CIEN
$41.29
Ciena
$1.41
3.54%
Earnings Details
3rd Quarter July 2019
Thursday, September 05, 2019 7:00:00 AM
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Summary

Ciena Beats

Ciena (CIEN) reported 3rd Quarter July 2019 earnings of $0.71 per share on revenue of $960.6 million. The consensus earnings estimate was $0.57 per share on revenue of $930.5 million. The Earnings Whisper number was $0.60 per share. Revenue grew 17.3% on a year-over-year basis.

The company said during its conference call it expects fourth quarter revenue of $945.0 million to $975.0 million. The current consensus revenue estimate is $956.2 million for the quarter ending October 31, 2019.

Ciena Corp is a network specialist providing networking solutions. It provides equipment, software & services supporting the transport, switching, aggregation, service delivery & management of voice, video and data traffic on communications networks.

Results
Reported Earnings
$0.71
Earnings Whisper
$0.60
Consensus Estimate
$0.57
Reported Revenue
$960.6 Mil
Revenue Estimate
$930.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Ciena Reports Fiscal Third Quarter 2019 Financial Results

HANOVER, Md.--(BUSINESS WIRE)--Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal third quarter ended July 31, 2019.

  • Q3 Revenue: $960.6 million, increasing 17.3% year over year
  • Q3 Net Income per Share: $0.55 GAAP; $0.71 adjusted (non-GAAP)
  • Share Repurchases: Repurchased approximately 1.1 million shares of common stock for an aggregate price of $45.4 million during the quarter

"We delivered another quarter of outstanding financial results as we benefit from our strong competitive position within the industry and continue to gain market share," said Gary Smith, President and CEO, Ciena. "Looking ahead, fiscal 2019 will be an extraordinary year for Ciena, including substantial revenue growth and increased profitability."

For the fiscal third quarter 2019, Ciena reported revenue of $960.6 million as compared to $818.8 million for the fiscal third quarter 2018.

Ciena's GAAP net income for the fiscal third quarter 2019 was $86.7 million, or $0.55 per diluted common share, which compares to a GAAP net income of $50.8 million, or $0.34 per diluted common share, for the fiscal third quarter 2018.

Ciena's adjusted (non-GAAP) net income for the fiscal third quarter 2019 was $112.3 million, or $0.71 per diluted common share, which compares to an adjusted (non-GAAP) net income of $74.3 million, or $0.48 per diluted common share, for the fiscal third quarter 2018.

Fiscal Third Quarter 2019 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

 

 

 

 

FY 2019

 

FY 2018

 

Y-T-Y*

Revenue

 

$

960.6

 

 

$

818.8

 

 

17.3

%

Gross margin

 

44.2

%

 

42.9

%

 

1.3

%

Operating expense

 

$

299.1

 

 

$

266.3

 

 

12.3

%

Operating margin

 

13.0

%

 

10.4

%

 

2.6

%

 

 

Non-GAAP Results

 

 

Q3

 

Q3

 

 

 

 

FY 2019

 

FY 2018

 

Y-T-Y*

Revenue

 

$

960.6

 

 

$

818.8

 

 

17.3

%

Adj. gross margin

 

44.7

%

 

43.4

%

 

1.3

%

Adj. operating expense

 

$

273.2

 

 

$

241.0

 

 

13.4

%

Adj. operating margin

 

16.2

%

 

14.0

%

 

2.2

%

*

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

 

 

Revenue by Segment

 

 

Q3 FY 2019

 

Q3 FY 2018

 

 

Revenue

 

%**

 

Revenue

 

%**

Networking Platforms

 

 

 

 

 

 

 

 

Converged Packet Optical

 

$

724.3

 

 

75.4

 

 

$

592.8

 

 

72.4

 

Packet Networking

 

71.8

 

 

7.5

 

 

84.6

 

 

10.4

 

Total Networking Platforms

 

796.1

 

 

82.9

 

 

677.4

 

 

82.8

 

 

 

 

 

 

 

 

 

 

Software and Software-Related Services

 

 

 

 

 

 

 

 

Platform Software and Services

 

37.3

 

 

3.9

 

 

36.8

 

 

4.5

 

Blue Planet Automation Software and Services

 

10.5

 

 

1.1

 

 

4.4

 

 

0.5

 

Total Software and Software-Related Services

 

47.8

 

 

5.0

 

 

41.2

 

 

5.0

 

 

 

 

 

 

 

 

 

 

Global Services

 

 

 

 

 

 

 

 

Maintenance Support and Training

 

65.9

 

 

6.9

 

 

60.9

 

 

7.4

 

Installation and Deployment

 

39.8

 

 

4.1

 

 

31.3

 

 

3.8

 

Consulting and Network Design

 

11.0

 

 

1.1

 

 

8.0

 

 

1.0

 

Total Global Services

 

116.7

 

 

12.1

 

 

100.2

 

 

12.2

 

 

 

 

 

 

 

 

 

 

Total

 

$

960.6

 

 

100.0

 

 

$

818.8

 

 

100.0

 

Additional Performance Metrics for Fiscal Third Quarter 2019

 

 

Revenue by Geographic Region

 

 

Q3 FY 2019

 

Q3 FY 2018

 

 

Revenue

 

% **

 

Revenue

 

% **

North America

 

$

617.0

 

 

64.2

 

 

$

497.0

 

 

60.7

 

Europe, Middle East and Africa

 

169.5

 

 

17.6

 

 

122.2

 

 

14.9

 

Caribbean and Latin America

 

39.3

 

 

4.1

 

 

27.5

 

 

3.4

 

Asia Pacific

 

134.8

 

 

14.1

 

 

172.1

 

 

21.0

 

Total

 

$

960.6

 

 

100.0

 

 

$

818.8

 

 

100.0

 

**

Denotes % of total revenue

  • Two 10%-plus customers represented a total of 25% of revenue
  • Cash and investments totaled $842.9 million
  • Cash flow from operations totaled $83.1 million
  • Average days' sales outstanding (DSOs) were 82
  • Accounts receivable balance was $798.9 million
  • Unbilled contract asset balance was $74.3 million
  • Inventories totaled $356.8 million, including:
    • Raw materials: $102.2 million
    • Work in process: $15.5 million
    • Finished goods: $193.5 million
    • Deferred cost of sales: $93.4 million
    • Reserve for excess and obsolescence: $(47.8) million
  • Product inventory turns were 5.1
  • Headcount totaled 6,368

Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Third Quarter 2019 Results

Today, Thursday, September 5, 2019, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website an accompanying investor presentation for its unaudited fiscal third quarter 2019 results.

Ciena's management will also host a discussion today with investors and financial analysts that will include the Company's outlook. The live audio web broadcast beginning at 8:30 a.m. Eastern will be accessible via www.ciena.com. An archived replay of the live broadcast will be available shortly following its conclusion on the Investor Relations page of Ciena's website.

Notes to Investors

Forward-Looking Statements. You are encouraged to review the Investors section of our website, where we routinely post press releases, SEC filings, recent news, financial results, supplemental financial information, and other announcements. From time to time we exclusively post material information to this website along with other disclosure channels that we use. This press release contains certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts, assumptions and other information available to the Company as of the date hereof. Forward-looking statements include statements regarding Ciena's expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. Forward-looking statements in this release include: “We delivered another quarter of outstanding financial results as we benefit from our strong competitive position within the industry and continue to gain market share. Looking ahead, fiscal 2019 will be an extraordinary year for Ciena, including substantial revenue growth and increased profitability.”

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 tax or trade regulations, including the imposition of tariffs and duties; 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 Quarterly Report on Form 10-Q filed with the SEC on June 12, 2019 and its Annual Report on Form 10-K filed with the SEC on December 21, 2018. 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 the Adaptive Network™ in response to the constantly changing demands of their users. By delivering best-in-class networking technology through high-touch consultative relationships, we build the world’s most agile networks with automation, openness and scale. For updates on Ciena, follow us on Twitter @Ciena, LinkedIn, the Ciena Insights blog, or visit www.ciena.com.

CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

 

Quarter Ended July 31,

 

Nine Months Ended July 31,

 

2019

 

2018

 

2019

 

2018

Revenue:

 

 

 

 

 

 

 

Products

$

810,588

 

 

$

691,758

 

 

$

2,163,808

 

 

$

1,821,593

 

Services

150,018

 

 

127,059

 

 

440,336

 

 

373,337

 

Total revenue

960,606

 

 

818,817

 

 

2,604,144

 

 

2,194,930

 

Cost of goods sold:

 

 

 

 

 

 

 

Products

454,921

 

 

399,886

 

 

1,246,413

 

 

1,085,574

 

Services

81,333

 

 

67,388

 

 

235,361

 

 

192,741

 

Total cost of goods sold

536,254

 

 

467,274

 

 

1,481,774

 

 

1,278,315

 

Gross profit

424,352

 

 

351,543

 

 

1,122,370

 

 

916,615

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

139,880

 

 

121,133

 

 

406,482

 

 

356,581

 

Selling and marketing

104,230

 

 

95,395

 

 

305,845

 

 

281,269

 

General and administrative

42,695

 

 

38,212

 

 

124,092

 

 

115,594

 

Amortization of intangible assets

5,529

 

 

3,837

 

 

16,586

 

 

11,083

 

Significant asset impairments and restructuring costs

5,355

 

 

6,359

 

 

11,696

 

 

16,679

 

Acquisition and integration costs

1,362

 

 

1,333

 

 

4,105

 

 

1,333

 

Total operating expenses

299,051

 

 

266,269

 

 

868,806

 

 

782,539

 

Income from operations

125,301

 

 

85,274

 

 

253,564

 

 

134,076

 

Interest and other income (loss), net

1,050

 

 

(1,543

)

 

5,059

 

 

1,328

 

Interest expense

(9,404

)

 

(13,611

)

 

(28,316

)

 

(40,376

)

Income before income taxes

116,947

 

 

70,120

 

 

230,307

 

 

95,028

 

Provision for income taxes

30,198

 

 

19,280

 

 

57,204

 

 

503,695

 

Net income (loss)

$

86,749

 

 

$

50,840

 

 

$

173,103

 

 

$

(408,667

)

 

 

 

 

 

 

 

 

Net Income (loss) per Common Share

 

 

 

 

 

 

 

Basic net income (loss) per common share

$

0.56

 

 

$

0.35

 

 

$

1.11

 

 

$

(2.84

)

Diluted net income (loss) per potential common share 1

$

0.55

 

 

$

0.34

 

 

$

1.10

 

 

$

(2.84

)

 

 

 

 

 

 

 

 

Weighted average basic common shares outstanding

155,488

 

 

143,400

 

 

156,013

 

 

143,766

 

Weighted average dilutive potential common shares outstanding 2

157,455

 

 

159,998

 

 

157,949

 

 

143,766

 

1. 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, which were converted by holders thereof immediately prior to maturity during the fourth quarter of fiscal 2018 and approximately $2.6 million associated with Ciena's 4.0% convertible senior notes, which were converted at Ciena's election during the fourth quarter of fiscal 2018, to the GAAP net income in order to derive the numerator for the diluted earnings per common share calculation.

 

2. Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per common share for the third quarter of fiscal 2019 includes 2.0 million shares underlying certain stock options and stock unit awards.

 

Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per common share for the first nine months of fiscal 2019 includes 1.9 million shares underlying certain stock options and stock unit awards.

 

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 stock unit awards, 3.0 million shares underlying Ciena's "New" 3.75% senior convertible notes, 3.0 million shares underlying Ciena's "Original" 3.75% convertible senior notes, which were converted by holders thereof immediately prior to maturity during the fourth quarter of fiscal 2018 and 9.2 million shares underlying Ciena's 4.0% convertible senior notes.

CIENA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)

 

July 31,
2019

 

October 31,
2018

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

723,229

 

 

$

745,423

 

Short-term investments

119,670

 

 

148,981

 

Accounts receivable, net

798,884

 

 

786,502

 

Inventories

356,818

 

 

262,751

 

Prepaid expenses and other

292,631

 

 

198,945

 

Total current assets

2,291,232

 

 

2,142,602

 

Long-term investments

 

 

58,970

 

Equipment, building, furniture and fixtures, net

280,630

 

 

292,067

 

Goodwill

297,884

 

 

297,968

 

Other intangible assets, net

121,270

 

 

148,225

 

Deferred tax asset, net

700,206

 

 

745,039

 

Other long-term assets

84,486

 

 

71,652

 

Total assets

$

3,775,708

 

 

$

3,756,523

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

356,716

 

 

$

340,582

 

Accrued liabilities and other short-term obligations

325,137

 

 

340,075

 

Deferred revenue

102,182

 

 

111,134

 

Current portion of long-term debt

7,000

 

 

7,000

 

Debt conversion liability

 

 

164,212

 

Total current liabilities

791,035

 

 

963,003

 

Long-term deferred revenue

42,848

 

 

58,323

 

Other long-term obligations

140,523

 

 

119,413

 

Long-term debt, net

681,918

 

 

686,450

 

Total liabilities

$

1,656,324

 

 

$

1,827,189

 

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; 155,113,012 and 154,318,531 shares issued and outstanding

1,551

 

 

1,543

 

Additional paid-in capital

6,866,341

 

 

6,881,223

 

Accumulated other comprehensive loss

(23,764

)

 

(5,780

)

Accumulated deficit

(4,724,744

)

 

(4,947,652

)

Total stockholders’ equity

2,119,384

 

 

1,929,334

 

Total liabilities and stockholders’ equity

$

3,775,708

 

 

$

3,756,523

 

CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

 

Nine Months Ended July 31,

 

2019

 

2018

Cash flows provided by operating activities:

 

 

 

Net income (loss)

$

173,103

 

 

$

(408,667

)

 

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

65,071

 

 

63,104

 

Share-based compensation costs

44,446

 

 

38,896

 

Amortization of intangible assets

26,610

 

 

18,196

 

Deferred taxes

35,949

 

 

491,863

 

Provision for inventory excess and obsolescence

18,833

 

 

19,942

 

Provision for warranty

15,933

 

 

15,715

 

Other

743

 

 

18,164

 

Changes in assets and liabilities:

 

 

 

Accounts receivable

(2,517

)

 

(112,696

)

Inventories

(115,427

)

 

17,751

 

Prepaid expenses and other

(85,039

)

 

(11,163

)

Accounts payable, accruals and other obligations

(9,005

)

 

14,840

 

Deferred revenue

4,427

 

 

(4,710

)

Net cash provided by operating activities

173,127

 

 

161,235

 

Cash flows provided by (used in) investing activities:

 

 

 

Payments for equipment, furniture, fixtures and intellectual property

(49,063

)

 

(50,386

)

Purchase of available for sale securities

(127,601

)

 

(217,715

)

Proceeds from maturities of available for sale securities

120,000

 

 

290,000

 

Proceeds from sales of available for sale securities

98,263

 

 

 

Settlement of foreign currency forward contracts, net

(3,155

)

 

4,759

 

Acquisition of business, net of cash acquired

 

 

(40,412

)

Purchase of equity investment

(2,667

)

 

(1,433

)

Net cash provided by (used in) investing activities

35,777

 

 

(15,187

)

Cash flows used in financing activities:

 

 

 

Payment of long term debt

(5,250

)

 

(3,000

)

Payment of capital lease obligations

(2,599

)

 

(2,811

)

Payment for debt conversion liability

(111,268

)

 

 

Shares repurchased for tax withholdings on vesting of restricted stock units

(23,234

)

 

 

Repurchases of common stock - repurchase program

(110,484

)

 

(73,512

)

Proceeds from issuance of common stock

22,895

 

 

22,735

 

Net cash used in financing activities

(229,940

)

 

(56,588

)

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

392

 

 

(3,759

)

Net increase (decrease) in cash, cash equivalents and restricted cash

(20,644

)

 

85,701

 

Cash, cash equivalents and restricted cash at beginning of period

745,434

 

 

640,513

 

Cash, cash equivalents and restricted cash at end of period

$

724,790

 

 

$

726,214

 

Supplemental disclosure of cash flow information

 

 

 

Cash paid during the period for interest

$

29,921

 

 

$

31,561

 

Cash paid during the period for income taxes, net

$

21,573

 

 

$

20,099

 

Non-cash investing activities

 

 

 

Purchase of equipment in accounts payable

$

4,328

 

 

$

5,677

 

Non-cash financing activities

 

 

 

Repurchase of common stock in accrued liabilities from repurchase program

$

1,441

 

 

$

1,275

 

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

$

52,944

$

 

APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures (unaudited)

 

 

 

 

 

 

 

Quarter Ended July 31,

 

 

2019

 

2018

Gross Profit Reconciliation (GAAP/non-GAAP)

 

 

 

 

GAAP gross profit

 

$

424,352

 

 

$

351,543

 

Share-based compensation-products

 

781

 

 

783

 

Share-based compensation-services

 

783

 

 

618

 

Amortization of intangible assets

 

3,303

 

 

2,534

 

Total adjustments related to gross profit

 

4,867

 

 

3,935

 

Adjusted (non-GAAP) gross profit

 

$

429,219

 

 

$

355,478

 

Adjusted (non-GAAP) gross profit percentage

 

44.7

%

 

43.4

%

 

 

 

 

 

Operating Expense Reconciliation (GAAP/non-GAAP)

 

 

 

 

GAAP operating expense

 

$

299,051

 

 

$

266,269

 

Share-based compensation-research and development

 

3,560

 

 

3,082

 

Share-based compensation-sales and marketing

 

4,192

 

 

3,417

 

Share-based compensation-general and administrative

 

5,813

 

 

4,538

 

Amortization of intangible assets

 

5,529

 

 

3,837

 

Significant asset impairments and restructuring costs

 

5,355

 

 

6,359

 

Acquisition and integration costs

 

1,362

 

 

1,333

 

Legal settlement

 

 

 

2,753

 

Total adjustments related to operating expense

 

25,811

 

 

25,319

 

Adjusted (non-GAAP) operating expense

 

$

273,240

 

 

$

240,950

 

 

 

 

 

 

Income from Operations Reconciliation (GAAP/non-GAAP)

 

 

 

 

GAAP income from operations

 

$

125,301

 

 

$

85,274

 

Total adjustments related to gross profit

 

4,867

 

 

3,935

 

Total adjustments related to operating expense

 

25,811

 

 

25,319

 

Total adjustments related to income from operations

 

30,678

 

 

29,254

 

Adjusted (non-GAAP) income from operations

 

$

155,979

 

 

$

114,528

 

Adjusted (non-GAAP) operating margin percentage

 

16.2

%

 

14.0

%

 

 

 

 

 

Net Income Reconciliation (GAAP/non-GAAP)

 

 

 

 

GAAP net income

 

$

86,749

 

 

$

50,840

 

Exclude GAAP provision for income taxes

 

30,198

 

 

19,280

 

Income before income taxes

 

116,947

 

 

70,120

 

Total adjustments related to income from operations

 

30,678

 

 

29,254

 

Non-cash interest expense

 

 

 

793

 

Adjusted income before income taxes

 

147,625

 

 

100,167

 

Non-GAAP tax provision on adjusted income before income taxes

 

35,282

 

 

25,913

 

Adjusted (non-GAAP) net income

 

$

112,343

 

 

$

74,254

 

 

 

 

 

 

Weighted average basic common shares outstanding

 

155,488

 

143,400

Weighted average dilutive potential common shares outstanding 1

 

157,455

 

159,998

 

 

 

 

 

Net Income per Common Share

 

 

 

 

GAAP diluted net income per common share

 

$

0.55

 

 

$

0.34

 

Adjusted (non-GAAP) diluted net income per common share2

 

$

0.71

 

 

$

0.48

 

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 2019 includes 2.0 million shares underlying certain stock options and stock unit awards.

 

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 stock unit awards, 3.0 million shares underlying Ciena's "New" 3.75% convertible senior notes, which were converted by holders thereof immediately prior to maturity during the fourth quarter of fiscal 2018, 3.0 million shares underlying Ciena's "Original" 3.75% convertible senior notes, which were converted by holders thereof immediately prior to maturity during the fourth quarter of fiscal 2018, and 9.2 million shares underlying Ciena's 4.0% convertible senior notes, which were converted at Ciena's election during the fourth quarter of fiscal 2018.

 

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 and $2.1 million associated with Ciena's 4.0% convertible senior notes 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,

 

 

2019

 

2018

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

 

 

 

 

Net income (GAAP)

 

$

86,749

 

 

$

50,840

 

Add: Interest expense

 

9,404

 

 

13,611

 

Less: Interest and other income (loss), net

 

1,050

 

 

(1,543

)

Add: Provision for income taxes

 

30,198

 

 

19,280

 

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

 

22,076

 

 

21,704

 

Add: Amortization of intangible assets

 

8,832

 

 

6,371

 

EBITDA

 

$

156,209

 

 

$

113,349

 

Add: Shared-based compensation cost

 

15,084

 

 

12,337

 

Add: Significant asset impairments and restructuring costs

 

5,355

 

 

6,359

 

Add: Acquisition and integration costs

 

1,362

 

 

1,333

 

Add: Legal settlement

 

 

 

2,753

 

Adjusted EBITDA

 

$

178,010

 

 

$

136,131

 

 

 

 

 

 

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.
  • Acquisition and integration costs - consist of financial, legal and accounting advisors' costs and severance and other employment-related costs related to Ciena's acquisition of Packet Design and DonRiver, including costs associated with a three-year earn-out arrangement related to the DonRiver acquisition. 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, during the third quarter of fiscal 2018, of 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, which were converted during the fourth quarter of 2018, 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 23.9% for the third fiscal quarter of 2019, and 25.87% for the third fiscal quarter of 2018. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy.

 

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

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

Source: Ciena Corporation