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INCOME TAXES (Tables)

12 Months Ended

Apr. 28, 2019

Income Tax Disclosure [Abstract]

Schedule of Allocation of Income Tax Expense

Total income tax expense was allocated as follows:

(dollars in thousands)		2019				2018				2017
income from operations		$	6,424				5,740				7,339
shareholders’ equity, related to the tax benefit arising from stock based compensation			—				—				(657	)
		$	6,424				5,740				6,682

Schedule of Income Tax Expense Attributable to Income from Operations

Income tax expense attributable to income from operations consists of:

(dollars in thousands)		2019				2018				2017
current
federal		$	(1,492	)			(1,367	)			109
state			27				9				13
2017 Tax Cuts and Jobs Act			(282	)			4,854				—
foreign			6,144				4,726				5,981
foreign – reversal of uncertain tax position			—				—				(3,431	)
			4,397				8,222				2,672
deferred
federal			3,123				4,295				404
state			(96	)			112				54
2017 Tax Cuts and Jobs Act (1)			(268	)			(6,903	)			—
undistributed earnings – foreign subsidiaries			3,735				(195	)			(101	)
U.S. operating loss carryforwards			74				—				3,630
foreign			(85	)			93				734
valuation allowance (1)			(4,456	)			116				(54	)
			2,027				(2,482	)			4,667
		$	6,424				5,740				7,339

(1) The income tax benefit of $6,903 recorded during fiscal 2018 included a charge of $4,550 for the establishment of a valuation allowance against U.S. foreign tax credits that were not more-likely-than not to be realized as a result of the 2017 Tax Cuts and Jobs Act. During fiscal 2019, we recorded an income tax charge of $4.5 million for the write-off of certain U.S. foreign tax credits, and in turn, we recorded an income tax benefit of $4.5 million for the reduction in our valuation allowance. The $4.5 million income charge for the write-off of certain U.S. foreign tax credits is included in the undistributed earnings - foreign subsidiaries income tax expense amount of $3.8 million.

Schedule of Income (Loss) before Income Taxes Related to Foreign and U.S. Operations

Income (loss) before income taxes related to our foreign and U.S. operations consists of:

(dollars in thousands)		2019				2018				2017
Foreign
China		$	9,899				11,036				13,650
Canada			5,488				5,985				4,918
Poland			—				—				(19	)
Cayman Islands			280				339				154
Total Foreign			15,667				17,360				18,703
United States			(3,671	)			9,523				10,993
		$	11,996				26,883				29,696

Summary of Differences in Income Tax Expense at Federal Income Tax Rate and Effective Income Tax Rate

The following schedule summarizes the principal differences between the income tax expense at the federal income tax rate and the effective income tax rate reflected in the consolidated financial statements:

		2019				2018				2017
federal income tax rate			21.0	%			30.4	%			34.0	%
undistributed earnings from foreign subsidiaries			37.2				—				—
valuation allowance			(37.1	)			0.4				(0.2	)
global intangible low taxed income tax (GILTI)			17.9				—				—
foreign tax rate differential			13.7				3.7				—
tax effects of the 2017 Tax Cuts and Jobs Act			(4.6	)			(7.6	)			—
tax effects of Chinese foreign exchange gains(losses)			2.3				(2.8	)			1.6
reversal of foreign uncertain income tax position			—				—				(11.6	)
tax effects of stock-based compensation			0.6				(1.8	)			—
other			2.6				(0.9	)			0.9
			53.6	%			21.4	%			24.7	%

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities consist of the following:

(dollars in thousands)		2019				2018
deferred tax assets:
accounts receivable		$	282				316
inventories			1,591				2,217
compensation			1,973				3,438
liabilities and other			284				117
foreign income tax credits - U.S.			1,252				5,720
property, plant and equipment (1)			193				226
loss carryforwards – U.S.			2,360				2,513
loss carryforwards – foreign			—				76
valuation allowances			(748	)			(5,204	)
total deferred tax assets			7,187				9,419
deferred tax liabilities:
undistributed earnings on foreign subsidiaries			(3,523	)			(4,256	)
unrecognized tax benefits – U.S.			(380	)			(380	)
property, plant and equipment (2)			(4,710	)			(4,352	)
goodwill			(1,203	)			(1,046	)
other			(90	)			(77	)
total deferred tax liabilities			(9,906	)			(10,111	)
Net deferred liabilities		$	(2,719	)			(692	)

(1) Pertains to the company’s operations located in China.

(2) Pertains to the company’s operations located in the U.S. and Canada. 

Summary of Valuation Allowances Against Deferred Income Taxes

valuation allowances against our deferred income taxes pertain to the following jurisdictions:

(dollars in thousands)		April 28, 2019				April 29, 2018
U.S. foreign income tax credits		$	82				4,550
U.S. state loss carryforwards and credits			666				578
Polish loss carryforwards			—				76
		$	748				5,204

Summary of Change in Valuation Allowances Against Deferred Income Taxes

A summary of the change in the valuation allowances against our deferred income taxes follows:

(dollars in thousands)		2019				2018				2017
beginning balance		$	5,204				536				590
write off of deferred income taxes			(4,544	)			—				—
establishment of valuation allowance (1)			—				4,550				—
change in estimate (2)			88				118				(54	)
ending balance		$	748				5,204				536

(1) The establishment of this valuation allowance pertains to U.S. foreign tax credits that were not more-likely-than not to be realized as a result of the Tax Act.

(2) Amounts pertain to a change in estimate of the recoverability of certain deferred income tax assets as of the end of the respective prior fiscal year. 

Schedule of Unrecognized Tax Benefit

The following table sets forth the change in the company’s unrecognized income tax benefit:

(dollars in thousands)		2019				2018				2017
beginning balance		$	844				12,245				14,897
increases from prior period tax positions			135				350				854
decreases from prior period tax positions (1)			(76	)			(11,751	)			(3,506	)
increases from current period tax positions			—				—				—
ending balance		$	903				844				12,245

(1) The $11.8 million reduction in our unrecognized income tax benefits during fiscal 2018 is mostly associated with the reduction in our U.S. Federal income tax rate pursuant to the Tax Act on the effective settlement of an IRS exam. The $3.5 million reduction in our unrecognized income tax benefits during fiscal 2017 was due to a lapse of applicable statute of limitations in a foreign jurisdiction.

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