Fair Value Measurements

3 Months Ended

Jan. 31, 2020

FAIR VALUE MEASUREMENTS

As of the date indicated, the following table summarizes the assets and liabilities that are recorded at fair value on a recurring basis (in thousands):



	January 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	632,620	$	—	$	—	$	632,620
Bond mutual fund	50,180		—		—		50,180
U.S. government obligations	—		120,143		—		120,143
Foreign currency forward contracts	—		273		—		273
Total assets measured at fair value	$	682,800	$	120,416	$	—	$	803,216

Liabilities:
Foreign currency forward contracts	$	—	$	710	$	—	$	710
Forward starting interest rate swaps	—		22,225		—		22,225
Contingent consideration	—		—		3,705		3,705
Total liabilities measured at fair value	$	—	$	22,935	$	3,705	$	26,640



	October 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	759,114	$	—	$	—	$	759,114
U.S. government obligations	—		119,954		—		119,954
Foreign currency forward contracts	—		1,570		—		1,570
Total assets measured at fair value	$	759,114	$	121,524	$	—	$	880,638

Liabilities:
Foreign currency forward contracts	$	—	$	35	$	—	$	35
Forward starting interest rate swaps	—		21,093		—		21,093
Contingent consideration	—		—		3,705		3,705
Total liabilities measured at fair value	$	—	$	21,128	$	3,705	$	24,833

As of the date indicated, the assets and liabilities above are presented on Ciena’s Condensed Consolidated Balance Sheets as follows (in thousands):



	January 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	682,800	$	—	$	—	$	682,800
Short-term investments	—		110,067		—		110,067
Prepaid expenses and other	—		273		—		273
Long-term investments	—		10,076		—		10,076
Total assets measured at fair value	$	682,800	$	120,416	$	—	$	803,216

Liabilities:
Accrued liabilities and other short-term obligations	$	—	$	710	$	3,705	$	4,415
Other long-term obligations	—		22,225		—		22,225
Total liabilities measured at fair value	$	—	$	22,935	$	3,705	$	26,640



	October 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	759,114	$	—	$	—	$	759,114
Short-term investments	—		109,940		—		109,940
Prepaid expenses and other	—		1,570		—		1,570
Long-term investments	—		10,014		—		10,014
Total assets measured at fair value	$	759,114	$	121,524	$	—	$	880,638

Liabilities:
Accrued liabilities and other short-term obligations	$	—	$	35	$	—	$	35
Other long-term obligations	—		21,093		3,705		24,798
Total liabilities measured at fair value	$	—	$	21,128	$	3,705	$	24,833

Ciena did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.

Ciena’s Level 3 liability includes $3.7 million in accrued liabilities and other short-term obligations as of January 31, 2020. This reflects a contingent consideration element of a three-year payout arrangement associated with Ciena’s purchase of DonRiver Holdings, LLC (“DonRiver”) in the fourth quarter of fiscal 2018. As of January 31, 2020, there was no material change to the fair value.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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