[August 30, 2018] |
|
Ciena Reports Fiscal Third Quarter 2018 Financial Results
Ciena® Corporation
(NYSE: CIEN)
-
Q3 Revenue: $818.8 million, increasing 12.4% year over year
-
Q3 Net Income per Share: $0.34 GAAP; $0.48 adjusted (non-GAAP)
-
Share Repurchases: Repurchased approximately 1.4 million shares
of common stock for an aggregate price of $35.6 million during the
quarter
Ciena today announced
unaudited financial results for its fiscal third quarter ended July 31,
2018.
"The combination of continued execution against our strategy and robust,
broad-based customer demand resulted in outstanding fiscal third quarter
performance," said Gary B. Smith, president and CEO of Ciena. "With our
diversification, global scale and innovation leadership, we remain
confident in our business model and our ability to achieve our
three-year financial targets."
For the fiscal third quarter 2018, Ciena reported revenue of $818.8
million as compared to $728.7 million for the fiscal third quarter 2017.
Ciena's GAAP net income for the fiscal third quarter 2018 was $50.8
million, or $0.34 per diluted common share, which compares to a GAAP net
income of $60.0 million, or $0.39 per diluted common share, for the
fiscal third quarter 2017.
Ciena's adjusted (non-GAAP) net income for the fiscal third quarter 2018
was $74.3 million, or $0.48 per diluted common share, which compares to
an adjusted (non-GAAP) net income of $56.4 million, or $0.35 per diluted
common share, for the fiscal third quarter 2017.
Fiscal Third Quarter 2018 Performance Summary
The tables below (in millions, except percentage data) provide
comparisons of certain quarterly results to the prior year. Appendix A
and B set forth reconciliations between the GAAP and adjusted (non-GAAP)
measures contained in this release.
|
|
|
|
|
|
|
GAAP Results
|
|
|
|
Q3
|
|
|
Q3
|
|
|
Period Change
|
|
|
|
FY 2018
|
|
|
FY 2017
|
|
|
Y-T-Y*
|
Revenue
|
|
|
$
|
818.8
|
|
|
|
$
|
728.7
|
|
|
|
12.4
|
%
|
Gross margin
|
|
|
|
42.9
|
%
|
|
|
|
45.0
|
%
|
|
|
(2.1
|
)%
|
Operating expense
|
|
|
$
|
266.3
|
|
|
|
$
|
246.1
|
|
|
|
8.2
|
%
|
Operating margin
|
|
|
|
10.4
|
%
|
|
|
|
11.3
|
%
|
|
|
(0.9
|
)%
|
|
|
|
|
|
|
|
Non-GAAP Results
|
|
|
|
Q3
|
|
|
Q3
|
|
|
Period Change
|
|
|
|
FY 2018
|
|
|
FY 2017
|
|
|
Y-T-Y*
|
Revenue
|
|
|
$
|
818.8
|
|
|
|
$
|
728.7
|
|
|
|
12.4
|
%
|
Adj. gross margin
|
|
|
|
43.4
|
%
|
|
|
|
45.5
|
%
|
|
|
(2.1
|
)%
|
Adj. operating expense
|
|
|
$
|
241.0
|
|
|
|
$
|
229.3
|
|
|
|
5.1
|
%
|
Adj. operating margin
|
|
|
|
14.0
|
%
|
|
|
|
14.1
|
%
|
|
|
(0.1
|
)%
|
Adj. EBITDA
|
|
|
$
|
136.1
|
|
|
|
$
|
122.8
|
|
|
|
10.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Denotes % change, or in the case of margin, absolute change
|
|
|
|
|
|
|
|
|
Revenue by Segment
|
|
|
|
Q3 FY 2018
|
|
|
Q3 FY 2017
|
|
|
|
Revenue
|
|
|
%**
|
|
|
Revenue
|
|
|
%**
|
Networking Platforms
|
|
|
|
|
|
|
|
|
|
|
|
|
Converged Packet Optical
|
|
|
$
|
592.8
|
|
|
72.5
|
|
|
$
|
510.2
|
|
|
70.0
|
Packet Networking
|
|
|
|
84.6
|
|
|
10.3
|
|
|
|
82.1
|
|
|
11.3
|
Total Networking Platforms
|
|
|
|
677.4
|
|
|
82.8
|
|
|
|
592.3
|
|
|
81.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software and Software-Related Services
|
|
|
|
|
|
|
|
|
|
|
|
|
Software Platforms
|
|
|
|
14.3
|
|
|
1.7
|
|
|
|
18.4
|
|
|
2.5
|
Software-Related Services
|
|
|
|
26.9
|
|
|
3.3
|
|
|
|
23.9
|
|
|
3.3
|
Total Software and Software-Related Services
|
|
|
|
41.2
|
|
|
5.0
|
|
|
|
42.3
|
|
|
5.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Services
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance Support and Training
|
|
|
|
60.9
|
|
|
7.4
|
|
|
|
57.9
|
|
|
7.9
|
Installation and Deployment
|
|
|
|
31.3
|
|
|
3.8
|
|
|
|
27.4
|
|
|
3.8
|
Consulting and Network Design
|
|
|
|
8.0
|
|
|
1.0
|
|
|
|
8.8
|
|
|
1.2
|
Total Global Services
|
|
|
|
100.2
|
|
|
12.2
|
|
|
|
94.1
|
|
|
12.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
818.8
|
|
|
100.0
|
|
|
$
|
728.7
|
|
|
100.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Performance Metrics for Fiscal Third Quarter 2018
|
|
|
|
|
|
|
Revenue by Geographic Region
|
|
|
|
Q3 FY 2018
|
|
|
Q3 FY 2017
|
|
|
|
Revenue
|
|
|
% **
|
|
|
Revenue
|
|
|
% **
|
North America
|
|
|
$
|
497.0
|
|
|
60.7
|
|
|
$
|
465.2
|
|
|
63.8
|
Europe, Middle East and Africa
|
|
|
|
122.2
|
|
|
14.9
|
|
|
|
96.1
|
|
|
13.2
|
Caribbean and Latin America
|
|
|
|
27.5
|
|
|
3.4
|
|
|
|
51.7
|
|
|
7.1
|
Asia Pacific
|
|
|
|
172.1
|
|
|
21.0
|
|
|
|
115.7
|
|
|
15.9
|
Total
|
|
|
$
|
818.8
|
|
|
100.0
|
|
|
$
|
728.7
|
|
|
100.0
|
|
** Denotes % of total revenue
|
|
-
U.S. customers contributed 57.3% of total revenue
-
Three customers accounted for greater than 10% of revenue and
represented 33% of total revenue
-
Cash and investments totaled $984.6 million
-
Cash flow from operations totaled $88.1 million
-
Free cash flow totaled $69.7 million
-
Average days' sales outstanding (DSOs) were 80
-
Accounts receivable balance was $728.9 million
-
Inventories totaled $227.9 million, including:
-
Raw materials: $54.0 million
-
Work in process: $11.1 million
-
Finished goods: $173.4 million
-
Deferred cost of sales: $38.5 million
-
Reserve for excess and obsolescence: $(49.1) million
-
Product inventory turns were 7.0
-
Headcount totaled 5,889
Supplemental Materials and Live Web Broadcast of Unaudited Fiscal
Third Quarter 2018 Results
Today, Thursday, August 30, 2018, in conjunction with this announcement,
Ciena has posted to the Quarterly
Results page of the Investor Relations section of its website
supporting materials for its unaudited fiscal third quarter 2018 results.
Ciena's management will also host a discussion today with investors and
financial analysts that will include the Company's fiscal third quarter
outlook. The live audio web broadcast beginning at 8:30 a.m. Eastern
will be accessible via www.ciena.com.
An archived replay of the live broadcast will be available shortly
following its conclusion on the Investor
Relations page of Ciena's website.
Notes to Investors
Forward-Looking Statements. You are encouraged to
review the Investors section of our website, where we routinely post
press releases, SEC filings, recent news, financial results,
supplemental financial information, and other announcements. From time
to time we exclusively post material information to this website along
with other disclosure channels that we use. This press release contains
certain forward-looking statements that involve risks and uncertainties.
These statements are based on current expectations, forecasts,
assumptions and other information available to the Company as of the
date hereof. Forward-looking statements include statements regarding
Ciena's expectations, beliefs, intentions or strategies regarding the
future and can be identified by forward-looking words such as
"anticipate," "believe," "could," "estimate," "expect," "intend," "may,"
"should," "will," and "would" or similar words. Forward-looking
statements in this release include: "The combination of continued
execution against our strategy and robust, broad-based customer demand
resulted in outstanding fiscal third quarter performance."; "With our
diversification, global scale and innovation leadership, we remain
confident in our business model and our ability to achieve our
three-year financial targets."
Ciena's actual results, performance or events may differ materially from
these forward-looking statements made or implied due to a number of
risks and uncertainties relating to Ciena's business, including: the
effect of broader economic and market conditions on our customers and
their business; changes in network spending or network strategy by
customers; seasonality and the timing and size of customer orders,
including our ability to recognize revenue relating to such sales; the
level of competitive pressure we encounter; the product, customer and
geographic mix of sales within the period; supply chain disruptions and
the level of success relating to efforts to optimize Ciena's operations;
changes in foreign currency exchange rates affecting revenue and
operating expense; the impact of the Tax Cuts and Jobs Act, changes in
estimates of prospective income tax rates and any adjustments to Ciena's
provisional estimates whether related to further guidance, analysis or
otherwise, and the other risk factors disclosed in Ciena's periodic
reports filed with the Securities and Exchange Commission, including its
Quarterly Report on Form 10-Q filed with the SEC on June 6, 2018 and its
Annual Report on Form 10-K filed with the SEC on December 22, 2017.
