Segments and Entity Wide Disclosures

9 Months Ended

Jul. 31, 2015

Segment Reporting [Abstract]

SEGMENTS AND ENTITY WIDE DISCLOSURES

SEGMENTS AND ENTITY WIDE DISCLOSURES

Segment Reporting

Ciena’s internal organizational structure and the management of its business are grouped into the following operating segments:

• Converged Packet Optical — includes the 6500 Packet-Optical Platform and the 5430 Reconfigurable Switching System, which feature Ciena's WaveLogic coherent optical processors. Products also include Ciena's family of CoreDirector® Multiservice Optical Switches and the OTN configuration for the 5410 Reconfigurable Switching System. 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 Condensed Consolidated Statement of Operations. In May 2015, Ciena launched its new Waveserver™ product. Revenue from sales of Waveserver are included in our Converged Packet Optical segment.

• Packet Networking — includes Ciena's 3000 family of service delivery switches and service aggregation switches and the 5000 family of service aggregation switches. This segment also includes Ciena’s 8700 Packetwave Platform and Ciena's Ethernet packet configuration for the 5410 Service Aggregation Switch. 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 Condensed Consolidated Statement of Operations.

• Optical Transport — includes the 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 includes sales from 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 Condensed Consolidated Statement of Operations.

• Software and Services — includes Ciena's Agility software portfolio, which includes a SDN multilayer WAN controller, NFV platform, and network level software applications for enabling on-demand, high-bandwidth WAN services delivered in an open network ecosystem. This segment also includes the OneControl Unified Management System, ON-Center® Network & Service Management Suite, Ethernet Services Manager and Optical Suite Release. This segment includes a broad range of services for consulting and network design, installation and deployment, maintenance support 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 Condensed Consolidated Statement of Operations.

Ciena's long-lived assets, including equipment, building, furniture and fixtures, finite-lived intangible assets and maintenance spares, are not reviewed by the chief operating decision maker for purposes of evaluating performance and allocating resources. As of July 31, 2015, equipment, building, furniture and fixtures totaling $159.6 million primarily support asset groups within Ciena's Converged Packet Optical, Packet Networking, and Software and Services segments and support Ciena's unallocated selling and general and administrative activities. As of July 31, 2015, all of Ciena's finite-lived intangible assets, totaling $89.0 million, were assigned to asset groups within Ciena's Converged Packet Optical segment. As of July 31, 2015, all of the maintenance spares, totaling $59.0 million, were assigned to asset groups within Ciena's Software and Services segment.

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,
	2014		2015		2014		2015
Revenue:
Converged Packet Optical	$	382,031	$	407,970	$	1,072,272	$	1,177,441
Packet Networking	69,464		57,209		187,699		165,480
Optical Transport	31,016		17,482		100,729		56,275
Software and Services	121,051		120,271		336,626		354,500
Consolidated revenue	$	603,562	$	602,932	$	1,697,326	$	1,753,696

Segment Profit

Segment profit 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; interest and other income (loss), net; interest expense; and provisions for income taxes.

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

	Quarter Ended July 31,						Nine Months Ended July 31,
	2014			2015			2014			2015
Segment profit:
Converged Packet Optical	$	104,020		$	118,223		$	279,299		$	322,652
Packet Networking	14,566			7,628			23,147			18,910
Optical Transport	8,900			2,813			29,259			13,428
Software and Services	38,802			40,826			93,136			111,243
Total segment profit	166,288			169,490			424,841			466,233
Less: Non-performance operating expenses
Selling and marketing	81,919			81,650			243,929			240,833
General and administrative	36,285			29,743			98,264			89,598
Acquisition and integration costs	—			2,435			—			3,455
Amortization of intangible assets	11,019			11,019			34,951			33,057
Restructuring costs	63			192			178			8,260
Add: Other non-performance financial items
Interest expense and other income (loss), net	(17,836		)	(17,374		)	(47,787		)	(57,764		)
Less: Provision for income taxes	3,006			3,452			9,666			7,767
Consolidated net income (loss)	$	16,160		$	23,625		$	(9,934	)	$	25,499

Entity Wide Reporting

Ciena's operating segments each engage in business across four geographic regions: North America; Europe, Middle East and Africa (“EMEA”); Asia Pacific (“APAC”); and Caribbean and Latin America ("CALA"). North America includes only activities in the United States and Canada. The following table reflects Ciena’s geographic distribution of revenue principally based on the relevant location for Ciena's delivery of products and performance of services. For the periods below, Ciena’s geographic distribution of revenue was as follows (in thousands):

	Quarter Ended July 31,				Nine Months Ended July 31,
	2014		2015		2014		2015
North America	$	403,250	$	389,593	$	1,136,867	$	1,118,309
EMEA	99,909		93,168		283,743		306,368
CALA	67,248		65,152		160,162		155,785
APAC	33,155		55,019		116,554		173,234
Total	$	603,562	$	602,932	$	1,697,326	$	1,753,696

North America includes $368.1 million and $360.7 million of United States revenue for fiscal quarters ended July 31, 2014 and 2015, respectively. For the nine months ended July 31, 2014 and 2015, United States revenue was $1,009.4 million and $1,026.0 million, respectively. No other country accounted for at least 10% of total revenue for the periods presented above.

The following table reflects Ciena's geographic distribution of equipment, building, furniture and fixtures, net, with any country accounting for a significant percentage of total equipment, building, furniture and fixtures, net, specifically identified. Equipment, building, furniture and fixtures, net, 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, building, furniture and fixtures was as follows (in thousands):

	October 31, 2014		July 31, 2015
United States	$	73,420	$	79,560
Canada	42,015		69,045
Other International	11,197		10,987
Total	$	126,632	$	159,592

AT&T accounted for greater than 10% of Ciena's revenue in Ciena's fiscal quarters ended July 31, 2014 and 2015 with total revenue of $130.3 million and $121.6 million, respectively. AT&T also accounted for greater than 10% of Ciena's revenue for the nine months ended July 31, 2014 and 2015 with total revenue of $351.3 million and $355.6 million, respectively. AT&T purchases products and services from each of Ciena's operating segments.