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Income Taxes
 12 Months Ended
May 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table represents the current and deferred income tax expense (benefit) for federal, state and foreign income taxes attributable to operations (in thousands):
For the Years Ended
May 31,
2025		May 25,
2024		May 27,
2023
Current:
Federal$51 $3,245 $19,317 
State(387)1,422 6,323 
Foreign2,296 3,596 2,945 
1,960 8,263 28,585 
Deferred:
Federal(6,540)935 (6,613)
State(1,793)273 (1,357)
Foreign2,078 (676)(2,356)
(6,255)532 (10,326)
Income tax expense (benefit)$(4,295)$8,795 $18,259 
Income (loss) before income tax expense (benefit) is as follows (in thousands):
For the Years Ended
May 31,
2025		May 25,
2024		May 27,
2023
Domestic$(181,733)$23,084 $60,835 
Foreign(14,342)6,745 11,783 
Income (loss) before income tax expense (benefit)$(196,075)$29,829 $72,618 
The income tax expense (benefit) differs from the amount that would result from applying the federal statutory rate as follows:
For the Years Ended
May 31,
2025		May 25,
2024		May 27,
2023
Statutory tax rate21.0 %21.0 %21.0 %
State taxes, net of federal benefit1.0 4.6 5.6 
Non-U.S. rate adjustments(0.3)2.8 1.4 
Stock-based compensation(0.6)2.2 (0.1)
Valuation allowance(8.6)5.8 (1.7)
U.S. international tax impact, net of credits
(0.3)0.9 0.4 
Contingent consideration
- (3.1)- 
Section 986(c) foreign exchange loss
- (1.3)- 
Capital loss carryforward
- (6.2)- 
Goodwill impairment
(9.8)- - 
Permanent items(0.2)2.5 0.3 
Return-to-provision & other adjustments0.1 (0.5)(1.6)
Other, net(0.1)0.8 (0.2)
Effective tax rate2.2 %29.5 %25.1 %

The impact of state taxes, net of federal benefit, and foreign income taxed at other than U.S. rates fluctuates year over year due to the changes in the mix of operating income and losses amongst the various states and foreign jurisdictions in which we operate. Our accounting policy is to recognize the U.S. tax effects of global intangible low-taxed income as a component of income tax expense in the period it arises.
The components of the net deferred tax asset (liability) consist of the following (in thousands):
As of
May 31,
2025		As of
May 25,
2024
Deferred tax assets:
Allowance for credit losses$369 $482 
Accrued compensation3,583 4,089 
Accrued expenses1,215 970 
Lease liability6,684 3,345 
Stock options and restricted stock2,770 3,870 
Foreign tax credit 345 477 
Net operating losses19,632 17,714 
Capital loss carryforwards
1,606 2,343 
State taxes- 113 
Property and equipment520 782 
Goodwill and intangibles
7,700 - 
Gross deferred tax asset44,424 34,185 
Valuation allowance(29,402)(8,550)
Gross deferred tax asset, net of valuation allowance15,022 25,635 
Deferred tax liabilities:
ROU asset(5,834)(2,911)
Outside basis difference - Sweden investment- (262)
Goodwill and intangibles- (19,830)
Net deferred tax asset$9,188 $2,632 
The Organisation for Economic Co-operation and Development (“OECD”) has released an Inclusive Framework on Base Erosion and Profit Shifting including Pillar Two Model Rules to reform international corporate taxation and introduce a new 15% global minimum tax applicable to large multinational corporations. Certain jurisdictions have enacted or substantively enacted the Pillar Two legislations. We have considered the applicability of such global implementations and determined that it does not have a material impact on our consolidated financial statements in fiscal 2025. We will continue to monitor and evaluate global implementation of Pillar Two legislations.

Additionally, we are continuing to monitor new guidance with regard to the new corporate alternative minimum tax (“CAMT”) and its applicability. We have considered the applicability of the CAMT and determined that it does not have a material impact on our consolidated financial statements in fiscal 2025.


The Company recognized a tax benefit of approximately $1.5 million, $1.3 million and $2.1 million for the years ended May 31, 2025, May 25, 2024 and May 27, 2023, respectively, associated with the exercise of nonqualified stock options, vesting of restricted stock awards, restricted stock units, performance-based stock units, and disqualifying dispositions by employees of shares acquired under the Company's Employee Stock Purchase Plan.
The Company has tax-effected foreign net operating loss carryforwards of $18.9 million ($76.1 million on a gross basis), tax-effected federal net operating loss carryforwards of $0.1 million, tax-effected state net operating loss carryforwards of $0.7 million, capital loss carryforwards of $1.6 million, and foreign tax credit carryforwards of $0.3 million. The federal net operating loss is carried forward indefinitely, but it may only reduce 80% of taxable income in a carryforward tax year. The state net operating loss carryforwards will expire beginning in fiscal 2030, the capital loss carryforwards will expire in fiscal 2028, and the foreign tax credits will expire beginning in fiscal 2028. The following table summarizes the foreign net operating losses expiration periods (in thousands):
Expiration PeriodsAmount of Net Operating Losses
Fiscal Years Ending:
2026$1 
2027 and beyond2,113 
Unlimited74,019 
Total$76,133 
The following table summarizes the activity in the Company’s valuation allowance accounts (in thousands):
Beginning
Balance		Charged to
Operations		Currency
Rate
Changes		Ending
Balance
Years Ended:
May 27, 2023$8,249 $(1,343)$(392)$6,514 
May 25, 2024$6,514 $1,964 $72 $8,550 
May 31, 2025$8,550 $20,450 $402 $29,402 

Realization of deferred tax assets is dependent upon generating sufficient future taxable income of the appropriate character. Management believes that it is more likely than not that all remaining deferred tax assets will be realized through future taxable earnings. Given the current economic outlook, management believes there is a reasonable possibility that within the next 12 months, sufficient evidence may become available to allow it to reach a conclusion to establish or release a valuation allowance on the deferred tax assets of certain foreign entities.

We repatriated $2.9 million from our Japan subsidiary during the year ended May 31, 2025. Remaining unremitted earnings as of May 31, 2025 in our Japan subsidiary are intended to be indefinitely reinvested in our Japan subsidiary's operations and growth. Going forward, the indefinite reversal criteria will apply only to the portion of our Japan subsidiary’s unremitted earnings that are needed for its ongoing operations and growth. Deferred income taxes have not been provided on the undistributed earnings of approximately $30.4 million from the Company's foreign subsidiaries as of May 31, 2025 since these amounts are intended to be indefinitely reinvested in foreign operations. If the earnings of the Company's foreign subsidiaries were to be distributed, management estimates that the income tax impact would be immaterial as a result of the transition tax and federal dividends received deduction for foreign source earnings provided under the US Tax Cuts and Jobs Act of 2017.
The following table summarizes the activity related to the gross unrecognized tax benefits (in thousands):
For the Years Ended
May 31,
2025		May 25,
2024		May 27,
2023
Unrecognized tax benefits, beginning of year$1,033 $962 $908 
Gross increases-tax positions in prior period82 71 54 
Unrecognized tax benefits, end of year$1,115 $1,033 $962 
The Company’s total liability for unrecognized gross tax benefits was $1.1 million, $1.0 million and $1.0 million as of May 31, 2025, May 25, 2024 and May 27, 2023, respectively, which, if ultimately recognized, any differences in assessment or non-assessment would impact the effective tax rate in future periods. The unrecognized tax benefits are
included in long-term liabilities in the Consolidated Balance Sheets. None of the unrecognized tax benefits are short-term liabilities as management does not anticipate any cash payments within 12 months to settle the liability.
The Company’s major income tax jurisdiction is the U.S., with federal statutes of limitations remaining open for fiscal 2020 and thereafter. For states within the U.S. in which the Company does significant business, the Company remains subject to examination for fiscal 2020 and thereafter. Most major foreign jurisdictions remain open for fiscal years ended 2020 and thereafter.
The Company recognizes interest and penalties related to unrecognized tax benefits as a part of its provision for income taxes. During the fiscal years ended May 31, 2025, May 25, 2024 and May 27, 2023, the Company accrued interest of $82,000, $71,000 and $54,000, respectively, as a component of the liability for unrecognized tax benefits. The Company's cumulative accrued interest was $267,000, $185,000 and $114,000 as of May 31, 2025, May 25, 2024 and May 27, 2023, respectively.