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Note 12 - Income Taxes | 12 Months Ended
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May 01, 2021
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | Note 12. 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 1, 2021 |  |  | May 2, 2020 |  |  | April 27, 2019 |
Domestic |  | $ | 10,413 |  |  | $ | (4,187 | ) |  | $ | (8,402 | )
Foreign |  |  | 3,647 |  |  |  | 4,178 |  |  |  | 3,458 |
Income (loss) before income taxes |  | $ | 14,060 |  |  | $ | (9 | ) |  | $ | (4,944 | )
Income tax expense (benefit) consisted of the following:
|  | Year Ended |
|  | May 1, 2021 |  |  | May 2, 2020 |  |  | April 27, 2019 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 507 |  |  | $ | 625 |  |  | $ | (2,142 | )
State |  |  | 422 |  |  |  | 297 |  |  |  | 384 |
Foreign |  |  | 891 |  |  |  | 761 |  |  |  | 1,151 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 1,216 |  |  |  | (2,028 | ) |  |  | (2,725 | )
State |  |  | 59 |  |  |  | (321 | ) |  |  | (390 | )
Foreign |  |  | 39 |  |  |  | 166 |  |  |  | (264 | )
|  | $ | 3,134 |  |  | $ | (500 | ) |  | $ | (3,986 | )
The reconciliation of the provision (benefit) for income taxes and the amount computed by applying the federal statutory rate to income (loss) before income taxes is as follows:
|  | Year Ended |
|  | May 1, 2021 |  |  | May 2, 2020 |  |  | April 27, 2019 |
Computed income tax expense (benefit) at federal statutory rates |  | $ | 2,953 |  |  | $ | (2 | ) |  | $ | (1,038 | )
Change in uncertain tax positions |  |  | (34 | ) |  |  | 4 |  |  |  | (2,600 | )
Research and development tax credit |  |  | (1,047 | ) |  |  | (1,621 | ) |  |  | (1,278 | )
Other, net |  |  | 403 |  |  |  | (241 | ) |  |  | 587 |
Change in valuation allowances |  |  | 402 |  |  |  | 482 |  |  |  | (471 | )
GILTI |  |  | (156 | ) |  |  | 149 |  |  |  | 391 |
Base Erosion Anti-Abuse Tax (BEAT) |  |  | (285 | ) |  |  | 301 |  |  |  | — |
Stock compensation |  |  | 355 |  |  |  | 318 |  |  |  | 308 |
Meals and entertainment |  |  | 49 |  |  |  | 305 |  |  |  | 248 |
Dividends paid to retirement plan |  |  | — |  |  |  | (111 | ) |  |  | (158 | )
State taxes, net of federal benefit |  |  | 494 |  |  |  | (84 | ) |  |  | 25 |
|  | $ | 3,134 |  |  | $ | (500 | ) |  | $ | (3,986 | )
The effective income tax rate for fiscal 2021 was impacted due to tax benefits from permanent tax credits and prior year provision to return adjustments offset by valuation allowances as well as other various permanent tax adjustments and state taxes. During fiscal 2020, our effective income tax rate 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 components of the net deferred tax assets were as follows:
|  | May 1, 2021 |  |  | May 2, 2020 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued warranty obligations |  | $ | 6,293 |  |  | $ | 6,202 |
Vacation accrual |  |  | 1,222 |  |  |  | 1,753 |
Deferred maintenance revenue |  |  | 398 |  |  |  | 987 |
Allowance for excess and obsolete inventory |  |  | 1,776 |  |  |  | 1,318 |
Legal reserve |  |  | — |  |  |  | 503 |
Equity compensation |  |  | 324 |  |  |  | 396 |
Allowance for doubtful accounts |  |  | 829 |  |  |  | 546 |
Inventory capitalization |  |  | 583 |  |  |  | 822 |
Accrued compensation and benefits |  |  | 1,707 |  |  |  | 539 |
Unrealized loss on foreign currency exchange |  |  | 85 |  |  |  | — |
Net operating loss carry forwards |  |  | 856 |  |  |  | 919 |
Research and development tax credit carry forwards |  |  | 516 |  |  |  | 1,975 |
Lease accounting - lease liability |  |  | 1,572 |  |  |  | 2,099 |
Other |  |  | 1,513 |  |  |  | 1,035 |
Total deferred tax assets |  |  | 17,674 |  |  |  | 19,094 |
Valuation allowance |  |  | (1,732 | ) |  |  | (1,189 | )
Net deferred tax assets |  |  | 15,942 |  |  |  | 17,905 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property and equipment |  |  | (2,373 | ) |  |  | (2,141 | )
Lease accounting - right of use asset |  |  | (1,580 | ) |  |  | (2,103 | )
Prepaid expenses |  |  | (337 | ) |  |  | (440 | )
Intangible assets |  |  | (69 | ) |  |  | (317 | )
Unrealized gain on foreign currency exchange |  |  | — |  |  |  | (17 | )
Other |  |  | (49 | ) |  |  | (68 | )
Total deferred tax liabilities |  |  | (4,408 | ) |  |  | (5,086 | )
Net deferred tax asset |  | $ | 11,534 |  |  | $ | 12,819 |
The classification of the net deferred tax assets in the accompanying consolidated balance sheets is:
|  | May 1, 2021 |  |  | May 2, 2020 |
Non-current assets |  | $ | 11,944 |  |  | $ | 13,271 |
Non-current liabilities |  |  | (410 | ) |  |  | (452 | )
|  | $ | 11,534 |  |  | $ | 12,819 |
The summary of changes in the amounts related to unrecognized uncertain tax benefits are:
|  | May 1, 2021 |  |  | May 2, 2020 |
Balance at beginning of year |  | $ | 582 |  |  | $ | 578 |
Gross increases related to prior period tax positions |  |  | 21 |  |  |  | 17 |
Gross decreases related to prior period tax positions |  |  | (1 | ) |  |  | (2 | )
Gross increases related to current period tax positions |  |  | 84 |  |  |  | 148 |
Lapse of statute of limitations |  |  | (138 | ) |  |  | (159 | )
Balance at end of year |  | $ | 548 |  |  | $ | 582 |
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 $150 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 $138 in unrecognized tax benefits related to the lapse of a statute of limitations in fiscal 2021. 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 $38 and $30 as of May 1, 2021 and May 2, 2020, respectively. As of May 1, 2021, we had foreign net operating loss (“NOL”) carryforwards of approximately $4,457 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 $856. However, due to uncertainty in future taxable income, a valuation allowance totaling approximately $595 was been recorded. 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 2018, 2019 and 2020 remain open to federal tax examinations, and fiscal years 2017, 2018, 2019 and 2020 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 2010. 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 1, 2021, we had no deferred tax liability recognized relating to our investment in foreign subsidiaries where the earnings have been indefinitely reinvested. The Tax Act of 2017 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, 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. Subsequently to the CARES Act, the Consolidated Appropriations Act (“CAA”) of 2021 was signed into law on December 27, 2020 expanding and extending rules pertaining to payroll tax credits outlined in the CARES Act. Additionally, the American Rescue Plan Act of 2021 (“ARPA”) signed into law on March 11, 2021, further extended the payroll tax credits with slight modifications. We continue to evaluate the specific rules, guidance, and procedures allowed by the provisions of the CARES Act, CAA and ARPA. 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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://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 http://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 http://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 http://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 http://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 http://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 http://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 http://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 http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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