[May 31, 2018] |
|
Ciena Reports Fiscal Second Quarter 2018 Financial Results
Ciena®
Corporation (NYSE: CIEN)
-
Q2 Revenue: $730.0 million, increasing 3% year over year
-
Q2 Net Income per Share: $0.09 GAAP; $0.23 adjusted (non-GAAP)
-
Share Repurchases: Repurchased approximately 1.4 million shares
of common stock for an aggregate price of $33.4 million during the
quarter
Ciena,
a network strategy and technology company, today announced unaudited
financial results for its fiscal second quarter ended April 30, 2018.
Ciena President and CEO Gary B. Smith remarked: "We delivered strong
revenue and record order flow in the second quarter as we continue to
broaden our leadership and capture market share. Gross margin was
impacted by several new, international service provider deployments in
their early stages; however, we are confident in our ability to return
to our normalized gross margin levels. We anticipate strong revenue
growth in the second half of fiscal 2018 and we remain confident in our
three-year financial targets."
For the fiscal second quarter 2018, Ciena reported revenue of $730.0
million as compared to $707.0 million for the fiscal second quarter 2017.
Ciena's GAAP net income for the fiscal second quarter 2018 was $13.9
million, or $0.09 per diluted common share, which compares to a GAAP net
income of $38.0 million, or $0.25 per diluted common share, for the
fiscal second quarter 2017.
Ciena's adjusted (non-GAAP) net income for the fiscal second quarter
2018 was $33.8 million, or $0.23 per diluted common share, which
compares to an adjusted (non-GAAP) net income of $48.2 million, or $0.30
per diluted common share, for the fiscal second quarter 2017.
Fiscal Second Quarter 2018 Performance Summary
The tables below (in millions, except percentage data) provide
comparisons of certain quarterly results to the prior year. Appendix A
and B set forth reconciliations between the GAAP and adjusted (non-GAAP)
measures contained in this release.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Results
|
|
|
|
|
|
Q2
|
|
|
Q2
|
|
|
Period Change
|
|
|
|
|
|
FY 2018
|
|
|
FY 2017
|
|
|
Y-T-Y*
|
Revenue
|
|
|
|
|
$
|
730.0
|
|
|
|
$
|
707.0
|
|
|
|
|
3.3
|
%
|
Gross margin
|
|
|
|
|
40.2
|
%
|
|
|
45.0
|
%
|
|
|
|
(4.8
|
)%
|
Operating expense
|
|
|
|
|
$
|
261.2
|
|
|
|
$
|
260.4
|
|
|
|
|
0.3
|
%
|
Operating margin
|
|
|
|
|
4.4
|
%
|
|
|
8.2
|
%
|
|
|
|
(3.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Results
|
|
|
Q2
|
|
|
Q2
|
|
|
Period Change
|
|
|
FY 2018
|
|
|
FY 2017
|
|
|
Y-T-Y*
|
Revenue
|
|
$
|
730.0
|
|
|
|
$
|
707.0
|
|
|
|
|
3.3
|
%
|
Adj. gross margin
|
|
40.7
|
%
|
|
|
45.7
|
%
|
|
|
|
(5.0
|
)%
|
Adj. operating expense
|
|
$
|
240.6
|
|
|
|
$
|
234.6
|
|
|
|
|
2.6
|
%
|
Adj. operating margin
|
|
7.7
|
%
|
|
|
12.5
|
%
|
|
|
|
(4.8
|
)%
|
Adj. EBITDA
|
|
$
|
77.1
|
|
|
|
$
|
107.6
|
|
|
|
|
(28.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Denotes % change, or in the case of margin, absolute change
|
|
|
|
Revenue by Segment
|
|
|
|
|
Q2 FY 2018
|
|
|
Q2 FY 2017
|
|
|
|
|
Revenue
|
|
|
%**
|
|
|
Revenue
|
|
|
%**
|
Networking Platforms
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Converged Packet Optical
|
|
|
|
$
|
527.9
|
|
|
|
72.4
|
|
|
|
$
|
505.2
|
|
|
|
71.4
|
Packet Networking
|
|
|
|
63.8
|
|
|
|
8.7
|
|
|
|
66.3
|
|
|
|
9.4
|
Total Networking Platforms
|
|
|
|
591.7
|
|
|
|
81.1
|
|
|
|
571.5
|
|
|
|
80.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software and Software-Related Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software Platforms
|
|
|
|
12.5
|
|
|
|
1.7
|
|
|
|
13.1
|
|
|
|
1.9
|
Software-Related Services
|
|
|
|
26.2
|
|
|
|
3.6
|
|
|
|
24.6
|
|
|
|
3.5
|
Total Software and Software-Related Services
|
|
|
|
38.7
|
|
|
|
5.3
|
|
|
|
37.7
|
|
|
|
5.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance Support and Training
|
|
|
|
60.9
|
|
|
|
8.3
|
|
|
|
58.2
|
|
|
|
8.2
|
Installation and Deployment
|
|
|
|
28.2
|
|
|
|
3.9
|
|
|
|
28.7
|
|
|
|
4.1
|
Consulting and Network Design
|
|
|
|
10.5
|
|
|
|
1.4
|
|
|
|
10.9
|
|
|
|
1.5
|
Total Global Services
|
|
|
|
99.6
|
|
|
|
13.6
|
|
|
|
97.8
|
|
|
|
13.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
730.0
|
|
|
|
100.0
|
|
|
|
$
|
707.0
|
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Performance Metrics for Fiscal Second Quarter 2018
|
|
|
|
|
|
|
|
|
Revenue by Geographic Region
|
|
|
|
|
Q2 FY 2018
|
|
|
Q2 FY 2017
|
|
|
|
|
Revenue
|
|
|
% **
|
|
|
Revenue
|
|
|
% **
|
North America
|
|
|
|
$
|
431.2
|
|
|
|
59.1
|
|
|
|
$
|
424.4
|
|
|
|
60.0
|
Europe, Middle East and Africa
|
|
|
|
121.7
|
|
|
|
16.7
|
|
|
|
105.8
|
|
|
|
15.0
|
Caribbean and Latin America
|
|
|
|
25.1
|
|
|
|
3.4
|
|
|
|
33.9
|
|
|
|
4.8
|
Asia Pacific
|
|
|
|
152.0
|
|
|
|
20.8
|
|
|
|
142.9
|
|
|
|
20.2
|
Total
|
|
|
|
$
|
730.0
|
|
|
|
100.0
|
|
|
|
$
|
707.0
|
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
** Denotes % of total revenue
-
U.S. customers contributed 53.8% of total revenue
-
One customer accounted for greater than 10% of revenue and represented
12% of total revenue
-
Cash and investments totaled $979.6 million
-
Cash flow from operations totaled $37.4 million
-
Free cash flow totaled $31.1 million
-
Average days' sales outstanding (DSOs) were 80
-
Accounts receivable balance was $647.4 million
-
Inventories totaled $231.3 million, including:
-
Raw materials: $48.4 million
-
Work in process: $13.2 million
-
Finished goods: $165.7 million
-
Deferred cost of sales: $55.2 million
-
Reserve for excess and obsolescence: $(51.2) million
-
Product inventory turns were 6.4
-
Headcount totaled 5,688
Acquisition of Packet Design
Ciena also announced
today that it has entered into a definitive agreement to acquire
privately-held Packet
Design, LLC, a provider of network performance management software
focused on Layer 3 network optimization, topology and route analytics.
The acquisition is intended to accelerate Ciena's Blue Planet software
strategy, extending its intelligent automation capabilities into IP with
critical new features that help customers optimize service delivery and
maximize network utilization.
Supplemental Materials and Live Web Broadcast of Unaudited Fiscal
Second Quarter 2018 Results
Today, Thursday, May 31, 2018, in conjunction with this announcement,
Ciena has posted to the Quarterly
Results page of the Investor Relations section of its website
supporting materials for its unaudited fiscal second quarter 2018
results.
Ciena's management will also host a discussion today with investors and
financial analysts that will include the Company's fiscal third quarter
outlook. The live audio web broadcast beginning at 8:30 a.m. Eastern
will be accessible via www.ciena.com.
An archived replay of the live broadcast will be available shortly
following its conclusion on the Investor
Relations page of Ciena's website.
Notes to Investors
Forward-Looking Statements. You are encouraged to
review the Investors section of our website, where we routinely post
press releases, SEC filings, recent news, financial results,
supplemental financial information, and other announcements. From time
to time we exclusively post material information to this website along
with other disclosure channels that we use. This press release contains
certain forward-looking statements that involve risks and uncertainties.
These statements are based on current expectations, forecasts,
assumptions and other information available to the Company as of the
date hereof. Forward-looking statements include statements regarding
Ciena's expectations, beliefs, intentions or strategies regarding the
future and can be identified by forward-looking words such as
"anticipate," "believe," "could," "estimate," "expect," "intend," "may,"
"should," "will," and "would" or similar words. Forward-looking
statements in this release include: "We delivered strong revenue and
record order flow in the second quarter as we continue to broaden our
leadership and capture market share."; "Gross margin was impacted by
several new, international service provider deployments in their early
stages; however, we are confident in our ability to return to our
normalized gross margin levels."; "We anticipate strong revenue growth
in the second half of fiscal 2018 and we remain confident in our
three-year financial targets."
Ciena's actual results, performance or events may differ materially from
these forward-looking statements made or implied due to a number of
risks and uncertainties relating to Ciena's business, including: the
effect of broader economic and market conditions on our customers and
their business; changes in network spending or network strategy by
customers; seasonality and the timing and size of customer orders,
including our ability to recognize revenue relating to such sales; the
level of competitive pressure we encounter; the product, customer and
geographic mix of sales within the period; supply chain disruptions and
the level of success relating to efforts to optimize Ciena's operations;
changes in foreign currency exchange rates affecting revenue and
operating expense; the impact of the Tax Cuts and Jobs Act, changes in
estimates of prospective income tax rates and any adjustments to Ciena's
provisional estimates whether related to further guidance, analysis or
otherwise, and the other risk factors disclosed in Ciena's periodic
reports filed with the Securities and Exchange Commission, including its
Quarterly Report on Form 10-Q filed with the SEC on March 7, 2018 and
its Annual Report on Form 10-K filed with the SEC on December 22, 2017.
Ciena assumes no obligation to update any forward-looking information
included in this press release.
Non-GAAP Presentation of Quarterly and Annual Results. This
release includes non-GAAP measures of Ciena's gross profit, operating
expense, income from operations, earnings before interest, tax,
depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of
net income and net income per share. In evaluating the operating
performance of Ciena's business, management excludes certain charges and
credits that are required by GAAP. These items share one or more of the
following characteristics: they are unusual and Ciena does not expect
them to recur in the ordinary course of its business; they do not
involve the expenditure of cash; they are unrelated to the ongoing
operation of the business in the ordinary course; or their magnitude and
timing is largely outside of Ciena's control. Management believes that
the non-GAAP measures below provide management and investors useful
information and meaningful insight to the operating performance of the
business. The presentation of these non-GAAP financial measures should
be considered in addition to Ciena's GAAP results and these measures are
not intended to be a substitute for the financial information prepared
and presented in accordance with GAAP. Ciena's non-GAAP measures and the
related adjustments may differ from non-GAAP measures used by other
companies and should only be used to evaluate Ciena's results of
operations in conjunction with our corresponding GAAP results. To the
extent not previously disclosed in a prior Ciena financial results press
release, Appendix A and B to this press release set forth a complete
GAAP to non-GAAP reconciliation of the non-GAAP measures contained in
this release.
About Ciena. Ciena (NYSE: CIEN) is a network strategy
and technology company. We translate best-in-class technology into value
through a high-touch, consultative business model - with a relentless
drive to create exceptional experiences measured by outcomes. For
updates on Ciena, follow us on Twitter @Ciena,
LinkedIn,
the Ciena
Insights blog, or visit www.ciena.com.
