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INCOME TAXES | 12 Months Ended
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Oct. 29, 2017
INCOME TAXES [Abstract] |
INCOME TAXES | NOTE 10 - INCOME TAXES Income before the income tax provisions consists of the following:
|  | Year Ended |
|  | October 29 2017 |  |  | October 30, 2016 |  |  | November 1, 2015 |
United States |  | $ | (11,544 | ) |  | $ | 6,270 |  |  | $ | 6,646 |
Foreign |  |  | 38,109 |  |  |  | 54,204 |  |  |  | 63,394 |
|  | $ | 26,565 |  |  | $ | 60,474 |  |  | $ | 70,040 |
The income tax provisions consist of the following:
|  | Year Ended |
|  | October 29, 2017 |  |  | October 30, 2016 |  |  | November 1, 2015 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 173 |  |  | $ | 492 |  |  | $ | 160 |
State |  |  | (4 | ) |  |  | (2 | ) |  |  | (109 | )
Foreign |  |  | 3,474 |  |  |  | 8,115 |  |  |  | 9,729 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | - |  |  |  | - |  |  |  | - |
State |  |  | 15 |  |  |  | 10 |  |  |  | 7 |
Foreign |  |  | 1,618 |  |  |  | (3,817 | ) |  |  | 3,394 |
Total |  | $ | 5,276 |  |  | $ | 4,798 |  |  | $ | 13,181 |
The income tax provisions differ from the amount computed by applying the statutory U.S. federal income tax rate to income before income taxes as a result of the following:
|  | Year Ended |
|  | October 29, 2017 |  |  | October 30, 2016 |  |  | November 1, 2015 |
U.S. federal income tax at statutory rate |  | $ | 9,298 |  |  | $ | 21,166 |  |  | $ | 24,514 |
Changes in valuation allowances |  |  | (3,632 | ) |  |  | (9,516 | ) |  |  | (11,471 | )
Distributions from foreign subsidiaries |  |  | 6,471 |  |  |  | 3,438 |  |  |  | 448 |
Foreign tax rate differentials |  |  | (5,230 | ) |  |  | (9,620 | ) |  |  | (4,356 | )
Tax credits |  |  | (1,925 | ) |  |  | (944 | ) |  |  | (2,729 | )
Uncertain tax positions, including reserves, settlements and resolutions |  |  | (932 | ) |  |  | 134 |  |  |  | (175 | )
Income tax holiday |  |  | (743 | ) |  |  | (507 | ) |  |  | (869 | )
Employee stock compensation |  |  | 512 |  |  |  | 452 |  |  |  | 634 |
Tax on foreign subsidiary earnings |  |  | 1,712 |  |  |  | 225 |  |  |  | 6,589 |
Other, net |  |  | (255 | ) |  |  | (30 | ) |  |  | 596 |
|  | $ | 5,276 |  |  | $ | 4,798 |  |  | $ | 13,181 |
The effective tax rates differ from the U.S. statutory rate of 35% in fiscal years 2017, 2016 and 2015 primarily due to earnings being taxed at lower statutory rates in foreign jurisdictions, changes in deferred tax asset valuation allowances, including the reversals noted below, together with the benefit of various investment credits in a foreign jurisdiction. In addition, the lower rate in fiscal year 2016 was partially driven by a benefit that resulted from the reversal of a previously recorded undistributed earnings tax liability in a foreign jurisdiction for which we are no longer liable. Two five-year tax holidays in Taiwan, one that expired in 2017 and the other that expires in 2019, reduced foreign taxes by $0.7 million, $0.5 million and $0.2 million in fiscal years 2017, 2016 and 2015, respectively. These tax holidays had no per share effect on our financial results of fiscal years 2017, 2016 and 2015. The net deferred income tax assets consist of the following:
|  | As of |
|  | October 29, 2017 |  |  | October 30, 2016 |
Deferred income tax assets: |  |  |  |  |  |
Net operating losses |  | $ | 40,942 |  |  | $ | 46,158 |
Reserves not currently deductible |  |  | 4,196 |  |  |  | 5,904 |
Alternative minimum tax credits |  |  | 3,946 |  |  |  | 3,772 |
Tax credit carryforwards |  |  | 10,037 |  |  |  | 8,814 |
Share-based compensation |  |  | 2,335 |  |  |  | 1,972 |
Other |  |  | 1,503 |  |  |  | 1,719 |
|  |  | 62,959 |  |  |  | 68,339 |
Valuation allowances |  |  | (25,590 | ) |  |  | (29,315 | )
|  |  | 37,369 |  |  |  | 39,024 |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Undistributed earnings of foreign subsidiaries |  |  | (4,335 | ) |  |  | (3,962 | )
Property, plant and equipment |  |  | (19,280 | ) |  |  | (19,977 | )
Other |  |  | (322 | ) |  |  | (254 | )
|  |  | (23,937 | ) |  |  | (24,193 | )
Net deferred income tax assets |  | $ | 13,432 |  |  | $ | 14,831 |
Reported as: |  |  |  |  |  |  |  |
Deferred income tax assets |  | $ | 15,481 |  |  | $ | 16,322 |
Deferred income tax liabilities |  |  | (2,049 | ) |  |  | (1,491 | )
|  | $ | 13,432 |  |  | $ | 14,831 |
We have established a valuation allowance for a portion of our deferred tax assets because we believe, based on the weight of all available evidence, that it is more likely than not that a portion of our net operating loss carryforwards will expire prior to utilization. During fiscal years 2016 and 2015, we determined that sufficient positive evidence existed in certain foreign jurisdictions that it was more likely than not that additional deferred tax assets were realizable and, therefore, we reduced the valuation allowance by $4.3 million and $1.5 million, respectively. In addition, the valuation allowance decreased in fiscal years 2017, 2016 and 2015 as a result of loss utilizations and deferred tax liability changes of $3.7 million, $5.2 million and $9.3 million, respectively. As of October 29, 2017, we have not provided deferred taxes on $170.6 million of undistributed earnings of non-U.S. subsidiaries, as it is our policy to indefinitely reinvest these earnings in non-U.S. operations. During fiscal year 2017, the permanently invested assertion was partially changed due to changes in circumstances within one of our non-U.S. subsidiary entities, and a U.S. tax liability was recognized for the related undistributed earnings. Should we elect in the future to repatriate the remaining foreign earnings deemed to be indefinitely reinvested, we may incur additional income tax expense on those foreign earnings, the amount of which is not practicable to compute. The following tables present our available operating loss and credit carryforwards at October 29, 2017, and their related expiration periods:
Operating Loss Carryforwards |  | Amount |  |  | Expiration Periods |
Federal |  | $ | 86,358 |  |  |  | 2025-2033 |
State |  |  | 214,532 |  |  |  | 2018-2037 |
Foreign |  |  | 15,414 |  |  |  | 2019-2023 |
Tax Credit Carryforwards |  | Amount |  |  | Expiration Period |
Federal research and development |  | $ | 5,580 |  |  |  | 2019-2037 |
Federal alternative minimum |  |  | 3,946 |  |  | Indefinite |
State |  |  | 5,829 |  |  |  | 2018-2031 |
Foreign |  |  | 667 |  |  |  | 2022 |
A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, is as follows:
|  | Year Ended |
|  | October 29, 2017 |  |  | October 30, 2016 |  |  | November 1, 2015 |
Balance at beginning of year |  | $ | 4,606 |  |  | $ | 4,029 |  |  | $ | 4,993 |
Additions (reductions) for tax positions in prior years |  |  | 207 |  |  |  | 744 |  |  |  | (212 | )
Additions based on current year tax positions |  |  | 323 |  |  |  | 268 |  |  |  | 318 |
Settlements |  |  | (922 | ) |  |  | (378 | ) |  |  | (720 | )
Lapses of statutes of limitations |  |  | (830 | ) |  |  | (57 | ) |  |  | (350 | )
Balance at end of year |  | $ | 3,384 |  |  | $ | 4,606 |  |  | $ | 4,029 |
As of October 29, 2017, October 30, 2016 and November 1, 2015, the balance of unrecognized tax benefits includes $3.4 million, $4.6 million and $4.1 million recorded in other liabilities in the consolidated balance sheets that, if recognized, would impact the effective tax rate. Included in these amounts in each of fiscal years 2017, 2016 and 2015 were $0.1 million of interest and penalties. We include any applicable interest and penalties related to uncertain tax positions in our income tax provision. The amounts reflected in the table above for the fiscal years 2017, 2016 and 2015 include settlements of non-U.S. audits. Although the timing of the expirations of statutes of limitations may be uncertain, as they can be dependent upon the settlement of tax audits, the Company believes that it is reasonably possible that up to $1.4 million of its uncertain tax positions (including accrued interest and penalties, and net of tax benefits) may be resolved over the next twelve months. Resolution of these uncertain tax positions may result from either or both of the lapses of statutes of limitations and tax settlements. The Company is no longer subject to tax authority examinations in the U.S., major foreign, or state tax jurisdictions for years prior to fiscal year 2013. Income tax payments were $9.3 million, $11.4 million and $4.9 million in fiscal years 2017, 2016 and 2015, respectively. Cash received as refunds of income taxes paid in prior years amounted to $0.1 million, $0.2 million and $0.1 million in fiscal years 2017, 2016 and 2015, respectively. Currently, Congress is considering various U.S. corporate tax reform bills, which if enacted could have a material impact on various components of the income taxes including but not limited to, valuation allowances, deferred tax assets and liabilities. If the proposed bills are signed into law we expect a reduction in the recorded deferred tax liability related to foreign earnings and an offsetting reduction in deferred tax assets related to U.S. net operating losses. At this time it is not practical to calculate the potential dollar amount of these potential income tax law changes. The Company will continue to evaluate the potential implications as more information becomes available and the changes are enacted.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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