Segments and Entity-Wide Disclosures

6 Months Ended

Apr. 30, 2019

SEGMENTS AND ENTITY-WIDE DISCLOSURES

Segment Reporting

Ciena has the following operating segments for reporting purposes: (i) Networking Platforms; (ii) Software and Software-Related Services; and (iii) Global Services. See Note 3 to Ciena’s Condensed Consolidated Financial Statements included in Item 1 of Part I of this report.

Ciena's long-lived assets, including equipment, building, furniture and fixtures, finite-lived intangible assets and maintenance spares, are not reviewed by Ciena's chief operating decision maker for purposes of evaluating performance and allocating resources. As of April 30, 2019, equipment, building, furniture and fixtures, net totaled $282.0 million, primarily supporting asset groups within Ciena’s Networking Platforms and Software and Software-Related Services segments and supporting Ciena’s unallocated selling and general and administrative activities. As of April 30, 2019, $25.0 million of Ciena’s intangible assets, net were assigned to asset groups within Ciena’s Networking Platforms segment and $105.0 million of Ciena’s intangible assets, net were assigned to asset groups within Ciena’s Software and Software-Related Services segment. As of April 30, 2019, $65.5 million of Ciena’s Goodwill was assigned to asset groups within Ciena’s Networking Platforms segment and $232.2 million of Ciena’s Goodwill was assigned to asset groups within Ciena’s Software and Software-Related Services segment. As of April 30, 2019, all of the maintenance spares, net, totaling $50.9 million, were assigned to asset groups within Ciena’s Global Services segment.

Segment Revenue

The table below (in thousands) sets forth Ciena’s segment revenue for the respective periods:



	Quarter Ended April 30,				Six Months Ended April 30,
	2019		2018		2019		2018
Revenue:
Networking Platforms
Converged Packet Optical	$	623,838	$	527,867	$	1,172,835	$	955,297
Packet Networking	73,138		63,815		144,707		132,418
Total Networking Platforms	696,976		591,682		1,317,542		1,087,715

Software and Software-Related Services
Platform Software and Services	35,229		36,393		76,827		80,529
Blue Planet Automation Software and Services	12,473		2,352		27,447		11,703
Total Software and Software-Related Services	47,702		38,745		104,274		92,232

Global Services
Maintenance Support and Training	68,788		60,904		130,065		116,862
Installation and Deployment	41,322		28,209		71,944		58,225
Consulting and Network Design	10,223		10,438		19,713		21,079
Total Global Services	120,333		99,551		221,722		196,166

Consolidated revenue	$	865,011	$	729,978	$	1,643,538	$	1,376,113

Segment Profit

Segment profit is determined based on internal performance measures used by Ciena’s 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; amortization of intangible assets; significant asset impairments and restructuring costs; acquisition and integration costs; interest and other income (loss), net; interest expense; and provision 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 April 30,						Six Months Ended April 30,
	2019			2018			2019			2018
Segment profit:
Networking Platforms	$	175,191		$	126,823		$	311,782		$	215,392
Software and Software-Related Services	6,536			8,276			24,952			31,911
Global Services	54,981			41,284			94,682			82,321
Total segment profit	236,708			176,383			431,416			329,624
Less: Non-performance operating expenses
Selling and marketing	103,502			97,359			201,615			185,874
General and administrative	42,154			38,976			81,397			77,382
Amortization of intangible assets	5,529			3,623			11,057			7,246
Significant asset impairments and restructuring costs	4,068			4,359			6,341			10,320
Acquisition and integration costs	1,135			—			2,743			—
Add: Other non-performance financial items
Interest expense and other income (loss), net	(9,715		)	(11,735		)	(14,903		)	(23,894		)
Less: Provision for income taxes	17,867			6,475			27,006			484,415
Consolidated net income (loss)	$	52,738		$	13,856		$	86,354		$	(459,507	)

Entity-Wide Reporting

Ciena’s revenue includes $545.6 million and $392.8 million of United States revenue for the second quarter of fiscal 2019 and 2018, respectively. For the six months ended April 30, 2019 and 2018, United States revenue was $1.01 billion and $776.1 million, respectively. No other country accounted for 10% or more 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 at least 10% of total equipment, building, furniture and fixtures, net, specifically identified. Equipment, building, furniture and fixtures, net, attributable to geographic regions outside of the U.S. and Canada are reflected as “Other International.” For the periods below, Ciena’s geographic distribution of equipment, building, furniture and fixtures, net, was as follows (in thousands):



	April 30, 2019		October 31, 2018
Canada	$	196,069	$	198,028
United States	67,633		75,479
Other International	18,320		18,560
Total	$	282,022	$	292,067

For the periods below, AT&T, Verizon and a Web-scale provider were the only customers that accounted for at least 10% of Ciena’s revenue as follows (in thousands):



	Quarter Ended April 30,				Six Months Ended April 30,
	2019		2018		2019		2018
AT&T	$	108,416	$	85,419	$	202,587	$	176,065
Verizon	106,350		n/a		195,125		n/a
Web-scale provider	n/a		n/a		174,853		n/a
Total	$	214,766	$	85,419	$	572,565	$	176,065



n/a	Denotes revenue representing less than 10% of total revenue for the period

The customers identified above purchased products and services from each of Ciena’s operating segments.