|
CIENA CORPORATION
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands, except per share data)
|
(unaudited)
|
|
|
|
|
|
Quarter Ended April 30,
|
|
|
Six Months Ended April 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
|
|
$
|
604,226
|
|
|
|
$
|
584,630
|
|
|
|
$
|
1,129,835
|
|
|
|
$
|
1,091,623
|
|
Services
|
|
|
|
125,752
|
|
|
|
122,392
|
|
|
|
246,278
|
|
|
|
236,896
|
|
Total revenue
|
|
|
|
729,978
|
|
|
|
707,022
|
|
|
|
1,376,113
|
|
|
|
1,328,519
|
|
Cost of goods sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
|
|
372,568
|
|
|
|
327,295
|
|
|
|
685,688
|
|
|
|
614,106
|
|
Services
|
|
|
|
64,103
|
|
|
|
61,487
|
|
|
|
125,353
|
|
|
|
122,388
|
|
Total cost of goods sold
|
|
|
|
436,671
|
|
|
|
388,782
|
|
|
|
811,041
|
|
|
|
736,494
|
|
Gross profit
|
|
|
|
293,307
|
|
|
|
318,240
|
|
|
|
565,072
|
|
|
|
592,025
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
116,924
|
|
|
|
121,623
|
|
|
|
235,448
|
|
|
|
238,492
|
|
Selling and marketing
|
|
|
|
97,359
|
|
|
|
88,551
|
|
|
|
185,874
|
|
|
|
173,553
|
|
General and administrative
|
|
|
|
38,976
|
|
|
|
34,990
|
|
|
|
77,382
|
|
|
|
70,854
|
|
Amortization of intangible assets
|
|
|
|
3,623
|
|
|
|
10,980
|
|
|
|
7,246
|
|
|
|
25,531
|
|
Significant asset impairments and restructuring costs
|
|
|
|
4,359
|
|
|
|
4,276
|
|
|
|
10,320
|
|
|
|
6,671
|
|
Total operating expenses
|
|
|
|
261,241
|
|
|
|
260,420
|
|
|
|
516,270
|
|
|
|
515,101
|
|
Income from operations
|
|
|
|
32,066
|
|
|
|
57,820
|
|
|
|
48,802
|
|
|
|
76,924
|
|
Interest and other income (loss), net
|
|
|
|
1,296
|
|
|
|
(2,918
|
)
|
|
|
2,871
|
|
|
|
(2,548
|
)
|
Interest expense
|
|
|
|
(13,031
|
)
|
|
|
(13,308
|
)
|
|
|
(26,765
|
)
|
|
|
(28,511
|
)
|
Income before income taxes
|
|
|
|
20,331
|
|
|
|
41,594
|
|
|
|
24,908
|
|
|
|
45,865
|
|
Provision for income taxes1
|
|
|
|
6,475
|
|
|
|
3,568
|
|
|
|
484,415
|
|
|
|
3,978
|
|
Net income (loss)
|
|
|
|
$
|
13,856
|
|
|
|
$
|
38,026
|
|
|
|
$
|
(459,507
|
)
|
|
|
$
|
41,887
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income(loss) per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income(loss) per common share
|
|
|
|
$
|
0.10
|
|
|
|
$
|
0.27
|
|
|
|
$
|
(3.19
|
)
|
|
|
$
|
0.30
|
|
Diluted net income(loss) per potential common share 2
|
|
|
|
$
|
0.09
|
|
|
|
$
|
0.25
|
|
|
|
$
|
(3.19
|
)
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average basic common shares outstanding
|
|
|
|
143,975
|
|
|
|
141,743
|
|
|
|
143,948
|
|
|
|
141,223
|
|
Weighted average dilutive potential common shares outstanding 3
|
|
|
|
147,973
|
|
|
|
165,273
|
|
|
|
143,948
|
|
|
|
147,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. The provision for income taxes for fiscal 2018 is primarily related
to the enactment of the Tax Cuts and Jobs Act. These amounts are
provisional and reflect management's current estimates and current
interpretations of the Tax Cuts and Jobs Act. These amounts may require
adjustment in future periods as additional guidance under the Tax Cuts
and Jobs Act becomes available and analysis of its provisions is
completed. As of April 30, 2018, Ciena has net deferred tax assets of
approximately $734.8 million, and consequently, over the near term,
Ciena's cash taxes will continue to be primarily related to state taxes
and tax expense of Ciena's foreign subsidiaries, which amounts have not
historically been significant. Ciena's foreign and domestic income tax
expense for the second quarter of fiscal 2018 and 2017 expected to be
paid using cash was $2.0 million and $3.6 million, respectively. Ciena's
foreign and domestic income tax expense for the six months ended April
30, 2018 and 2017 expected to be paid using cash was $3.0 million and
$4.0 million, respectively.
2. The calculation of GAAP diluted net income per common share for the
second quarter of fiscal 2017 requires adding back interest expense of
approximately $0.5 million associated with Ciena's 0.875% convertible
senior notes, which were paid at maturity during the third quarter of
fiscal 2017, and approximately $3.6 million associated with Ciena's
"Original" 3.75% convertible senior notes, due October 15, 2018 to the
GAAP net income in order to derive the numerator for the diluted
earnings per common share calculation.
The calculation of GAAP diluted net income per common share for the
first six months of fiscal 2017 requires adding back interest expense of
approximately $1.1 million associated with Ciena's 0.875% convertible
senior notes, which were paid at maturity during the third quarter of
fiscal 2017, to the GAAP net income in order to derive the numerator for
the diluted earnings per common share calculation.
3. Weighted average dilutive potential common shares outstanding used in
calculating GAAP diluted net income per common share for the second
quarter of fiscal 2018 includes 1.3 million shares underlying certain
stock options and restricted stock units and 2.7 million shares
underlying Ciena's "New" 3.75% convertible senior notes, due October 15,
2018.
Weighted average dilutive potential common shares outstanding used in
calculating GAAP diluted net income per common share for the second
quarter of fiscal 2017 includes 1.3 million shares underlying certain
stock options and restricted stock units, 4.9 million shares underlying
Ciena's 0.875% convertible senior notes, which were paid at maturity
during the third quarter of fiscal 2017 and 17.4 million shares
underlying Ciena's "Original" 3.75% convertible senior notes, due
October 15, 2018.
Weighted average dilutive potential common shares outstanding used in
calculating GAAP diluted net income per common share for the first six
months of fiscal 2017 includes 1.4 million shares underlying certain
stock options and restricted stock units and 5.2 million shares
underlying Ciena's 0.875% convertible senior notes, which were paid at
maturity during the third quarter of fiscal 2017.
|
CIENA CORPORATION
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(in thousands, except share data)
|
(unaudited)
|
|
|
|
|
|
April 30, 2018
|
|
|
October 31, 2017
|
ASSETS
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
652,096
|
|
|
|
$
|
640,513
|
|
Short-term investments
|
|
|
|
268,584
|
|
|
|
279,133
|
|
Accounts receivable, net
|
|
|
|
647,380
|
|
|
|
622,183
|
|
Inventories
|
|
|
|
231,338
|
|
|
|
267,143
|
|
Prepaid expenses and other
|
|
|
|
186,024
|
|
|
|
197,339
|
|
Total current assets
|
|
|
|
1,985,422
|
|
|
|
2,006,311
|
|
Long-term investments
|
|
|
|
58,895
|
|
|
|
49,783
|
|
Equipment, building, furniture and fixtures, net
|
|
|
|
298,631
|
|
|
|
308,465
|
|
Goodwill
|
|
|
|
267,442
|
|
|
|
267,458
|
|
Other intangible assets, net
|
|
|
|
90,573
|
|
|
|
100,997
|
|
Deferred tax asset, net
|
|
|
|
734,824
|
|
|
|
1,155,104
|
|
Other long-term assets
|
|
|
|
70,767
|
|
|
|
63,593
|
|
Total assets
|
|
|
|
$
|
3,506,554
|
|
|
|
$
|
3,951,711
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
264,398
|
|
|
|
$
|
260,098
|
|
Accrued liabilities and other short-term obligations
|
|
|
|
270,231
|
|
|
|
322,934
|
|
Deferred revenue
|
|
|
|
101,918
|
|
|
|
102,418
|
|
Current portion of long-term debt
|
|
|
|
353,208
|
|
|
|
352,293
|
|
Total current liabilities
|
|
|
|
989,755
|
|
|
|
1,037,743
|
|
Long-term deferred revenue
|
|
|
|
76,725
|
|
|
|
82,589
|
|
Other long-term obligations
|
|
|
|
110,417
|
|
|
|
111,349
|
|
Long-term debt, net
|
|
|
|
585,538
|
|
|
|
583,688
|
|
Total liabilities
|
|
|
|
$
|
1,762,435
|
|
|
|
$
|
1,815,369
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
Preferred stock - par value $0.01; 20,000,000 shares authorized;
zero shares issued and outstanding
|
|
|
|
-
|
|
|
|
-
|
|
Common stock - par value $0.01; 290,000,000 shares authorized;
143,427,976 and 143,043,227 shares issued and outstanding
|
|
|
|
1,434
|
|
|
|
1,430
|
|
Additional paid-in capital
|
|
|
|
6,810,226
|
|
|
|
6,810,182
|
|
Accumulated other comprehensive income (loss)
|
|
|
|
(5,072
|
)
|
|
|
(11,017
|
)
|
Accumulated deficit
|
|
|
|
(5,062,469
|
)
|
|
|
(4,664,253
|
)
|
Total stockholders' equity
|
|
|
|
1,744,119
|
|
|
|
2,136,342
|
|
Total liabilities and stockholders' equity
|
|
|
|
$
|
3,506,554
|
|
|
|
$
|
3,951,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIENA CORPORATION
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in thousands)
|
(unaudited)
|
|
|
|
|
|
Six Months Ended April 30,
|
|
|
|
|
2018
|
|
|
2017
|
Cash flows provided by operating activities:
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
$
|
(459,507
|
)
|
|
|
$
|
41,887
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Depreciation of equipment, building, furniture and fixtures, and
amortization of leasehold improvements
|
|
|
|
41,400
|
|
|
|
35,548
|
|
Share-based compensation costs
|
|
|
|
26,559
|
|
|
|
24,830
|
|
Amortization of intangible assets
|
|
|
|
11,824
|
|
|
|
33,466
|
|
Deferred taxes
|
|
|
|
481,401
|
|
|
|
-
|
|
Provision for inventory excess and obsolescence
|
|
|
|
14,977
|
|
|
|
19,623
|
|
Provision for warranty
|
|
|
|
10,565
|
|
|
|
2,347
|
|
Other
|
|
|
|
12,645
|
|
|
|
10,416
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(28,055
|
)
|
|
|
9,381
|
|
Inventories
|
|
|
|
20,420
|
|
|
|
(95,554
|
)
|
Prepaid expenses and other
|
|
|
|
2,623
|
|
|
|
(15,054
|
)
|
Accounts payable, accruals and other obligations
|
|
|
|
(55,986
|
)
|
|
|
(24,974
|
)
|
Deferred revenue
|
|
|
|
(5,736
|
)
|
|
|
3,832
|
|
Net cash provided by operating activities
|
|
|
|
73,130
|
|
|
|
45,748
|
|
Cash flows used in investing activities:
|
|
|
|
|
|
|
|
Payments for equipment, furniture, fixtures and intellectual property
|
|
|
|
(31,946
|
)
|
|
|
(60,328
|
)
|
Restricted cash
|
|
|
|
54
|
|
|
|
-
|
|
Purchase of available for sale securities
|
|
|
|
(198,026
|
)
|
|
|
(179,833
|
)
|
Proceeds from maturities of available for sale securities
|
|
|
|
200,000
|
|
|
|
180,000
|
|
Settlement of foreign currency forward contracts, net
|
|
|
|
132
|
|
|
|
(2,965
|
)
|
Purchase of cost method investment
|
|
|
|
(767
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
|
(30,553
|
)
|
|
|
(63,126
|
)
|
Cash flows used in financing activities:
|
|
|
|
|
|
|
|
Payment of long term debt
|
|
|
|
(2,000
|
)
|
|
|
(47,296
|
)
|
Payment for modification of term loans
|
|
|
|
-
|
|
|
|
(93,625
|
)
|
Payment of capital lease obligations
|
|
|
|
(1,868
|
)
|
|
|
(1,528
|
)
|
Repurchases of common stock-repurchase program
|
|
|
|
(38,036
|
)
|
|
|
-
|
|
Proceeds from issuance of common stock
|
|
|
|
11,804
|
|
|
|
10,345
|
|
Net cash used in financing activities
|
|
|
|
(30,100
|
)
|
|
|
(132,104
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(894
|
)
|
|
|
490
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
11,583
|
|
|
|
(148,992
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
|
640,513
|
|
|
|
777,615
|
|
Cash and cash equivalents at end of period
|
|
|
|
$
|
652,096
|
|
|
|
$
|
628,623
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
Cash paid during the period for interest
|
|
|
|
$
|
21,843
|
|
|
|
$
|
23,439
|
|
Cash paid during the period for income taxes, net
|
|
|
|
$
|
15,136
|
|
|
|
$
|
11,379
|
|
Non-cash investing activities
|
|
|
|
|
|
|
|
Purchase of equipment in accounts payable
|
|
|
|
$
|
3,226
|
|
|
|
$
|
3,818
|
|
Building subject to capital lease
|
|
|
|
$
|
-
|
|
|
|
$
|
20,695
|
|
Non-cash financing activities
|
|
|
|
|
|
|
|
Repurchase of common stock in accrued liabilities from repurchase
program
|
|
|
|
$
|
1,111
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly
Measures (unaudited)
|
|
|
|
|
|
|
|
Quarter Ended April 30,
|
|
|
2018
|
|
2017
|
Gross Profit Reconciliation (GAAP/non-GAAP)
|
|
|
|
|
GAAP gross profit
|
|
$
|
293,307
|
|
|
$
|
318,240
|
|
Share-based compensation-products
|
|
824
|
|
|
708
|
|
Share-based compensation-services
|
|
722
|
|
|
679
|
|
Amortization of intangible assets
|
|
2,289
|
|
|
3,623
|
|
Total adjustments related to gross profit
|
|
3,835
|
|
|
5,010
|
|
Adjusted (non-GAAP) gross profit
|
|
$
|
297,142
|
|
|
$
|
323,250
|
|
Adjusted (non-GAAP) gross profit percentage
|
|
40.7
|
%
|
|
45.7
|
%
|
|
|
|
|
|
Operating Expense Reconciliation (GAAP/non-GAAP)
|
|
|
|
|
GAAP operating expense
|
|
$
|
261,241
|
|
|
$
|
260,420
|
|
Share-based compensation-research and development
|
|
3,796
|
|
|
3,653
|
|
Share-based compensation-sales and marketing
|
|
3,760
|
|
|
3,513
|
|
Share-based compensation-general and administrative
|
|
5,109
|
|
|
3,417
|
|
Amortization of intangible assets
|
|
3,623
|
|
|
10,980
|
|
Significant asset impairments and restructuring costs
|
|
4,359
|
|
|
4,276
|
|
Total adjustments related to operating expense
|
|
20,647
|
|
|
25,839
|
|
Adjusted (non-GAAP) operating expense
|
|
$
|
240,594
|
|
|
$
|
234,581
|
|
|
|
|
|
|
Income from Operations Reconciliation (GAAP/non-GAAP)
|
|
|
|
|
GAAP income from operations
|
|
$
|
32,066
|
|
|
$
|
57,820
|
|
Total adjustments related to gross profit
|
|
3,835
|
|
|
5,010
|
|
Total adjustments related to operating expense
|
|
20,647
|
|
|
25,839
|
|
Total adjustments related to income from operations
|
|
24,482
|
|
|
30,849
|
|
Adjusted (non-GAAP) income from operations
|
|
$
|
56,548
|
|
|
$
|
88,669
|
|
Adjusted (non-GAAP) operating margin percentage
|
|
7.7
|
%
|
|
12.5
|
%
|
|
|
|
|
|
Net Income Reconciliation (GAAP/non-GAAP)
|
|
|
|
|
GAAP net income
|
|
$
|
13,856
|
|
|
$
|
38,026
|
|
Exclude GAAP provision for income taxes
|
|
6,475
|
|
|
3,568
|
|
Income before income taxes
|
|
$
|
20,331
|
|
|
$
|
41,594
|
|
Total adjustments related to income from operations
|
|
24,482
|
|
|
30,849
|
|
Non-cash interest expense
|
|
759
|
|
|
526
|
|
Modification of debt
|
|
-
|
|
|
2,924
|
|
Adjusted income before income taxes
|
|
$
|
45,572
|
|
|
$
|
75,893
|
|
Non-GAAP tax provision on adjusted income before income taxes
|
|
11,789
|
|
|
27,701
|
|
Adjusted (non-GAAP) net income
|
|
$
|
33,783
|
|
|
$
|
48,192
|
|
|
|
|
|
|
Weighted average basic common shares outstanding
|
|
143,975
|
|
141,743
|
Weighted average dilutive potential common shares outstanding 1
|
|
151,011
|
|
174,471
|
|
|
|
|
|
Net Income per Common Share
|
|
|
|
|
GAAP diluted net income per common share
|
|
$
|
0.09
|
|
|
$
|
0.25
|
|
Adjusted (non-GAAP) diluted net income per common share 2
|
|
$
|
0.23
|
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
Weighted average dilutive potential common shares outstanding used
in calculating Adjusted (non-GAAP) diluted net income per common
share for the second quarter of fiscal 2018 includes 1.3 million
shares underlying certain stock options and restricted stock units,
2.7 million shares underlying Ciena's "New" 3.75% convertible senior
notes, due October 15, 2018 and 3.0 million shares underlying
Ciena's "Original" 3.75% convertible senior notes, due October 15,
2018.
|
|
|
|
|
|
Weighted average dilutive potential common shares outstanding used
in calculating Adjusted (non-GAAP) diluted net income per common
share for the second quarter of fiscal 2017 includes 1.3 million
shares underlying certain stock options and restricted stock units,
4.9 million shares underlying Ciena's 0.875% convertible senior
notes, which were paid at maturity during the third quarter of
fiscal 2017, 17.4 million shares underlying Ciena's "Original" 3.75%
convertible senior notes, due October 15, 2018 and 9.2 million
shares underlying Ciena's 4.0% convertible senior notes, due
December 15, 2020.
|
|
|
|
2.
|
|
The calculation of Adjusted (non-GAAP) diluted net income per common
share for the second quarter of fiscal 2018 requires adding back
interest expense of approximately $0.5 million associated with
Ciena's "Original" 3.75% convertible senior notes, due October 15,
2018 to the Adjusted (non-GAAP) net income in order to derive the
numerator for the Adjusted earnings per common share calculation.
|
|
|
|
|
|
The calculation of Adjusted (non-GAAP) diluted net income per common
share for the second quarter of fiscal 2017 requires adding back
interest expense of approximately $0.3 million associated with
Ciena's 0.875% convertible senior notes, which were paid at maturity
during the third quarter of fiscal 2017, approximately $2.3 million
associated with Ciena's "Original" 3.75% convertible senior notes,
due October 15, 2018 and approximately $1.8 million associated with
Ciena's 4.0% convertible senior notes, due December 15, 2020 to the
Adjusted (non-GAAP) net income in order to derive the numerator for
the Adjusted earnings per common share calculation.
|
|
|
|
|
APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended April 30,
|
|
|
|
|
2018
|
|
|
2017
|
Earnings Before Interest, Tax, Depreciation and Amortization
(EBITDA)
|
|
|
|
|
|
|
|
Net income (GAAP)
|
|
|
|
$
|
13,856
|
|
|
|
$
|
38,026
|
|
Add: Interest expense
|
|
|
|
13,031
|
|
|
|
13,308
|
|
Less: Interest and other income (loss), net
|
|
|
|
1,296
|
|
|
|
(2,918
|
)
|
Add: Provision for income taxes
|
|
|
|
6,475
|
|
|
|
3,568
|
|
Add: Depreciation of equipment, building, furniture and fixtures,
and amortization of leasehold improvements
|
|
|
|
20,567
|
|
|
|
18,849
|
|
Add: Amortization of intangible assets
|
|
|
|
5,912
|
|
|
|
14,602
|
|
EBITDA
|
|
|
|
$
|
58,545
|
|
|
|
$
|
91,271
|
|
Add: Shared-based compensation cost
|
|
|
|
14,166
|
|
|
|
12,005
|
|
Add: Significant asset impairments and restructuring costs
|
|
|
|
4,359
|
|
|
|
4,276
|
|
Adjusted EBITDA
|
|
|
|
$
|
77,070
|
|
|
|
$
|
107,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The adjusted (non-GAAP) measures above and their reconciliation to
Ciena's GAAP results for the periods presented reflect adjustments
relating to the following items:
-
Share-based compensation - a non-cash expense incurred in
accordance with share-based compensation accounting guidance.
-
Amortization of intangible assets - a non-cash expense arising
from the acquisition of intangible assets, principally developed
technologies and customer-related intangibles, that Ciena is required
to amortize over its expected useful life.
-
Significant asset impairments and restructuring costs - costs
incurred as a result of restructuring activities taken to align
resources with perceived market opportunities.
-
Non-cash interest expense - a non-cash debt discount expense
amortized as interest expense during the term of Ciena's 4.0% senior
convertible notes due December 15, 2020 relating to the required
separate accounting of the equity component of these convertible notes.
-
Modification of debt - costs incurred as a result of the
modification of debt to refinance then existing term loans.
-
Non-GAAP tax provision - consists of current and deferred
income tax expense commensurate with the level of adjusted income
before income taxes and utilizes a current, blended U.S. and foreign
statutory annual tax rate of 25.87% for the second fiscal quarter of
2018, and 36.5% for the second fiscal quarter of 2017. This rate may
be subject to change in the future, including as a result of changes
in tax policy or tax strategy.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180531005345/en/
[ Back To TMCnet.com's Homepage ]
|