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INCOME TAXES
 12 Months Ended
Oct. 31, 2021
INCOME TAXES [Abstract]  
INCOME TAXES
NOTE 12 - INCOME TAXES


Income before the income tax provisions consists of the following:

 
Year Ended
  
   
October 31,
2021
    
October 31,
2020
    
October 31,
2019
  
                   
United States
  
$
(19,447
)
  
$
(10,672
)
  
$
(8,379
)
Foreign
    
121,453
      
72,273
      
59,080
  
   
$
102,006
    
$
61,601
    
$
50,701
  


The income tax provisions consist of the following:

 
Year Ended
  
   
October 31,
2021
    
October 31,
2020
    
October 31,
2019
  
Current:
                  
Federal
  
$
-
    
$
-
    
$
(3,916
)
State
    
4
      
4
      
11
  
Foreign
    
25,296
      
21,698
      
17,777
  
      25,300       21,702       13,872  
                         
Deferred:
                        
Federal
    
-
      
-
      
3,673
  
State
    
103
      
8
      
10
  
Foreign
    
(2,213
)
    
(452
)
    
(7,345
)
      (2,110 )     (444 )     (3,662 )
Total
  
$
23,190
    
$
21,258
    
$
10,210
  


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 31,
2021
    
October 31,
2020
    
October 31,
2019
  
                   
U.S. federal income tax at statutory rate
  
$
21,421
    
$
12,936
    
$
10,647
  
Changes in valuation allowances
    
364
      
6,942
      
2,673
  
Foreign tax rate differentials
    
3,244
      
1,718
      
218
  
Tax credits
    
(3,942
)
    
(1,562
)
    
(1,268
)
Uncertain tax positions, including reserves, settlements and resolutions
    
1,037
      
1,637
      
134
  
Income tax holiday
    
-
      
(318
)
    
(2,234
)
Other, net
    
1,066
      
(95
)
    
40
  
   
$
23,190
    
$
21,258
    
$
10,210
  
Effective tax rate
    
22.7
%
    
34.5
%
    
20.1
%


The 2021 effective tax rate differs from the U.S. federal blended rate of 21% primarily due to loss jurisdiction pre-tax losses not being benefited due to valuation allowances, non-U.S. pre-tax income being taxed at higher statutory rates in the non-U.S. jurisdictions, and investment credits in foreign jurisdictions.


The 2020 effective tax rate differs from the U.S. statutory rate of 21% primarily due to loss jurisdiction pre-tax losses not being benefited due to valuation allowances, non-U.S. pre-tax income being taxed at higher statutory rates in the non-U.S. jurisdictions (partially offset by the benefits of a tax holiday), and investment credits in foreign jurisdictions.


The 2019 effective tax rate differs from the U.S. statutory rate of 21% due to the recognition of a benefit related to previously unrecognized tax positions, loss jurisdiction pre-tax losses being benefited at higher statutory rates than pre-tax income in income jurisdictions was taxed, changes in deferred tax asset valuation allowance, the benefits of a tax holiday, and investment credits in foreign jurisdictions.


We were granted a five-year tax holiday in Taiwan that expired on December 31, 2019. This tax holiday reduced foreign taxes by $0.1 million and $2.2 million in 2020 and 2019, respectively, with a two cents per share impact in 2019, and an immaterial per share effect in 2020.


The net deferred income tax assets consist of the following:

 
As of
  
   
October 31,
2021
    
October 31,
2020
  
Deferred income tax assets:
            
Net operating losses
  
$
31,657
    
$
34,457
  
Reserves not currently deductible
    
8,201
      
6,287
  
Tax credit carryforwards
    
9,877
      
9,481
  
Share-based compensation
    
1,500
      
1,306
  
Property, plant and equipment
    
7,566
      
3,887
  
Lease liabilities
     9,134       -  
Other
    
157
      
398
  
     
68,092
      
55,816
  
Valuation allowances
    
(34,337
)
    
(33,973
)
     
33,755
      
21,843
  
Deferred income tax liabilities:
                
ROU assets
    
(9,698
)
    
-
  
     
(9,698
)
    
-
  
Net deferred income tax assets
  
$
24,057
    
$
21,843
  
                 
Classification
                
Deferred income tax assets
  
$
24,353
    
$
22,070
  
Other liabilities
    
(296
)
    
(227
)
   
$
24,057
    
$
21,843
  


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 deferred tax assets will expire prior to utilization. In 2021 the valuation allowance decreased as a result of management’s determination that tax benefits on deferred tax assets in a non-U.S. jurisdiction would more likely than not be realized and, therefore, decreased the valuation allowance to include these deferred tax assets.


Due to the Tax Cuts and Jobs Act, which was signed into law in December 2017, as of fiscal year end 2018, U.S. deferred taxes were no longer provided on the undistributed earnings of non-U.S. subsidiaries. Our policy to indefinitely reinvest these earnings in non-U.S. operations remains unchanged for the purpose of determining deferred tax liabilities for U.S. state and foreign withholding taxes. Therefore, should we elect in the future to repatriate the remaining foreign earnings deemed to be indefinitely reinvested, we may incur additional state and foreign withholding tax expense on those earnings, the amount of which is not practicable to compute.



The following tables present our available operating loss and credit carryforwards as of October 31, 2021, and their related expiration periods:

Operating Loss Carryforwards
  
Amount
    
Expiration
Period
  
Federal
  
$
99,636
    
2029-Indefinite
  
State
    
187,044
      
2022-Indefinite
  
Foreign
    
113
      
2024-2031
  


Tax Credit Carryforwards
  
Amount
    
Expiration
Period
  
Federal research and development
  
$
5,204
      
2024-2041
  
State
   $
5,915
      
2022-2035
  


A reconciliation of the beginning and ending amounts of unrecognized tax benefits is presented below.

 
Year Ended
  
   
October 31,
2021
    
October 31,
2020
    
October 31,
2019
  
Balance at beginning of year before interest and penalties
  
$
2,550
    
$
1,758
    
$
1,775
  
Additions (reductions) for tax positions in prior years
    
181
      
227
      
(466
)
Additions based on current year tax positions
    
1,313
      
1,576
      
1,286
  
Settlements
    
(489
)
    
(992
)
    
(204
)
Lapses of statutes of limitations
    
(21
)
    
(19
)
    
(633
)
Balance at end of year before interest and penalties
  

3,534
    

2,550
    

1,758
  
Interest and penalties
     223       131       177  
Balance at end of year including interest and penalties
   $ 3,757     $ 2,681     $ 1,935  


At October 31, 2021, October 31, 2020 and October 31, 2019, unrecognized tax benefits, which are included in Other liabilities, include $3.8 million, $2.0 million, and $1.9 million, respectively, that, if recognized, would impact the effective tax rates. We include any applicable interest and penalties related to uncertain tax positions in our income tax provision. The amounts reflected in the table above include settlements of non-U.S. audits.


Although the timing of the reversal of uncertain tax positions may be uncertain, as they can be dependent upon the settlement of tax audits or expirations of statutes of limitations, the Company believes that the amount of uncertain tax positions (including accrued interest and penalties, and net of tax benefits) that may be resolved over the next twelve months is $0.5 million. Resolution of these uncertain tax positions may result from either or both 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 2016.


Income tax payments were $22.7 million, $23.0 million and $15.9 million in 2021, 2020 and 2019, respectively. Cash received as refunds of income taxes paid in prior years amounted to $0.7 million in 2021, $4.3 million in 2020, and an immaterial amount in 2019.