Income Taxes (Tables)

12 Months Ended

Oct. 31, 2019

Income Tax Disclosure [Abstract]

Provision (benefit) for income taxes

For the fiscal periods indicated, the provision (benefit) for income taxes consists of the following (in thousands):

	Year Ended October 31,
	2019			2018					2017
Provision (benefit) for income taxes:
Current:
Federal	$	13,143		$	8,327				$	—
State	16,945			8,219					6,342
Foreign	9,816			13,294					14,563
Total current	39,904			29,840					20,905
Deferred:
Federal	31,872			475,951			(1	)	(1,047,699		)	(1	)
State	(9,159		)	(8,202		)			(77,429		)	(1	)
Foreign	(2,861		)	(4,118		)			(1,604		)
Total deferred	19,852			463,631					(1,126,732		)
Provision (benefit) for income taxes	$	59,756		$	493,471				$	(1,105,827	)

_________________________________

(1) The income tax expense for 2018 includes the impact of the remeasurement of the net deferred tax assets and the federal transition tax. See further discussion below. The income tax benefit for fiscal 2017 includes the reversal of a significant portion of the valuation allowance on Ciena’s deferred tax assets in the U.S.

Income before provision (benefit) for income taxes

For the fiscal periods indicated, income before provision for income taxes consists of the following (in thousands):

	Year Ended October 31,
	2019		2018		2017
United States	$	256,461	$	106,972	$	114,242
Foreign	56,729		41,809		41,884
Total	$	313,190	$	148,781	$	156,126

Tax provision (benefit) reconciles to the amount computed by multiplying income or loss before income taxes by the U.S. federal statutory rate of 35%

For the periods indicated, the tax provision (benefit) reconciles to the amount computed by multiplying income before income taxes by the U.S. federal statutory rate of 21% for fiscal 2019, 23.41% for fiscal 2018 (see note below), and 35% for fiscal 2017 as follows:

	Year Ended October 31,
	2019		2018		2017
Provision at statutory rate	21.00	%	23.41	%	35.00	%
Deferred tax assets remeasurement	—	%	294.56	%	—	%
Base Erosion and Anti-Abuse Tax	3.60	%	—	%	—	%
State taxes	2.18	%	(0.16	)%	2.29	%
Foreign taxes	(0.37	)%	1.22	%	(0.35	)%
Research and development credit	(7.53	)%	(8.80	)%	(15.38	)%
Non-deductible compensation	1.01	%	3.39	%	3.45	%
Fair value of debt conversion liability	—	%	1.90	%	—	%
Transition tax	0.29	%	23.23	%	—	%
Valuation allowance	(2.13	)%	(11.95	)%	(739.97	)%
Other	1.03	%	4.88	%	6.67	%
Effective income tax rate	19.08	%	331.68	%	(708.29	)%

Significant components of deferred tax assets and liabilities

The significant components of DTA are as follows (in thousands):

	October 31,
	2019			2018
Deferred tax assets:
Reserves and accrued liabilities	$	54,183		$	40,959
Depreciation and amortization	455,007			353,838
NOL and credit carry forward	302,325			483,495
Other	39,405			9,397
Gross deferred tax assets	850,920			887,689
Valuation allowance	(135,978		)	(142,650		)
Deferred tax asset, net of valuation allowance	$	714,942		$	745,039

Reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):

	Amount
Unrecognized tax benefits at October 31, 2016	$	30,668
Increase related to positions taken in prior period	122
Increase related to positions taken in current period	111,412
Reductions related to expiration of statute of limitations	(620		)
Unrecognized tax benefits at October 31, 2017	141,582
Decrease related to positions taken in prior period	(46,400		)
Increase related to positions taken in current period	2,482
Reductions related to expiration of statute of limitations	(1,301		)
Unrecognized tax benefits at October 31, 2018	96,363
Increase related to positions taken in prior period	1,959
Reductions related to settlements with taxing authorities	(1,224		)
Reductions related to expiration of statute of limitations	(2,494		)
Unrecognized tax benefits at October 31, 2019	$	94,604

Summary of valuation allowance against the gross deferred tax assets

The following table summarizes the activity in Ciena’s valuation allowance against its gross deferred tax assets (in thousands):

Year ended	Beginning						Ending
October 31,	Balance		Additions		Deductions		Balance
2017	$	1,489,780	$	—	$	1,303,882	$	185,898
2018	$	185,898	$	23,720	$	66,968	$	142,650
2019	$	142,650	$	27,459	$	34,131	$	135,978