Income Taxes (Tables)

12 Months Ended

Sep. 30, 2017

Schedule of Components of the Provision (Benefit) for Income Taxes



	Years Ended September 30,
	2017		2016			2015
	(dollars in thousands)
Domestic	$	1,900	$	2,100		$	94
Foreign	7,930		(7,550		)	(4,901		)
	$	9,830	$	(5,450	)	$	(4,807	)

The components of the provision (benefit) for income taxes are as follows:



	Years Ended September 30,
	2017		2016		2015
	(dollars in thousands)
Current:
Domestic federal	$	54	$	530	$	(320	)
Foreign	1,330		500		500
Foreign withholding taxes	240		280		1,240
Domestic state	120		110		—
Total current	1,744		1,420		1,420

Deferred:
Domestic federal	—		1,680		720
Foreign	—		—		(210		)
Domestic state	—		—		(20		)
Total deferred	—		1,680		490
Total provision	$	1,744	$	3,100	$	1,910

Reconciliation of Actual Income Taxes to Expected Federal Corporate Income Taxes

A reconciliation of actual income taxes to income taxes at the expected United States federal corporate income tax rate of thirty-four percent is as follows:



	Years Ended September 30,
	2017			2016			2015
	(dollars in thousands)
Tax expense (benefit) at the U.S. rate (34%)	$	3,340		$	(1,890	)	$	(1,630	)
Effect of permanent book-tax differences	340			1,120			(1,570		)
State tax provision	100			110			(40		)
Valuation allowance for net deferred tax assets	(1,610		)	2,690			2,490
Uncertain tax items	350			350			330
Foreign tax rate differential	(776		)	1,050			1,890
Other items	—			(330		)	440
	$	1,744		$	3,100		$	1,910

Schedule of Deferred Tax Assets and Deferred Tax Liability

The tax effects of temporary book-tax differences that give rise to significant portions of the deferred tax assets and deferred tax liability are as follows:



	Years Ended September 30,
	2017			2016
	(dollars in thousands)
Deferred tax assets - current:
Capitalized inventory costs	$	210		$	270
Inventory write-downs	1,945			2,460
Accrued warranty	260			160
Deferred profits	1,190			1,180
Accruals and reserves not currently deductible	1,945			1,720
Deferred tax assets - current	$	5,550		$	5,790
Valuation allowance	(5,550		)	(5,790		)
Deferred tax assets - current, net of valuation allowance	$	—		$	—

Deferred tax assets (liabilities) - non-current:
Stock option expense	$	1,080		$	890
Book vs. tax basis of acquired assets	(1,290		)	(1,340		)
Federal net operating loss carryforwards	4,820			3,370
Foreign and state net operating losses	14,800			13,200
Book vs. tax depreciation and amortization	(2,250		)	(2,200		)
Foreign tax credits	420			4,230
Other deferred tax assets	—			570
Total deferred tax assets - non-current	17,580			18,720
Valuation allowance	(17,380		)	(18,520		)
Deferred tax assets (liabilities) - non-current, net of valuation allowance	$	200		$	200

Changes in Deferred Tax Valuation Allowance

Changes in the deferred tax valuation allowance are as follows:



	Years Ended September 30,
	2017			2016
	(dollars in thousands)
Balance at the beginning of the year	$	24,310		$	23,810
(Reductions) additions to valuation allowance	(1,380		)	500
Balance at the end of the year	$	22,930		$	24,310

Schedule of Unrecognized Tax Benefit Liabilities

A reconciliation of the beginning and ending amount of our unrecognized tax benefits is summarized as follows:



	Years Ended September 30,
	2017		2016		2015
	(dollars in thousands)
Balance at beginning of the year	$	3,860	$	3,510	$	3,180
Additions related to tax positions taken in prior years	350		350		330
Reductions due to lapse of statute of limitations	—		—		—
Balance at the end of the year	$	4,210	$	3,860	$	3,510