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Note 14 - Income Taxes | 12 Months Ended
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Jun. 26, 2016
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 14. Income Taxes Components of income before income taxes The components of income before income taxes consist of the following:
|  | For the Fiscal Year Ended |
|  | June 26, 2016 |  |  | June 28, 2015 |  |  | June 29, 2014 |
United States |  | $ | 21,843 |  |  | $ | 38,341 |  |  | $ | 38,816 |
Foreign |  |  | 26,400 |  |  |  | 15,471 |  |  |  | 9,065 |
Income before income taxes |  | $ | 48,243 |  |  | $ | 53,812 |  |  | $ | 47,881 |
Components of provision for income taxes Provision for income taxes consists of the following:
|  | For the Fiscal Year Ended |
|  | June 26, 2016 |  |  | June 28, 2015 |  |  | June 29, 2014 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 655 |  |  | $ | 7,985 |  |  | $ | 14,463 |
State |  |  | 599 |  |  |  | 1,231 |  |  |  | 1,035 |
Foreign |  |  | 7,836 |  |  |  | 7,926 |  |  |  | 4,092 |
Total current tax expense |  |  | 9,090 |  |  |  | 17,142 |  |  |  | 19,590 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 6,220 |  |  |  | (4,006 | ) |  |  | 183 |
State |  |  | 246 |  |  |  | (112 | ) |  |  | 900 |
Foreign |  |  | (483 | ) |  |  | 322 |  |  |  | (512 | )
Total deferred tax expense |  |  | 5,983 |  |  |  | (3,796 | ) |  |  | 571 |
Provision for income taxes |  | $ | 15,073 |  |  | $ | 13,346 |  |  | $ | 20,161 |
On December 18, 2015, the Protecting Americans from Tax Hikes Act (the “PATH Act”) was signed into law. The PATH Act did not significantly impact the Company’s effective tax rate in fiscal 2016. Utilization of Net Operating Loss Carryforwards State deferred tax expense includes the utilization of net operating loss (“NOL”) carryforwards of $42, $196 and $499 for fiscal 2016, 2015 and 2014, respectively. Foreign deferred tax expense includes the utilization of NOL carryforwards of $0, $147 and $216 for fiscal 2016, 2015 and 2014, respectively. Effective tax rate Reconciliation from the federal statutory tax rate to the effective tax rate is as follows:
|  | For the Fiscal Year Ended |
|  | June 26, 2016 |  |  | June 28, 2015 |  |  | June 29, 2014 |
Federal statutory tax rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Foreign income taxed at different rates |  |  | (7.7 | ) |  |  | (3.2 | ) |  |  | (1.2 | )
Repatriation of foreign earnings and withholding taxes |  |  | (1.0 | ) |  |  | (0.3 | ) |  |  | 0.4 |
Change in valuation allowance |  |  | (3.7 | ) |  |  | (5.6 | ) |  |  | 4.0 |
Domestic production activities deduction |  |  | (0.5 | ) |  |  | (1.3 | ) |  |  | (2.3 | )
Research and other credits |  |  | 4.8 |  |  |  | (0.4 | ) |  |  | (0.3 | )
State income taxes, net of federal tax benefit |  |  | 1.5 |  |  |  | 1.8 |  |  |  | 2.8 |
Change in uncertain tax positions |  |  | 1.2 |  |  |  | 5.4 |  |  |  | (0.5 | )
Settlement of certain intercompany foreign currency transactions |  |  | — |  |  |  | 5.6 |  |  |  | — |
Indefinite reinvestment assertion |  |  | — |  |  |  | (14.2 | ) |  |  | 0.5 |
Renewable energy credits |  |  | — |  |  |  | (1.9 | ) |  |  | — |
Nondeductible expenses and other |  |  | 1.6 |  |  |  | 3.9 |  |  |  | 3.7 |
Effective tax rate |  |  | 31.2 | % |  |  | 24.8 | % |  |  | 42.1 | %
The effective tax rate for fiscal 2016 benefitted from, among other things, (i) a lower overall effective tax rate for the Company’s foreign earnings (reflecting free-trade zone sales in El Salvador and lower statutory tax rates in both Brazil and China); (ii) a decrease in the valuation allowance for the Company’s investment in PAL (for which the Company maintains a full valuation allowance) reflecting the recognition of lower taxable income versus book income, and a reduction in the valuation allowance related to foreign tax credits utilized in 2016. This was partially offset by (a) utilization of foreign tax credits, (b) increase in the valuation allowance for net operating losses, including Renewables, for which no tax benefit could be recognized (c) state and local taxes net of the assumed federal benefit and (d) a change in uncertain tax positions. The Company’s effective tax rate for fiscal 2015 benefitted from a lower overall effective tax rate for the Company’s foreign earnings (reflecting free-trade zone sales in El Salvador and lower statutory tax rates in both Brazil and China); the reversal of the indefinite reinvestment assertion which provided for indefinitely reinvested foreign earnings at June 