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Income Taxes | 12 Months Ended
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Jun. 30, 2021
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%. Through provisions in the CARES Act, we have an income tax benefit of $5.2 million from the ability to carryback the fiscal 2021 federal net operating loss to a period with a higher statutory federal income tax rate. We estimate that we will receive a $13.0 million tax refund in connection with the carryback of the fiscal 2021 net operating loss, which is included in income taxes receivable in the Consolidated Balance Sheets. We have deferred $11.1 million of U.S. payroll tax as of June 30, 2021 through provisions of the CARES Act. The deferred payroll taxes are included within other accrued expenses and other liabilities in the Consolidated Balance Sheets. We must repay half of the deferred payroll tax by December 31, 2021 and the remainder by December 31, 2022. Sources of pretax income (loss)
|  | Fiscal Years Ended
|  | June 30, 2021 |  | June 30, 2020 |  | June 30, 2019
|  | (In thousands)
Domestic |  | $ | (38,867) |  |  | $ | (32,660) |  |  | $ | 46,032 |
Foreign |  | (4,396) |  |  | (3,984) |  |  | (7,620) |
Total |  | $ | (43,263) |  |  | $ | (36,644) |  |  | $ | 38,412 |
Components of the provision for income tax expense (benefit)
|  | Fiscal Years Ended
|  | June 30, 2021 |  | June 30, 2020 |  | June 30, 2019
|  | (In thousands)
Current: |  |  |  |  |  |
Federal |  | $ | (13,154) |  |  | $ | (376) |  |  | $ | 6,085 |
State |  | 465 |  |  | 412 |  |  | 2,390 |
Foreign |  | (239) |  |  | 23 |  |  | (97) |
|  | (12,928) |  |  | 59 |  |  | 8,378 |
Deferred: |  |  |  |  |  |
Federal |  | 774 |  |  | (5,000) |  |  | (528) |
State |  | (291) |  |  | (1,091) |  |  | 451 |
Foreign |  | 406 |  |  | 2,462 |  |  | 2,129 |
|  | 889 |  |  | (3,629) |  |  | 2,052 |
|  | $ | (12,039) |  |  | $ | (3,570) |  |  | $ | 10,430 |
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, 2021 |  | June 30, 2020 |  | June 30, 2019
|  | (In thousands)
Expected provision (benefit) for federal income taxes at the statutory rate |  | $ | (9,085) |  |  | $ | (7,695) |  |  | $ | 8,067 |
State income taxes, net of federal benefit |  | (1,240) |  |  | (768) |  |  | 2,288 |
Impairment of non-deductible goodwill(1) |  | — |  |  | 1,813 |  |  | — |
Charges without tax benefit |  | 961 |  |  | 1,707 |  |  | 1,233 |
Change in valuation allowance(2) |  | 2,797 |  |  | 3,062 |  |  | 4,512 |
Reversal of branch liability(2) |  | — |  |  | — |  |  | (3,546) |
Excess tax expense (benefit) on stock-based compensation |  | 1,826 |  |  | 230 |  |  | (296) |
Research and development and other tax credits |  | (1,707) |  |  | (1,724) |  |  | (1,972) |
Foreign tax differential |  | (96) |  |  | (132) |  |  | (248) |
Federal rate differential net operating loss carryback(3) |  | (5,223) |  |  | — |  |  | — |
Change in uncertain tax positions |  | (7) |  |  | 20 |  |  | 22 |
Other |  | (265) |  |  | (83) |  |  | 370 |
Provision (benefit) for federal, state and foreign income taxes |  | $ | (12,039) |  |  | $ | (3,570) |  |  | $ | 10,430 |
(1)In fiscal 2020, we impaired $32.9 million of goodwill, which included $8.6 million of non-deductible goodwill. See Note 4 - Goodwill and Other Intangible Assets for more information about the impairments. (2)In fiscal 2021, we placed $2.8 million of valuation allowances, including $1.5 million on certain state net operating loss carryforwards due to a recent history of cumulative losses for a subsidiary. In fiscal 2020, we placed $3.1 million of valuation allowances on net operating loss carryforwards and foreign tax credits primarily related to Canada. In fiscal 2019, we placed $4.5 million of valuation allowances on net operating loss carryforwards and foreign tax credits generated by 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)Relates to fiscal 2021 net operating losses carried back under provisions of the CARES Act to fiscal years 2016 and 2017 which had a 35% federal tax rate. Significant components of our deferred tax assets and liabilities
|  | June 30, 2021 |  | June 30, 2020
|  | (In thousands)
Deferred tax assets: |  |  |  |
Warranty reserve |  | $ | 206 |  |  | $ | 206 |
Bad debt reserve |  | 231 |  |  | 233 |
Paid-time-off accrual |  | 747 |  |  | 669 |
Insurance reserve |  | 1,229 |  |  | 1,221 |
Legal reserve |  | 146 |  |  | 207 |
Net operating loss benefit and credit carryforwards |  | 14,966 |  |  | 10,354 |
Valuation allowance |  | (11,104) |  |  | (7,763) |
Accrued compensation and pension |  | 690 |  |  | 1,447 |
Prepaid insurance |  | 27 |  |  | — |
Stock compensation expense on nonvested deferred shares |  | 1,895 |  |  | 3,231 |
Accrued losses |  | 64 |  |  | 96 |
Restructuring reserve |  | 725 |  |  | 1,381 |
Book over tax amortization |  | 3,765 |  |  | 5,195 |
Deferred FICA |  | 1,920 |  |  | — |
Foreign currency translation and other |  | 665 |  |  | 843 |
Total deferred tax assets |  | 16,172 |  |  | 17,320 |
Deferred tax liabilities: |  |  |  |
Tax over book depreciation |  | 10,315 |  |  | 11,313 |
Branch future liability |  | — |  |  | 74 |
Receivable holdbacks and other |  | 596 |  |  | 6 |
Total deferred tax liabilities |  | 10,911 |  |  | 11,393 |
Net deferred tax asset |  | $ | 5,261 |  |  | $ | 5,927 |
As reported in the Consolidated Balance Sheets:
|  | June 30, 2021 |  | June 30, 2020
|  | (In thousands)
Deferred income tax assets |  | 5,295 |  |  | 5,988 |
Deferred income tax liabilities |  | (34) |  |  | (61) |
Net deferred tax asset |  | 5,261 |  |  | $ | 5,927 |
Operating loss and tax credit carryforwards We have 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, 2021 and June 30, 2020 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 2025 to indefinite | $ | 57,786 |
Foreign net operating losses | June 2029 to June 2041 | $ | 33,242 |
Tax Credit Carryforwards | Expiration Period | Amount (in thousands)
State tax credits | June 2033 to indefinite | $ | 578 |
Federal tax credits | June 2041 | $ | 1,087 |
Federal foreign tax credits | June 2023 to June 2025 | $ | 655 |
Foreign tax credits | June 2035 to June 2041 | $ | 687 |
Other In general, it is our practice and intention to reinvest the earnings of our foreign subsidiaries in our foreign operations. We do not provide for outside basis differences under the indefinite reinvestment assertion of ASC 740-30. We file tax returns in multiple domestic and foreign taxing jurisdictions. With a few exceptions, we are no longer subject to examination by taxing authorities through fiscal 2016. At June 30, 2021, we updated our evaluation of our open tax years in all known jurisdictions. As of June 30, 2021, we have a $0.3 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=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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