Income Taxes

9 Months Ended

Jul. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was enacted. The Tax Act significantly revised the U.S. corporate income tax laws by, among other things, lowering the statutory corporate income tax rate from 35% to 21% effective January 1, 2018, implementing a modified territorial tax system, and imposing a mandatory one-time transition tax on accumulated earnings of foreign subsidiaries. The enactment of the Tax Act resulted in Ciena recording a provisional tax expense of $472.8 million in fiscal 2018.

The effective tax rate for the third quarter and nine months ended July 31, 2019 was lower than the effective tax rate for the third quarter and nine months ended July 31, 2018, primarily due to the impact of the Tax Act. The reduction of the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018, required the remeasurement of net deferred tax assets and liabilities (“DTA”). Ciena also recorded U.S. transition tax in the nine months ended July 31, 2018.

As of July 31, 2019, Ciena continues to maintain a valuation allowance primarily related to state and foreign net operating losses and credits that Ciena estimates it will not be able to use. Ciena will continue to monitor its forecasts and results and may adjust the valuation allowance as conditions change.