Other Balance Sheet Details

3 Months Ended

Apr. 30, 2011

Other Balance Sheet Details [Abstract]

OTHER BALANCE SHEET DETAILS

(12) OTHER BALANCE SHEET DETAILS

     As of the dates indicated, other long-term assets are comprised of the following (in thousands):

	October 31,		April 30,
	2010		2011
Maintenance spares inventory, net	$	53,654	$	50,582
Deferred debt issuance costs, net		28,853		26,149
Embedded redemption feature		4,220		13,380
Restricted cash		37,796		39,869
Other		5,296		5,230
	$	129,819	$	135,210

     Deferred debt issuance costs are amortized using the straight line method, which approximates the effect of the effective interest rate method, through the maturity of the related debt. Amortization of debt issuance costs, which is included in interest expense, was $1.5 million and $2.7 million during the first six months of fiscal 2010 and fiscal 2011, respectively.

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

	October 31,		April 30,
	2010		2011
Warranty	$	54,372	$	47,252
Compensation, payroll related tax and benefits		39,391		50,312
Vacation		20,412		27,028
Current restructuring liabilities		2,784		4,374
Interest payable		4,345		4,357
Other		72,690		57,295
	$	193,994	$	190,618

     The following table summarizes the activity in Ciena’s accrued warranty for the fiscal periods indicated (in thousands):

										Balance at
Six months ended	Beginning									end of
April 30,	Balance		Acquired		Provisions		Settlements			period
2010	$	40,196		26,000		8,847		(10,362	)	$	64,681
2011	$	54,372		-		5,646		(12,766	)	$	47,252

     During the first quarter of fiscal 2010, Ciena recorded an adjustment to reduce its warranty liability and cost of goods sold by $3.3 million, to correct an overstatement of warranty expenses related to prior periods. The adjustment related to an error in the methodology of computing the annual failure rate used to calculate the warranty accrual. There was no tax impact as a result of this adjustment. Ciena believes this adjustment is not material to its financial statements for prior annual or interim periods.

     As a result of the substantial completion of integration activities related to the MEN Acquisition, Ciena consolidated certain support operations and processes during the first quarter of fiscal 2011, resulting in a reduction in costs to service future warranty obligations. As a result of the lower expected costs, Ciena reduced its warranty liability by $6.9 million, which had the effect of reducing the provisions in the table above.

     As of the dates indicated, deferred revenue is comprised of the following (in thousands):

	October 31,			April 30,
	2010			2011
Products	$	31,187		$	39,001
Services		73,862			85,047
		105,049			124,048
Less current portion		(75,334	)		(99,187	)
Long-term deferred revenue	$	29,715		$	24,861