Note 6 - Income Taxes

6 Months Ended

Nov. 26, 2017

6 .	Income Taxes

The provision for income taxes for the

six

months ended

November 26, 2017

was

$1.5

million. The effective tax rate for the

six

months ended

November 26, 2017

and

November 27, 2016

was

36%

and

34%,

respectively

. The effective tax rate for the

six

months ended

November 26, 2017

was higher than the statutory federal income tax rate of

35%

primarily due to state income taxes and incentive stock option expense; partially offset by the domestic manufacturing deduction and research and development credits. There are

significant discrete tax benefits included in the effective tax rate for the

six

months ended

November 26, 2017.

As of

November 26, 2017

and

May 28, 2017,

the Company had unrecognized tax benefits of approximately

$535,

000

and

$537

,000,

respectively. Included in the balance of unrecognized tax benefits as of

November 26, 2017

and

May 28, 2017

is approximately

$433

,000

and

$419,000,

respectively, of tax benefits that, if recognized, would result in an adjustment to the Company’s effective tax rate. The Company does

not

expect its unrecognized tax benefits to change significantly within the next

twelve

months.

The Company has elected to classify interest and penalties related to uncertain tax positions as a component of its provision for income taxes.

The Company has accrued an insignificant amount of interest and penalties relating to the income tax on the unrecognized tax benefits as of

November 26, 2017

and

May 28, 2017

Due to tax attribute carryforwards, the Company is subject to examination for tax years

2013

forward for U.S. tax purposes. The Company is also subject to examination in various state jurisdictions for tax years

2012

forward,

none

of which were individually material.

Our estimated annual effective tax rate

may

be subject to further uncertainty d

ue to the recent changes in U.S. tax rates and tax laws.