XML 35 R15.htm IDEA: XBRL DOCUMENT v3.21.2
Income Taxes
 12 Months Ended
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 
State465 412 2,390 
Foreign(239)23 (97)
(12,928)59 8,378 
Deferred:
Federal774 (5,000)(528)
State(291)(1,091)451 
Foreign406 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)$8,067 
State income taxes, net of federal benefit(1,240)(768)2,288 
Impairment of non-deductible goodwill(1)
— 1,813 — 
Charges without tax benefit961 1,707 1,233 
Change in valuation allowance(2)
2,797 3,062 4,512 
Reversal of branch liability(2)
— — (3,546)
Excess tax expense (benefit) on stock-based compensation1,826 230 (296)
Research and development and other tax credits(1,707)(1,724)(1,972)
Foreign tax differential(96)(132)(248)
Federal rate differential net operating loss carryback(3)
(5,223)— — 
Change in uncertain tax positions(7)20 22 
Other(265)(83)370 
Provision (benefit) for federal, state and foreign income taxes$(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 reserve231 233 
Paid-time-off accrual747 669 
Insurance reserve1,229 1,221 
Legal reserve146 207 
Net operating loss benefit and credit carryforwards14,966 10,354 
Valuation allowance(11,104)(7,763)
Accrued compensation and pension690 1,447 
Prepaid insurance27 — 
Stock compensation expense on nonvested deferred shares1,895 3,231 
Accrued losses64 96 
Restructuring reserve725 1,381 
Book over tax amortization3,765 5,195 
Deferred FICA1,920 — 
Foreign currency translation and other665 843 
Total deferred tax assets16,172 17,320 
Deferred tax liabilities:
Tax over book depreciation10,315 11,313 
Branch future liability— 74 
Receivable holdbacks and other596 6 
Total deferred tax liabilities10,911 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 assets5,295 5,988 
Deferred income tax liabilities(34)(61)
Net deferred tax asset5,261 $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 CarryforwardsExpiration PeriodAmount (in thousands)
State net operating lossesJune 2025 to indefinite$57,786 
Foreign net operating lossesJune 2029 to June 2041$33,242 
Tax Credit CarryforwardsExpiration PeriodAmount (in thousands)
State tax creditsJune 2033 to indefinite$578 
Federal tax creditsJune 2041$1,087 
Federal foreign tax creditsJune 2023 to June 2025$655 
Foreign tax creditsJune 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.