INVENTORIES

3 Months Ended

Jan. 27, 2024

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


	January 27, 2024		October 28, 2023
Raw materials	$	571,666	$	664,797
Work-in-process	60,644		55,242
Finished goods	369,771		314,168
Deferred cost of goods sold	36,824		66,634
Gross inventories	1,038,905		1,100,841
Reserve for inventory excess and obsolescence	(54,019)		(50,003)
Inventories, net	$	984,886	$	1,050,838

Ciena has been expanding its manufacturing capacity and had been 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 upon the easing of supply constraints for certain common components. During the first quarter of fiscal 2024 Ciena reduced its raw materials inventory of components due to the consumption of raw materials in excess of purchases. The increase in finished goods inventories resulted primarily from planned fulfillment of customer advance orders for which some deliveries have been rescheduled outside of the first quarter of fiscal 2024.

Ciena makes estimates about future customer demand for its products when establishing the appropriate reserve for excess and obsolete inventory. For the periods presented, future demand was calculated using both customer backlog and future forecasted sales. 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 the first three months of fiscal 2024, Ciena recorded a provision for inventory excess and obsolescence of $10.4 million, 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 disposal activities.