Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Ciena Reports Fiscal Fourth Quarter 2021 and Year-End Financial Results By: Ciena Corporation via Business Wire December 09, 2021 at 07:00 AM EST Board Authorizes Share Repurchase up to $1.0 Billion Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal fourth quarter and year ended October 30, 2021. Q4 Revenue: $1.04 billion, increasing 25.7% year over year Q4 Net Income per Share: $0.66 GAAP; $0.85 adjusted (non-GAAP), increasing 41.7% year over year Share Repurchases: Repurchased approximately 0.5 million shares of common stock for an aggregate price of $26.7 million during the fourth quarter “Our strong financial results exceeded our expectations in the fourth quarter and for the full fiscal year, driven by continued execution of our strategy and our demonstrated ability to manage supply chain challenges,” said Gary Smith, President and CEO, Ciena. “Looking ahead, we intend to continue driving growth in our business by leveraging our market leadership and investing to capitalize on robust demand dynamics. In addition, our strong balance sheet and cash generation expectations allow us to increase return of capital to our shareholders.” For fiscal fourth quarter 2021, Ciena reported revenue of $1.04 billion, as compared to $828.5 million for fiscal fourth quarter 2020. For fiscal year 2021, Ciena reported revenue of $3.62 billion, as compared to $3.53 billion for fiscal year 2020. Ciena's GAAP net income for fiscal fourth quarter 2021 was $103.5 million, or $0.66 per diluted common share, which compares to GAAP net income of $65.0 million, or $0.42 per diluted common share, for fiscal fourth quarter 2020. For fiscal year 2021, Ciena's GAAP net income was $500.2 million, or $3.19 per diluted common share, as compared to GAAP net income of $361.3 million, or $2.32 per diluted common share, for fiscal year 2020. Ciena's adjusted (non-GAAP) net income for fiscal fourth quarter 2021 was $132.7 million, or $0.85 per diluted common share, which compares to adjusted (non-GAAP) net income of $94.5 million, or $0.60 per diluted common share, for fiscal fourth quarter 2020. For fiscal year 2021, Ciena's adjusted (non-GAAP) net income was $456.5 million, or $2.91 per diluted common share, as compared to adjusted (non-GAAP) net income of $460.1 million, or $2.95 per diluted common share, for fiscal year 2020. Share Repurchase Program On December 1, 2021, Ciena's Board of Directors authorized the repurchase of up to $1.0 billion of the Company's stock, replacing the previous share repurchase authorization. In connection with this new authorization, the company intends to enter into an accelerated share repurchase (ASR) arrangement under which it will repurchase $250 million of its common stock. The final settlement of the ASR is expected to be completed in the second quarter of fiscal 2022. Performance Summary for the Fiscal Fourth Quarter and the Year Ended October 30, 2021 The tables below (in millions, except percentage data) provide comparisons of certain quarterly and annual results to the prior year. Appendices A and B set forth reconciliations between the GAAP and adjusted (non-GAAP) measures contained in this release. GAAP Results (unaudited) Quarter Ended Period Year Ended Period October 30, October 31, Change October 30, October 31, Change 2021 2020 Y-T-Y* 2021 2020 Y-T-Y* Revenue $ 1,041.5 $ 828.5 25.7 % $ 3,620.7 $ 3,532.2 2.5 % Gross margin 45.8 % 48.8 % (3.0 )% 47.6 % 46.8 % 0.8 % Operating expense $ 339.7 $ 310.9 9.3 % $ 1,226.6 $ 1,165.9 5.2 % Operating margin 13.2 % 11.3 % 1.9 % 13.7 % 13.8 % (0.1 )% Non-GAAP Results (unaudited) Quarter Ended Period Year Ended Period October 30, October 31, Change October 30, October 31, Change 2021 2020 Y-T-Y* 2021 2020 Y-T-Y* Revenue $ 1,041.5 $ 828.5 25.7 % $ 3,620.7 $ 3,532.2 2.5 % Adj. gross margin 46.3 % 49.5 % (3.2 )% 47.9 % 47.4 % 0.5 % Adj. operating expense $ 307.1 $ 278.9 10.1 % $ 1,129.3 $ 1,055.3 7.0 % Adj. operating margin 16.8 % 15.8 % 1.0 % 16.8 % 17.6 % (0.8 )% Adj. EBITDA $ 199.2 $ 154.5 28.9 % $ 702.8 $ 713.9 (1.6 )% * Denotes % change, or in the case of margin, absolute change Revenue by Segment (unaudited) Quarter Ended October 30, 2021 October 31, 2020 Revenue %** Revenue % ** Networking Platforms Converged Packet Optical $ 754.6 72.5 $ 579.3 69.9 Routing and Switching (1) 74.2 7.1 56.0 6.8 Total Networking Platforms 828.8 79.6 635.3 76.7 Platform Software and Services 66.1 6.3 54.5 6.6 Blue Planet Automation Software and Services 19.8 1.9 20.9 2.5 Global Services Maintenance Support and Training 71.3 6.9 67.0 8.1 Installation and Deployment 47.2 4.5 43.0 5.2 Consulting and Network Design 8.3 0.8 7.8 0.9 Total Global Services 126.8 12.2 117.8 14.2 Total $ 1,041.5 100.0 $ 828.5 100.0 Revenue by Segment (unaudited) Year Ended October 30, 2021 October 31, 2020 Revenue %** Revenue % ** Networking Platforms Converged Packet Optical $ 2,553.5 70.5 $ 2,547.6 72.1 Routing and Switching (1) 271.8 7.5 267.5 7.6 Total Networking Platforms 2,825.3 78.0 2,815.1 79.7 Platform Software and Services 229.6 6.4 197.8 5.6 Blue Planet Automation Software and Services 77.2 2.1 62.6 1.8 Global Services Maintenance Support and Training 283.4 7.8 269.4 7.6 Installation and Deployment 171.5 4.7 152.0 4.3 Consulting and Network Design 33.7 1.0 35.3 1.0 Total Global Services 488.6 13.5 456.7 12.9 Total $ 3,620.7 100.0 $ 3,532.2 100.0 ** Denotes % of total revenue (1) Ciena renamed its former “Packet Networking” product line “Routing and Switching” effective as of the beginning of fiscal 2021. This change, affecting only the presentation of such information, was made on a prospective basis and does not impact comparability of previous financial results or the composition of this product category. Additional Performance Metrics for Fiscal Fourth Quarter and Year Ended October 30, 2021 Revenue by Geographic Region (unaudited) Quarter Ended October 30, 2021 October 31, 2020 Revenue % ** Revenue % ** Americas $ 748.7 71.9 $ 531.6 64.2 Europe, Middle East and Africa 170.8 16.4 157.6 19.0 Asia Pacific 122.0 11.7 139.3 16.8 Total $ 1,041.5 100.0 $ 828.5 100.0 Revenue by Geographic Region (unaudited) Year Ended October 30, 2021 October 31, 2020 Revenue % ** Revenue % ** Americas $ 2,525.6 69.8 $ 2,469.3 69.9 Europe, Middle East and Africa 670.5 18.5 591.5 16.8 Asia Pacific 424.6 11.7 471.4 13.3 Total $ 3,620.7 100.0 $ 3,532.2 100.0 ** Denotes % of total revenue One 10%-plus customer represented a total of 12.9% and 12.4% of revenue for the fiscal fourth quarter and fiscal year 2021, respectively Cash and investments totaled $1.7 billion Cash flow from operations totaled $254.9 million and $541.6 million for the fiscal fourth quarter and fiscal year 2021, respectively Average days' sales outstanding (DSOs) were 85 and 98 for the fiscal fourth quarter and fiscal year 2021, respectively Accounts receivable, net balance was $885.0 million Unbilled contract asset balance, net was $101.4 million Inventories totaled $374.3 million, including: Raw materials: $175.4 million Work in process: $10.3 million Finished goods: $180.8 million Deferred cost of sales: $44.7 million Reserve for excess and obsolescence: $(36.9) million Product inventory turns were 5.0 and 4.1 for the fiscal fourth quarter and fiscal year 2021, respectively Headcount totaled 7,241 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Fourth Quarter and Year-End 2021 Results Today, Thursday, December 9, 2021, in conjunction with this announcement, Ciena posted to the Quarterly Results page of the Investor Relations section of its website certain related supporting materials for its unaudited fiscal fourth quarter and fiscal year 2021 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: "Our strong financial results exceeded our expectations in the fourth quarter and for the full fiscal year, driven by continued execution of our strategy and our demonstrated ability to manage supply chain challenges"; "Looking ahead, we intend to continue driving growth in our business by leveraging our market leadership and investing to capitalize on robust demand dynamics"; In addition, our strong balance sheet and cash generation expectations allow us to increase return of capital to our shareholders." Ciena's actual results, performance or events may differ materially from these forward-looking statements made or implied due to a number of risks and uncertainties relating to Ciena's business, including: the effect of broader economic and market conditions on our customers and their business; our ability to execute our business and growth strategies; the duration and severity of the COVID-19 pandemic and the impact of countermeasures taken to mitigate its spread; the impact of COVID-19 on macroeconomic conditions, the level of economic activity, demand for our technology solutions, short- and long-term customer or end user needs and changes thereto, continuity of supply chain, logistics and business operations, liquidity and financial results; 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; factors