LEASES

12 Months Ended

Oct. 28, 2023

Leases [Abstract]

LEASES

LEASES

Ciena leases over 1.1 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 leases smaller engineering facilities in the United States, Canada, and Europe. 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 9 years. Certain leases provide for options to extend up to 10 years and/or options to terminate within 4 years.

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

	Classification	Balance at October 28, 2023		Balance at October 29, 2022
Operating leases:
Operating ROU Assets	Operating right-of-use assets	$	35,140	$	45,108
Operating lease liabilities	Operating lease liabilities and Long-term operating lease liabilities	$	49,914	$	61,317
Finance leases:
Buildings, gross	Equipment, building, furniture and fixtures, net	$	67,904	$	69,247
Less: accumulated depreciation	Equipment, building, furniture and fixtures, net	(30,079)		(26,266)
Buildings, net		$	37,825	$	42,981
Finance lease liabilities	Accrued liabilities and other short-term obligations and other long-term obligations	$	52,145	$	56,934

ROU assets that involve subleased or vacant space aggregate $7.5 million as of October 28, 2023. Finance lease buildings, net, that involve subleased or vacant space aggregate $6.0 million as of October 28, 2023. 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.

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 28, 2023		October 29, 2022		October 30, 2021
Operating lease costs	Operating expense	$	16,080	$	17,966	$	16,602
Finance lease cost:
Amortization of finance ROU asset	Operating expense	4,448		4,592		4,773
Interest on finance lease liabilities	Interest expense	4,069		4,601		4,882
Total finance lease cost		8,517		9,193		9,655
Non-capitalized lease cost	Operating expense	910		917		1,152
Variable lease cost(1)	Operating expense	3,421		5,898		5,690
Net lease cost(2)		$	28,928	$	33,974	$	33,099

(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 $6.5 million, $12.8 million, and $8.8 million for the fiscal years ended October 28, 2023, October 29, 2022, and October 30, 2021, 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 28, 2023 were as follows (in thousands):

	Operating Leases		Finance Leases		Total
2024	$	18,126	$	7,640	$	25,766
2025	13,568		7,793		21,361
2026	9,951		7,824		17,775
2027	5,563		8,095		13,658
2028	1,516		8,367		9,883
Thereafter	5,796		31,435		37,231
Total lease payments	54,520		71,154		125,674
Less: Imputed interest	(4,606)		(19,009)		(23,615)
Present value of lease liabilities	49,914		52,145		102,059
Less: Current portion of present value of minimum lease payments	16,655		3,953		20,608
Long-term portion of present value of minimum lease payments	$	33,259	$	48,192	$	81,451

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 28, 2023		As of October 29, 2022
Operating leases	4.07		3.85
Finance leases	8.71		9.71
Weighted-average discount rates:
Operating leases	3.88	%	2.97	%
Finance leases	7.56	%	7.56	%

LEASES

LEASES

Ciena leases over 1.1 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 leases smaller engineering facilities in the United States, Canada, and Europe. 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 9 years. Certain leases provide for options to extend up to 10 years and/or options to terminate within 4 years.

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

	Classification	Balance at October 28, 2023		Balance at October 29, 2022
Operating leases:
Operating ROU Assets	Operating right-of-use assets	$	35,140	$	45,108
Operating lease liabilities	Operating lease liabilities and Long-term operating lease liabilities	$	49,914	$	61,317
Finance leases:
Buildings, gross	Equipment, building, furniture and fixtures, net	$	67,904	$	69,247
Less: accumulated depreciation	Equipment, building, furniture and fixtures, net	(30,079)		(26,266)
Buildings, net		$	37,825	$	42,981
Finance lease liabilities	Accrued liabilities and other short-term obligations and other long-term obligations	$	52,145	$	56,934

ROU assets that involve subleased or vacant space aggregate $7.5 million as of October 28, 2023. Finance lease buildings, net, that involve subleased or vacant space aggregate $6.0 million as of October 28, 2023. 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.

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 28, 2023		October 29, 2022		October 30, 2021
Operating lease costs	Operating expense	$	16,080	$	17,966	$	16,602
Finance lease cost:
Amortization of finance ROU asset	Operating expense	4,448		4,592		4,773
Interest on finance lease liabilities	Interest expense	4,069		4,601		4,882
Total finance lease cost		8,517		9,193		9,655
Non-capitalized lease cost	Operating expense	910		917		1,152
Variable lease cost(1)	Operating expense	3,421		5,898		5,690
Net lease cost(2)		$	28,928	$	33,974	$	33,099

(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 $6.5 million, $12.8 million, and $8.8 million for the fiscal years ended October 28, 2023, October 29, 2022, and October 30, 2021, 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 28, 2023 were as follows (in thousands):

	Operating Leases		Finance Leases		Total
2024	$	18,126	$	7,640	$	25,766
2025	13,568		7,793		21,361
2026	9,951		7,824		17,775
2027	5,563		8,095		13,658
2028	1,516		8,367		9,883
Thereafter	5,796		31,435		37,231
Total lease payments	54,520		71,154		125,674
Less: Imputed interest	(4,606)		(19,009)		(23,615)
Present value of lease liabilities	49,914		52,145		102,059
Less: Current portion of present value of minimum lease payments	16,655		3,953		20,608
Long-term portion of present value of minimum lease payments	$	33,259	$	48,192	$	81,451

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 28, 2023		As of October 29, 2022
Operating leases	4.07		3.85
Finance leases	8.71		9.71
Weighted-average discount rates:
Operating leases	3.88	%	2.97	%
Finance leases	7.56	%	7.56	%