Segment and Entity Wide Disclosures

9 Months Ended

Jul. 31, 2012

Segment Reporting [Abstract]

SEGMENT AND ENTITY WIDE DISCLOSURES

SEGMENT AND ENTITY WIDE DISCLOSURES

Segment Reporting

Ciena’s segments are discussed in the following product and service groupings:

• Packet-Optical Transport — includes optical transport solutions that increase network capacity and enable more rapid delivery of a broader mix of high-bandwidth services. These products are used by network operators to facilitate the cost effective and efficient transport of voice, video and data traffic in core, regional, metro and access networks. Ciena's Packet-Optical Transport products support the efficient delivery of a wide variety of consumer-oriented network services, as well as key managed service and enterprise applications. Ciena's principal products in this segment include the 6500 Packet-Optical Platform, 4200 Advanced Services Platform, Corestream® Agility Optical Transport System, 5100/5200 Advanced Services Platform, Common Photonic Layer (CPL), and 6100 Multiservice Optical Platform. This segment also includes sales from legacy SONET/SDH, transport and data networking products, as well as certain enterprise-oriented transport solutions that support storage and LAN extension, interconnection of data centers, and virtual private networks. This segment also includes operating system software and enhanced software features embedded in each of these products. Revenue from this segment is included in product revenue on the Consolidated Statement of Operations.

• Packet-Optical Switching — includes optical switching platforms that enable automated optical infrastructures for the delivery of a wide variety of enterprise and consumer-oriented network services. Ciena's principal products in this segment include its family of CoreDirector® Multiservice Optical Switches, its 5430 Reconfigurable Switching System and its OTN configuration for the 5410 Reconfigurable Switching System. These products include multiservice, multi-protocol switching systems that consolidate the functionality of an add/drop multiplexer, digital cross-connect and packet switch into a single, high-capacity intelligent switching system. These products address both the core and metro segments of communications networks and support key managed services, Ethernet/TDM Private Line, Triple Play and IP services. This segment also includes sales of operating system software and enhanced software features embedded in each of these products. Revenue from this segment is included in product revenue on the Consolidated Statement of Operations.

• Carrier-Ethernet Solutions — principally includes Ciena's 3000 family of service delivery switches and service aggregation switches, the 5000 series of service aggregation switches, and its Carrier Ethernet packet configuration for the 5410 Service Aggregation Switch. These products support the access and aggregation tiers of communications networks and have principally been deployed to support wireless backhaul infrastructures and business data services. Employing sophisticated Carrier Ethernet switching technology, these products deliver quality of service capabilities, virtual local area networking and switching functions, and carrier-grade operations, administration, and maintenance features. This segment also includes legacy broadband products, including the CNX-5 Broadband DSL System (CNX-5), that transitions legacy voice networks to support Internet-based (IP) telephony, video services and DSL. This segment also includes sales of operating system software and enhanced software features embedded in each of these products. Revenue from this segment is included in product revenue on the Consolidated Statement of Operations.

• Software and Services — includes the Ciena One software suite, including OneControl, the integrated network and service management software designed to automate and simplify network management, operation and service delivery. These software solutions can track individual services across multiple product suites, facilitating planned network maintenance, outage detection and identification of customers or services affected by network troubles. In addition to Ciena One, this segment includes the ON-Center® Network & Service Management Suite, and the OMEA and Preside platforms from the MEN Business. This segment also includes a broad range of consulting and support services, including installation and deployment, maintenance support, consulting, network design and training activities. Except for revenue from the software portion of this segment, which is included in product revenue, revenue from this segment is included in services revenue on the Consolidated Statement of Operations.

Reportable segment asset information is not disclosed because it is not reviewed by the chief operating decision maker for purposes of evaluating performance and allocating resources.

Segment Revenue

The table below (in thousands) sets forth Ciena’s segment revenue for the respective periods:

	Quarter Ended July 31,				Nine Months Ended July 31,
	2011		2012		2011		2012
Revenue:
Packet-Optical Transport	$	266,551	$	298,477	$	825,667	$	882,772
Packet-Optical Switching	40,682		37,786		107,223		112,221
Carrier-Ethernet Solutions	40,475		31,275		99,034		83,828
Software and Services	87,605		106,552		254,591		289,571
Consolidated revenue	$	435,313	$	474,090	$	1,286,515	$	1,368,392

Segment Profit (Loss)

Segment profit (loss) is determined based on internal performance measures used by the chief executive officer to assess the performance of each operating segment in a given period. In connection with that assessment, the chief executive officer excludes the following items: selling and marketing costs; general and administrative costs; acquisition and integration costs; amortization of intangible assets; restructuring costs; change in fair value of contingent consideration; interest and other income (net); interest expense; equity investment gains or losses and provisions (benefit) for income taxes.

The table below (in thousands) sets forth Ciena’s segment profit (loss) and the reconciliation to consolidated net income (loss) during the respective periods:

	Quarter Ended July 31,						Nine Months Ended July 31,
	2011			2012			2011			2012
Segment profit (loss):
Packet-Optical Transport	$	51,827		$	65,762		$	127,359		$	180,908
Packet-Optical Switching	12,783			2,732			34,147			26,255
Carrier-Ethernet Solutions	6,519			(201		)	12,409			(11,235		)
Software and Services	20,552			24,713			56,691			67,712
Total segment profit	91,681			93,006			230,606			263,640
Less: non-performance operating expenses
Selling and marketing	61,895			65,397			180,755			192,325
General and administrative	28,172			27,870			98,966			84,350
Acquisition and integration costs	4,822			6			39,748			(140		)
Amortization of intangible assets	13,673			12,714			56,131			39,152
Restructuring costs	504			2,291			5,190			5,864
Change in fair value of contingent consideration	—			—			(3,289		)	—
Add: other non-performance financial items
Interest expense and other income (loss), net	(12,630		)	(12,055		)	(21,092		)	(40,545		)
Less: Provision for income taxes	1,435			2,490			5,205			6,794
Consolidated net loss	$	(31,450	)	$	(29,817	)	$	(173,192	)	$	(105,250	)

Entity Wide Reporting

The following table reflects Ciena’s geographic distribution of revenue based on the location of the purchaser, with any country accounting for a significant percentage of total revenue in the period specifically identified. Revenue attributable to geographic regions outside of the United States and Canada is reflected as “Other International” revenue. For the periods below, Ciena’s geographic distribution of revenue was as follows (in thousands):

	Quarter Ended July 31,				Nine Months Ended July 31,
	2011		2012		2011		2012
United States	$	227,524	$	237,288	$	678,674	$	723,034
Canada	43,815		49,042		128,770		137,129
Other International	163,974		187,760		479,071		508,229
Total	$	435,313	$	474,090	$	1,286,515	$	1,368,392

The following table reflects Ciena's geographic distribution of equipment, furniture and fixtures, with any country accounting for a significant percentage of total equipment, furniture and fixtures specifically identified. Equipment, furniture and fixtures attributable to geographic regions outside of the United States and Canada are reflected as “Other International.” For the periods below, Ciena's geographic distribution of equipment, furniture and fixtures was as follows (in thousands):

	October 31, 2011		July 31, 2012
United States	$	60,848	$	60,331
Canada	47,424		47,647
Other International	14,286		10,590
Total	$	122,558	$	118,568

For the periods below, customers accounting for at least 10% of Ciena’s revenue were as follows (in thousands):

	Quarter Ended July 31,				Nine Months Ended July 31,
	2011		2012		2011		2012
Company A	$	75,068	n/a		$	202,009	$	195,308
Company B	n/a		n/a		131,721		n/a
Total	$	75,068	$	—	$	333,730	$	195,308

n/a Denotes revenue representing less than 10% of total revenue for the period