Income Taxes

12 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Sources of Pretax Income (Loss) 

	Fiscal Years Ended
	June 30, 2023		June 30, 2022		June 30, 2021
	(In thousands)
Domestic	$	(52,636)	$	(53,258)	$	(38,867)
Foreign	(125)		(5,025)		(4,396)
Total	$	(52,761)	$	(58,283)	$	(43,263)

Components of the Provision for Income Tax Expense (Benefit)

	Fiscal Years Ended
	June 30, 2023		June 30, 2022		June 30, 2021
	(In thousands)
Current:
Federal	$	(369)	$	230	$	(13,154)
State	(31)		28		465
Foreign	—		1		(239)
	(400)		259		(12,928)
Deferred:
Federal	—		2,504		774
State	—		2,858		(291)
Foreign	—		(4)		406
	—		5,358		889
	$	(400)	$	5,617	$	(12,039)

Reconciliation Between the Expected Income Tax Provision Applying the Domestic Federal Statutory Tax Rate and the Reported Income Tax Provision 

	Fiscal Years Ended
	June 30, 2023		June 30, 2022		June 30, 2021
	(In thousands)
Expected benefit for federal income taxes at the statutory rate	$	(11,080)	$	(12,239)	$	(9,085)
State income taxes, net of federal benefit	(2,320)		(1,971)		(1,240)
Impairment of non-deductible goodwill(1)	—		1,132		—
Charges without tax benefit	358		265		961
Change in valuation allowance(2)	12,595		17,943		2,797
Excess tax expense (benefit) on stock-based compensation	1,216		1,019		1,826
Research and development and other tax credits	(1,175)		(613)		(1,707)
Foreign tax differential	50		(232)		(96)
Federal rate differential net operating loss carryback(3)	—		141		(5,223)
Change in uncertain tax positions	(90)		(120)		(7)
Other	46		292		(265)
Provision (benefit) for federal, state and foreign income taxes	$	(400)	$	5,617	$	(12,039)

(1)In fiscal 2022, we impaired $18.3 million of goodwill, which included $5.4 million of non-deductible goodwill. See Note 4 - Goodwill and Other Intangible Assets for more information about the impairments.

(2)Due to the existence of a cumulative loss over a three-year period, we recorded a full valuation allowance against our deferred tax assets in fiscal 2022 and recorded additional valuation allowances against newly generated deferred tax assets in fiscal 2023. These assets are primarily comprised of federal net operating losses, which have an indefinite carryforward, federal tax credits and state net operating losses. To the extent we generate taxable income in the future, or cumulative losses are no longer present and our future projections for growth or tax planning strategies are demonstrated, we will realize the benefit associated with the net operating losses for which the valuation allowance has been provided. In fiscal 2021, we placed $2.8 million of valuation allowances, including $1.5 million on certain state net operating loss carryforwards due to a history of cumulative losses for a subsidiary.

(3)Relates to fiscal 2021 net operating losses carried back under provisions of the CARES Act to fiscal years 2016 and 2017 which had a 35% federal tax rate.

Significant Components of our Deferred Tax Assets and Liabilities

	June 30, 2023		June 30, 2022
	(In thousands)
Deferred tax assets:
Accruals and reserves	$	504	$	1,534
Bad debt reserve	273		340
Insurance reserve	913		1,035
Net operating loss benefit and credit carryforwards	26,888		23,717
Accrued compensation and pension	964		1,051
Stock compensation expense on nonvested restricted stock units	1,794		1,910
Book over tax amortization	7,218		5,449
Deferred FICA	—		1,427
Research and development capitalization	6,592		—
Foreign currency translation and other	1,608		1,002
Valuation allowance	(41,060)		(28,615)
Total deferred tax assets	5,694		8,850
Deferred tax liabilities:
Tax over book depreciation	5,472		7,842
Other	248		1,034
Total deferred tax liabilities	5,720		8,876
Net deferred tax liability	$	(26)	$	(26)

As reported in the Consolidated Balance Sheets:

	June 30, 2023		June 30, 2022
	(In thousands)
Deferred income tax assets	$	—	$	—
Deferred income tax liabilities	(26)		(26)
Net deferred tax liability	$	(26)	$	(26)

Valuation Allowance

We placed a valuation allowance on our deferred tax assets in the second quarter of fiscal 2022 due to the existence of a cumulative loss over a three-year period. We will continue to place valuation allowances on newly generated deferred tax assets and will realize the benefit associated with the deferred tax assets for which the valuation allowance has been provided to the extent we generate taxable income in the future, or cumulative losses are no longer present and our future projections for growth or tax planning strategies are demonstrated.

Operating Loss and Tax Credit Carryforwards

We have net operating loss carryforwards and tax credit carryforwards in federal, state and foreign jurisdictions. The valuation allowance at June 30, 2023 and June 30, 2022 reduces the recognized tax benefit of these carryforwards to an amount that is more likely than not to be realized.  The gross carryforwards will generally expire as shown below for each jurisdiction:

Operating Loss and Tax Credit Carryforwards	Expiration Period	Amount (in thousands)
Federal net operating loss	Indefinite	$	38,606
Federal tax credits	June 2041 to June 2043	$	3,270
Federal foreign tax credits	June 2024 to June 2025	$	548
State net operating losses	June 2025 to indefinite	$	95,480
State tax credits	June 2033 to indefinite	$	984
Foreign net operating losses	June 2033 to June 2043	$	31,453
Foreign tax credits	June 2035 to June 2043	$	693

Net Operating Loss Carryback Refund

Through provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the "CARES Act"), we had an income tax benefit from the ability to carryback the fiscal 2021 federal net operating loss to a period with a higher statutory federal income tax rate. We received a $13.3 million tax refund in connection with this carryback during fiscal 2023, which was included in income taxes receivable in the Consolidated Balance Sheets as of June 30, 2022.

Deferred Payroll Taxes

During the second quarter of fiscal 2023, we repaid the remaining $5.6 million of U.S. payroll taxes we deferred through the provisions of the CARES Act. The balance of deferred payroll taxes was included within accrued wages and benefits in the Consolidated Balance Sheets as of June 30, 2022.

Other

In general, it is our practice and intention to reinvest the earnings of our foreign subsidiaries in our foreign operations. We do not provide for outside basis differences under the indefinite reinvestment assertion of ASC 740-30.

We file tax returns in multiple domestic and foreign taxing jurisdictions. With a few exceptions, we are no longer subject to examination by taxing authorities through fiscal 2018. At June 30, 2023, we updated our evaluation of our open tax years in all known jurisdictions. As of June 30, 2023, we have a $0.2 million liability for unrecognized tax positions and the payment of related interest and penalties. We treat the related interest and penalties as income tax expense. Due to the uncertainties related to these tax matters, we are unable to make a reasonably reliable estimate as to when cash settlement with a taxing authority will occur.