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Income Taxes (Tables) | 12 Months Ended
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May 01, 2022
Income Tax Disclosure [Abstract] |
Schedule of Allocation of Income Tax Expense | Total income tax expense was allocated as follows:
(dollars in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
(loss) income from continuing operations |  | $ | 2,886 |  |  | $ | 7,693 |  |  | $ | 3,354 |
loss from discontinued operation |  |  | — |  |  |  | — |  |  |  | (68 | )
|  | $ | 2,886 |  |  | $ | 7,693 |  |  | $ | 3,286 |
Schedule of Income Tax Expense Attributable to (Loss) Income from Operations | Income tax expense attributable to (loss) income from continuing operations consists of:
(dollars in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
current |  |  |  |  |  |  |  |  |  |  |  |
federal |  | $ | — |  |  |  | (17 | ) |  |  | — |
state |  |  | 2 |  |  |  | 3 |  |  |  | 7 |
foreign |  |  | 2,156 |  |  |  | 4,151 |  |  |  | 4,248 |
uncertain income tax positions |  |  | 37 |  |  |  | (204 | ) |  |  | 725 |
|  |  | 2,195 |  |  |  | 3,933 |  |  |  | 4,980 |
deferred |  |  |  |  |  |  |  |  |  |  |  |
federal |  |  | 1,121 |  |  |  | (1,933 | ) |  |  | (1,875 | )
state |  |  | 47 |  |  |  | (80 | ) |  |  | (103 | )
2017 Tax Cuts and Jobs Act |  |  | — |  |  |  | (3,674 | ) |  |  | — |
undistributed earnings – foreign subsidiaries |  |  | 76 |  |  |  | 112 |  |  |  | (114 | )
U.S. Federal & State carryforwards and credits |  |  | (971 | ) |  |  | 451 |  |  |  | 974 |
uncertain income tax positions |  |  | (380 | ) |  |  | 380 |  |  |  | (380 | )
foreign |  |  | 615 |  |  |  | (22 | ) |  |  | (247 | )
valuation allowance |  |  | 183 |  |  |  | 8,526 |  |  |  | 119 |
|  |  | 691 |  |  |  | 3,760 |  |  |  | (1,626 | )
|  | $ | 2,886 |  |  |  | 7,693 |  |  |  | 3,354 |
Schedule of (Loss) Income before Income Taxes Related to Foreign and U.S. Operations | (Loss) income before income taxes from continuing operations related to our foreign and U.S. operations consists of:
(dollars in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
Foreign |  |  |  |  |  |  |  |  |  |  |  |
China |  | $ | 6,998 |  |  |  | 10,007 |  |  |  | 8,316 |
Canada |  |  | 1,302 |  |  |  | 4,764 |  |  |  | (1,391 | )
Haiti |  |  | (980 | ) |  |  | 817 |  |  |  | — |
Cayman Islands |  |  | — |  |  |  | (5 | ) |  |  | (6 | )
Total Foreign |  |  | 7,320 |  |  |  | 15,583 |  |  |  | 6,919 |
United States |  |  | (7,645 | ) |  |  | (4,703 | ) |  |  | (14,598 | )
|  | $ | (325 | ) |  |  | 10,880 |  |  |  | (7,679 | )
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:
|  | 2022 |  |  | 2021 |  |  | 2020 |
U.S. federal income tax rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
valuation allowance |  |  | (56.3 | ) |  |  | 78.4 |  |  |  | (1.6 | )
income tax effects of the 2017 Tax Cuts and Jobs Act |  |  | — |  |  |  | (33.8 | ) |  |  | — |
global intangible low taxed income tax (GILTI) |  |  | (540.9 | ) |  |  | — |  |  |  | (19.0 | )
foreign tax rate differential |  |  | (206.2 | ) |  |  | 10.9 |  |  |  | (5.4 | )
income tax effects of Chinese foreign exchange gains and losses |  |  | (20.6 | ) |  |  | (8.4 | ) |  |  | (5.0 | )
withholding taxes associated with foreign tax jurisdictions |  |  | (172.8 | ) |  |  | 7.7 |  |  |  | (16.0 | )
uncertain income tax positions |  |  | 105.4 |  |  |  | 1.6 |  |  |  | (4.8 | )
U.S. state income taxes |  |  | 21.5 |  |  |  | 0.3 |  |  |  | 0.4 |
stock-based compensation |  |  | (3.3 | ) |  |  | 0.3 |  |  |  | (0.3 | )
gain on bargain purchase |  |  | — |  |  |  | (1.6 | ) |  |  | — |
income tax effects of impairment of nondeductible goodwill |  |  | — |  |  |  | — |  |  |  | (11.3 | )
other (2) |  |  | (35.8 | ) |  |  | (5.7 | ) |  |  | (1.7 | )
Consolidated effective income tax rate (1) |  |  | (888.0 | )% |  |  | 70.7 | % |  |  | (43.7 | )%
(1) | Our consolidated effective income tax rates for all fiscal years presented were negatively affected by the mix of consolidated (loss) income before income taxes from continuing operations, as significant pre-tax losses have been incurred by our U.S. operations and almost all our taxable income was earned by our foreign operations located in China and Canada, which have higher income tax rates than the U.S. As a result, income tax expense incurred stems from taxable income from our foreign jurisdictions that exceeds our consolidated (loss) income before income taxes from continuing operations. Accordingly, the extent of the fluctuations in our consolidated effective income tax rates is dependent on the extent income tax expense incurred from our foreign operations compares with our consolidated (loss) income before income taxes from continuing operations that has been significantly lowered by our U.S. operations.
(2) | “Other” for all periods presented represents miscellaneous adjustments that pertain to U.S. permanent differences such as meals and entertainment and income tax provision to return adjustments.
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) |  | 2022 |  |  | 2021 |
deferred tax assets: |  |  |  |  |  |  |  |
accounts receivable |  | $ | 227 |  |  |  | 362 |
inventories |  |  | 2,020 |  |  |  | 2,019 |
compensation |  |  | 2,437 |  |  |  | 3,284 |
liabilities and other |  |  | 28 |  |  |  | 23 |
intangible assets and goodwill |  |  | 536 |  |  |  | 690 |
property, plant, and equipment (1) |  |  | 199 |  |  |  | 202 |
operating lease liability |  |  | 1,297 |  |  |  | 836 |
foreign income tax credits - U.S. |  |  | 783 |  |  |  | 783 |
loss carryforwards – U.S. |  |  | 8,373 |  |  |  | 7,533 |
valuation allowance - U.S. |  |  | (11,857 | ) |  |  | (11,674 | )
total deferred tax assets |  |  | 4,043 |  |  |  | 4,058 |
deferred tax liabilities: |  |  |  |  |  |  |  |
undistributed earnings on foreign subsidiaries |  |  | (3,586 | ) |  |  | (3,521 | )
unrecognized tax benefits – U.S. |  |  | — |  |  |  | (380 | )
property, plant and equipment (2) |  |  | (4,292 | ) |  |  | (3,968 | )
right of use assets |  |  | (1,520 | ) |  |  | (855 | )
other |  |  | (121 | ) |  |  | (119 | )
total deferred tax liabilities |  |  | (9,519 | ) |  |  | (8,843 | )
Net deferred liabilities |  | $ | (5,476 | ) |  |  | (4,785 | )
(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 U.S. Net Deferred Income Tax Assets | Based on our assessments as of May 1, 2022, and May 2, 2021, valuation allowances against our U.S. net deferred income tax assets pertain to the following:
(dollars in thousands) |  | May 1, 2022 |  |  | May 2, 2021 |
U.S. federal and state net deferred income tax assets |  | $ | 9,527 |  |  | $ | 9,344 |
U.S. capital loss carryforward |  |  | 2,330 |  |  |  | 2,330 |
|  | $ | 11,857 |  |  | $ | 11,674 |
Summary of Change in Valuation Allowances Against U.S. Net Deferred Income Tax Assets | A summary of the change in the valuation allowances against our U.S. net deferred income tax assets follows:
(dollars in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
beginning balance |  | $ | 11,674 |  |  |  | 3,148 |  |  |  | 748 |
change in judgement of beginning of year U.S. valuation allowance (1) |  |  | — |  |  |  | 6,964 |  |  |  | — |
change in valuation allowance associated with current year earnings |  |  | 1,640 |  |  |  | 1,004 |  |  |  | — |
establishment of valuation allowance (2) |  |  | — |  |  |  | — |  |  |  | 2,281 |
change in estimate during current year (3) |  |  | (1,457 | ) |  |  | 558 |  |  |  | 119 |
ending balance |  | $ | 11,857 |  |  |  | 11,674 |  |  |  | 3,148 |
(1) | Refer to the above Assessment 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) | 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, (iii) recognition of uncertain income tax position due to expiration of statute of limitations, and (iv) 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) |  | 2022 |  |  | 2021 |  |  | 2020 |
beginning balance |  | $ | 1,444 |  |  |  | 1,269 |  |  |  | 903 |
increases from prior period tax positions |  |  | 114 |  |  |  | 249 |  |  |  | 106 |
decreases from prior period tax positions |  |  | (77 | ) |  |  | (74 | ) |  |  | (85 | )
lapse of applicable statute of limitations |  |  | (380 | ) |  |  | — |  |  |  | — |
increases from current period tax positions |  |  | — |  |  |  | — |  |  |  | 434 |
decreases from current period tax positions |  |  | — |  |  |  | — |  |  |  | (89 | )
ending balance |  | $ | 1,101 |  |  |  | 1,444 |  |  |  | 1,269 |
Summary of Income Taxes Paid (Refunded) | The following table sets forth income taxes paid (refunded) by jurisdiction:
(dollars in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
United States Federal - Alternative Minimum Tax (AMT) credit refunds (1) |  | $ | — |  |  | $ | (1,510 | ) |  | $ | — |
United States Federal - Transition Tax |  |  | 266 |  |  |  | 226 |  |  |  | — |
China - Income Taxes |  |  | 2,036 |  |  |  | 2,076 |  |  |  | 2,559 |
China - Withholding Taxes Associated with Earnings and Profits Distribution to U.S. Parent |  |  | 487 |  |  |  | 798 |  |  |  | 838 |
Canada - Income Taxes |  |  | 311 |  |  |  | 1,408 |  |  |  | 1,598 |
|  | $ | 3,100 |  |  | $ | 2,998 |  |  | $ | 4,995 |
(1) | In accordance with the provisions of the TCJA, we elected to treat our prior AMT credit carryforward balance of $1.5 million as refundable. We received refunds totaling $1.5 million in two separate installments totaling $746,000 and $764,000 during the first and second quarters of fiscal 2021, respectively.

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