Item 1. Financial Statements

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Item 1. Financial Statements

CIENA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Quarter Ended
	January 27,		January 28,
	2024		2023
Revenue:
Products	$	835,777	$	877,715
Services	201,932		178,806
Total revenue	1,037,709		1,056,521
Cost of goods sold:
Products	466,472		500,337
Services	104,275		100,238
Total cost of goods sold	570,747		600,575
Gross profit	466,962		455,946
Operating expenses:
Research and development	187,269		181,730
Selling and marketing	128,158		123,807
General and administrative	54,683		50,896
Significant asset impairments and restructuring costs	4,971		4,298
Amortization of intangible assets	7,252		7,441
Acquisition and integration costs	—		2,558

Total operating expenses	382,333		370,730
Income from operations	84,629		85,216
Interest and other income, net	10,650		31,973
Interest expense	(23,776)		(15,870)

Income before income taxes	71,503		101,319
Provision for income taxes	21,956		25,078
Net income	$	49,547	$	76,241
Basic net income per common share	$	0.34	$	0.51
Diluted net income per potential common share	$	0.34	$	0.51
Weighted average basic common shares outstanding	145,291		149,081
Weighted average dilutive potential common shares outstanding	145,848		149,551

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

CIENA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Quarter Ended
	January 27,		January 28,
	2024		2023
Net income	$	49,547	$	76,241
Unrealized gain on available-for-sale securities, net of tax	895		1,050
Unrealized gain on foreign currency forward contracts, net of tax	7,156		5,342

Unrealized loss on interest rate swaps, net of tax	(9,474)		(5,025)
Change in cumulative translation adjustments	14,323		15,979
Other comprehensive income	12,900		17,346
Total comprehensive income	$	62,447	$	93,587

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

CIENA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)


	January 27, 2024		October 28, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	1,264,751	$	1,010,618
Short-term investments	106,678		104,753
Accounts receivable, net of allowance for credit losses of $14.3 million and $11.7 million as of January 27, 2024 and October 28, 2023, respectively.	865,239		1,003,876
Inventories, net	984,886		1,050,838
Prepaid expenses and other	387,193		405,694
Total current assets	3,608,747		3,575,779
Long-term investments	103,862		134,278
Equipment, building, furniture and fixtures, net	280,357		280,147
Operating right-of-use assets	35,679		35,140
Goodwill	445,084		444,765
Other intangible assets, net	195,682		205,627
Deferred tax asset, net	814,098		809,306
Other long-term assets	109,701		116,453
Total assets	$	5,593,210	$	5,601,495
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	316,094	$	317,828
Accrued liabilities and other short-term obligations	329,910		431,419
Deferred revenue	166,714		154,419
Operating lease liabilities	16,888		16,655
Current portion of long-term debt	11,700		11,700
Total current liabilities	841,306		932,021
Long-term deferred revenue	76,556		74,041
Other long-term obligations	176,313		170,407
Long-term operating lease liabilities	32,418		33,259
Long-term debt, net	1,543,118		1,543,406
Total liabilities	2,669,711		2,753,134
Commitments and contingencies (Note 19)
Stockholders’ equity:
Preferred stock – par value $0.01; 20,000,000 shares authorized; zero shares issued and outstanding	—		—
Common stock – par value $0.01; 290,000,000 shares authorized; 144,946,510 and 144,829,938 shares issued and outstanding	1,449		1,448
Additional paid-in capital	6,274,773		6,262,083
Accumulated other comprehensive loss	(24,867)		(37,767)
Accumulated deficit	(3,327,856)		(3,377,403)
Total stockholders’ equity	2,923,499		2,848,361
Total liabilities and stockholders’ equity	$	5,593,210	$	5,601,495

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

CIENA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)


	Three Months Ended
	January 27,		January 28,
	2024		2023
Cash flows provided by (used in) operating activities:
Net income	$	49,547	$	76,241
Adjustments to reconcile net income to net cash provided by (used in) operating activities:




Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements	22,808		22,208
Share-based compensation costs	37,827		30,512
Amortization of intangible assets	10,016		10,325
Deferred taxes	(4,368)		(7,247)
Provision for inventory excess and obsolescence	10,350		5,503
Provision for warranty	4,841		8,230

Gain on cost method equity investments, net	—		(26,455)
Other	5,051		7,325
Changes in assets and liabilities:
Accounts receivable	135,160		(133,067)
Inventories	56,157		(235,059)
Prepaid expenses and other	17,116		4,667
Operating lease right-of-use assets	3,084		3,891
Accounts payable, accruals and other obligations	(90,915)		(56,979)
Deferred revenue	14,022		29,459
Short- and long-term operating lease liabilities	(4,620)		(5,193)
Net cash provided by (used in) operating activities	266,076		(265,639)
Cash flows provided by (used in) investing activities:
Payments for equipment, furniture, fixtures and intellectual property	(16,599)		(30,030)

Purchases of investments	(21,213)		(35,411)
Proceeds from sales and maturities of investments	53,674		123,249
Settlement of foreign currency forward contracts, net	2,271		(4,001)




Acquisition of business, net of cash acquired	—		(230,048)

Net cash provided by (used in) investing activities	18,133		(176,241)
Cash flows provided by (used in) financing activities:


Proceeds from issuance of term loan, net	—		497,500
Payment of long-term debt	—		(1,732)

Payment of debt issuance costs	(2,402)		(3,996)
Payment of finance lease obligations	(981)		(913)

Shares repurchased for tax withholdings on vesting of stock unit awards	(10,076)		(12,980)
Repurchases of common stock - repurchase program, net	(38,195)		—
Proceeds from issuance of common stock	16,934		14,315
Net cash provided by (used in) financing activities	(34,720)		492,194
Effect of exchange rate changes on cash, cash equivalents and restricted cash	4,646		9,884
Net increase in cash, cash equivalents and restricted cash	254,135		60,198
Cash, cash equivalents and restricted cash at beginning of period	1,010,786		994,378
Cash, cash equivalents and restricted cash at end of period	$	1,264,921	$	1,054,576
Supplemental disclosure of cash flow information
Cash paid during the period for interest, net	$	18,582	$	10,536
Cash paid during the period for income taxes, net	$	8,260	$	8,383
Operating lease payments	$	5,080	$	5,638
Non-cash investing and financing activities
Purchase of equipment in accounts payable	$	4,225	$	7,354

Repurchase of common stock in accrued liabilities from repurchase program	$	3,110	$	—



Operating right-of-use assets subject to lease liability	$	3,498	$	6,244
Gain on cost method equity investments, net	$	—	$	26,455

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

CIENA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)


	Common Stock Shares	Par Value		Additional Paid-in-Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
Balance at October 28, 2023	144,829,938	$	1,448	$	6,262,083	$	(37,767)	$	(3,377,403)	$	2,848,361

Net income	—	—		—		—		49,547		49,547
Other comprehensive income	—	—		—		12,900		—		12,900
Repurchase of common stock - repurchase program, net	(691,088)	(7)		(31,987)		—		—		(31,994)
Issuance of shares from employee equity plans	1,039,765	10		16,924		—		—		16,934
Share-based compensation expense	—	—		37,827		—		—		37,827
Shares repurchased for tax withholdings on vesting of stock unit awards	(232,105)	(2)		(10,074)		—		—		(10,076)

Balance at January 27, 2024	144,946,510	$	1,449	$	6,274,773	$	(24,867)	$	(3,327,856)	$	2,923,499


	Common Stock Shares	Par Value		Additional Paid-in-Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
Balance at October 29, 2022	148,412,943	$	1,484	$	6,390,252	$	(46,645)	$	(3,632,230)	$	2,712,861
Net income	—	—		—		—		76,241		76,241
Other comprehensive income	—	—		—		17,346		—		17,346

Issuance of shares from employee equity plans	1,009,649	11		14,304		—		—		14,315
Share-based compensation expense	—	—		30,512		—		—		30,512

Shares repurchased for tax withholdings on vesting of stock unit awards	(265,004)	(3)		(12,977)		—		—		(12,980)

Balance at January 28, 2023	149,157,588	$	1,492	$	6,422,091	$	(29,299)	$	(3,555,989)	$	2,838,295

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

CIENA CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(1) INTERIM FINANCIAL STATEMENTS

The interim financial statements included herein for Ciena Corporation and its wholly owned subsidiaries (“Ciena”) have been prepared by Ciena, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires Ciena to make judgments, assumptions, and estimates that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Among other things, these estimates form the basis for judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions. To the extent that there are material differences between Ciena’s estimates and actual results, Ciena’s consolidated financial statements will be affected.

In the opinion of management, the financial statements included in this report reflect all normal recurring adjustments that Ciena considers necessary for the fair statement of the results of operations of Ciena for the interim periods covered and of the financial position of Ciena at the date of the interim balance sheets. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations. The Condensed Consolidated Balance Sheet as of October 28, 2023 was derived from audited financial statements, but does not include all disclosures required by GAAP. However, Ciena believes that the disclosures are adequate to understand the information presented herein. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. These financial statements should be read in conjunction with Ciena’s audited consolidated financial statements and the notes thereto included in Ciena’s Annual Report on Form 10-K for the fiscal year ended October 28, 2023 (the “2023 Annual Report”).

Ciena has a 52 or 53-week fiscal year, with quarters ending on the Saturday nearest to the last day of January, April, July, and October, respectively, of each year. Fiscal 2024 is a 53-week fiscal year with the additional week occurring in the fourth quarter. Fiscal 2023 was a 52-week fiscal year.

(2) SIGNIFICANT ACCOUNTING POLICIES

Except for the changes in certain policies described below, there have been no material changes to Ciena’s significant accounting policies, compared to the accounting policies described in Note 1, Ciena Corporation and Significant Accounting Policies and Estimates, in Notes to Consolidated Financial Statements in Item 8 of Part II of the 2023 Annual Report.

Newly Issued Accounting Standards - Effective

In October 2021, the FASB issued ASU No. 2021-08 (“ASU 2021-08”), Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers to improve the accounting for acquired revenue contracts with customers in a business combination to address recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. ASU 2021-08 was effective for Ciena beginning in the first quarter of fiscal 2024 without any material impact on its consolidated financial position, results of operations and related disclosures.

Newly Issued Accounting Standards - Not Yet Effective

In November 2023, the FASB issued ASU No. 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 on a retrospective basis. Early adoption is permitted. Ciena is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvement to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024; however, early adoption is permitted. ASU 2023-09 allows for

adoption using either a prospective or retrospective method. Ciena is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.

**(3)**REVENUE

Disaggregation of Revenue

Ciena’s disaggregated revenue as presented below depicts the nature, amount, and timing of revenue and cash flows for similar groupings of Ciena’s various offerings. The sales cycle, contractual obligations, customer requirements, and go-to-market strategies may differ for each of its product categories, resulting in different economic risk profiles for each category.

The tables below set forth Ciena’s disaggregated revenue for the respective periods (in thousands):


	Quarter Ended January 27, 2024
	Networking Platforms		Platform Software and Services		Blue Planet Automation Software and Services		Global Services		Total
Product lines:
Optical Networking	$	695,849	$	—	$	—	$	—	$	695,849
Routing and Switching	111,387		—		—		—		111,387
Platform Software and Services	—		89,745		—		—		89,745
Blue Planet Automation Software and Services	—		—		13,942		—		13,942
Maintenance Support and Training	—		—		—		74,115		74,115
Installation and Deployment	—		—		—		42,723		42,723
Consulting and Network Design	—		—		—		9,948		9,948
Total revenue by product line	$	807,236	$	89,745	$	13,942	$	126,786	$	1,037,709

Timing of revenue recognition:
Products and services at a point in time	$	807,236	$	27,694	$	1,069	$	9,638	$	845,637
Services transferred over time	—		62,051		12,873		117,148		192,072
Total revenue by timing of revenue recognition	$	807,236	$	89,745	$	13,942	$	126,786	$	1,037,709


	Quarter Ended January 28, 2023
	Networking Platforms		Platform Software and Services		Blue Planet Automation Software and Services		Global Services		Total
Product lines:
Optical Networking	$	735,634	$	—	$	—	$	—	$	735,634
Routing and Switching	119,505		—		—		—		119,505
Platform Software and Services	—		73,445		—		—		73,445
Blue Planet Automation Software and Services	—		—		15,405		—		15,405
Maintenance Support and Training	—		—		—		67,891		67,891
Installation and Deployment	—		—		—		34,575		34,575
Consulting and Network Design	—		—		—		10,066		10,066
Total revenue by product line	$	855,139	$	73,445	$	15,405	$	112,532	$	1,056,521

Timing of revenue recognition:
Products and services at a point in time	$	855,139	$	18,864	$	3,982	$	9,255	$	887,240
Services transferred over time	—		54,581		11,423		103,277		169,281
Total revenue by timing of revenue recognition	$	855,139	$	73,445	$	15,405	$	112,532	$	1,056,521

Ciena reports its sales geographically using the following markets: (i) the United States, Canada, the Caribbean and Latin America (“Americas”); (ii) Europe, Middle East and Africa (“EMEA”); and (iii) Asia Pacific, Japan and India (“APAC”). Within each geographic area, Ciena maintains specific teams or personnel that focus on a particular region, country, customer, or market vertical. These teams include sales management, account salespersons, and sales engineers, as well as services professionals and commercial management personnel. The following table reflects Ciena’s geographic distribution of revenue based principally 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 27,		January 28,
	2024		2023
Geographic distribution:
Americas	$	718,198	$	765,096
EMEA	207,413		152,804
APAC	112,098		138,621
Total revenue by geographic distribution	$	1,037,709	$	1,056,521

Ciena’s revenue includes $677.6 million and $693.6 million of United States revenue for the first quarter of fiscal 2024 and 2023, respectively. No other country accounted for 10% or more of total revenue for the periods presented above.

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 27,		January 28,
	2024		2023
Cloud provider A	$	166,008	n/a
Cloud provider B	109,098		121,327
AT&T	n/a		149,981
Total	$	275,106	$	271,308

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

The cloud providers noted in the above table purchased products from each of Ciena’s operating segments excluding Blue Planet® Automation Software and Services. AT&T purchased products and services from each of Ciena’s operating segments for the period presented.

Networking Platforms revenue reflects sales of Ciena’s Optical Networking and Routing and Switching product lines.
Optical Networking - includes the 6500 Packet-Optical Platform, the Waveserver® modular interconnect system, the 6500 Reconfigurable Line System (RLS), the 5400 family of Packet-Optical Platforms, and the Coherent ELS open line system (OLS). This product line also includes the WaveLogic 5 Nano (WL5n) 100G-400G coherent pluggable transceivers.
Routing and Switching - includes the 3000 family of service delivery platforms and the 5000 family of service aggregation. This product line also includes the 6500 Packet Transport System (PTS), which combines packet switching, control plane operation, and integrated optics, the 8100 Coherent IP networking platforms, the 8700 Packetwave Platform, and virtualization software. This product line also includes SD-Edge software and our microplug Optical Line Terminal (OLT) transceiver. This product line also includes Ciena’s WaveRouterTM product, which was introduced during fiscal 2023, for which there have been no material sales to date.

The Networking Platforms segment also includes sales of operating system software and enhanced software features embedded in each of the product lines above. Revenue from this segment is included in product revenue on the Condensed Consolidated Statements of Operations. Operating system software and enhanced software features embedded in Ciena hardware are each considered distinct performance obligations for which the revenue is generally recognized upfront at a point in time upon transfer of control.

Platform Software and Services offerings provide domain control management, analytics, data and planning tools and applications to assist customers in managing their networks, including by creating more efficient operations and providing more proactive visibility into their networks. Ciena’s platform software includes its Navigator Network Control SuiteTM (“Navigator NCS”) domain controller solution, its suite of Navigator NCS applications, which was previously referred to as “Manage, Control and Plan (MCP),” and its OneControl Unified Management System, as well as planning tools and legacy software solutions that support Ciena’s installed base of network solutions. Platform software-related services revenue includes sales of subscription, installation, support, and consulting services related to Ciena’s software platforms, operating system software and enhanced software features embedded in each of the Networking Platforms product lines above. Revenue from the software portion of this segment is included in product revenue on the Condensed Consolidated Statements of Operations. Revenue from services portions of this segment is included in services revenue on the Condensed Consolidated Statements of Operations.
Blue Planet Automation Software and Services is a comprehensive, cloud native, and standards-based software portfolio, together with related services, that enables customers to realize digital transformation through the automation of the services lifecycle. Ciena’s Blue Planet Automation Platform includes multi-domain service orchestration (MDSO), inventory management (BPI), route optimization and analysis (ROA), multi-cloud orchestration (MCO), and unified assurance and analytics (UAA). Services revenue includes sales of subscription, installation, support, consulting and design services related to Ciena’s Blue Planet Automation Platform. Revenue from the software portion of this segment is included in product revenue on the Condensed Consolidated Statements of Operations. Revenue from services portions of this segment is included in services revenue on the Condensed Consolidated Statements of Operations.

Ciena’s software platform revenue typically reflects either perpetual or term-based software licenses, and these sales are considered distinct performance obligations where revenue is generally recognized upfront at a point in time upon transfer of control. Revenue from software subscription and support is recognized ratably over the period during which the services are performed. Revenue from professional services for solution customization, software and solution support services, consulting and design, and build-operate-transfer services relating to Ciena’s software offerings is recognized over time with Ciena applying the input method to determine the amount of revenue to be recognized in a given period.

Global Services revenue reflects sales of a broad range of Ciena’s services for maintenance support and training, installation and deployment, and consulting and network design activities. Revenue from this segment is included in services revenue on the Condensed Consolidated Statements of Operations.

Ciena’s Global Services are considered a distinct performance obligation where revenue is generally recognized over time. Revenue from maintenance support is recognized ratably over the period during which the services are performed. Revenue from installation and deployment services and consulting and network design services is recognized over time with Ciena applying the input method to determine the amount of revenue to be recognized in a given period. Revenue from training services is generally recognized at a point in time upon completion of the service.

Contract Balances

The following table provides information about receivables, contract assets, and contract liabilities (deferred revenue) from contracts with customers (in thousands):


	Balance at January 27, 2024		Balance at October 28, 2023
Accounts receivable, net	$	865,239	$	1,003,876
Contract assets for unbilled accounts receivable, net	$	151,572	$	150,312
Deferred revenue	$	243,270	$	228,460

Ciena’s contract assets represent unbilled accounts receivable, net where transfer of a product or service has occurred but invoicing is conditional upon completion of future performance obligations. These amounts are primarily related to installation and deployment and professional services arrangements where transfer of control has occurred, but Ciena has not yet invoiced the customer. Contract assets are included in prepaid expenses and other on the Condensed Consolidated Balance Sheets. See Note 10 below.

Contract liabilities consist of deferred revenue and represent advanced payments against non-cancelable customer orders received prior to revenue recognition. Ciena recognized approximately $70.6 million and $67.9 million of revenue during the first three months of fiscal 2024 and 2023, respectively, that was included in the deferred revenue balance at October 28, 2023 and October 29, 2022, respectively. Revenue recognized due to changes in transaction price from performance obligations satisfied or partially satisfied in previous periods was immaterial during the three months ended January 27, 2024 and January 28, 2023.

Capitalized Contract Acquisition Costs

Capitalized contract acquisition costs consist of deferred sales commissions, and were $27.8 million and $30.2 million as of January 27, 2024 and October 28, 2023, respectively. Capitalized contract acquisition costs were included in (i) prepaid expenses and other and (ii) other long-term assets on the Condensed Consolidated Balance Sheets. The amortization expense associated with these costs was $7.7 million and $7.2 million during the first three months of fiscal 2024 and 2023, respectively, and was included in selling and marketing expense on the Condensed Consolidated Statements of Operations.

Remaining Performance Obligations

Remaining performance obligations (“RPO”) are comprised of non-cancelable customer purchase orders for products and services that are awaiting transfer of control for revenue recognition under the applicable contract terms. As of January 27, 2024, the aggregate amount of RPO was $1.7 billion. As of January 27, 2024, Ciena expects approximately 83% of the RPO to be recognized as revenue within the next 12 months.

**(4)**SIGNIFICANT ASSET IMPAIRMENT AND RESTRUCTURING COSTS

Restructuring Costs

Ciena has undertaken a number of restructuring activities intended to reduce expense and to align its workforce and costs with market opportunities, product development, and business strategies. The following table sets forth the restructuring activity and balance of the restructuring liability accounts, which are included in accrued liabilities and other short-term obligations on the Condensed Consolidated Balance Sheets, for the three months ended January 27, 2024 (in thousands):


	Workforce reduction			Other restructuring activities			Total
Balance at October 28, 2023	$	1,913		$	—		$	1,913
Charges	2,861		(1)	2,110		(2)	4,971

Cash payments	(4,058)			(2,110)			(6,168)
Balance at January 27, 2024	$	716		$	—		$	716
Current restructuring liabilities	$	716		$	—		$	716

(1) Reflects employee costs associated with workforce reductions during the three months ended January 27, 2024 as part of a business optimization strategy to improve gross margin, constrain operating expense, and redesign certain business processes.

(2) Primarily represents costs related to restructured real estate facilities and the redesign of certain business processes associated with Ciena’s supply chain and distribution structure reorganization.

The following table sets forth the restructuring activity and balance of the restructuring liability accounts, which are included in accrued liabilities and other short-term obligations on the Condensed Consolidated Balance Sheets for the three months ended January 28, 2023 (in thousands):


	Workforce reduction			Other restructuring activities			Total
Balance at October 29, 2022	$	1,215		$	4,620		$	5,835
Charges	704		(1)	3,594		(2)	4,298


Cash payments	(1,498)			(8,214)			(9,712)
Balance at January 28, 2023	$	421		$	—		$	421
Current restructuring liabilities	$	421		$	—		$	421

(1) Reflects employee costs associated with workforce reductions during the three months ended January 28, 2023 as part of a business optimization strategy to improve gross margin, constrain operating expense, and redesign certain business processes.

(2) Primarily represents the redesign of certain business processes associated with Ciena’s supply chain and distribution structure reorganization and costs related to restructured real estate facilities.

(5) INTEREST AND OTHER INCOME, NET

The components of interest and other income, net, are as follows for the periods indicated (in thousands):


	Quarter Ended
	January 27,		January 28,
	2024		2023
Interest income	$	15,177	$	7,121

Gains (losses) on non-hedge designated foreign currency forward contracts	3,112		(1,769)
Foreign currency exchange losses	(9,192)		(1,889)

Gain on cost method equity investments, net	—		26,455
Other	1,553		2,055
Interest and other income, net	$	10,650	$	31,973

During the first quarter of fiscal 2023, the acquisition of Tibit Communications, Inc. (“Tibit”) by Ciena triggered the remeasurement of Ciena’s previously held investment in Tibit to fair value, which resulted in Ciena recognizing a gain on its cost method equity investment of $26.5 million.

Ciena Corporation, as the U.S. parent entity, uses the U.S. Dollar as its functional currency; however, some of its foreign branch offices and subsidiaries use local currencies as their functional currencies. Ciena recorded $9.2 million and $1.9 million during the first three months of fiscal 2024 and fiscal 2023, respectively, in foreign currency exchange rate losses as a result of monetary assets and liabilities that were transacted in a currency other than Ciena’s functional currency. The related remeasurement adjustments were recorded in interest and other income, net, on the Condensed Consolidated Statements of Operations. From time to time, Ciena uses foreign currency forwards to hedge this type of balance sheet exposure. These

forwards are not designated as hedges for accounting purposes, and any net gain or loss associated with these derivatives is reported in interest and other income, net, on the Condensed Consolidated Statements of Operations. During the first three months of fiscal 2024, Ciena recorded gains of $3.1 million from non-hedge designated foreign currency forward contracts. During the first three months of fiscal 2023, Ciena recorded losses of $1.8 million from non-hedge designated foreign currency forward contracts.

(6) INCOME TAXES

The effective tax rate for the quarter ended January 27, 2024 was higher than the effective tax rate for the quarter ended January 28, 2023, primarily due to the tax benefit of a gain on a cost method equity investment in the first quarter of fiscal 2023.

(7) CASH EQUIVALENT, SHORT-TERM AND LONG-TERM INVESTMENTS

As of the dates indicated, investments are comprised of the following (in thousands):


	January 27, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. government obligations	$	141,947	$	759	$	(82)	$	142,624
Corporate debt securities	57,604		40		(25)		57,619
Time deposits	144,106		20		—		144,126
	$	343,657	$	819	$	(107)	$	344,369

Included in cash equivalents	$	133,829	$	—	$	—	$	133,829
Included in short-term investments	106,603		143		(68)		106,678
Included in long-term investments	103,225		676		(39)		103,862
	$	343,657	$	819	$	(107)	$	344,369


	October 28, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. government obligations	$	170,260	$	28	$	(379)	$	169,909
Corporate debt securities	59,683		1		(115)		59,569
Time deposits	138,830		4		(5)		138,829
	$	368,773	$	33	$	(499)	$	368,307

Included in cash equivalents	$	129,276	$	—	$	—	$	129,276
Included in short-term investments	105,042		4		(293)		104,753
Included in long-term investments	134,455		29		(206)		134,278
	$	368,773	$	33	$	(499)	$	368,307

The following table summarizes the final legal maturities of debt investments as of January 27, 2024 (in thousands):


	Amortized Cost		Estimated Fair Value
Less than one year	$	240,433	$	240,507
Due in 1-2 years	103,224		103,862
	$	343,657	$	344,369

**(8)**FAIR VALUE MEASUREMENTS

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


	January 27, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	895,909	$	—	$	—	$	895,909
Bond mutual fund	156,300		—		—		156,300
Time deposits	144,126		—		—		144,126
Deferred compensation plan assets	14,614		—		—		14,614
U.S. government obligations	—		142,624		—		142,624
Corporate debt securities	—		57,619		—		57,619
Foreign currency forward contracts	—		3,020		—		3,020
Interest rate swaps	—		12,501		—		12,501

Total assets measured at fair value	$	1,210,949	$	215,764	$	—	$	1,426,713

Liabilities:
Foreign currency forward contracts	$	—	$	6,184	$	—	$	6,184


Total liabilities measured at fair value	$	—	$	6,184	$	—	$	6,184


	October 28, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	661,101	$	—	$	—	$	661,101
Bond mutual fund	104,171		—		—		104,171
Time deposits	138,829		—		—		138,829
Deferred compensation plan assets	11,456		—		—		11,456
U.S. government obligations	—		169,909		—		169,909
Corporate debt securities	—		59,569		—		59,569
Foreign currency forward contracts	—		1,119		—		1,119
Interest rate swaps	—		24,953		—		24,953

Total assets measured at fair value	$	915,557	$	255,550	$	—	$	1,171,107

Liabilities:
Foreign currency forward contracts	$	—	$	14,509	$	—	$	14,509


Total liabilities measured at fair value	$	—	$	14,509	$	—	$	14,509

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


	January 27, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	1,183,109	$	2,929	$	—	$	1,186,038
Short-term investments	13,226		93,452		—		106,678
Prepaid expenses and other	—		3,020		—		3,020
Long-term investments	—		103,862		—		103,862
Other long-term assets	14,614		12,501		—		27,115
Total assets measured at fair value	$	1,210,949	$	215,764	$	—	$	1,426,713

Liabilities:
Accrued liabilities and other short-term obligations	$	—	$	6,184	$	—	$	6,184

Total liabilities measured at fair value	$	—	$	6,184	$	—	$	6,184


	October 28, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	891,788	$	2,760	$	—	$	894,548
Short-term investments	12,313		92,440		—		104,753
Prepaid expenses and other	—		1,119		—		1,119
Long-term investments	—		134,278		—		134,278
Other long-term assets	11,456		24,953		—		36,409
Total assets measured at fair value	$	915,557	$	255,550	$	—	$	1,171,107

Liabilities:
Accrued liabilities and other short-term obligations	$	—	$	14,509	$	—	$	14,509


Total liabilities measured at fair value	$	—	$	14,509	$	—	$	14,509

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

(9) INVENTORIES

As of the dates indicated, inventories are comprised of the following (in thousands):


	January 27, 2024		October 28, 2023
Raw materials	$	571,666	$	664,797
Work-in-process	60,644		55,242
Finished goods	369,771		314,168
Deferred cost of goods sold	36,824		66,634
Gross inventories	1,038,905		1,100,841
Reserve for inventory excess and obsolescence	(54,019)		(50,003)
Inventories, net	$	984,886	$	1,050,838

Ciena has been expanding its manufacturing capacity and had been accumulating raw materials inventory of components that are available, in some cases with expanded lead times, in an effort to prepare Ciena to produce finished goods more quickly upon the easing of supply constraints for certain common components. During the first quarter of fiscal 2024 Ciena reduced its raw materials inventory of components due to the consumption of raw materials in excess of purchases. The increase in finished goods inventories resulted primarily from planned fulfillment of customer advance orders for which some deliveries have been rescheduled outside of the first quarter of fiscal 2024.

Ciena makes estimates about future customer demand for its products when establishing the appropriate reserve for excess and obsolete inventory. For the periods presented, future demand was calculated using both customer backlog and future forecasted sales. Generally, Ciena’s customers may cancel or change their orders with limited advance notice, or they may decide not to accept its products and services, although instances of both cancellation and non-acceptance are rare. Ciena writes down its inventory for estimated obsolescence or unmarketable inventory by an amount equal to the difference between the cost of inventory and the estimated net realizable value based on assumptions about future demand, which are affected by changes in Ciena’s strategic direction, discontinuance of a product or introduction of newer versions of products, declines in the sales of or forecasted demand for certain products, and general market conditions. During the first three months of fiscal 2024, Ciena recorded a provision for inventory excess and obsolescence of $10.4 million, primarily related to a decrease in the forecasted demand for certain Networking Platforms products. Deductions from the provision for excess and obsolete inventory relate primarily to disposal activities.

(10) PREPAID EXPENSES AND OTHER

As of the dates indicated, prepaid expenses and other are comprised of the following (in thousands):


	January 27, 2024		October 28, 2023
Contract assets for unbilled accounts receivable, net	$	151,572	$	150,312
Prepaid VAT and other taxes	87,965		96,724
Prepaid expenses	60,495		58,954
Product demonstration equipment, net	40,294		40,682
Capitalized contract acquisition costs	20,824		23,326
Other non-trade receivables	20,910		33,408
Derivative Assets	3,020		1,118
Deferred deployment expense	2,113		1,170
	$	387,193	$	405,694

Depreciation of product demonstration equipment was $1.9 million during both the first three months of fiscal 2024 and fiscal 2023.

For further discussion on contract assets and capitalized contract acquisition costs, see Note 3 above.

(11) OTHER BALANCE SHEET DETAILS

As of the dates indicated, accrued liabilities and other short-term obligations are comprised of the following (in thousands):


	January 27, 2024		October 28, 2023
Compensation, payroll related tax and benefits	$	93,937	$	159,530
Warranty	56,400		57,089
Vacation	29,700		29,503
Interest payable	8,856		4,514
Income taxes payable	8,153		16,341
Foreign currency forward contracts	6,184		14,509
Finance lease liabilities	4,169		3,953

Other	122,511		145,980
	$	329,910	$	431,419

The following table summarizes the activity in Ciena’s accrued warranty for the periods indicated (in thousands):


	Beginning Balance		Current Period Provisions	Settlements	Ending Balance
Three Months Ended January 28, 2023	$	45,503	8,230	(5,190)	$	48,543
Three Months Ended January 27, 2024	$	57,089	4,841	(5,530)	$	56,400

As of the dates indicated, deferred revenue is comprised of the following (in thousands):


	January 27, 2024		October 28, 2023
Products	$	24,415	$	28,353
Services	218,855		200,107
Total deferred revenue	243,270		228,460
Less current portion	(166,714)		(154,419)
Long-term deferred revenue	$	76,556	$	74,041

(12) DERIVATIVE INSTRUMENTS

Foreign Currency Derivatives

Ciena conducts business globally in numerous currencies, and thus is exposed to adverse foreign currency exchange rate changes. To limit this exposure, Ciena enters into foreign currency contracts. Ciena does not enter into such contracts for speculative purposes.

As of January 27, 2024 and October 28, 2023, Ciena had forward contracts to hedge its foreign exchange exposure in order to reduce variability in certain currencies for expenses principally related to research and development activities. The notional amount of these contracts was approximately $349.5 million and $367.3 million as of January 27, 2024 and October 28, 2023, respectively. These foreign exchange contracts have maturities of 24 months or less and have been designated as cash flow hedges.

As of January 27, 2024 and October 28, 2023, Ciena had forward contracts designated as net investment hedges to minimize the effect of foreign exchange rate movements on its net investments in foreign operations. The notional amount of these contracts was approximately $48.1 million and $48.0 million as of January 27, 2024 and October 28, 2023, respectively. These foreign exchange contracts have maturities of 24 months or less and have been designated as net investment hedges.

As of January 27, 2024 and October 28, 2023, Ciena had forward contracts in place to hedge its foreign exchange exposure in order to reduce the variability in various currencies of certain balance sheet items. The notional amount of these contracts was approximately $190.8 million and $226.3 million as of January 27, 2024 and October 28, 2023, respectively. These foreign exchange contracts have maturities of 12 months or less and have not been designated as hedges for accounting purposes.

Interest Rate Derivatives

Ciena is exposed to floating rates of interest on its term loan borrowings (see Note 13 below) and has hedged such risk by entering into floating-to-fixed interest rate swap arrangements.

In April 2022, Ciena entered into forward starting interest rate swaps to fix the Secured Overnight Financing Rate (“SOFR”) for the first $350.0 million of its floating rate debt at 2.968% from September 2023 through September 2025 (“2025 interest rate swaps”). The total notional amount of the 2025 interest swaps was $350.0 million as of January 27, 2024.

In January 2023, Ciena entered into interest rate swaps to fix SOFR for an additional $350.0 million of its floating rate debt at 3.47% through January 2028 (“2028 interest rate swaps”). The total notional amount of these interest rate swaps in effect as of January 27, 2024 was $350.0 million.

In December 2023, Ciena entered into forward starting interest rate swaps to fix SOFR for an additional $350.0 million of its floating rate debt at 3.287% from September 2025 through December 2028 (“2028 forward starting interest rate swaps”). The total notional amount of the 2028 forward starting interest rate swaps effective September 2025 was $350.0 million as of January 27, 2024.

Ciena expects the variable rate payments to be received under the terms of these interest rate swaps to offset exactly the forecasted variable rate payments on the equivalent notional amount of the 2030 New Term Loan (as defined in Note 13 below). These derivative contracts have been designated as cash flow hedges.

Other information regarding Ciena’s derivatives is immaterial for separate financial statement presentation. See Note 5 and Note 8 above.

(13) SHORT-TERM AND LONG-TERM DEBT

Outstanding Term Loan Payable

2030 New Term Loan

On October 24, 2023, Ciena entered into an Incremental Amendment Agreement to its Credit Agreement to which Ciena incurred a new tranche of senior secured term loans in an aggregate principal amount of $1.2 billion maturing on October 24, 2030 (the “2030 New Term Loan”) and a new senior secured revolving credit facility of $300.0 million (the “Revolving Credit Facility”). The 2030 New Term Loan requires Ciena to make installment payments of $2.9 million quarterly, or $11.7 million annually, with the remaining balance payable at maturity.

The net carrying value of the 2030 New Term Loan was comprised of the following as of the date indicated (in thousands):


	January 27, 2024								October 28, 2023
	Principal Balance		Unamortized Discount		Deferred Debt Issuance Costs		Net Carrying Value		Net Carrying Value
2030 New Term Loan	$	1,170,000	$	(4,934)	$	(6,157)	$	1,158,909	$	1,159,371

Deferred debt issuance costs that were deducted from the carrying amount of the 2030 New Term Loan totaled $6.2 million as of January 27, 2024 and $5.5 million at October 28, 2023. Deferred debt issuance costs are amortized using the straight-line method, which approximates the effect of the effective interest rate, through the maturity of the 2030 New Term Loan. The amortization of deferred debt issuance costs for the 2030 New Term Loan is included in interest expense and was approximately $0.2 million during the first three months of fiscal 2024.

As of January 27, 2024, the estimated fair value of the 2030 New Term Loan was $1.2 billion. The 2030 New Term Loan is categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its 2030 New Term Loan using a market approach based on observable inputs, such as current market transactions involving comparable securities.

Refinanced Term Loans

The proceeds of the 2030 New Term Loan, net of original issuance discount, was used to repay in full $1.2 billion of outstanding principal of the 2025 Term Loan (as defined below) and the 2030 Term Loan (as defined below), together the Refinanced Term Loans, including accrued interest.

2025 Term Loan

On January 19, 2023, pursuant to the Incremental Agreement (as defined below) to the Credit Agreement, the Credit Agreement was amended to replace LIBOR with SOFR for Ciena’s senior secured term loan maturing on September 28, 2025 (the “2025 Term Loan”) in response to pending impact of FASB Accounting Standards Codification 848, Reference Rate Reform. Deferred debt issuance costs are amortized using the straight-line method, which approximates the effect of the effective interest rate method, through the maturity of the 2025 Term Loan. The amortization of deferred debt issuance costs for the 2025 Term Loan is included in interest expense, and was $0.2 million for the first three months of fiscal 2023.

2030 Term Loan

On January 19, 2023, Ciena entered into an Incremental Joinder and Amendment Agreement (the “Incremental Agreement”) to its Credit Agreement, dated July 15, 2014, as amended, by and among Ciena, the lenders party thereto and Bank of America, N.A., as administrative agent, pursuant to which Ciena incurred a new tranche of senior secured term loans in an aggregate principal amount of $500.0 million and maturing on January 19, 2030 (the “2030 Term Loan”). Net of original issue discount and debt issuance costs, the $492.5 million in proceeds from the 2030 Term Loan were used for general corporate purposes. Deferred debt issuance costs are amortized using the straight-line method, which approximates the effect of the effective interest rate method, through the maturity of the 2030 Term Loan. The amortization of deferred debt issuance costs for the 2030 Term Loan is included in interest expense, and was nominal for the first three months of fiscal 2023.

Outstanding Senior Notes Payable

2030 Notes

On January 18, 2022, Ciena entered into an indenture among Ciena, as issuer, certain domestic subsidiaries of Ciena, as guarantors, and U.S. Bank National Association, as trustee, pursuant to which Ciena issued $400.0 million in aggregate principal amount of 4.00% fixed-rate senior notes due 2030 (the “2030 Notes”).

The net carrying value of the 2030 Notes was comprised of the following as of the dates indicated (in thousands):


	January 27, 2024						October 28, 2023
	Principal Balance		Deferred Debt Issuance Costs		Net Carrying Value		Net Carrying Value
2030 Notes	$	400,000	$	(4,091)	$	395,909	$	395,735

Deferred debt issuance costs that were deducted from the carrying amount of the 2030 Notes totaled $4.1 million as of January 27, 2024 and $4.3 million as of October 28, 2023. Deferred debt issuance costs are amortized using the straight-line method, which approximates the effect of the effective interest rate, through the maturity of the 2030 Notes. The amortization of deferred debt issuance costs for the 2030 Notes is included in interest expense, and was approximately $0.2 million during both the first three months of fiscal 2024 and fiscal 2023.

As of January 27, 2024, the estimated fair value of the 2030 Notes was $363.5 million. The 2030 Notes are categorized as Level 2 in the fair value hierarchy. Ciena estimated the fair value of its 2030 Notes using a market approach based on observable inputs, such as current market transactions involving comparable securities.

(14) ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table summarizes the changes in accumulated balances of other comprehensive income (“AOCI”), net of tax, for the three months ended January 27, 2024 (in thousands):


	Unrealized Gain (Loss) on
	Available-for-sale Securities		Foreign Currency Forward Contracts		Interest Rate Swaps		Cumulative Translation Adjustment		Total
Balance at October 28, 2023	$	(372)	$	(8,156)	$	18,962	$	(48,201)	$	(37,767)
Other comprehensive gain (loss) before reclassifications	895		6,448		(5,592)		14,323		16,074
Amounts reclassified from AOCI	—		708		(3,882)		—		(3,174)
Balance at January 27, 2024	$	523	$	(1,000)	$	9,488	$	(33,878)	$	(24,867)

The following table summarizes the changes in AOCI, net of tax, for the three months ended January 28, 2023 (in thousands):


	Unrealized Gain (Loss) on
	Available-for-sale Securities		Foreign Currency Forward Contracts		Interest Rate Swaps		Cumulative Translation Adjustment		Total
Balance at October 29, 2022	$	(2,965)	$	(10,197)	$	9,397	$	(42,880)	$	(46,645)
Other comprehensive gain (loss) before reclassifications	1,050		7,630		(4,226)		15,979		20,433
Amounts reclassified from AOCI	—		(2,288)		(799)		—		(3,087)
Balance at January 28, 2023	$	(1,915)	$	(4,855)	$	4,372	$	(26,901)	$	(29,299)

All amounts reclassified from AOCI, related to settlement (gains) losses on foreign currency forward contracts designated as cash flow hedges, impacted research and development expense on the Condensed Consolidated Statements of Operations. All amounts reclassified from AOCI, related to settlement (gains) losses on interest rate swaps designated as cash flow hedges, impacted interest and other income, net, on the Condensed Consolidated Statements of Operations.

(15) EARNINGS PER SHARE CALCULATION

Basic net income per common share (“Basic EPS”) is computed using the weighted average number of common shares outstanding. Diluted net income per potential common share (“Diluted EPS”) is computed using the weighted average number of the following, in each case, to the extent that the effect is not anti-dilutive: (i) common shares outstanding; (ii) shares issuable upon vesting of stock unit awards; and (iii) shares issuable under Ciena’s employee stock purchase plan and upon exercise of outstanding stock options, using the treasury stock method.

The following table presents the calculation of Basic and Diluted EPS for the periods indicated (in thousands, except per share amounts):


	Quarter Ended
	January 27,		January 28,
	2024		2023
Net income	$	49,547	$	76,241
Basic weighted average shares outstanding	145,291		149,081
Effect of dilutive potential common shares	557		470
Diluted weighted average shares	145,848		149,551
Basic EPS	$	0.34	$	0.51
Diluted EPS	$	0.34	$	0.51
Antidilutive employee share-based awards, excluded	2,491		2,768

(16) STOCKHOLDERS’ EQUITY

Stock Repurchase Program

On December 9, 2021, Ciena announced that its Board of Directors authorized a program to repurchase up to $1.0 billion of its common stock.

During the first three months of fiscal 2024, Ciena repurchased an additional 0.7 million shares of its common stock for an aggregate purchase price of $32.0 million at an average price of $46.30 per share. As of January 27, 2024, Ciena (i) has repurchased 14.8 million shares for an aggregate purchase price of $782.0 million at an average price of $52.85 per share and (ii) has an aggregate of $218.0 million authorized and remaining under its stock repurchase program.

The purchase price for the shares of Ciena’s stock repurchased is reflected as a reduction of common stock and additional paid-in capital.

Stock Repurchases Related to Stock Unit Award Tax Withholdings

Ciena repurchases shares of its common stock to satisfy employee tax withholding obligations due on vesting of stock unit awards. The related purchase price of $10.1 million for the shares of Ciena’s stock repurchased during the first three months of fiscal 2024 is reflected as a reduction to stockholders’ equity. Ciena is required to allocate the purchase price of the repurchased shares as a reduction of common stock and additional paid-in capital.

(17) SHARE-BASED COMPENSATION EXPENSE

The following table summarizes share-based compensation expense for the periods indicated (in thousands):


	Quarter Ended
	January 27,		January 28,
	2024		2023
Products	$	1,318	$	1,051
Services	3,020		2,297
Share-based compensation expense included in cost of goods sold	4,338		3,348
Research and development	12,880		9,234
Selling and marketing	10,305		8,424
General and administrative	10,079		9,468

Share-based compensation expense included in operating expense	33,264		27,126
Share-based compensation expense capitalized in inventory, net	225		38
Total share-based compensation expense	$	37,827	$	30,512

As of January 27, 2024, total unrecognized share-based compensation expense was approximately $333.9 million, which relates to unvested stock unit awards and is expected to be recognized over a weighted-average period of 1.56 years.

(18) 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.

Ciena's long-lived assets, including equipment, building, furniture and fixtures, right-of-use (“ROU”) assets, 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 27, 2024, equipment, building, furniture and fixtures, net, totaled $280.4 million, and operating ROU assets totaled $35.7 million both of which support asset groups within Ciena’s four operating segments and unallocated selling and general and administrative activities. As of January 27, 2024, finite-lived intangible assets, goodwill, and maintenance spares are assigned to asset groups within the following segments (in thousands):


	January 27, 2024
	Networking Platforms		Platform Software and Services	Blue Planet Automation Software and Services	Global Services	Total
Other intangible assets, net	$	181,155	—	14,527	—	$	195,682
Goodwill	$	199,844	156,191	89,049	—	$	445,084
Maintenance spares, net	$	—	—	—	56,266	$	56,266

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; significant asset impairments and restructuring costs; amortization of intangible assets; acquisition and integration costs; interest and other income, net; interest expense; and provision for income taxes.

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


	Quarter Ended
	January 27,		January 28,
	2024		2023
Segment profit (loss):
Networking Platforms	$	183,775	$	202,147
Platform Software and Services	58,004		45,650
Blue Planet Automation Software and Services	(7,069)		(11,059)
Global Services	44,983		37,478
Total segment profit	279,693		274,216
Less: Non-performance operating expenses
Selling and marketing	128,158		123,807
General and administrative	54,683		50,896
Significant asset impairments and restructuring costs	4,971		4,298
Amortization of intangible assets	7,252		7,441
Acquisition and integration costs	—		2,558

Add: Other non-performance financial items
Interest and other income, net	10,650		31,973
Interest expense	(23,776)		(15,870)
Less: Provision for income taxes	21,956		25,078
Net income	$	49,547	$	76,241

Entity-Wide Reporting

The following table reflects Ciena’s geographic distribution of equipment, building, furniture and fixtures, net, and operating ROU assets, with any country accounting for at least 10% of total equipment, building, furniture and fixtures, net, and operating ROU assets specifically identified. Equipment, building, furniture and fixtures, net, and operating ROU assets attributable to geographic regions outside of the United States and Canada are reflected as “Other International.” For the periods indicated, Ciena’s geographic distribution of equipment, building, furniture and fixtures, net, and operating ROU assets was as follows (in thousands):


	January 27, 2024		October 28, 2023
Canada	$	230,712	$	229,707
United States	47,231		46,933
Other International	38,093		38,647
Total	$	316,036	$	315,287

(19) COMMITMENTS AND CONTINGENCIES

Tax Contingencies

Ciena is subject to various tax liabilities arising in the ordinary course of business. Ciena does not expect that the ultimate settlement of these tax liabilities will have a material effect on its results of operations, financial position, or cash flows.

Litigation

Ciena is subject to various legal proceedings, claims, and other matters arising in the ordinary course of business, including those that relate to employment, commercial, tax, and other regulatory matters. Ciena is also subject to intellectual property related claims, including claims against third parties that may involve contractual indemnification obligations on the part of Ciena. Ciena does not expect that the ultimate costs to resolve such matters will have a material effect on its results of operations, financial position, or cash flows.

Purchase Order Obligations

Ciena has certain advanced orders for supply of certain long lead time components. As of January 27, 2024, Ciena had $1.9 billion in outstanding purchase order commitments to contract manufacturers and component suppliers for inventory. In certain instances, Ciena is permitted to cancel, reschedule or adjust these orders. Consequently, only a portion of this amount relates to firm, non-cancelable and unconditional obligations.

(20) SUBSEQUENT EVENTS

Stock Repurchase Program

From the end of the first quarter of fiscal 2024 through March 1, 2024, Ciena repurchased an additional 0.3 million shares of its common stock for an aggregate purchase price of $19.2 million at an average price of $55.44 per share, inclusive of repurchases pending settlement. As of March 1, 2024, Ciena has repurchased an aggregate of 15.1 million shares and has an aggregate of $198.8 million of authorized funds remaining under its stock repurchase program.

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