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Leases Leases
 3 Months Ended
Jan. 31, 2020
Leases [Abstract]  
Leases LEASES

Ciena leases over 1.4 million square feet of facilities globally related to the ongoing operations of its business segments and related functions. Ciena’s principal executive offices 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 and/or service delivery facilities located in San Jose, California; Petaluma, California; Alpharetta, Georgia; Quebec, Canada; Austin, Texas; 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 13 years. Certain leases provide for options to extend up to 10 years and/or options to terminate within eight years.

As previously disclosed in Note 2, the restructuring reserve liability related to our subleased space and vacated space for which subleases are being pursued was $11.1 million as of October 31, 2019. Upon Ciena’s adoption of ASC 842 on November 1, 2019, the existing Accrued liabilities and other short-term obligations and Other long-term obligations were reclassified as a reduction of the Operating right-of-use assets recorded in accordance with the updated guidance.

Leases included in the Condensed Consolidated Balance Sheets were as follows:
 
Classification
 
As of January 31, 2020
Operating leases:
 
 
 
Operating ROU Assets
Operating right-of-use assets
 
$
50,148

Operating lease liabilities
Operating lease liabilities and Long-term operating lease liabilities
 
71,956

Finance leases:
 
 
 
Buildings, gross
Equipment, building, furniture and fixtures, net
 
$
71,235

Less: accumulated depreciation
Equipment, building, furniture and fixtures, net
 
(14,548
)
Buildings, net
 
 
$
56,687

Finance lease liabilities
Accrued liabilities and other short-term obligations and other long-term obligations
 
$
66,831



The components of lease expense included in the Condensed Consolidated Statement of Operations were as follows:
 
 
 
Three months ended
 
Classification
 
January 31, 2020
Operating lease costs
Operating expense
 
$
4,457

Finance lease cost:
 
 
 
Amortization of finance ROU asset
Operating expense
 
1,140

Interest on finance lease liabilities
Interest expense
 
1,244

Total finance lease cost
 
 
2,384

Non-capitalized lease cost
Operating expense
 
621

Variable lease cost(1)
Operating expense
 
1,311

Net lease cost(2)
 
 
$
8,773


(1) Variable lease costs includes 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 $4.3 million for the three months ended January 31, 2020, related to amortization of leasehold improvements.

Lease expense (excluding amortization of leasehold improvements of $2.4 million) incurred in the three months ended January 31, 2019 was $6.8 million.

Future minimum lease payments and the present value of minimum lease payments related to operating and finance leases as of January 31, 2020 were as follows:
 
Operating Leases
 
Finance Leases
 
Total
Remaining fiscal 2020
$
15,778

 
$
7,512

 
$
23,290

2021
18,261

 
7,491

 
25,752

2022
13,440

 
7,932

 
21,372

2023
10,157

 
8,008

 
18,165

2024
8,052

 
8,024

 
16,076

Thereafter
12,205

 
64,616

 
76,821

Total lease payments
77,893

 
103,583

 
181,476

Less: Imputed interest
(5,937
)
 
(36,752
)
 
(42,689
)
Present value of lease liabilities
71,956

 
66,831

 
138,787

Less: Current portion of present value of minimum lease payments
(18,623
)
 
(2,710
)
 
(21,333
)
Long-term portion of present value of minimum lease payments
$
53,333

 
$
64,121

 
$
117,454



As of January 31, 2020, the weighted average remaining lease terms and weighted average discount rates for operating and finance leases were as follows:
 
 
Weighted-average remaining lease term in years:
 
Operating leases
4.91

Finance leases
12.62

Weighted-average discount rates:
 
Operating leases
2.39
%
Finance leases
7.56
%


There was no significant non-cash lease activity for the three months ended January 31, 2020.

