Use\rof Estimates: The preparation of financial statements in conformity with GAAP requires management to make significant estimates\rand assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities\rat the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management\rcontinuously evaluates its critical accounting policies and estimates, including the allowance for doubtful accounts, revenue\rrecognition, inventory obsolescence, goodwill and other intangible assets, loss contingencies and income taxes. Management bases\rthe estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances, however,\ractual results could differ from those estimates.
\r\r\r\r"}]},{"name":"rpt:f-320","factDimensions":{"xbrl:concept":"us-gaap:FairValueOfFinancialInstrumentsPolicy","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Fair\rValues of Financial Instruments: The fair values of financial instruments are determined based on quoted market prices and\rmarket interest rates as of the end of the reporting period. Our financial instruments include investments, accounts receivable,\raccounts payable and accrued liabilities. The fair values of these financial instruments approximate carrying values at June\r2, 2018 and May 27, 2017.
"}]},{"name":"rpt:f-321","factDimensions":{"xbrl:concept":"us-gaap:CashAndCashEquivalentsPolicyTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Cash\rand Cash Equivalents: We consider short-term, highly liquid investments that are readily convertible to known amounts\rof cash, and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates,\rand that have a maturity of three months or less, when purchased, to be cash equivalents. The carrying amounts reported in the\rbalance sheet for cash and cash equivalents approximate the fair market value of these assets.
"}]},{"name":"rpt:f-322","factDimensions":{"xbrl:concept":"us-gaap:ReceivablesTradeAndOtherAccountsReceivableAllowanceForDoubtfulAccountsPolicy","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Allowance\rfor Doubtful Accounts: Our allowance for doubtful accounts includes estimated losses that result from uncollectible receivables.\rThe estimates are influenced by the following: continuing credit evaluation of customers’ financial conditions; aging of\rreceivables, individually and in the aggregate; a large number of customers which are widely dispersed across geographic areas;\rand collectability and delinquency history by geographic area. Significant changes in one or more of these considerations may\rrequire adjustments affecting net income and net carrying value of accounts receivable. The allowance for doubtful accounts was\rapproximately $0.3 million as of June 2, 2018 and $0.4 million as of May 27, 2017.
"}]},{"name":"rpt:f-323","factDimensions":{"xbrl:concept":"us-gaap:CommitmentsAndContingenciesPolicyTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Loss\rContingencies: We accrue a liability for loss contingencies when it is probable that a liability has been incurred and the\ramount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range\ris accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in\rthe range is accrued. If we determine that there is at least a reasonable possibility that a loss may have been incurred, we will\rinclude a disclosure describing the contingency.
"}]},{"name":"rpt:f-324","factDimensions":{"xbrl:concept":"us-gaap:RevenueRecognitionPolicyTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Revenue\rRecognition: Our product sales are recognized as revenue upon shipment, when title passes to the customer, when delivery\rhas occurred or services have been rendered and when collectability is reasonably assured. We also record estimated discounts\rand returns based on our historical experience. Our products are often manufactured to meet the specific design needs of our customers’\rapplications. Our engineers work closely with customers to ensure that our products will meet their needs. Our customers are under\rno obligation to compensate us for designing the products we sell.
"}]},{"name":"rpt:f-325","factDimensions":{"xbrl:concept":"us-gaap:ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Foreign\rCurrency Translation: The functional currency is the local currency at all foreign locations, with the exception of Hong\rKong, which the functional currency is the US dollar. Balance sheet items for our foreign entities, included in our consolidated\rbalance sheets, are translated into U.S. dollars at end-of-period spot rates. Gains and losses resulting from translation of foreign\rsubsidiary financial statements are credited or charged directly to accumulated other comprehensive income/(loss), a component\rof stockholders’ equity. Revenues and expenses are translated at the current rate on the date of the transaction. Gains\rand losses resulting from foreign currency transactions are included in income. Foreign exchange losses reflected in our\rconsolidated statements of comprehensive income (loss) were a loss of $0.2 million during fiscal 2018, a loss of $0.6 million\rduring fiscal 2017 and a loss of $0.2 million during fiscal 2016.
"}]},{"name":"rpt:f-326","factDimensions":{"xbrl:concept":"us-gaap:ShippingAndHandlingCostPolicyTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Shipping\rand Handling Fees and Costs: Shipping and handling costs billed to customers are reported as revenue and the related\rcosts are reported as a component of cost of sales.
