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Income Taxes | 12 Months Ended
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Jun. 30, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Coronavirus Aid, Relief, and Economic Security Act On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the "CARES Act") was signed into law. The purpose of the CARES Act was to provide $2.2 trillion in funding to fight the COVID-19 pandemic and provide economic relief in the form of tax relief, government loans and grants. The CARES Act contains the following key provisions which affect income taxes: •Eliminates the 80% of taxable income limitations by allowing corporations to fully utilize net operating loss carryforwards to offset taxable income in 2018, 2019, or 2020 and reinstating it for tax years after 2020; •Allows net operating losses generated in 2018, 2019 or 2020 to be carried back five years; •Increases the net interest expense deduction limit to 50% of adjusted taxable income from 30% for the 2019 and 2020 tax years; •Allows taxpayers with alternative minimum tax credits to claim a refund for the entire amount of the credit instead of recovering the credit through refunds over a period of years, as required by the 2017 Tax Cuts and Jobs Act; and •Allows entities to deduct more of their charitable cash contributions made during calendar year 2020 by increasing the taxable income limitation to 25% from 10%. The income tax provisions in the CARES Act have not had a material impact on the Company as of June 30, 2020. The CARES Act also provides certain payroll tax credits and allows companies to defer payroll tax that would otherwise be due from enactment through December 31, 2020. The Company has recognized $0.8 million of payroll tax credits during fiscal 2020 and has deferred $3.8 million of payroll tax as of June 30, 2020. The payroll tax credits are included as a reduction of selling, general and administrative expenses in the Consolidated Statements of Income and the deferred payroll taxes are included within other liabilities in the Consolidated Balance Sheets. The Company must repay half of the deferred payroll tax by December 31, 2021 and the remainder by December 31, 2022. The Company has also received $1.1 million of subsidies in Canada during fiscal 2020 as part the Canada Emergency Wage Subsidy program, which was designed to compensate Canadian employers whose business has been affected by the COVID-19 pandemic. These subsidies are included as a reduction of selling, general and administrative expenses in the Consolidated Statements of Income. Sources of pretax income (loss)
|  | Fiscal Years Ended |  |  |  |
|  | June 30, 2020 |  | June 30, 2019 |  | June 30, 2018
|  | (In thousands) |  |  |  |
Domestic |  | $ | (32,660) |  |  | $ | 46,032 |  |  | $ | (2,656) |
Foreign |  | (3,984) |  |  | (7,620) |  |  | (9,492) |
Total |  | $ | (36,644) |  |  | $ | 38,412 |  |  | $ | (12,148) |
Components of the provision for income tax expense (benefit)
|  | Fiscal Years Ended |  |  |  |
|  | June 30, 2020 |  | June 30, 2019 |  | June 30, 2018
|  | (In thousands) |  |  |  |
Current: |  |  |  |  |  |
Federal |  | $ | (376) |  |  | $ | 6,085 |  |  | $ | (121) |
State |  | 412 |  |  | 2,390 |  |  | 135 |
Foreign |  | 23 |  |  | (97) |  |  | 504 |
|  | 59 |  |  | 8,378 |  |  | 518 |
Deferred: |  |  |  |  |  |
Federal |  | (5,000) |  |  | (528) |  |  | 1,093 |
State |  | (1,091) |  |  | 451 |  |  | (590) |
Foreign |  | 2,462 |  |  | 2,129 |  |  | (1,689) |
|  | (3,629) |  |  | 2,052 |  |  | (1,186) |
|  | $ | (3,570) |  |  | $ | 10,430 |  |  | $ | (668) |
Reconciliation between the expected income tax provision applying the domestic federal statutory tax rate and the reported income tax provision
|  | Fiscal Years Ended |  |  |  |
|  | June 30, 2020 |  | June 30, 2019 |  | June 30, 2018
|  | (In thousands) |  |  |  |
Expected provision (benefit) for federal income taxes at the statutory rate |  | $ | (7,695) |  |  | $ | 8,067 |  |  | $ | (3,408) |
State income taxes, net of federal benefit |  | (768) |  |  | 2,288 |  |  | 247 |
Impairment of non-deductible goodwill(1) |  | 1,813 |  |  | — |  |  | 2,342 |
Charges without tax benefit |  | 1,707 |  |  | 1,233 |  |  | 1,100 |
Change in valuation allowance(2) |  | 3,062 |  |  | 4,512 |  |  | 1,173 |
Reversal of branch liability(2) |  | — |  |  | (3,546) |  |  | — |
Excess tax expense (benefit) on stock-based compensation |  | 230 |  |  | (296) |  |  | 511 |
Remeasurement of deferred taxes(3) |  | — |  |  | — |  |  | (455) |
Research and development and other tax credits |  | (1,724) |  |  | (1,972) |  |  | (1,665) |
Foreign tax differential |  | (132) |  |  | (248) |  |  | (10) |
Change in uncertain tax positions |  | 20 |  |  | 22 |  |  | (7) |