As of October 31, 2019, minimum aggregate rentals under operating leases were as follows:
 
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
 
Total
Operating leases (1)
 
$
28,776

 
$
24,184

 
$
16,767

 
$
13,393

 
$
10,632

 
$
26,110

 
$
119,862


1) The amount for operating lease commitments above include estimated variable expenses relating to insurance, taxes, maintenance and other costs required by the applicable operating lease.
Leases LEASES

Ciena leases over 1.4 million square feet of facilities globally related to the ongoing operations of its business segments and related functions. Ciena’s principal executive offices 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 and/or service delivery facilities located in San Jose, California; Petaluma, California; Alpharetta, Georgia; Quebec, Canada; Austin, Texas; 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 13 years. Certain leases provide for options to extend up to 10 years and/or options to terminate within eight years.

As previously disclosed in Note 2, the restructuring reserve liability related to our subleased space and vacated space for which subleases are being pursued was $11.1 million as of October 31, 2019. Upon Ciena’s adoption of ASC 842 on November 1, 2019, the existing Accrued liabilities and other short-term obligations and Other long-term obligations were reclassified as a reduction of the Operating right-of-use assets recorded in accordance with the updated guidance.

Leases included in the Condensed Consolidated Balance Sheets were as follows:
 
Classification
 
As of January 31, 2020
Operating leases:
 
 
 
Operating ROU Assets
Operating right-of-use assets
 
$
50,148

Operating lease liabilities
Operating lease liabilities and Long-term operating lease liabilities
 
71,956

Finance leases:
 
 
 
Buildings, gross
Equipment, building, furniture and fixtures, net
 
$
71,235

Less: accumulated depreciation
Equipment, building, furniture and fixtures, net
 
(14,548
)
Buildings, net
 
 
$
56,687

Finance lease liabilities
Accrued liabilities and other short-term obligations and other long-term obligations
 
$
66,831



The components of lease expense included in the Condensed Consolidated Statement of Operations were as follows:
 
 
 
Three months ended
 
Classification
 
January 31, 2020
Operating lease costs
Operating expense
 
$
4,457

Finance lease cost:
 
 
 
Amortization of finance ROU asset
Operating expense
 
1,140

Interest on finance lease liabilities
Interest expense
 
1,244

Total finance lease cost
 
 
2,384

Non-capitalized lease cost
Operating expense
 
621

Variable lease cost(1)
Operating expense
 
1,311

Net lease cost(2)
 
 
$
8,773


(1) Variable lease costs includes 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 $4.3 million for the three months ended January 31, 2020, related to amortization of leasehold improvements.

Lease expense (excluding amortization of leasehold improvements of $2.4 million) incurred in the three months ended January 31, 2019 was $6.8 million.

Future minimum lease payments and the present value of minimum lease payments related to operating and finance leases as of January 31, 2020 were as follows:
 
Operating Leases
 
Finance Leases
 
Total
Remaining fiscal 2020
$
15,778

 
$
7,512

 
$
23,290

2021
18,261

 
7,491

 
25,752

2022
13,440

 
7,932

 
21,372

2023
10,157

 
8,008

 
18,165

2024
8,052

 
8,024

 
16,076

Thereafter
12,205

 
64,616

 
76,821

Total lease payments
77,893

 
103,583

 
181,476

Less: Imputed interest
(5,937
)
 
(36,752
)
 
(42,689
)
Present value of lease liabilities
71,956

 
66,831

 
138,787

Less: Current portion of present value of minimum lease payments
(18,623
)
 
(2,710
)
 
(21,333
)
Long-term portion of present value of minimum lease payments
$
53,333

 
$
64,121

 
$
117,454



As of January 31, 2020, the weighted average remaining lease terms and weighted average discount rates for operating and finance leases were as follows:
 
 
Weighted-average remaining lease term in years:
 
Operating leases
4.91

Finance leases
12.62

Weighted-average discount rates:
 
Operating leases
2.39
%
Finance leases
7.56
%


There was no significant non-cash lease activity for the three months ended January 31, 2020.

As of October 31, 2019, minimum aggregate rentals under operating leases were as follows:
 
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
 
Total
Operating leases (1)
 
$
28,776

 
$
24,184

 
$
16,767

 
$
13,393

 
$
10,632

 
$
26,110

 
$
119,862


1) The amount for operating lease commitments above include estimated variable expenses relating to insurance, taxes, maintenance and other costs required by the applicable operating lease.