Segments and Entity-Wide Disclosures

3 Months Ended

Jan. 31, 2020

SEGMENTS AND ENTITY-WIDE DISCLOSURES

Segment Reporting

Ciena has the following operating segments for reporting purposes: (i) Networking Platforms; (ii) Platform Software and Services; (iii) Blue Planet Automation Software and Services; and (iv) Global Services. During fiscal 2019, Ciena separated its previous Software and Software-Related Services segment into two stand-alone operating segments. Because Ciena previously disclosed its Platform Software and Services and Blue Planet Automation Software and Services as distinct product lines in its presentation of segment revenue for Software and Software-Related Services, there is no significant change to the presentation of segment revenues as a result of this separation. Comparative periods have been retrospectively adjusted to disclose segment profit for Platform Software and Services and Blue Planet Automation Software and 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 January 31, 2020, equipment, building, furniture and fixtures, net, totaled $277.7 million, and operating right of use assets, net totaled $50.1 million, primarily supporting asset groups within Ciena’s Networking Platforms, Platform Software and Services and Blue Planet Automation Software and Services segments and supporting Ciena’s unallocated selling and general and administrative activities. As of January 31, 2020, $17.9 million of Ciena’s intangible assets, net were assigned to asset groups within Ciena’s Networking Platforms segment and $107.7 million of Ciena’s intangible assets, net were assigned to asset groups within Ciena’s Blue Planet Automation Software and Services segment. As of January 31, 2020, $65.7 million, $156.2 million and $89.0 million of Ciena’s Goodwill was assigned to asset groups within Ciena’s Networking Platforms, Platform Software and Services and Blue Planet Automation Software and Services segments, respectively. As of January 31, 2020, all of the maintenance spares, net, totaling $54.9 million, were assigned to asset groups within Ciena’s Global Services segment.

Segment Revenue

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



	Quarter Ended January 31,
	2020		2019
Revenue:
Networking Platforms
Converged Packet Optical	$	591,549	$	548,997
Packet Networking	67,508		71,569
Total Networking Platforms	659,057		620,566

Platform Software and Services	51,888		41,598

Blue Planet Automation Software and Services	15,466		14,974

Global Services
Maintenance Support and Training	61,793		61,277
Installation and Deployment	34,954		30,622
Consulting and Network Design	9,754		9,490
Total Global Services	106,501		101,389

Consolidated revenue	$	832,912	$	778,527

Segment Profit (Loss)

Segment profit (loss) 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, net; interest expense; loss on extinguishment and modification of debt and provision for income taxes.

The table below sets forth Ciena’s segment profit (loss) and the reconciliation to consolidated net income during the respective periods indicated (in thousands):



	Quarter Ended January 31,
	2020			2019
Segment profit (loss):
Networking Platforms	$	168,270		$	136,590
Platform Software and Services	28,951			20,464
Blue Planet Automation Software and Services	(3,113		)	(2,047		)
Global Services	45,527			39,701
Total segment profit	239,635			194,708
Less: Non-performance operating expenses
Selling and marketing	107,066			98,113
General and administrative	42,468			39,243
Amortization of intangible assets	5,853			5,528
Significant asset impairments and restructuring costs	4,472			2,273
Acquisition and integration costs	1,819			1,608
Add: Other non-performance financial items
Interest expense and other income, net	(5,169		)	(5,188		)
Loss on extinguishment and modification of debt	(646		)	—
Less: Provision for income taxes	9,814			9,139
Consolidated net income	$	62,328		$	33,616

Entity-Wide Reporting

Ciena’s operating segments each engage in business across three geographic regions: Americas; Europe, Middle East and Africa (“EMEA”); and Asia-Pacific, Japan and India (“APAC”). Americas include activities in North America and South America (previously, Caribbean and Latin America (“CALA”)). The following table reflects Ciena’s geographic distribution of revenue principally based on the relevant location for Ciena’s delivery of products and performance of services. For the periods below, Ciena’s geographic distribution of revenue was as follows (in thousands):



	Quarter Ended January 31,
	2020		2019
Americas	$	574,004	$	516,481
EMEA	129,965		129,190
APAC	128,943		132,856
Total	$	832,912	$	778,527

Ciena’s revenue includes $524.3 million and $464.1 million of United States revenue for the first quarter of fiscal 2020 and 2019, 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):



	January 31, 2020		October 31, 2019
Canada	$	209,101	$	211,901
United States	51,819		58,119
Other International	16,819		16,864
Total	$	277,739	$	286,884

For the periods below, the only customers that accounted for at least 10% of Ciena’s revenue were as follows (in thousands):



	Quarter Ended January 31,
	2020		2019
Verizon	$	114,548	$	88,775
AT&T	84,010		94,172
Web-scale provider	n/a		89,514
Total	$	198,558	$	272,461



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

The Web-scale provider noted above contributed greater than 10% of total revenue for the first time in fiscal 2019 and purchased products from each of Ciena’s operating segments excluding Blue Planet Automation Software and Services. The other customers identified above purchased products and services from each of Ciena’s operating segments.