SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Jun. 01, 2013

Use Of Estimates

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

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 June 1, 2013, and June 2, 2012.

Cash and Cash Equivalents

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

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 $1.1 million as of June 1, 2013, and $1.1 million as of June 2, 2012.

Inventories

Inventories: Our worldwide inventories are stated at the lower of cost or market, generally using a weighted-average cost method. Our inventories include approximately $31.6 million of finished goods and $2.4 million of raw materials and work-in-progress as of June 1, 2013, as compared to approximately $31.8 million of finished goods and $2.9 million of raw materials and work-in-progress as of June 2, 2012.

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 $0.4 million, $0.4 million, and $1.1 million during fiscal 2013, 2012, and 2011, 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

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

Investments: During fiscal 2013, we invested in time deposits and certificate of deposits (“CD”) in the amount of $44.0 million. Of this, $39.0 million mature in less than twelve months and $5.0 million mature in greater than twelve months. As of June 2, 2012, we had approximately $115.3 million invested in time deposits and CD’s. Of this, $105.0 million matures in less than twelve months and $10.3 million mature 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 $0.4 million at June 1, 2013, and $0.4 million at June 2, 2012. Proceeds from the sale of securities were $0.2 million during fiscal 2013 and $0.2 million during fiscal 2012 and fiscal 2011. 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 2013 and less than $0.1 million during fiscal 2012 and fiscal 2011. Net unrealized holding losses during fiscal 2013 were less than $0.1 million, and during fiscal 2012 and fiscal 2011, were $0.1 million or less, and have been included in accumulated comprehensive income (loss) during its respective fiscal year.

Discontinued Operations

Discontinued Operations: In accordance with 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 5 “Discontinued Operations” for additional discussion on the sale of RFPD.

Property, Plant and Equipment

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, $1.1 million, and $1.2 million during fiscal 2013, 2012, and 2011, respectively. Property, plant and equipment consist of the following (in thousands):

	June 1, 2013			June 2, 2012
Land and improvements	$	1,503		$	1,447
Buildings and improvements		18,384			18,394
Computer and communications equipment		1,676			1,698
Construction in progress (1)		1,305			—
Machinery and other equipment		4,963			4,772
	$	27,831		$	26,311
Accumulated depreciation		(22,758	)		(21,936	)
Property, plant, and equipment, net	$	5,073		$	4,375

(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

Goodwill and Other Intangible Assets

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. As of the fiscal year ended June 1, 2013, our goodwill balance was $1.5 million and represents the premium we paid for Powerlink of $1.3 million during our second quarter of fiscal 2012, adjusted for foreign currency translation, and the premium we paid for D and C of $0.2 million during our second quarter of fiscal 2013.

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 primarily on projected future operating results, discounted cash flows, and other assumptions. 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.

The results of our goodwill impairment tests as of March 2, 2013 and March 1, 2012, indicated no goodwill impairment as estimated fair value of each reporting unit exceeded the carrying value.

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.

Our intangible assets represent the fair value for customer relationships acquired in connection with the acquisition of Powerlink during our second quarter of fiscal 2012 and D and C acquired during second quarter of fiscal 2013.

Accrued Liabilities

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

	June 1, 2013		June 2, 2012
Compensation and payroll taxes	$	4,138	$	3,442
Income taxes		1,191		1,196
Professional fees		811		603
Other accrued expenses		3,426		3,225
Accrued Liabilities	$	9,566	$	8,466

Warranties

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 2013 and 2012 were as follows (in thousands):

	Warranty Reserve
Balance at May 28, 2011	$	138
Accruals for products sold		328
Utilization		(305	)
Adjustment		(10	)
Foreign exchange		(3	)
Balance at June 2, 2012	$	148
Accruals for products sold		259
Utilization		(215	)
Adjustment		(4	)
Foreign exchange		—
Balance at June 1, 2013	$	188

Other Non-Current Liabilities

Other Non-Current Liabilities: Other non-current liabilities of $1.3 million at June 1, 2013, and $1.2 million at June 2, 2012, primarily represent employee-benefits obligations in various non-US locations.

Loss Contingencies

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.

Share-Based Compensation

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 $0.6 million during fiscal 2013, $0.5 million during fiscal 2012, and $1.2 million during fiscal 2011.

