Segments and Entity-Wide Disclosures

9 Months Ended

Jul. 31, 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 July 31, 2019, equipment, building, furniture and fixtures, net totaled $280.6 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 July 31, 2019, $22.7 million of Ciena’s intangible assets, net were assigned to asset groups within Ciena’s Networking Platforms segment and $98.6 million of Ciena’s intangible assets, net were assigned to asset groups within Ciena’s Software and Software-Related Services segment. As of July 31, 2019, $65.7 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 July 31, 2019, all of the maintenance spares, net, totaling $51.1 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 July 31,				Nine Months Ended July 31,
	2019		2018		2019		2018
Revenue:
Networking Platforms
Converged Packet Optical	$	724,245	$	592,892	$	1,897,080	$	1,548,189
Packet Networking	71,823		84,559		216,529		216,977
Total Networking Platforms	796,068		677,451		2,113,609		1,765,166

Software and Software-Related Services
Platform Software and Services	37,312		36,818		114,139		117,347
Blue Planet Automation Software and Services	10,530		4,365		37,977		16,068
Total Software and Software-Related Services	47,842		41,183		152,116		133,415

Global Services
Maintenance Support and Training	65,936		60,897		196,002		177,759
Installation and Deployment	39,802		31,262		111,746		89,487
Consulting and Network Design	10,958		8,024		30,671		29,103
Total Global Services	116,696		100,183		338,419		296,349

Consolidated revenue	$	960,606	$	818,817	$	2,604,144	$	2,194,930

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 July 31,						Nine Months Ended July 31,
	2019			2018			2019			2018
Segment profit:
Networking Platforms	$	230,610		$	181,603		$	542,391		$	396,995
Software and Software-Related Services	6,029			9,305			30,982			41,216
Global Services	47,833			39,502			142,515			121,823
Total segment profit	284,472			230,410			715,888			560,034
Less: Non-performance operating expenses
Selling and marketing	104,230			95,395			305,845			281,269
General and administrative	42,695			38,212			124,092			115,594
Amortization of intangible assets	5,529			3,837			16,586			11,083
Significant asset impairments and restructuring costs	5,355			6,359			11,696			16,679
Acquisition and integration costs	1,362			1,333			4,105			1,333
Add: Other non-performance financial items
Interest expense and other income (loss), net	(8,354		)	(15,154		)	(23,257		)	(39,048		)
Less: Provision for income taxes	30,198			19,280			57,204			503,695
Consolidated net income (loss)	$	86,749		$	50,840		$	173,103		$	(408,667	)

Entity-Wide Reporting

Ciena’s revenue includes $592.2 million and $469.2 million of United States revenue for the third quarter of fiscal 2019 and 2018, respectively. Ciena’s revenue also includes $83.6 million of India revenue for the third quarter of fiscal 2018. For the nine months ended July 31, 2019 and 2018, United States revenue was $1.60 billion and $1.25 billion, 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):



	July 31, 2019		October 31, 2018
Canada	$	201,126	$	198,028
United States	62,231		75,479
Other International	17,273		18,560
Total	$	280,630	$	292,067

For the periods below, as applicable, 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 July 31,				Nine Months Ended July 31,
	2019		2018		2019		2018
AT&T	n/a		$	87,389	$	297,049	$	263,453
Verizon	118,875		97,103		314,000		221,475
Web-scale provider	123,253		86,364		298,106		n/a
Total	$	242,128	$	270,856	$	909,155	$	484,928



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.