Other Balance Sheet Details

9 Months Ended

Jul. 31, 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,		July 31,
	2010		2011
Maintenance spares inventory, net	$	53,654	$	50,117
Deferred debt issuance costs, net		28,853		24,815
Embedded redemption feature		4,220		7,600
Restricted cash		37,796		37,951
Other		5,296		5,318
	$	129,819	$	125,801

     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 $2.6 million and $4.0 million during the first nine months of fiscal 2010 and fiscal 2011, respectively.

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

	October 31,		July 31,
	2010		2011
Warranty	$	54,372	$	45,705
Compensation, payroll related tax and benefits		39,391		40,728
Vacation		20,412		27,614
Current restructuring liabilities		2,784		2,692
Interest payable		4,345		10,096
Other		72,690		55,728
	$	193,994	$	182,563

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

										Balance at
Nine months ended	Beginning									end of
July 31,	Balance		Acquired		Provisions		Settlements			period
2010	$	40,196		26,000		16,388		(18,074	)	$	64,510
2011	$	54,372		—		10,538		(19,205	)	$	45,705

     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 expense 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 Business, 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,			July 31,
	2010			2011
Products	$	31,187		$	39,811
Services		73,862			87,479
		105,049			127,290
Less current portion		(75,334	)		(100,988	)
Long-term deferred revenue	$	29,715		$	26,302