VENEZUELA'S HIGHLY INFLATIONARY ECONOMY	9 Months Ended
Feb. 28, 2014
VENEZUELA'S HIGHLY INFLATIONARY ECONOMY	16. VENEZUELA’S HIGHLY INFLATIONARY ECONOMY We operate a small service location in Punta Fijo, Venezuela, whose annual revenues have historically been less than one percent of our consolidated revenues for all periods presented. Because of the uncertain political environment in Venezuela, starting in the third quarter of fiscal year 2010, we began to account for Venezuelan operations pursuant to accounting guidance for hyperinflationary economies. Following the designation of the Venezuelan economy as hyperinflationary, we ceased taking the effects of currency fluctuations to accumulated other comprehensive income and began reflecting all effects as a component of other income in our statement of operations. Prior to February 2013, we were using the Venezuelan central bank’s official published rate (5.3 Bolivars per U.S. Dollar) to translate Venezuelan assets into U.S. Dollars as no other legal rate was readily available. In February 2013, the Venezuelan government announced a devaluation in its currency and created a new official exchange rate of 6.3 Bolivars per U.S. Dollar. As a result of the currency devaluation, we recognized a $0.6 million pre-tax foreign currency loss in the third quarter of fiscal year 2013. In the third quarter of fiscal year 2014, we began using an alternative Venezuelan, state-run exchange rate, commonly referred to as SICAD-1, to translate local currency financial statements. We believe using the SICAD-1 rate of 11.8 Bolivars per Dollar is more economically representative of what we might expect to receive in a dividend transaction than the official exchange rate of 6.3 Bolivars per Dollar because any dividend payments that would have been approved by the Central Bank of Venezuela prior to March 2014 would likely have been converted to U.S. Dollars at the SICAD-1 rate. As a result of the revaluation, we recognized a $1.9 million foreign currency loss in the third quarter of fiscal 2014. In March 2014, a market-based, state-run exchange, commonly referred to as SICAD-2, was initiated by the Central Bank of Venezuela. The nascent exchange system reported early exchange rates of about 50 Bolivars per U.S. Dollar. Management is closely monitoring the applicability and viability of this new exchange system. We have not yet determined whether we will utilize SICAD-1 or SICAD-2 exchange rates in the future for translation of local financial statements into U.S. Dollars. At February 28, 2014, after giving effect to the revaluation in the third quarter of fiscal 2014, our Venezuelan subsidiary had net assets of $2.4 million, consisting primarily of Bolivars denominated accounts receivable. If SICAD-2 rates are used to translate local currency financial statements to U.S. Dollars in the future, a further significant revaluation of our net assets in Venezuela can be expected in the fourth quarter of fiscal year 2014.

16. VENEZUELA’S HIGHLY INFLATIONARY ECONOMY

We operate a small service location in Punta Fijo, Venezuela, whose annual revenues have historically been less than one percent of our consolidated revenues for all periods presented. Because of the uncertain political environment in Venezuela, starting in the third quarter of fiscal year 2010, we began to account for Venezuelan operations pursuant to accounting guidance for hyperinflationary economies. Following the designation of the Venezuelan economy as hyperinflationary, we ceased taking the effects of currency fluctuations to accumulated other comprehensive income and began reflecting all effects as a component of other income in our statement of operations. Prior to February 2013, we were using the Venezuelan central bank’s official published rate (5.3 Bolivars per U.S. Dollar) to translate Venezuelan assets into U.S. Dollars as no other legal rate was readily available. In February 2013, the Venezuelan government announced a devaluation in its currency and created a new official exchange rate of 6.3 Bolivars per U.S. Dollar. As a result of the currency devaluation, we recognized a $0.6 million pre-tax foreign currency loss in the third quarter of fiscal year 2013.

In the third quarter of fiscal year 2014, we began using an alternative Venezuelan, state-run exchange rate, commonly referred to as SICAD-1, to translate local currency financial statements. We believe using the SICAD-1 rate of 11.8 Bolivars per Dollar is more economically representative of what we might expect to receive in a dividend transaction than the official exchange rate of 6.3 Bolivars per Dollar because any dividend payments that would have been approved by the Central Bank of Venezuela prior to March 2014 would likely have been converted to U.S. Dollars at the SICAD-1 rate. As a result of the revaluation, we recognized a $1.9 million foreign currency loss in the third quarter of fiscal 2014.

In March 2014, a market-based, state-run exchange, commonly referred to as SICAD-2, was initiated by the Central Bank of Venezuela. The nascent exchange system reported early exchange rates of about 50 Bolivars per U.S. Dollar. Management is closely monitoring the applicability and viability of this new exchange system. We have not yet determined whether we will utilize SICAD-1 or SICAD-2 exchange rates in the future for translation of local financial statements into U.S. Dollars.

At February 28, 2014, after giving effect to the revaluation in the third quarter of fiscal 2014, our Venezuelan subsidiary had net assets of $2.4 million, consisting primarily of Bolivars denominated accounts receivable. If SICAD-2 rates are used to translate local currency financial statements to U.S. Dollars in the future, a further significant revaluation of our net assets in Venezuela can be expected in the fourth quarter of fiscal year 2014.