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Business Combinations | 12 Months Ended
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Oct. 31, 2020
Business Combinations [Abstract] |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS Centina Systems, Inc. Acquisition On November 2, 2019, Ciena acquired Centina Systems, Inc. (“Centina”), a provider of service assurance analytics and network performance management solutions, for approximately $34.0 million in cash. This transaction has been accounted for as the acquisition of a business. During fiscal 2020, Ciena incurred approximately $0.8 million of acquisition-related costs associated with this transaction. These costs primarily reflect fees associated with financial, legal and accounting advisors. The following table summarizes the final purchase price allocation related to the acquisition based on the estimated fair value of the acquired assets and assumed liabilities (in thousands):
| Amount
Cash and cash equivalents | $ | 5,718 |
Accounts receivable | 610 |
Prepaid expenses and other | 536 |
Equipment, furniture and fixtures | 17 |
Goodwill | 13,055 |
Customer relationships and contracts | 400 |
Developed technology | 22,200 |
Accounts payable | (47) |
Accrued liabilities | (286) |
Deferred revenue | (1,493) |
Deferred tax liability | (6,692) |
Total purchase consideration | $ | 34,018 |
Customer relationships and contracts represent agreements with existing Centina customers and have an estimated useful life of two years. Developed technology represents purchased technology that has reached technological feasibility and for which Centina had substantially completed development as of the date of acquisition. Fair value was determined using future discounted cash flows related to the projected income stream of the developed technology for a discrete projection period. Cash flows were discounted to their present value as of the closing date. Developed technology is amortized on a straight-line basis over its estimated useful life of five years. The goodwill generated from the acquisition of Centina is primarily related to expected synergies. The total goodwill amount was recorded in the Blue Planet Automation Software and Services segment. The goodwill is not deductible for income tax purposes. Pro forma disclosures have not been included due to immateriality. DonRiver Acquisition On October 1, 2018, Ciena acquired Don River Holdings, LLC (“ DonRiver”), a global software and services company specializing in federated network and service inventory management solutions within the service provider Operational Support Systems (OSS) environment. This transaction has been accounted for as the acquisition of a business. During fiscal 2020, fiscal 2019 and fiscal 2018, Ciena incurred approximately $6.9 million, $7.5 million and $3.5 million, respectively. These costs and expenses include fees associated with financial, legal and accounting advisors, severance and other employee-related costs associated with our acquisition of DonRiver, including the contingent compensation portion of the three year earn-out agreement as described below. These costs were recorded in acquisition and integration costs in the Consolidated Statement of Operations. The following table summarizes the purchase price for the acquisition (in thousands):
| Amount
Cash | $ | 43,283 |
Contingent consideration | 10,900 |
Total purchase price | $ | 54,183 |
The following table summarizes the final purchase price allocation related to the acquisition based on the estimated fair value of the acquired assets and assumed liabilities (in thousands):
| Amount
Cash and cash equivalents | $ | 1,025 |
Accounts receivable | 4,790 |
Prepaid expenses and other long-term assets | 372 |
Goodwill | 10,453 |
Customer relationships and contracts | 37,700 |
Developed technology | 9,700 |
Deferred revenue | (193) |
Other current and long-term liabilities | (9,664) |
Total purchase price | $ | 54,183 |
The acquisition of DonRiver included a $28.5 million three-year earn-out arrangement that consisted of both a contingent consideration element and a contingent compensation element. The contingent consideration element required additional cash consideration to be paid based on the future revenues generally derived from the DonRiver business over a 25-month period from the acquisition date through October 31, 2020. The undiscounted amounts potentially payable by Ciena under the contingent consideration element ranged from $0.0 million to $15.0 million in the aggregate over the period. The $10.9 million fair value of the contingent consideration element as of the acquisition date was estimated by applying the income approach based on a discounted cash flow technique using Monte Carlo simulations. See Note 7 below. The contingent compensation element of the earn-out arrangement included an employment condition for the selling shareholders who became employees of Ciena upon the completion of the acquisition. The range of amounts that Ciena could pay under the contingent compensation element is between $0.0 million and $13.5 million in the aggregate over the period. These amounts are accrued over the period earned and recorded as expense in the acquisition and integration costs line item in the Consolidated Statement of Operations. During fiscal 2020, fiscal 2019 and fiscal 2018, Ciena recorded $6.9 million, $5.1 million and $0.4 million, of contingent compensation associated with the earn-out arrangement, respectively. The contingent consideration liability established at closing had an acquisition date fair value of $10.9 million. As of November 2, 2019, the fair value of the contingent consideration liability was $8.1 million. During fiscal 2020 and fiscal 2019, decreases of $3.7 million and $2.8 million, respectively, were recorded as reductions to expense in the acquisition and integration cost line item in the Consolidated Statement of Operations. During fiscal 2019, $4.4 million of the total contingent consideration liability was earned. This payment was paid during the first quarter of fiscal 2020. As of October 31, 2020, no contingent consideration liability remained. Customer relationships and contracts represent agreements with existing DonRiver customers. Customer relationships and contracts are amortized on a straight-line basis over their estimated useful life of seven years. Fair value was determined using the multi-period excess earnings method based on the present value of the incremental after-tax cash flows (or “excess earnings”) attributable to customer relationships for a discrete projection period. Developed technology represents purchased technology that had reached technological feasibility and for which DonRiver had substantially completed development as of the date of acquisition. Fair value was determined using future discounted cash flows related to the projected income stream of the developed technology for a discrete projection period. Cash flows were discounted to their present value as of the closing date. Developed technology is amortized on a straight-line basis over its estimated useful life of seven years. The goodwill generated from the acquisition of DonRiver is primarily related to expected synergies. The total goodwill amount was recorded in the previous Software and Software-Related Services segment. The goodwill related to this acquisition is not deductible for tax purposes. Pro forma disclosures have not been included due to immateriality. Packet Design Acquisition On July 2, 2018, Ciena acquired Packet Design, a provider of network performance management software focused on Layer 3 network optimization, topology and route analytics, in a cash transaction for approximately $41.1 million in cash. This transaction has been accounted for as the acquisition of a business. During fiscal 2018, Ciena incurred approximately $1.6 million of acquisition-related costs associated with this transaction. There were minimal acquisition-related costs associated with this transaction during fiscal 2019. These costs and expenses include fees associated with financial, legal and accounting advisors and severance and other employment-related costs, including payments to certain former Packet Design employees. The following table summarizes the final purchase price allocation related to the acquisition based on the estimated fair value of the acquired assets and assumed liabilities (in thousands):
| Amount
Cash and cash equivalents | $ | 642 |
Accounts receivable | 1,525 |
Prepaid expenses and other | 450 |
Equipment, furniture and fixtures | 31 |
Goodwill | 20,304 |
Customer relationships and contracts | 2,200 |
Developed technology | 21,900 |
Accounts payable | (165) |
Accrued liabilities | (657) |
Deferred revenue | (5,176) |
Total purchase price | $ | 41,054 |
Customer relationships and contracts represent agreements with existing Packet Design customers. Customer relationships and contracts are amortized on a straight line basis over their estimated useful life of three years. Developed technology represents purchased technology that had reached technological feasibility and for which Packet Design had substantially completed development as of the date of acquisition. Fair value was determined using future discounted cash flows related to the projected income stream of the developed technology for a discrete projection period. Cash flows were discounted to their present value as of the closing date. Developed technology is amortized on a straight line basis over its estimated useful life of five years. The goodwill generated from the acquisition of Packet Design is primarily related to expected synergies. The total goodwill amount was recorded in the previous Software and Software-Related Services segment. The goodwill related to this acquisition is not deductible for tax purposes. Pro forma disclosures have not been included due to immateriality.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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