Stock options granted to members of the Board of Directors generally vest immediately and stock options granted to employees 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 29, 2010		1,683		$	8.09
Granted		209			12.94
Exercised		(699	)		7.77
Forfeited		(114	)		5.99
Cancelled		(196	)		13.69
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		6.7	$	2,087
Options Vested at June 1, 2013		468		$	9.17		5.1	$	1,449

There were 31,000 stock options exercised during fiscal 2013, with cash received of $0.2 million. The total intrinsic value of options exercised totaled $0.1 million during fiscal 2013, $0.6 million during fiscal 2012, and $2.8 million during fiscal 2011. The weighted average fair value of stock option grants was $4.75 during fiscal 2013, $5.83 during fiscal 2012, and $6.72 during fiscal 2011. As of June 1, 2013, 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 2013 was $0.7 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
	June 1, 2013			June 2, 2012			May 28, 2011
Expected volatility		50.79	%		53.91	%		54.56	%
Risk-free interest rate		1.12	%		1.52	%		2.73	%
Expected lives (years)		6.37			6.29			6.32
Annual cash dividend	$	0.24		$	0.20		$	0.11

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 2013, 2012, and 2011, 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 June 1, 2013 (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		254	$	5.72		5.6	$	1,587		166	$	5.84		5.4	$	1,015
$7.32 to $11.00		138	$	8.96		3.3	$	414		138	$	8.96		3.3	$	413
$11.12 to $13.76		552	$	12.45		8.1	$	86		164	$	12.72		6.4	$	21
Total		944	$	10.13		6.7	$	2,087		468	$	9.17		5.1	$	1,449

A summary of restricted stock award transactions was as follows (in thousands):

	Shares
Unvested at May 29, 2010		4
Granted		—
Vested		(4	)
Cancelled		—
Unvested at May 28, 2011		—
Granted		—
Vested		—
Cancelled		—
Unvested at June 2, 2012		—
Granted		10
Vested		—
Cancelled		—
Unvested at June 1, 2013		10

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 2013, 2012, and 2011.

The Employees’ 2011 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, 444,000 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, 150,000 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.

Foreign Currency Translation

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 was a loss of $0.8 million during fiscal 2013, a gain of less than $0.1 million during fiscal 2012, and a loss of $0.6 million during fiscal 2011.

Revenue Recognition

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.

In the limited cases where remaining performance obligations exist after delivery of the product, the obligation relative to the unit of accounting is inconsequential or perfunctory and is not essential to the functionality of the delivered product. This conclusion was reached based on the following facts: the timing of any remaining obligation is agreed upon with the customer, which in most cases, is performed immediately after the delivery of the product; the cost and time involved to complete the remaining obligation is insignificant in relation to the item sold, and the costs and time do not vary significantly; we have a demonstrated history of completing the remaining obligations timely; and finally, failure to complete the remaining obligation does not enable the customer to receive a full or partial refund of the product or service, and the timing of the payment for the product is not contingent upon completion of remaining performance obligations, if any.

Shipping and Handling Fees and Costs

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.

Earnings per Share

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 are based on the following (amounts in thousands, except per share amounts):

	For the Fiscal Year Ended
	June 1, 2013						June 2, 2012						May 28, 2011
	Basic			Diluted			Basic			Diluted			Basic		Diluted
Numerator for Basic and Diluted EPS:
Income from continuing operations	$	482		$	482		$	7,990		$	7,990		$	1,982	$	1,982
Less dividends:
Common stock		2,971			2,971			2,787			2,787			1,647		1,647
Class B common stock		600			600			528			528			299		299
Undistributed earnings (losses)	$	(3,089	)	$	(3,089	)	$	4,675		$	4,675		$	36	$	36
Common stock undistributed earnings (losses)	$	(2,570	)	$	(2,575	)	$	3,933		$	3,939		$	30	$	31
Class B common stock undistributed earnings (losses)		(519	)		(514	)		742			736			6		5
Total undistributed earnings (losses)	$	(3,089	)	$	(3,089	)	$	4,675		$	4,675		$	36	$	36
Income from discontinued operations	$	766		$	766		$	536		$	536		$	85,966	$	85,966
Less dividends:
Common stock		2,971			2,971			2,787			2,787			1,647		1,647
Class B common stock		600			600			528			528			299		299
Undistributed earnings (losses)	$	(2,805	)	$	(2,805	)	$	(2,779	)	$	(2,779	)	$	84,020	$	84,020
Common stock undistributed earnings (losses)	$	(2,334	)	$	(2,338	)	$	(2,338	)	$	(2,342	)	$	71,081	$	71,267
Class B common stock undistributed earnings (losses)		(471	)		(467	)		(441	)		(437	)		12,939		12,753
Total undistributed earnings (losses)	$	(2,805	)	$	(2,805	)	$	(2,779	)	$	(2,779	)	$	84,020	$	84,020
Net income	$	1,248		$	1,248		$	8,526		$	8,526		$	87,948	$	87,948
Less dividends:
Common stock		2,971			2,971			2,787			2,787			1,647		1,647
Class B common stock		600			600			528			528			299		299
Undistributed earnings (losses)	$	(2,323	)	$	(2,323	)	$	5,211		$	5,211		$	86,002	$	86,002
Common stock undistributed earnings (losses)	$	(1,933	)	$	(1,937	)	$	4,384		$	4,391		$	72,757	$	72,948
Class B common stock undistributed earnings (losses)		(390	)		(386	)		827			820			13,245		13,054
Total undistributed earnings (losses)	$	(2,323	)	$	(2,323	)	$	5,211		$	5,211		$	86,002	$	86,002
Denominator for basic and diluted EPS:
Common stock weighted average shares		12,448			12,448			14,025			14,025			14,926		14,926
Class B common stock weighted average shares, and shares under if-converted method for diluted EPS		2,790			2,790			2,941			2,941			3,019		3,019
Effect of dilutive securities
Dilutive stock options					134						152					258
Denominator for diluted EPS adjusted for weighted average shares and assumed conversions					15,372						17,118					18,203
Income from continuing operations per share:
Common stock	$	0.03		$	0.03		$	0.48		$	0.47		$	0.11	$	0.11
Class B common stock	$	0.03		$	0.03		$	0.43		$	0.43		$	0.10	$	0.10
Income from discontinued operations per share:
Common stock	$	0.05		$	0.05		$	0.03		$	0.03		$	4.87	$	4.72
Class B common stock	$	0.05		$	0.05		$	0.03		$	0.03		$	4.38	$	4.32
Net income per share:
Common stock	$	0.08		$	0.08		$	0.51		$	0.50		$	4.98	$	4.83
Class B common stock	$	0.08		$	0.08		$	0.46		$	0.46		$	4.48	$	4.42

Note: Common stock options that were anti-dilutive and not included in diluted earnings per common share for fiscal 2013, fiscal 2012, and fiscal 2011 were 280,764, 272,864, and 237,064, respectively.

New Accounting Pronouncements

New Accounting Pronouncements: During December 2011, the FASB issued Accounting Standard Update (ASU) No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. The amendments to the Codification in ASU No. 2011-12 are effective at the same time as the amendments in ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income, so that entities will not be required to comply with the presentation requirements in ASU No. 2011-05 that ASU No. 2011-12 is deferring. In order to defer only those changes in ASU No. 2011-05 that relate to the presentation of reclassification adjustments, the paragraphs in ASU No. 2011-12 supersede certain pending paragraphs in ASU No. 2011-05. The amendments are being made to allow the FASB time to re-deliberate whether to present on the face of the financial statements the effects of the reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. While the FASB is considering the operational concerns about the presentation requirements for reclassification adjustments and the needs of financial statement users for additional information about reclassification adjustments, entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU No. 2011-05. All other requirements in ASU No. 2011-05 are not affected by ASU No. 2011-12, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. Public entities should apply these requirements for fiscal years, and interim periods with those years, beginning after December 15, 2011, and as such, we have adopted ASU No. 2011-05 during our third quarter of fiscal 2012.

During November 2011, the FASB issued ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities, (ASU Update No. 2011-11). ASU Update No. 2011-11, requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. Offsetting, otherwise known as netting, is the presentation of assets and liabilities as a single net amount in the statement of financial position (balance sheet). An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. We will be adopting ASU Update No. 2011-11 during our first quarter of fiscal 2014, and the adoption will not have a material impact on our financial results.

During May 2011, the FASB issued ASC Update No. 2011-05, Comprehensive Income: Presentation of Comprehensive Income, (“ASC Update No. 2011-05”). This amends the FASB Accounting Standards Codification to allow an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with the total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU Update No. 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments to the Codification in the ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU Update No. 2011-05 should be applied retrospectively. For public entities, the amendments are effective for fiscal years, and interim period within those years, beginning after December 15, 2011, and as such, we adopted ASC Update No. 2011-05 during our third quarter of fiscal 2012.