INVENTORIES

12 Months Ended

Nov. 02, 2024

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


	November 2, 2024		October 28, 2023
Raw materials	$	542,785	$	664,797
Work-in-process	32,219		55,242
Finished goods	324,697		314,168
Deferred cost of goods sold	27,902		66,634
Gross inventories	927,603		1,100,841
Reserve for excess and obsolescence	(107,173)		(50,003)
Inventories, net	$	820,430	$	1,050,838

Ciena has expanded its manufacturing capacity and accumulating raw materials inventory of components that were 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 fiscal 2024 Ciena reduced its raw materials inventory of components primarily due to the consumption of raw materials previously purchased.

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. 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 fiscal 2024, fiscal 2023 and fiscal 2022, Ciena recorded a provision for excess and obsolescence of $77.3 million, $29.5 million, and $16.2 million, respectively, primarily related to a decrease in the forecasted demand for certain Networking Platforms products primarily sold to communications service providers. Deductions from the provision for excess and obsolete inventory relate primarily to the sale of previously reserved items and disposal activities.

The following table summarizes the activity in Ciena’s reserve for excess and obsolete inventory for the fiscal years indicated (in thousands):


Year Ended	Beginning Balance		Provisions		Disposals		Ending Balance
October 29, 2022	$	36,959	$	16,184	$	17,057	$	36,086
October 28, 2023	$	36,086	$	29,464	$	15,547	$	50,003
November 2, 2024	$	50,003	$	77,341	$	20,171	$	107,173