Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

This report contains statements that discuss future events or expectations, projections of results of operations or financial condition, changes in the markets for our products and services, trends in our business, operational matters including the expansion of manufacturing capacity and accumulation of inventory, business prospects and strategies and other “forward-looking” information. Forward-looking statements may appear throughout this report, including in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” In some cases, you can identify “forward-looking statements” by words like “may,” “will,” “would,” “can,” “should,” “could,” “expects,” “future,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “projects,” “targets,” “prepare,” or “continue” or the negative of those words and other comparable words. You should be aware that the forward-looking statements contained in this report are based on our current views and assumptions, and are subject to known and unknown risks, uncertainties, and other factors that may cause actual events or results to differ materially.

For a discussion identifying some of the important factors that could cause actual results to vary materially from those anticipated in the forward-looking statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in this report. For a more complete understanding of the risks associated with an investment in our securities, you should review these factors and the rest of this report in combination with the more detailed description of our business and management’s discussion and analysis of financial condition and risk factors described in our Annual Report on Form 10-K for the fiscal year ended November 2, 2024, which we filed with the Securities and Exchange Commission (the “SEC”) on December 20, 2024 (our “2024 Annual Report”). However, we operate in a very competitive and dynamic environment and new risks and uncertainties emerge, are identified or become apparent from time to time and therefore may not be identified in this report. We cannot predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. You should be aware that the forward-looking statements contained in this report are based on our current views and assumptions. We undertake no obligation to revise or to update any forward-looking statements made in this report to reflect events or circumstances after the date hereof or to reflect new information or the occurrence of unanticipated events, except as required by law. The forward-looking statements in this report are intended to be subject to protection afforded by the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Unless the context requires otherwise, references in this report to “Ciena,” the “Company,” “we,” “us,” and “our” refer to Ciena Corporation and its consolidated subsidiaries.

Overview

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is designed to provide an understanding of Ciena’s financial condition, results of operations, and cash flows, and should be read in conjunction with our Condensed Consolidated Financial Statements and the accompanying notes thereto included in Item 1 of Part I of this report and in Item 8 of Part II of our 2024 Annual Report.

We are a network technology company, providing hardware, software, and services to a wide range of network operators and enabling enhanced network capacity, service delivery, and automation. Our solutions support network traffic across a wide range of applications, including cloud, video, data, AI, and voice. Our network solutions are used globally by communications service providers, cable and multiservice operators, cloud providers, submarine network operators, governments, and enterprises across multiple industry verticals. Our portfolio is designed to enable the Adaptive Network™, which is our vision for a network end state that leverages a programmable and scalable network infrastructure, driven by software control and automation capabilities, that is informed by network analytics and intelligence. Our solutions include Networking Platforms, including our Optical Networking portfolio and our Routing and Switching portfolio, which can be applied from the network core to end-user access points, and which allow network operators to scale capacity, increase transmission speeds, allocate traffic efficiently, and adapt dynamically to changing end-user service demands. To complement our Networking Platforms, we offer Platform Software, which includes our Navigator NCS and advanced applications that deliver multi-layer domain control and operations for network operators. Through our Blue Planet Automation Software, we also enable complete service lifecycle management automation with productized OSS, including inventory, orchestration and assurance solutions that help our customers to achieve closed loop automation across multi-vendor and multi-domain environments.

Market Opportunity and Investment in Technology Innovation

The market into which we sell our communications networking solutions is dynamic and characterized by a high rate of change, including rapid growth in bandwidth demand and network traffic, the proliferation of cloud-based services, and new approaches, or “consumption models,” for designing and procuring networking solutions. Drivers of increased bandwidth demand include enterprise and consumer cloud network adoption, generative AI, 5G, high-definition video, and network operator focus on resilience and automation. To address these growing service demands and manage network cost, many network operators are looking to adopt next-generation infrastructures that are more programmable and better capable of leveraging data for network insight, analytics and automation.

We believe that our investment capacity and our efforts to push the pace of innovation are important competitive differentiators in our markets. Keeping pace with the market’s demand for technology innovation requires considerable research and development investment capacity and expenditures, and research and development spending represented 18.0% of our revenue in the first quarter of fiscal 2025. During the first quarter of fiscal 2025, we invested $192.7 million in research and development activities, an increase of 2.9% compared to first quarter of fiscal 2024. In particular, in an effort to capture certain market opportunities created by the impact of artificial intelligence (AI) on networks, we have continued to innovate, increase the performance of, and enhance the capabilities for our leading WaveLogicTM coherent modem technology in multiple form factors. Through this innovation, we seek to extend our leadership in our core business and leverage this to expand our addressable market into complementary and adjacent network applications, including inside and around the data center.

Business Momentum

During the first quarter of fiscal 2025, we continued to experience broad-based business momentum, with year-over-year order growth in our major customer segments, led by cloud providers and including continued improvement in orders from communications service providers. As a result, our revenue increased by 3.3% to $1.07 billion in the first quarter of fiscal 2025 as compared to $1.04 billion in the first quarter of fiscal 2024. Although our business remains subject to quarterly fluctuations due to customer purchasing patterns and supply chain dynamics, we continue to believe that certain trends and shifts in business and consumer behaviors and the drivers of bandwidth demand described above under “Market Opportunity and Investment in Technology Innovation” represent long-term opportunities for our business.

For additional information regarding our business, industry, market opportunity, competitive landscape, and strategy, see our 2024 Annual Report.

Consolidated Results of Operations

Operating Segments

Our results of operations are presented based on the following operating segments: (i) Networking Platforms; (ii) Platform Software and Services; (iii) Blue Planet Automation Software and Services; and (iv) Global Services. See Note 3 to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report.

Revenue

As a result of the factors described under “Overview” above, our revenue increased by 3.3%, or $34.5 million in the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024.

Operating Segment Revenue

The table below sets forth the changes in our operating segment revenue for the periods indicated (in thousands, except percentage data):

			Quarter Ended
			February 1, 2025						January 27, 2024												%*
Revenue:
Networking Platforms
Optical Networking			$	727,973					$	695,849											4.6		%
%**			67.9		%				67.1		%
Routing and Switching			93,169						111,387												(16.4)		%
%**			8.7		%				10.7		%
Total Networking Platforms			821,142						807,236												1.7		%
%**			76.6		%				77.8		%
Platform Software and Services			95,067						89,745												5.9		%
%**			8.9		%				8.6		%
Blue Planet Automation Software and Services			26,032						13,942												86.7		%
%**			2.4		%				1.4		%
Global Services
Maintenance Support and Training			74,573						74,115												0.6		%
%**			7.0		%				7.1		%
Installation and Deployment			47,682						42,723												11.6		%
%**			4.4		%				4.1		%
Consulting and Network Design			7,764						9,948												(22.0)		%
%**			0.7		%				1.0		%
Total Global Services			130,019						126,786												2.5		%
%**			12.1		%				12.2		%
Total revenue			$	1,072,260					$	1,037,709											3.3		%

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• Denotes % change from fiscal 2024 to fiscal 2025

** Denotes % of total revenue

Quarter ended February 1, 2025 as compared to the quarter ended January 27, 2024

*•*Networking Platforms segment revenue increased by $13.9 million.

• Optical Networking products revenue increased by $32.1 million, primarily driven by increases in sales of our 6500 Packet-Optical Platforms, primarily to service provider customers, our 6500 Reconfigurable Line Systems (RLS) and our coherent pluggables, both primarily to cloud provider customers. These increases were partially offset by a reduction in Waveserver revenue, primarily related to decreased sales to cloud provider customers.

• Routing and Switching products revenue decreased by $18.2 million, primarily driven by decreases in sales of our 3000 and 5000 families of service delivery and aggregation switches, partially offset by an increase in sales of our virtualization software.

• Platform Software and Services segment revenue** increased by $5.3 million, primarily reflecting sales increases of our software maintenance services, partially offset by sales decreases of our software platforms.

• Blue Planet Automation Software and Services** segment revenue increased by $12.1 million primarily reflecting sales increases in software and services for our unified assurance and analytics.

• Global Services** segment revenue increased by $3.2 million, primarily reflecting a sales increase in our installation and deployment services, partially offset by a sales decrease in our consulting and network design services.

Revenue by Geographic Region

Our operating segments engage in business and operations across three geographic regions: the United States, Canada, the Caribbean and Latin America (“Americas”); Europe, Middle East and Africa (“EMEA”); and Asia Pacific, Japan and India (“APAC”). The geographic distribution of our revenue can fluctuate significantly from period to period, and the timing of revenue recognition for large network projects, particularly outside of the United States, can result in large variations in geographic revenue results in any particular period.

The following table reflects our geographic distribution of revenue, principally based on the relevant location for our delivery of products and performance of services. The table sets forth the changes in geographic distribution of revenue for the periods indicated (in thousands, except percentage data):

			Quarter Ended
			February 1, 2025						January 27, 2024												%*
Americas			$	795,632					$	718,198											10.8		%
%**			74.2		%				69.2		%
EMEA			157,916						207,413												(23.9)		%
%**			14.7		%				20.0		%
APAC			118,712						112,098												5.9		%
%**			11.1		%				10.8		%
Total			$	1,072,260					$	1,037,709											3.3		%

---

• Denotes % change from fiscal 2024 to fiscal 2025

** Denotes % of total revenue

Quarter ended February 1, 2025 as compared to the quarter ended January 27, 2024

*•*Americas revenue increased by $77.4 million, primarily driven by increased sales to communications service providers and cloud providers, partially offset by decreased sales to cable and multiservice operators, each primarily in the United States.

• EMEA revenue** decreased by $49.5 million, primarily driven by decreased sales to cloud providers and to submarine network operators.

• APAC revenue** increased by $6.6 million, primarily driven by increased sales to communications service providers in India.

Currency Fluctuations

During the first quarter of fiscal 2025, approximately 15.2% of our revenue was non-U.S. Dollar-denominated. During the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024, the U.S. Dollar primarily strengthened against other currencies. These currency fluctuations had an adverse effect on our revenue reported in U.S. Dollars of approximately $6.5 million, or 0.6%, as compared to the first quarter of fiscal 2024.

Cost of Goods Sold and Gross Profit

There are a number of important factors or conditions that can adversely affect or cause our gross profit as a percentage of product or service revenue, or “gross margin,” to fluctuate on a quarterly basis. For example, early stages of new network builds also often include an increased concentration of lower margin “common” equipment, photonic line systems, pluggable solutions, and installation services, with the intent to improve margin as we sell channel cards, advanced software, and maintenance services to customers as they add capacity. The component elements that comprise our product cost of goods sold and services cost of goods sold, and certain factors that can cause gross margin to fluctuate, are described in detail in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of our 2024 Annual Report.

The tables below set forth the changes in revenue, cost of goods sold and gross profit for the periods indicated (in thousands, except percentage data):

			Quarter Ended
			February 1, 2025						January 27, 2024												%*
Total revenue			$	1,072,260					$	1,037,709											3.3		%
Total cost of goods sold			600,439						570,747												5.2		%
Gross profit			$	471,821					$	466,962											1.0		%
%**			44.0		%				45.0		%

---

• Denotes % change from fiscal 2024 to fiscal 2025

** Denotes % of total revenue

Quarter ended February 1, 2025 as compared to the quarter ended January 27, 2024

• Gross profit increased by $4.9 million. Gross margin decreased by 100 basis points, primarily reflecting decreased product margin, partially offset by increased services margin.

• Gross profit on products decreased by $5.3 million from $369.3 million for the first quarter of fiscal 2024 to $364.0 million for the first quarter of fiscal 2025. Product gross margin decreased by 160 basis points, from 44.2% for the first quarter of fiscal 2024 to 42.6% for the first quarter of fiscal 2025, primarily due to product mix, partially offset by certain manufacturing efficiencies.

• Gross profit on services increased by $10.2 million from $97.7 million for the first quarter of fiscal 2024 to $107.8 million for the first quarter of fiscal 2025. Gross margin increased by 120 basis points, from 48.4% for the first quarter of fiscal 2024 to 49.6% for the first quarter of fiscal 2025, primarily due to efficiencies in delivering platform software related services.

Operating Expense

The component elements that comprise each of our operating expense categories in the table below are set forth in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our 2024 Annual Report. The table below sets forth the changes in operating expense for the periods indicated (in thousands, except percentage data):

			Quarter Ended
			February 1, 2025						January 27, 2024												%*
Research and development			$	192,663					$	187,269											2.9		%
%**			18.0		%				18.0		%
Selling and marketing			136,504						128,158												6.5		%
%**			12.7		%				12.3		%
General and administrative			53,902						54,683												(1.4)		%
%**			5.0		%				5.3		%
Significant asset impairments and restructuring costs			1,544						4,971												(68.9)		%
%**			0.1		%				0.5		%
Amortization of intangible assets			6,545						7,252												(9.7)		%
%**			0.6		%				0.7		%
Total operating expenses			$	391,158					$	382,333											2.3		%
%**			36.5		%				36.8		%

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• Denotes % change from fiscal 2024 to fiscal 2025

** Denotes % of total revenue

Quarter ended February 1, 2025 as compared to the quarter ended January 27, 2024

• Research and development expense increased by $5.4 million. Net of hedging, this increase primarily reflects increases in employee-related compensation costs partially offset by lower prototype expense.

• Selling and marketing expense increased by $8.3 million. Net of hedging, this increase primarily reflects increases in employee-related compensation costs primarily due to higher commission expense.

• General and administrative expense remained relatively unchanged.

• Significant asset impairments and restructuring costs decreased by $3.4 million, primarily due to a reduction in restructuring activities that we have taken with respect to our global workforce.

• Amortization of intangible assets remained relatively unchanged.

Currency Fluctuations

Approximately 47.5% of our operating expense was non-U.S. Dollar-denominated during the first quarter of fiscal 2025. During the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024, the U.S. Dollar primarily strengthened against other currencies. These currency fluctuations, net of hedging, had the effect of reducing our operating expense by approximately $5.5 million, or 1.4%, as compared to the first quarter of fiscal 2024.

Segment Profit (Loss)

Segment profit (loss) is determined based on internal performance measures used by our 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; interest and other income, net; interest expense; loss on extinguishment and modification of debt; and provision for income taxes.

The table below sets forth the changes in our segment profit (loss) for the periods indicated (in thousands, except percentage data):

			Quarter Ended
			February 1, 2025						January 27, 2024												%*
Segment profit (loss):
Networking Platforms			$	167,079					$	183,775											(9.1)		%
Platform Software and Services			$	63,125					$	58,004											8.8		%
Blue Planet Automation Software and Services			$	4,576					$	(7,069)											164.7		%
Global Services			$	44,378					$	44,983											(1.3)		%

---

• Denotes % change from fiscal 2024 to fiscal 2025

Quarter ended February 1, 2025 as compared to the quarter ended January 27, 2024

• Networking Platforms segment profit decreased by $16.7 million, primarily due to lower product margin as described above and higher research and development costs, partially offset by higher sales volume.

• Platform Software and Services segment profit increased by $5.1 million, primarily due to higher services sales volume and improved services margin as described above.

• Blue Planet Automation Software and Services segment profit increased by $11.6 million, primarily due to higher sales volume as described above, and improved margins on services.

• Global Services segment profit slightly decreased, primarily due to reduced margins on maintenance support and training partially offset by increased sales volume.

Other Items

The table below sets forth the changes in other items for the periods indicated (in thousands, except percentage data):

			Quarter Ended
			February 1, 2025						January 27, 2024												%*
Interest and other income, net			$	11,578					$	10,650											8.7		%
%**			1.1		%				1.0		%
Interest expense			$	(22,918)					$	(23,776)											(3.6)		%
%**			2.1		%				2.3		%
Loss on extinguishment and modification of debt			$	(729)					$	—											100.0		%
%**			(0.1)		%				—		%
Provision for income taxes			$	24,022					$	21,956											9.4		%
%**			2.2		%				2.1		%

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• Denotes % change from fiscal 2024 to fiscal 2025

** Denotes % of total revenue

Quarter ended February 1, 2025 as compared to the quarter ended January 27, 2024

• Interest and other income, net increased primarily resulting from the impact of foreign exchange rates on assets and liabilities denominated in a currency other than the relevant functional currency, net of hedging activity.

• Interest expense remained relatively unchanged. For more information on our short-term and long-term debt, see Note 11 to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report.

