XML 67 R16.htm IDEA: XBRL DOCUMENT
v3.24.1

Income Taxes | 12 Months Ended
--- | ---
May 28, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The (benefit) provision for income taxes from continuing operations consisted of the following:
(in thousands) | Year Ended
| May 28, 2023 |  | May 29, 2022 |  | May 30, 2021
|  |  | As Restated |  | As Restated
Current: |  |  |  |  |
Federal | $ | (1) |  |  | $ | — |  |  | $ | (38) |
State | 55 |  |  | 23 |  |  | 74 |
Foreign | — |  |  | 356 |  |  | 56 |
Total | 54 |  |  | 379 |  |  | 92 |
Deferred: |  |  |  |  |
Federal | 234 |  |  | (4,936) |  |  | (5,983) |
State | 20 |  |  | (654) |  |  | (459) |
Total | 254 |  |  | (5,590) |  |  | (6,442) |
Income tax provision (benefit) | $ | 308 |  |  | $ | (5,211) |  |  | $ | (6,350) |
The actual (benefit) provision for income taxes from continuing operations differs from the statutory U.S. federal income tax rate as follows:
(in thousands) | Year Ended
| May 28, 2023 |  | May 29, 2022 |  | May 30, 2021
|  |  | As Restated |  | As Restated
Tax at U.S. statutory rate (1) | $ | (13,932) |  |  | $ | (4,344) |  |  | $ | (6,256) |
State income taxes, net of federal benefit | (1,805) |  |  | (638) |  |  | (830) |
Change in valuation allowance | 19,461 |  |  | (1,065) |  |  | 2,597 |
Tax credit carryforwards | (611) |  |  | (436) |  |  | (606) |
Other compensation-related activity | 283 |  |  | 234 |  |  | 249 |
Impairment of goodwill | — |  |  | 2,347 |  |  | — |
Foreign rate differential | (2,749) |  |  | (496) |  |  | (1,414) |
Other | (339) |  |  | (813) |  |  | (90) |
Income tax provision (benefit) | $ | 308 |  |  | $ | (5,211) |  |  | $ | (6,350) |
(1) Statutory rate was 21.0% for fiscal year 2023, 2022 and 2021. The effective tax rate for fiscal year 2023 changed from a tax benefit of 25.19% to a tax provision of 0.48% in comparison to fiscal year 2022 after adjustment for discontinued operations. The decrease in the effective tax rate for fiscal year 2023 was primarily due to a significant valuation allowance increase and the impairment of Yucatan goodwill. The income tax (provision) benefit from discontinued operations for fiscal years 2023, 2022, and 2021 of $0.0 million, $0.7 million, and $1.4 million are not included in the above income tax benefit from continuing operations. The effective tax rate for fiscal year 2022 changed from a tax provision benefit of 21.32% to a tax provision benefit of 25.19% in comparison to fiscal year 2021 after adjustment for discontinued operations. The increase in the income tax benefit for fiscal year 2022 was primarily due to significant decrease in the Company’s loss before tax from continuing operations, and the decrease in change in valuation allowance which offsets the impairment of Yucatan goodwill. Significant components of deferred tax assets and liabilities reported in the accompanying Consolidated Balance Sheets consisted of the following:
(in thousands) | Year Ended
| May 28, 2023 |  | May 29, 2022
|  |  | As Restated
Deferred tax assets: |  |  |
Accruals and reserves | $ | 1,798 |  |  | $ | 1,753 |
Net operating loss carryforwards | 44,618 |  |  | 28,957 |
Stock-based compensation | 984 |  |  | 880 |
Research and AMT credit carryforwards | 6,269 |  |  | 5,611 |
Lease liability | 1,843 |  |  | 2,874 |
Limitations on business interest expense | 8,614 |  |  | 3,504 |
Goodwill and other indefinite life intangibles | — |  |  | 2,745 |
Other | 434 |  |  | 752 |
Gross deferred tax assets | 64,560 |  |  | 47,076 |
Valuation allowance | (52,510) |  |  | (36,531) |
Net deferred tax assets | 12,050 |  |  | 10,545 |
Deferred tax liabilities: |  |  |
Depreciation and amortization | (10,526) |  |  | (8,594) |
Goodwill and other indefinite life intangibles | (877) |  |  | — |
Right of use asset | (1,027) |  |  | (2,077) |
Deferred tax liabilities | (12,430) |  |  | (10,671) |
Net deferred tax liabilities | $ | (380) |  |  | $ | (126) |
The effective tax rates for fiscal years 2023 and 2022 differ from the blended statutory federal income tax rate of 21% as a result of several factors, including the change in valuation allowance related with federal, state and foreign deferred balances, foreign rate differential, change in ending state deferred blended rate, impairment of goodwill and intangibles, and the benefit of federal and state research and development credits. As of May 28, 2023, the Company had federal, California, Indiana, and other state net operating loss carryforwards of approximately $171.8 million, $70.7 million, $33.7 million, and $33.1 million respectively. These losses expire in different periods through 2032, if not utilized. The Company acquired additional net operating losses through the acquisition of Greenline. Utilization of these acquired net operating losses in a specific year is limited due to the “change in ownership” provision of the Internal Revenue Code of 1986 and similar state provisions. The net operating losses presented above for federal and state purposes is net of any such limitation. As of May 28, 2023, the Company has federal, California, and Minnesota research and development tax credit carryforwards of approximately $3.3 million, $2.2 million, and $1.7 million, respectively. The research and development tax credit carryforwards have an unlimited carryforward period for California purposes, 20-year carryforward for federal purposes, and 15-year carryforward for Minnesota purposes. Valuation allowances are reviewed each period on a tax jurisdiction by jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets. Based on this analysis and considering all positive and negative evidence, we determined that as of May 28, 2023, a valuation allowance of federal $41.1 million, and state $11.7 million should be recorded as a result of uncertainty around the utilization of federal and state net operating losses, and federal capital loss carryforward. The accounting for uncertainty in income taxes recognized in an enterprise’s financial statements prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and the derecognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure, and transition. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in thousands) | Year Ended
| May 28, 2023 |  | May 29, 2022 |  | May 30, 2021
|  |  | As Restated |  | As Restated
Unrecognized tax benefits – beginning of the period | $ | 1,041 |  |  | $ | 958 |  |  | $ | 836 |
Gross increases – prior-period tax positions | 16 |  |  | — |  |  | — |
Gross increases – current-period tax positions | 116 |  |  | 83 |  |  | 122 |
Unrecognized tax benefits – end of the period | $ | 1,173 |  |  | $ | 1,041 |  |  | $ | 958 |
As of May 28, 2023, the total amount of net unrecognized tax benefits is $1.2 million, of which, $1.0 million, if recognized, would affect the effective tax rate. The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. The total amount of penalties and interest is not material as of May 28, 2023. The Company does not expect its unrecognized tax benefits to decrease within the next twelve months. Due to tax attribute carryforwards, the Company is subject to examination for tax years 2013 forward for U.S. tax purposes. The Company was also subject to examination in various state jurisdictions for tax years 2012 forward, none of which were individually material.

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 -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration