to additional risk and expense that could adversely affect our results of operations.
We market, sell and service our products globally, maintain personnel in numerous countries, and rely on a global supply chain for sourcing important components and manufacturing our products. Our international sales and operations are subject to inherent risks, including:
adverse social, political and economic conditions in countries outside the United States;
effects of adverse changes in currency exchange rates;

24


greater difficulty in collecting accounts receivable and longer collection periods;
difficulty and cost of staffing and managing foreign operations;
higher incidence of corruption or unethical business practices;
less protection for intellectual property rights in some countries;
tax and customs changes that adversely impact our global sourcing strategy, manufacturing practices, transfer-pricing, or competitiveness of our products for global sales;
compliance with certain testing, homologation or customization of products to conform to local standards;
significant changes to free trade agreements, trade protection measures, tariffs, export compliance, domestic preference procurement requirements, qualification to transact business and additional regulatory requirements; and
natural disasters, epidemics and acts of war or terrorism.
Our international operations are subject to complex foreign and U.S. laws and regulations, including anti-bribery and corruption laws, antitrust or competition laws, data privacy laws, such as the EU General Data Protection Regulation, and environmental regulations, among others. In particular, recent years have seen a substantial increase in anti-bribery law enforcement activity by U.S. regulators, and we currently operate and seek to operate in many parts of the world that are recognized as having greater potential for corruption. Violations of any of these laws and regulations could result in fines and penalties, criminal sanctions against us or our employees, prohibitions on the conduct of our business and on our ability to offer our products and services in certain geographies, and significant harm to our business reputation. Our policies and procedures to ensure compliance with these laws and regulations and to mitigate these risks may not protect us from all acts committed by our employees or third-party vendors, including contractors, agents and services partners. Additionally, the costs of complying with these laws (including the costs of investigations, auditing and monitoring) could adversely affect our current or future business.
The success of our international sales and operations will depend, in large part, on our ability to anticipate and manage these risks effectively. Our failure to manage any of these risks could harm our international operations, reduce our international sales, and could give rise to liabilities, costs or other business difficulties that could adversely affect our operations and financial results.
Changes in trade policy, including the imposition of tariffs and efforts to withdraw from or materially modify international trade agreements, may adversely affect our business, operations and financial condition.
The United States and various foreign governments have established certain trade and tariff requirements under which we have implemented a global approach to the sourcing and manufacture of our products, as well as distribution and fulfillment to customers around the world. Recently, the U.S. government has indicated a willingness to revise, renegotiate, or terminate various existing multilateral trade agreements and to impose new taxes on certain goods imported into the U.S. Because we rely on a global sourcing strategy and third-party contract manufacturers in markets outside of the U.S. to perform substantially all of the manufacturing of our products, such steps, if adopted, could adversely impact our business and operations, increase our costs, and make our products less competitive in the U.S. and other markets. 
For example, the U.S. government has threatened to undertake a number of actions relating to trade with Mexico, including the closure of the border and the imposition of escalating tariffs on goods imported into the U.S. from Mexico. A substantial portion of our products are manufactured and distributed by third-party contract manufacturers in Mexico. If adopted, such actions could adversely impact our business and significantly disrupt our operations. These actions may also make our products less competitive in the United States and other markets. In addition, the U.S. government reached a new trade agreement with the Canadian and Mexican governments to replace the North American Free Trade Agreement (“NAFTA”) with the United States-Mexico-Canada Agreement (“USMCA”). Withdrawal from NAFTA by the U.S. or failure of these countries to ratify USMCA could similarly adversely impact our business and significantly disrupt our operations.
In addition, as a result of our global sourcing strategy, our supply chain includes certain direct and indirect suppliers based in China who supply goods to us, our manufacturers or our third-party suppliers. Recently, there have been a number of significant geopolitical events, including trade tensions and regulatory actions, involving the governments of the United States and China. The U.S. government has raised tariffs, and imposed new tariffs, on a wide range of imports of Chinese products, including component elements of our solutions and certain finished goods products that we sell. Effective September 1, 2019, a new 15% tariff was imposed on approximately $120 billion of China-origin imports covered by the so called “List 4A,” which includes certain of our products. In December 2019, the U.S. government announced that as part of a so called “Phase One” agreement between the U.S. and China on trade matters, this tariff was expected to be reduced to 7.5%.
At this time, it remains unclear what additional actions, if any, will be taken by the U.S. or other governments with respect to international trade agreements, the imposition of tariffs on goods imported into the U.S., tax policy related to international commerce, or other trade matters. Based on our manufacturing practices and locations, there can be no assurance that any future

25


executive or legislative action in the United States or other countries relating to tax policy and trade regulation would not adversely affect our business, operations and financial results.
Government regulation of usage, import or export of our products, or our technology within our products, changes in that regulation, or our failure to obtain required approvals for our products, could harm our international and domestic sales and adversely affect our revenue and costs of sales. Failure to comply with such regulations could result in enforcement actions, fines, penalties or restrictions on export privileges. In addition, costly tariffs on our equipment, restrictions on importation, trade protection measures and domestic preference requirements of certain countries could limit our access to these markets and harm our sales. These regulations could adversely affect the sale or use of our products, substantially increase our cost of sales and adversely affect our business and revenue.
Our reliance on certain third-party component suppliers exposes us to certain risks relating to their businesses that, in turn, could disrupt our business or limit our sales.

We are exposed to risks relating to unfavorable economic conditions, financial conditions and a wide range of challenges affecting the businesses and results of operations of our component suppliers. These challenges can affect their material costs, sales, liquidity levels, ability to continue investing in their businesses, ability to import or export goods, ability to meet development commitments and manufacturing capability. A number of our key technology vendors rely upon sales to customers, including our competitors, in China for a material portion of their revenue. In January 2018, China’s Ministry of Industry and Information Technology released its Optoelectronic Devices Industry Technology Roadmap, a five-year plan to improve China’s capabilities in the optoelectronics industry. There can be no assurance that this initiative, or similar efforts in China such as the Made in China 2025 initiatives, will not have an adverse impact on the business of our component suppliers or our access to necessary components. Separately, in May 2019, the U.S. Department of Commerce amended the Export Administration Regulations by adding Huawei Technologies Co., Ltd. and 68 of its non-U.S. affiliates to the “Entity List” for actions contrary to the national security and foreign policy interests of the United States, which amendment imposes significant new restrictions on export, reexport and transfer of U.S. regulated technologies and products to Huawei. In August, the U.S. Department of Commerce further added 46 affiliates to the Entity List (collectively, “Huawei”). Several of our third-party component suppliers, including certain sole and limited source suppliers, sell products to Huawei and, in some cases, Huawei is a significant customer for such suppliers. Any continued restriction on our suppliers’ ability to make sales to Huawei may adversely impact their businesses. Such industry, market and regulatory disruptions affecting these suppliers could, in turn, expose our business to loss or lack of supply or discontinuation of components that could result in lost revenue, additional product costs, increased lead times and deployment delays that could harm our business and customer relationships. Our business and results of operations would be negatively affected if we were to experience any significant disruption or difficulties with key suppliers affecting the price, quality, availability or timely delivery of required components. At this time, there can be no assurance regarding the scope or duration of the restrictions imposed on Huawei and any future impact on our suppliers.

Product performance problems and undetected errors affecting the performance, interoperability, reliability or security of our products could damage our business reputation and negatively affect our results of operations.
The development and production of sophisticated hardware and software for communications network equipment is highly complex. Some of our products can be fully tested only when deployed in communications networks or when carrying traffic with other equipment, and software products may contain bugs that can interfere with expected performance. As a result, undetected defects or errors, and product quality, interoperability, reliability and performance problems are often more acute for initial deployments of new products and product enhancements. We have recently launched, and are in the process of launching, a number of new hardware and software offerings, including evolutions of our WaveLogic coherent optical modem technology, Packet Networking platforms and solutions targeting access and metro networks and data center interconnect applications. Unanticipated product performance problems can relate to the design, manufacturing, installation, operation and interoperability of our products. Undetected errors can also arise as a result of defects in components, software or manufacturing, installation or maintenance services supplied by third parties, and technology acquired from or licensed by third parties. From time to time we have had to replace certain components, provide software remedies or other remediation in response to defects or bugs, and we may have to do so again in the future. Remediation of such events could materially adversely impact our business and results of operations. In addition, we may encounter unanticipated security vulnerabilities relating to our products or the activities of our supply chain. Our products are used in customer networks transmitting a range of sensitive information and any actual or perceived exposure of our solutions to malicious software or cyber-attacks could adversely affect our business and results of operations. Product performance, reliability, security and quality problems may result in some or all of the following effects:
damage to our reputation, declining sales and order cancellations;
increased costs to remediate defects or replace products;
payment of liquidated damages, contractual or similar penalties, or other claims for performance failures or delays;