Ciena assumes no obligation to update any forward-looking information
included in this press release.
Non-GAAP Presentation of Quarterly and Annual Results. This
release includes non-GAAP measures of Ciena's gross profit, operating
expense, income from operations, earnings before interest, tax,
depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of
net income and net income per share. In evaluating the operating
performance of Ciena's business, management excludes certain charges and
credits that are required by GAAP. These items share one or more of the
following characteristics: they are unusual and Ciena does not expect
them to recur in the ordinary course of its business; they do not
involve the expenditure of cash; they are unrelated to the ongoing
operation of the business in the ordinary course; or their magnitude and
timing is largely outside of Ciena's control. Management believes that
the non-GAAP measures below provide management and investors useful
information and meaningful insight to the operating performance of the
business. The presentation of these non-GAAP financial measures should
be considered in addition to Ciena's GAAP results and these measures are
not intended to be a substitute for the financial information prepared
and presented in accordance with GAAP. Ciena's non-GAAP measures and the
related adjustments may differ from non-GAAP measures used by other
companies and should only be used to evaluate Ciena's results of
operations in conjunction with our corresponding GAAP results. To the
extent not previously disclosed in a prior Ciena financial results press
release, Appendix A and B to this press release set forth a complete
GAAP to non-GAAP reconciliation of the non-GAAP measures contained in
this release.
About Ciena. Ciena (NYSE: CIEN) is a networking
systems, services, and software company. We provide solutions that help
our clients create more adaptive networks in response to the constantly
changing demands of their users. By delivering best-in-class networking
technology through high-touch consultative relationships, we build the
world's most sophisticated networks with automation and scale. For
updates on Ciena, follow us on Twitter @Ciena,
LinkedIn, the Ciena
Insights blog, or visit www.ciena.com.
|
CIENA CORPORATION
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands, except per share data)
|
(unaudited)
|
|
|
|
|
Quarter Ended July 31,
|
|
|
Nine Months Ended July 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
|
$
|
691,758
|
|
|
|
$
|
610,742
|
|
|
|
$
|
1,821,593
|
|
|
|
$
|
1,702,365
|
|
Services
|
|
|
|
127,059
|
|
|
|
|
117,977
|
|
|
|
|
373,337
|
|
|
|
|
354,873
|
|
Total revenue
|
|
|
|
818,817
|
|
|
|
|
728,719
|
|
|
|
|
2,194,930
|
|
|
|
|
2,057,238
|
|
Cost of goods sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
|
|
399,886
|
|
|
|
|
341,197
|
|
|
|
|
1,085,574
|
|
|
|
|
955,303
|
|
Services
|
|
|
|
67,388
|
|
|
|
|
59,446
|
|
|
|
|
192,741
|
|
|
|
|
181,834
|
|
Total cost of goods sold
|
|
|
|
467,274
|
|
|
|
|
400,643
|
|
|
|
|
1,278,315
|
|
|
|
|
1,137,137
|
|
Gross profit
|
|
|
|
351,543
|
|
|
|
|
328,076
|
|
|
|
|
916,615
|
|
|
|
|
920,101
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
|
121,133
|
|
|
|
|
117,729
|
|
|
|
|
356,581
|
|
|
|
|
356,221
|
|
Selling and marketing
|
|
|
|
95,395
|
|
|
|
|
86,739
|
|
|
|
|
281,269
|
|
|
|
|
260,292
|
|
General and administrative
|
|
|
|
38,212
|
|
|
|
|
35,569
|
|
|
|
|
115,594
|
|
|
|
|
106,423
|
|
Significant asset impairments and restructuring costs
|
|
|
|
6,359
|
|
|
|
|
2,203
|
|
|
|
|
16,679
|
|
|
|
|
8,874
|
|
Amortization of intangible assets
|
|
|
|
3,837
|
|
|
|
|
3,837
|
|
|
|
|
11,083
|
|
|
|
|
29,368
|
|
Acquisition and integration costs
|
|
|
|
1,333
|
|
|
|
|
-
|
|
|
|
|
1,333
|
|
|
|
|
-
|
|
Total operating expenses
|
|
|
|
266,269
|
|
|
|
|
246,077
|
|
|
|
|
782,539
|
|
|
|
|
761,178
|
|
Income from operations
|
|
|
|
85,274
|
|
|
|
|
81,999
|
|
|
|
|
134,076
|
|
|
|
|
158,923
|
|
Interest and other income (loss), net
|
|
|
|
(1,543
|
)
|
|
|
|
(848
|
)
|
|
|
|
1,328
|
|
|
|
|
(3,396
|
)
|
Interest expense
|
|
|
|
(13,611
|
)
|
|
|
|
(13,415
|
)
|
|
|
|
(40,376
|
)
|
|
|
|
(41,926
|
)
|
Income before income taxes
|
|
|
|
70,120
|
|
|
|
|
67,736
|
|
|
|
|
95,028
|
|
|
|
|
113,601
|
|
Provision for income taxes 1
|
|
|
|
19,280
|
|
|
|
|
7,726
|
|
|
|
|
503,695
|
|
|
|
|
11,704
|
|
Net income (loss)
|
|
|
$
|
50,840
|
|
|
|
$
|
60,010
|
|
|
|
$
|
(408,667
|
)
|
|
|
$
|
101,897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income(loss) per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per common share
|
|
|
$
|
0.35
|
|
|
|
$
|
0.42
|
|
|
|
$
|
(2.84
|
)
|
|
|
$
|
0.72
|
|
Diluted net income (loss) per potential common share 2
|
|
|
$
|
0.34
|
|
|
|
$
|
0.39
|
|
|
|
$
|
(2.84
|
)
|
|
|
$
|
0.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average basic common shares outstanding
|
|
|
|
143,400
|
|
|
|
|
142,464
|
|
|
|
|
143,766
|
|
|
|
|
141,631
|
|
Weighted average dilutive potential common shares outstanding 3
|
|
|
|
159,998
|
|
|
|
|
172,112
|
|
|
|
|
143,766
|
|
|
|
|
164,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. The provision for income taxes for fiscal 2018 is primarily
related to the enactment of the Tax Cuts and Jobs Act. These amounts
are provisional and reflect management's current estimates and
current interpretations of the Tax Cuts and Jobs Act. These amounts
may require adjustment in future periods as additional guidance
under the Tax Cuts and Jobs Act becomes available and analysis of
its provisions is completed. As of July 31, 2018, Ciena has net
deferred tax assets of approximately $724.1 million, and
consequently, over the near term, Ciena's cash taxes will continue
to be primarily related to state taxes and tax expense of Ciena's
foreign subsidiaries, which amounts have not historically been
significant. Ciena's foreign and domestic income tax expense for the
third quarter of fiscal 2018 and 2017 expected to be paid using cash
was $8.8 million and $7.7 million, respectively. Ciena's foreign and
domestic income tax expense for the nine months ended July 31, 2018
and 2017 expected to be paid using cash was $11.8 million and $11.7
million, respectively.
|
|
2. The calculation of GAAP diluted net income per common share for
the third quarter of fiscal 2018 requires adding back interest
expense of approximately $0.5 million associated with Ciena's
"Original" 3.75% convertible senior notes, due October 15, 2018, and
approximately $2.6 million associated with Ciena's 4.0% convertible
senior notes, due December 15, 2020 to the GAAP net income in order
to derive the numerator for the diluted earnings per common share
calculation.
|
|
The calculation of GAAP diluted net income per common share for the
third quarter of fiscal 2017 requires adding back interest expense
of approximately $0.2 million associated with Ciena's 0.875%
convertible senior notes, which were paid at maturity during the
third quarter of fiscal 2017, approximately $3.6 million associated
with Ciena's "Original" 3.75% convertible senior notes, due October
15, 2018, and approximately $3.3 million associated with Ciena's
4.0% convertible senior notes, due December 15, 2020 to the GAAP net
income in order to derive the numerator for the diluted earnings per
common share calculation.
|
|
The calculation of GAAP diluted net income per common share for the
first nine months of fiscal 2017 requires adding back interest
expense of approximately $1.3 million associated with Ciena's 0.875%
convertible senior notes, which were paid at maturity during the
third quarter of fiscal 2017, and approximately $10.8 million
associated with Ciena's "Original" 3.75% convertible senior notes,
due October 15, 2018 to the GAAP net income in order to derive the
numerator for the diluted earnings per common share calculation.
|
|
3. Weighted average dilutive potential common shares outstanding
used in calculating GAAP diluted net income per common share for the
third quarter of fiscal 2018 includes 1.3 million shares underlying
certain stock options and restricted stock units, 3.0 million shares
underlying Ciena's "New" 3.75% convertible senior notes, due October
15, 2018, 3.0 million shares underlying Ciena's "Original" 3.75%
convertible senior notes, due October 15, 2018, and 9.2 million
shares underlying Ciena's 4.0% convertible senior notes, due
December 15, 2020.
|
|
Weighted average dilutive potential common shares outstanding used
in calculating GAAP diluted net income per common share for the
third quarter of fiscal 2017 includes 1.4 million shares underlying
certain stock options and restricted stock units, 1.7 million shares
underlying Ciena's 0.875% convertible senior notes, which were paid
at maturity during the third quarter of fiscal 2017, 17.4 million
shares underlying Ciena's "Original" 3.75% convertible senior notes,
due October 15, 2018, and 9.2 million shares underlying Ciena's 4.0%
convertible senior notes, due December 15, 2020.
|
|
Weighted average dilutive potential common shares outstanding used
in calculating GAAP diluted net income per common share for the
first nine months of fiscal 2017 includes 1.4 million shares
underlying certain stock options and restricted stock units, 4.0
million shares underlying Ciena's 0.875% convertible senior notes,
which were paid at maturity during the third quarter of fiscal 2017
and 17.4 million shares underlying Ciena's "Original" 3.75%
convertible senior notes, due October 15, 2018.
|
|
|
CIENA CORPORATION
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(in thousands, except share data)
|
(unaudited)
|
|
|
|
|
July 31, 2018
|
|
|
October 31, 2017
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
726,214
|
|
|
|
$
|
640,513
|
|
Short-term investments
|
|
|
|
228,940
|
|
|
|
|
279,133
|
|
Accounts receivable, net
|
|
|
|
728,940
|
|
|
|
|
622,183
|
|
Inventories
|
|
|
|
227,885
|
|
|
|
|
267,143
|
|
Prepaid expenses and other
|
|
|
|
192,497
|
|
|
|
|
197,339
|
|
Total current assets
|
|
|
|
2,104,476
|
|
|
|
|
2,006,311
|
|
Long-term investments
|
|
|
|
29,465
|
|
|
|
|
49,783
|
|
Equipment, building, furniture and fixtures, net
|
|
|
|
295,863
|
|
|
|
|
308,465
|
|
Goodwill
|
|
|
|
287,551
|
|
|
|
|
267,458
|
|
Other intangible assets, net
|
|
|
|
108,302
|
|
|
|
|
100,997
|
|
Deferred tax asset, net
|
|
|
|
724,087
|
|
|
|
|
1,155,104
|
|
Other long-term assets
|
|
|
|
72,951
|
|
|
|
|
63,593
|
|
Total assets
|
|
|
$
|
3,622,695
|
|
|
|
$
|
3,951,711
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
312,611
|
|
|
|
$
|
260,098
|
|
Accrued liabilities and other short-term obligations
|
|
|
|
297,988
|
|
|
|
|
322,934
|
|
Deferred revenue
|
|
|
|
104,170
|
|
|
|
|
102,418
|
|
Current portion of long-term debt
|
|
|
|
353,669
|
|
|
|
|
352,293
|
|
Total current liabilities
|
|
|
|
1,068,438
|
|
|
|
|
1,037,743
|
|
Long-term deferred revenue
|
|
|
|
79,914
|
|
|
|
|
82,589
|
|
Other long-term obligations
|
|
|
|
108,884
|
|
|
|
|
111,349
|
|
Long-term debt, net
|
|
|
|
586,505
|
|
|
|
|
583,688
|
|
Total liabilities
|
|
|
$
|
1,843,741
|
|
|
|
$
|
1,815,369
|
|
Stockholders' equity:
|
|
|
|
|
|
|
Preferred stock - par value $0.01; 20,000,000 shares authorized;
zero shares issued and outstanding
|
|
|
|
-
|
|
|
|
|
-
|
|
Common stock - par value $0.01; 290,000,000 shares authorized;
143,050,180 and 143,043,227 shares issued and outstanding
|
|
|
|
1,431
|
|
|
|
|
1,430
|
|
Additional paid-in capital
|
|
|
|
6,797,857
|
|
|
|
|
6,810,182
|
|
Accumulated other comprehensive income (loss)
|
|
|
|
(8,705
|
)
|
|
|
|
(11,017
|
)
|
Accumulated deficit
|
|
|
|
(5,011,629
|
)
|
|
|
|
(4,664,253
|
)
|
Total stockholders' equity
|
|
|
|
1,778,954
|
|
|
|
|
2,136,342
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
3,622,695
|
|
|
|
$
|
3,951,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIENA CORPORATION
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in thousands)
|
(unaudited)
|
|
|
|
|
Nine Months Ended July 31,
|
|
|
|
2018
|
|
|
2017
|
Cash flows provided by operating activities:
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
(408,667
|
)
|
|
|
$
|
101,897
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
Depreciation of equipment, building, furniture and fixtures, and
amortization of leasehold improvements
|
|
|
|
63,104
|
|
|
|
|
55,873
|
|
Share-based compensation costs
|
|
|
|
38,896
|
|
|
|
|
36,843
|
|
Amortization of intangible assets
|
|
|
|
18,196
|
|
|
|
|
39,721
|
|
Deferred taxes
|
|
|
|
491,863
|
|
|
|
|
-
|
|
Provision for inventory excess and obsolescence
|
|
|
|
19,942
|
|
|
|
|
28,727
|
|
Provision for warranty
|
|
|
|
15,715
|
|
|
|
|
5,188
|
|
Other
|
|
|
|
18,164
|
|
|
|
|
21,076
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(112,696
|
)
|
|
|
|
(80,652
|
)
|
Inventories
|
|
|
|
17,751
|
|
|
|
|
(93,896
|
)
|
Prepaid expenses and other
|
|
|
|
(11,163
|
)
|
|
|
|
(26,450
|
)
|
Accounts payable, accruals and other obligations
|
|
|
|
14,840
|
|
|
|
|
(5,960
|
)
|
Deferred revenue
|
|
|
|
(4,710
|
)
|
|
|
|
13,978
|
|
Net cash provided by operating activities
|
|
|
|
161,235
|
|
|
|
|
96,345
|
|
Cash flows used in investing activities:
|
|
|
|
|
|
|
Payments for equipment, furniture, fixtures and intellectual property
|
|
|
|
(50,386
|
)
|
|
|
|
(76,004
|
)
|
Purchase of available for sale securities
|
|
|
|
(217,715
|
)
|
|
|
|
(189,802
|
)
|
Proceeds from maturities of available for sale securities
|
|
|
|
290,000
|
|
|
|
|
260,003
|
|
Settlement of foreign currency forward contracts, net
|
|
|
|
4,759
|
|
|
|
|
(1,619
|
)
|
Acquisition of business, net of cash acquired
|
|
|
|
(40,412
|
)
|
|
|
|
-
|
|
Purchase of cost method investment
|
|
|
|
(1,433
|
)
|
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
|
(15,187
|
)
|
|
|
|
(7,422
|
)
|
Cash flows used in financing activities:
|
|
|
|
|
|
|
Payment of long term debt
|
|
|
|
(3,000
|
)
|
|
|
|
(232,554
|
)
|
Payment for modification of term loans
|
|
|
|
-
|
|
|
|
|
(93,625
|
)
|
Payment of capital lease obligations
|
|
|
|
(2,811
|
)
|
|
|
|
(2,650
|
)
|
Repurchases of common stock-repurchase program
|
|
|
|
(73,512
|
)
|
|
|
|
-
|
|
Proceeds from issuance of common stock
|
|
|
|
22,735
|
|
|
|
|
20,395
|
|
Net cash used in financing activities
|
|
|
|
(56,588
|
)
|
|
|
|
(308,434
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(3,759
|
)
|
|
|
|
1,436
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
85,701
|
|
|
|
|
(218,075
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
|
640,513
|
|
|
|
|
777,615
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
726,214
|
|
|
|
$
|
559,540
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
Cash paid during the period for interest
|
|
|
$
|
31,561
|
|
|
|
$
|
33,861
|
|
Cash paid during the period for income taxes, net
|
|
|
$
|
20,099
|
|
|
|
$
|
26,793
|
|
Non-cash investing activities
|
|
|
|
|
|
|
Purchase of equipment in accounts payable
|
|
|
$
|
5,677
|
|
|
|
$
|
6,012
|
|
Building subject to capital lease
|
|
|
$
|
-
|
|
|
|
$
|
50,370
|
|
Non-cash financing activities
|
|
|
|
|
|
|
Repurchase of common stock in accrued liabilities from repurchase
program
|
|
|
$
|
1,275
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly
Measures (unaudited)
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended July 31,
|
|
|
|
2018
|
|
|
2017
|
Gross Profit Reconciliation (GAAP/non-GAAP)
|
|
|
|
|
|
|
GAAP gross profit
|
|
|
$
|
351,543
|
|
|
|
$
|
328,076
|
|
Share-based compensation-products
|
|
|
|
783
|
|
|
|
|
709
|
|
Share-based compensation-services
|
|
|
|
618
|
|
|
|
|
619
|
|
Amortization of intangible assets
|
|
|
|
2,534
|
|
|
|
|
2,417
|
|
Total adjustments related to gross profit
|
|
|
|
3,935
|
|
|
|
|
3,745
|
|
Adjusted (non-GAAP) gross profit
|
|
|
$
|
355,478
|
|
|
|
$
|
331,821
|
|
Adjusted (non-GAAP) gross profit percentage
