EARNINGS PER SHARE CALCULATION

The following table (in thousands except per share amounts) is a reconciliation of the numerator and denominator of the basic net income (loss) per common share (“Basic EPS”) and the diluted net income (loss) per potential common share (“Diluted EPS”). Basic EPS is computed using the weighted average number of common shares outstanding. Diluted EPS is computed using the weighted average number of the following, in each case, to the extent the effect is not anti-dilutive: (i) common shares outstanding; (ii) shares issuable upon vesting of restricted stock units; (iii) shares issuable under Ciena’s employee stock purchase plan and upon exercise of outstanding stock options, using the treasury stock method; (iv) shares underlying Ciena’s outstanding convertible notes for which Ciena uses the treasury stock method (the New Notes); and (v) shares underlying Ciena’s outstanding convertible notes for which Ciena uses the if-converted method.



	Quarter Ended January 31,
Numerator	2018			2017
Net income (loss)	$	(473,363	)	$	3,861



	Quarter Ended January 31,
Denominator	2018	2017
Basic weighted average shares outstanding	143,922	140,682
Add: Shares underlying outstanding stock options and restricted stock units and issuable under employee stock purchase plan	—	1,502
Dilutive weighted average shares outstanding	143,922	142,184



	Quarter Ended January 31,
EPS	2018			2017
Basic EPS	$	(3.29	)	$	0.03
Diluted EPS	$	(3.29	)	$	0.03

The following table summarizes the weighted average shares excluded from the calculation of the denominator for Diluted EPS due to their anti-dilutive effect for the periods indicated (in thousands):



	Quarter Ended January 31,
	2018	2017
Shares underlying stock options and restricted stock units	3,414	1,556
0.875% Convertible Senior Notes due June 15, 2017	—	5,564
3.75% Convertible Senior Notes due October 15, 2018 (Original)	3,038	17,355
3.75% Convertible Senior Notes due October 15, 2018 (New) ⁽¹⁾	691	—
4.0% Convertible Senior Notes due December 15, 2020	9,198	9,198
Total shares excluded due to anti-dilutive effect	16,341	33,673

(1)

Since Ciena intends, upon any conversion of the outstanding 3.75% Convertible Senior Notes due 2018 (New Notes), to settle the principal amount thereof in cash, Ciena uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The 14.3 million shares underlying the New Notes will have a dilutive impact on diluted net income per share of common stock when the average market price of Ciena common stock for a given period exceeds the conversion price of $20.17 per share for the New Notes. During the first quarter of fiscal 2018, the average market price of Ciena common stock was $21.19 and, as such, the New Notes are dilutive by the conversion spread, or 0.7 million shares.