beyond our control such as natural disasters, acts of war or terrorism, and public health emergencies, including the COVID-19 pandemic; the impact of the Tax Cuts and Jobs Act; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; 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 September 8, 2021 and its Annual Report on Form 10-K to be filed with the SEC. Ciena assumes no obligation to update any forward-looking information included in this press release. Non-GAAP Presentation of Quarterly and Annual Results. This release includes non-GAAP measures of Ciena's gross profit, operating expense, income from operations, earnings before interest, tax, depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of net income and net income per share. In evaluating the operating performance of Ciena's business, management excludes certain charges and credits that are required by GAAP. These items share one or more of the following characteristics: they are unusual and Ciena does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of Ciena's control. Management believes that the non-GAAP measures below provide management and investors useful information and meaningful insight to the operating performance of the business. The presentation of these non-GAAP financial measures should be considered in addition to Ciena's GAAP results and these measures are not intended to be a substitute for the financial information prepared and presented in accordance with GAAP. Ciena's non-GAAP measures and the related adjustments may differ from non-GAAP measures used by other companies and should only be used to evaluate Ciena's results of operations in conjunction with our corresponding GAAP results. To the extent not previously disclosed in a prior Ciena financial results press release for the relevant period, 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 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Quarter Ended Year Ended October 30, October 31, October 30, October 31, 2021 2020 2021 2020 Revenue: Products $ 860,925 $ 668,661 $ 2,932,602 $ 2,914,790 Services 180,561 159,819 688,082 617,367 Total revenue 1,041,486 828,480 3,620,684 3,532,157 Cost of goods sold: Products 470,334 343,413 1,545,269 1,573,791 Services 94,033 80,718 353,436 305,475 Total cost of goods sold 564,367 424,131 1,898,705 1,879,266 Gross profit 477,119 404,349 1,721,979 1,652,891 Operating expenses: Research and development 147,454 137,237 536,666 529,888 Selling and marketing 129,625 113,382 452,214 416,425 General and administrative 49,383 43,415 181,874 169,548 Significant asset impairments and restructuring costs 5,700 7,854 29,565 22,652 Amortization of intangible assets 5,836 5,851 23,732 23,383 Acquisition and integration costs 1,712 3,127 2,572 4,031 Total operating expenses 339,710 310,866 1,226,623 1,165,927 Income from operations 137,409 93,483 495,356 486,964 Interest and other income (loss), net (168) (249) (1,768) 964 Interest expense (7,916) (7,395) (30,837) (31,321) Loss on extinguishment and modification of debt — — — (646) Income before income taxes 129,325 85,839 462,751 455,961 Provision (benefit) for income taxes 25,826 20,798 (37,445) 94,670 Net income $ 103,499 $ 65,041 $ 500,196 $ 361,291 Net Income per Common Share Basic net income per common share $ 0.67 $ 0.42 $ 3.22 $ 2.34 Diluted net income per potential common share $ 0.66 $ 0.42 $ 3.19 $ 2.32 Weighted average basic common shares outstanding 155,232 154,706 155,279 154,287 Weighted average diluted potential common shares outstanding(1) 156,689 156,563 156,743 155,955 (1) Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the fourth quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the fourth quarter of fiscal 2020 includes 1.9 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for fiscal 2020 includes 1.7 million shares underlying certain stock option and stock unit awards. CIENA CORPORATION CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) October 30, October 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 1,422,546 $ 1,088,624 Short-term investments 181,483 150,667 Accounts receivable, net 884,958 719,405 Inventories 374,265 344,379 Prepaid expenses and other 325,654 308,084 Total current assets 3,188,906 2,611,159 Long-term investments 70,038 82,226 Equipment, building, furniture and fixtures, net 284,968 272,377 Operating lease right-of-use assets 44,285 57,026 Goodwill 311,645 310,847 Other intangible assets, net 65,314 96,647 Deferred tax asset, net 800,180 647,805 Other long-term assets 99,891 102,830 Total assets $ 4,865,227 $ 4,180,917 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 356,176 $ 291,904 Accrued liabilities and other short-term obligations 409,285 334,132 Deferred revenue 118,007 108,700 Operating lease liabilities 18,632 19,035 Current portion of long-term debt 6,930 6,930 Total current liabilities 909,030 760,701 Long-term deferred revenue 57,457 49,663 Other long-term obligations 166,803 123,185 Long-term operating lease liabilities 41,564 61,415 Long-term debt, net 670,355 676,356 Total liabilities $ 1,845,209 $ 1,671,320 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; 154,858,981 and 154,563,005 shares issued and outstanding 1,549 1,546 Additional paid-in capital 6,803,162 6,826,531 Accumulated other comprehensive income (loss) 439 (35,358 ) Accumulated deficit (3,785,132 ) (4,283,122 ) Total stockholders’ equity 3,020,018 2,509,597 Total liabilities and stockholders’ equity $ 4,865,227 $ 4,180,917 CIENA CORPORATION CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended October 30, 2021 October 31, 2020 Cash flows provided by operating activities: Net income $ 500,196 $ 361,291 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 96,233 93,908 Share-based compensation costs 84,336 67,758 Amortization of intangible assets 36,033 38,619 Deferred taxes (156,469 ) 64,339 Provision for inventory excess and obsolescence 17,850 24,701 Provision for warranty 17,093 22,417 Other 14,525 20,483 Changes in assets and liabilities: Accounts receivable (174,377 ) (17,299 ) Inventories (47,567 ) (25,044 ) Prepaid expenses and other (19,691 ) (38,998 ) Operating lease right-of-use assets 16,632 16,787 Accounts payable, accruals and other obligations 162,134 (117,931 ) Deferred revenue 16,822 2,519 Short and long-term operating lease liabilities (22,104 ) (19,896 ) Net cash provided by operating activities 541,646 493,654 Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (79,550 ) (82,667 ) Purchase of available for sale securities (172,778 ) (223,196 ) Proceeds from maturities of available for sale securities 152,253 110,390 Settlement of foreign currency forward contracts, net 4,680 3,531 Proceeds from sale of equity investment 4,678 — Acquisition of businesses, net of cash acquired — (28,300 ) Net cash used in investing activities (90,717 ) (220,242 ) Cash flows used in financing activities: Payment of long-term debt (6,929 ) (5,198 ) Payment of debt issuance costs — (382 ) Payment of finance lease obligations (3,004 ) (2,703 ) Shares repurchased for tax withholdings on vesting of stock unit awards (44,071 ) (32,472 ) Repurchases of common stock - repurchase program (91,288 ) (74,535 ) Proceeds from issuance of common stock 28,457 28,068 Net cash used in financing activities (116,835 ) (87,222 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash (198 ) (1,643 ) Net increase in cash, cash equivalents and restricted cash 333,896 184,547 Cash, cash equivalents and restricted cash at beginning of fiscal year 1,088,708 904,161 Cash, cash equivalents and restricted cash at end of fiscal year $ 1,422,604 $ 1,088,708 Supplemental disclosure of cash flow information Cash paid during the fiscal year for interest $ 29,864 $ 32,837 Cash paid during the fiscal year for income taxes, net $ 73,127 $ 53,076 Operating lease payments $ 24,058 $ 22,089 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 10,138 $ 7,854 Repurchase of common stock in accrued liabilities from repurchase program $ 800 $ — Operating lease right-of-use assets subject to lease liability $ 4,356 $ 24,160 Unrealized gain on equity investment $ — $ 2,681 APPENDIX A - Reconciliation of Adjusted (Non-GAAP) Measurements (unaudited) Quarter Ended Year Ended October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 477,119 $ 404,349 $ 1,721,979 $ 1,652,891 Share-based compensation-products 920 724 3,408 3,182 Share-based compensation-services 1,240 968 5,181 3,853 Canadian Emergency Wage Subsidy-products — — (4,283 ) — Canadian Emergency Wage Subsidy-services — — (2,667 ) — Amortization of intangible assets 2,856 3,732 12,301 15,235 Total adjustments related to gross profit 5,016 5,424 13,940 22,270 Adjusted (non-GAAP) gross profit $ 482,135 $ 409,773 $ 1,735,919 $ 1,675,161 Adjusted (non-GAAP) gross profit percentage 46.3 % 49.5 % 47.9 % 47.4 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 339,710 $ 310,866 $ 1,226,623 $ 1,165,927 Share-based compensation-research and development 5,684 4,030 21,863 16,987 Share-based compensation-sales