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INCOME TAXES (Tables)

12 Months Ended

Oct. 31, 2019

INCOME TAXES

Schedule of Income Taxes Provision (Benefit)

In the fiscal years set forth below, the provision for income taxes consisted of the following (in thousands):

		Year Ended October 31,
		2019			2018			2017
Current:
U.S. taxes		$	1,854		$	6,333		$	308
Foreign taxes			3,715			5,203			4,185
			5,569			11,536			4,493
Deferred:
U.S. taxes			(31)			(326)			1,236
Foreign taxes			291			(204)			(128)
			260			(530)			1,108
		$	5,829		$	11,006		$	5,601

Schedule of Reconciliation of Statutory Tax Rate to Effective Tax Rate

A comparison of income tax expense at the U.S. statutory rate to the Company’s effective tax rate is as follows (dollars in thousands):

		Year Ended October 31,
		2019			2018			2017
Income before income taxes:
Domestic		$	9,793		$	14,101		$	5,477
Foreign			13,531			18,395			15,239
		$	23,324		$	32,496		$	20,716
Tax rates:
U.S. statutory rate			21	%		23	%		34	%
Effect of tax rate of international jurisdictions different than U.S. statutory rates			4	%		2	%		(5)	%
Valuation allowance			1	%		0	%		1	%
State taxes			1	%		0	%		0	%
Tax Credits			(2)	%		(1)	%		(3)	%
Effect of Tax Rate Changes			0	%		4	%		0	%
Transition Tax			(1)	%		7	%		0	%
US tax on distributed and undistributed earnings			3	%		0	%		0	%
US benefit of foreign intangible income			(3)	%		0	%		0	%
Other			1	%		(1)	%		0	%
Effective tax rate			25	%		34	%		27	%

Schedule of Deferred Tax Assets and Liabilities

Significant components of our deferred tax assets and liabilities at October 31, 2019 and 2018 are as follows (in thousands):

		October 31,
		2019			2018
Deferred Tax Assets:
Accrued inventory reserves		$	1,224		$	1,325
Accrued warranty expenses			363			499
Compensation related expenses			2,723			2,644
Unrealized exchange gain/loss			143			159
Other accrued expenses			170			170
Net operating loss carryforwards			1,380			1,316
Other credit carryforwards			766			686
Other			293			350
			7,062			7,149
Less: Valuation allowance – net operating loss and other credit carryforwards			(2,227)			(2,106)
Deferred tax assets			4,835			5,043
Deferred Tax Liabilities:
Net derivative instruments			(313)			(208)
Property and equipment and capitalized software development costs			(2,632)			(2,370)
Other			(204)			(231)
Net deferred tax assets		$	1,686		$	2,234

Schedule of Income Tax Expense

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

		2019			2018			2017
Balance, beginning of year		$	180		$	1,101		$	1,102
Additions based on tax positions related to the current year			36			37			37
Additions (reductions) related to prior year tax positions			—			(945)			(20)
Reductions due to statute expiration			(23)			(18)			(74)
Other			—			5			56
Balance, end of year		$	193		$	180		$	1,101

Summary of open tax years by major jurisdiction

United States federal		Fiscal 2016 through the current period
Germany¹		Fiscal 2017 through the current period
Taiwan		Fiscal 2017 through the current period

¹ Includes federal as well as state, provincial or similar local jurisdictions, as applicable.

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure for tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities and other income tax contingencies. Includes, but is not limited to, interest and penalties, reconciliation of unrecognized tax benefits, unrecognized tax benefits that would affect the effective tax rate, tax years that remain subject to examination by tax jurisdictions, and information about positions for which it is reasonably possible that amounts unrecognized will significantly change within 12 months.

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