SHORT-TERM AND LONG-TERM DEBT

Outstanding Term Loan Payable

2022 Term Loan

The net carrying value of Ciena’s Term Loan due January 30, 2022 (the “2022 Term Loan”) was comprised of the following for the fiscal periods indicated (in thousands):



	July 31, 2018		October 31, 2017
Term Loan Payable due January 30, 2022	$	390,863	$	392,972

Deferred debt issuance costs that were deducted from the carrying amounts of the 2022 Term Loan totaled $2.6 million at July 31, 2018 and $3.1 million at October 31, 2017. Deferred debt issuance costs are amortized using the straight-line method, which approximates the effect of the effective interest rate method, through the maturity of the 2022 Term Loan. The amortization of deferred debt issuance costs for the 2022 Term Loan is included in interest expense, and was $0.5 million and $0.4 million during the first nine months of fiscal 2018 and 2017, respectively. The carrying values of the 2022 Term Loan listed above are also net of any unamortized debt discounts.

The principal balance, unamortized debt discount, deferred debt issuance costs and net carrying value of the liability components of the 2022 Term Loan were as follows as of July 31, 2018 (in thousands):




	Principal Balance		Unamortized Debt Discount			Deferred Debt Issuance Costs			Net Carrying Value
Term Loan Payable due January 30, 2022	$	395,000	$	(1,580	)	$	(2,557	)	$390,863

The following table sets forth the carrying value and the estimated fair value of the 2022 Term Loan (in thousands):



	July 31, 2018
	Carrying Value		Fair Value⁽¹⁾
Term Loan Payable due January 30, 2022	$	390,863	$	396,481


(1)	The 2022 Term Loan is categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of the 2022 Term Loan using a market approach based upon observable inputs, such as current market transactions involving comparable securities.

Outstanding Convertible Notes Payable

The net carrying values of Ciena’s outstanding convertible notes payable was comprised of the following for the fiscal periods indicated (in thousands):



	July 31, 2018		October 31, 2017
3.75% Convertible Senior Notes due October 15, 2018 (Original)	$	61,234	$	61,071
3.75% Convertible Senior Notes due October 15, 2018 (New)	288,435		287,221
4.0% Convertible Senior Notes due December 15, 2020	199,642		194,717
	$	549,311	$	543,009

Deferred debt issuance costs that were deducted from the carrying amounts of the convertible notes payable totaled $0.9 million at July 31, 2018 and $2.1 million at October 31, 2017. Deferred debt issuance costs are amortized using the straight-line method, which approximates the effect of the effective interest rate method, through the maturity of the convertible notes payable. The amortization of deferred debt issuance costs is included in interest expense, and was $1.2 million during both the first nine months of fiscal 2018 and 2017. The carrying values of the convertible notes payable listed above also include accretion of principal and are net of any unamortized debt discounts.

The principal balance, unamortized debt discount, deferred debt issuance costs and net carrying value of the liability and equity components of Ciena’s outstanding issues of convertible notes were as follows as of July 31, 2018 (in thousands):



	Liability Component										Equity Component
	Principal Balance		Unamortized Debt Discount			Deferred Debt Issuance Costs			Net Carrying Value		Net Carrying Value
3.75% Convertible Senior Notes, due October 15, 2018 (Original)	$	61,270	$	—		$	(36	)	$	61,234	$	—
3.75% Convertible Senior Notes, due October 15, 2018 (New)	$	288,730	$	(125	)	$	(170	)	$	288,435	$	—
4.0% Convertible Senior Notes due December 15, 2020 ⁽¹⁾	$	207,809	$	(7,437	)	$	(730	)	$	199,642	$	43,131


(1)	Includes accretion of principal at a rate of 1.85% per year.

The following table sets forth, in thousands, the net carrying value and the estimated fair value of Ciena’s outstanding issues of convertible notes as of July 31, 2018:



	July 31, 2018
	Net Carrying Value		Fair Value⁽¹⁾
3.75% Convertible Senior Notes, due October 15, 2018 (Original)	$	61,234	$	77,047
3.75% Convertible Senior Notes, due October 15, 2018 (New)	288,435		363,078
4.0% Convertible Senior Notes due December 15, 2020	199,642		233,269
	$	549,311	$	673,394


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