and marketing 6,192 5,137 25,152 20,194 Share-based compensation-general and administrative 7,466 5,982 28,804 23,424 Canadian Emergency Wage Subsidy-research and development — — (29,519 ) — Canadian Emergency Wage Subsidy-sales and marketing — — (2,604 ) — Canadian Emergency Wage Subsidy-general and administrative — — (2,207 ) — Significant asset impairments and restructuring costs 5,700 7,854 29,565 22,652 Amortization of intangible assets 5,836 5,851 23,732 23,383 Acquisition and integration costs 1,712 3,127 2,572 4,031 Total adjustments related to operating expense $ 32,590 $ 31,981 $ 97,358 $ 110,671 Adjusted (non-GAAP) operating expense $ 307,120 $ 278,885 $ 1,129,265 $ 1,055,256 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 137,409 $ 93,483 $ 495,356 $ 486,964 Total adjustments related to gross profit 5,016 5,424 13,940 22,270 Total adjustments related to operating expense 32,590 31,981 97,358 110,671 Total adjustments related to income from operations 37,606 37,405 111,298 132,941 Adjusted (non-GAAP) income from operations $ 175,015 $ 130,888 $ 606,654 $ 619,905 Adjusted (non-GAAP) operating margin percentage 16.8 % 15.8 % 16.8 % 17.6 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 103,499 $ 65,041 $ 500,196 $ 361,291 Exclude GAAP provision (benefit) for income taxes 25,826 20,798 (37,445 ) 94,670 Income before income taxes 129,325 85,839 462,751 455,961 Total adjustments related to income from operations 37,606 37,405 111,298 132,941 Loss on extinguishment and modification of debt — — — 646 Unrealized (gain) loss on equity investment — (2,681 ) 165 (2,681 ) Adjusted income before income taxes 166,931 120,563 574,214 586,867 Non-GAAP tax provision on adjusted income before income taxes 34,221 26,042 117,714 126,763 Adjusted (non-GAAP) net income $ 132,710 $ 94,521 $ 456,500 $ 460,104 Weighted average basic common shares outstanding 155,232 154,706 155,279 154,287 Weighted average diluted potential common shares outstanding(1) 156,689 156,563 156,743 155,955 Net Income per Common Share GAAP diluted net income per potential common share $ 0.66 $ 0.42 $ 3.19 $ 2.32 Adjusted (non-GAAP) diluted net income per potential common share $ 0.85 $ 0.60 $ 2.91 $ 2.95 (1) Weighted average diluted potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the fourth quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the fourth quarter of fiscal 2020 includes 1.9 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for fiscal 2020 includes 1.7 million shares underlying certain stock option and stock unit awards. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) Quarter Ended Year Ended October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 103,499 $ 65,041 $ 500,196 $ 361,291 Add: Interest expense 7,916 7,395 30,837 31,321 Less: Interest and other income (loss), net (168 ) (249 ) (1,768 ) 964 Add: Loss on extinguishment and modification of debt — — — (646 ) Add: Provision (benefit) for income taxes 25,826 20,798 (37,445 ) 94,670 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 24,315 23,538 96,233 93,908 Add: Amortization of intangible assets 8,692 9,584 36,033 38,619 EBITDA $ 170,416 $ 126,605 $ 627,622 $ 619,491 Less: Canadian Emergency Wage Subsidy — — 41,280 — Add: Share-based compensation cost 21,366 16,920 84,336 67,758 Add: Significant asset impairments and restructuring costs 5,700 7,854 29,565 22,652 Add: Acquisition and integration costs 1,712 3,127 2,572 4,031 Adjusted EBITDA $ 199,194 $ 154,506 $ 702,815 $ 713,932 The adjusted (non-GAAP) measures above and their reconciliation to Ciena's GAAP results for the periods presented reflect adjustments relating to the following items: Share-based compensation - a non-cash expense incurred in accordance with share-based compensation accounting guidance. Canadian Emergency Wage Subsidy - a program introduced by the Government of Canada to offset a portion of employee wages for a limited period in response to COVID-19 outbreak. Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities and the redesign of business processes. Amortization of intangible assets - a non-cash expense arising from the acquisition of intangible assets, principally developed technologies and customer-related intangibles, that Ciena is required to amortize over its expected useful life. Acquisition and integration costs - includes expenses for financial, legal and accounting advisors, severance and other employee-related costs associated with our acquisition of Centina in fiscal 2020, and costs and recoveries of acquisition consideration and compensation associated with a three-year earn-out arrangement related to the DonRiver acquisition in fiscal 2018. Ciena does not believe that these costs are reflective of its ongoing operating expense following its completion of these integration activities. Loss on extinguishment and modification of debt - reflects extinguishment and modification of debt expenses related to refinancing of our Term Loan due September 28, 2025. Unrealized (gain)loss on equity investment - reflects a change in the carrying value of certain cost method equity investments. Non-GAAP tax provision - consists of current and deferred income tax expense commensurate with the level of adjusted income before income taxes and utilizes a current, blended U.S. and foreign statutory annual tax rate of 20.5% for fiscal 2021 and 21.6% for fiscal 2020. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy. Ciena's GAAP tax provision for fiscal 2021 benefited from recording a $119.3 million tax benefit related to an internal transfer of non-U.S. intangible assets that was recognized as a result of the step-up in basis of such rights for tax purposes. The Non-GAAP tax provision for the periods presented do not include this tax benefit or the corresponding deferred tax asset. View source version on businesswire.com: https://www.businesswire.com/news/home/20211209005238/en/Contacts Press: Jamie Moody Ciena Corporation +1 (214) 995-8035 pr@ciena.com Investor: Gregg Lampf Ciena Corporation +1 (410) 694-5700 ir@ciena.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Ciena Reports Fiscal Fourth Quarter 2021 and Year-End Financial Results By: Ciena Corporation via Business Wire December 09, 2021 at 07:00 AM EST Board Authorizes Share Repurchase up to $1.0 Billion Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal fourth quarter and year ended October 30, 2021. Q4 Revenue: $1.04 billion, increasing 25.7% year over year Q4 Net Income per Share: $0.66 GAAP; $0.85 adjusted (non-GAAP), increasing 41.7% year over year Share Repurchases: Repurchased approximately 0.5 million shares of common stock for an aggregate price of $26.7 million during the fourth quarter “Our strong financial results exceeded our expectations in the fourth quarter and for the full fiscal year, driven by continued execution of our strategy and our demonstrated ability to manage supply chain challenges,” said Gary Smith, President and CEO, Ciena. “Looking ahead, we intend to continue driving growth in our business by leveraging our market leadership and investing to capitalize on robust demand dynamics. In addition, our strong balance sheet and cash generation expectations allow us to increase return of capital to our shareholders.” For fiscal fourth quarter 2021, Ciena reported revenue of $1.04 billion, as compared to $828.5 million for fiscal fourth quarter 2020. For fiscal year 2021, Ciena reported revenue of $3.62 billion, as compared to $3.53 billion for fiscal year 2020. Ciena's GAAP net income for fiscal fourth quarter 2021 was $103.5 million, or $0.66 per diluted common share, which compares to GAAP net income of $65.0 million, or $0.42 per diluted common share, for fiscal fourth quarter 2020. For fiscal year 2021, Ciena's GAAP net income was $500.2 million, or $3.19 per diluted common share, as compared to GAAP net income of $361.3 million, or $2.32 per diluted common share, for fiscal year 2020. Ciena's adjusted (non-GAAP) net income for fiscal fourth quarter 2021 was $132.7 million, or $0.85 per diluted common share, which compares to adjusted (non-GAAP) net income of $94.5 million, or $0.60 per diluted common share, for fiscal fourth quarter 2020. For fiscal year 2021, Ciena's adjusted (non-GAAP) net income was $456.5 million, or $2.91 per diluted common share, as compared to adjusted (non-GAAP) net income of $460.1 million, or $2.95 per diluted common share, for fiscal year 2020. Share Repurchase Program On December 1, 2021, Ciena's Board of Directors authorized the repurchase of up to $1.0 billion of the Company's stock, replacing the previous share repurchase authorization. In connection with this new authorization, the company intends to enter into an accelerated share repurchase (ASR) arrangement under which it will repurchase $250 million of its common stock. The final settlement of the ASR is expected to be completed in the second quarter of fiscal 2022. Performance Summary for the Fiscal Fourth Quarter and the Year Ended October 30, 2021 The tables below (in millions, except percentage data) provide comparisons of certain quarterly and annual results to the prior year. Appendices A and B set forth reconciliations between the GAAP and adjusted (non-GAAP) measures contained in this release. GAAP Results (unaudited) Quarter Ended Period Year Ended Period October 30, October 31, Change October 30, October 31, Change 2021 2020 Y-T-Y* 2021 2020 Y-T-Y* Revenue $ 1,041.5 $ 828.5 25.7 % $ 3,620.7 $ 3,532.2 2.5 % Gross margin 45.8 % 48.8 % (3.0 )% 47.6 % 46.8 % 0.8 % Operating expense $ 339.7 $ 310.9 9.3 % $ 1,226.6 $ 1,165.9 5.2 % Operating margin 13.2 % 11.3 % 1.9 % 13.7 % 13.8 % (0.1 )% Non-GAAP Results (unaudited) Quarter Ended Period Year Ended Period October 30, October 31, Change October 30, October 31, Change 2021 2020 Y-T-Y* 2021 2020 Y-T-Y* Revenue $ 1,041.5 $ 828.5 25.7 % $ 3,620.7 $ 3,532.2 2.5 % Adj. gross margin 46.3 % 49.5 % (3.2 )% 47.9 % 47.4 % 0.5 % Adj. operating expense $ 307.1 $ 278.9 10.1 % $ 1,129.3 $ 1,055.3 7.0 % Adj. operating margin 16.8 % 15.8 % 1.0 % 16.8 % 17.6 % (0.8 )% Adj. EBITDA $ 199.2 $ 154.5 28.9 % $ 702.8 $ 713.9 (1.6 )% * Denotes % change, or in the case of margin, absolute change Revenue by Segment (unaudited) Quarter Ended October 30, 2021 October 31, 2020 Revenue %** Revenue % ** Networking Platforms Converged Packet Optical $ 754.6 72.5 $ 579.3 69.9 Routing and Switching (1) 74.2 7.1 56.0 6.8 Total Networking Platforms 828.8 79.6 635.3 76.7 Platform Software and Services 66.1 6.3 54.5 6.6 Blue Planet Automation Software and Services 19.8 1.9 20.9 2.5 Global Services Maintenance Support and Training 71.3 6.9 67.0 8.1 Installation and Deployment 47.2 4.5 43.0 5.2 Consulting and Network Design 8.3 0.8 7.8 0.9 Total Global Services 126.8 12.2 117.8 14.2 Total $ 1,041.5 100.0 $ 828.5 100.0 Revenue by Segment (unaudited) Year Ended October 30, 2021 October 31, 2020 Revenue %** Revenue % ** Networking Platforms Converged Packet Optical $ 2,553.5 70.5 $ 2,547.6 72.1 Routing and Switching (1) 271.8 7.5 267.5 7.6 Total Networking Platforms 2,825.3 78.0 2,815.1 79.7 Platform Software and Services 229.6 6.4 197.8 5.6 Blue Planet Automation Software and Services 77.2 2.1 62.6 1.8 Global Services Maintenance Support and Training 283.4 7.8 269.4 7.6 Installation and Deployment 171.5 4.7 152.0 4.3 Consulting and Network Design 33.7 1.0 35.3 1.0 Total Global Services 488.6 13.5 456.7 12.9 Total $ 3,620.7 100.0 $ 3,532.2 100.0 ** Denotes % of total revenue (1) Ciena renamed its former “Packet Networking” product line “Routing and Switching” effective as of the beginning of fiscal 2021. This change, affecting only the presentation of such information, was made on a prospective basis and does not impact comparability of previous financial results or the composition of this product category. Additional Performance Metrics for Fiscal Fourth Quarter and Year Ended October 30, 2021 Revenue by Geographic Region (unaudited) Quarter Ended October 30, 2021 October 31, 2020 Revenue % ** Revenue % ** Americas $ 748.7 71.9 $ 531.6 64.2 Europe, Middle East and Africa 170.8 16.4 157.6 19.0 Asia Pacific 122.0 11.7 139.3 16.8 Total $ 1,041.5 100.0 $ 828.5 100.0 Revenue by Geographic Region (unaudited) Year Ended October 30, 2021 October 31, 2020 Revenue % ** Revenue % ** Americas $ 2,525.6 69.8 $ 2,469.3 69.9 Europe, Middle East and Africa 670.5 18.5 591.5 16.8 Asia Pacific 424.6 11.7 471.4 13.3 Total $ 3,620.7 100.0 $ 3,532.2 100.0 ** Denotes % of total revenue One 10%-plus customer represented a total of 12.9% and 12.4% of revenue for the fiscal fourth quarter and fiscal year 2021, respectively Cash and investments totaled $1.7 billion Cash flow from operations totaled $254.9 million and $541.6 million for the fiscal fourth quarter and fiscal year 2021, respectively Average days' sales outstanding (DSOs) were 85 and 98 for the fiscal fourth quarter and fiscal year 2021, respectively Accounts receivable, net balance was $885.0 million Unbilled contract asset balance, net was $101.4 million Inventories totaled $374.3 million, including: Raw materials: $175.4 million Work in process: $10.3 million Finished goods: $180.8 million Deferred cost of sales: $44.7 million Reserve for excess and obsolescence: $(36.9) million Product inventory turns were 5.0 and 4.1 for the fiscal fourth quarter and fiscal year 2021, respectively Headcount totaled 7,241 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Fourth Quarter and Year-End 2021 Results Today, Thursday, December 9, 2021, in conjunction with this announcement, Ciena posted to the Quarterly Results page of the Investor Relations section of its website certain related supporting materials for its unaudited fiscal fourth quarter and fiscal year 2021 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: "Our strong financial results exceeded our expectations in the fourth quarter and for the full fiscal year, driven by continued execution of our strategy and our demonstrated ability to manage supply chain challenges"; "Looking ahead, we intend to continue driving growth in our business by leveraging our market leadership and investing to capitalize on robust demand dynamics"; In addition, our strong balance sheet and cash generation expectations allow us to increase return of capital to our shareholders." Ciena's actual results, performance or events may differ materially from these forward-looking statements made or implied due to a number of risks and uncertainties relating to Ciena's business, including: the effect of broader economic and market conditions on our customers and their business; our ability to execute our business and growth strategies; the duration and severity of the COVID-19 pandemic and the impact of countermeasures taken to mitigate its spread; the impact of COVID-19 on macroeconomic conditions, the level of economic activity, demand for our technology solutions, short- and long-term customer or end user needs and changes thereto, continuity of supply chain, logistics and business operations, liquidity and financial results; 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; factors beyond our control such as natural disasters, acts of war or terrorism, and public health emergencies, including the COVID-19 pandemic; the impact of the Tax Cuts and Jobs Act; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; 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 September 8, 2021 and its Annual Report on Form 10-K to be filed with the SEC. Ciena assumes no obligation to update any forward-looking information included in this press release. Non-GAAP Presentation of Quarterly and Annual Results. This release includes non-GAAP measures of Ciena's gross profit, operating expense, income from operations, earnings before interest, tax, depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of net income and net income per share. In evaluating the operating performance of Ciena's business, management excludes certain charges and credits that are required by GAAP. These items share one or more of the following characteristics: they are unusual and Ciena does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of Ciena's control. Management believes that the non-GAAP measures below provide management and investors useful information and meaningful insight to the operating performance of the business. The presentation of these non-GAAP financial measures should be considered in addition to Ciena's GAAP results and these measures are not intended to be a substitute for the financial information prepared and presented in accordance with GAAP. Ciena's non-GAAP measures and the related adjustments may differ from non-GAAP measures used by other companies and should only be used to evaluate Ciena's results of operations in conjunction with our corresponding GAAP results. To the extent not previously disclosed in a prior Ciena financial results press release for the relevant period, 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 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Quarter Ended Year Ended October 30, October 31, October 30, October 31, 2021 2020 2021 2020 Revenue: Products $ 860,925 $ 668,661 $ 2,932,602 $ 2,914,790 Services 180,561 159,819 688,082 617,367 Total revenue 1,041,486 828,480 3,620,684 3,532,157 Cost of goods sold: Products 470,334 343,413 1,545,269 1,573,791 Services 94,033 80,718 353,436 305,475 Total cost of goods sold 564,367 424,131 1,898,705 1,879,266 Gross profit 477,119 404,349 1,721,979 1,652,891 Operating expenses: Research and development 147,454 137,237 536,666 529,888 Selling and marketing 129,625 113,382 452,214 416,425 General and administrative 49,383 43,415 181,874 169,548 Significant asset impairments and restructuring costs 5,700 7,854 29,565 22,652 Amortization of intangible assets 5,836 5,851 23,732 23,383 Acquisition and integration costs 1,712 3,127 2,572 4,031 Total operating expenses 339,710 310,866 1,226,623 1,165,927 Income from operations 137,409 93,483 495,356 486,964 Interest and other income (loss), net (168) (249) (1,768) 964 Interest expense (7,916) (7,395) (30,837) (31,321) Loss on extinguishment and modification of debt — — — (646) Income before income taxes 129,325 85,839 462,751 455,961 Provision (benefit) for income taxes 25,826 20,798 (37,445) 94,670 Net income $ 103,499 $ 65,041 $ 500,196 $ 361,291 Net Income per Common Share Basic net income per common share $ 0.67 $ 0.42 $ 3.22 $ 2.34 Diluted net income per potential common share $ 0.66 $ 0.42 $ 3.19 $ 2.32 Weighted average basic common shares outstanding 155,232 154,706 155,279 154,287 Weighted average diluted potential common shares outstanding(1) 156,689 156,563 156,743 155,955 (1) Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the fourth quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the fourth quarter of fiscal 2020 includes 1.9 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for fiscal 2020 includes 1.7 million shares underlying certain stock option and stock unit awards. CIENA CORPORATION CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) October 30, October 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 1,422,546 $ 1,088,624 Short-term investments 181,483 150,667 Accounts receivable, net 884,958 719,405 Inventories 374,265 344,379 Prepaid expenses and other 325,654 308,084 Total current assets 3,188,906 2,611,159 Long-term investments 70,038 82,226 Equipment, building, furniture and fixtures, net 284,968 272,377 Operating lease right-of-use assets 44,285 57,026 Goodwill 311,645 310,847 Other intangible assets, net 65,314 96,647 Deferred tax asset, net 800,180 647,805 Other long-term assets 99,891 102,830 Total assets $ 4,865,227 $ 4,180,917 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 356,176 $ 291,904 Accrued liabilities and other short-term obligations 409,285 334,132 Deferred revenue 118,007 108,700 Operating lease liabilities 18,632 19,035 Current portion of long-term debt 6,930 6,930 Total current liabilities 909,030 760,701 Long-term deferred revenue 57,457 49,663 Other long-term obligations 166,803 123,185 Long-term operating lease liabilities 41,564 61,415 Long-term debt, net 670,355 676,356 Total liabilities $ 1,845,209 $ 1,671,320 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; 154,858,981 and 154,563,005 shares issued and outstanding 1,549 1,546 Additional paid-in capital 6,803,162 6,826,531 Accumulated other comprehensive income (loss) 439 (35,358 ) Accumulated deficit (3,785,132 ) (4,283,122 ) Total stockholders’ equity 3,020,018 2,509,597 Total liabilities and stockholders’ equity $ 4,865,227 $ 4,180,917 CIENA CORPORATION CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended October 30, 2021 October 31, 2020 Cash flows provided by operating activities: Net income $ 500,196 $ 361,291 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 96,233 93,908 Share-based compensation costs 84,336 67,758 Amortization of intangible assets 36,033 38,619 Deferred taxes (156,469 ) 64,339 Provision for inventory excess and obsolescence 17,850 24,701 Provision for warranty 17,093 22,417 Other 14,525 20,483 Changes in assets and liabilities: Accounts receivable (174,377 ) (17,299 ) Inventories (47,567 ) (25,044 ) Prepaid expenses and other (19,691 ) (38,998 ) Operating lease right-of-use assets 16,632 16,787 Accounts payable, accruals and other obligations 162,134 (117,931 ) Deferred revenue 16,822 2,519 Short and long-term operating lease liabilities (22,104 ) (19,896 ) Net cash provided by operating activities 541,646 493,654 Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (79,550 ) (82,667 ) Purchase of available for sale securities (172,778 ) (223,196 ) Proceeds from maturities of available for sale securities 152,253 110,390 Settlement of foreign currency forward contracts, net 4,680 3,531 Proceeds from sale of equity investment 4,678 — Acquisition of businesses, net of cash acquired — (28,300 ) Net cash used in investing activities (90,717 ) (220,242 ) Cash flows used in financing activities: Payment of long-term debt (6,929 ) (5,198 ) Payment of debt issuance costs — (382 ) Payment of finance lease obligations (3,004 ) (2,703 ) Shares repurchased for tax withholdings on vesting of stock unit awards (44,071 ) (32,472 ) Repurchases of common stock - repurchase program (91,288 ) (74,535 ) Proceeds from issuance of common stock 28,457 28,068 Net cash used in financing activities (116,835 ) (87,222 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash (198 ) (1,643 ) Net increase in cash, cash equivalents and restricted cash 333,896 184,547 Cash, cash equivalents and restricted cash at beginning of fiscal year 1,088,708 904,161 Cash, cash equivalents and restricted cash at end of fiscal year $ 1,422,604 $ 1,088,708 Supplemental disclosure of cash flow information Cash paid during the fiscal year for interest $ 29,864 $ 32,837 Cash paid during the fiscal year for income taxes, net $ 73,127 $ 53,076 Operating lease payments $ 24,058 $ 22,089 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 10,138 $ 7,854 Repurchase of common stock in accrued liabilities from repurchase program $ 800 $ — Operating lease right-of-use assets subject to lease liability $ 4,356 $ 24,160 Unrealized gain on equity investment $ — $ 2,681 APPENDIX A - Reconciliation of Adjusted (Non-GAAP) Measurements (unaudited) Quarter Ended Year Ended October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 477,119 $ 404,349 $ 1,721,979 $ 1,652,891 Share-based compensation-products 920 724 3,408 3,182 Share-based compensation-services 1,240 968 5,181 3,853 Canadian Emergency Wage Subsidy-products — — (4,283 ) — Canadian Emergency Wage Subsidy-services — — (2,667 ) — Amortization of intangible assets 2,856 3,732 12,301 15,235 Total adjustments related to gross profit 5,016 5,424 13,940 22,270 Adjusted (non-GAAP) gross profit $ 482,135 $ 409,773 $ 1,735,919 $ 1,675,161 Adjusted (non-GAAP) gross profit percentage 46.3 % 49.5 % 47.9 % 47.4 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 339,710 $ 310,866 $ 1,226,623 $ 1,165,927 Share-based compensation-research and development 5,684 4,030 21,863 16,987 Share-based compensation-sales and marketing 6,192 5,137 25,152 20,194 Share-based compensation-general and administrative 7,466 5,982 28,804 23,424 Canadian Emergency Wage Subsidy-research and development — — (29,519 ) — Canadian Emergency Wage Subsidy-sales and marketing — — (2,604 ) — Canadian Emergency Wage Subsidy-general and administrative — — (2,207 ) — Significant asset impairments and restructuring costs 5,700 7,854 29,565 22,652 Amortization of intangible assets 5,836 5,851 23,732 23,383 Acquisition and integration costs 1,712 3,127 2,572 4,031 Total adjustments related to operating expense $ 32,590 $ 31,981 $ 97,358 $ 110,671 Adjusted (non-GAAP) operating expense $ 307,120 $ 278,885 $ 1,129,265 $ 1,055,256 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 137,409 $ 93,483 $ 495,356 $ 486,964 Total adjustments related to gross profit 5,016 5,424 13,940 22,270 Total adjustments related to operating expense 32,590 31,981 97,358 110,671 Total adjustments related to income from operations 37,606 37,405 111,298 132,941 Adjusted (non-GAAP) income from operations $ 175,015 $ 130,888 $ 606,654 $ 619,905 Adjusted (non-GAAP) operating margin percentage 16.8 % 15.8 % 16.8 % 17.6 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 103,499 $ 65,041 $ 500,196 $ 361,291 Exclude GAAP provision (benefit) for income taxes 25,826 20,798 (37,445 ) 94,670 Income before income taxes 129,325 85,839 462,751 455,961 Total adjustments related to income from operations 37,606 37,405 111,298 132,941 Loss on extinguishment and modification of debt — — — 646 Unrealized (gain) loss on equity investment — (2,681 ) 165 (2,681 ) Adjusted income before income taxes 166,931 120,563 574,214 586,867 Non-GAAP tax provision on adjusted income before income taxes 34,221 26,042 117,714 126,763 Adjusted (non-GAAP) net income $ 132,710 $ 94,521 $ 456,500 $ 460,104 Weighted average basic common shares outstanding 155,232 154,706 155,279 154,287 Weighted average diluted potential common shares outstanding(1) 156,689 156,563 156,743 155,955 Net Income per Common Share GAAP diluted net income per potential common share $ 0.66 $ 0.42 $ 3.19 $ 2.32 Adjusted (non-GAAP) diluted net income per potential common share $ 0.85 $ 0.60 $ 2.91 $ 2.95 (1) Weighted average diluted potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the fourth quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the fourth quarter of fiscal 2020 includes 1.9 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for fiscal 2020 includes 1.7 million shares underlying certain stock option and stock unit awards. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) Quarter Ended Year Ended October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 103,499 $ 65,041 $ 500,196 $ 361,291 Add: Interest expense 7,916 7,395 30,837 31,321 Less: Interest and other income (loss), net (168 ) (249 ) (1,768 ) 964 Add: Loss on extinguishment and modification of debt — — — (646 ) Add: Provision (benefit) for income taxes 25,826 20,798 (37,445 ) 94,670 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 24,315 23,538 96,233 93,908 Add: Amortization of intangible assets 8,692 9,584 36,033 38,619 EBITDA $ 170,416 $ 126,605 $ 627,622 $ 619,491 Less: Canadian Emergency Wage Subsidy — — 41,280 — Add: Share-based compensation cost 21,366 16,920 84,336 67,758 Add: Significant asset impairments and restructuring costs 5,700 7,854 29,565 22,652 Add: Acquisition and integration costs 1,712 3,127 2,572 4,031 Adjusted EBITDA $ 199,194 $ 154,506 $ 702,815 $ 713,932 The adjusted (non-GAAP) measures above and their reconciliation to Ciena's GAAP results for the periods presented reflect adjustments relating to the following items: Share-based compensation - a non-cash expense incurred in accordance with share-based compensation accounting guidance. Canadian Emergency Wage Subsidy - a program introduced by the Government of Canada to offset a portion of employee wages for a limited period in response to COVID-19 outbreak. Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities and the redesign of business processes. Amortization of intangible assets - a non-cash expense arising from the acquisition of intangible assets, principally developed technologies and customer-related intangibles, that Ciena is required to amortize over its expected useful life. Acquisition and integration costs - includes expenses for financial, legal and accounting advisors, severance and other employee-related costs associated with our acquisition of Centina in fiscal 2020, and costs and recoveries of acquisition consideration and compensation associated with a three-year earn-out arrangement related to the DonRiver acquisition in fiscal 2018. Ciena does not believe that these costs are reflective of its ongoing operating expense following its completion of these integration activities. Loss on extinguishment and modification of debt - reflects extinguishment and modification of debt expenses related to refinancing of our Term Loan due September 28, 2025. Unrealized (gain)loss on equity investment - reflects a change in the carrying value of certain cost method equity investments. Non-GAAP tax provision - consists of current and deferred income tax expense commensurate with the level of adjusted income before income taxes and utilizes a current, blended U.S. and foreign statutory annual tax rate of 20.5% for fiscal 2021 and 21.6% for fiscal 2020. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy. Ciena's GAAP tax provision for fiscal 2021 benefited from recording a $119.3 million tax benefit related to an internal transfer of non-U.S. intangible assets that was recognized as a result of the step-up in basis of such rights for tax purposes. The Non-GAAP tax provision for the periods presented do not include this tax benefit or the corresponding deferred tax asset. View source version on businesswire.com: https://www.businesswire.com/news/home/20211209005238/en/Contacts Press: Jamie Moody Ciena Corporation +1 (214) 995-8035 pr@ciena.com Investor: Gregg Lampf Ciena Corporation +1 (410) 694-5700 ir@ciena.com
Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal fourth quarter and year ended October 30, 2021. Q4 Revenue: $1.04 billion, increasing 25.7% year over year Q4 Net Income per Share: $0.66 GAAP; $0.85 adjusted (non-GAAP), increasing 41.7% year over year Share Repurchases: Repurchased approximately 0.5 million shares of common stock for an aggregate price of $26.7 million during the fourth quarter “Our strong financial results exceeded our expectations in the fourth quarter and for the full fiscal year, driven by continued execution of our strategy and our demonstrated ability to manage supply chain challenges,” said Gary Smith, President and CEO, Ciena. “Looking ahead, we intend to continue driving growth in our business by leveraging our market leadership and investing to capitalize on robust demand dynamics. In addition, our strong balance sheet and cash generation expectations allow us to increase return of capital to our shareholders.” For fiscal fourth quarter 2021, Ciena reported revenue of $1.04 billion, as compared to $828.5 million for fiscal fourth quarter 2020. For fiscal year 2021, Ciena reported revenue of $3.62 billion, as compared to $3.53 billion for fiscal year 2020. Ciena's GAAP net income for fiscal fourth quarter 2021 was $103.5 million, or $0.66 per diluted common share, which compares to GAAP net income of $65.0 million, or $0.42 per diluted common share, for fiscal fourth quarter 2020. For fiscal year 2021, Ciena's GAAP net income was $500.2 million, or $3.19 per diluted common share, as compared to GAAP net income of $361.3 million, or $2.32 per diluted common share, for fiscal year 2020. Ciena's adjusted (non-GAAP) net income for fiscal fourth quarter 2021 was $132.7 million, or $0.85 per diluted common share, which compares to adjusted (non-GAAP) net income of $94.5 million, or $0.60 per diluted common share, for fiscal fourth quarter 2020. For fiscal year 2021, Ciena's adjusted (non-GAAP) net income was $456.5 million, or $2.91 per diluted common share, as compared to adjusted (non-GAAP) net income of $460.1 million, or $2.95 per diluted common share, for fiscal year 2020. Share Repurchase Program On December 1, 2021, Ciena's Board of Directors authorized the repurchase of up to $1.0 billion of the Company's stock, replacing the previous share repurchase authorization. In connection with this new authorization, the company intends to enter into an accelerated share repurchase (ASR) arrangement under which it will repurchase $250 million of its common stock. The final settlement of the ASR is expected to be completed in the second quarter of fiscal 2022. Performance Summary for the Fiscal Fourth Quarter and the Year Ended October 30, 2021 The tables below (in millions, except percentage data) provide comparisons of certain quarterly and annual results to the prior year. Appendices A and B set forth reconciliations between the GAAP and adjusted (non-GAAP) measures contained in this release. GAAP Results (unaudited) Quarter Ended Period Year Ended Period October 30, October 31, Change October 30, October 31, Change 2021 2020 Y-T-Y* 2021 2020 Y-T-Y* Revenue $ 1,041.5 $ 828.5 25.7 % $ 3,620.7 $ 3,532.2 2.5 % Gross margin 45.8 % 48.8 % (3.0 )% 47.6 % 46.8 % 0.8 % Operating expense $ 339.7 $ 310.9 9.3 % $ 1,226.6 $ 1,165.9 5.2 % Operating margin 13.2 % 11.3 % 1.9 % 13.7 % 13.8 % (0.1 )% Non-GAAP Results (unaudited) Quarter Ended Period Year Ended Period October 30, October 31, Change October 30, October 31, Change 2021 2020 Y-T-Y* 2021 2020 Y-T-Y* Revenue $ 1,041.5 $ 828.5 25.7 % $ 3,620.7 $ 3,532.2 2.5 % Adj. gross margin 46.3 % 49.5 % (3.2 )% 47.9 % 47.4 % 0.5 % Adj. operating expense $ 307.1 $ 278.9 10.1 % $ 1,129.3 $ 1,055.3 7.0 % Adj. operating margin 16.8 % 15.8 % 1.0 % 16.8 % 17.6 % (0.8 )% Adj. EBITDA $ 199.2 $ 154.5 28.9 % $ 702.8 $ 713.9 (1.6 )% * Denotes % change, or in the case of margin, absolute change Revenue by Segment (unaudited) Quarter Ended October 30, 2021 October 31, 2020 Revenue %** Revenue % ** Networking Platforms Converged Packet Optical $ 754.6 72.5 $ 579.3 69.9 Routing and Switching (1) 74.2 7.1 56.0 6.8 Total Networking Platforms 828.8 79.6 635.3 76.7 Platform Software and Services 66.1 6.3 54.5 6.6 Blue Planet Automation Software and Services 19.8 1.9 20.9 2.5 Global Services Maintenance Support and Training 71.3 6.9 67.0 8.1 Installation and Deployment 47.2 4.5 43.0 5.2 Consulting and Network Design 8.3 0.8 7.8 0.9 Total Global Services 126.8 12.2 117.8 14.2 Total $ 1,041.5 100.0 $ 828.5 100.0 Revenue by Segment (unaudited) Year Ended October 30, 2021 October 31, 2020 Revenue %** Revenue % ** Networking Platforms Converged Packet Optical $ 2,553.5 70.5 $ 2,547.6 72.1 Routing and Switching (1) 271.8 7.5 267.5 7.6 Total Networking Platforms 2,825.3 78.0 2,815.1 79.7 Platform Software and Services 229.6 6.4 197.8 5.6 Blue Planet Automation Software and Services 77.2 2.1 62.6 1.8 Global Services Maintenance Support and Training 283.4 7.8 269.4 7.6 Installation and Deployment 171.5 4.7 152.0 4.3 Consulting and Network Design 33.7 1.0 35.3 1.0 Total Global Services 488.6 13.5 456.7 12.9 Total $ 3,620.7 100.0 $ 3,532.2 100.0 ** Denotes % of total revenue (1) Ciena renamed its former “Packet Networking” product line “Routing and Switching” effective as of the beginning of fiscal 2021. This change, affecting only the presentation of such information, was made on a prospective basis and does not impact comparability of previous financial results or the composition of this product category. Additional Performance Metrics for Fiscal Fourth Quarter and Year Ended October 30, 2021 Revenue by Geographic Region (unaudited) Quarter Ended October 30, 2021 October 31, 2020 Revenue % ** Revenue % ** Americas $ 748.7 71.9 $ 531.6 64.2 Europe, Middle East and Africa 170.8 16.4 157.6 19.0 Asia Pacific 122.0 11.7 139.3 16.8 Total $ 1,041.5 100.0 $ 828.5 100.0 Revenue by Geographic Region (unaudited) Year Ended October 30, 2021 October 31, 2020 Revenue % ** Revenue % ** Americas $ 2,525.6 69.8 $ 2,469.3 69.9 Europe, Middle East and Africa 670.5 18.5 591.5 16.8 Asia Pacific 424.6 11.7 471.4 13.3 Total $ 3,620.7 100.0 $ 3,532.2 100.0 ** Denotes % of total revenue One 10%-plus customer represented a total of 12.9% and 12.4% of revenue for the fiscal fourth quarter and fiscal year 2021, respectively Cash and investments totaled $1.7 billion Cash flow from operations totaled $254.9 million and $541.6 million for the fiscal fourth quarter and fiscal year 2021, respectively Average days' sales outstanding (DSOs) were 85 and 98 for the fiscal fourth quarter and fiscal year 2021, respectively Accounts receivable, net balance was $885.0 million Unbilled contract asset balance, net was $101.4 million Inventories totaled $374.3 million, including: Raw materials: $175.4 million Work in process: $10.3 million Finished goods: $180.8 million Deferred cost of sales: $44.7 million Reserve for excess and obsolescence: $(36.9) million Product inventory turns were 5.0 and 4.1 for the fiscal fourth quarter and fiscal year 2021, respectively Headcount totaled 7,241 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Fourth Quarter and Year-End 2021 Results Today, Thursday, December 9, 2021, in conjunction with this announcement, Ciena posted to the Quarterly Results page of the Investor Relations section of its website certain related supporting materials for its unaudited fiscal fourth quarter and fiscal year 2021 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: "Our strong financial results exceeded our expectations in the fourth quarter and for the full fiscal year, driven by continued execution of our strategy and our demonstrated ability to manage supply chain challenges"; "Looking ahead, we intend to continue driving growth in our business by leveraging our market leadership and investing to capitalize on robust demand dynamics"; In addition, our strong balance sheet and cash generation expectations allow us to increase return of capital to our shareholders." Ciena's actual results, performance or events may differ materially from these forward-looking statements made or implied due to a number of risks and uncertainties relating to Ciena's business, including: the effect of broader economic and market conditions on our customers and their business; our ability to execute our business and growth strategies; the duration and severity of the COVID-19 pandemic and the impact of countermeasures taken to mitigate its spread; the impact of COVID-19 on macroeconomic conditions, the level of economic activity, demand for our technology solutions, short- and long-term customer or end user needs and changes thereto, continuity of supply chain, logistics and business operations, liquidity and financial results; 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; factors beyond our control such as natural disasters, acts of war or terrorism, and public health emergencies, including the COVID-19 pandemic; the impact of the Tax Cuts and Jobs Act; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; 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 September 8, 2021 and its Annual Report on Form 10-K to be filed with the SEC. Ciena assumes no obligation to update any forward-looking information included in this press release. Non-GAAP Presentation of Quarterly and Annual Results. This release includes non-GAAP measures of Ciena's gross profit, operating expense, income from operations, earnings before interest, tax, depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of net income and net income per share. In evaluating the operating performance of Ciena's business, management excludes certain charges and credits that are required by GAAP. These items share one or more of the following characteristics: they are unusual and Ciena does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of Ciena's control. Management believes that the non-GAAP measures below provide management and investors useful information and meaningful insight to the operating performance of the business. The presentation of these non-GAAP financial measures should be considered in addition to Ciena's GAAP results and these measures are not intended to be a substitute for the financial information prepared and presented in accordance with GAAP. Ciena's non-GAAP measures and the related adjustments may differ from non-GAAP measures used by other companies and should only be used to evaluate Ciena's results of operations in conjunction with our corresponding GAAP results. To the extent not previously disclosed in a prior Ciena financial results press release for the relevant period, 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 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Quarter Ended Year Ended October 30, October 31, October 30, October 31, 2021 2020 2021 2020 Revenue: Products $ 860,925 $ 668,661 $ 2,932,602 $ 2,914,790 Services 180,561 159,819 688,082 617,367 Total revenue 1,041,486 828,480 3,620,684 3,532,157 Cost of goods sold: Products 470,334 343,413 1,545,269 1,573,791 Services 94,033 80,718 353,436 305,475 Total cost of goods sold 564,367 424,131 1,898,705 1,879,266 Gross profit 477,119 404,349 1,721,979 1,652,891 Operating expenses: Research and development 147,454 137,237 536,666 529,888 Selling and marketing 129,625 113,382 452,214 416,425 General and administrative 49,383 43,415 181,874 169,548 Significant asset impairments and restructuring costs 5,700 7,854 29,565 22,652 Amortization of intangible assets 5,836 5,851 23,732 23,383 Acquisition and integration costs 1,712 3,127 2,572 4,031 Total operating expenses 339,710 310,866 1,226,623 1,165,927 Income from operations 137,409 93,483 495,356 486,964 Interest and other income (loss), net (168) (249) (1,768) 964 Interest expense (7,916) (7,395) (30,837) (31,321) Loss on extinguishment and modification of debt — — — (646) Income before income taxes 129,325 85,839 462,751 455,961 Provision (benefit) for income taxes 25,826 20,798 (37,445) 94,670 Net income $ 103,499 $ 65,041 $ 500,196 $ 361,291 Net Income per Common Share Basic net income per common share $ 0.67 $ 0.42 $ 3.22 $ 2.34 Diluted net income per potential common share $ 0.66 $ 0.42 $ 3.19 $ 2.32 Weighted average basic common shares outstanding 155,232 154,706 155,279 154,287 Weighted average diluted potential common shares outstanding(1) 156,689 156,563 156,743 155,955 (1) Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the fourth quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the fourth quarter of fiscal 2020 includes 1.9 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating GAAP diluted net income per potential common share for fiscal 2020 includes 1.7 million shares underlying certain stock option and stock unit awards. CIENA CORPORATION CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) October 30, October 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 1,422,546 $ 1,088,624 Short-term investments 181,483 150,667 Accounts receivable, net 884,958 719,405 Inventories 374,265 344,379 Prepaid expenses and other 325,654 308,084 Total current assets 3,188,906 2,611,159 Long-term investments 70,038 82,226 Equipment, building, furniture and fixtures, net 284,968 272,377 Operating lease right-of-use assets 44,285 57,026 Goodwill 311,645 310,847 Other intangible assets, net 65,314 96,647 Deferred tax asset, net 800,180 647,805 Other long-term assets 99,891 102,830 Total assets $ 4,865,227 $ 4,180,917 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 356,176 $ 291,904 Accrued liabilities and other short-term obligations 409,285 334,132 Deferred revenue 118,007 108,700 Operating lease liabilities 18,632 19,035 Current portion of long-term debt 6,930 6,930 Total current liabilities 909,030 760,701 Long-term deferred revenue 57,457 49,663 Other long-term obligations 166,803 123,185 Long-term operating lease liabilities 41,564 61,415 Long-term debt, net 670,355 676,356 Total liabilities $ 1,845,209 $ 1,671,320 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; 154,858,981 and 154,563,005 shares issued and outstanding 1,549 1,546 Additional paid-in capital 6,803,162 6,826,531 Accumulated other comprehensive income (loss) 439 (35,358 ) Accumulated deficit (3,785,132 ) (4,283,122 ) Total stockholders’ equity 3,020,018 2,509,597 Total liabilities and stockholders’ equity $ 4,865,227 $ 4,180,917 CIENA CORPORATION CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year Ended October 30, 2021 October 31, 2020 Cash flows provided by operating activities: Net income $ 500,196 $ 361,291 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 96,233 93,908 Share-based compensation costs 84,336 67,758 Amortization of intangible assets 36,033 38,619 Deferred taxes (156,469 ) 64,339 Provision for inventory excess and obsolescence 17,850 24,701 Provision for warranty 17,093 22,417 Other 14,525 20,483 Changes in assets and liabilities: Accounts receivable (174,377 ) (17,299 ) Inventories (47,567 ) (25,044 ) Prepaid expenses and other (19,691 ) (38,998 ) Operating lease right-of-use assets 16,632 16,787 Accounts payable, accruals and other obligations 162,134 (117,931 ) Deferred revenue 16,822 2,519 Short and long-term operating lease liabilities (22,104 ) (19,896 ) Net cash provided by operating activities 541,646 493,654 Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (79,550 ) (82,667 ) Purchase of available for sale securities (172,778 ) (223,196 ) Proceeds from maturities of available for sale securities 152,253 110,390 Settlement of foreign currency forward contracts, net 4,680 3,531 Proceeds from sale of equity investment 4,678 — Acquisition of businesses, net of cash acquired — (28,300 ) Net cash used in investing activities (90,717 ) (220,242 ) Cash flows used in financing activities: Payment of long-term debt (6,929 ) (5,198 ) Payment of debt issuance costs — (382 ) Payment of finance lease obligations (3,004 ) (2,703 ) Shares repurchased for tax withholdings on vesting of stock unit awards (44,071 ) (32,472 ) Repurchases of common stock - repurchase program (91,288 ) (74,535 ) Proceeds from issuance of common stock 28,457 28,068 Net cash used in financing activities (116,835 ) (87,222 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash (198 ) (1,643 ) Net increase in cash, cash equivalents and restricted cash 333,896 184,547 Cash, cash equivalents and restricted cash at beginning of fiscal year 1,088,708 904,161 Cash, cash equivalents and restricted cash at end of fiscal year $ 1,422,604 $ 1,088,708 Supplemental disclosure of cash flow information Cash paid during the fiscal year for interest $ 29,864 $ 32,837 Cash paid during the fiscal year for income taxes, net $ 73,127 $ 53,076 Operating lease payments $ 24,058 $ 22,089 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 10,138 $ 7,854 Repurchase of common stock in accrued liabilities from repurchase program $ 800 $ — Operating lease right-of-use assets subject to lease liability $ 4,356 $ 24,160 Unrealized gain on equity investment $ — $ 2,681 APPENDIX A - Reconciliation of Adjusted (Non-GAAP) Measurements (unaudited) Quarter Ended Year Ended October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 477,119 $ 404,349 $ 1,721,979 $ 1,652,891 Share-based compensation-products 920 724 3,408 3,182 Share-based compensation-services 1,240 968 5,181 3,853 Canadian Emergency Wage Subsidy-products — — (4,283 ) — Canadian Emergency Wage Subsidy-services — — (2,667 ) — Amortization of intangible assets 2,856 3,732 12,301 15,235 Total adjustments related to gross profit 5,016 5,424 13,940 22,270 Adjusted (non-GAAP) gross profit $ 482,135 $ 409,773 $ 1,735,919 $ 1,675,161 Adjusted (non-GAAP) gross profit percentage 46.3 % 49.5 % 47.9 % 47.4 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 339,710 $ 310,866 $ 1,226,623 $ 1,165,927 Share-based compensation-research and development 5,684 4,030 21,863 16,987 Share-based compensation-sales and marketing 6,192 5,137 25,152 20,194 Share-based compensation-general and administrative 7,466 5,982 28,804 23,424 Canadian Emergency Wage Subsidy-research and development — — (29,519 ) — Canadian Emergency Wage Subsidy-sales and marketing — — (2,604 ) — Canadian Emergency Wage Subsidy-general and administrative — — (2,207 ) — Significant asset impairments and restructuring costs 5,700 7,854 29,565 22,652 Amortization of intangible assets 5,836 5,851 23,732 23,383 Acquisition and integration costs 1,712 3,127 2,572 4,031 Total adjustments related to operating expense $ 32,590 $ 31,981 $ 97,358 $ 110,671 Adjusted (non-GAAP) operating expense $ 307,120 $ 278,885 $ 1,129,265 $ 1,055,256 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 137,409 $ 93,483 $ 495,356 $ 486,964 Total adjustments related to gross profit 5,016 5,424 13,940 22,270 Total adjustments related to operating expense 32,590 31,981 97,358 110,671 Total adjustments related to income from operations 37,606 37,405 111,298 132,941 Adjusted (non-GAAP) income from operations $ 175,015 $ 130,888 $ 606,654 $ 619,905 Adjusted (non-GAAP) operating margin percentage 16.8 % 15.8 % 16.8 % 17.6 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 103,499 $ 65,041 $ 500,196 $ 361,291 Exclude GAAP provision (benefit) for income taxes 25,826 20,798 (37,445 ) 94,670 Income before income taxes 129,325 85,839 462,751 455,961 Total adjustments related to income from operations 37,606 37,405 111,298 132,941 Loss on extinguishment and modification of debt — — — 646 Unrealized (gain) loss on equity investment — (2,681 ) 165 (2,681 ) Adjusted income before income taxes 166,931 120,563 574,214 586,867 Non-GAAP tax provision on adjusted income before income taxes 34,221 26,042 117,714 126,763 Adjusted (non-GAAP) net income $ 132,710 $ 94,521 $ 456,500 $ 460,104 Weighted average basic common shares outstanding 155,232 154,706 155,279 154,287 Weighted average diluted potential common shares outstanding(1) 156,689 156,563 156,743 155,955 Net Income per Common Share GAAP diluted net income per potential common share $ 0.66 $ 0.42 $ 3.19 $ 2.32 Adjusted (non-GAAP) diluted net income per potential common share $ 0.85 $ 0.60 $ 2.91 $ 2.95 (1) Weighted average diluted potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the fourth quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the fourth quarter of fiscal 2020 includes 1.9 million shares underlying certain stock option and stock unit awards. Weighted average diluted potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for fiscal 2020 includes 1.7 million shares underlying certain stock option and stock unit awards. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) Quarter Ended Year Ended October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 103,499 $ 65,041 $ 500,196 $ 361,291 Add: Interest expense 7,916 7,395 30,837 31,321 Less: Interest and other income (loss), net (168 ) (249 ) (1,768 ) 964 Add: Loss on extinguishment and modification of debt — — — (646 ) Add: Provision (benefit) for income taxes 25,826 20,798 (37,445 ) 94,670 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 24,315 23,538 96,233 93,908 Add: Amortization of intangible assets 8,692 9,584 36,033 38,619 EBITDA $ 170,416 $ 126,605 $ 627,622 $ 619,491 Less: Canadian Emergency Wage Subsidy — — 41,280 — Add: Share-based compensation cost 21,366 16,920 84,336 67,758 Add: Significant asset impairments and restructuring costs 5,700 7,854 29,565 22,652 Add: Acquisition and integration costs 1,712 3,127 2,572 4,031 Adjusted EBITDA $ 199,194 $ 154,506 $ 702,815 $ 713,932 The adjusted (non-GAAP) measures above and their reconciliation to Ciena's GAAP results for the periods presented reflect adjustments relating to the following items: Share-based compensation - a non-cash expense incurred in accordance with share-based compensation accounting guidance. Canadian Emergency Wage Subsidy - a program introduced by the Government of Canada to offset a portion of employee wages for a limited period in response to COVID-19 outbreak. Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities and the redesign of business processes. Amortization of intangible assets - a non-cash expense arising from the acquisition of intangible assets, principally developed technologies and customer-related intangibles, that Ciena is required to amortize over its expected useful life. Acquisition and integration costs - includes expenses for financial, legal and accounting advisors, severance and other employee-related costs associated with our acquisition of Centina in fiscal 2020, and costs and recoveries of acquisition consideration and compensation associated with a three-year earn-out arrangement related to the DonRiver acquisition in fiscal 2018. Ciena does not believe that these costs are reflective of its ongoing operating expense following its completion of these integration activities. Loss on extinguishment and modification of debt - reflects extinguishment and modification of debt expenses related to refinancing of our Term Loan due September 28, 2025. Unrealized (gain)loss on equity investment - reflects a change in the carrying value of certain cost method equity investments. Non-GAAP tax provision - consists of current and deferred income tax expense commensurate with the level of adjusted income before income taxes and utilizes a current, blended U.S. and foreign statutory annual tax rate of 20.5% for fiscal 2021 and 21.6% for fiscal 2020. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy. Ciena's GAAP tax provision for fiscal 2021 benefited from recording a $119.3 million tax benefit related to an internal transfer of non-U.S. intangible assets that was recognized as a result of the step-up in basis of such rights for tax purposes. The Non-GAAP tax provision for the periods presented do not include this tax benefit or the corresponding deferred tax asset. View source version on businesswire.com: https://www.businesswire.com/news/home/20211209005238/en/
Press: Jamie Moody Ciena Corporation +1 (214) 995-8035 pr@ciena.com Investor: Gregg Lampf Ciena Corporation +1 (410) 694-5700 ir@ciena.com