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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 29, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    
Commission File Number: 001-36250
Ciena Corporation
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)
7035 Ridge Road, Hanover, MD
(Address of principal executive offices)

23-2725311
(I.R.S. Employer Identification No.)
21076
(Zip Code)

(410694-5700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareCIENNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
ClassOutstanding at March 4, 2022
Common Stock, par value $0.01 per share152,126,441



CIENA CORPORATION
INDEX
FORM 10-Q
 PAGE
NUMBER
 
 
2


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Quarter Ended
 January 29,January 30,
 20222021
Revenue: 
Products$665,007 $597,220 
Services179,436 159,910 
Total revenue844,443 757,130 
Cost of goods sold: 
Products372,565 315,098 
Services87,691 84,141 
Total cost of goods sold460,256 399,239 
Gross profit384,187 357,891 
Operating expenses: 
Research and development148,409 132,741 
Selling and marketing118,881 97,278 
General and administrative44,498 39,993 
Significant asset impairments and restructuring costs3,409 5,867 
Amortization of intangible assets8,918 5,910 
Acquisition and integration costs68 307 
Total operating expenses324,183 282,096 
Income from operations60,004 75,795 
Interest and other income (loss), net3,686 (1,121)
Interest expense(8,648)(7,360)
Income before income taxes55,042 67,314 
Provision for income taxes9,219 11,966 
Net income$45,823 $55,348 
Basic net income per common share$0.30 $0.36 
Diluted net income per potential common share$0.29 $0.35 
Weighted average basic common shares outstanding154,151 155,174 
Weighted average dilutive potential common shares outstanding155,807 156,583 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


3


CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
Quarter Ended
 January 29,January 30,
 20222021
Net income $45,823 $55,348 
Change in unrealized loss on available-for-sale securities, net of tax (774)(49)
Change in unrealized gain (loss) on foreign currency forward contracts, net of tax(5,339)6,617 
Change in unrealized gain on forward starting interest rate swaps, net of tax3,926 1,382 
Change in cumulative translation adjustments(13,157)15,861 
Other comprehensive gain (loss)(15,344)23,811 
Total comprehensive income$30,479 $79,159 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


4


CIENA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
January 29,
2022
October 30,
2021
ASSETS 
Current assets: 
Cash and cash equivalents$1,118,636 $1,422,546 
Short-term investments460,368 181,483 
Accounts receivable, net of allowance for credit losses of $9.4 million and $10.9 million as of January 29, 2022 and October 30, 2021, respectively.
795,247 884,958 
Inventories, net457,604 374,265 
Prepaid expenses and other332,259 325,654 
Total current assets3,164,114 3,188,906 
Long-term investments88,640 70,038 
Equipment, building, furniture and fixtures, net276,120 284,968 
Operating right-of-use assets43,340 44,285 
Goodwill322,822 311,645 
Other intangible assets, net101,026 65,314 
Deferred tax asset, net799,593 800,180 
Other long-term assets104,707 99,891 
      Total assets$4,900,362 $4,865,227 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities: 
Accounts payable$310,107 $356,176 
Accrued liabilities and other short-term obligations299,408 409,285 
Deferred revenue124,956 118,007 
Operating lease liabilities18,927 18,632 
Current portion of long-term debt6,930 6,930 
Total current liabilities760,328 909,030 
Long-term deferred revenue60,670 57,457 
Other long-term obligations159,942 166,803 
Long-term operating lease liabilities39,369 41,564 
Long-term debt, net1,065,263 670,355 
Total liabilities$2,085,572 $1,845,209 
Commitments and contingencies (Note 21)
Stockholders’ equity:
Preferred stock – par value $0.01; 20,000,000 shares authorized; zero shares issued and outstanding
  
Common stock – par value $0.01; 290,000,000 shares authorized; 152,990,723 and 154,858,981 shares issued and outstanding
1,530 1,549 
Additional paid-in capital6,567,474 6,803,162 
Accumulated other comprehensive income (loss)(14,905)439 
Accumulated deficit(3,739,309)(3,785,132)
Total stockholders’ equity2,814,790 3,020,018 
Total liabilities and stockholders’ equity$4,900,362 $4,865,227 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
5


CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
Three Months Ended
 January 29,January 30,
 20222021
Cash flows used in operating activities: 
Net income$45,823 $55,348 
Adjustments to reconcile net income to net cash used in operating activities: 
Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements23,653 23,188 
Share-based compensation expense24,297 18,964 
Amortization of intangible assets12,230 9,642 
Deferred taxes(766)(905)
Provision for inventory excess and obsolescence3,799 5,905 
Provision for warranty2,817 3,239 
Other(8,615)4,277 
Changes in assets and liabilities: 
Accounts receivable87,223 18,862 
Inventories(87,178)(51,020)
Prepaid expenses and other(14,134)(13,835)
Operating right-of-use assets4,120 4,103 
Accounts payable, accruals and other obligations(152,981)(112,170)
Deferred revenue10,417 31,917 
Short- and long-term operating lease liabilities(5,116)(4,834)
Net cash used in operating activities(54,411)(7,319)
Cash flows used in investing activities: 
Payments for equipment, furniture, fixtures and intellectual property(25,804)(20,868)
Purchase of available-for-sale securities(350,465)(71,756)
Proceeds from maturities of available-for-sale securities50,000 51,266 
Settlement of foreign currency forward contracts, net1,346 2,357 
Proceeds from sale of cost method equity investment 4,678 
Acquisition of business, net of cash acquired(56,036) 
Net cash used in investing activities(380,959)(34,323)
Cash flows provided by (used in) financing activities: 
Proceeds from issuance of senior notes400,000  
Payment of long-term debt (1,732)
Payment of debt issuance costs(4,506) 
Payment of finance lease obligations(771)(702)
Shares repurchased for tax withholdings on vesting of stock unit awards(25,150)(19,242)
Repurchases of common stock - repurchase program(250,000)(12,406)
Proceeds from issuance of common stock15,146 13,447 
Net cash provided by (used in) financing activities134,719 (20,635)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(3,259)2,879 
Net decrease in cash, cash equivalents and restricted cash(303,910)(59,398)
Cash, cash equivalents and restricted cash at beginning of period1,422,604 1,088,708 
Cash, cash equivalents and restricted cash at end of period$1,118,694 $1,029,310 
Supplemental disclosure of cash flow information 
Cash paid during the period for interest$7,670 $7,566 
Cash paid during the period for income taxes, net$6,112 $8,798 
Operating lease payments$5,480 $5,387 
Non-cash investing and financing activities 
Purchase of equipment in accounts payable$2,972 $5,935 
Repurchase of common stock in accrued liabilities from repurchase program$ $800 
Operating right-of-use assets subject to lease liability $3,376 $555 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
6


CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)
Common Stock
Shares
Par ValueAdditional
Paid-in-Capital
Accumulated Other
Comprehensive Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
Balance at October 30, 2021154,858,981 $1,549 $6,803,162 $439 $(3,785,132)$3,020,018 
Net income— — — — 45,823 45,823 
Other comprehensive loss— — — (15,344)— (15,344)
Repurchase of common stock - repurchase program(2,698,327)(27)(249,973)— — (250,000)
Issuance of shares from employee equity plans1,169,006 11 15,135 — — 15,146 
Share-based compensation expense— — 24,297 — — 24,297 
Shares repurchased for tax withholdings on vesting of stock unit awards(338,937)(3)(25,147)— — (25,150)
Balance at January 29, 2022152,990,723 $1,530 $6,567,474 $(14,905)$(3,739,309)$2,814,790 
Common Stock
Shares
Par ValueAdditional
Paid-in-Capital
Accumulated Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
Balance at October 31, 2020154,563,005 $1,546 $6,826,531 $(35,358)$(4,283,122)$2,509,597 
Net income— — — — 55,348 55,348 
Other comprehensive income— — — 23,811 — 23,811 
Repurchase of common stock - repurchase program(251,578)(3)(13,203)— — (13,206)
Issuance of shares from employee equity plans1,252,120 12 13,435 — — 13,447 
Share-based compensation expense— — 18,964 — — 18,964 
Shares repurchased for tax withholdings on vesting of stock unit awards(375,602)(3)(19,239)— — (19,242)
Effect of adoption of new accounting standard— — — — (2,206)(2,206)
Balance at January 30, 2021155,187,945 $1,552 $6,826,488 $(11,547)$(4,229,980)$2,586,513 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
7


CIENA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(1) INTERIM FINANCIAL STATEMENTS
The interim financial statements included herein for Ciena Corporation and its wholly owned subsidiaries (“Ciena”) have been prepared by Ciena, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires Ciena to make judgments, assumptions, and estimates that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. The inputs into certain of Ciena’s judgments, assumptions, and estimates reflect, among other things, the information available to Ciena regarding the economic implications of the COVID-19 pandemic, and expectations as to its impact on Ciena’s business. Among other things, these estimates form the basis for judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions. To the extent that there are material differences between Ciena’s estimates and actual results, Ciena’s consolidated financial statements will be affected. In addition, because the duration and severity of COVID-19 pandemic are uncertain, certain of these estimates could require further judgment or modification and therefore carry a higher degree of variability and volatility. As events continue to evolve, Ciena’s estimates may change materially in future periods.
In the opinion of management, the financial statements included in this report reflect all normal recurring adjustments that Ciena considers necessary for the fair statement of the results of operations of Ciena for the interim periods covered and of the financial position of Ciena at the date of the interim balance sheets. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations. The Condensed Consolidated Balance Sheet as of October 30, 2021 was derived from audited financial statements, but does not include all disclosures required by GAAP. However, Ciena believes that the disclosures are adequate to understand the information presented herein. The operating results for interim periods are not necessarily indicative of the operating results for the entire year. These financial statements should be read in conjunction with Ciena’s audited consolidated financial statements and the notes thereto included in Ciena’s annual report on Form 10-K for fiscal 2021 (the “2021 Annual Report”).
Ciena has a 52 or 53-week fiscal year, with quarters ending on the Saturday nearest to the last day of January, April, July and October, respectively, of each year. Fiscal 2022 and 2021 are 52-week fiscal years.

(2) SIGNIFICANT ACCOUNTING POLICIES
Except for the changes in certain policies described below, there have been no material changes to Ciena’s significant accounting policies, compared to the accounting policies described in Note 1, Ciena Corporation and Significant Accounting Policies and Estimates, in Notes to Consolidated Financial Statements in Item 8 of Part II of the 2021 Annual Report.

Newly Issued Accounting Standards - Effective

In December 2019, the Financial Accounting Standards Board (the ”FASB”) issued Accounting Standards Update No. 2019-12 (“ASU 2019-12”), Income Taxes (ASC 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC 740. The amendments also improve consistent application of and simplify GAAP for other areas of ASC 740 by clarifying and amending existing guidance. Most amendments within this standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. ASU 2019-12 is effective for Ciena beginning in the first quarter of fiscal year 2022. Ciena adopted ASU 2019-12 beginning in the first quarter of fiscal 2022 without any material impact on its financial position and results of operations.

In November 2021, the FASB issued ASU No. 2021-10 (“ASU 2021-10”), Government Assistance, to increase transparency of government assistance including the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements. ASU 2021-10 is effective for annual periods beginning after December 15, 2021. Early adoption is permitted. Ciena elected to adopt ASU 2021-10 in the first quarter of fiscal 2022 without any material impact on its financial position and results of operations

In March 2020, the FASB issued ASU No. 2020-04 (“ASU 2020-04”), Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides temporary optional guidance on contract modifications and hedging accounting to ease the financial reporting burdens of the expected market transition from the London
8


Interbank Offered Rate (“LIBOR”) to alternative reference rates. In January 2021, the FASB issued ASU 2021-01, which refines the scope of Topic 848 and clarifies some of its guidance as part of the FASB’s monitoring of global reference rate activities. The new guidance was effective upon issuance and may be applied prospectively through December 31, 2022. Ciena adopted Topic 848 beginning in the first quarter of fiscal 2022 without any material impact on its financial position and results of operations.

Newly Issued Accounting Standards - Not Yet Effective

In October 2021, the FASB issued ASU No. 2021-08 (“ASU 2021-08”), Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers to improve the accounting for acquired revenue contracts with customers in a business combination to address recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. ASU 2021-08 is effective for annual periods beginning after December 15, 2022 on a prospective basis. Early adoption is permitted. Ciena is currently evaluating the impact of this accounting standard update on its condensed consolidated financial statements and related disclosures.

(3)REVENUE
Disaggregation of Revenue

Ciena’s disaggregated revenue represents similar groups that depict the nature, amount, and timing of revenue and cash flows for Ciena’s various offerings. The sales cycle, contractual obligations, customer requirements, and go-to-market strategies may differ for each of its product lines, resulting in different economic risk profiles for each line.

The tables below set forth Ciena’s disaggregated revenue for the respective periods (in thousands):
Quarter Ended January 29, 2022
Networking PlatformsPlatform Software and ServicesBlue Planet Automation Software and ServicesGlobal ServicesTotal
Product lines:
Converged Packet Optical
$540,936 $ $ $ $540,936 
Routing and Switching85,710    85,710 
Platform Software and Services
 72,917   72,917 
Blue Planet Automation Software and Services
  21,110  21,110 
Maintenance Support and Training
   72,491 72,491 
Installation and Deployment
   40,370 40,370 
Consulting and Network Design
   10,909 10,909 
Total revenue by product line
$626,646 $72,917 $21,110 $123,770 $844,443 
Timing of revenue recognition:
Products and services at a point in time
$626,646 $29,682 $8,774 $8,491 673,593 
Services transferred over time 43,235 12,336 115,279 170,850 
Total revenue by timing of revenue recognition
$626,646 $72,917 $21,110 $123,770 $844,443 





9


Quarter Ended January 30, 2021
Networking PlatformsPlatform Software and ServicesBlue Planet Automation Software and ServicesGlobal ServicesTotal
Product lines:
Converged Packet Optical
$512,324 $ $ $ $512,324 
Routing and Switching64,307    64,307 
Platform Software and Services
 49,839   49,839 
Blue Planet Automation Software and Services
  16,934  16,934 
Maintenance Support and Training
   67,630 67,630 
Installation and Deployment
   39,611 39,611 
Consulting and Network Design
   6,485 6,485 
Total revenue by product line
$576,631 $49,839 $16,934 $113,726 $757,130 
Timing of revenue recognition:
Products and services at a point in time
$576,631 $16,062 $5,173 $1,857 $599,723 
Services transferred over time
 33,777 11,761 111,869 157,407 
Total revenue by timing of revenue recognition
$576,631 $49,839 $16,934 $113,726 $757,130 

Ciena reports its sales geographically using the following markets: (i) Americas; (ii) Europe, Middle East and Africa (“EMEA”); and (iii) Asia Pacific, Japan and India (“APAC”). Americas includes activities in North America and South America. Within each geographic area, Ciena maintains specific teams or personnel that focus on a particular region, country, customer or market vertical. These teams include sales management, account salespersons and sales engineers, as well as services professionals and commercial management personnel. The following table reflects Ciena’s geographic distribution of revenue based principally on the relevant location for Ciena’s delivery of products and performance of services.
For the periods below, Ciena’s geographic distribution of revenue was as follows (in thousands):
Quarter Ended
January 29,January 30,
20222021
Geographic distribution:
Americas
$595,144 $496,611 
EMEA
150,785 155,418 
APAC
98,514 105,101 
Total revenue by geographic distribution
$844,443 $757,130 
Ciena’s revenue includes $543.5 million and $439.4 million of United States revenue for the first quarter of fiscal 2022 and 2021, respectively. No other country accounted for 10% or more of total revenue for the periods presented above.
For the periods below, the only customer that accounted for at least 10% of Ciena’s revenue was as follows (in thousands):
Quarter Ended
 January 29,January 30,
 20222021
AT&T$110,876 n/a
n/aDenotes revenue representing less than 10% of total revenue for the period
The customer identified above for the first quarter of fiscal 2022 purchased products and services from each of Ciena’s operating segments.

Networking Platforms revenue reflects sales of Ciena’s Converged Packet Optical and Routing and Switching product lines.
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Converged Packet Optical - includes the 6500 Packet-Optical Platform, the Waveserver® stackable interconnect system, the 6500 Reconfigurable Line System (RLS), the 5400 family of Packet-Optical Platforms, and the Coherent ELS open line system (OLS). This product line also includes sales of the Z-Series Packet-Optical Platform.

Routing and Switching - includes the 3900 family of service delivery platforms and the 5000 family of service aggregation. This product line also includes the 6500 Packet Transport System (PTS), which combines packet switching, control plane operation, and integrated optics, the 8100 Coherent IP networking platforms, and the 8700 Packetwave Platform. This product line also includes the Vyatta virtual routing and switching products acquired from AT&T during the first quarter of fiscal 2022.

The Networking Platforms segment also includes sales of operating system software and enhanced software features embedded in each of the product lines above. Revenue from this segment is included in product revenue on the Condensed Consolidated Statements of Operations. Operating system software and enhanced software features embedded in Ciena hardware are each considered distinct performance obligations for which the revenue is generally recognized upfront at a point in time upon transfer of control.

Platform Software and Services provides analytics, data, and planning tools to assist customers in managing Ciena’s Networking Platforms products in their networks. Ciena’s platform software includes its Manage, Control and Plan (MCP) domain controller solution and its OneControl Unified Management System, as well as planning tools and a number of legacy software solutions that support Ciena’s installed base of network solutions. Platform software-related services revenue includes sales of subscription, installation, support, and consulting services related to Ciena’s software platforms, operating system software and enhanced software features embedded in each of the Networking Platforms product lines above. Revenue from the software portion of this segment is included in product revenue on the Condensed Consolidated Statements of Operations. Revenue from services portions of this segment is included in services revenue on the Condensed Consolidated Statements of Operations.

Blue Planet® Automation Software and Services is a comprehensive, micro-services, standards-based open software suite, together with related services, that enables customers to implement large-scale software and IT-led operations support system (OSS) transformations by transforming legacy networks into “service ready” networks, accelerating the creation, delivery and lifecycle management of new, cloud-based services. Ciena’s Blue Planet Automation Platform includes multi-domain service orchestration (MDSO), inventory management (BPI), route optimization and analysis (ROA), network function virtualization orchestration (NFVO), and unified assurance and analytics (UAA). Services revenue includes sales of subscription, installation, support, consulting and design services related to Ciena’s Blue Planet Automation Platform. Revenue from the software portion of this segment is included in product revenue on the Condensed Consolidated Statements of Operations. Revenue from services portions of this segment is included in services revenue on the Condensed Consolidated Statements of Operations.

Ciena’s software platform revenue typically reflects either perpetual or term-based software licenses, and these sales are considered distinct performance obligations in which revenue is generally recognized upfront at a point in time upon transfer of control. Revenue from software subscription and support is recognized ratably over the period during which the services are performed. Revenue from professional services for solution customization, software and solution support services, consulting and design, and build-operate-transfer services relating to Ciena’s software offerings is recognized over time with Ciena applying the input method to determine the amount of revenue to be recognized in a given period.

Global Services revenue reflects sales of a broad range of Ciena’s services for maintenance support and training, installation and deployment, and consulting and network design activities. Revenue from this segment is included in services revenue on the Condensed Consolidated Statements of Operations.

Ciena’s Global Services are considered a distinct performance obligation where revenue is generally recognized over time. Revenue from maintenance support is recognized ratably over the period during which the services are performed. Revenue from installation and deployment services and consulting and network design services is recognized over time with Ciena applying the input method to determine the amount of revenue to be recognized in a given period. Revenue from training services is generally recognized at a point in time upon completion of the service.

Contract Balances

11


The following table provides information about receivables, contract assets and contract liabilities (deferred revenue) from contracts with customers (in thousands):
Balance at January 29, 2022Balance at October 30, 2021
Accounts receivable, net$795,247 $884,958 
Contract assets for unbilled accounts receivable, net$117,003 $101,355 
Deferred revenue$185,626 $175,464 

Ciena’s contract assets represent unbilled accounts receivable, net where transfer of a product or service has occurred but invoicing is conditional upon completion of future performance obligations. These amounts are primarily related to installation and deployment and professional services arrangements where transfer of control has occurred, but Ciena has not yet invoiced the customer. Contract assets are included in prepaid expenses and other in the Condensed Consolidated Balance Sheets. See Note 11 below.

Contract liabilities consist of deferred revenue and represent advanced payments against non-cancelable customer orders received prior to revenue recognition. Ciena recognized approximately $56.8 million and $46.4 million of revenue during the first three months of fiscal 2022 and 2021, respectively, that was included in the deferred revenue balance as of October 30, 2021 and October 31, 2020, respectively. Revenue recognized due to changes in transaction price from performance obligations satisfied or partially satisfied in previous periods was immaterial during the three months ended January 29, 2022 and January 30, 2021.

Capitalized Contract Acquisition Costs

Capitalized contract acquisition costs consist of deferred sales commissions, and were $29.6 million and $27.6 million as of January 29, 2022 and October 30, 2021, respectively. Capitalized contract acquisition costs were included in prepaid expenses and other and other long-term assets. The amortization expense associated with these costs was $7.0 million and $5.5 million during the first three months of fiscal 2022 and 2021, respectively, and was included in selling and marketing expense on the Condensed Consolidated Statement of Operations.

Remaining Performance Obligations

Remaining Performance Obligations (“RPO”) are comprised of non-cancelable customer purchase orders for products and services that are awaiting transfer of control for revenue recognition under the applicable contract terms. As of January 29, 2022, the aggregate amount of RPO was $2.4 billion. As of January 29, 2022, Ciena expects approximately 89% of the RPO to be recognized as revenue within the next 12 months.

(4)BUSINESS COMBINATIONS

Vyatta Acquisition
On November 1, 2021, Ciena acquired AT&T’s Vyatta Software Technology (“Vyatta”), a provider of software-based virtual routing and switching technology for approximately $56.0 million in cash. This transaction has been accounted for as the acquisition of a business. AT&T is a customer of Ciena, see Note 3 above.
Ciena incurred approximately $1.4 million in acquisition-related costs associated with the acquisition of Vyatta, which were primarily incurred during the fourth quarter of fiscal 2021. These costs and expenses primarily include fees associated with financial, legal and accounting advisors. These costs were recorded in acquisition and integration costs in the Condensed Consolidated Statement of Operations.
The following table summarizes the final purchase price allocation related to the acquisition based on the estimated fair value of the acquired assets and assumed liabilities (in thousands):
12


Amount
Prepaid expenses and other$191 
Equipment, furniture and fixtures694 
Customer relationships and contracts15,800 
Developed technology32,300 
Goodwill11,521 
Accrued liabilities(4,470)
Total purchase consideration$56,036 

Customer relationships and contracts represent agreements with existing Vyatta customers and have an estimated useful life of two years.
Developed technology represents purchased technology that has reached technological feasibility and for which Vyatta had substantially completed development as of the date of acquisition. Fair value was determined using future discounted cash flows related to the projected income stream of the developed technology for a discrete projection period. Cash flows were discounted to their present value as of the closing date. Developed technology is amortized on a straight-line basis over its estimated useful life of five years.
The goodwill generated from the acquisition of Vyatta is primarily related to expected economic synergies. The total goodwill amount was recorded in the Networking Platforms segment. The goodwill is not deductible for income tax purposes.
Pro forma disclosures have not been included due to immateriality. The amounts of revenue and earnings of Vyatta since the acquisition date included in the Condensed Consolidated Statement of Operations for the reporting period are immaterial.


(5) RESTRUCTURING COSTS
Ciena has undertaken a number of restructuring activities intended to reduce expense and to align its workforce and costs with market opportunities, product development and business strategies. The following table sets forth the restructuring activity and balance of the restructuring liability accounts, which are included in accrued liabilities and other short-term obligations on Ciena’s Condensed Consolidated Balance Sheets, for the three months ended January 29, 2022 (in thousands):
Workforce
reduction
Other restructuring activitiesTotal
Balance at October 30, 2021$781 $ $781 
Charges410 
(1)
2,999 
(2)
3,409 
Cash payments(421)(2,999)(3,420)
Balance at January 29, 2022$770 $ $770 
Current restructuring liabilities$770 $ $770 

(1) Reflects employee costs associated with workforce reductions during the three months ended January 29, 2022 as part of a business optimization strategy to improve gross margin, constrain operating expense and redesign certain business processes.
(2) Primarily represents the redesign of certain business processes associated with Ciena’s supply chain and distribution structure reorganization, and costs related to restructured real estate facilities.

The following table sets forth the restructuring activity and balance of the restructuring liability accounts, which are included in accrued liabilities and other short-term obligations on Ciena’s Condensed Consolidated Balance Sheets for the three months ended January 30, 2021 (in thousands):
Workforce
reduction
Other restructuring activitiesTotal
Balance at October 31, 20202,915 $ $2,915 
Charges1,990 
(1)
3,877 
(2)
5,867 
Cash payments(2,994)(3,877)(6,871)
Balance at January 30, 2021$1,911 $ $1,911 
Current restructuring liabilities$1,911 $ $1,911 
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(1) Reflects employee costs associated with workforce reductions during the three months ended January 30, 2021 as part of a business optimization strategy to improve gross margin, constrain operating expense and redesign certain business processes.
(2) Primarily represents variable costs and imputed interest expense related to restructured real estate facilities and the redesign of certain business processes.


(6) INTEREST AND OTHER INCOME (LOSS), NET
The components of interest and other income (loss), net, are as follows (in thousands):
Quarter Ended
January 29,January 30,
20222021
Interest income$754 $534 
Gains (losses) on non-hedge designated foreign currency forward contracts(4,259)4,530 
Foreign currency exchange gains (losses)4,766 (6,918)
Unrealized gain on cost method equity investment4,120  
Other(1,694)733 
Interest and other income (loss), net$3,686 $(1,121)

Ciena Corporation, as the U.S. parent entity, uses the U.S. Dollar as its functional currency; however, some of its foreign branch offices and subsidiaries use local currencies as their functional currencies. Ciena recorded $4.8 million in foreign currency exchange rate gains for the first three months of fiscal 2022 and $6.9 million in foreign currency exchange rate losses during the first three months of fiscal 2021, as a result of monetary assets and liabilities that were transacted in a currency other than Ciena’s functional currency. The related remeasurement adjustments were recorded in interest and other income (loss), net, on the Condensed Consolidated Statements of Operations. From time to time, Ciena uses foreign currency forwards to hedge this type of balance sheet exposure. These forwards are not designated as hedges for accounting purposes, and any net gain or loss associated with these derivatives is reported in interest and other income (loss), net, on the Condensed Consolidated Statements of Operations. During the first three months of fiscal 2022, Ciena recorded losses of $4.3 million and during the first three months of fiscal 2021, Ciena recorded gains of $4.5 million from non-hedge designated foreign currency forward contracts. During the first quarter of fiscal 2021, Ciena recorded an unrealized gain of $4.1 million on its cost method equity investment.

(7) INCOME TAXES

The effective tax rate for the quarter ended January 29, 2022 was lower than the effective tax rate for the quarter ended January 30, 2021, primarily due to an increased tax benefit associated with stock compensation.

Ciena’s future income tax provisions and deferred tax balances may be affected by the amount of pre-tax income, the jurisdictions where it is earned, the existence and ability to utilize tax attributes and changes in tax laws and business reorganizations. Ciena continues to monitor these items and will adopt strategies to address their impact as appropriate.


(8) SHORT-TERM AND LONG-TERM INVESTMENTS

As of the dates indicated, investments are comprised of the following (in thousands):
 January 29, 2022
Amortized CostGross Unrealized
Gains
Gross Unrealized
Losses
Estimated Fair
Value
U.S. government obligations:
Included in short-term investments$460,683 $ $(315)$460,368 
Included in long-term investments89,527  (887)88,640 
$550,210 $ $(1,202)$549,008 
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 October 30, 2021
Amortized CostGross Unrealized
Gains
Gross Unrealized
Losses
Estimated Fair
Value
U.S. government obligations:
Included in short-term investments$181,488 $5 $(10)$181,483 
Included in long-term investments70,225  (187)70,038 
$251,713 $5 $(197)$251,521 


The following table summarizes the final legal maturities of debt investments at January 29, 2022 (in thousands):
Amortized
Cost
Estimated
Fair Value
Less than one year$460,683 $460,368 
Due in 1-2 years89,527 88,640 
 $550,210 $549,008 

(9) FAIR VALUE MEASUREMENTS

    As of the date indicated, the following table summarizes the assets and liabilities that are recorded at fair value on a recurring basis (in thousands):
 January 29, 2022
 Level 1Level 2Level 3Total
Assets: