XML 27 R14.htm IDEA: XBRL DOCUMENT
v3.22.4

INCOME TAXES | 12 Months Ended
--- | ---
Oct. 31, 2022
INCOME TAXES |
INCOME TAXES | 6. INCOME TAXES We utilize the asset and liability method of accounting for income taxes. Under this method, the provision (benefit) for income taxes represents income taxes payable or refundable for the current year plus the change in deferred taxes during the year. ​ The Inflation Reduction Act of 2022 (the “Inflation Reduction Act” or “IRA”) was signed into law on August 16, 2022. The IRA provides investment in clean energy, promotes reductions in carbon emissions, and extends select Affordable Care Act premium reductions. The IRA is paid for through the implementation of a 15 percent corporate minimum tax on corporations with over $1 billion of financial statement income, budget increases for the Internal Revenue Service, an excise tax on stock repurchases, and changes to Medicare rules. The Company is currently evaluating the impact of the Inflation Reduction Act on future fiscal years. ​ In response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law on March 27, 2020. The CARES Act, among other things, included tax provisions that we applied relating to refundable payroll tax credits, the deferral of employer’s social security payments, and modifications to net operating loss carryback provisions. We filed the net operating loss carryback claims during the fourth quarter of fiscal 2021 and received $5.4 million in tax refunds during fiscal year 2022. On December 27, 2020, the Consolidated Appropriations Act of 2021 (the “CAA”), which includes the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act and the American Rescue Plan Act of 2021, was signed into law and provided further COVID-19 economic relief with an expansion of the employee retention credit. As a result, we recorded operating income of $2.9 million related to the employee retention credit during fiscal 2021. We did not qualify for the employee retention credit in fiscal 2022. ​ In the fiscal years set forth below, the provision (benefit) for income taxes consisted of the following (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended October 31,
​ |  | 2022 |  | 2021 |  | 2020
Current: |  | ​ |  |  | ​ | ​ |  | ​ |
U.S. taxes | ​ | $ | 1,092 |  | $ | 1,763 | ​ | $ | (4,932)
Foreign taxes | ​ |  | 3,191 | ​ |  | 1,706 | ​ |  | 923
​ | ​ |  | 4,283 | ​ |  | 3,469 | ​ |  | (4,009)
Deferred: | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
U.S. taxes | ​ |  | (933) | ​ |  | 66 | ​ |  | (256)
Foreign taxes | ​ |  | 302 | ​ |  | (178) | ​ |  | (291)
​ | ​ |  | (631) | ​ |  | (112) | ​ |  | (547)
​ | ​ | $ | 3,652 |  | $ | 3,357 | ​ | $ | (4,556)
​ The components of income (loss) before taxes are (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended October 31,
​ |  | 2022 |  | 2021 |  | 2020
Income (loss) before income taxes: |  | ​ |  |  | ​ |  |  | ​ |
Domestic | ​ | $ | (232) |  | $ | 4,340 |  | $ | (11,681)
Foreign | ​ |  | 12,110 |  |  | 5,781 |  |  | 878
​ | ​ | $ | 11,878 |  | $ | 10,121 |  | $ | (10,803)
​ A comparison of income tax expense at the U.S. statutory rate to our effective tax rate is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended October 31, |
​ |  | 2022 |  | 2021 |  | 2020 |
​ | ​ |  | ​ | ​ |  | ​ | ​ |  |  |
U.S. statutory rate | ​ |  | 21 | % |  | 21 | % |  | 21 | %
Effect of tax rate of international jurisdictions different than U.S. statutory rates | ​ |  | 4 | % |  | 4 | % |  | (2) | %
Valuation allowance | ​ |  | 3 | % |  | — | % |  | — | %
State taxes | ​ |  | 1 | % |  | 1 | % |  | 2 | %
Tax credits | ​ |  | 1 | % |  | — | % |  | 1 | %
U.S. benefit of foreign intangible income | ​ | ​ | (3) | % | ​ | (1) | % | ​ | — | %
Impact of CARES act | ​ | ​ | — | % | ​ | 5 | % | ​ | 22 | %
Other | ​ |  | 4 | % 1 |  | 3 | % 1 |  | (2) | %
Effective tax rate | ​ |  | 31 | % |  | 33 | % |  | 42 | %
1 Primarily due to discrete items for unearned stock awards | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ The Tax Reform Act enacted on December 22, 2017, made comprehensive changes to U.S. federal income tax laws by moving from a global to a modified territorial tax regime. As a result, cash repatriated to the U.S. is generally no longer subject to U.S. federal income tax. As of October 31, 2022, the undistributed earnings of our foreign subsidiaries are expected to be permanently reinvested and retained for continuing operations. Accordingly, we did not accrue any withholding taxes on the undistributed earnings of our foreign subsidiaries, consistent with the position adopted on January 1, 2018. ​ Deferred income taxes are determined based on the difference between the amounts used for financial reporting purposes and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred taxes are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Net deferred tax assets and liabilities are classified as non-current in the consolidated financial statements. ​ As of October 31, 2022, we had deferred tax assets established for accumulated net operating loss carryforwards of $1.4 million, primarily related to state and foreign jurisdictions. We also have deferred tax assets for tax credits of $0.7 million. We established a valuation allowance against some of these carryforwards due to the uncertainty of their full realization. As of October 31, 2022, and 2021, the balance of this valuation allowance was $1.8 million and $1.9 million, respectively. ​ Significant components of our deferred tax assets and liabilities at October 31, 2022 and 2021 are as follows (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | October 31,
​ |  | 2022 |  | 2021
Deferred Tax Assets: |  | ​ |  |  | ​ |
Accrued inventory reserves | ​ | $ | 1,329 |  | $ | 973
Accrued warranty expenses | ​ |  | 270 | ​ |  | 308
Compensation related expenses | ​ |  | 2,495 | ​ |  | 2,444
Net derivative gain | ​ | ​ | 98 | ​ | ​ | 49
Unrealized exchange gain | ​ |  | 117 | ​ |  | —
Other accrued expenses | ​ |  | 318 | ​ |  | 282
Net operating loss carryforwards | ​ |  | 1,449 | ​ |  | 1,705
Other credit carryforwards | ​ |  | 703 | ​ |  | 839
Operating lease liabilities | ​ | ​ | 2,023 | ​ | ​ | 2,570
Goodwill and intangibles | ​ | ​ | 831 | ​ | ​ | 967
Other | ​ |  | 171 | ​ |  | 215
​ | ​ |  | 9,804 | ​ |  | 10,352
Less: Valuation allowance – net operating loss and other credit carryforwards | ​ |  | (1,754) | ​ |  | (1,871)
Deferred tax assets | ​ |  | 8,050 | ​ |  | 8,481
​ | ​ |  | ​ | ​ |  | ​
Deferred Tax Liabilities: | ​ |  | ​ | ​ |  | ​
Unrealized exchange loss | ​ |  | — | ​ |  | (15)
Property and equipment and capitalized software development costs | ​ |  | (2,394) | ​ |  | (2,533)
Operating lease - right of use assets | ​ | ​ | (1,960) | ​ | ​ | (2,495)
Other | ​ |  | (321) | ​ |  | (352)
Net deferred tax assets | ​ | $ | 3,375 |  | $ | 3,086
​ As of October 31, 2022, we had net operating loss carryforwards for international and U.S. income tax purposes of $5.8 million, of which $3.8 million will expire within five years beginning in fiscal year 2023 and $0.2 million are state net operating losses which will expire between five and 20 years. The remaining $1.8 million in net operating losses will be carried forward indefinitely based on current international tax laws. We also had tax credits of $0.7 million which will expire between years 2023 and 2032. ​ 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): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2022 |  | 2021 |  | 2020
Balance, beginning of year | ​ | $ | 167 |  | $ | 168 | ​ | $ | 193
Additions based on tax positions related to the current year | ​ |  | 21 | ​ |  | 74 | ​ |  | 9
Additions (reductions) related to prior year tax positions | ​ |  | — | ​ |  | — | ​ |  | (2)
Reductions due to statute expiration | ​ |  | (50) | ​ |  | (75) | ​ |  | (32)
Balance, end of year | ​ | $ | 138 |  | $ | 167 | ​ | $ | 168
​ The entire balance of the unrecognized tax benefits and related interest on October 31, 2022, if recognized, could affect the effective tax rate in future periods. ​ We recognize accrued interest and penalties related to unrecognized tax benefits as components of our income tax provision. As of October 31, 2022, the amount of interest accrued, reported in other liabilities, was approximately $33,000 which did not include the federal tax benefit of interest deductions. The statute of limitations with respect to unrecognized tax benefits will expire between August 2023 and August 2025. ​ We file U.S. federal and state income tax returns, as well as tax returns in applicable foreign jurisdictions. Currently, our subsidiary in Germany is under tax audit for fiscal years 2017 through 2021. ​ A summary of open tax years by major jurisdiction is presented below: ​
​ | ​ | ​
United States federal |  | Fiscal year 2014 through the current period
Germany¹ |  | Fiscal year 2017 through the current period
United Kingdom | ​ | Fiscal year 2015 through the current period
Taiwan |  | Fiscal year 2017 through the current period
¹ | Includes federal as well as state, provincial or similar local jurisdictions, as applicable.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration