

3.	SIGNIFICANT ACCOUNTING POLICIES AND DISCLOSURES

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management continuously evaluates its critical accounting policies and estimates, including the allowance for doubtful accounts, revenue recognition, inventory obsolescence, goodwill and other intangible assets, loss contingencies, and income taxes. Management bases the estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances, however, actual results could differ from those estimates.

Fair Values of Financial Instruments: The fair values of financial instruments are determined based on quoted market prices and market interest rates as of the end of the reporting period. Our financial instruments include investments, accounts receivable, accounts payable, and accrued liabilities. The fair values of these financial instruments were not materially different from their carrying values at May 31, 2014, and June 1, 2013.

Cash and Cash Equivalents: We consider short-term, highly liquid investments that are readily convertible to known amounts of cash, and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates, and that have a maturity of three months or less, when purchased, to be cash equivalents. The carrying amounts reported in the balance sheet for cash and cash equivalents approximate the fair market value of these assets.

Allowance for Doubtful Accounts: Our allowance for doubtful accounts includes estimated losses that result from uncollectible receivables. The estimates are influenced by the following: continuing credit evaluation of customers’ financial conditions; aging of receivables, individually and in the aggregate; a large number of customers which are widely dispersed across geographic areas; collectability and delinquency history by geographic area; and the fact that no single customer accounts for more than 10% of net sales. Significant changes in one or more of these considerations may require adjustments affecting net income and net carrying value of accounts receivable. The allowance for doubtful accounts was approximately $0.6 million as of May 31, 2014, and $1.1 million as of June 1, 2013.

Loss Contingencies: We accrue a liability for loss contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. If we determine that there is at least a reasonable possibility that a loss may have been incurred, we will include a disclosure describing the contingency.

Revenue Recognition: Our product sales are recognized as revenue upon shipment, when title passes to the customer, when delivery has occurred or services have been rendered, and when collectability is reasonably assured. We also record estimated discounts and returns based on our historical experience. Our products are often manufactured to meet the specific design needs of our customers’ applications. Our engineers work closely with customers to ensure that our products will meet their needs. Our customers are under no obligation to compensate us for designing the products we sell.

Foreign Currency Translation: Balance sheet items for our foreign entities, included in our consolidated balance sheet are translated into U.S. dollars at end-of-period spot rates. Gains and losses resulting from translation of foreign subsidiary financial statements are credited or charged directly to accumulated other comprehensive income/(loss), a component of stockholders’ equity. Revenues and expenses are translated at the current rate on the date of the transaction. Gains and losses resulting from foreign currency transactions are included in income. Foreign currency translation reflected in our consolidated statements of comprehensive income (loss) was a loss of $0.1 million during fiscal 2014, a loss of $0.8 million during fiscal 2013, and a gain of less than $0.1 million during fiscal 2012.

Shipping and Handling Fees and Costs: Shipping and handling costs billed to customers are reported as revenue and the related costs are reported as a component of cost of sales.

Inventories: Our worldwide inventories are stated at the lower of cost or market, generally using a weighted-average cost method. Our inventories include approximately $30.9 million of finished goods and $3.0 million of raw materials and work-in-progress as of May 31, 2014, as compared to approximately $31.6 million of finished goods and $2.4 million of raw materials and work-in-progress as of June 1, 2013.

Provisions for obsolete or slow moving inventories are recorded based upon regular analysis of stock rotation privileges, obsolescence, the exiting of certain markets, and assumptions about future demand and market conditions. If future demand, changes in the industry, or market conditions differ from management’s estimates, additional provisions may be necessary.

We recorded provisions to our inventory reserves of $0.8 million, $0.4 million, and $0.4 million during fiscal 2014, 2013, and 2012, respectively, which were included in cost of sales from continuing operations. The provisions were principally for obsolete and slow moving parts. The parts were written down to estimated realizable value.

Income Taxes: We recognize deferred tax assets and liabilities based on the differences between financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and determine the need for a valuation allowance based on a number of factors, including both positive and negative evidence. These factors include historical taxable income or loss, projected future taxable income or loss, the expected timing of the reversals of existing temporary differences, and the implementation of tax planning strategies. In circumstances where we, or any of our affiliates, have incurred three years of cumulative losses which constitute significant negative evidence, positive evidence of equal or greater significance is needed to overcome the negative evidence before a tax benefit is recognized for deductible temporary differences and loss carryforwards.

Investments: During fiscal 2014, we invested in time deposits and certificates of deposit (“CD”) in the amount of $32.7 million. Of this, $31.7 million mature in less than twelve months and $1.0 million mature in greater than twelve months. As of June 1, 2013, we had approximately $44.0 million invested in time deposits and CD’s. Of this, $39.0 million matured in less than twelve months and $5.0 million matured in greater than twelve months. The fair value of these investments is the face value of each time deposit and CD.

We also have investments in equity securities, all of which are classified as available-for-sale and are carried at their fair value based on quoted market prices. Our investments, which are included in non-current assets, had a carrying amount of $0.5 million at May 31, 2014, and $0.4 million at June 1, 2013. Proceeds from the sale of securities were $0.2 million during fiscal 2014 and $0.2 million during fiscal 2013 and fiscal 2012. We reinvested proceeds from the sale of securities, and the cost of the equity securities sold was based on a specific identification method. Gross realized gains and losses on those sales were less than $0.1 million during fiscal 2014 and less than $0.1 million during fiscal 2013 and fiscal 2012. Net unrealized holding losses during fiscal 2014 were less than $0.1 million, and during fiscal 2013 and fiscal 2012, were $0.1 million or less, and have been included in accumulated comprehensive income (loss) during its respective fiscal year.

Discontinued Operations: During fiscal year 2011, we completed the sale of the assets primarily used or held for use in, and certain liabilities of, our RF, Wireless and Power Division ("RFPD"), as well as certain other Company assets, including our information technology assets, to Arrow Electronics, Inc. ("Arrow") in exchange for $238.8 million, ("the Transaction"). In accordance with Accounting Standards Codification ("ASC") 205-20, Presentation of Financial Statements - Discontinued Operations (“ASC 205-20”), we reported the financial results of RFPD as a discontinued operation. Refer to Note 4 “Discontinued Operations” for additional discussion on the sale of RFPD.

Goodwill and Other Intangible Assets: Goodwill is initially recorded based on the premium paid for acquisitions and is subsequently tested for impairment. We test goodwill for impairment annually and whenever events or circumstances indicates an impairment may have occurred, such as a significant adverse change in the business climate, loss of key personnel or a decision to sell or dispose of a reporting unit.

During the fourth quarter of each fiscal year, our goodwill balances are reviewed for impairment through the application of a fair-value based test, using the third quarter as the measurement date. In performing our annual review of goodwill balances for impairment, we estimate the fair value of each of our reporting units based on projected future operating results, market approach, and discounted cash flows. Projected future operating results and cash flows used for valuation purposes may reflect considerable improvements relative to historical periods with respect to, among other things, revenue growth and operating margins. Although we believe our projected future operating results and cash flows and related estimates regarding fair values are based on reasonable assumptions, historically, projected operating results and cash flows have not always been achieved. In accordance with ASC 350 “Intangibles - Goodwill and Other”, if indicators of impairment are deemed to be present, we would perform an interim impairment test and any resulting impairment loss would be charged to expense in the period identified.

Intangible assets are initially recorded at their fair market values determined on quoted market prices in active markets, if available, or recognized valuation models. Intangible assets that have finite useful lives are amortized on a straight-line basis over their useful lives.

Property, Plant and Equipment: Property, plant and equipment are stated at cost, net of accumulated depreciation. Improvements and replacements are capitalized while expenditures for maintenance and repairs are charged to expense as incurred. Provisions for depreciation are computed using the straight-line method over the estimated useful life of the asset. Depreciation expense was approximately $1.0 million, $1.0 million, and $1.1 million during fiscal 2014, 2013, and 2012, respectively. Property, plant and equipment consist of the following (in thousands):



	May 31, 2014			June 1, 2013
Land and improvements	$	1,598		$	1,503
Buildings and improvements	18,456			18,384
Computer and communications equipment⁽¹⁾	3,792			1,676
Construction in progress⁽¹⁾	1,377			1,305
Machinery and other equipment	5,795			4,963
	$	31,018		$	27,831
Accumulated depreciation	(23,795		)	(22,758		)
Property, plant, and equipment, net	$	7,223		$	5,073


(1)	Relates primarily to IT Infrastructure for our ERP Implementation.

Supplemental disclosure information of the estimated useful life of the asset:



Land improvements	10 years
Buildings and improvements	10 - 30 years
Computer and communications equipment	3 - 10 years
Machinery and other equipment	3 - 10 years

We review property, plant and equipment for impairment whenever adverse events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. We have concluded that property, plant and equipment reported as of May 31, 2014, were not impaired.

Accrued Liabilities: Accrued liabilities consist of the following (in thousands):



	May 31, 2014		June 1, 2013
Compensation and payroll taxes	$	4,692	$	4,138
Income taxes	68		1,191
Professional fees	560		811
Other accrued expenses	3,900		3,426
Accrued Liabilities	$	9,220	$	9,566

Warranties: We offer warranties for the limited number of specific products we manufacture. We also provide extended warranties for some products we sell that lengthen the period of coverage specified in the manufacturer’s original warranty. Our warranty terms generally range from one to three years.

We estimate the cost to perform under the warranty obligation and recognize this estimated cost at the time of the related product sale. We record expense related to our warranty obligations as cost of sales in our consolidated statements of comprehensive income. Each quarter, we assess actual warranty costs incurred on a product-by-product basis and compare the warranty costs to our estimated warranty obligation. With respect to new products, estimates are based generally on knowledge of the products, the extended warranty period, and warranty experience.

Warranty reserves are established for costs that are expected to be incurred after the sale and delivery of products under warranty. Warranty reserves are included in accrued liabilities on our consolidated balance sheets. The warranty reserves are determined based on known product failures, historical experience, and other available evidence.

Changes in the warranty reserve during fiscal 2014 and 2013 were as follows (in thousands):



	Warranty Reserve
Balance at June 2, 2012	$	148
Accruals for products sold	259
Utilization	(219		)
Balance at June 1, 2013	$	188
Accruals for products sold	202
Utilization	(215		)
Balance at May 31, 2014	$	175

Other Non-Current Liabilities: Other non-current liabilities of $1.3 million at May 31, 2014, and $1.3 million at June 1, 2013, primarily represent employee-benefits obligations in various non-US locations.

Share-Based Compensation: We measure and recognize compensation cost at fair value for all share-based payments, including stock options. We estimate fair value using the Black-Scholes option-pricing model, which requires assumptions such as expected volatility, risk-free interest rate, expected life, and dividends. Compensation cost is recognized using a graded-vesting schedule over the applicable vesting period, or date on which retirement eligibility is achieved, if shorter (non-substantive vesting period approach). Share-based compensation expense totaled approximately $0.8 million during fiscal 2014, $0.6 million during fiscal 2013, and $0.5 million during fiscal 2012.

Stock options granted generally vest over a period of five years and have contractual terms to exercise of 10 years. A summary of stock option activity is as follows (in thousands, except option prices and years):



	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Options Outstanding at May 28, 2011	883		$	8.51
Granted	140		12.87
Exercised	(121	)	6.68
Forfeited	(62	)	8.91
Cancelled	(74	)	7.92
Options Outstanding at June 2, 2012	766		$	9.52
Granted	225		11.70
Exercised	(31	)	6.37
Forfeited	(14	)	10.40
Cancelled	(2	)	12.43
Options Outstanding at June 1, 2013	944		$	10.13
Granted	224		11.15
Exercised	(32	)	5.84
Forfeited	(54	)	11.73
Cancelled	(17	)	11.52
Options Outstanding at May 31, 2014	1,065		$	10.37	6.4	$	1,189
Options Vested at May 31, 2014	576		$	9.50	4.8	$	1,040

There were 32,000 stock options exercised during fiscal 2014, with cash received of $0.2 million. The total intrinsic value of options exercised totaled $0.2 million during fiscal 2014, $0.1 million during fiscal 2013, and $0.6 million during fiscal 2012. The weighted average fair value of stock option grants was $4.53 during fiscal 2014, $4.75 during fiscal 2013, and $5.38 during fiscal 2012. As of May 31, 2014, total unrecognized compensation costs related to unvested stock options was approximately $2.1 million which is expected to be recognized over the remaining weighted average period of five years. The total grant date fair value of stock options vested during fiscal 2014 was $0.8 million.

The fair value of stock options is estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:



	Fiscal Year Ended
	May 31, 2014			June 1, 2013			June 2, 2012
Expected volatility	49.31		%	50.79		%	53.91		%
Risk-free interest rate	2.03		%	1.12		%	1.52		%
Expected lives (years)	6.47			6.37			6.29
Annual cash dividend	$	0.24		$	0.24		$	0.20

The expected volatility assumptions are based on historical experience. The risk-free interest rate is based on the yield of a treasury note with a remaining term equal to the expected life of the stock option.

The expected stock option life assumption is based on the Securities and Exchange Commission’s (“SEC”) guidance in Staff Accounting Bulletin (“SAB”) No. 107 (“SAB No. 107”). On December 21, 2007, the SEC issued SAB No. 110 stating that they will continue to accept SAB No. 107, past the original expiration date of December 31, 2007. For stock options granted during fiscal years 2014, 2013, and 2012, we believe that our historical stock option experience does not provide a reasonable basis upon which to estimate expected term. We utilized the Safe Harbor option, or Simplified Method, to determine the expected term of these options in accordance with SAB No. 107 for options granted. We intend to continue to utilize the Simplified Method for future grants in accordance with SAB No. 110 until such time that we believe that our historical stock option experience will provide a reasonable basis to estimate an expected term.

The following table summarizes information about stock options outstanding at May 31, 2014 (in thousands, except option prices and years):



	Outstanding						Vested
Exercise Price Range	Shares	Price		Life	Aggregate Intrinsic Value		Shares	Price		Life	Aggregate Intrinsic Value
$4.18 to $7.24	224	$	5.74	4.8	$	994	191	$	5.75	4.7	$	845
$7.32 to $11.00	135	$	8.96	2.3	$	195	135	$	8.96	2.3	$	195
$11.12 to $13.76	706	$	12.10	7.7	$	—	250	$	12.66	6.2	$	—
Total	1,065	$	10.37	6.4	$	1,189	576	$	9.50	4.8	$	1,040

As of May 31, 2014, we had zero unvested restricted shares compared to 10,000 unvested restricted shares as of

June 1, 2013.

Compensation effects arising from issuing stock awards have been charged against income and recorded as additional paid-in-capital in the consolidated statements of stockholder’s equity and were immaterial during fiscal 2014, 2013, and 2012.

The Employees’ 2011 Long-Term Incentive Compensation Plan authorizes the issuance of up to 750,000 shares as incentive stock options, non-qualified stock options, or stock awards. Under this plan, 359,000 shares are reserved for future issuance. The Plan authorizes the granting of stock options at the fair market value at the date of grant. Generally, these options become exercisable over five years and expire up to 10 years from the date of grant.

On June 16, 2005, our Board of Directors adopted the 2006 Stock Option Plan for Non-Employee Directors which authorizes the issuance of up to 400,000 shares as non-qualified stock options. Under this plan, 70,000 shares of common stock have been reserved for future issuance relating to stock options exercisable based on the passage of time. Each option is exercisable over a period of time from its date of grant at the market value on the grant date and expires after 10 years and one month.

Earnings per Share: We have authorized 30,000,000 shares of common stock, 10,000,000 shares of Class B common stock, and 5,000,000 shares of preferred stock. The Class B common stock has 10 votes per share and has transferability restrictions; however, Class B common stock may be converted into common stock on a share-for-share basis at any time. With respect to dividends and distributions, shares of common stock and Class B common stock rank equally and have the same rights, except that Class B common stock cash dividends are limited to 90% of the amount of Class A common stock cash dividends.

In accordance with ASC 260-10, Earnings Per Share (“ASC 260”), our Class B common stock is considered a participating security requiring the use of the two-class method for the computation of basic and diluted earnings per share. The two-class computation method for each period reflects the cash dividends paid per share for each class of stock, plus the amount of allocated undistributed earnings per share computed using the participation percentage which reflects the dividend rights of each class of stock. Basic and diluted earnings per share were computed using the two-class method as prescribed in ASC 260. The shares of Class B common stock are considered to be participating convertible securities since the shares of Class B common stock are convertible on a share-for-share basis into shares of common stock and may participate in dividends with common stock according to a predetermined formula which is 90% of the amount of Class A common stock cash dividends.

The per share amounts presented in the consolidated statements of comprehensive income (loss) are based on the following (amounts in thousands, except per share amounts):



	For the Fiscal Year Ended
	May 31, 2014						June 1, 2013						June 2, 2012
	Basic			Diluted			Basic			Diluted			Basic			Diluted
Numerator for Basic and Diluted EPS:
Income (loss) from continuing operations	$	(345	)	$	(345	)	$	482		$	482		$	7,990		$	7,990
Less dividends:
Common stock	2,853			2,853			2,971			2,971			2,787			2,787
Class B common stock	488			488			600			600			528			528
Undistributed earnings (losses)	$	(3,686	)	$	(3,686	)	$	(3,089	)	$	(3,089	)	$	4,675		$	4,675
Common stock undistributed earnings (losses)	$	(3,151	)	$	(3,151	)	$	(2,570	)	$	(2,575	)	$	3,933		$	3,939
Class B common stock undistributed earnings (losses)	(535		)	(535		)	(519		)	(514		)	742			736
Total undistributed earnings (losses)	$	(3,686	)	$	(3,686	)	$	(3,089	)	$	(3,089	)	$	4,675		$	4,675
Income (loss) from discontinued operations	$	(170	)	$	(170	)	$	766		$	766		$	536		$	536
Less dividends:
Common stock	2,853			2,853			2,971			2,971			2,787			2,787
Class B common stock	488			488			600			600			528			528
Undistributed earnings (losses)	$	(3,511	)	$	(3,511	)	$	(2,805	)	$	(2,805	)	$	(2,779	)	$	(2,779	)
Common stock undistributed earnings (losses)	$	(3,001	)	$	(3,001	)	$	(2,334	)	$	(2,338	)	$	(2,338	)	$	(2,342	)
Class B common stock undistributed earnings (losses)	(510		)	(510		)	(471		)	(467		)	(441		)	(437		)
Total undistributed earnings (losses)	$	(3,511	)	$	(3,511	)	$	(2,805	)	$	(2,805	)	$	(2,779	)	$	(2,779	)
Net income (loss)	$	(515	)	$	(515	)	$	1,248		$	1,248		$	8,526		$	8,526
Less dividends:
Common stock	2,853			2,853			2,971			2,971			2,787			2,787
Class B common stock	488			488			600			600			528			528
Undistributed earnings (losses)	$	(3,856	)	$	(3,856	)	$	(2,323	)	$	(2,323	)	$	5,211		$	5,211
Common stock undistributed earnings (losses)	$	(3,296	)	$	(3,296	)	$	(1,933	)	$	(1,937	)	$	4,384		$	4,391
Class B common stock undistributed earnings (losses)	(560		)	(560		)	(390		)	(386		)	827			820
Total undistributed earnings (losses)	$	(3,856	)	$	(3,856	)	$	(2,323	)	$	(2,323	)	$	5,211		$	5,211
Denominator for basic and diluted EPS:
Common stock weighted average shares	11,915			11,915			12,448			12,448			14,025			14,025
Class B common stock weighted average shares, and shares under if-converted method for diluted EPS	2,250			2,250			2,790			2,790			2,941			2,941
Effect of dilutive securities
Dilutive stock options				—						134						152
Denominator for diluted EPS adjusted for weighted average shares and assumed conversions				14,165						15,372						17,118
Income (loss) from continuing operations per share:
Common stock	$	(0.03	)	$	(0.03	)	$	0.03		$	0.03		$	0.48		$	0.47
Class B common stock	$	(0.02	)	$	(0.02	)	$	0.03		$	0.03		$	0.43		$	0.43
Income (loss) from discontinued operations per share:
Common stock	$	(0.01	)	$	(0.01	)	$	0.05		$	0.05		$	0.03		$	0.03
Class B common stock	$	(0.01	)	$	(0.01	)	$	0.05		$	0.05		$	0.03		$	0.03
Net income (loss) per share:
Common stock	$	(0.04	)	$	(0.04	)	$	0.08		$	0.08		$	0.51		$	0.50
Class B common stock	$	(0.03	)	$	(0.03	)	$	0.08		$	0.08		$	0.46		$	0.46

Note: Common stock options that were anti-dilutive and not included in diluted earnings per common share for fiscal 2014, fiscal 2013, and fiscal 2012 were 489,064; 280,764; and 272,864, respectively.

New Accounting Pronouncements: In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-12, Compensation - Stock Compensation (Topic718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This ASU standardizes the reporting for these awards by requiring that entities treat these performance targets as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. For all entities, ASU 2014-12 is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015; early adoption is permitted. We are currently evaluating the impact that the adoption of ASU 2014-11 will have on our financial condition, results of operations and disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 is principles based guidance that can be applied to all contracts with customers, enhancing comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. The core principle of the guidance is that entities should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The guidance details the steps entities should apply to achieve the core principle. For public entities, ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period; early adoption is not permitted. We are currently evaluating the impact that the adoption of ASU 2014-09 will have on our financial condition, results of operations and disclosures.

In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This ASU limits discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have (or will have) a major effect on an entity’s operations and financial results. In addition, the amendments in this ASU require expanded disclosures for discontinued operations as well as for disposals that do not qualify as discontinued operations. For public entities, ASU 2014-08 is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2014. Early adoption is permitted for disposals that have not been reported in financial statements previously issued. We are currently evaluating the impact that the adoption of ASU 2014-08 will have on our financial condition, results of operations and disclosures.

We have evaluated and adopted the guidance of the following ASUs issued by the FASB in 2013; adopting these ASUs did not materially impact the presentation of our financial condition, results of operations and disclosures:

•

ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists issued in July 2013. ASU 2013-11 standardizes the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists; it does not require new recurring disclosures. ASU 2013-11 requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward unless specific criteria exist, in which case the unrecognized tax benefit should be presented as a liability and should not be combined with deferred tax assets .

•

ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity issued in March 2013. ASU 2013-05 provides guidance on releasing cumulative translation adjustments (“CTA”) when an entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity, and also provides guidance on releasing CTA in partial sales of equity method investments and in step acquisitions.

•

ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date issued in February 2013. The guidance in ASU 2013-04 requires entities to measure obligations resulting from joint and several liability arrangements, for which the total obligation amount is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount it expects to pay on behalf of its co-obligors. ASU 2013-04 also specifies disclosure requirements.