INVENTORIES

12 Months Ended

Oct. 29, 2022

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


	October 29, 2022		October 30, 2021
Raw materials	$	664,916	$	175,399
Work-in-process	18,232		10,260
Finished goods	258,584		180,800
Deferred cost of goods sold	41,084		44,765
Gross inventories	982,816		411,224
Reserve for excess and obsolescence	(36,086)		(36,959)
Inventories, net	$	946,730	$	374,265

Ciena has been expanding its manufacturing capacity and 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 when supply constraints ease for certain common components, including integrated circuit components, for which delivery continues to be delayed. The increase in raw materials inventory is related to these steps to mitigate the impact of current supply chain constraints and the global market shortage of semiconductor parts.

Ciena makes estimates about future customer demand for its products when establishing the appropriate reserve for excess and obsolete inventory. For fiscal 2022, future demand was calculated primarily based on customer backlog. 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 fiscal 2022, fiscal 2021 and fiscal 2020, Ciena recorded a provision for excess and obsolescence of $16.2 million, $17.9 million, and $24.7 million, respectively, 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 the sale of previously reserved items and disposal activities.

The following table summarizes the activity in Ciena’s reserve for excess and obsolete inventory for the fiscal years indicated (in thousands):


Year Ended	Beginning Balance		Provisions		Disposals		Ending Balance
October 31, 2020	$	47,322	$	24,701	$	32,386	$	39,637
October 30, 2021	$	39,637	$	17,850	$	20,528	$	36,959
October 29, 2022	$	36,959	$	16,184	$	17,057	$	36,086