Other |  | (83) |  |  | 370 |  |  | (496) |
Provision (benefit) for federal, state and foreign income taxes |  | $ | (3,570) |  |  | $ | 10,430 |  |  | $ | (668) |
(1)In fiscal 2020, the Company impaired $32.9 million of goodwill, which included $8.6 million of non-deductible goodwill. In fiscal 2018, the Company impaired $17.3 million of goodwill, which included $8.3 million of non-deductible goodwill. See Note 4 - Goodwill and Other Intangible Assets for more information about the impairments. (2)In fiscal 2020, the Company placed $3.1 million of valuation allowances on net operating loss carryforwards and foreign tax credits primarily related to Canada. In fiscal 2019, the Company placed $4.5 million of valuation allowances on net operating loss carryforwards and foreign tax credits generated by its branch operations in Canada, which will likely not be utilized prior to their expiration. These valuation allowances were largely offset by the reversal $3.5 million of branch liabilities associated with the Canadian net operating loss carryforwards and foreign tax credits. (3)This represents the remeasurement of deferred taxes in connection with Tax Cuts and Jobs Act. Significant components of the Company’s deferred tax assets and liabilities
|  | June 30, 2020 |  | June 30, 2019
|  | (In thousands) |  |
Deferred tax assets: |  |  |  |
Warranty reserve |  | $ | 206 |  |  | $ | 206 |
Bad debt reserve |  | 233 |  |  | 238 |
Paid-time-off accrual |  | 669 |  |  | 616 |
Insurance reserve |  | 1,221 |  |  | 1,577 |
Legal reserve |  | 207 |  |  | 1 |
Net operating loss benefit and credit carryforwards |  | 10,354 |  |  | 10,054 |
Valuation allowance |  | (7,763) |  |  | (4,959) |
Accrued compensation and pension |  | 1,447 |  |  | 1,115 |
Stock compensation expense on nonvested deferred shares |  | 3,231 |  |  | 3,679 |
Accrued losses |  | 96 |  |  | 194 |
Restructuring reserve |  | 1,381 |  |  | — |
Foreign currency translation and other |  | 843 |  |  | 833 |
Total deferred tax assets |  | 12,125 |  |  | 13,554 |
Deferred tax liabilities: |  |  |  |
Tax over book depreciation |  | 11,313 |  |  | 9,349 |
Tax over book (book over tax) amortization |  | (5,195) |  |  | 1,770 |
Branch future liability |  | 74 |  |  | 34 |
Receivable holdbacks and other |  | 6 |  |  | 16 |
Total deferred tax liabilities |  | 6,198 |  |  | 11,169 |
Net deferred tax asset |  | $ | 5,927 |  |  | $ | 2,385 |
As reported in the Consolidated Balance Sheets:
|  | June 30, 2020 |  | June 30, 2019
|  | (In thousands) |  |
Deferred income tax assets |  | 5,988 |  |  | 2,683 |
Deferred income tax liabilities |  | (61) |  |  | (298) |
Net deferred tax asset |  | $ | 5,927 |  |  | $ | 2,385 |
Operating loss and tax credit carryforwards The Company has state net operating loss carryforwards, state tax credit carryforwards, federal foreign tax credit carryforwards, foreign net operating loss carryforwards and foreign tax credit carryforwards. The valuation allowance at June 30, 2020 and June 30, 2019 reduces the recognized tax benefit of these carryforwards to an amount that is more likely than not to be realized. These carryforwards will generally expire as shown below:
Operating Loss Carryforwards | Expiration Period | Amount (in thousands)
State net operating losses | June 2024 to June 2040 | $ | 19,676 |
Foreign net operating losses | June 2029 to June 2040 | $ | 24,618 |
Tax Credit Carryforwards | Expiration Period | Amount (in thousands)
State tax credits | June 2032 to June 2035 | $ | 877 |
Federal foreign tax credits | June 2021 to June 2025 | $ | 1,239 |
Foreign tax credits | June 2035 to June 2040 | $ | 627 |
Other In general, it is the practice and intention of the Company to reinvest the earnings of its foreign subsidiaries in its foreign operations. We do not provide for outside basis differences under the indefinite reinvestment assertion of ASC 740-30. The Company files tax returns in multiple domestic and foreign taxing jurisdictions. With a few exceptions, the Company is no longer subject to examination by taxing authorities through fiscal 2015. At June 30, 2020, the Company updated its evaluation of its open tax years in all known jurisdictions. As of June 30, 2020, we have a $0.5 million liability for unrecognized tax positions and the payment of related interest and penalties. We treat the related interest and penalties as income tax expense. Due to the uncertainties related to these tax matters, we are unable to make a reasonably reliable estimate as to when cash settlement with a taxing authority will occur.

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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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
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