Immaterial Revision

12 Months Ended

Jun. 02, 2015

NOTE M — IMMATERIAL REVISION

As the Company disclosed in a Current Report on Form 8-K filing on January 20, 2015, subsequent to the close of the second quarter ended December 16, 2014, the Company discovered that a former employee had been unlawfully diverting Company funds into his personal accounts over a multi-year period. The completion of a forensic investigation in the Third Quarter Fiscal 2015 determined that the amount embezzled approximated $3,900.

A summary of the effects of the adjustments on the Company’s prior period financial statements was as follows. The pretax earnings adjustment applicable to Fiscal Year 2014 was a $60 reduction to administrative and advertising expense. The pretax earnings adjustment applicable to Fiscal Year 2013 resulted in a $350 increase to administrative and advertising expenses. The pretax impact to all periods prior to Fiscal Year 2013 was an aggregate increase of $1,406 in administrative and advertising expense. As a result, at June 3, 2014, cash was overstated by approximately $914 and accounts payable was understated by approximately $782. The remainder of the theft had already been expensed in the Company’s financial statements during the periods that funds were diverted.

Pursuant to the guidance of Staff Accounting Bulletin (SAB) No. 99, “Materiality”, the Company evaluated the materiality of these errors quantitatively and qualitatively and has concluded that the errors described above were not material to any of its annual or quarterly prior period financial statements or trends of financial results. The errors were immaterial to prior periods. However, because of the significance of the cumulative out-of-period corrections that would be needed, the prior period financial statements were instead revised, in accordance with SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”.

The table below reconciles the effects of the adjustments to the previously reported Consolidated Balance Sheet at June 3, 2014 (including related tax effect):

NOTE M — IMMATERIAL REVISION (continued)

		June 3, 2014
Consolidated Balance Sheet		Previously Reported		Adjustment		As Adjusted
	Cash and equivalents	$	2,038	$	(914)	$	1,124
	Deferred income taxes and other tax receivables		2,787		606		3,393
	Accounts payable		6,812		782		7,594
	Retained earnings		56,798		(1,090)		55,708

The following table reconciles the effects of the adjustments to the previously reported Consolidated Statement of Earnings for the fiscal years ended June 3, 2014 and May 28, 2013:

		June 3, 2014						May 28, 2013
Consolidated Statement of Earnings		Previously Reported		Adjustment		As Adjusted		Previously Reported		Adjustment		As Adjusted
	Administrative and advertising	$	12,599	$	(60)	$	12,539	$	13,074	$	350	$	13,424
	Income taxes		832		21		853		2,513		(125)		2,388
	Net earnings		9,433		39		9,472		6,816		(225)		6,591

The following table reconciles the effects of the adjustments to the previously reported Consolidated Statement of Cash Flows for the fiscal years ended June 3, 2014 and May 28, 2013:


			June 3, 2014						May 28, 2013
Consolidated Statement of Cash Flows			Previously Reported		Adjustment		As Adjusted		Previously Reported		Adjustment		As Adjusted
	Net earnings	$	9,433	$	39	$	9,472	$	6,816	$	(225)	$	6,591
	Deferred income taxes and other obligations		(620)		21		(599)		861		(125)		736
	Accounts payable		933		346		1,279		(414)		131		(283)
	Net increase (decrease) in cash and equivalents		(2,218)		406		(1,811)		(41,706)		(219)		(41,925)
	Cash and equivalents at beginning of year		4,256		(1,321)		2,935		45,962		(1,102)		44,860

There was no impact to the Consolidated Statement of Comprehensive Income or the Consolidated Statement of Shareholders’ Equity for any of the respective periods other than the impact on Net Earnings. In addition, the immaterial revision did not affect the Company’s compliance with debt covenants.