XML 21 R8.htm IDEA: XBRL DOCUMENT
v3.22.1

Income Taxes | 12 Months Ended
--- | ---
Feb. 26, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Earnings before income taxes consisted of the following:
(In thousands) |  | 2022 |  | 2021 |  | 2020
United States |  | $ | 70,039 |  |  | $ | 45,651 |  |  | $ | 97,297 |
International |  | (56,170) |  |  | (23,040) |  |  | (17,547) |
Earnings before income taxes |  | $ | 13,869 |  |  | $ | 22,611 |  |  | $ | 79,750 |
The components of income tax expense for each of the last three fiscal years are as follows:
(In thousands) |  | 2022 |  | 2021 |  | 2020
Current |  |  |  |  |  |
Federal |  | $ | 13,806 |  |  | $ | 11,495 |  |  | $ | 8,493 |
State and local |  | 4,823 |  |  | 702 |  |  | 2,064 |
International |  | 39 |  |  | 1,642 |  |  | (2,720) |
Total current |  | 18,668 |  |  | 13,839 |  |  | 7,837 |
Deferred |  |  |  |  |  |
Federal |  | (1,528) |  |  | (2,860) |  |  | 9,513 |
State and local |  | (4,270) |  |  | 538 |  |  | 2,152 |
International |  | (2,158) |  |  | (4,138) |  |  | (1,202) |
Total deferred |  | (7,956) |  |  | (6,460) |  |  | 10,463 |
Total non-current tax (benefit) expense |  | (329) |  |  | (204) |  |  | (464) |
Total income tax expense |  | $ | 10,383 |  |  | $ | 7,175 |  |  | $ | 17,836 |
Income tax payments, net of refunds, were $8.2 million, $14.1 million and $17.8 million in fiscal 2022, 2021 and 2020, respectively. The following table provides a reconciliation of the statutory federal income tax rate to our consolidated effective tax rates:
|  | 2022 |  | 2021 |  | 2020
Statutory federal income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State and local income taxes, net of federal tax benefit |  | 16.4 |  |  | (2.5) |  |  | 1.8 |
Foreign tax rate differential |  | (15.4) |  |  | (3.4) |  |  | (1.3) |
Nondeductible goodwill impairment expense |  | — |  |  | 5.6 |  |  | — |
Valuation allowance |  | 63.2 |  |  | 11.4 |  |  | 2.2 |
Nontaxable gain (loss) on life insurance policies |  | 1.2 |  |  | (1.8) |  |  | (0.4) |
Deduction for foreign derived intangible income |  | (2.6) |  |  | (0.8) |  |  | (0.3) |
Research & development tax credit |  | (9.4) |  |  | (5.3) |  |  | (1.6) |
§162(m) Executive Compensation Limitation |  | 3.5 |  |  | 3.6 |  |  | 0.3 |
Tax benefit of share based awards |  | (5.2) |  |  | 0.2 |  |  | 0.2 |
Other, net |  | 2.2 |  |  | 3.7 |  |  | 0.5 |
Consolidated effective income tax rate |  | 74.9 | % |  | 31.7 | % |  | 22.4 | %
The estimated effective tax rate for fiscal 2022 increased 43.2 percentage points from fiscal 2021, primarily due to the valuation allowance recorded against the tax benefit of the Sotawall impairment and the impact of the permanent items in relation to reduced earnings in fiscal 2022. Deferred tax assets and deferred tax liabilities at February 26, 2022 and February 27, 2021 were:
(In thousands) |  | 2022 |  | 2021
Deferred tax assets |  |  |  |
Accrued expenses |  | $ | 3,515 |  |  | $ | 6,309 |
Deferred compensation |  | 8,602 |  |  | 9,452 |
Depreciation |  | 509 |  |  | — |
Employment tax accrual |  | 1,546 |  |  | 1,483 |
Goodwill and other intangibles |  | 13,237 |  |  | 4,215 |
Liability for unrecognized tax benefits |  | 1,965 |  |  | 1,916 |
Unearned income |  | 9,802 |  |  | 5,778 |
Operating lease liabilities |  | 13,769 |  |  | 16,039 |
Net operating losses and tax credits |  | 8,580 |  |  | 9,952 |
Other |  | 2,931 |  |  | 1,984 |
Total deferred tax assets |  | 64,456 |  |  | 57,128 |
Less: valuation allowance |  | (15,370) |  |  | (7,435) |
Deferred tax assets, net of valuation allowance |  | 49,086 |  |  | 49,693 |
Deferred tax liabilities |  |  |  |
Accrued expenses |  | 558 |  |  | 1,095 |
Goodwill and other intangibles |  | 2,516 |  |  | 3,263 |
Depreciation |  | 26,095 |  |  | 34,573 |
Operating lease, right-of-use assets |  | 12,768 |  |  | 15,435 |
Other |  | 3,015 |  |  | 820 |
Total deferred tax liabilities |  | 44,952 |  |  | 55,186 |
Net deferred tax assets (liabilities) |  | $ | 4,134 |  |  | $ | (5,493) |
The Company has state and foreign net operating loss carryforwards with a tax effect of $8.6 million. A valuation allowance of $4.5 million has been established for these net operating loss carryforwards due to the uncertainty of the use of the tax benefits in future periods. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing Deferred Tax Assets ("DTAs"). This has resulted in valuation allowances being recorded against DTAs in prior years in Brazil, Canada and various states. During the fourth quarter of fiscal 2022, an additional valuation allowance of $11.5 million was recorded against Canadian DTAs to recognize only the portion of the DTA that is more likely than not to be realized. As of February 26, 2022, we have a full valuation allowance recorded against our Canadian DTAs. A significant piece of objective negative evidence evaluated in the fourth quarter of fiscal 2022 was the cumulative losses incurred in Canada over the three-year period ended February 26, 2022, driven primarily by the impairments recorded in the fourth quarter of fiscal 2022. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. The amount of the DTA considered realizable could be adjusted if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth or if the Company were to identify and implement a tax strategy to provide a future source of taxable income. The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, Canada, Brazil and other international jurisdictions. The Company is no longer subject to U.S. federal tax examinations for years prior to fiscal 2019, or state and local income tax examinations for years prior to fiscal 2013. The Company is not currently under U.S. federal examination for years subsequent to fiscal year 2018, and there is very limited audit activity of the Company’s income tax returns in U.S. state jurisdictions or international jurisdictions. The Company considers the earnings of its non-U.S. subsidiaries to be indefinitely invested outside of the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and specific plans for reinvestment of those subsidiary earnings. Should the Company decide to repatriate the foreign earnings, it would need to adjust the income tax provision in the period it was determined that the earnings will no longer be indefinitely invested outside the U.S. If we were to prevail on all unrecognized tax benefits recorded, $1.7 million, $2.2 million and $2.6 million for fiscal 2022, 2021 and 2020, respectively, would benefit the effective tax rate. Penalties and interest related to unrecognized tax benefits are recorded in income tax expense. For fiscal 2022, 2021 and 2020, we accrued penalties and interest related to unrecognized tax benefits of $0.3 million. The following table provides a reconciliation of the total amounts of gross unrecognized tax benefits:
(In thousands) |  | 2022 |  | 2021 |  | 2020
Gross unrecognized tax benefits at beginning of year |  | $ | 3,755 |  |  | $ | 4,071 |  |  | $ | 5,111 |
Gross increases in tax positions for prior years |  | 108 |  |  | 106 |  |  | 82 |
Gross decreases in tax positions for prior years |  | (145) |  |  | (351) |  |  | (1,100) |
Gross increases based on tax positions related to the current year |  | 420 |  |  | 429 |  |  | 425 |
Settlements |  | (147) |  |  | (96) |  |  | (15) |
Statute of limitations expiration |  | (670) |  |  | (404) |  |  | (432) |
Gross unrecognized tax benefits at end of year |  | $ | 3,321 |  |  | $ | 3,755 |  |  | $ | 4,071 |
On March 27, 2020, the U.S. enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) in response to the COVID-19 pandemic. The CARES Act contains numerous income tax provisions, such as relaxing limitations on the deductibility of interest and the ability to carryback net operating losses arising in taxable years from 2018 through 2020. While these provisions did not impact the Company, a provision related to the temporary deferral of the employer share of payroll taxes allowed us to defer remittance of $13.6 million of payroll taxes in calendar 2020. During the fourth quarter of fiscal 2022, we repaid half of the deferred tax payments in the amount of $6.8 million, with the remaining amount of $6.8 million included within accrued payroll and other benefits on our consolidated balance sheets to be repaid in calendar year 2022.

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 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration