SHORT-TERM AND LONG-TERM DEBT

Term Loan due 2021

On April 25, 2016, Ciena entered into an Incremental Joinder and Amendment Agreement (the “Incremental Term Loan Credit Agreement”) that amends the Credit Agreement (the "Term Loan Credit Agreement"), dated July 15, 2014. The Incremental Term Loan Credit Agreement provides for a new tranche of senior secured term loans under the Term Loan Credit Agreement in an aggregate principal amount of $250 million (the “2021 Term Loan”). The proceeds of approximately $246.1 million, net of fees and expenses, will initially supplement cash on the balance sheet and are expected to provide additional liquidity to contribute, in part, to the repayment of the outstanding principal amount owing under Ciena’s 0.875% senior convertible notes due June 15, 2017.

The 2021 Term Loan will, among other things:


•	mature on April 25, 2021;


•	amortize in equal quarterly installments in aggregate amounts of $0.6 million (equal to 0.25% of the original principal amount), with the balance payable at maturity;


•	be subject to mandatory prepayment on the same basis as Ciena’s existing 2019 Term Loan under the Term Loan Credit Agreement;


•	bear interest, at Ciena’s election, at a per annum rate equal to (a) LIBOR (subject to a floor of 0.75%) plus a margin ranging from 3.25% to 3.50%, or (b) a base rate (subject to a floor of 1.75%) plus a margin ranging from 2.25% to 2.50%, in each case, with the actual margin determined according to Ciena’s total net leverage ratio;


•	be repayable at any time at Ciena's election, provided that repayment of the 2021 Term Loan with proceeds of certain indebtedness prior to October 25, 2016 shall require a prepayment premium of 1% of the aggregate principal amount of such prepayment; and


•	except as described above or otherwise set forth in the Incremental Term Loan Credit Agreement, have identical terms as the existing 2019 Term Loan under the Term Loan Credit Agreement.

Except as amended by the Incremental Term Loan Credit Agreement, the remaining terms of the Term Loan Credit Agreement remain in full force and effect.

The principal balance, unamortized discount and net carrying amount of the 2021 Term Loan were as follows as of April 30, 2016 (in thousands):



	Principal Balance		Unamortized Discount		Net Carrying Amount
Term Loan Payable due April 25, 2021	$	250,000	$	1,247	$	248,753

The following table sets forth the carrying value and the estimated fair value of the 2021 Term Loan (in thousands):



	April 30, 2016
	Carrying Value		Fair Value⁽²⁾
Term Loan Payable due April 25, 2021⁽¹⁾	$	248,753	$	250,938


(1)	Includes unamortized bond discount.


(2)	The 2021 Term Loan is categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its 2021 Term Loan using a market approach based upon observable inputs, such as current market transactions involving comparable securities.

Term Loan due 2019

On July 15, 2014, Ciena entered into the Term Loan Credit Agreement providing for senior secured term loans in an aggregate principal amount of $250 million (the “2019 Term Loan”) with a maturity date of July 15, 2019. The 2019 Term Loan requires Ciena to make installment payments of approximately $0.6 million on a quarterly basis. The principal balance, unamortized discount and net carrying amount of the 2019 Term Loan were as follows as of April 30, 2016 (in thousands):



	Principal Balance		Unamortized Discount		Net Carrying Amount
Term Loan Payable due July 15, 2019	$	245,625	$	929	$	244,696

The following table sets forth the carrying value and the estimated fair value of the 2019 Term Loan (in thousands):



	April 30, 2016
	Carrying Value		Fair Value⁽²⁾
Term Loan Payable due July 15, 2019⁽¹⁾	$	244,696	$	245,011


(1)	Includes unamortized bond discount.


(2)	The 2019 Term Loan is categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its 2019 Term Loan using a market approach based upon observable inputs, such as current market transactions involving comparable securities.

Outstanding Convertible Notes Payable

During the first quarter of fiscal 2016, Ciena entered into certain private transactions to repurchase $14.1 million of the outstanding principal amount of its 0.875% Convertible Senior Notes due June 15, 2017, for a cash purchase price slightly below par.

The principal balance, unamortized discount and net carrying amount of the liability and equity components of Ciena's 4.0% Convertible Senior Notes due December 15, 2020 are as follows as of April 30, 2016:



	Liability Component						Equity Component
	Principal Balance		Unamortized Discount		Net Carrying Amount		Net Carrying Amount
4.0% Convertible Senior Notes due December 15, 2020	$	199,400	$	12,446	$	186,954	$	43,131

The following table sets forth, in thousands, the carrying value and the estimated fair value of Ciena’s outstanding issues of convertible notes:



	April 30, 2016
	Carrying Value		Fair Value⁽¹⁾
0.875% Convertible Senior Notes due June 15, 2017	$	479,985	$	471,585
3.75% Convertible Senior Notes due October 15, 2018	350,000		395,063
4.0% Convertible Senior Notes due December 15, 2020 ⁽²⁾	186,954		224,766
	$	1,016,939	$	1,091,414


(1)	The convertible notes are categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its outstanding convertible notes using a market approach based upon observable inputs, such as current market transactions involving comparable securities.


(2)	Includes unamortized discount and accretion of principal.