28, 2015; a decrease in the valuation allowance related to PAL; benefits from federal and state credits, especially renewable energy credits in connection with the installation of a solar farm; and the domestic production activities deduction. These benefits were partially offset by the change in uncertain tax positions, an increase in the valuation allowance related to Renewables, certain nondeductible expenses and state income tax (net of federal benefit). The Company’s effective tax rate for fiscal 2014 was impacted by, among other things, an increase in the valuation allowance related to PAL and Renewables, state and local taxes net of the assumed federal benefit, and nondeductible expenses. The impact was partially offset by a lower overall effective tax rate for the Company’s foreign earnings and the domestic production activities deduction. Deferred income taxes The significant components of the Company’s deferred tax assets and liabilities consist of the following:
|  | June 26, 2016 |  |  | June 28, 2015 |
Deferred tax assets: |  |  |  |  |  |  |  |
Investments, including unconsolidated affiliates |  | $ | 8,337 |  |  | $ | 9,675 |
State tax credits |  |  | 361 |  |  |  | 461 |
Accrued liabilities and valuation reserves |  |  | 3,660 |  |  |  | 2,620 |
Net operating loss carryforwards |  |  | 3,952 |  |  |  | 2,904 |
Intangible assets, net |  |  | 4,349 |  |  |  | 4,964 |
Incentive compensation plans |  |  | 3,297 |  |  |  | 3,515 |
Foreign tax credits |  |  | — |  |  |  | 2,588 |
Other items |  |  | 4,668 |  |  |  | 4,673 |
Total gross deferred tax assets |  |  | 28,624 |  |  |  | 31,400 |
Valuation allowance |  |  | (13,550 | ) |  |  | (15,606 | )
Net deferred tax assets |  |  | 15,074 |  |  |  | 15,794 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property, plant and equipment |  |  | (17,098 | ) |  |  | (11,432 | )
Other |  |  | (580 | ) |  |  | (530 | )
Total deferred tax liabilities |  |  | (17,678 | ) |  |  | (11,962 | )
Net deferred tax asset (liability) |  | $ | (2,604 | ) |  | $ | 3,832 |
Deferred income taxes - valuation allowance In assessing the realizability of deferred tax assets, the Company considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of taxable temporary differences, taxable income in carryback years, projected future taxable income and tax planning strategies in making this assessment. Since the Company operates in multiple jurisdictions, the assessment is made on a jurisdiction-by-jurisdiction basis, taking into account the effects of local tax law. The balances and activity for the Company’s deferred tax valuation allowance are as follows:
|  | For the Fiscal Year Ended |
|  | June 26, 2016 |  |  | June 28, 2015 |  |  | June 29, 2014 |
Balance at beginning of the year |  | $ | (15,606 | ) |  | $ | (18,615 | ) |  | $ | (16,690 | )
Benefit to (charge to) provision for income taxes |  |  | 2,056 |  |  |  | 3,009 |  |  |  | (1,925 | )
Balance at end of year |  | $ | (13,550 | ) |  | $ | (15,606 | ) |  | $ | (18,615 | )
Components of the Company’s deferred tax valuation allowance are as follows:
|  | For the Fiscal Year Ended |
|  | June 26, 2016 |  |  | June 28, 2015 |  |  | June 29, 2014 |
Investment in a former domestic unconsolidated affiliate |  | $ | (6,418 | ) |  | $ | (6,503 | ) |  | $ | (6,493 | )
Equity-method investment in Parkdale America, LLC |  |  | (2,102 | ) |  |  | (3,261 | ) |  |  | (7,286 | )
Foreign tax credits |  |  | — |  |  |  | (1,680 | ) |  |  | (1,680 | )
Other (1) |  |  | (5,030 | ) |  |  | (4,162 | ) |  |  | (3,156 | )
Total deferred tax valuation allowance |  | $ | (13,550 | ) |  | $ | (15,606 | ) |  | $ | (18,615 | )
(1) Other relates primarily to Renewables. During fiscal 2016, the Company’s valuation allowance decreased by $2,056. This decrease consists primarily of $1,159 related to the Company’s investment in PAL due to the timing of PAL’s taxable income versus book income and the utilization of $1,680 of foreign tax credits. The decrease was partially offset by a net $858 increase related to the Company’s investment in Renewables and related NOLs as a result of its continued losses. During fiscal year 2015, the Company’s valuation allowance decreased by $3,009. This decrease relates to the timing of taxable income versus book income for PAL partially offset by a net increase in NOLs for Renewables which were deemed unrealizable, and the disposal of certain miscanthus grass. During fiscal year 2014, the Company’s valuation allowance increased by $1,925. This increase relates to (i) the timing of taxable income versus book income for PAL and (ii) the generation of additional NOLs for Renewables which were deemed unrealizable. Unrecognized tax benefits A reconciliation of beginning and ending gross amounts of unrecognized tax benefits is as follows:
