XML 39 R21.htm IDEA: XBRL DOCUMENT
v3.25.2

Income Taxes | 12 Months Ended
--- | ---
Apr. 27, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | 12. INCOME TAXES Income Tax Expense and Effective Income Tax Rate The entire amount of income tax expense of $392,000, $3.0 million, and $3.1 million during fiscal 2025, 2024, and 2023, respectively, was allocated to loss from continuing operations. Income tax expense consists of:
(dollars in thousands) |  | 2025 |  |  | 2024 |  |  | 2023 |
current |  |  |  |  |  |  |  |  |
federal |  | $ | — |  |  |  | — |  |  |  | — |
state |  |  | 4 |  |  |  | — |  |  |  | 1 |
foreign |  |  | 2,199 |  |  |  | 2,584 |  |  |  | 3,053 |
uncertain income tax positions |  |  | (468 | ) |  |  | 78 |  |  |  | 78 |
|  |  | 1,735 |  |  |  | 2,662 |  |  |  | 3,132 |
deferred |  |  |  |  |  |  |  |  |
federal |  |  | (161 | ) |  |  | 1,342 |  |  |  | (1,591 | )
state |  |  | (9 | ) |  |  | 63 |  |  |  | (66 | )
undistributed earnings – foreign subsidiaries |  |  | 316 |  |  |  | 627 |  |  |  | 628 |
U.S. federal & state carryforwards and credits |  |  | (4,130 | ) |  |  | (4,734 | ) |  |  | (5,162 | )
foreign |  |  | (1,658 | ) |  |  | (240 | ) |  |  | (629 | )
valuation allowance |  |  | 4,299 |  |  |  | 3,329 |  |  |  | 6,818 |
|  |  | (1,343 | ) |  |  | 387 |  |  |  | (2 | )
|  | $ | 392 |  |  |  | 3,049 |  |  |  | 3,130 |
Loss before income taxes related to our foreign and U.S. operations consists of:
(dollars in thousands) |  | 2025 |  |  | 2024 |  |  | 2023 |
Foreign |  |  |  |  |  |  |  |  |
China |  | $ | 6,424 |  |  |  | 9,091 |  |  |  | 7,062 |
Canada |  |  | (5,098 | ) |  |  | 902 |  |  |  | 1,516 |
Haiti |  |  | (1,553 | ) |  |  | (2,127 | ) |  |  | (3,483 | )
Vietnam |  |  | (89 | ) |  |  | (22 | ) |  |  | — |
Total Foreign |  |  | (316 | ) |  |  | 7,844 |  |  |  | 5,095 |
United States |  |  | (18,395 | ) |  |  | (18,614 | ) |  |  | (33,485 | )
|  | $ | (18,711 | ) |  |  | (10,770 | ) |  |  | (28,390 | )
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:
|  | 2025 |  | 2024 |  | 2023 |
U.S. federal income tax rate |  |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
valuation allowance |  |  | (23.0 | ) |  | (30.9 | ) |  | (24.0 | )
foreign tax rate differential |  |  | (1.4 | ) |  | (4.7 | ) |  | (4.0 | )
income tax effects of Chinese foreign exchange gains |  |  | (0.5 | ) |  | (3.6 | ) |  | (0.9 | )
withholding taxes associated with foreign tax jurisdictions |  |  | (1.7 | ) |  | (6.5 | ) |  | (2.4 | )
uncertain income tax positions |  |  | 2.5 |  |  | (0.7 | ) |  | (0.3 | )
U.S. state income taxes |  |  | 1.1 |  |  | 0.8 |  |  | 0.6 |
stock-based compensation |  |  | (0.3 | ) |  | (1.8 | ) |  | (0.3 | )
other (1) |  |  | 0.2 |  |  | (1.9 | ) |  | (0.7 | )
consolidated effective income tax rate (2) (3) |  |  | (2.1 | )% |  | (28.3 | )% |  | (11.0 | )%
(1) “Other” for all periods presented represents miscellaneous adjustments that pertain to U.S. permanent differences such as meals and entertainment, income tax provision to return adjustments, and other and miscellaneous items. (2) Our negative consolidated effective income tax rates during fiscal 2025, 2024, and 2023, were caused by the mix of earnings between our U.S. operations and foreign subsidiaries, as our taxable income stemmed from our operations located in China during fiscal 2025 and both our operations located in China and Canada during fiscal 2024 and 2023, which jurisdictions have higher income tax rates than the U.S. In addition, we applied a full valuation allowance against our U.S. deferred income tax assets during fiscal 2025, 2024, and 2023, respectively. Consequently, an income tax benefit was not recognized for the pre-tax losses associated with our U.S. operations totaling $(18.4) million, $(18.6) million, and $(33.5) million that were incurred during fiscal 2025, 2024, and 2023, respectively. (3) Our negative consolidated effective income tax rates during fiscal 2025, 2024, and 2023 were further caused by pre-tax losses associated with our Haitian operations, which are not subject to income tax. Our Haitian operations are located in an economic zone that permits a 0% income tax rate for the first fifteen years of operations, for which we have seven years remaining. As a result of the 0% income tax rate, an income tax benefit was not recognized for the pre-tax losses associated with our Haitian operations totaling $(1.6) million, $(2.1) million, and $(3.5) million that were incurred during fiscal 2025, 2024, and 2023, respectively. Deferred Income Taxes - Overall 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) |  | April 27, 2025 |  |  | April 28, 2024 |
deferred tax assets: |  |  |  |  |  |
accounts receivable |  | $ | 305 |  |  |  | 195 |
inventories |  |  | 2,128 |  |  |  | 1,972 |
compensation |  |  | 1,767 |  |  |  | 2,152 |
liabilities and other |  |  | 56 |  |  |  | 8 |
intangible assets and goodwill |  |  | 455 |  |  |  | 349 |
property, plant, and equipment |  |  | 178 |  |  |  | 171 |
operating lease liability |  |  | 744 |  |  |  | 693 |
foreign income tax credits - U.S. |  |  | 783 |  |  |  | 783 |
loss carryforwards – U.S. |  |  | 22,521 |  |  |  | 18,344 |
valuation allowance - U.S. |  |  | (26,303 | ) |  |  | (22,004 | )
total deferred tax assets |  |  | 2,634 |  |  |  | 2,663 |
deferred tax liabilities: |  |  |  |  |  |
undistributed earnings on foreign subsidiaries |  |  | (5,155 | ) |  |  | (4,840 | )
property, plant and equipment |  |  | (1,010 | ) |  |  | (2,694 | )
right of use assets |  |  | (920 | ) |  |  | (851 | )
other |  |  | (67 | ) |  |  | (139 | )
total deferred tax liabilities |  |  | (7,152 | ) |  |  | (8,524 | )
Net deferred liabilities |  | $ | (4,518 | ) |  |  | (5,861 | )
As of April 27, 2025, our U.S. federal net operating loss carryforward totaled $88.1 million, with related future income tax benefits of $18.5 million. In accordance with the 2017 Tax Cuts and Jobs Act (“TCJA”), U.S. federal net operating loss carryforwards generated in fiscal 2019 and after do not expire. As of April 27, 2025, all of our unused U.S. federal net operating loss carryforwards were generated during fiscal 2019 and after, and therefore, do not expire in accordance with the TCJA. As of April 27, 2025, our U.S. state net operating loss carryforwards totaled $37.6 million, with related future income tax benefits of $1.5 million, and have expiration dates ranging from fiscal year 2026 through fiscal 2045, along with certain U.S. state net operating loss carryforwards that do not expire due to conformity with U.S. federal income tax regulations. Our U.S. foreign income tax credits of $783,000 have expiration dates ranging from fiscal years 2026 through 2028, which represent 10 years from when the associated earnings and profits from our foreign subsidiaries were repatriated to the U.S. Deferred Income Taxes – Valuation Allowance Assessment We evaluate the realizability of our deferred income taxes to determine if a valuation allowance is required. We assess whether a valuation allowance should be established based on the consideration of all available evidence using a “more-likely-than-not” standard, with significant weight being given to evidence that can be objectively verified. Since the company operates in multiple jurisdictions, we assess the need for a valuation allowance on a jurisdiction-by-jurisdiction basis, considering the effects of local tax law. As of April 27, 2025, we evaluated the realizability of our U.S. net deferred income tax assets to determine if a full valuation allowance was still required. Based on our assessment, we determined we still have a recent history of significant cumulative U.S. pre-tax losses, in that we experienced U.S. pre-tax losses during each of the last three fiscal years. In addition, we are currently expecting a U.S. pre-tax loss during fiscal 2026. As a result of the significant weight of this negative evidence, we believe it is more-likely-than-not that our U.S net deferred income tax assets will not be fully realizable, and therefore we provided for a full valuation allowance against our U.S. net deferred income tax assets. Based on our assessments as of April 27, 2025, and April 28, 2024, valuation allowances against our U.S. net deferred income tax assets pertain to the following:
(dollars in thousands) |  | April 27, 2025 |  |  | April 28, 2024 |
U.S. federal and state net deferred income tax assets |  | $ | 23,973 |  |  | $ | 19,674 |
U.S. capital loss carryforward |  |  | 2,330 |  |  |  | 2,330 |
|  | $ | 26,303 |  |  | $ | 22,004 |
A summary of the change in the valuation allowances against our U.S. net deferred income tax assets follows:
(dollars in thousands) |  | 2025 |  |  | 2024 |  |  | 2023 |
beginning balance |  | $ | 22,004 |  |  |  | 18,675 |  |  |  | 11,857 |
change in valuation allowance associated with current year earnings |  |  | 4,162 |  |  |  | 3,318 |  |  |  | 7,252 |
change in estimate during current year (1) |  |  | 137 |  |  |  | 11 |  |  |  | (434 | )
ending balance |  | $ | 26,303 |  |  |  | 22,004 |  |  |  | 18,675 |
(1) Amounts represent 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) expiration of certain U.S. state loss carryforwards; and (iv) other immaterial items. Deferred Income Taxes – Undistributed Earnings from Foreign Subsidiaries We assess whether the undistributed earnings from our foreign subsidiaries will be reinvested indefinitely or eventually distributed to our U.S. parent company and whether we are required to record a deferred income tax liability for those undistributed earnings from our foreign subsidiaries that will not be reinvested indefinitely. As of April 27, 2025, we assessed the liquidity requirements of our U.S. parent company and determined that our undistributed earnings and profits from our foreign subsidiaries would not be reinvested indefinitely and would be eventually distributed to our U.S. parent company. The conclusion reached from this assessment has been consistent with prior years. As a result of the TCJA, a U.S. corporation is allowed a 100% dividend received deduction for earnings and profits received from a 10% owned foreign corporation. Therefore, a deferred income tax liability will be required only for unremitted withholding taxes associated with earnings and profits generated by our foreign subsidiaries that will ultimately be repatriated to the U.S. parent company. As a result, we recorded a deferred income tax liability of $5.2 million and $4.8 million as of April 27, 2025, and April 28, 2024, respectively. Uncertainty in Income Taxes An unrecognized income tax benefit for an uncertain income tax position can be recognized in the first interim period if the more-likely-than-not recognition threshold is met by the end of the reporting period, or is effectively settled through examination, negotiation, or litigation, or if the statute of limitations for the relevant taxing authority to examine and challenge the tax position has expired. If it is determined that any of the above conditions occur regarding our uncertain income tax positions, an adjustment to our unrecognized income tax benefit will be recorded at that time. The following table sets forth the change in the company’s unrecognized income tax benefit:
(dollars in thousands) |  | 2025 |  |  | 2024 |  |  | 2023 |
beginning balance |  | $ | 1,258 |  |  |  | 1,179 |  |  |  | 1,101 |
increases from prior period tax positions |  |  | 224 |  |  |  | 197 |  |  |  | 175 |
decreases from prior period tax positions |  |  | (76 | ) |  |  | (118 | ) |  |  | (97 | )
lapse of applicable statute of limitations |  |  | (616 | ) |  |  | — |  |  |  | — |
ending balance |  | $ | 790 |  |  |  | 1,258 |  |  |  | 1,179 |
As of April 27, 2025, and April 28, 2024, we had $790,000 and $1.3 million of total gross unrecognized tax benefits, of which the entire amount was classified as income taxes payable - long-term in the accompanying Consolidated Balance Sheets. These unrecognized income tax benefits would favorably affect income tax expense in future periods by $790,000 and $1.3 million as of April 27, 2025, and April 28, 2024, respectively. We elected to classify interest and penalties as part of income tax expense. As of April 27, 2025, and April 28, 2024, the gross amount of interest and penalties due to unrecognized tax benefits was $191,000 and $281,000, respectively. Our gross unrecognized income tax benefit of $790,000 as of April 27, 2025, relates to income tax positions for which significant change is currently not expected within the next year. This amount primarily relates to taxation under applicable income tax treaties with foreign tax jurisdictions. United States federal and state income tax returns filed by us remain subject to examination for income tax years 2019 and subsequent. Canadian federal income tax returns filed by us remain subject to examination for income tax years 2021 and subsequent. Canadian provincial (Quebec) income tax returns filed by us remain subject to examination for income tax years 2021 and subsequent. Income tax returns associated with our operations located in China are subject to examination for income tax year 2020 and subsequent. Income Taxes Paid The following table sets forth income taxes paid (refunded) by jurisdiction:
(dollars in thousands) |  | 2025 |  |  | 2024 |  |  | 2023 |
United States federal - Transition Tax |  | $ | 665 |  |  | $ | 499 |  |  | $ | 265 |
China - Income Taxes |  |  | 1,785 |  |  |  | 2,317 |  |  |  | 1,831 |
Canada - Income Taxes |  |  | (146 | ) |  |  | 468 |  |  |  | 228 |
|  | $ | 2,304 |  |  | $ | 3,284 |  |  | $ | 2,324 |

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration