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Income Taxes (Tables) | 12 Months Ended
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May 28, 2022
Income Tax Disclosure [Abstract] |
Schedule of Income (Loss) Before Income Tax, Domestic and Foreign | Income (loss) before income taxes included the following components (in thousands):
|  | Fiscal Year Ended |
|  | May 28, 2022 |  |  | May 29, 2021 |  |  | May 30, 2020 |
United States |  | $ | 12,299 |  |  | $ | 1,077 |  |  | $ | (3,716 | )
Foreign |  |  | 3,460 |  |  |  | 1,231 |  |  |  | 2,502 |
Income (loss) before income taxes |  | $ | 15,759 |  |  | $ | 2,308 |  |  | $ | (1,214 | )
Schedule of Components of Income Tax Expense (Benefit) | The provision for income taxes for fiscal 2022, fiscal 2021 and fiscal 2020 consisted of the following (in thousands):
|  | Fiscal Year Ended |
|  | May 28, 2022 |  |  | May 29, 2021 |  |  | May 30, 2020 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (4,213 | ) |  | $ | 108 |  |  | $ | — |
State |  |  | 950 |  |  |  | — |  |  |  | — |
Foreign |  |  | 1,038 |  |  |  | 665 |  |  |  | 616 |
Total current |  |  | (2,225 | ) |  |  | 773 |  |  |  | 616 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | — |  |  |  | (88 | )
Foreign |  |  | 57 |  |  |  | (120 | ) |  |  | 96 |
Total deferred |  |  | 57 |  |  |  | (120 | ) |  |  | 8 |
Income tax (benefit) provision |  | $ | (2,168 | ) |  | $ | 653 |  |  | $ | 624 |
Schedule of Effective Income Tax Rate Reconciliation | The differences between income taxes at the U.S. federal statutory income tax rate of 21.0% for fiscal 2022, fiscal 2021 and fiscal 2020 and the reported income tax provision for fiscal 2022, fiscal 2021 and fiscal 2020, are summarized as follows:
|  | Fiscal Year Ended |
|  | May 28, 2022 |  |  | May 29, 2021 |  |  | May 30, 2020 |
Federal statutory rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
Effect of: |  |  |  |  |  |  |  |  |  |  |  |
State income taxes, net of federal tax benefit |  |  | 5.5 |  |  |  | 21.6 |  |  |  | 6.6 |
Foreign taxes at other rates |  |  | 4.5 |  |  |  | 10.5 |  |  |  | (15.3 | )
Permanent tax differences |  |  | (2.0 | ) |  |  | 18.3 |  |  |  | (41.1 | )
Change in valuation allowance for deferred tax assets |  |  | (43.1 | ) |  |  | (49.7 | ) |  |  | (29.8 | )
Return to provision adjustments |  |  | 0.2 |  |  |  | 2.2 |  |  |  | 1.4 |
Other |  |  | 0.2 |  |  |  | 4.4 |  |  |  | 5.8 |
Effective tax rate |  |  | (13.7 | )% |  |  | 28.3 | % |  |  | (51.4 | )%
Schedule of Deferred Tax Assets and Liabilities |
|  | Fiscal Year Ended |
|  | May 28, 2022 |  |  | May 29, 2021 |
Deferred tax assets: |  |  |  |  |  |  |  |
NOL carryforwards - foreign and domestic |  | $ | 2,796 |  |  | $ | 7,362 |
Inventory valuations |  |  | 1,571 |  |  |  | 1,501 |
Goodwill |  |  | 1,182 |  |  |  | 1,286 |
Foreign tax credits |  |  | 1,782 |  |  |  | 1,782 |
Severance reserve |  |  | 183 |  |  |  | 185 |
Foreign capital loss |  |  | 1,224 |  |  |  | 1,261 |
Other |  |  | 1,480 |  |  |  | 1,469 |
Subtotal |  |  | 10,218 |  |  |  | 14,846 |
Valuation allowance - foreign and domestic |  |  | (3,474 | ) |  |  | (12,225 | )
Net deferred tax assets after valuation allowance |  |  | 6,744 |  |  |  | 2,621 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Accelerated depreciation |  |  | (2,406 | ) |  |  | (2,279 | )
Tax on undistributed earnings |  |  | (24 | ) |  |  | (24 | )
Other |  |  | (1 | ) |  | 18 |
Subtotal |  |  | (2,431 | ) |  |  | (2,285 | )
Net deferred tax assets |  | $ | 4,313 |  |  | $ | 336 |
Supplemental disclosure of net deferred tax assets, excluding valuation allowance: |  |  |  |  |  |  |  |
Domestic |  | $ | 6,017 |  |  | $ | 10,653 |
Foreign |  |  | 1,770 |  |  |  | 1,913 |
Total |  | $ | 7,787 |  |  | $ | 12,566 |
On December 22, 2017, the U.S. government enacted new tax legislation, Tax Cuts and Jobs Act (the “Act”). The Company was subject to requirements of the Act beginning in fiscal 2019. Provisions include an income inclusion for global intangible low-taxed income (“GILTI”), a tax determined by base erosion and anti-avoidance tax (“BEAT”) related to certain payments between a U.S. corporation and foreign related entities, a limitation of certain executive compensation and a deduction for foreign derived intangible income. The Company has determined its accounting policy to treat the taxes due on GILTI as a period cost. The Company is not subject to the BEAT provision due to the revenue thresholds.
Schedule of Unrecognized Tax Benefits | The following table summarizes the activity related to the unrecognized tax benefits (in thousands):
|  | Fiscal Year Ended |
|  | May 28, 2022 |  |  | May 29, 2021 |
Unrecognized tax benefits, beginning of period |  | $ | 142 |  |  | $ | 129 |
Currency translation adjustment |  |  | (17 | ) |  |  | 13 |
Unrecognized tax benefits, end of period |  | $ | 125 |  |  | $ | 142 |

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