26


increased warranty expense or estimates resulting from higher failure rates, additional field service obligations or other rework costs related to defects;
higher charges for increased inventory obsolescence;
costs, liabilities and claims that may not be covered by insurance coverage or recoverable from third parties; and
delays in recognizing revenue or collecting accounts receivable.
These and other consequences relating to undetected errors affecting the quality, reliability and security of our products could negatively affect our business and results of operations.
If we fail to accurately predict demand, we may be required to write off significant amounts of inventory as a result of our inventory purchase practices and could incur additional costs or experience manufacturing delays.
To avoid delays and meet customer demand for shorter delivery terms, we place orders with our contract manufacturers and component suppliers based on forecasts of customer demand. In a number of cases these suppliers may require longer lead times for fulfillment than we have with our customers. Thus, our practice of buying inventory based on forecasted demand exposes us to the risk that our customers ultimately may not order the products we have forecast or will purchase fewer products than forecast. As a result, we may purchase inventory in anticipation of sales that ultimately do not occur. We regularly incur, on a quarterly basis, expense provisions against excess or obsolete inventory and may have difficulty forecasting inventory and customer spending. Moreover, our customer purchase agreements generally do not include any minimum purchase commitment and customers often have the right to modify, reduce or cancel purchase quantities. Our products are highly configurable, and certain new products have overlapping feature sets or application with existing products. Accordingly, it is increasingly possible that customers may forgo purchases of certain products we have inventoried in favor of a similar or newer product. We may also be exposed to inventory write-offs as a result of certain supply chain initiatives, including consolidation and transfer of key manufacturing activities. If we are required to write off or write down a significant amount of inventory, our results of operations for the applicable period would be materially adversely affected. Conversely, if we underestimate our demand, our contract manufacturers and component suppliers may have inadequate time, materials, or components required to manufacture our products. This could increase costs or delay or interrupt manufacturing of our products, resulting in delays in shipments and deferral or loss of revenues and could adversely impact customer satisfaction.
Our go-to-market activities and the distribution of our WaveLogic coherent modem technology within the merchant modem market could expose us to increased or new forms of competition, or adversely affect our existing systems business and results of operations.
We recently entered the merchant modem market to monetize our coherent optical technology, expand our addressable market and address a range of customer consumption models for networking solutions. Making our critical technology available in this manner could adversely impact the sale of products in our existing systems business. For example, our customers may choose to adopt disaggregated consumption models or third-party solutions that embed Ciena-designed optical modules instead of purchasing systems-based solutions from us. Accordingly, we may encounter situations where we are competing for opportunities in the market directly against a system from one of our competitors that incorporates Ciena-designed modules. Making this key technology available and enabling third-party sales of Ciena-designed modules may adversely affect our competitive position and increase the risk that third parties misappropriate or attempt to use our technology or related intellectual property without our authorization. These and other risks or unanticipated liabilities or costs associated with the sales of our WaveLogic coherent technology could harm our reputation and adversely affect our business and our results of operations. Our go-to-market activities and the distribution of our WaveLogic coherent technology within the merchant modem market could expose us to increased or new forms of competition, or adversely affect our systems business and results of operation.

27


Data security breaches and cyber-attacks could compromise our intellectual property or other sensitive information and cause significant damage to our business and reputation.
 In the ordinary course of our business, we maintain on our network systems, and on the networks of our third-party providers, certain information that is confidential, proprietary or otherwise sensitive in nature. This information includes intellectual property, financial information and confidential business information relating to us and our customers, suppliers and other business partners. Companies in the technology industry have been increasingly subject to a wide variety of security incidents, cyber-attacks and other attempts to gain unauthorized access to networks or sensitive information. Our network systems and storage and other business applications, and the systems and storage and other business applications maintained by our third-party providers, have been in the past, and may be in the future, subject to attempts to gain unauthorized access, breach, malfeasance or other system disruptions. In some cases, it is difficult to anticipate or to detect immediately such incidents and the damage caused thereby. If an actual or perceived breach of security occurs in our network or any of our third-party providers’ networks, we could incur significant costs and our reputation could be harmed. While we work to safeguard our internal network systems and validate the security of our third party providers to mitigate these potential risks, including through information security policies and employee awareness and training, there is no assurance that such actions will be sufficient to prevent cyber-attacks or security breaches. We have been subjected in the past to a range of incidents including phishing, emails purporting to come from a company executive or vendor seeking payment requests, and communications from look-alike corporate domains. While these have not had a material effect on our business or our network security to date, security incidents involving access or improper use of our systems, networks or products could compromise confidential or otherwise protected information, destroy or corrupt data, or otherwise disrupt our operations. These security events could also negatively impact our reputation and our competitive position and could result in litigation with third parties, regulatory action, loss of business, potential liability and increased remediation costs, any of which could have a material adverse effect on our financial condition and results of operations.
Efforts to increase our sales and capture market share in targeted international markets may be unsuccessful.
Part of our business and growth strategy is to expand our geographic reach and increase market share in international markets through a combination of direct and indirect sales resources. We are also aggressively pursuing opportunities with service provider customers in additional geographies, including EMEA and APAC. This diversification of our markets and customer base has been a significant component of the growth of our business in recent years. Our efforts to continue to increase our sales and capture market share in international markets may ultimately be unsuccessful or may adversely impact our financial results, including our gross margin. Our failure to continue to increase our sales and market share in international markets could limit our growth and could harm our results of operations.
Our intellectual property rights may be difficult and costly to enforce.
We generally rely on a combination of patents, copyrights, trademarks and trade secret laws to establish and maintain proprietary rights in our products and technology. Although we have been issued numerous patents, and other patent applications are currently pending, there can be no assurance that any of these patents or other proprietary rights will not be challenged, invalidated or circumvented, or that our rights will provide us with any competitive advantage. In addition, there can be no assurance that patents will be issued for our pending applications or that claims allowed on any patents will be sufficiently broad to protect our technology. Further, the laws of some foreign countries may not protect our proprietary rights to the same extent as do the laws of the United States.
We are subject to the risk that third parties may attempt to access, divert or use our intellectual property without authorization. Protecting against the unauthorized use of our products, technology and other proprietary rights is difficult, time-consuming and expensive, and we cannot be certain that the steps that we are taking will prevent or minimize the risks of such unauthorized use. In addition, our intellectual property strategy must continually evolve to protect our proprietary rights in new solutions, including our software solutions. Litigation may be necessary to enforce or defend our intellectual property rights or to determine the validity or scope of the proprietary rights of others. Such litigation could result in substantial cost and diversion of management time and resources, and there can be no assurance that we will obtain a successful result. Any inability to protect and enforce our intellectual property rights could harm our ability to compete effectively.
We may incur significant costs in response to claims by others that we infringe their intellectual property rights.
From time to time third parties may assert claims or initiate litigation or other proceedings related to patent, copyright, trademark and other intellectual property rights to technologies and related standards that are relevant to our business. The rate of infringement assertions by patent assertion entities is increasing, particularly in the United States. Generally, these patent owners neither manufacture nor use the patented invention directly, and they seek to derive value from their ownership solely through royalties from patent licensing programs.

28


We could be adversely affected by litigation, other proceedings or claims against us, as well as claims against our manufacturers, suppliers or customers, alleging infringement of third-party proprietary rights by our products and technology, or components thereof. Regardless of the merit of these claims, they can be time-consuming, divert the time and attention of our technical and management personnel, and result in costly litigation. These claims, if successful, could require us to:
pay substantial damages or royalties;
comply with an injunction or other court order that could prevent us from offering certain of our products;
seek a license for the use of certain intellectual property, which may not be available on commercially reasonable terms or at all;
develop non-infringing technology, which could require significant effort and expense and ultimately may not be successful; and
indemnify our customers or other third parties pursuant to contractual obligations to hold them harmless or pay expenses or damages on their behalf.
Any of these events could adversely affect our business, results of operations and financial condition. Our exposure to risks associated with the use of intellectual property may increase as a result of acquisitions, as we would have a lower level of visibility into the development process with respect to the acquired technology and the steps taken to safeguard against the risks of infringing the rights of third parties.
Our products incorporate software and other technology under license from third parties, and our business would be adversely affected if this technology were no longer available to us on commercially reasonable terms.
We integrate third-party software and other technology into our operating system, network management, and intelligent automation software and other products. As a result, we may be required to license certain software or technology from third parties, including competitors. Licenses for software or other technology may not be available or may not continue to be available to us on commercially reasonable terms. Third-party licensors may insist on unreasonable financial or other terms in connection with our use of such technology. Our failure to comply with the terms of any license may result in our inability to continue to use such license, which may result in significant costs, harm our market opportunities and require us to obtain or develop a substitute technology.
Some of our solutions, including our Blue Planet Automation Software, utilize elements of open source or publicly available software. As network operators seek to enhance programmability and automation of networks, we expect that we and other communications networking solutions vendors will increasingly contribute to and use technology or open source software developed by standards settings bodies or other industry forums that seek to promote the integration of network layers and functions. The terms of such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our products. This increases our risks associated with our use of such software and may require us to seek licenses from third parties, to re-engineer our products or to discontinue the sale of such solutions. Difficulty obtaining and maintaining technology licenses with third parties may disrupt development of our products, increase our costs and adversely affect our business.
We rely on third-party resellers and distribution partners to sell our solutions, and our failure to develop and manage these relationships effectively could adversely affect our business and result of operations.
In order to sell into new markets, diversify our customer base and broaden the application for our solutions, and to complement our global field resources, we rely on a number of third-party resellers, distribution partners and sales agents, both domestic and international, and we believe that these relationships are an important part of our business. There can be no assurance that we will successfully identify and qualify these resources or that we will realize the expected benefits of these sales relationships. Our failure to effectively identify, develop and manage our third-party sales relationships could adversely affect our business, growth and result of operations. We must also assess and qualify resellers, distribution partners and sales agents under our channel programs to ensure their understanding of and willingness and ability to adhere to our Code of Business Conduct and Ethics, our Ciena Partner Network Code of Business Conduct and Ethics and ethical business practices. We may be held responsible or liable for the actions or omissions of these third parties. Actions, omissions or violations of law by our third-party sales partners or agents could have a material adverse effect on our business, operating results and financial condition.
Our failure to manage our relationships with third-party service partners effectively could adversely impact our financial results and relationships with customers.
We rely on a number of third-party service partners, both domestic and international, to complement our global service and support resources. We rely on these partners for certain installation, maintenance and support functions. In addition, as network

29


operators increasingly seek to rely on vendors to perform additional services relating to the design, construction and operation of their networks, the scope of work performed by our support partners is likely to increase and may include areas where we have less experience providing or managing such services. We must successfully identify, assess, train and certify qualified service partners in order to ensure the proper installation, deployment and maintenance of our products, as well as to ensure the skillful performance of other services associated with expanded solutions offerings, including site assessment and construction-related services. We must also assess and certify service partners in order to ensure their understanding of and willingness and ability to adhere to our Code of Business Conduct and Ethics, and ethical business practices. Vetting and certification of these partners can be costly and time-consuming, and certain partners may not have the same operational history, financial resources and scale as we have. Moreover, certain service partners may provide similar services for other companies, including our competitors. We may not be able to manage our relationships with our service partners effectively, and we cannot be certain that they will be able to deliver services in the manner or time required, that we will be able to maintain the continuity of their services, or that they will adhere to our approach to ethical business practices. We may also be exposed to a number of risks or challenges relating to the performance of our service partners, including:
delays in recognizing revenue;
liability for injuries to persons, damage to property or other claims relating to the actions or omissions of our service partners;
our services revenue and gross margin may be adversely affected; and
our relationships with customers could suffer.
As our service offering expands and customers look to identify vendors capable of managing, integrating and optimizing multi-domain, multi-vendor networks with unified software, our relationships with third-party service partners will become increasingly important. If we do not effectively manage our relationships with third-party service partners, or if they fail to perform these services in the manner or time required, our financial results and relationships with customers could be adversely affected.
We may be adversely affected by fluctuations in currency exchange rates.
As a company with global operations, we face exposure to movements in foreign currency exchange rates. Due to our global presence, a significant percentage of our revenue, operating expense and assets and liabilities are non-U.S. Dollar denominated and therefore subject to foreign currency fluctuation. We face exposure to currency exchange rates as a result of the growth in our non-U.S. Dollar denominated operating expense in Canada, Europe, Asia and Latin America. An increase in the value of the U.S. Dollar could increase the real cost to our customers of our products in those markets outside the United States where we sell in Dollars, and a weakened Dollar could increase the cost of local operating expenses and procurement of materials or service that we purchase in foreign currencies. From time to time, we hedge against currency exposure associated with anticipated foreign currency cash flows or assets and liabilities denominated in foreign currency. Such attempts to offset the impact of currency fluctuations are costly, and we cannot hedge against all foreign exchange rate volatility. Losses associated with these hedging instruments and the adverse effect of foreign currency exchange rate fluctuation may negatively affect our results of operations.
Changes in government regulations affecting the communications and technology industries and the businesses of our customers could harm our prospects and operating results.
The Federal Communications Commission (the “FCC”) has jurisdiction over the U.S. communications industry, and similar agencies have jurisdiction over the communication industries in other countries. Many of our largest customers, including service providers and cable and multiservice network operators, are subject to the rules and regulations of these agencies, while others participate in and benefit from government-funded programs that encourage the development of network infrastructures. These regulatory requirements and funding programs are subject to changes that may adversely impact our customers, with resulting adverse impacts on our business.
In December 2017, the FCC voted to roll back its 2015 order regulating broadband internet service providers as telecommunications service carriers under Title II of the Telecommunications Act. This decision repeals net neutrality regulations that prohibit blocking, degrading or prioritizing certain types of internet traffic and restores the light touch regulatory treatment of broadband service in place prior to 2015. Although the FCC has preempted state jurisdiction on net neutrality, at least two states, Montana and New York have already taken executive action directed at reinstating aspects of the FCC’s 2015 order. In addition, in September 2018, California passed legislation that seeks to reestablish net neutrality. Changes in regulatory requirements or uncertainty associated with the regulatory environment could delay or serve as a disincentive to investment in network infrastructures by network operators, which could adversely affect the sale of our products and services. Similarly, changes in regulatory tariff requirements or other regulations relating to pricing or terms of carriage on communications

30


networks could slow the development or expansion of network infrastructures and adversely affect our business, operating results, and financial condition.
In October 2019, the Supreme Court in India ruled against an industry group of India service providers in a long-standing dispute over the calculation of license and other regulatory fees owing to the Department of Telecommunications. The ruling has resulted in the possibility of significant near-term liability among these service providers, which include our customers, for amounts owing to the Department of Telecommunications in relation to these revenue-based license fees along with certain penalties and interest. There can be no assurance that this ruling, the resulting license fee interpretation and amounts owing, will not adversely affect spending by these customers or our business or sales in India.
Separately, certain of our Web-scale customers have been the subject of regulatory and other government actions, including inquiries and investigations, formal or informal, by competition authorities in the United States, Europe and other jurisdictions. In July 2019, the U.S. Department of Justice announced that it would commence an antitrust review into significant online technology platforms, and in September 2019, various state attorneys general announced antitrust investigations involving certain technology companies. In addition, certain committees of the U.S. Congress have recently held hearings to consider the businesses associated with these platforms and their impact on competition. There can be no assurance that these government actions will not adversely impact the network spending, procurement strategies, or business practices of our Web-scale customers in a manner adverse to us.
We are a party to legal proceedings, investigations and other claims or disputes, which are costly to defend and, if determined adversely to us, could require us to pay fines or damages, undertake remedial measures or prevent us from taking certain actions, any of which could adversely affect our business.
In the course of our business, we are, and in the future may be, a party to legal proceedings, investigations and other claims or disputes, which have related and may relate to subjects including commercial transactions, intellectual property, securities, employee relations, or compliance with applicable laws and regulations. A description of certain of these matters can be found in Note 25, Commitments and Contingencies, in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Report. Legal proceedings and investigations are inherently uncertain and we cannot predict their duration, scope, outcome or consequences. There can be no assurance that these or any such matters that have been or may in the future be brought against us will be resolved favorably. In connection with any government investigations, in the event the government takes action against us or the parties resolve or settle the matter, we may be required to pay substantial fines or civil and criminal penalties and/or be subject to equitable remedies, including disgorgement or injunctive relief. Other legal or regulatory proceedings, including lawsuits filed by private litigants, may also follow as a consequence. These matters are likely to be expensive and time-consuming to defend, settle and/or resolve, and may require us to implement certain remedial measures that could prove costly or disruptive to our business and operations. They may also cause damage to our business reputation. The unfavorable resolution of one or more of these matters could have a material adverse effect on our business, results of operations, financial condition or cash flows.
Our exposure to the credit risks of our customers and resellers may make it difficult to collect receivables and could adversely affect our revenue and operating results.
In the course of our sales to customers and resale channel partners, we may have difficulty collecting receivables, and our business and results of operations could be exposed to risks associated with uncollectible accounts. Lack of liquidity in the capital markets, macroeconomic weakness and market volatility may increase our exposure to these credit risks. Our attempts to monitor customer payment capability and to take appropriate measures to protect ourselves may not be sufficient, and it is possible that we may have to write down or write off accounts receivable. Such write-downs or write-offs could negatively affect our operating results for the period in which they occur, and, if large, could have a material adverse effect on our revenue and operating results.
Growth of our business is dependent on the proper functioning and scalability of our internal business processes and information systems. Adoption of new systems, modifications or interruptions of services may disrupt our business, processes and internal controls.
We rely on a number of internal business processes and information systems to support key business functions, and the efficient operation of these processes and systems is critical to managing our business. Our business processes and information systems must be sufficiently scalable to support the growth of our business and may require modifications or upgrades that expose us to a number of operational risks. We continually pursue initiatives to transform and optimize our business operations through the reengineering of certain processes, investment in automation, and engagement of strategic partners or resources to assist with certain business functions. These changes require a significant investment of capital and human resources and may be costly and disruptive to our operations, and they could impose substantial demands on management time. These changes may

31


also require changes in our information systems, modification of internal control procedures and significant training of employees or third-party resources. There can be no assurance that our business and operations will not experience disruption in connection with system upgrades or other initiatives. Even if we do not encounter these adverse effects or disruption in our business, the design and implementation of these new systems may be more costly than anticipated.
Our IT systems, and those of third-party IT providers or business partners, may also be vulnerable to damage or disruption caused by circumstances beyond our control, including catastrophic events, power anomalies or outages, natural disasters, cyber-security related incidents, and computer system or network failures. There can be no assurance that our business systems or those of our third-party business partners will not be subject to similar incidents, exposing us to significant cost, reputational harm and disruption or damage to our business.
Outstanding indebtedness under our senior secured credit facilities may adversely affect our liquidity and results of operations and could limit our business.
We are a party to credit agreements relating to a $300 million senior secured asset-based revolving credit facility and an outstanding senior secured term loan with approximately $693.0 million repayable at maturity in fiscal 2025. The agreements governing these credit facilities contain certain covenants that limit our ability, among other things, to incur additional debt, create liens and encumbrances, pay cash dividends, redeem or repurchase stock, enter into certain acquisition transactions or transactions with affiliates, repay certain indebtedness, make investments, or dispose of assets. The agreements also include customary remedies, including the right of the lenders to take action with respect to the collateral securing the loans, that would apply should we default or otherwise be unable to satisfy our debt obligations.
Our indebtedness could have important negative consequences, including:
increasing our vulnerability to adverse economic and industry conditions;
limiting our ability to obtain additional financing, particularly in unfavorable capital and credit market conditions;
debt service and repayment obligations that may adversely impact our results of operations and reduce the availability of cash resources for other business purposes;
limiting our flexibility in planning for, or reacting to, changes in our business and the markets; and
placing us at a possible competitive disadvantage to competitors that have better access to capital resources.
We may also enter into additional debt transactions or credit facilities, including equipment loans, working capital lines of credit, senior notes and other long-term debt, which may increase our indebtedness and result in additional restrictions on our business. In addition, major debt rating agencies regularly evaluate our debt based on a number of factors. There can be no assurance that we will be able to maintain our existing debt ratings, and failure to do so could adversely affect our cost of funds, liquidity and access to capital markets.
Significant volatility and uncertainty in the capital markets may limit our access to funding on favorable terms or at all.
The operation of our business requires significant capital. We have accessed the capital markets in the past and have successfully raised funds, including through the issuance of equity, convertible notes and other indebtedness, to increase our cash position, support our operations and undertake strategic growth initiatives. We regularly evaluate our liquidity position, debt obligations and anticipated cash needs to fund our long-term operating plans, and we may consider it necessary or advisable to raise additional capital or incur additional indebtedness in the future. If we raise additional funds through further issuance of equity or securities convertible into equity, or undertake certain transactions intended to address our existing indebtedness, our existing stockholders could suffer dilution in their percentage ownership of our company or our leverage and outstanding indebtedness could increase. Global capital markets have undergone periods of significant volatility and uncertainty in the past, and there can be no assurance that such financing alternatives will be available to us on favorable terms or at all, should we determine it necessary or advisable to seek additional capital.
The effects of the UK’s potential withdrawal from membership in the European Union remain uncertain.
In June 2016, the UK held a referendum in which voters approved an exit from the EU, commonly referred to as “Brexit,” and in March 2017, notified the EU that it intended to exit as provided in Article 50 of the Treaty on European Union. The terms of the withdrawal are subject to ongoing negotiation that has created significant uncertainty about the future relationship between the UK and the EU. It is possible that the level of economic activity in this region will be adversely impacted and that there will be increased regulatory and legal complexities, including those relating to tax, trade, security and employees. Such changes could be costly and potentially disruptive to our operations and business relationships in these markets. Economic uncertainty related to Brexit, including volatility in global stock markets and currency exchange rates, could adversely impact our business. In addition, there is a risk that the UK will withdraw from the EU without any agreement on the terms of the

32


withdrawal, which has resulted in additional uncertainty and could lead to further costs and disruptions. While we have adopted certain operational and financial measures to reduce the risks of doing business internationally, we cannot ensure that such measures will be adequate to allow us to operate without disruption or adverse impact to our business and financial results in the affected regions.
Restructuring activities could disrupt our business and affect our results of operations.
We have taken steps, including reductions in force, office closures, and internal reorganizations to reduce the cost of our operations, improve efficiencies, or realign our organization and staffing to better match our market opportunities and our technology development initiatives. We may take similar steps in the future as we seek to realize operating synergies, to achieve our target operating model and profitability objectives, or to reflect more closely changes in the strategic direction of our business. These changes could be disruptive to our business, including our research and development efforts, and could result in significant expense, including accounting charges for inventory and technology-related write-offs, workforce reduction costs and charges relating to consolidation of excess facilities. Substantial expense or charges resulting from restructuring activities could adversely affect our results of operations and use of cash in those periods in which we undertake such actions.
If we are unable to attract and retain qualified personnel, we may be unable to manage our business effectively.
Competition to attract and retain highly skilled technical, engineering and other personnel with experience in our industry is intense, and our employees have been the subject of targeted hiring by our competitors. Competition is particularly intense in certain jurisdictions where we have research and development centers, including the Silicon Valley area of northern California, and we may experience difficulty retaining and motivating existing employees and attracting qualified personnel to fill key positions. Because we rely on equity awards as a significant component of compensation, particularly for our executive team, a lack of positive performance in our stock price, reduced grant levels, or changes to our compensation program may adversely affect our ability to attract and retain key employees. In addition, none of our executive officers is bound by an employment agreement for any specific term. We have a number of workforce planning initiatives underway and our failure to manage these programs effectively could result in the loss of key personnel. Similarly, the failure to properly manage the necessary knowledge transfer required from these employee transitions could impact our ability to maintain industry and innovation leadership. The loss of members of our management team or other key personnel could be disruptive to our business and, were it necessary, it could be difficult to replace such individuals. If we are unable to attract and retain qualified personnel, we may be unable to manage our business effectively, and our operations and financial results could suffer.
Strategic acquisitions and investments could disrupt our operations and may expose us to increased costs and unexpected liabilities.
From time to time, we acquire or make investments in other technology companies, or enter into other strategic relationships, to expand the markets we address, diversify our customer base or acquire, or accelerate the development of, technology or products. To do so, we may use cash, issue equity that could dilute our current stockholders, or incur debt or assume indebtedness. Strategic transactions can involve numerous additional risks, including:
failure to achieve the anticipated transaction benefits or the projected financial results and operational synergies;
greater than expected acquisition and integration costs;
disruption due to the integration and rationalization of operations, products, technologies and personnel;
diversion of management attention;
difficulty completing projects of the acquired company and costs related to in-process projects;
difficulty managing customer transitions or entering into new markets;
the loss of key employees;
disruption or termination of business relationships with customers, suppliers, vendors, landlords, licensors and other business partners;
ineffective internal controls over financial reporting;
dependence on unfamiliar suppliers or manufacturers;
assumption of or exposure to unanticipated liabilities, including intellectual property infringement or other legal claims; and
adverse tax or accounting impact.
As a result of these and other risks, our acquisitions, investments or strategic transactions may not realize the intended benefits and may ultimately have a negative impact on our business, results of operation and financial condition.
We may be exposed to unanticipated risks and additional obligations in connection with our resale of complementary products or technology of other companies.

33


We have entered into agreements with strategic supply partners that permit us to distribute their products or technology. We may rely on these relationships to add complementary products or technologies, to diversify our product portfolio, or to address a particular customer or geographic market. We may enter into additional original equipment manufacturer (OEM), resale or similar strategic arrangements in the future. We may incur unanticipated costs or difficulties relating to our resale of third-party products. Our third-party relationships could expose us to risks associated with the business, financial condition, intellectual property rights and supply chain continuity of such partners, as well as delays in their development, manufacturing or delivery of products or technology. We may also be required by customers to assume warranty, indemnity, service and other commercial obligations, including potential liability to customers, greater than the commitments, if any, made to us by our technology partners. Some of our strategic supply partners are relatively small companies with limited financial resources. If they are unable to satisfy their obligations to us or our customers, we may have to expend our own resources to satisfy these obligations. Exposure to these risks could harm our reputation with key customers and could negatively affect our business and our results of operations.
Government regulations related to the environment, climate change and social initiatives could adversely affect our business and operating results.
Our operations are regulated under various federal, state, local and international laws relating to the environment and climate change. If we were to violate or become liable under these laws or regulations, we could incur fines, costs related to damage to property or personal injury and costs related to investigation or remediation activities. Our product design efforts and the manufacturing of our products are also subject to evolving requirements relating to the presence of certain materials or substances in our equipment, including regulations that make producers for such products financially responsible for the collection, treatment and recycling of certain products. For example, our operations and financial results may be negatively affected by environmental regulations, such as the Waste Electrical and Electronic Equipment (WEEE) and Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (RoHS) that have been adopted by the EU. Compliance with these and similar environmental regulations may increase our cost of designing, manufacturing, selling and removing our products. The SEC requires disclosure regarding the use of “conflict minerals” mined from the Democratic Republic of the Congo and adjoining countries (the “DRC”) and disclosure with respect to procedures regarding a manufacturer’s efforts to prevent the sourcing of such minerals from the DRC. Certain of these minerals are present in our products. SEC rules implementing these requirements may have the effect of reducing the pool of suppliers that can supply “conflict free” components and parts, and we may not be able to obtain conflict free products or supplies in sufficient quantities for our operations. Because our supply chain is complex, we may face reputational challenges with our customers, stockholders and other stakeholders if we are unable to verify sufficiently the origins for the “conflict minerals” used in our products and cannot assert that our products are “conflict free.” Environmental or similar social initiatives may also make it difficult to obtain supply of compliant components or may require us to write off non-compliant inventory, which could have an adverse effect on our business and operating results.
We may be required to write down the value of certain significant assets, which would adversely affect our operating results.
We have a number of significant assets on our balance sheet as of October 31, 2019 and the value of these assets can be adversely impacted by factors related to our business and operating performance, as well as factors outside of our control. As of October 31, 2019, our balance sheet includes a $714.9 million net deferred tax asset. The value of our net deferred tax assets can be significantly impacted by changes in tax policy or our tax planning strategy. For example, the Tax Act required us to write down our net deferred tax assets by approximately $438.2 million in fiscal 2018. If any additional write downs are required, our operating results may be materially adversely affected.

As of October 31, 2019, our balance sheet also includes $297.9 million of goodwill. We test each reporting unit for impairment of goodwill on an annual basis and, between annual tests, if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the reporting unit below its carrying value. As of October 31, 2019, our balance sheet also includes $455.1 million in long-lived assets, which includes $112.8 million of intangible assets. Valuation of our long-lived assets requires us to make assumptions about future sales prices and sales volumes for our products. These assumptions are used to forecast future, undiscounted cash flows on which our estimates are based. The value of our net deferred tax asset above may also be subject to change in the future, based on our actual or projected generation of future taxable income. If market conditions or our forecasts for our business or any particular operating segment change, we may be required to reassess the value of these assets. We could be required to record an impairment charge against our goodwill and long-lived assets or a valuation allowance against our deferred tax assets. Any write down of the value of these significant assets would have the effect of decreasing our earnings or increasing our losses in such period. If we are required to take a substantial write down or charge, our operating results would be materially adversely affected in such period.

34


Failure to maintain effective internal controls over financial reporting could have a material adverse effect on our business, operating results and stock price.
Section 404 of the Sarbanes-Oxley Act of 2002 requires that we include in our annual report a report containing management’s assessment of the effectiveness of our internal controls over financial reporting as of the end of our fiscal year and a statement as to whether or not such internal controls are effective. Compliance with these requirements has resulted in, and is likely to continue to result in, significant costs and the commitment of time and operational resources. Certain ongoing initiatives, including efforts to transform business processes or to transition certain functions to third-party resources or providers, will necessitate modifications to our internal control systems, processes and related information systems as we optimize our business and operations. Our expansion into new regions could pose further challenges to our internal control systems. We cannot be certain that our current design for internal control over financial reporting, or any additional changes to be made, will be sufficient to enable management to determine that our internal controls are effective for any period, or on an ongoing basis. If we are unable to assert that our internal controls over financial reporting are effective, market perception of our financial condition and the trading price of our stock may be adversely affected, and customer perception of our business may suffer.
Our stock price is volatile.
Our common stock price has experienced substantial volatility in the past and may remain volatile in the future. Volatility in our stock price can arise as a result of a number of the factors discussed in this “Risk Factors” section. During fiscal 2019, our closing stock price ranged from a high of $45.95 per share to a low of $30.64 per share. The stock market has experienced significant price and volume fluctuation that has affected the market price of many technology companies, with such volatility often unrelated to the operating performance of these companies. Divergence between our actual results and our forward-looking guidance for such results, the published expectations of investment analysts, or the expectations of the market generally, can cause significant swings in our stock price. Our stock price can also be affected by market conditions in our industry as well as announcements that we, our competitors, vendors or our customers may make. These may include announcements by us or our competitors of financial results or changes in estimated financial results, technological innovations, the gain or loss of customers, or other strategic initiatives. Our common stock is also included in certain market indices, and any change in the composition of these indices to exclude our company would adversely affect our stock price. These and other factors affecting macroeconomic conditions or financial markets may materially adversely affect the market price of our common stock in the future.
Changes in effective tax rates and other adverse outcomes with taxing authorities could adversely affect our results of operations.
Our future effective tax rates could be subject to volatility or adversely affected by changes in tax laws, regulations, accounting principles, or interpretations thereof. The impact of income taxes on our business can also be affected by a number of items relating to our business. These may include estimates for and the actual geographic mix of our earnings; changes in the valuation of our deferred tax assets; the use or expiration of net operating losses or research and development credit arrangements applicable to us in certain geographies; and changes in our methodology for transfer pricing, valuing developed technology or conducting intercompany arrangements. On December 22, 2017, the Tax Act was signed into law and introduced significant changes to U.S. federal corporate tax law. These changes include a reduction to the federal corporate income tax rate, the current taxation of certain foreign earnings, the imposition of base-erosion prevention measures which may limit the deductions relating to certain intercompany transactions, and possible limitations on the deductibility of net interest expense or corporate debt obligations. Accounting for the income tax effects of the Tax Act requires significant judgments and estimates that are based on then current interpretations of the Tax Act and could be affected by changing interpretations of the Act, as well as additional legislation and guidance around the Act. Any refinements to tax estimates are difficult to predict and could impact our financial results. We are also subject to the continuous examination of our income tax and other returns by the Internal Revenue Service and other tax authorities and have a number of such reviews underway at any time. It is possible that tax authorities may disagree with certain positions we have taken and an adverse outcome of such a review or audit could have a negative effect on our financial position and operating results. There can be no assurance that the outcomes from such examinations, or changes in our effective tax rates, will not have an adverse effect on our business, financial condition and results of operations.


35


Item 1B. Unresolved Staff Comments
Not applicable.

Item 2. Properties
     Overview. As of October 31, 2019, all of our properties are leased, and we do not own any real property. We lease facilities globally related to the ongoing operations of our three business segments and related functions. Our principal executive offices are located in two buildings in Hanover, Maryland.
Our largest facilities are our research and development centers located in Ottawa, Canada and Gurgaon, India. We also have engineering and/or service delivery facilities located in San Jose, California; Petaluma, California; Alpharetta, Georgia; Quebec, Canada; Austin, Texas; Pune and Bangalore, India. In addition, we lease various smaller offices in the United States, Canada, Mexico, South America, Europe, the Middle East and the Asia Pacific region to support our sales and services operations. We believe the facilities we are now using are adequate and suitable for our business requirements.
Hanover, Maryland Headquarters Lease. We entered into an agreement dated November 3, 2011, with W2007 RDG Realty, L.L.C. relating to a 15-year lease of office space for our corporate headquarters in Hanover, Maryland, consisting of an agreed-upon rentable area of approximately 154,100 square feet.
Ottawa Leases. On October 23, 2014, Ciena Canada, Inc. entered into an 18-year lease agreement for the office building located at 5050 Innovation Drive, Ottawa, Canada, consisting of a rentable area of 170,582 square feet. In addition, on April 15, 2015, Ciena Canada, Inc. entered into a 15-year lease agreement for two new office buildings adjacent to the building at 5050 Innovation Drive, located at 383 and 385 Terry Fox Drive, Ottawa, Canada, consisting of a rentable area of approximately 254,318 square feet.
Gurgaon Leases. On October 12, 2016, Ciena India Pvt. Ltd. entered into a five-year rental agreement for an office building located at Plot No. 13, Echelon Institutional Sector 32, Gurgaon, which is adjacent to another building rented by Ciena India Pvt. Ltd., located at Plot No. 14, Echelon Institutional Sector 32, Gurgaon. The Gurgaon offices consist of a rentable area of approximately 282,580 square feet.
        For additional information regarding our lease obligations, see Note 25 to our Consolidated Financial Statements included in Item 8 of Part II of this annual report.

36


Item 3. Legal Proceedings

As a result of the acquisition of Cyan in August 2015, we became a defendant in a securities class action lawsuit. On April 1, 2014, the first of two purported stockholder class action lawsuits was filed in the Superior Court of California, County of San Francisco, against Cyan, the members of Cyan’s board of directors, Cyan’s former Chief Financial Officer, and the underwriters of Cyan’s initial public offering. The cases were consolidated as Beaver County Employees Retirement Fund, et al. v. Cyan, Inc. et al., Case No. CGC-14-538355. The consolidated complaint alleged violations of federal securities laws on behalf of a purported class consisting of purchasers of Cyan’s common stock pursuant or traceable to the registration statement and prospectus for Cyan’s initial public offering in April 2013, and sought unspecified compensatory damages and other relief. On May 19, 2015, the proposed class was certified. During the fourth quarter of fiscal 2018, the parties agreed to the terms of a settlement of the action, which settlement was subject to notice to class members and approval by the court. On August 8, 2019, the court approved the settlement and entered judgment in the case. The terms of the settlement, which include a release and dismissal of all claims against all defendants without any liability or wrongdoing attributed to them, are not material to our financial results.
As first disclosed in our Form 10-K for fiscal 2017, during that year one of our third-party vendors raised allegations about certain questionable payments to one or more individuals employed by a customer in a country in the ASEAN region. We promptly initiated an internal investigation into the matter, with the assistance of outside counsel, which investigation corroborated direct and indirect payments to one such individual and sought to determine whether the payments may have violated applicable laws and regulations, including the U.S. Foreign Corrupt Practices Act. In September 2017, we voluntarily contacted the SEC and the U.S. Department of Justice (the “DOJ”) to advise them of the relevant events and the findings of our internal investigation. On December 10, 2018, the DOJ advised that it declined to prosecute this matter and that its investigation into this matter is closed. On September 9, 2019, the SEC advised that it has concluded its investigation into this matter and that its staff does not intend to recommend any enforcement action by the SEC against us.
In addition, the information set forth under the heading “Litigation” in Note 25, Commitments and Contingencies, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Report, is incorporated herein by reference.

Item 4. Mine Safety Disclosures
    
Not applicable.
PART II

37


Item 5. Market for Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities
(a) Our common stock is traded on the New York Stock Exchange under the stock symbol “CIEN.”
As of December 16, 2019, there were approximately 881 holders of record of our common stock and 154,054,072 shares of common stock outstanding. We have never paid cash dividends on our capital stock. We currently intend to retain earnings for use in our business, and we do not anticipate paying any cash dividends in the foreseeable future.

Issuer Purchases of Equity Securities
The following table provides a summary of repurchases of our common stock during the fourth quarter of fiscal 2019:
Period
 
Total Number of Shares Purchased (1)
 
Average Price Paid Per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
 
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
(in Thousands)
August 1, 2019 to August 31, 2019
 
345,963

 
$
41.64

 
345,963

 
$
373,669

September 1, 2019 to September 30, 2019
 
342,893

 
$
39.91

 
342,893

 
$
359,983

October 1, 2019 to October 31, 2019
 
268,046

 
$
37.53

 
268,046

 
$
349,924

Total
 
956,902

 
$
39.87

 
956,902

 
 
(1) On December 13, 2018, we announced that our Board of Directors authorized a program to repurchase up to $500 million of our common stock. Shares reported in this table were repurchased under this program. 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. See Note 20 to our Consolidated Financial Statements in Item 8 of Part II of this Report for information regarding the share repurchase program authorized by our Board of Directors.

Stock Performance Graph
The following graph shows a comparison of cumulative total returns for an investment in our common stock, the S&P North American Technology-Multimedia Networking Index and the Russell 1000 from October 31, 2014 to October 31, 2019. These comparative indices differ from those presented in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. However, for this year, we have included our current and previous indices for comparative purposes in order to allow investors to benchmark our performance as we make this transition. We believe that our current indices more closely align with our business from a market capitalization and industry perspective. Among other things, we have recently been added to the Russell 1000 index, which comprises the stocks representing the 1,000 largest publicly traded American companies as measured by market capitalization. We also currently measure our relative stock performance against the S&P North American Technology-Multimedia Networking Index for purposes of certain, performance-based market stock unit awards that have been granted to our executive officers. The S&P North American Technology-Multimedia Networking Index comprises stocks in the S&P Total Market Index that are classified under the Global Industry Classification Standard communications equipment sub-industry. This graph is not deemed to be “soliciting material” or “filed” with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the graph shall not be deemed to be incorporated by reference into any prior or subsequent filing by us under the Securities Act of 1933, as amended, or the Exchange Act.

38


https://cdn.kscope.io/86157ceddf3e277f6527b3872f2ad8f7-stockperformancegraph04.jpg
Assumes $100 invested in Ciena Corporation, the S&P North American Technology-Multimedia Networking Index, the Russell 1000, the S&P Telecom Select Index and the S&P Global SmallCap Index, respectively, on October 31, 2014 with all dividends reinvested at month-end.
(b) Not applicable.
(c) Not applicable.

39


Item 6. Selected Consolidated Financial Data
The following selected consolidated financial data should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and the notes thereto included in Item 8, “Financial Statements and Supplementary Data” in Part II of this annual report. We have a 52 or 53-week fiscal year, which ends on the Saturday nearest to the last day of October in each year. For purposes of financial statement presentation, each fiscal year is described as having ended on October 31. Fiscal 2019, 2017, 2016 and 2015 each consisted of 52 weeks, and fiscal 2018 consisted of 53 weeks.
 
Year Ended October 31,
(in thousands, except per share data)
 
2019 (1) (3) (4)
 
2018 (1) (2) (4) (5)
 
2017 (2) (4) (5)
 
2016
 
2015
Revenue
$
3,572,131

 
$
3,094,286

 
$
2,801,687

 
$
2,600,573

 
$
2,445,669

Gross profit
$
1,542,066

 
$
1,314,690

 
$
1,245,786

 
$
1,161,576

 
$
1,075,563

Income from operations
$
346,766

 
$
229,946

 
$
214,722

 
$
156,169

 
$
100,448

Provision (benefit) for income taxes
$
59,756

 
$
493,471

 
$
(1,105,827
)
 
$
14,134

 
$
12,097

Net income (loss)
$
253,434

 
$
(344,690
)
 
$
1,261,953

 
$
72,584

 
$
11,667

Basic net income (loss) per common share
$
1.63

 
$
(2.40
)
 
$
8.89

 
$
0.52

 
$
0.10

Diluted net income (loss) per potential common share
$
1.61

 
$
(2.49
)
 
$
7.53

 
$
0.51

 
$
0.10

Weighted average basic common shares outstanding
155,720

 
143,738

 
141,997

 
138,312

 
118,416

Weighted average diluted potential common shares outstanding
157,612

 
143,738

 
169,919

 
150,704

 
120,101

Net cash provided by operating activities
$
413,140

 
$
229,261

 
$
234,882

 
$
289,520

 
$
262,112

Cash used for repurchase of common stock - repurchase program
$
150,076

 
$
110,981

 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
 
Cash, cash equivalents and investments
$
1,023,999

 
$
953,374

 
$
969,429

 
$
1,143,035

 
$
1,021,183

Deferred tax asset, net
$
714,942

 
$
745,039

 
$
1,155,104

 
$
1,116

 
$

Total assets
$
3,893,346

 
$
3,756,523

 
$
3,951,711

 
$
2,873,575

 
$
2,685,001

Short-term and long-term debt, net
$
687,406

 
$
693,450

 
$
935,981

 
$
1,253,682

 
$
1,264,089

Total liabilities
$
1,720,585

 
$
1,827,189

 
$
1,815,369

 
$
2,107,234

 
$
2,064,125

Stockholders’ equity
$
2,172,761

 
$
1,929,334

 
$
2,136,342

 
$
766,341

 
$
620,876


(1) See Note 20 to our Consolidated Financial Statements in Item 8 of Part II of this Report for information regarding the share repurchase program authorized by our Board of Directors.
(2)
See Note 3 to our Consolidated Financial Statements included in Item 8 of Part II of this annual report for additional information regarding the acquisitions of Packet Design, LLC (“Packet Design”) on July 2, 2018 and DonRiver Holdings, LLC (“DonRiver”) on October 1, 2018.
(3)
See Note 17 to our Consolidated Financial Statements included in Item 8 of Part II of this annual report for additional information regarding changes in our short-term and long-term debt.
(4)
See Note 19 to our Consolidated Financial Statements included in Item 8 of Part II of this annual report for additional information regarding changes in our weighted average basic and diluted potential common shares outstanding.
(5)
Net income, deferred tax asset, net, total assets and stockholders’ equity for fiscal 2018 reflect a $472.8 million impact for the remeasurement of the net deferred tax assets and the federal transition tax and fiscal 2017 reflects a $1.2 billion deferred tax asset valuation allowance reversal. See Note 21 to our Consolidated Financial Statements included in Item 8 of Part II of this annual report for additional information.

At the beginning of fiscal 2019, we adopted Accounting Standards Codification (“ASC”) 606, a new accounting standard related to revenue recognition, using the modified retrospective method to those contracts that were not completed as of October 31, 2018. See Note 2 to our Consolidated Financial Statements included in Item 8 of Part II of this annual report for the impact of this adoption. No other factors materially affected the comparability of the information presented above.

40



Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our “Selected Consolidated Financial Data” and consolidated financial statements and notes thereto included elsewhere in this annual report.
 
Overview

We are a networking systems, services and software company, providing solutions that enable a wide range of network operators to deploy and manage next-generation networks that deliver services to businesses and consumers. We provide hardware, software and services that support the transport, switching, aggregation, service delivery and management of video, data and voice traffic on communications networks. Our solutions are used by communications service providers, cable and multiservice operators, Web-scale providers, submarine network operators, governments, enterprises, research and education institutions and other emerging network operators.
Our solutions include our portfolio of Networking Platforms, including our Converged Packet Optical and Packet Networking products, that can be applied from the network core to end user access points, and that allow network operators to scale capacity, increase transmission speeds, allocate traffic and adapt dynamically to changing end-user service demands. We offer Platform Software that provides management and domain control of our hardware solutions and automates network lifecycle operations, including provisioning equipment and services. Through our Blue Planet® Automation Software, we enable network providers to use network data, analytics and policy-based assurance to achieve closed loop automation across multi-vendor and multi-domain network environments, streamlining key business and network processes. To complement our hardware and software products, we offer a broad range of services that help our customers build, operate and improve their networks and associated operational environments.
We refer to our complete portfolio vision as the Adaptive Network™. The Adaptive Network emphasizes a programmable network infrastructure, software control and automation capabilities, and network analytics and intelligence. By transforming network infrastructures into a dynamic, programmable environment driven by automation and analytics, network operators can realize greater business agility, dynamically adapt to changing end user service demands and rapidly introduce new revenue-generating services. They can also gain valuable real-time network insights, allowing them to optimize network operation and maximize the return on their network infrastructure investment.
Market Opportunity

The markets in which we sell our communications networking solutions have seen significant changes in recent years, including rapid growth in bandwidth demand and network traffic, the proliferation of cloud-based services and new approaches, or “consumption models,” for designing and procuring networking solutions. Emerging services and applications, including 5G mobile communications, fiber deep and the Internet of Things, are further impacting or expected to impact wireline network infrastructures, particularly at the edge of networks, where increased computing power and automation are required to provide the quality of experience demanded by end users. The business models of many network operators are under pressure to constrain their capital expenditure budgets, as they cannot grow their network spending at the rate of bandwidth growth. To address these growing service demands and better manage network cost, many network operators are looking to adopt next-generation infrastructures that are more programmable and better capable of leveraging data for network insight, analytics and automation. Other network operators are pursuing a diverse range of consumption models in their design and procurement of network infrastructure solutions. Our Adaptive Network vision and our business strategy to capitalize on these changing market dynamics include the initiatives set forth in the “Strategy” section of the description of our business in Item 1 of Part 1 of this annual report.

Revenue and Earnings Growth

During fiscal 2019, our revenue and earnings growth accelerated, as we benefited meaningfully from strong network operator demand for capacity, favorable industry and competitive dynamics, and the continued execution of our strategy. Our strategy has focused on innovation leadership, the diversification of our business and customer base, and leveraging our global scale to capture additional market share. From fiscal 2018 to fiscal 2019, our revenue grew from $3.09 billion to $3.57 billion, or approximately 15.4%, and our income from operations grew from $229.9 million to $346.8 million, or approximately 50.8%. Our results can fluctuate and, given the degree of outstanding performance of our business during fiscal 2019, we do not expect that these revenue and profit growth rates will be sustained in future periods.
        

41


Business Diversification

We continue to diversify our business across geographies, customer segments and product solutions and applications. In fiscal 2019 and for the last several years, our diversification and global scale have been key contributors to our strong revenue growth despite any challenges in a particular geography, segment or account that may have served as a meaningful revenue contributor in an earlier period. During fiscal 2019, we grew revenue in our North America, EMEA and CALA geographic regions, and across three of our four operating segments. During fiscal 2019, we also grew revenue with our largest service provider customers, particularly in North America, after recent years of declining revenues. During fiscal 2019 we also benefited meaningfully from our strong market position with leading Web-scale providers for data center interconnection applications. Sales to Web-scale provider customers, representing approximately 22% of total revenue and growing over 40% year-over-year, were an important contributor to our annual revenue growth, with certain of these customers among our largest customers by revenue for fiscal 2019. Certain of such customers have announced an intention to reduce capital spending in future periods, and we expect our revenue from Web-scale customers to moderate from the level achieved in fiscal 2019. Our revenue gains from these areas offset a meaningful revenue reduction from our APAC region during fiscal 2019. After recent years of strong growth driven by aggressive network build outs by service providers in India, capital spending in this region decreased year-over-year. We believe our business and financial performance in recent years highlights the benefits of our diverse global business and our ability to target high growth segments within our markets.

Technology Innovation

We believe that our investment capacity and our efforts to push the pace of innovation in our markets, and to provide market-leading offerings ahead of our competitors, are important competitive differentiators that have contributed to the growth of our business during fiscal 2019. We are focused on growing our optical and packet infrastructure business by addressing fast-growing markets and applications, including data center interconnection, packet aggregation and switching, network densification applications including 5G and fiber deep, and access networks and submarine networks. We are also introducing Packet Networking solutions with enhanced IP/Ethernet capabilities that enable our Adaptive Network vision and expand our addressable market into additional applications and layers of the network. Importantly, we are also executing on parallel innovation paths for the next generation of our modem technology – WaveLogic 5 Extreme (WL5e) and WaveLogic 5 Nano (WL5n) – to address customer consumption models ranging from integrated systems to pluggable form factors. Keeping pace with the market’s demand for technology innovation requires considerable research and development investment capacity and expenditures. During fiscal 2019, we invested $548.1 million in research and development activities, an increase of approximately 11.5% compared to fiscal 2018. We believe that remaining competitive in our addressable geographies, markets, and customer segments depends on our continued degree of investment in innovation and our ability to offer leading solutions that enable adoption of next-generation network infrastructures and evolving consumption models for networking solutions.

Investment in Blue Planet Automation Software

We have continued to pursue both organic investments and acquisition opportunities to expand our Blue Planet Automation Software and Services portfolio and business. On November 4, 2019, after the end of fiscal 2019, we acquired privately held Centina Systems, Inc., a provider of service assurance analytics and network performance management solutions. The acquisition of Centina is intended to accelerate Blue Planet’s software strategy of providing closed loop, intelligent automation solutions that help communications service providers analyze network conditions, traffic demands, and resource availability, and determine the best placement of traffic for optimal service quality and resource utilization. See Note 26 to our Consolidated Financial Statements included in Item 8 of Part II of this report.

Consolidated Results of Operations

A discussion regarding our financial condition and results of operations for fiscal 2019 compared to fiscal 2018 is presented below. A discussion regarding our financial condition and results of operations for fiscal 2018 compared to fiscal 2017 can be found under Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended October 31, 2018, filed with the SEC on December 21, 2018 (our “2018 Annual Report”), which is available free of charge on the SEC’s website at www.sec.gov and our Investor Relations website at investor.ciena.com.
 
Operating Segments

During fiscal 2019, we separated our previous Software and Software-Related Services segment into two stand-alone operating segments: (i) Blue Planet Automation Software and Services; and (ii) Platform Software and Services. We separated this operating segment in alignment with and recognition of our corporate strategy to further promote customer adoption of our

42


Blue Planet Automation Software and Services, and corresponding changes by management to our evaluation of resource allocation for and measurement of performance of this business. Accordingly, as of the end of fiscal 2019, for reporting purposes, our results of operations are presented based on the following operating segments: (i) Networking Platforms; (ii) Platform Software and Services; (iii) Blue Planet Automation Software and Services; and (iv) Global Services. Because we previously disclosed our Blue Planet Automation Software and Services and Platform Software and Services as distinct product lines in our presentation of segment revenue for our previous Software and Software-Related Services segment, our presentation of segment revenues has not significantly changed as a result of this separation. See Note 23 to our Consolidated Financial Statements included in Item 8 of Part II of this report.

Fiscal 2019 Compared to Fiscal 2018

Revenue
During fiscal 2019, approximately 16.4% of our revenue was non-U.S. Dollar denominated, primarily including sales in Euros, Japanese Yen, Canadian Dollars, Indian Rupee, British Pounds, and Brazilian Reais. During fiscal 2019 as compared to fiscal 2018, the U.S. Dollar fluctuated against these and other currencies. Consequently, our revenue reported in U.S. Dollars was slightly reduced by approximately $23.4 million, or 0.7%, as compared to fiscal 2018 due to fluctuations in foreign currency. The table below (in thousands, except percentage data) sets forth the changes in our operating segment revenue for the periods indicated:
 
Fiscal Year
 
 
 
 
 
2019
 
%*
 
2018
 
%*
 
Increase
(decrease)
 
%**
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Networking Platforms
 
 
 
 
 
 
 
 
 
 
 
Converged Packet Optical
$
2,562,841

 
71.8
 
$
2,194,519

 
70.9
 
$
368,322

 
16.8

Packet Networking
348,477

 
9.8
 
283,499

 
9.2
 
64,978

 
22.9

Total Networking Platforms
2,911,318

 
81.6
 
2,478,018

 
80.1
 
433,300

 
17.5

 
 
 

 
 
 

 


 


  Platform Software and Services
155,376

 
4.3
 
173,949

 
5.6
 
(18,573
)
 
(10.7
)
Blue Planet Automation Software and Services
54,555

 
1.5
 
26,764

 
0.9
 
27,791

 
103.8

 
 
 

 
 
 

 


 


Global Services
 
 

 
 
 

 


 


Maintenance Support and Training
261,337

 
7.3
 
245,161

 
7.9
 
16,176

 
6.6

Installation and Deployment
148,233

 
4.1
 
128,829

 
4.2
 
19,404

 
15.1

Consulting and Network Design
41,312

 
1.2
 
41,565

 
1.3
 
(253
)
 
(0.6
)
Total Global Services
450,882

 
12.6
 
415,555

 
13.4
 
35,327

 
8.5

 
 
 
 
 
 
 
 
 
 
 
 
Consolidated revenue
$
3,572,131

 
100.0
 
$
3,094,286

 
100.0
 
$
477,845

 
15.4

_________________________________
*
Denotes % of total revenue
**
Denotes % change from 2018 to 2019
Networking Platforms segment revenue increased, reflecting product line sales increases of $368.3 million of our Converged Packet Optical products and $65.0 million of our Packet Networking products.
Converged Packet Optical sales increased, primarily reflecting sales increases of $249.7 million of our Waveserver stackable interconnect system and $193.4 million of our 6500 Packet-Optical Platform. These increases were partially offset by a sales decrease of $71.5 million of our 5410/5430 Reconfigurable Switching Systems. Waveserver sales increases reflect sales to Web-scale providers which have been an increasingly important contributor to our overall growth, and certain of these customers were among our largest customers by revenue. 6500 Packet-Optical Platform sales increases primarily reflect increased sales to communications service providers and cable and multiservice operators.

43


Packet Networking sales increased, primarily reflecting a sales increase of $99.1 million of our 6500 Packet Transport System (PTS) to a North American service provider, partially offset by sales decreases of $14.9 million of our packet networking platform independent software and $11.8 million of our 3000 and 5000 families of service delivery and aggregation switches. Part of our strategy is to continue to grow sales and reduce our concentration of revenue within our Packet Networking product line.
Platform Software and Services segment revenue decreased, reflecting software sales decreases of $20.1 million due to decreases of $12.0 million and $8.1 million in sales of our legacy software and our Manage, Control and Plan (“MCP”) software, respectively, partially offset by an increase of $1.5 million related to services. We continue to pursue further customer adoption of our MCP software platform and its enhanced features and functionality. As we transition existing customers as well as features and functionality from our legacy software to this platform, we expect revenue declines for our other legacy software solutions within this segment.
Blue Planet Automation Software and Services segment revenue increased, reflecting software sales increases of $5.1 million and service sales increases of $22.7 million. The increase in our software and service sales include sales of $12.8 million and $16.1 million related to the Packet Design and DonRiver businesses acquired during fiscal 2018, respectively. Our entrance into the software automation market is in the early stages and, as such, revenue from our Blue Planet Automation Software platform has not been significant to date.
Global Services segment revenue increased, primarily reflecting sales increases of $19.4 million of our installation and deployment services and $16.2 million of our maintenance support.

Our operating segments engage in business and operations across four geographic regions: North America; EMEA; CALA; and APAC. Results for North America include only activities in the U.S. and Canada. The following table reflects our geographic distribution of revenue principally based on the relevant location for our delivery of products and performance of services. Our revenue, when considered by geographic distribution, can fluctuate significantly, and the timing of revenue recognition for large network projects, particularly outside of North America, can result in large variations in geographic revenue results in any particular period. The table below (in thousands, except percentage data) sets forth the changes in geographic distribution of revenue for the periods indicated:
 
Fiscal Year
 
 
 
 
 
2019
 
%*
 
2018
 
%*
 
Increase
(decrease)
 
%**
North America
$
2,351,260

 
65.8
 
$
1,886,450

 
61.0
 
$
464,810

 
24.6

EMEA
566,718

 
15.9
 
464,876

 
15.0
 
101,842

 
21.9

CALA
152,653

 
4.3
 
140,177

 
4.5
 
12,476

 
8.9

APAC
501,500

 
14.0
 
602,783

 
19.5
 
(101,283
)
 
(16.8
)
Total
$
3,572,131

 
100.0
 
$
3,094,286

 
100.0
 
$
477,845

 
15.4

_________________________________
*
Denotes % of total revenue
**
Denotes % change from 2018 to 2019
North America revenue increased, reflecting increases of $453.6 million within our Networking Platforms segment, $15.4 million within our Global Services segment, and $15.9 million within our Blue Planet Automation Software and Services segment. These increases were partially offset by a decrease of $20.1 million within our Platform Software and Services segment. The Networking Platforms segment revenue increase includes a product line sales increase of $349.5 million of Converged Packet Optical products, primarily related to sales increases of $201.5 million of our 6500 Packet-Optical Platform to communication service providers and $165.9 million of our Waveserver to Web-scale providers.
EMEA revenue increased, reflecting increases of $91.8 million within our Networking Platforms segment. The increase within our Networking Platforms segment primarily reflects a product line sales increase of $90.4 million of Converged Packet Optical products, primarily related to sales increases of $66.0 million of our Waveserver to Web-scale providers and $33.7 million of our 6500 Packet-Optical Platform primarily to communications submarine network operators. The increase in EMEA revenue was primarily driven by increased sales in the United Kingdom and the Netherlands.

44


CALA revenue increased, reflecting increases of $4.3 million within our Networking Platforms segment and $5.8 million within our Global Services segment. The increase in CALA revenue primarily reflects increased sales to cable and multiservice operators and communications services providers in Mexico.
APAC revenue decreased, reflecting a decrease of $116.4 million within our Networking Platforms segment partially offset by revenue increases of $6.4 million within our Blue Planet Automation Software and Services segment, $5.7 million within our Global Services segment and $3.0 million within our Platform Software and Services segment. The decrease in Networking Platforms segment revenue reflects product line decreases of $74.8 million in Converged Packet Optical sales and $41.6 million in Packet Networking sales, primarily in India and Australia. See “Risk Factors – Changes in government regulations . . .” for additional information regarding an October 2019 regulatory ruling in India that may adversely impact future spending in that geography. The decrease in Converged Packet Optical sales is primarily due to decreases of $46.4 million and $45.8 million in sales of our 6500 Packet-Optical Platform and our 5410/5430 Reconfigurable Switching Systems, respectively, partially offset by an increase of $18.3 million in sales of Waveserver. Although our APAC revenue declined, we experienced increased sales in Japan and continued to capture new market share with communications service providers in the region.

In fiscal 2019 and fiscal 2018, our top ten customers contributed 59.3% and 56.5% of revenue, respectively. Consequently, our financial results are closely correlated with the spending of a relatively small number of customers and can be significantly affected by market, industry or competitive dynamics affecting their businesses. Our reliance on a rela