XML 35 R17.htm IDEA: XBRL DOCUMENT v3.22.2.2
Income Taxes
 12 Months Ended
Jun. 30, 2022
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)202220212020
Currently Payable (Refundable):   
Federal$(2,783)$(269)$9,890 
State(200)510 4,019 
Total current$(2,983)$241 $13,909 
Deferred Taxes:   
Federal$1,949 $(1,293)$1,979 
State(672)(1,754)(812)
Total deferred$1,277 $(3,047)$1,167 
Total provision (benefit) for income taxes$(1,706)$(2,806)$15,076 
A reconciliation of the statutory U.S. income tax rate to Kimball International’s effective income tax rate follows:
Year Ended June 30
202220212020
(Amounts in Thousands)Amount%Amount%Amount%
Tax provision (benefit) computed at U.S. federal statutory rate$(3,658)21.0 %$968 21.0 %$11,787 21.0 %
State income taxes, net of federal income tax benefit(1,714)9.8 (433)(9.4)2,533 4.5 
Goodwill impairment8,808 (50.5)— — — — 
Change in fair value of contingent earn-out liability(4,396)25.3 (2,840)(61.6)— — 
Research credit(600)3.4 (600)(13.0)(430)(0.8)
Other - net(146)0.8 99 2.1 1,186 2.2 
Total provision (benefit) for income taxes$(1,706)9.8 %$(2,806)(60.9 %)$15,076 26.9 %
Net cash payments (refunds) for income taxes were, in thousands, $(3,520), $7,187, and $11,114 in fiscal years 2022, 2021, and 2020, 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, $3,628 can be carried forward indefinitely and, in thousands, $16,526 expire from fiscal year 2023 to 2042. Deferred tax assets associated with tax credit carryforwards of, in thousands, $5,139, expire from fiscal year 2025 to 2042. Valuation allowances were provided as of June 30, 2022 for deferred tax assets relating to state net operating losses of, in thousands, $3,453, and foreign tax credits of, in thousands, $802, 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, of which $14.6 million remains 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 $4.7 million in connection with the Poppin, Inc. acquisition, of which an estimated $3.2 million remains 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, 2022 and 2021, were as follows:
(Amounts in Thousands)20222021
Deferred Tax Assets:  
Receivables$618 $665 
Inventory2,475 3,242 
Employee benefits158 246 
Deferred compensation6,603 5,402 
Other current liabilities266 459 
Warranty reserve651 736 
Tax credit carryforwards5,139 4,974 
Restructuring472 670 
Net operating loss carryforward20,154 21,935 
Miscellaneous4,741 4,014 
Valuation allowance(4,255)(3,295)
Total asset$37,022 $39,048 
Deferred Tax Liabilities:  
Property and equipment$8,604 $7,833 
Intangible assets10,765 12,423 
Goodwill689 493 
Miscellaneous2,492 1,931 
Total liability$22,550 $22,680 
Net Deferred Tax Assets$14,472 $16,368 
Changes in the unrecognized tax benefit, excluding accrued interest and penalties, during fiscal years 2022, 2021, and 2020 were as follows:
(Amounts in Thousands)202220212020
Beginning balance - July 1$812 $798 $753 
Increases related to prior fiscal years9 24 74 
Decreases related to lapses in statute of limitations(285)(10)(29)
Ending balance - June 30$536 $812 $798 
Portion that, if recognized, would reduce tax expense and effective tax rate$423 $686 $676 
Amounts accrued for interest and penalties were as follows:
As of June 30
(Amounts in Thousands)202220212020
Accrued Interest and Penalties:   
Interest$121 $175 $156 
Penalties$134 $143 $137 
Interest and penalties expense (income) recognized for fiscal years 2022, 2021, and 2020 were, in thousands, $(63), $25, and $102, respectively.
We are no longer subject to any significant U.S. federal tax examinations by tax authorities for years before fiscal year 2019, and to various state and local income tax examinations by tax authorities for years before 2018. 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 $1.3 million on June 30, 2022. 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.