|  | For the Fiscal Year Ended |
|  | June 26, 2016 |  |  | June 28, 2015 |  |  | June 29, 2014 |
Balance at beginning of the year |  | $ | 4,029 |  |  | $ | 983 |  |  | $ | 964 |
Gross increases related to current period tax positions |  |  | 110 |  |  |  | 3,469 |  |  |  | 78 |
Gross increases related to tax positions in prior periods |  |  | 1,058 |  |  |  | 18 |  |  |  | 68 |
Gross decreases related to settlements with tax authorities |  |  | (274 | ) |  |  | (178 | ) |  |  | (2 | )
Gross decreases related to lapse of applicable statute of limitations |  |  | (391 | ) |  |  | (263 | ) |  |  | (125 | )
Balance at end of year |  | $ | 4,532 |  |  | $ | 4,029 |  |  | $ | 983 |
Unrecognized tax benefits would generate a favorable impact of $4,532 on the Company’s effective tax rate when recognized. The Company does not expect material changes in uncertain tax positions within the next twelve months. The reversal of interests and penalties recognized by the Company within the provision for income taxes were $(23), $(95) and $(193) for fiscal 2016, 2015 and 2014, respectively. The Company has $279, $23 and $118 accrued for interest and/or penalties related to uncertain tax positions as of June 26, 2016, June 28, 2015 and June 29, 2014, respectively. Expiration of net operating loss carryforwards and foreign tax credits As of June 26, 2016, the Company has $943 of state net operating loss carryforwards, for which no valuation allowance is established, that may be used to offset future taxable income. These carryforwards, if unused, will expire as follows:
State net operating loss carryforwards | 2017 | through | 2033
Tax years subject to examination The Company and its domestic subsidiaries file a consolidated federal income tax return, as well as income tax returns in multiple state and foreign jurisdictions. The tax years subject to examination vary by jurisdiction. The Company regularly assesses the outcomes of both completed and ongoing examinations to ensure that the Company’s provision for income taxes is sufficient. In fiscal 2016, the Internal Revenue Service examined the Company’s tax return for the year ending June 30, 2013. The examination closed with no material assessment. As such, the Company is no longer subject to examination for U.S. Federal income tax for years ending June 30, 2013 and prior. In fiscal 2016, the North Carolina Department of Revenue initiated an audit for tax periods ending June 24, 2012 to June 29, 2014. The audit was not concluded at the end of fiscal 2016. No material assessment is anticipated. The Company is currently under appeal in Colombia for tax years 2006 and 2007. The Company believes it is more likely than not to conclude the appeal with no material assessment. Statutes related to material foreign jurisdictions are open from January 1, 2012 and material state jurisdictions from June 24, 2012. Certain carry forward tax attributes generated in years prior remain subject to examination and could change subsequent tax years. Indefinite reinvestment assertion During the fourth quarter of fiscal 2015, the Company completed a reorganization of certain foreign subsidiaries that changed the historical ownership structure. The Company provides for U.S. income taxes on the earnings of foreign subsidiaries unless the subsidiaries’ earnings are considered indefinitely reinvested outside the United States. As of June 26, 2016, U.S. income taxes were not provided for on a cumulative total of approximately $78,300 of undistributed earnings and profits of the Company’s foreign subsidiaries as the Company currently intends to reinvest these earnings in these foreign operations indefinitely. If at a later date, these earnings were repatriated to the U.S., the Company would be required to pay taxes on these amounts. Nevertheless, in future periods, the Company will continue to assess the existing circumstances, including any changes in tax laws, and reevaluate the necessity for any deferred tax liability. Determination of the amount of any deferred tax liability on these undistributed earnings is not practicable.

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- 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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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