XML 32 R16.htm IDEA: XBRL DOCUMENT v3.21.2
Income Taxes
 12 Months Ended
Jun. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Kimball International, or one of its wholly-owned subsidiaries, files U.S. federal income tax returns and income tax returns in various state and local jurisdictions. Our provision (benefit) for income taxes is composed of the following items:
Year Ended June 30
(Amounts in Thousands)202120202019
Currently Payable:   
Federal$(269)$9,890 $13,458 
State510 4,019 2,677 
Total current$241 $13,909 $16,135 
Deferred Taxes:   
Federal$(1,293)$1,979 $(3,270)
State(1,754)(812)(539)
Total deferred$(3,047)$1,167 $(3,809)
Total provision (benefit) for income taxes$(2,806)$15,076 $12,326 
A reconciliation of the statutory U.S. income tax rate to Kimball International’s effective income tax rate follows:
Year Ended June 30
202120202019
(Amounts in Thousands)Amount%Amount%Amount%
Tax provision computed at U.S. federal statutory rate$968 21.0 %$11,787 21.0 %$10,851 21.0 %
State income taxes, net of federal income tax benefit(433)(9.4)2,533 4.5 1,689 3.3 
Change in fair value of contingent earn-out liability(2,840)(61.6)— — — — 
Research credit(600)(13.0)(430)(0.8)(300)(0.6)
Other - net99 2.1 1,186 2.2 86 0.2 
Total provision (benefit) for income taxes$(2,806)(60.9 %)$15,076 26.9 %$12,326 23.9 %
Net cash payments for income taxes were, in thousands, $7,187, $11,114, and $10,225 in fiscal years 2021, 2020, and 2019, respectively.
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets associated with net operating losses of, in thousands, $4,819 can be carried forward indefinitely and $17,116 expire from fiscal year 2022 to 2041. Deferred tax assets associated with tax credit carryforwards of, in thousands, $4,974, expire from fiscal year 2025 to 2041. Valuation allowances were provided as of June 30, 2021 for deferred tax assets relating to state net operating losses of, in thousands, $2,590, and foreign tax credits of, in thousands, $705, that we currently believe are more likely than not to remain unrealized in the future. In all periods presented, the change in the valuation allowance is reported as a component of income tax expense.
During fiscal year 2021, we acquired U.S. federal net operating losses (“NOLs”) with a tax benefit of approximately $16.2 million in connection with the Poppin, Inc. acquisition, all of which are available to offset future taxable income during the carryforward periods based on limitations under Section 382 of the Internal Revenue Code of 1986, as amended. We also acquired state NOLs with a tax benefit of approximately $3.5 million in connection with the Poppin, Inc. acquisition, of which an estimated $2.1 million are available to offset future taxable income during the carryforward periods. We provided a full valuation allowance against the available state NOLs, as we do not have sufficient positive evidence at this time to conclude that Poppin, Inc. will be able to utilize the NOL carryforwards in the states where the losses were generated, considering state limitations on the utilization of NOLs.
The components of the deferred tax assets and liabilities as of June 30, 2021 and 2020, were as follows:
(Amounts in Thousands)20212020
Deferred Tax Assets:  
Receivables$665 $892 
Inventory3,242 421 
Employee benefits246 247 
Deferred compensation5,402 6,678 
Other current liabilities459 492 
Warranty reserve736 821 
Tax credit carryforwards4,974 3,018 
Restructuring670 60 
Net operating loss carryforward21,935 1,713 
Miscellaneous4,014 3,167 
Valuation Allowance(3,295)(1,113)
Total asset$39,048 $16,396 
Deferred Tax Liabilities:  
Property and equipment$7,833 $7,067 
Intangible assets12,423 — 
Goodwill493 — 
Miscellaneous1,931 1,844 
Total liability$22,680 $8,911 
Net Deferred Tax Assets$16,368 $7,485 
Changes in the unrecognized tax benefit, excluding accrued interest and penalties, during fiscal years 2021, 2020, and 2019 were as follows:
(Amounts in Thousands)202120202019
Beginning balance - July 1$798 $753 $989 
Tax positions related to prior fiscal years:   
Additions24 74 80 
Reductions— — (222)
Tax positions related to current fiscal year:   
Additions— — — 
Reductions— — — 
Settlements— — — 
Lapses in statute of limitations(10)(29)(94)
Ending balance - June 30$812 $798 $753 
Portion that, if recognized, would reduce tax expense and effective tax rate$686 $676 $643 
Amounts accrued for interest and penalties were as follows:
As of June 30
(Amounts in Thousands)202120202019
Accrued Interest and Penalties:   
Interest$175 $156 $90 
Penalties$143 $137 $101 
Interest and penalties expense (income) recognized for fiscal years 2021, 2020, and 2019 were, in thousands, $25, $102, and $23, respectively.
We are no longer subject to any significant U.S. federal tax examinations by tax authorities for years before fiscal year 2018, and to various state and local income tax examinations by tax authorities for years before 2017. We do not expect the change in the amount of unrecognized tax benefits in the next 12 months to have a significant impact on our results of operations or financial position.
We consider the earnings of certain non-U.S. subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs. No provision was made for income taxes that may result from future remittances of the undistributed earnings of foreign subsidiaries that are determined to be indefinitely reinvested, which was $1.8 million on June 30, 2021. Future remittances of these undistributed earnings of foreign subsidiaries are not subject to U.S. income tax or foreign withholding taxes in the foreign country where the foreign subsidiaries operate.