Earnings Per Share Calculation (Tables)

9 Months Ended

Jul. 31, 2018

Schedule of Reconciliation of Numerator and Denominator of Basic and Diluted Earnings Per Share

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 July 31,				Nine Months Ended July 31,
Numerator	2018		2017		2018			2017
Net income (loss)	$	50,840	$	60,010	$	(408,667	)	$	101,897
Add: Interest expense associated with 0.875% Convertible Senior Notes due 2017 ⁽¹⁾	—		246		—			1,343
Add: Interest expense associated with 3.75% Convertible Senior Notes due 2018 (Original)	464		3,572		—			10,750
Add: Interest expense associated with 4.0% Convertible Senior Notes due 2020	2,624		3,323		—			—
Net income (loss) used to calculate Diluted EPS	$	53,928	$	67,151	$	(408,667	)	$	113,990



	Quarter Ended July 31,		Nine Months Ended July 31,
Denominator	2018	2017	2018	2017
Basic weighted average shares outstanding	143,400	142,464	143,766	141,631
Add: Shares underlying outstanding stock options and restricted stock units and issuable under employee stock purchase plan	1,330	1,386	—	1,401
Add: Shares underlying 0.875% Convertible Senior Notes due 2017 ⁽¹⁾	—	1,708	—	4,043
Add: Shares underlying 3.75% Convertible Senior Notes due 2018 (New) ⁽²⁾	3,032	—	—	—
Add: Shares underlying 3.75% Convertible Senior Notes due 2018 (Original)	3,038	17,356	—	17,356
Add: Shares underlying 4.0% Convertible Senior Notes due 2020	9,198	9,198	—	—
Dilutive weighted average shares outstanding	159,998	172,112	143,766	164,431



	Quarter Ended July 31,				Nine Months Ended July 31,
EPS	2018		2017		2018			2017
Basic EPS	$	0.35	$	0.42	$	(2.84	)	$	0.72
Diluted EPS	$	0.34	$	0.39	$	(2.84	)	$	0.69

Schedule of Weighted Average Shares Excluded From Calculation of Denominator for Basic and Diluted EPS

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 July 31,		Nine Months Ended July 31,
	2018	2017	2018	2017
Shares underlying stock options and restricted stock units	318	682	2,183	988
3.75% Convertible Senior Notes due October 15, 2018 (Original)	—	—	3,038	—
3.75% Convertible Senior Notes due October 15, 2018 (New) ⁽²⁾	—	—	2,125	—
4.0% Convertible Senior Notes due December 15, 2020	—	—	9,198	9,198
Total shares excluded due to anti-dilutive effect	318	682	16,544	10,186

(1) Ciena’s 0.875% convertible senior notes were paid at maturity during the third quarter of fiscal 2017.

(2) Upon any conversion of the outstanding 3.75% Convertible Senior Notes due 2018 (New) (the “New Notes”), Ciena intends to settle the principal amount thereof in cash. See Note 19 below. Accordingly, 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 third quarter of fiscal 2018, the average market price of Ciena common stock was $25.59. As a result, for the quarter ended July 31, 2018, the conversion spread for the New Notes of 3.0 million shares is included in the calculation of the denominator. For the nine months ended July 31, 2018, the conversion spread for the New Notes of 2.1 million shares is excluded from the calculation of the denominator as their inclusion would have had an anti-dilutive effect.