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Income Taxes | 12 Months Ended
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Sep. 30, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of income before income taxes are (in thousands):
| Fiscal year ended September 30,
| 2019 |  | 2018 (as adjusted)* |  | 2017 (as adjusted)*
United States | $ | 7,981 |  |  | $ | (2,427 | ) |  | $ | 5,229 |
International | 3,164 |  |  | 5,677 |  |  | 4,321 |
Income before income taxes | $ | 11,145 |  |  | $ | 3,250 |  |  | $ | 9,550 |
*Prior period information has been restated for the adoption of ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which we adopted on October 1, 2018. The components of the income tax provision are (in thousands):
| Fiscal year ended September 30,
| 2019 |  | 2018 (as adjusted)* |  | 2017 (as adjusted)*
Current: |  |  |  |  |
Federal | $ | 950 |  |  | $ | 526 |  |  | $ | 312 |
State | 290 |  |  | 57 |  |  | 165 |
Foreign | 746 |  |  | 1,412 |  |  | 1,756 |
Deferred: |  |  |  |  |
U.S. | (825 | ) |  | (536 | ) |  | (1,432 | )
Foreign | 26 |  |  | 160 |  |  | (654 | )
Income tax provision | $ | 1,187 |  |  | $ | 1,619 |  |  | $ | 147 |
*Prior period information has been restated for the adoption of ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which we adopted on October 1, 2018. Net deferred tax asset consists of (in thousands):
| As of September 30,
| 2019 |  | 2018 (as adjusted)*
Non-current deferred tax asset | $ | 7,330 |  |  | $ | 6,600 |
Non-current deferred tax liability | (261 | ) |  | (334 | )
Net deferred tax asset | $ | 7,069 |  |  | $ | 6,266 |
Depreciation and amortization | $ | (480 | ) |  | $ | (856 | )
Inventories | 536 |  |  | 740 |
Compensation costs | 3,675 |  |  | 3,388 |
Other accruals | 3,870 |  |  | 1,422 |
Tax credit carryforwards | 4,911 |  |  | 7,063 |
Valuation allowance | (3,810 | ) |  | (3,291 | )
Identifiable intangible assets | (1,633 | ) |  | (2,298 | )
Other | — |  |  | 98 |
Net deferred tax asset | $ | 7,069 |  |  | $ | 6,266 |
*Prior period information has been restated for the adoption of ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which we adopted on October 1, 2018. As of September 30, 2019, we had $2.4 million of tax carryforwards (net of reserves) related to federal and state research and development tax credits. We also had $2.6 million of carryforwards (net, tax effected) consisting of a U.S. capital loss of $2.2 million, $0.1 million of other U.S. tax attributes, and non-U.S. net operating losses of $0.3 million. The majority of our federal research and development tax credits have a 20-year carryforward period. The state research and development tax credits have a 15-year carryforward period. The majority of our non-U.S. net operating losses have an unlimited carryforward period. Our non-U.S. tax credit carryforwards will expire in 2032. Our U.S. capital loss carryforward will expire in 2020. 12. INCOME TAXES (CONTINUED) Our valuation allowance for certain U.S. and foreign locations was $3.8 million at September 30, 2019 and $3.3 million at September 30, 2018. The increase in valuation allowance is primarily the result of state research and development credits generated. The deferred tax assets realized could vary if there are differences in the timing or amount of future reversals of existing deferred tax liabilities or changes in the amounts of future taxable income. If future taxable income projections are not realized, an additional valuation allowance may be required. This would be reflected as income tax expense at the time that any such change in future taxable income is determined. The reconciliation of the statutory federal income tax amount to our income tax provision is (in thousands):
| Fiscal year ended September 30,
| 2019 |  | 2018 (as adjusted)* |  | 2017 (as adjusted)*
Statutory income tax amount | $ | 2,341 |  |  | $ | 809 |  |  | $ | 3,249 |
Increase (decrease) resulting from: |  |  |  |  |
State taxes, net of federal benefits | 196 |  |  | (71 | ) |  | 124 |
Manufacturing deduction | — |  |  | (364 | ) |  | (150 | )
Transaction costs | — |  |  | 79 |  |  | — |
Employee stock purchase plan | 59 |  |  | 56 |  |  | 79 |
Foreign operations | 225 |  |  | 318 |  |  | (142 | )
Non-deductible executive compensation | 171 |  |  | 27 |  |  | — |
Change in valuation allowance | 520 |  |  | (994 | ) |  | 77 |
Utilization of research and development tax credits | (2,112 | ) |  | (1,971 | ) |  | (1,405 | )
One-time transition tax | — |  |  | 250 |  |  | — |
Deferred balance sheet remeasure | 9 |  |  | 2,727 |  |  | — |
ASU 2016-09 excess stock compensation | (56 | ) |  | 643 |  |  | — |
Contingent consideration | 250 |  |  | 388 |  |  | (1,172 | )
Changes from provision to return | (511 | ) |  | (554 | ) |  | (196 | )
Adjustment of tax contingency reserves | 146 |  |  | 193 |  |  | (370 | )
Other, net | (51 | ) |  | 83 |  |  | 53 |
Income tax provision | $ | 1,187 |  |  | $ | 1,619 |  |  | $ | 147 |
*Prior period information has been restated for the adoption of ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which we adopted on October 1, 2018. The Tax Cuts & Jobs Act of 2017 was enacted in the U.S. on December 22, 2017. We applied the guidance in Staff Accounting Bulletin ("SAB") 118 when accounting for the enactment-date income tax effects of this act in fiscal 2018. At September 30, 2018 we had not fully completed our accounting for the enactment effects of this act. We, however, had recorded a provisional estimate of the effects on our existing deferred tax balances and the one-time transition tax. The provision tax expense recorded in fiscal 2018 was $3.0 million. In the first quarter of fiscal 2019 we completed our accounting for the enactment date income tax effects of this act, and there were no significant adjustments to the provisional amounts recorded in fiscal 2018. In addition, certain provisions of this act became effective for us in fiscal 2019. The estimated tax impacts of these provisions are included in our effective tax rate for the current period. 12. INCOME TAXES (CONTINUED) A reconciliation of the beginning and ending amount of unrecognized tax benefits is (in thousands):
| Fiscal year ended September 30,
| 2019 |  | 2018 |  | 2017
Unrecognized tax benefits at beginning of fiscal year | $ | 1,561 |  |  | $ | 1,335 |  |  | $ | 1,708 |
Increases related to: |  |  |  |  |
Prior year income tax positions | 9 |  |  | 39 |  |  | 21 |
Current year income tax positions | 314 |  |  | 315 |  |  | 257 |
Decreases related to: |  |  |  |  |
Prior year income tax positions | (34 | ) |  | — |  |  | — |
Expiration of statute of limitations | (137 | ) |  | (128 | ) |  | (651 | )
Unrecognized tax benefits at end of fiscal year | $ | 1,713 |  |  | $ | 1,561 |  |  | $ | 1,335 |
The total amount of unrecognized tax benefits ("UTB") at September 30, 2019 that, if recognized, would affect our effective tax rate was $1.6 million. We expect that it is reasonably possible that the total amounts of UTB will decrease by approximately $0.3 million over the next 12 months due to the expiration of various statutes of limitations. Of the $1.7 million of UTB, $1.1 million is included in non-current income taxes payable and $0.6 million is included with non-current deferred tax assets on the Consolidated Balance Sheets at September 30, 2019. We recognize interest and penalties related to income tax matters in income tax expense. During fiscal 2019 and 2018, there were insignificant amounts of interest and penalties related to income tax matters in income tax expense. We accrued interest and penalties related to unrecognized tax benefits of $0.1 million at both September 30, 2019 and 2018. These accrued interest and penalties are included in our non-current income taxes payable on our Consolidated Balance Sheets. We operate in multiple tax jurisdictions both in the U.S. and outside of the U.S. and face audits from various tax authorities regarding transfer pricing, tax credits, and other matters. Accordingly, we must determine the appropriate allocation of income to each of these jurisdictions. This determination requires us to make several estimates and assumptions. Tax audits associated with the allocation of this income, and other complex issues, may require an extended period of time to resolve and may result in adjustments to our income tax balances in those years that are material to our Consolidated Balance Sheets and results of operations. We file a U.S. federal income tax return and income tax returns in various states and foreign jurisdictions. With few exceptions, we are no longer subject to state and local or non-U.S. income tax examinations by tax authorities for years before fiscal year 2015. We are currently under U.S. federal examination for fiscal year 2017, and there is very limited audit activity of our income tax returns in U.S. state jurisdictions or international jurisdictions. At September 30, 2019, the majority of undistributed foreign earnings are taxed under the one time transition tax and the global intangible low-taxed income ("GILTI") provision of the Tax Cuts and Jobs Act of 2017. Additionally, the previously un-taxed accumulated undistributed foreign earnings from fiscal 2018 are still permanently reinvested and, as such, we have not accrued additional U.S. tax. It is our position that the earnings of our foreign subsidiaries are to be reinvested indefinitely to fund current operations and provide for future international expansion opportunities and only repatriate earnings to the extent that U.S. taxes have already been recorded. As of September 30, 2019, we are permanently reinvested with respect to previously taxed accumulated earnings in all jurisdictions. Although we have no current need to repatriate historical foreign earnings that have not been taxed in the U.S., if we change our assertion from indefinitely reinvesting undistributed foreign earnings, we would have to accrue applicable taxes. The amount of any taxes and the application of any tax credits would be determined based on the income tax laws at the time of such repatriation. Under current tax law, we estimate the unrecognized tax liability to be immaterial.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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