INCOME TAXES (Tables)

12 Months Ended

Oct. 31, 2017

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,
	2017		2016		2015
Current:
U.S. taxes	$	308	$	1,362	$	4,600
Foreign taxes		4,185		4,456		3,752
		4,493		5,818		8,352
Deferred:
U.S. taxes		1,236		(176)		(896)
Foreign taxes		(128)		(49)		(117)
		1,108		(225)		(1,013)
	$	5,601	$	5,593	$	7,339

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,
	2017			2016			2015
Income before income taxes:
Domestic	$	5,477		$	2,703		$	10,806
Foreign		15,239			16,182			12,747
Earnings (Loss) before taxes on income	$	20,716		$	18,885		$	23,553
Tax rates:
U.S. statutory rate		34	%		34	%		35	%
Effect of tax rate of international jurisdictions different than U.S. statutory rates		(5	%)		(7	%)		(5	%)
Valuation allowance.		1	%		3	%		1	%
State taxes		0	%		0	%		1	%
Tax Credits		(3	%)		(2	%)		(1	%)
Effect of Tax Rate Changes		0	%		4	%		0	%
Other		0	%		(2	%)		0	%
Effective tax rate		27	%		30	%		31	%

Schedule of Deferred Tax Assets and Liabilities

Significant components of our deferred tax assets and liabilities at October 31, 2017 and 2016 were as follows (in thousands):

	October 31,
	2017		2016
Deferred Tax Assets:
Accrued inventory reserves	$	1,965	$	1,824
Accrued warranty expenses		438		312
Compensation related expenses		2,952		2,664
Net derivative instruments		417		—
Unrealized exchange gain/loss		—		370
Other accrued expenses		187		194
Net operating loss carryforwards		1,722		1,616
Other credit carryforwards		517		474
Other		404		331
		8,602		7,785
Less: Valuation allowance - net operating loss and other credit carryforwards		(2,282)		(2,067)
Deferred tax assets		6,320		5,718

Deferred Tax Liabilities:
Net derivative instruments		—		(701)
Property and equipment and capitalized software development costs		(3,241)		(2,717)
Unrealized exchange gain/loss		(116)		—
Other		(624)		(456)

Net deferred tax assets	$	2,339	$	1,844

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):

	2017		2016		2015
Balance, beginning of year	$	1,102	$	1,034	$	1,196
Additions based on tax positions related to the current year		37		52		17
Additions (reductions) related to prior year tax positions		(20)		19		(51)
Reductions due to statute expiration		(74)		—		—
Other		56		(3)		(128)

Balance, end of year	$	1,101	$	1,102	$	1,034

Summary of open tax years by major jurisdiction

A summary of open tax years by major jurisdiction is presented below:

United States federal	Fiscal 2014 through the current period
Germany¹	Fiscal 2013 through the current period
Taiwan	Fiscal 2014 through the current period

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