• Loss on extinguishment and modification of debt reflects the refinance of our 2030 Term Loan. See Note 11 to our Condensed Consolidated Financial Statements in Item 1 of Part 1 of this report for more details.

• Provision for income taxes increased by $2.1 million, primarily due to income in jurisdictions with higher tax rates.

Liquidity and Capital Resources

Based on past performance and current expectations, we believe that cash from operations, cash, cash equivalents, investments, and other sources of liquidity, including our Revolving Credit Facility, will satisfy our currently anticipated working capital needs, capital expenditures, and other liquidity requirements associated with our operations through the next 12 months and the reasonably foreseeable future. We regularly evaluate our liquidity position, debt obligations, and anticipated cash needs to fund our operating or investment plans, and will continue to consider capital raising and other market opportunities that may be available to us. We regularly evaluate alternatives to manage our capital structure and market opportunities to enhance our liquidity and provide further operational and strategic flexibility.

Principal Sources of Liquidity. Our principal sources of liquidity on hand include our cash, cash equivalents, and investments, which, as of February 1, 2025, totaled $1.3 billion, as well as the unused portion of our senior secured revolving credit facility (the “Revolving Credit Facility”), to which we and certain of our subsidiaries are parties. The Revolving Credit Facility provides for a total commitment of $300.0 million with a maturity date of October 24, 2028. We principally use the Revolving Credit Facility to support the issuance of letters of credit that arise in the ordinary course of our business and for general corporate purposes. As of February 1, 2025, letters of credit totaling $58.3 million were issued under the Revolving Credit Facility. There were no borrowings outstanding under the Revolving Credit Facility as of February 1, 2025.

Foreign Liquidity. The amount of cash, cash equivalents and short-term investments held by our foreign subsidiaries was $157.9 million as of February 1, 2025. Approximately $92.5 million of future cash generated from these foreign subsidiaries is expected to be repatriated, with any remaining amount continuing to be indefinitely reinvested. A deferred tax liability related to the expected repatriation amount was accrued in fiscal 2023. There are no other significant temporary differences related to our investment in the foreign subsidiaries for which a deferred tax liability has not been recognized.

Stock Repurchase Authorization. On October 2, 2024, we announced that our Board of Directors authorized a program to repurchase up to $1.0 billion of our common stock, which replaced in its entirety the previous stock repurchase program authorized in fiscal 2022. During the first three months of fiscal 2025, we repurchased $79.2 million of our common stock under the stock repurchase program, and $920.8 million remained under the current repurchase authorization as of February 1, 2025. The amount and timing of any further repurchases under our stock repurchase program are subject to a variety of factors including liquidity, cash flow, stock price, and general business and market conditions. The program may be modified, suspended, or discontinued at any time. See Note 14 to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report as well as Item 2 of Part II of this report.

Cash Flows

The following table sets forth changes in our cash, cash equivalents and investments in marketable debt securities for the periods indicated (in thousands):

			February 1, 2025						November 2, 2024						Increase (Decrease)
Cash and cash equivalents			$	874,749					$	934,863					$	(60,114)
Short-term investments in marketable debt securities			337,320						316,343						20,977
Long-term investments in marketable debt securities			105,035						80,920						24,115
Total cash, cash equivalents, and investments in marketable debt securities			$	1,317,104					$	1,332,126					$	(15,022)

Cash, cash equivalents and investments decreased by $15.0 million during the first three months of fiscal 2025. Cash from operations generated $103.7 million which was partially offset by the following: (i) cash used for stock repurchases under our stock repurchase program of $81.2 million; (ii) cash used to fund our investing activities for capital expenditures totaling $26.9 million; and (iii) stock repurchases on vesting of our stock unit awards to employees relating to tax withholding of $25.5 million. In addition to cash provided by operating activities, proceeds from the issuance of equity under our employee stock purchase plan provided $17.1 million in cash during the three months ended February 1, 2025.

Cash Provided By Operating Activities

The following sections set forth the components of our $103.7 million of cash provided by operating activities during the first three months of fiscal 2025 as net income (adjusted for non-cash charges) of $111.7 million was partially offset by a net use of cash in operating assets and liabilities of $8.0 million.

Net income (adjusted for non-cash charges)

The following table sets forth our net income (adjusted for non-cash charges) during the period (in thousands):

			Three Months Ended
			February 1, 2025
Net income			$	44,572
Adjustments for non-cash charges:
Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements			24,679
Share-based compensation expense			40,806
Amortization of intangible assets			8,778
Deferred taxes			(17,085)
Provision for inventory excess and obsolescence			10,918
Provision for warranty			5,697
Other			(6,655)
Net income (adjusted for non-cash charges)			$	111,710

Operating Assets and Liabilities

Operating asset and liability requirements increased by $8.0 million during the period. The following table sets forth the major components of the cash changes in operating assets and liabilities (in thousands):

			Three Months Ended
			February 1, 2025
Accounts receivable			$	(33,454)
Inventories			(35,844)
Prepaid expenses and other			92,036
Accounts payable, accruals, and other obligations			(49,577)
Deferred revenue			20,311
Operating lease assets and liabilities, net			(1,459)
Total cash consumed in operating assets and liabilities			$	(7,987)

As compared to the end of fiscal 2024, for the first three months of fiscal 2025:

• The change in accounts receivable primarily reflects the timing of cash collections from customers;

• The change in inventories primarily reflects increases in raw materials;

• The change in prepaid expenses and other primarily reflects reduced refundable cash advances to a third-party contract manufacturer and lower non-trade receivables;

• The change in accounts payable, accruals, and other obligations primarily reflects the timing of payments to suppliers, our annual cash incentive compensation plans and income taxes;

• The change in deferred revenue represents an increase in advanced payments received on multi-year maintenance contracts from customers prior to revenue recognition; and

• The change in operating lease assets and liabilities, net, represents cash paid for operating lease payments in excess of operating lease costs.

Our days sales outstanding (“DSOs”) increased from 88 for the first three months of fiscal 2024 to 90 for the first three months of fiscal 2025. The calculation of DSOs includes accounts receivables, net and contract assets for unbilled receivables, net included in prepaid expenses and other. Our inventory turns increased from 1.9 for the first three months of fiscal 2024 to 2.3 for the first three months of fiscal 2025.

Cash Paid for Interest, Net

The following table sets forth the cash paid for interest, net, during the period (in thousands):

			Three Months Ended
			February 1, 2025
2030 Term Loan terminated January 17, 2025(1)			$	18,639
Refinanced 2030 Term Loan due October 28, 2030(2)			9
2030 Senior Notes due January 31, 2030(3)			8,000
Interest rate swaps(4)			(2,424)
Revolving Credit Facility(5)			466
Finance leases			869
Cash paid during period			$	25,559

(1) The 2030 Term Loan bore interest at SOFR for the chosen borrowing period plus a spread of 2.00% subject to a minimum SOFR rate of 0.00%.

(2) Interest on the Refinanced 2030 Term Loan is payable periodically based on the interest period selected for borrowing. The Refinanced 2030 Term Loan bears interest at SOFR for the chosen borrowing period plus a spread of 1.75% subject to a minimum SOFR rate of 0.00%. At the end of the first quarter of fiscal 2025, the interest rate on the Refinanced 2030 Term Loan was 6.05%.

(3) The 2030 Notes bear interest at a rate of 4.00% per annum. Interest is payable on the 2030 Notes in arrears on January 31 and July 31 of each year.

(4) Our interest rate swaps fix the SOFR rate for $350.0 million of our Term Loan at 3.47% through January 2028 and another $350.0 million of our Term Loan at 2.968% through September 2025.

(5) During the first three months of fiscal 2025, we utilized the Revolving Credit Facility to issue certain standby letters of credit and paid nominal commitment fees, interest expense and other administrative charges primarily relating to the Revolving Credit Facility.

For additional information about our debt and interest rate swaps, see Notes 10 and 11 to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report.

Contractual Obligations

Our contractual obligations have not changed materially since November 2, 2024. For a summary of our contractual obligations, see Item 7 of Part II of the 2024 Annual Report.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates have not changed materially since November 2, 2024. For a discussion of our critical accounting policies and estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II of our 2024 Annual Report.

Effects of Recent Accounting Pronouncements

See Note 2 to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report for information relating to our discussion of the effects of recent accounting pronouncements.