LEASES

12 Months Ended

Oct. 29, 2022

Leases [Abstract]

LEASES

LEASESCiena leases over 1.3 million square feet of facilities globally. Ciena’s corporate headquarters are located in Hanover, Maryland. Ciena’s largest facilities are research and development centers located in Ottawa, Canada and Gurgaon, India. Ciena also has engineering facilities located in San Jose, California; Alpharetta, Georgia; Quebec, Canada; and Pune and Bangalore,

India. In addition, Ciena leases various smaller offices in regions throughout the world to support sales and services operations. Office facilities are leased under various non-cancelable operating or finance leases. Ciena's current leases have remaining terms that vary up to 10 years. Certain leases provide for options to extend up to 10 years and/or options to terminate within four years.

Leases included in the Consolidated Balance Sheets for the fiscal periods indicated were as follows (in thousands):

	Classification	Balance at October 29, 2022		Balance at October 30, 2021
Operating leases:
Operating ROU Assets	Operating right-of-use assets	$	45,108	$	44,285
Operating lease liabilities	Operating lease liabilities and Long-term operating lease liabilities	$	61,317	$	60,196
Finance leases:
Buildings, gross	Equipment, building, furniture and fixtures, net	$	69,247	$	76,123
Less: accumulated depreciation	Equipment, building, furniture and fixtures, net	(26,266)		(24,027)
Buildings, net		$	42,981	$	52,096
Finance lease liabilities	Accrued liabilities and other short-term obligations and other long-term obligations	$	56,934	$	66,203

ROU assets that involve subleased or vacant space aggregate $7.1 million as of October 29, 2022. Finance lease buildings, net, that involve subleased or vacant space aggregate $6.8 million as of October 29, 2022. These assets may become impaired if tenants are unable to service their obligations under the sublease, and/or if the estimates as to occupancy are not realized, either of which may be more likely as COVID-19 impacts evolve.

For the periods indicated, the components of lease expense included in the Consolidated Statements of Operations were as follows (in thousands):

		Year Ended		Year Ended		Year Ended
	Classification	October 29, 2022		October 30, 2021		October 31, 2020
Operating lease costs	Operating expense	$	17,966	$	16,602	$	17,544
Finance lease cost:
Amortization of finance ROU asset	Operating expense	4,592		4,773		4,465
Interest on finance lease liabilities	Interest expense	4,601		4,882		4,777
Total finance lease cost		9,193		9,655		9,242
Non-capitalized lease cost	Operating expense	917		1,152		2,976
Variable lease cost(1)	Operating expense	5,898		5,690		5,185
Net lease cost(2)		$	33,974	$	33,099	$	34,947

(1) Variable lease costs include expenses relating to insurance, taxes, maintenance and other costs required by the applicable operating lease. Variable lease costs are determined by whether they are to be included in base rent and if amounts are based on a consumer price index.

(2) Excludes other operating expense of $12.8 million, $8.8 million, and $11.0 million for the fiscal years ended October 29, 2022, October 30, 2021, and October 31, 2020, respectively, related to amortization of leasehold improvements.

Future minimum lease payments and the present value of minimum lease payments related to operating and finance leases as of October 29, 2022 were as follows (in thousands):

	Operating Leases		Finance Leases		Total
2023	$	20,401	$	7,791	$	28,192
2024	16,795		7,791		24,586
2025	12,387		7,947		20,334
2026	8,879		7,979		16,858
2027	4,435		8,255		12,690
Thereafter	2,245		40,588		42,833
Total lease payments	65,142		80,351		145,493
Less: Imputed interest	(3,825)		(23,417)		(27,242)
Present value of lease liabilities	61,317		56,934		118,251
Less: Current portion of present value of minimum lease payments	18,925		3,758		22,683
Long-term portion of present value of minimum lease payments	$	42,392	$	53,176	$	95,568

The weighted average remaining lease terms and weighted average discount rates for operating and finance leases were as follows (in thousands):

Weighted-average remaining lease term in years:	As of October 29, 2022		As of October 30, 2021
Operating leases	3.85		4.06
Finance leases	9.71		10.71
Weighted-average discount rates:
Operating leases	2.97	%	2.49	%
Finance leases	7.56	%	7.56	%

LEASES

LEASESCiena leases over 1.3 million square feet of facilities globally. Ciena’s corporate headquarters are located in Hanover, Maryland. Ciena’s largest facilities are research and development centers located in Ottawa, Canada and Gurgaon, India. Ciena also has engineering facilities located in San Jose, California; Alpharetta, Georgia; Quebec, Canada; and Pune and Bangalore,

India. In addition, Ciena leases various smaller offices in regions throughout the world to support sales and services operations. Office facilities are leased under various non-cancelable operating or finance leases. Ciena's current leases have remaining terms that vary up to 10 years. Certain leases provide for options to extend up to 10 years and/or options to terminate within four years.

Leases included in the Consolidated Balance Sheets for the fiscal periods indicated were as follows (in thousands):

	Classification	Balance at October 29, 2022		Balance at October 30, 2021
Operating leases:
Operating ROU Assets	Operating right-of-use assets	$	45,108	$	44,285
Operating lease liabilities	Operating lease liabilities and Long-term operating lease liabilities	$	61,317	$	60,196
Finance leases:
Buildings, gross	Equipment, building, furniture and fixtures, net	$	69,247	$	76,123
Less: accumulated depreciation	Equipment, building, furniture and fixtures, net	(26,266)		(24,027)
Buildings, net		$	42,981	$	52,096
Finance lease liabilities	Accrued liabilities and other short-term obligations and other long-term obligations	$	56,934	$	66,203

ROU assets that involve subleased or vacant space aggregate $7.1 million as of October 29, 2022. Finance lease buildings, net, that involve subleased or vacant space aggregate $6.8 million as of October 29, 2022. These assets may become impaired if tenants are unable to service their obligations under the sublease, and/or if the estimates as to occupancy are not realized, either of which may be more likely as COVID-19 impacts evolve.

For the periods indicated, the components of lease expense included in the Consolidated Statements of Operations were as follows (in thousands):

		Year Ended		Year Ended		Year Ended
	Classification	October 29, 2022		October 30, 2021		October 31, 2020
Operating lease costs	Operating expense	$	17,966	$	16,602	$	17,544
Finance lease cost:
Amortization of finance ROU asset	Operating expense	4,592		4,773		4,465
Interest on finance lease liabilities	Interest expense	4,601		4,882		4,777
Total finance lease cost		9,193		9,655		9,242
Non-capitalized lease cost	Operating expense	917		1,152		2,976
Variable lease cost(1)	Operating expense	5,898		5,690		5,185
Net lease cost(2)		$	33,974	$	33,099	$	34,947

(1) Variable lease costs include expenses relating to insurance, taxes, maintenance and other costs required by the applicable operating lease. Variable lease costs are determined by whether they are to be included in base rent and if amounts are based on a consumer price index.

(2) Excludes other operating expense of $12.8 million, $8.8 million, and $11.0 million for the fiscal years ended October 29, 2022, October 30, 2021, and October 31, 2020, respectively, related to amortization of leasehold improvements.

Future minimum lease payments and the present value of minimum lease payments related to operating and finance leases as of October 29, 2022 were as follows (in thousands):

	Operating Leases		Finance Leases		Total
2023	$	20,401	$	7,791	$	28,192
2024	16,795		7,791		24,586
2025	12,387		7,947		20,334
2026	8,879		7,979		16,858
2027	4,435		8,255		12,690
Thereafter	2,245		40,588		42,833
Total lease payments	65,142		80,351		145,493
Less: Imputed interest	(3,825)		(23,417)		(27,242)
Present value of lease liabilities	61,317		56,934		118,251
Less: Current portion of present value of minimum lease payments	18,925		3,758		22,683
Long-term portion of present value of minimum lease payments	$	42,392	$	53,176	$	95,568

The weighted average remaining lease terms and weighted average discount rates for operating and finance leases were as follows (in thousands):

Weighted-average remaining lease term in years:	As of October 29, 2022		As of October 30, 2021
Operating leases	3.85		4.06
Finance leases	9.71		10.71
Weighted-average discount rates:
Operating leases	2.97	%	2.49	%
Finance leases	7.56	%	7.56	%