INCOME TAXES (Tables)

12 Months Ended

Apr. 29, 2018

Income Tax Disclosure [Abstract]

Schedule of Allocation of Income Tax Expense

Total income tax expense was allocated as follows:

(dollars in thousands)	2018		2017			2016
income from operations	$	5,740		7,339			10,963
shareholders’ equity, related to the tax benefit arising from stock based compensation		—		(657	)		(841	)
	$	5,740		6,682			10,122

Schedule of Income Tax Expense Attributable to Income from Operations

Income tax expense attributable to income from operations consists of:

(dollars in thousands)	2018			2017			2016
current
federal	$	(1,367	)		109			—
state		9			13			6
2017 Tax Cuts and Jobs Act		4,854			—			—
foreign		4,726			5,981			6,765
foreign – reversal of uncertain tax position		—			(3,431	)		—
		8,222			2,672			6,771
deferred
federal		4,295			404			(1,205	)
state		112			54			305
2017 Tax Cuts and Jobs Act (1)		(6,903	)		—			—
undistributed earnings – foreign subsidiaries		(195	)		(101	)		(1,129	)
U.S. operating loss carryforwards		—			3,630			5,467
foreign		93			734			1,086
valuation allowance (1)		116			(54	)		(332	)
		(2,482	)		4,667			4,192
	$	5,740			7,339			10,963

(1) The income tax benefit of $6,903 includes a charge of $4,550 for the establishment of a valuation allowance against U.S. foreign tax credits that are more-likely-than not to be realized as a result of the 2017 Tax Cuts and Jobs Act.

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)	2018		2017			2016
Foreign
China	$	11,036		13,650			14,130
Canada		5,985		4,918			3,647
Poland		—		(19	)		(62	)
Cayman Islands		339		154			—
Total Foreign		17,360		18,703			17,715
United States		9,523		10,993			10,183
	$	26,883		29,696			27,898

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:

	2018			2017			2016
federal income tax rate		30.4	%		34.0	%		34.0	%
tax effects of the 2017 Tax Cuts and Jobs Act		(7.6	)		—			—
tax effects of Chinese foreign exchange (losses) gains		(2.8	)		1.6			4.4
reversal of foreign uncertain income tax position		—			(11.6	)		—
tax effects of stock-based compensation		(1.8	)		—			—
undistributed earnings from foreign subsidiaries		3.7			—			—
other		(0.5	)		0.7			0.9
		21.4	%		24.7	%		39.3	%

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)	2018			2017
deferred tax assets:
accounts receivable	$	316			447
inventories		2,217			2,196
compensation		3,438			6,222
liabilities and other		117			890
foreign income tax credits – U.S.		5,720			44,917
alternative minimum tax credit – U.S.		—			1,428
property, plant and equipment (1)		226			245
loss carryforwards – U.S.		2,513			3,842
loss carryforwards – foreign		76			73
unrecognized tax benefits – U.S.		—			(3,842	)
valuation allowances		(5,204	)		(536	)
total deferred tax assets		9,419			55,882
deferred tax liabilities:
undistributed earnings on foreign subsidiaries		(4,256	)		(43,978	)
unrecognized tax benefits – U.S.		(380	)		(7,936	)
property, plant and equipment (2)		(4,352	)		(5,546	)
goodwill		(1,046	)		(1,478	)
other		(77	)		(118	)
total deferred tax liabilities		(10,111	)		(59,056	)
Net deferred liabilities	$	(692	)		(3,174	)

(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 29, 2018		April 30, 2017
U.S. foreign income tax credits	$	4,550		—
U.S. state loss carryforwards and credits		578		464
Polish loss carryforwards		76		72
	$	5,204		536

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)	2018		2017			2016
beginning balance	$	536		590			922
establishment of valuation allowance (1)		4,550		—			—
change in estimate (2)		118		(54	)		(332	)
ending balance	$	5,204		536			590

(1) The establishment of this valuation allowance pertains to U.S. foreign tax credits that are 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)	2018			2017			2016
beginning balance	$	12,245			14,897			14,141
increases from prior period tax positions		350			854			454
decreases from prior period tax positions (1)		(11,751	)		(3,506	)		(77	)
increases from current period tax positions		—			—			379
ending balance	$	844			12,245			14,897

(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 on an IRS exam. The $3.5 million reduction in our unrecognized income tax benefits during fiscal 2017 is due to a lapse of applicable statute of limitations in a foreign jurisdiction.