XML 22 R11.htm IDEA: XBRL DOCUMENT v3.8.0.1
6. Income Taxes
9 Months Ended
Mar. 25, 2018
Income Tax Disclosure [Abstract]  
Income Taxes

For the three months ended March 25, 2018, the Company recorded an income tax expense of $6 thousand. This amount was comprised of an income tax benefit of $130 thousand calculated at a 27.5% weighted-average rate consistent with the statutory U.S. federal rate offset by an income tax expense of $130 thousand related to a valuation allowance for deferred tax assets and state taxes of $6 thousand.

 

For the nine months ended March 25, 2018, the Company recorded an income tax benefit of $8 thousand. This amount was comprised of an income tax benefit of $390 thousand calculated at a 27.5% weighted-average rate consistent with the statutory U.S. federal rate offset by an income tax expense of $390 thousand related to recording a valuation allowance for deferred tax assets, foreign taxes of $6 thousand, state taxes of $19 thousand and a federal tax refund of $33 thousand.

 

The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. The Company continues to record a full valuation allowance against its net deferred tax assets. The Company assessed whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, using a “more likely than not” standard. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Future sources of taxable income were also considered in determining the amount of the recorded valuation allowance. Based on the Company’s review of this evidence at March 25, 2018, management determined that a full valuation allowance against all of the Company’s deferred tax assets was appropriate.

 

In December 2017, President Donald Trump signed the Tax Cuts and Jobs Act. The new law reduces the income tax rate for corporations from 35% to 21% effective January 1, 2018. The Company has not completed the accounting for the tax effects of enactment of the Act, but has estimated the effects on the deferred tax balances. The Company measured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, the Company is still analyzing certain aspects of the Act and refining calculations, which could potentially affect the remeasurement of these balances or give rise to new deferred tax amounts. The estimated increase in deferred taxes recorded due to the remeasurement was $3.3 million and the valuation allowance was adjusted by the same amount. There were approximately $6.0 million of deferred tax assets at March 25, 2018.