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Income Taxes | 12 Months Ended
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May 02, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Note 15. Income Taxes The following tables reflect the significant components of our income tax provision. The pretax income attributable to domestic and foreign operations was as follows:
| Year Ended
| May 2, 2020 |  | April 27, 2019 |  | April 28, 2018
Domestic | $ | (4,187 | ) |  | $ | (8,402 | ) |  | $ | 9,235 |
Foreign | 4,178 |  |  | 3,458 |  |  | 3,194 |
(Loss) income before income taxes | $ | (9 | ) |  | $ | (4,944 | ) |  | $ | 12,429 |
Income tax (benefit) expense consisted of the following:
| Year Ended
| May 2, 2020 |  | April 27, 2019 |  | April 28, 2018
Current: |  |  |  |  |
Federal | $ | 625 |  |  | $ | (2,142 | ) |  | $ | 1,646 |
State | 297 |  |  | 384 |  |  | 868 |
Foreign | 761 |  |  | 1,151 |  |  | 1,205 |
Deferred: |  |  |  |  |
Federal | (2,028 | ) |  | (2,725 | ) |  | 3,693 |
State | (321 | ) |  | (390 | ) |  | 27 |
Foreign | 166 |  |  | (264 | ) |  | (572 | )
| $ | (500 | ) |  | $ | (3,986 | ) |  | $ | 6,867 |
The reconciliation of the provision for income taxes and the amount computed by applying the federal statutory rate to income before income taxes is as follows:
| Year Ended
| May 2, 2020 |  | April 27, 2019 |  | April 28, 2018
Computed income tax (benefit) expense at federal statutory rates | $ | (2 | ) |  | $ | (1,038 | ) |  | $ | 3,779 |
Change in uncertain tax positions | 4 |  |  | (2,600 | ) |  | 65 |
Research and development tax credit | (1,621 | ) |  | (1,278 | ) |  | (1,598 | )
Other, net | (241 | ) |  | 587 |  |  | 559 |
Change in valuation allowances | 482 |  |  | (471 | ) |  | (486 | )
GILTI | 149 |  |  | 391 |  |  | — |
Base Erosion Anti-Abuse Tax (BEAT) | 301 |  |  | — |  |  | — |
Stock compensation | 318 |  |  | 308 |  |  | 336 |
Meals and entertainment | 305 |  |  | 248 |  |  | 333 |
Dividends paid to retirement plan | (111 | ) |  | (158 | ) |  | (238 | )
State taxes, net of federal benefit | (84 | ) |  | 25 |  |  | 592 |
Impact of Tax Act | — |  |  | — |  |  | 3,819 |
Domestic production activities deduction | — |  |  | — |  |  | (294 | )
| $ | (500 | ) |  | $ | (3,986 | ) |  | $ | 6,867 |
The effective income tax rate for fiscal 2020 was impacted due to the tax benefit of permanent tax credits reduced by a valuation allowance placed on equity investments in proportion to a small pre-tax book loss which results in an abnormal looking tax rate. During fiscal 2019, our effective income tax rate was impacted due to a tax benefit of a book loss plus permanent credits and deductions, the release of unrecognized tax benefits, and the reversal of a valuation allowance related to foreign net operating loss carryforwards. The effective income tax rate for fiscal 2018 was higher than the federal statutory rate primarily due to the impacts of the Tax Act signed into law on December 22, 2017, which included a re-measurement of deferred taxes resulting in an impact to tax expense and an estimated one-time transition tax on certain undistributed earnings for our foreign subsidiaries. The Tax Act reduced the federal normal statutory rate from 35 percent to 21 percent; however, since we are a fiscal year tax filer, a blended rate of 30.4 percent was used for fiscal year 2018. The components of the net deferred tax assets were as follows:
| May 2, 2020 |  | April 27, 2019
Deferred tax assets: |  |  |
Accrued warranty obligations | $ | 6,202 |  |  | $ | 5,912 |
Vacation accrual | 1,753 |  |  | 1,571 |
Deferred maintenance revenue | 987 |  |  | 716 |
Allowance for excess and obsolete inventory | 1,318 |  |  | 1,340 |
Legal reserve | 503 |  |  | 260 |
Equity compensation | 396 |  |  | 486 |
Allowance for doubtful accounts | 546 |  |  | 402 |
Inventory capitalization | 822 |  |  | 567 |
Accrued compensation and benefits | 539 |  |  | 549 |
Net operating loss carry forwards | 919 |  |  | 1,059 |
Research and development tax credit carry forwards | 1,975 |  |  | 1,299 |
Lease accounting - lease liability | 2,099 |  |  | — |
Other | 1,035 |  |  | 1,647 |
Total deferred tax assets | 19,094 |  |  | 15,808 |
Valuation allowance | (1,189 | ) |  | (893 | )
Net deferred tax assets | 17,905 |  |  | 14,915 |
Deferred tax liabilities: |  |  |  |  |
Property and equipment | (2,141 | ) |  | (3,100 | )
Lease accounting - right of use asset | (2,103 | ) |  | — |
Prepaid expenses | (440 | ) |  | (476 | )
Intangible assets | (317 | ) |  | (623 | )
Unrealized gain on foreign currency exchange | (17 | ) |  | (6 | )
Other | (68 | ) |  | (75 | )
Total deferred tax liabilities | (5,086 | ) |  | (4,280 | )
Net deferred tax asset | $ | 12,819 |  |  | $ | 10,635 |
The classification of the net deferred tax assets in the accompanying consolidated balance sheets is:
| May 2, 2020 |  | April 27, 2019
Non-current assets | $ | 13,271 |  |  | $ | 11,168 |
Non-current liabilities | (452 | ) |  | (533 | )
| $ | 12,819 |  |  | $ | 10,635 |
The summary of changes in the amounts related to unrecognized uncertain tax benefits are:
| May 2, 2020 |  | April 27, 2019
Balance at beginning of year | $ | 578 |  |  | $ | 3,178 |
Gross increases related to prior period tax positions | 17 |  |  | 13 |
Gross decreases related to prior period tax positions | (2 | ) |  | (18 | )
Gross increases related to current period tax positions | 148 |  |  | 146 |
Lapse of statute of limitations | (159 | ) |  | (2,741 | )
Balance at end of year | $ | 582 |  |  | $ | 578 |
All of our unrecognized tax benefits would have an impact on the effective tax rate if recognized. It is reasonably possible that the amount of unrecognized tax benefits could change due to one or more of the following events occurring in the next 12 months: expiring statutes, audit activity, tax payments, or competent authority proceedings. A statute of limitations relating to $138 of the unrecognized tax benefits (including interest) expires in the next 12 months. The benefit will be recognized if the statute lapses with no further action taken by regulators. Additionally, we recognized the release of $159 in unrecognized tax benefits related to the lapse of a statute of limitations in fiscal 2020. Interest and penalties incurred associated with uncertain tax positions are included in the "Income tax expense" line item in our consolidated statements of operations. Accrued interest and penalties are included in the related tax liability line item in our consolidated balance sheets of $30 and $26 as of May 2, 2020 and April 27, 2019, respectively. As of May 2, 2020, we had foreign net operating loss (“NOL”) carryforwards of approximately $4,832 primarily related to our operations in Belgium and Ireland, which have indefinite lives. A deferred tax asset has been recorded for all NOL carryforwards totaling approximately $919. However, due to uncertainty in future taxable income, a valuation allowance totaling approximately $627 has been recorded in Belgium. If sufficient evidence of our ability to generate future taxable income in the jurisdictions in which we currently maintain a valuation allowance causes us to determine that our deferred tax assets are more likely than not realizable, we would release our valuation allowance, which would result in an income tax benefit being recorded in our consolidated statements of operations. Additional tax information: We are subject to U.S. federal income tax as well as income taxes of multiple state and foreign jurisdictions. Fiscal years 2017, 2018 and 2019 remain open to federal tax examinations, and fiscal years 2016, 2017, 2018 and 2019 remain open for state income tax examinations. Certain subsidiaries are also subject to income tax in several foreign jurisdictions which have open tax years varying by jurisdiction beginning in fiscal 2008. In the event of any future tax assessments, we have elected to record the income taxes and any related interest and penalties as income tax expense in our consolidated statement of operations. As of May 2, 2020, we had no deferred tax liability recognized relating to our investment in foreign subsidiaries where the earnings have been indefinitely reinvested. The Tax Act generally eliminates U.S. federal income taxes on dividends from foreign subsidiaries, and, as a result, the accumulated undistributed earnings would be subject only to other taxes, such as withholding taxes and state income taxes, on the distribution of such earnings. No additional withholding or income taxes have been provided for any remaining undistributed foreign earnings not subject to the one-time deemed repatriation tax, as it is our intention for these amounts to continue to be indefinitely reinvested in foreign operations in all of our non-U.S. jurisdictions. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted in response to the COVID-19 global pandemic. The CARES Act includes provisions such as: a deferral of the employer portion of certain payroll taxes, refundable payroll tax credits, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property, and permitting NOL incurred in tax years 2018, 2019, and 2020 (our fiscal years 2019, 2020, and 2021) to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. We are evaluating the specific rules, guidance, and procedures allowed by the provisions of the CARES Act. Some of these provisions do not apply to our income tax results; however, we are currently participating in the payment deferral of the employer portion of certain payroll taxes.

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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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