|
|
|
|
43.4
|
%
|
|
|
|
45.5
|
%
|
|
|
|
|
|
|
|
Operating Expense Reconciliation (GAAP/non-GAAP)
|
|
|
|
|
|
|
GAAP operating expense
|
|
|
$
|
266,269
|
|
|
|
$
|
246,077
|
|
Share-based compensation-research and development
|
|
|
|
3,082
|
|
|
|
|
3,139
|
|
Share-based compensation-sales and marketing
|
|
|
|
3,417
|
|
|
|
|
3,242
|
|
Share-based compensation-general and administrative
|
|
|
|
4,538
|
|
|
|
|
4,321
|
|
Significant asset impairments and restructuring costs
|
|
|
|
6,359
|
|
|
|
|
2,203
|
|
Amortization of intangible assets
|
|
|
|
3,837
|
|
|
|
|
3,837
|
|
Acquisition and integration costs
|
|
|
|
1,333
|
|
|
|
|
-
|
|
Legal settlement
|
|
|
|
2,753
|
|
|
|
|
-
|
|
Total adjustments related to operating expense
|
|
|
|
25,319
|
|
|
|
|
16,742
|
|
Adjusted (non-GAAP) operating expense
|
|
|
$
|
240,950
|
|
|
|
$
|
229,335
|
|
|
|
|
|
|
|
|
Income from Operations Reconciliation (GAAP/non-GAAP)
|
|
|
|
|
|
|
GAAP income from operations
|
|
|
$
|
85,274
|
|
|
|
$
|
81,999
|
|
Total adjustments related to gross profit
|
|
|
|
3,935
|
|
|
|
|
3,745
|
|
Total adjustments related to operating expense
|
|
|
|
25,319
|
|
|
|
|
16,742
|
|
Total adjustments related to income from operations
|
|
|
|
29,254
|
|
|
|
|
20,487
|
|
Adjusted (non-GAAP) income from operations
|
|
|
$
|
114,528
|
|
|
|
$
|
102,486
|
|
Adjusted (non-GAAP) operating margin percentage
|
|
|
|
14.0
|
%
|
|
|
|
14.1
|
%
|
|
|
|
|
|
|
|
Net Income Reconciliation (GAAP/non-GAAP)
|
|
|
|
|
|
|
GAAP net income
|
|
|
$
|
50,840
|
|
|
|
$
|
60,010
|
|
Exclude GAAP provision for income taxes
|
|
|
|
19,280
|
|
|
|
|
7,726
|
|
Income before income taxes
|
|
|
$
|
70,120
|
|
|
|
$
|
67,736
|
|
Total adjustments related to income from operations
|
|
|
|
29,254
|
|
|
|
|
20,487
|
|
Non-cash interest expense
|
|
|
|
793
|
|
|
|
|
535
|
|
Adjusted income before income taxes
|
|
|
$
|
100,167
|
|
|
|
$
|
88,758
|
|
Non-GAAP tax provision on adjusted income before income taxes
|
|
|
|
25,913
|
|
|
|
|
32,397
|
|
Adjusted (non-GAAP) net income
|
|
|
$
|
74,254
|
|
|
|
$
|
56,361
|
|
|
|
|
|
|
|
|
Weighted average basic common shares outstanding
|
|
|
|
143,400
|
|
|
|
|
142,464
|
|
Weighted average dilutive potential common shares outstanding 1
|
|
|
|
159,998
|
|
|
|
|
172,112
|
|
|
|
|
|
|
|
|
Net Income per Common Share
|
|
|
|
|
|
|
GAAP diluted net income per common share
|
|
|
$
|
0.34
|
|
|
|
$
|
0.39
|
|
Adjusted (non-GAAP) diluted net income per common share 2
|
|
|
$
|
0.48
|
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
Weighted average dilutive potential common shares outstanding used
in calculating Adjusted (non-GAAP) diluted net income per common
share for the third quarter of fiscal 2018 includes 1.3 million
shares underlying certain stock options and restricted stock units,
3.0 million shares underlying Ciena's "New" 3.75% convertible senior
notes, due October 15, 2018, 3.0 million shares underlying Ciena's
"Original" 3.75% convertible senior notes, due October 15, 2018, and
9.2 million shares underlying Ciena's 4.0% convertible senior notes,
due December 15, 2020.
|
|
|
|
|
|
Weighted average dilutive potential common shares outstanding used
in calculating Adjusted (non-GAAP) diluted net income per common
share for the third quarter of fiscal 2017 includes 1.4 million
shares underlying certain stock options and restricted stock units,
1.7 million shares underlying Ciena's 0.875% convertible senior
notes, which were paid at maturity during the third quarter of
fiscal 2017, 17.4 million shares underlying Ciena's "Original" 3.75%
convertible senior notes, due October 15, 2018 and 9.2 million
shares underlying Ciena's 4.0% convertible senior notes, due
December 15, 2020.
|
|
|
|
2.
|
|
The calculation of Adjusted (non-GAAP) diluted net income per common
share for the third quarter of fiscal 2018 requires adding back
interest expense of approximately $0.5 million associated with
Ciena's "Original" 3.75% convertible senior notes, due October 15,
2018 and approximately $2.1 million associated with Ciena's 4.0%
convertible senior notes, due December 15, 2020 to the Adjusted
(non-GAAP) net income in order to derive the numerator for the
Adjusted earnings per common share calculation.
|
|
|
|
|
|
The calculation of Adjusted (non-GAAP) diluted net income per common
share for the third quarter of fiscal 2017 requires adding back
interest expense of approximately $0.2 million associated with
Ciena's 0.875% convertible senior notes, which were paid at maturity
during the third quarter of fiscal 2017, approximately $2.2 million
associated with Ciena's "Original" 3.75% convertible senior notes,
due October 15, 2018 and approximately $1.8 million associated with
Ciena's 4.0% convertible senior notes, due December 15, 2020 to the
Adjusted (non-GAAP) net income in order to derive the numerator for
the Adjusted earnings per common share calculation.
|
|
|
|
|
APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited)
|
|
|
|
|
Quarter Ended July 31,
|
|
|
|
2018
|
|
|
2017
|
Earnings Before Interest, Tax, Depreciation and Amortization
(EBITDA)
|
|
|
|
|
|
|
Net income (GAAP)
|
|
|
$
|
50,840
|
|
|
|
$
|
60,010
|
|
Add: Interest expense
|
|
|
|
13,611
|
|
|
|
|
13,415
|
|
Less: Interest and other income (loss), net
|
|
|
|
(1,543
|
)
|
|
|
|
(848
|
)
|
Add: Provision for income taxes
|
|
|
|
19,280
|
|
|
|
|
7,726
|
|
Add: Depreciation of equipment, building, furniture and fixtures,
and amortization of leasehold improvements
|
|
|
|
21,704
|
|
|
|
|
20,325
|
|
Add: Amortization of intangible assets
|
|
|
|
6,371
|
|
|
|
|
6,254
|
|
EBITDA
|
|
|
$
|
113,349
|
|
|
|
$
|
108,578
|
|
Add: Shared-based compensation cost
|
|
|
|
12,337
|
|
|
|
|
12,013
|
|
Add: Significant asset impairments and restructuring costs
|
|
|
|
6,359
|
|
|
|
|
2,203
|
|
Add: Acquisition and integration costs
|
|
|
|
1,333
|
|
|
|
|
-
|
|
Add: Legal settlement
|
|
|
|
2,753
|
|
|
|
|
-
|
|
Adjusted EBITDA
|
|
|
$
|
136,131
|
|
|
|
$
|
122,794
|
|
|
|
|
|
|
|
|
The adjusted (non-GAAP) measures above and their reconciliation to
Ciena's GAAP results for the periods presented reflect adjustments
relating to the following items:
-
Share-based compensation - a non-cash expense incurred in
accordance with share-based compensation accounting guidance.
-
Significant asset impairments and restructuring costs - costs
incurred as a result of restructuring activities taken to align
resources with perceived market opportunities.
-
Amortization of intangible assets - a non-cash expense arising
from the acquisition of intangible assets, principally developed
technologies and customer-related intangibles, that Ciena is required
to amortize over its expected useful life.
-
Acquisition and integration costs - consist of
financial, legal and accounting advisors' costs and severance and
other employment-related costs related to Ciena's recent acquisition
of Packet Design. Ciena does not believe that these costs are
reflective of its ongoing operating expense following its completion
of these integration activities.
-
Legal settlement - costs incurred as a result of a settlement
associated with a commercial dispute with a former vendor.
-
Non-cash interest expense - a non-cash debt discount expense
amortized as interest expense during the term of Ciena's 4.0% senior
convertible notes due December 15, 2020 relating to the required
separate accounting of the equity component of these convertible notes.
-
Non-GAAP tax provision - consists of current and deferred
income tax expense commensurate with the level of adjusted income
before income taxes and utilizes a current, blended U.S. and foreign
statutory annual tax rate of 25.87% for the third fiscal quarter of
2018, and 36.5% for the third fiscal quarter of 2017. This rate may be
subject to change in the future, including as a result of changes in
tax policy or tax strategy.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180830005361/en/
[ Back To TMCnet.com's Homepage ]
|