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Income Taxes (Tables) | 12 Months Ended
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May 02, 2021
Income Tax Disclosure [Abstract] |
Schedule of Allocation of Income Tax Expense | Total income tax expense was allocated as follows:
(dollars in thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |
income (loss) from continuing operations |  | $ | 7,693 |  |  | $ | 3,354 |  |  | $ | 6,537 |
loss from discontinued operation |  |  | — |  |  |  | (68 | ) |  |  | (113 | )
|  | $ | 7,693 |  |  | $ | 3,286 |  |  | $ | 6,424 |
Schedule of Income Tax Expense Attributable to Income from Operations | Income tax expense attributable to income from continuing operations consists of:
(dollars in thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |
current |  |  |  |  |  |  |  |  |  |  |  |
federal |  | $ | (17 | ) |  |  | — |  |  |  | (1,492 | )
state |  |  | 3 |  |  |  | 7 |  |  |  | 27 |
2017 Tax Cuts and Jobs Act |  |  | — |  |  |  | — |  |  |  | (282 | )
foreign |  |  | 4,151 |  |  |  | 4,248 |  |  |  | 6,144 |
uncertain income tax positions |  |  | (204 | ) |  |  | 725 |  |  |  | — |
|  |  | 3,933 |  |  |  | 4,980 |  |  |  | 4,397 |
deferred |  |  |  |  |  |  |  |  |  |  |  |
federal |  |  | (1,933 | ) |  |  | (1,875 | ) |  |  | 3,236 |
state |  |  | (80 | ) |  |  | (103 | ) |  |  | (96 | )
2017 Tax Cuts and Jobs Act |  |  | (3,674 | ) |  |  | — |  |  |  | (268 | )
undistributed earnings – foreign subsidiaries |  |  | 112 |  |  |  | (114 | ) |  |  | 3,735 |
U.S. Federal & State carryforwards and credits |  |  | 451 |  |  |  | 974 |  |  |  | 74 |
uncertain income tax positions |  |  | 380 |  |  |  | (380 | ) |  |  | — |
foreign |  |  | (22 | ) |  |  | (247 | ) |  |  | (85 | )
valuation allowance |  |  | 8,526 |  |  |  | 119 |  |  |  | (4,456 | )
|  |  | 3,760 |  |  |  | (1,626 | ) |  |  | 2,140 |
|  | $ | 7,693 |  |  |  | 3,354 |  |  |  | 6,537 |
Schedule of Income (Loss) before Income Taxes Related to Foreign and U.S. Operations | Income (loss) before income taxes from continuing operations related to our foreign and U.S. operations consists of:
(dollars in thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |
Foreign |  |  |  |  |  |  |  |  |  |  |  |
China |  | $ | 10,007 |  |  |  | 8,316 |  |  |  | 9,899 |
Canada |  |  | 4,764 |  |  |  | (1,391 | ) |  |  | 5,488 |
Haiti |  |  | 817 |  |  |  | — |  |  |  | — |
Cayman Islands |  |  | (5 | ) |  |  | (6 | ) |  |  | 280 |
Total Foreign |  |  | 15,583 |  |  |  | 6,919 |  |  |  | 15,667 |
United States |  |  | (4,703 | ) |  |  | (14,598 | ) |  |  | (2,945 | )
|  | $ | 10,880 |  |  |  | (7,679 | ) |  |  | 12,722 |
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 from continuing operations at the federal income tax rate and the effective income tax rate from continuing operations reflected in the consolidated financial statements:
|  | 2021 |  |  | 2020 |  |  | 2019 |
U.S. federal income tax rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
valuation allowance |  |  | 78.4 |  |  |  | (1.6 | ) |  |  | (35.0 | )
write-off of U.S. foreign income tax credits |  |  | — |  |  |  | — |  |  |  | 35.1 |
income tax effects of the 2017 Tax Cuts and Jobs Act |  |  | (33.8 | ) |  |  | — |  |  |  | (4.3 | )
global intangible low taxed income tax (GILTI) |  |  | — |  |  |  | (19.0 | ) |  |  | 16.9 |
foreign tax rate differential |  |  | 10.9 |  |  |  | (5.4 | ) |  |  | 4.8 |
income tax effects of Chinese foreign exchange gains and losses |  |  | (8.4 | ) |  |  | (5.0 | ) |  |  | 2.2 |
withholding taxes associated with foreign tax jurisdictions |  |  | 7.7 |  |  |  | (16.0 | ) |  |  | 8.1 |
income tax effects of impairment of nondeductible goodwill |  |  | — |  |  |  | (11.3 | ) |  |  | — |
other |  |  | (5.1 | ) |  |  | (6.4 | ) |  |  | 2.6 |
|  |  | 70.7 | % |  |  | (43.7 | )% |  |  | 51.4 | %
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) |  | 2021 |  |  | 2020 |
deferred tax assets: |  |  |  |  |  |  |  |
accounts receivable |  | $ | 362 |  |  |  | 263 |
inventories |  |  | 2,019 |  |  |  | 2,280 |
compensation |  |  | 3,284 |  |  |  | 1,970 |
liabilities and other |  |  | 23 |  |  |  | 166 |
intangible assets and goodwill |  |  | 690 |  |  |  | 856 |
property, plant, and equipment (1) |  |  | 202 |  |  |  | 185 |
operating lease liability |  |  | 836 |  |  |  | 671 |
foreign income tax credits - U.S. |  |  | 783 |  |  |  | 783 |
loss carryforwards – U.S. |  |  | 7,533 |  |  |  | 4,137 |
valuation allowance - U.S. |  |  | (11,674 | ) |  |  | (3,148 | )
total deferred tax assets |  |  | 4,058 |  |  |  | 8,163 |
deferred tax liabilities: |  |  |  |  |  |  |  |
undistributed earnings on foreign subsidiaries |  |  | (3,521 | ) |  |  | (3,409 | )
unrecognized tax benefits – U.S. |  |  | (380 | ) |  |  | — |
property, plant and equipment (2) |  |  | (3,968 | ) |  |  | (5,008 | )
right of use assets |  |  | (855 | ) |  |  | (690 | )
other |  |  | (119 | ) |  |  | (81 | )
total deferred tax liabilities |  |  | (8,843 | ) |  |  | (9,188 | )
Net deferred liabilities |  | $ | (4,785 | ) |  |  | (1,025 | )
(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 | Based on our assessments as of May 2, 2021, and May 3, 2020, valuation allowances against our deferred income taxes pertain to the following jurisdictions:
(dollars in thousands) |  | May 2, 2021 |  |  | May 3, 2020 |
U.S. federal and state net deferred income tax assets |  | $ | 9,344 |  |  |  | 867 |
U.S. capital loss carryforward |  |  | 2,330 |  |  |  | 2,281 |
|  | $ | 11,674 |  |  |  | 3,148 |
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) |  | 2021 |  |  | 2020 |  |  | 2019 |
beginning balance |  | $ | 3,148 |  |  |  | 748 |  |  |  | 5,204 |
change in judgement of beginning of year U.S. valuation allowance (1) |  |  | 6,964 |  |  |  | — |  |  |  | — |
change in valuation allowance associated with current year earnings |  |  | 1,004 |  |  |  | — |  |  |  | — |
establishment of valuation allowance (2) |  |  | — |  |  |  | 2,281 |  |  |  | — |
write-off of deferred income taxes (3) |  |  | — |  |  |  | — |  |  |  | (4,544 | )
change in estimate during current year (4) |  |  | 558 |  |  |  | 119 |  |  |  | 88 |
ending balance |  | $ | 11,674 |  |  |  | 3,148 |  |  |  | 748 |
(1) | Refer to the above Summary within the section titled Deferred Income Taxes – Valuation Allowance for further details regarding our assessment and conclusions reached for providing a full valuation allowance against our U.S net deferred income tax assets during the first quarter of fiscal 2021.
(2) | In connection with the sale of a discontinued operation that was treated as a partnership for income tax purposes, we generated a capital loss carryforward totaling $10.9 million with a related future income tax benefit of $2.3 million. Since capital losses can only be offset by capital gains, we established a full valuation allowance on this capital loss carryforward as we do not have capital assets that would generate capital gains that would utilize this carryforward.
(3) | During fiscal 2019, we recorded an income tax charge of $4.5 million for the write-off of certain U.S. foreign income tax credits, and in turn, we recorded an income tax benefit of $4.5 million for the reduction in our valuation allowance.
(4) | Amount represents changes in our U.S. net deferred income tax asset balances during the current year that pertain to (i) income tax provision to return adjustments, (ii) changes in estimates of our U.S. effective income tax rate that pertain to U.S. state income tax rates and apportionment percentages, and (iii) other immaterial items.
Schedule of Unrecognized Tax Benefit | The following table sets forth the change in the company’s unrecognized income tax benefit:
(dollars in thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |
beginning balance |  | $ | 1,269 |  |  |  | 903 |  |  |  | 844 |
increases from prior period tax positions |  |  | 249 |  |  |  | 106 |  |  |  | 135 |
decreases from prior period tax positions |  |  | (74 | ) |  |  | (85 | ) |  |  | (76 | )
increases from current period tax positions |  |  | — |  |  |  | 434 |  |  |  | — |
decreases from current period tax positions |  |  | — |  |  |  | (89 | ) |  |  | — |
ending balance |  | $ | 1,444 |  |  |  | 1,269 |  |  |  | 903 |
Summary of Income Taxes Paid (Refunded) | The following table sets forth income taxes paid (refunded) by jurisdiction:
(dollars in thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |
United States Federal - AMT credit refunds (1) |  | $ | (1,510 | ) |  | $ | — |  |  | $ | — |
United States Federal - transition tax |  |  | 226 |  |  |  | — |  |  |  | 600 |
Unites States state income tax payments |  |  | — |  |  |  | — |  |  |  | 60 |
China |  |  | 2,874 |  |  |  | 3,397 |  |  | $ | 3,543 |
Canada |  |  | 1,408 |  |  |  | 1,598 |  |  |  | 2,491 |
|  | $ | 2,998 |  |  | $ | 4,995 |  |  | $ | 6,694 |
(1) | In accordance with the TCJA, corporate taxpayers were eligible to treat prior AMT credit carryforwards as refundable. Accordingly, we elected to treat our prior AMT credit carryforward balance of $1.5 million as refundable, and as a result, 50% of the $1.5 million refundable balance was expected to be received in each of our fiscal years 2021 and 2022, respectively. We received our first 50% installment totaling $746,000 during the first quarter of fiscal 2021. In accordance with the CARES Act, 100% of AMT credit carryforwards for tax years beginning in the 2019 tax year were immediately refundable. Accordingly, we
| claimed credit for the remaining 50% installment of our refundable AMT credit carryforward in May 2020. We received our remaining 50% installment plus interest totaling $764,000 during the second quarter of fiscal 2021.

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