INVENTORIES

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



	October 31, 2011			July 31, 2012
Raw materials	$	45,333		$	37,976
Work-in-process	13,851			12,622
Finished goods	134,998			185,679
Deferred cost of goods sold	67,665			46,113
	261,847			282,390
Provision for excess and obsolescence	(31,771		)	(37,347		)
	$	230,076		$	245,043

Ciena writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated net realizable value based on assumptions about future demand and market conditions. During the first nine months of fiscal 2012, Ciena recorded a provision for excess and obsolescence of $19.1 million, primarily related to engineering design changes and the discontinuance of certain parts and components used in the manufacture of our Packet-Optical Transport and Packet-Optical Switching products. Deductions from the provision for excess and obsolete inventory relate to disposal activities.