Income Taxes

6 Months Ended

May 01, 2021

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The effective tax rate for the quarter and six months ended May 1, 2021 was lower than the effective tax rate for the second quarter and six months ended May 2, 2020, primarily due to an increased deduction for foreign-derived intangible income (“FDII”) as well as a decrease in the foreign effective tax rate.

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.

To better accommodate the requirements of a global business, Ciena is evaluating a plan to reorganize its global supply chain and distribution structure, which would include a legal entity reorganization and related system upgrade. Ciena expects to adopt the plan in the third quarter of fiscal 2021. This reorganization could have a material effect on Ciena’s financial position and operating results, including a significant one-time tax benefit associated with the recognition of a net deferred tax asset and potential reversal of a portion of the valuation allowance.