"}]},{"name":"rpt:f-327","factDimensions":{"xbrl:concept":"us-gaap:InventoryPolicyTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Inventories,\rnet: Our consolidated inventories are stated at the lower of cost and net realizable value, generally using a weighted-average\rcost method. Our net inventories include approximately $42.6 million of finished goods, $5.7 million of raw materials and $2.4\rmillion of work-in-progress as of June 2, 2018 as compared to approximately $36.0 million of finished goods, $5.3 million of raw\rmaterials and $1.4 million of work-in-progress as of May 27, 2017. The inventory reserve as of June 2, 2018 was $4.0 million compared\rto $3.5 million as of May 27, 2017.
\r\r\r\r
Provisions\rfor obsolete or slow moving inventories are recorded based upon regular analysis of stock rotation privileges, obsolescence, the\rexiting of certain markets and assumptions about future demand and market conditions. If future demand changes in the industry\ror market conditions differ from management’s estimates, additional provisions may be necessary.
\r\r\r\r
We\rrecorded provisions to our inventory reserves of $0.8 million, $0.5 million and $0.7 million during fiscal 2018, 2017 and 2016,\rrespectively, which were included in cost of sales. The provisions were primarily for obsolete and slow moving parts. The parts\rwere written down to estimated realizable value.
"}]},{"name":"rpt:f-328","factDimensions":{"xbrl:concept":"us-gaap:InvestmentPolicyTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Investments:\rAs of June 2, 2018, we had no investments. As of May 27, 2017, we have invested in time deposits and certificates of deposit\r(“CD”) in the amount of $8.2 million. Of this, $6.4 million mature in less than twelve months and $1.8 million mature\rin greater than twelve months.
\r\r\r\r
We\rliquidated our investments in equity securities in fiscal 2018. Proceeds from the liquidation were $0.9 million with gross realized\rgains of $0.2 million for fiscal 2018. Prior to the liquidation of our investment in equity securities, our investments in equity\rsecurities were classified as available-for-sale and were carried at their fair value based on quoted market prices. Our investments,\rwhich were included in non-current assets, had a carrying amount of $0.6 million at May 27, 2017. Proceeds from the sale of securities\rwere $0.3 million during fiscal 2017 and $0.3 million during fiscal 2016. Prior to liquidation of the equity securities, we reinvested\rproceeds from the sale of securities, and the cost of the equity securities sold was based on a specific identification method.\rGross realized gains and losses on those sales were less than $0.1 million during fiscal 2017 and 2016. Net unrealized holding\rgain (loss) during fiscal 2017 and 2016 were less than $0.1 million and have been included in accumulated comprehensive loss during\rits respective fiscal year.
"}]},{"name":"rpt:f-329","factDimensions":{"xbrl:concept":"us-gaap:DiscontinuedOperationsPolicyTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Discontinued Operations: On September\r12, 2017, the Company received an income tax refund from the State of Illinois of approximately $2.0 million, which included interest\rearned. The refund was a result of the conclusion of the Illinois amended return related to the sale of the RF, Wireless and Power\rDivision (“RFPD”) in 2011. A net benefit of $1.5 million, which included $0.5 million of professional fee costs incurred\rto pursue the refund, was recognized in the second quarter of fiscal 2018 in discontinued operations.
\r\r\r\r
During fiscal 2017, the Company disposed\rof, by sale, the PACS Display business in the Healthcare segment. Based on our assessment of the criteria that must be met to\rqualify a disposal transaction as a discontinued operation set forth in Accounting Standards Update 2014-08, the disposal of the\rPACS Display business does not qualify as a discontinued operation.
"}]},{"name":"rpt:f-330","factDimensions":{"xbrl:concept":"us-gaap:GoodwillAndIntangibleAssetsPolicyTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Goodwill\rand Intangible Assets: We test goodwill for impairment annually and whenever events or circumstances indicate an impairment\rmay have occurred, such as a significant adverse change in the business climate, loss of key personnel or a decision to sell or\rdispose of a reporting unit.
\r\r\r\r
In\rJanuary 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)\rNo. 2017-04 (“ASU 2017-04”), Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates step 2 from the\rgoodwill impairment test. As amended, the goodwill impairment test will consist of one-step comparing the fair value of a reporting\runit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount\rexceeds the reporting unit’s fair value. An entity may still perform the optional qualitative assessment for a reporting\runit to determine if it is more likely than not that goodwill is impaired. ASU 2017-04 will be effective for fiscal years and\rinterim periods beginning after December 15, 2019. ASU 2017-04 is required to be applied prospectively and early adoption is permitted\rfor interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company elected to early\radopt ASU 2017-04 for our fiscal 2018 annual impairment test.
\r\r\r\r
During\rthe fourth quarter of each fiscal year, our goodwill balances are reviewed for impairment using the first day of our fourth quarter\ras the measurement date. If after reviewing the totality of events or circumstances, we determine that it is more likely than\rnot that the fair value of a reporting unit is less than its carrying amount, then we test for impairment through the application\rof a fair value based test. We estimate the fair value of each of our reporting units based on projected future operating results,\rmarket approach and discounted cash flows.
\r\r\r\r
After\rreviewing the totality of events or circumstances as provided in FASB ASC 350-20-35, we determined that it was more likely than\rnot that the fair value for the IMES reporting unit was less than its carrying value. Accordingly, the quantitative goodwill impairment\rtest as described in FASB ASC 350-20-35 was performed. We performed the quantitative impairment test using the income method,\rwhich is based on a discounted future cash flow approach that uses the significant assumptions of projected revenue, projected\roperational profit, terminal growth rates and the cost of capital. Refer to Note 7 “Goodwill and Intangible Assets”\rof the notes to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
\r\r\r\r
Intangible\rassets are initially recorded at their fair market values determined on quoted market prices in active markets, if available,\ror recognized valuation models. Intangible assets that have finite useful lives are amortized over their useful lives either on\ra straight-line basis or over their projected future cash flows and are tested for impairment when events or changes in circumstances\roccur that indicate possible impairment. Our intangible assets represent the fair value for trade name, customer relationships,\rnon-compete agreements and technology acquired in connection with the acquisition.
"}]},{"name":"rpt:f-331","factDimensions":{"xbrl:concept":"us-gaap:PropertyPlantAndEquipmentPolicyTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Property,\rPlant and Equipment: Property, plant and equipment are stated at cost, net of accumulated depreciation. Improvements\rand replacements are capitalized while expenditures for maintenance and repairs are charged to expense as incurred. Provisions\rfor depreciation are computed using the straight-line method over the estimated useful life of the asset. Depreciation expense\rwas approximately $2.6 million, $2.4 million and $2.0 million during fiscal 2018, 2017 and 2016, respectively. Property, plant\rand equipment consist of the following (in thousands):
\r\r\r\r
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r |||
| Land\r and improvements | \r\r | $ | \r1,301 | \r\r | \r | $ | \r1,301 | \r|
| Buildings\r and improvements | \r\r | \r | 21,673 | \r\r | \r | \r | 19,885 | \r|
| Computer,\r communications equipment and software | \r\r | \r | 9,652 | \r\r | \r | \r | 8,551 | \r|
| Construction\r in progress | \r\r | \r | 1,582 | \r\r | \r | \r | 2,063 | \r|
| Machinery\r and other equipment | \r\r | \r | 12,004 | \r\r | \r | \r | 10,387 | \r|
| \r | \r | $ | \r46,212 | \r\r | \r | $ | \r42,187 | \r|
| Accumulated\r depreciation | \r\r | \r | (27,980 | \r) | \r\r | \r | (26,374 | \r) |
| Property,\r plant, and equipment, net | \r\r | $ | \r18,232 | \r\r | \r | $ | \r15,813 | \r
\r\r
Construction\rin progress at June 2, 2018 includes $0.7 million related to our Healthcare growth initiatives. All projects are expected to be\rcompleted before the end of fiscal 2019.
\r\r\r\r
Supplemental\rdisclosure information of the estimated useful life of the assets:
\r\r\r\r
| Land\r improvements | \r10 years |
| Buildings and improvements | \r10 - 30 years |
| Computer and communications\r equipment | \r3 - 10 years |
| Machinery and other\r equipment | \r3 - 20 years |
\r\r
We\rreview all property, plant and equipment for impairment when events or changes in circumstances occur which indicate a possible\rimpairment may exist. We have concluded that our property, plant and equipment as of June 2, 2018 were not impaired.
"}]},{"name":"rpt:f-332","factDimensions":{"xbrl:concept":"rell:AccruedLiabilitiesPolicyTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Accrued\rLiabilities: Accrued liabilities consist of the following (in thousands):
\r\r\r\r
| \r | \r | June\r 2, 2018 | \r\r | \r | May\r 27, 2017 | \r|||
| Compensation\r and payroll taxes | \r\r | $ | \r3,449 | \r\r | \r | $ | \r3,250 | \r|
| Accrued\r severance(1) | \r\r | \r | 454 | \r\r | \r | \r | 706 | \r|
| Professional\r fees | \r\r | \r | 527 | \r\r | \r | \r | 535 | \r|
| Deferred\r revenue | \r\r | \r | 2,395 | \r\r | \r | \r | 1,460 | \r|
| Other\r accrued expenses | \r\r | \r | 3,518 | \r\r | \r | \r | 2,360 | \r|
| Accrued\r Liabilities | \r\r | $ | \r10,343 | \r\r | \r | $ | \r8,311 | \r
\r\r
| (1) | \r\r | In the second\r quarter of fiscal 2017, the Company executed a reduction in headcount to streamline operations and reduce costs and recorded\r $1.3 million of expense included in selling, general and administrative expenses for employee termination costs payable to\r terminated employees with employment and/or separation agreements with the Company. The changes in the severance accrual\r for fiscal 2018 included provisions and payments of $0.1 million and $0.3 million, respectively. The changes in the severance\r accrual for fiscal 2017 included provisions and payments of $1.3 million and $1.2 million, respectively. |
Warranties:\rWe offer warranties for the limited number of specific products we manufacture. We also provide extended warranties for some\rproducts we sell that lengthen the period of coverage specified in the manufacturer’s original warranty. Our warranty terms\rgenerally range from one to three years.
\r\r\r\r
We\restimate the cost to perform under the warranty obligation and recognize this estimated cost at the time of the related product\rsale. We record expense related to our warranty obligations as cost of sales in our consolidated statements of comprehensive income\r(loss). Each quarter, we assess actual warranty costs incurred on a product-by-product basis and compare the warranty costs to\rour estimated warranty obligation. With respect to new products, estimates are based generally on knowledge of the products, the\rextended warranty period and warranty experience.
\r\r\r\r
Warranty\rreserves are established for costs that are expected to be incurred after the sale and delivery of products under warranty. Warranty\rreserves are included in accrued liabilities on our consolidated balance sheets. The warranty reserves are determined based on\rknown product failures, historical experience and other available evidence.
\r\r\r\r
Changes\rin the warranty reserve during fiscal 2018 and 2017 were as follows (in thousands):
\r\r\r\r
| \r | \r | Warranty\r Reserve | \r||
| Balance\r at May 30, 2016 | \r\r | $ | \r210 | \r|
| Accruals\r for products sold | \r\r | \r | 89 | \r|
| Utilization | \r\r | \r | (78 | \r) |
| Recovery | \r\r | \r | (115 | \r) |
| Balance\r at May 27, 2017 | \r\r | $ | \r106 | \r|
| Accruals\r for products sold | \r\r | \r | 65 | \r|
| Utilization | \r\r | \r | (22 | \r) |
| Balance\r at June 2, 2018 | \r\r | $ | \r149 | \r
Other\rNon-Current Liabilities: Other non-current liabilities of $0.9 million at June 2, 2018 and $0.7 million at May 27,\r2017, primarily represent employee-benefits obligations in various non-US locations.
"}]},{"name":"rpt:f-335","factDimensions":{"xbrl:concept":"us-gaap:ShareBasedCompensationOptionAndIncentivePlansPolicy","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Share-Based\rCompensation: We measure and recognize share-based compensation cost at fair value for all share-based payments, including\rstock options. We estimate fair value using the Black-Scholes option-pricing model, which requires assumptions such as expected\rvolatility, risk-free interest rate, expected life and dividends. Compensation cost is recognized using a graded-vesting schedule\rover the applicable vesting period. Share-based compensation expense totaled approximately $0.5 million during fiscal 2018, $0.4\rmillion during fiscal 2017 and $0.5 million during fiscal 2016.
\r\r\r\r
Stock\roptions granted generally vest over a period of five years and have contractual terms to exercise of 10 years. A summary of stock\roption activity is as follows (in thousands, except option prices and years):
\r\r\r\r
| \r | \r | \r | Number of Options | \r \r | \r | Weighted Average\r Exercise Price | \r \r | \r | Weighted Average\r Remaining Contractual Life | \r \r | \r | Aggregate Intrinsic\r Value | \r |||||
| Options\r Outstanding at May 30, 2015 | \r\r | \r | \r | 1,137 | \r\r | \r | $ | \r10.35 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Granted | \r\r | \r | \r | 122 | \r\r | \r | \r | 5.88 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Exercised | \r\r | \r | \r | (28 | \r) | \r\r | \r | 5.18 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Forfeited | \r\r | \r | \r | (105 | \r) | \r\r | \r | 10.98 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Cancelled | \r\r | \r | \r | (107 | \r) | \r\r | \r | 9.97 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Options\r Outstanding at May 28, 2016 | \r\r | \r | \r | 1,019 | \r\r | \r | $ | \r9.93 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Granted | \r\r | \r | \r | 190 | \r\r | \r | \r | 6.90 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Exercised | \r\r | \r | \r | (5 | \r) | \r\r | \r | 5.61 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Forfeited | \r\r | \r | \r | (43 | \r) | \r\r | \r | 8.39 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Cancelled | \r\r | \r | \r | (88 | \r) | \r\r | \r | 11.17 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Options\r Outstanding at May 27, 2017 | \r\r | \r | \r | 1,073 | \r\r | \r | $ | \r9.38 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Granted | \r\r | \r | \r | 200 | \r\r | \r | \r | 6.08 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Exercised | \r\r | \r | \r | (16 | \r) | \r\r | \r | 5.85 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Forfeited | \r\r | \r | \r | (11 | \r) | \r\r | \r | 8.05 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Cancelled | \r\r | \r | \r | (51 | \r) | \r\r | \r | 9.36 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Options\r Outstanding at June 2, 2018 | \r\r | \r | \r | 1,195 | \r\r | \r | $ | \r8.89 | \r\r | \r | \r | 5.8 | \r\r | \r | $ | \r2,033 | \r|
| Options\r Vested at June 2, 2018 | \r\r | \r | \r | 746 | \r\r | \r | $ | \r9.87 | \r\r | \r | \r | 4.5 | \r\r | \r | $ | \r876 | \r
\r\r
There\rwere 16,000 stock options exercised during fiscal 2018, with cash received of $0.1 million. The total intrinsic value of options\rexercised totaled less than $0.1 million during fiscal 2018, fiscal 2017 and fiscal 2016. The weighted average fair value of stock\roption grants was $0.85 during fiscal 2018, $1.14 during fiscal 2017 and $1.21 during fiscal 2016. As of June 2, 2018, total unrecognized\rcompensation costs related to unvested stock options was approximately $0.6 million, which is expected to be recognized over the\rremaining weighted average period of approximately three to four years. The total grant date fair value of stock options vested\rduring fiscal 2018 was $0.4 million.
\r\r\r\r
The\rfair value of stock options is estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:
\r\r\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||||||
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r \r | \r | May\r 28, 2016 | \r ||||
| Expected\r volatility | \r\r | \r | 21.92 | \r% | \r\r | \r | 25.41 | \r% | \r\r | \r | 32.21 | \r% |
| Risk-free\r interest rate | \r\r | \r | 2.22 | \r% | \r\r | \r | 1.46 | \r% | \r\r | \r | 1.78 | \r% |
| Expected\r lives (years) | \r\r | \r | 6.31 | \r\r | \r | \r | 6.50 | \r\r | \r | \r | 6.50 | \r|
| Annual\r cash dividend | \r\r | $ | \r0.24 | \r\r | \r | $ | \r0.24 | \r\r | \r | $ | \r0.24 | \r
\r\r
The\rexpected volatility assumptions are based on historical experience commensurate with the expected term. The risk-free interest\rrate is based on the yield of a treasury note with a remaining term equal to the expected life of the stock option.
\r\r\r\r
The\rexpected stock option life assumption is based on the Securities and Exchange Commission’s (“SEC”) guidance\rin Staff Accounting Bulletin (“SAB”) No. 107 (“SAB No. 107”). For stock options granted during\rfiscal 2018, fiscal 2017 and fiscal 2016, we believe that our historical stock option experience does not provide a reasonable\rbasis upon which to estimate expected term. We utilized the Safe Harbor option, or Simplified Method, to determine the expected\rterm of these options in accordance with SAB No. 107 for options granted. We intend to continue to utilize the Simplified\rMethod for future grants in accordance with SAB No. 110 until such time that we believe that our historical stock option\rexperience will provide a reasonable basis to estimate an expected term.
\r\r\r\r
The\rfollowing table summarizes information about stock options outstanding at June 2, 2018 (in thousands, except option prices\rand years):
\r\r\r\r
| \r | \r | \r | Outstanding | \r\r | \r | Vested | \r|||||||||||||||||||||||||||
| Exercise\r Price Range | \r\r | \r | Shares | \r\r | \r | Weighted\r Average Exercise Price | \r \r | \r | Weighted\r Average Life | \r \r | \r | Aggregate\r Intrinsic Value | \r \r | \r | Shares | \r\r | \r | Weighted\r Average Exercise Price | \r \r | \r | Weighted\r Average Life | \r \r | \r | Aggregate\r Intrinsic Value | \r |||||||||
| $5.03 to\r $6.47 | \r\r | \r | \r | 383 | \r\r | \r | $ | \r5.76 | \r\r | \r | \r | 6.4 | \r\r | \r | $ | \r1,508 | \r\r | \r | \r | 190 | \r\r | \r | $ | \r5.63 | \r\r | \r | \r | 4.0 | \r\r | \r | $ | \r772 | \r|
| $6.90 to $10.85 | \r\r | \r | \r | 385 | \r\r | \r | $ | \r8.48 | \r\r | \r | \r | 7.3 | \r\r | \r | $ | \r525 | \r\r | \r | \r | 159 | \r\r | \r | $ | \r9.31 | \r\r | \r | \r | 6.4 | \r\r | \r | $ | \r104 | \r|
| $11.14\r to $13.76 | \r\r | \r | \r | 427 | \r\r | \r | $ | \r12.05 | \r\r | \r | \r | 4.1 | \r\r | \r | $ | \r— | \r\r | \r | \r | 397 | \r\r | \r | $ | \r12.12 | \r\r | \r | \r | 4.0 | \r\r | \r | $ | \r— | \r|
| Total | \r\r | \r | \r | 1,195 | \r\r | \r | $ | \r8.89 | \r\r | \r | \r | 5.8 | \r\r | \r | $ | \r2,033 | \r\r | \r | \r | 746 | \r\r | \r | $ | \r9.87 | \r\r | \r | \r | 4.5 | \r\r | \r | $ | \r876 | \r
\r\r
As\rof June 2, 2018, a summary of restricted stock award transactions was as follows (in thousands):
\r\r\r\r
| \r | \r | \r | \r | \r | |
| \r | \r | \r | Unvested Restricted Shares | \r ||
| Unvested at May 27,\r 2017 | \r\r | \r | \r | — | \r|
| Granted | \r\r | \r | \r | 78 | \r|
| Unvested\r at June 2, 2018 | \r\r | \r | \r | 78 | \r
\r\r
Compensation\reffects arising from issuing stock awards have been charged against income and recorded as additional paid-in-capital in the consolidated\rstatements of stockholders’ equity during fiscal years 2018, 2017 and 2016.
\r\r\r\r
The\rEmployees’ 2011 Long-Term Incentive Compensation Plan authorizes the issuance of up to 1,500,000 shares as incentive stock\roptions, non-qualified stock options or stock awards. Under this plan, 524,000 shares are reserved for future issuance. The\rPlan authorizes the granting of stock options at the fair market value at the date of grant. Generally, these options become exercisable\rover five years and expire up to 10 years from the date of grant.
"}]},{"name":"rpt:f-336","factDimensions":{"xbrl:concept":"us-gaap:EarningsPerSharePolicyTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Earnings\rper Share: We have authorized 17,000,000 shares of common stock, and 3,000,000 shares of Class B common stock. The Class B\rcommon stock has 10 votes per share and has transferability restrictions; however, Class B common stock may be converted into\rcommon stock on a share-for-share basis at any time. With respect to dividends and distributions, shares of common stock and Class\rB common stock rank equally and have the same rights, except that Class B common stock cash dividends are limited to 90% of the\ramount of Class A common stock cash dividends.
\r\r\r\r
In\raccordance with ASC 260-10, Earnings Per Share (“ASC 260”), our Class B common stock is considered a participating\rsecurity requiring the use of the two-class method for the computation of basic and diluted earnings per share. The two-class\rcomputation method for each period reflects the cash dividends paid per share for each class of stock, plus the amount of allocated\rundistributed earnings per share computed using the participation percentage which reflects the dividend rights of each class\rof stock. Basic and diluted earnings per share were computed using the two-class method as prescribed in ASC 260. The shares of\rClass B common stock are considered to be participating convertible securities since the shares of Class B common stock are convertible\ron a share-for-share basis into shares of common stock and may participate in dividends with common stock according to a predetermined\rformula which is 90% of the amount of Class A common stock cash dividends.
\r\r\r\r
The\rearnings per share (“EPS”) presented in our consolidated statements of comprehensive income (loss) are based on the\rfollowing (in thousands, except per share amounts):
\r\r\r\r
| \r | \r | For\r the Fiscal Year Ended | \r||||||||||||||||||||||
| \r | \r | June\r 2, 2018 | \r\r | \r | May\r 27, 2017 | \r\r | \r | May\r 28, 2016 | \r||||||||||||||||
| \r | \r | Basic | \r\r | \r | Diluted | \r\r | \r | Basic | \r\r | \r | Diluted | \r\r | \r | Basic | \r\r | \r | Diluted | \r|||||||
| Numerator\r for Basic and Diluted EPS: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Income\r (loss) from continuing operations | \r\r | $ | \r2,326 | \r\r | \r | $ | \r2,326 | \r\r | \r | $ | \r(6,928 | \r) | \r\r | $ | \r(6,928 | \r) | \r\r | $ | \r(6,766 | \r) | \r\r | $ | \r(6,766 | \r) |
| Less\r dividends: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock | \r\r | \r | 2,586 | \r\r | \r | \r | 2,586 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,615 | \r\r | \r | \r | 2,615 | \r|
| Class\r B common stock | \r\r | \r | 462 | \r\r | \r | \r | 462 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r|
| Undistributed\r losses | \r\r | $ | \r(722 | \r) | \r\r | $ | \r(722 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,845 | \r) | \r\r | $ | \r(9,845 | \r) |
| Common\r stock undistributed losses | \r\r | $ | \r(613 | \r) | \r\r | $ | \r(613 | \r) | \r\r | $ | \r(8,440 | \r) | \r\r | $ | \r(8,440 | \r) | \r\r | $ | \r(8,367 | \r) | \r\r | $ | \r(8,367 | \r) |
| Class\r B common stock undistributed losses | \r\r | \r | (109 | \r) | \r\r | \r | (109 | \r) | \r\r | \r | (1,519 | \r) | \r\r | \r | (1,519 | \r) | \r\r | \r | (1,478 | \r) | \r\r | \r | (1,478 | \r) |
| Total\r undistributed losses | \r\r | $ | \r(722 | \r) | \r\r | $ | \r(722 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,845 | \r) | \r\r | $ | \r(9,845 | \r) |
| Income\r from discontinued operations | \r\r | $ | \r1,496 | \r\r | \r | $ | \r1,496 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| Less\r dividends: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock | \r\r | \r | 2,586 | \r\r | \r | \r | 2,586 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,615 | \r\r | \r | \r | 2,615 | \r|
| Class\r B common stock | \r\r | \r | 462 | \r\r | \r | \r | 462 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r|
| Undistributed\r losses | \r\r | $ | \r(1,552 | \r) | \r\r | $ | \r(1,552 | \r) | \r\r | $ | \r(3,031 | \r) | \r\r | $ | \r(3,031 | \r) | \r\r | $ | \r(3,079 | \r) | \r\r | $ | \r(3,079 | \r) |
| Common\r stock undistributed losses | \r\r | $ | \r(1,317 | \r) | \r\r | $ | \r(1,318 | \r) | \r\r | $ | \r(2,567 | \r) | \r\r | $ | \r(2,567 | \r) | \r\r | $ | \r(2,615 | \r) | \r\r | $ | \r(2,615 | \r) |
| Class\r B common stock undistributed losses | \r\r | \r | (235 | \r) | \r\r | \r | (234 | \r) | \r\r | \r | (464 | \r) | \r\r | \r | (464 | \r) | \r\r | \r | (464 | \r) | \r\r | \r | (464 | \r) |
| Total\r undistributed losses | \r\r | $ | \r(1,552 | \r) | \r\r | $ | \r(1,552 | \r) | \r\r | $ | \r(3,031 | \r) | \r\r | $ | \r(3,031 | \r) | \r\r | $ | \r(3,079 | \r) | \r\r | $ | \r(3,079 | \r) |
| Net\r income (loss) | \r\r | $ | \r3,822 | \r\r | \r | $ | \r3,822 | \r\r | \r | $ | \r(6,928 | \r) | \r\r | $ | \r(6,928 | \r) | \r\r | $ | \r(6,766 | \r) | \r\r | $ | \r(6,766 | \r) |
| Less\r dividends: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock | \r\r | \r | 2,586 | \r\r | \r | \r | 2,586 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,615 | \r\r | \r | \r | 2,615 | \r|
| Class\r B common stock | \r\r | \r | 462 | \r\r | \r | \r | 462 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r|
| Undistributed\r income (losses) | \r\r | $ | \r774 | \r\r | \r | $ | \r774 | \r\r | \r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,845 | \r) | \r\r | $ | \r(9,845 | \r) |
| Common\r stock undistributed income (losses) | \r\r | $ | \r657 | \r\r | \r | $ | \r657 | \r\r | \r | $ | \r(8,440 | \r) | \r\r | $ | \r(8,440 | \r) | \r\r | $ | \r(8,367 | \r) | \r\r | $ | \r(8,367 | \r) |
| Class\r B common stock undistributed income (losses) | \r\r | \r | 117 | \r\r | \r | \r | 117 | \r\r | \r | \r | (1,519 | \r) | \r\r | \r | (1,519 | \r) | \r\r | \r | (1,478 | \r) | \r\r | \r | (1,478 | \r) |
| Total\r undistributed income (losses) | \r\r | $ | \r774 | \r\r | \r | $ | \r774 | \r\r | \r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,845 | \r) | \r\r | $ | \r(9,845 | \r) |
| Denominator\r for Basic and Diluted EPS: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock weighted average shares | \r\r | \r | 10,765 | \r\r | \r | \r | 10,765 | \r\r | \r | \r | 10,705 | \r\r | \r | \r | 10,705 | \r\r | \r | \r | 10,908 | \r\r | \r | \r | 10,908 | \r|
| Class\r B common stock weighted average shares, and shares under if-converted method for diluted EPS | \r\r | \r | 2,137 | \r\r | \r | \r | 2,137 | \r\r | \r | \r | 2,140 | \r\r | \r | \r | 2,140 | \r\r | \r | \r | 2,141 | \r\r | \r | \r | 2,141 | \r|
| Effect\r of dilutive securities | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Dilutive\r stock options | \r\r | \r | \r | \r | \r | \r | 59 | \r\r | \r | \r | \r | \r | \r | \r | — | \r\r | \r | \r | \r | \r | \r | \r | — | \r|
| Denominator\r for diluted EPS adjusted for weighted average shares and assumed conversions | \r\r | \r | \r | \r | \r | \r | 12,961 | \r\r | \r | \r | \r | \r | \r | \r | 12,845 | \r\r | \r | \r | \r | \r | \r | \r | 13,049 | \r|
| Income\r (loss) from continuing operations per share: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock | \r\r | $ | \r0.18 | \r\r | \r | $ | \r0.18 | \r\r | \r | $ | \r(0.55 | \r) | \r\r | $ | \r(0.55 | \r) | \r\r | $ | \r(0.53 | \r) | \r\r | $ | \r(0.53 | \r) |
| Class\r B common stock | \r\r | $ | \r0.16 | \r\r | \r | $ | \r0.16 | \r\r | \r | $ | \r(0.49 | \r) | \r\r | $ | \r(0.49 | \r) | \r\r | $ | \r(0.47 | \r) | \r\r | $ | \r(0.47 | \r) |
| Income\r from discontinued operations per share: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock | \r\r | $ | \r0.12 | \r\r | \r | $ | \r0.12 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| Class\r B common stock | \r\r | $ | \r0.11 | \r\r | \r | $ | \r0.11 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| Net\r income (loss) per share: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock | \r\r | $ | \r0.30 | \r\r | \r | $ | \r0.30 | \r\r | \r | $ | \r(0.55 | \r) | \r\r | $ | \r(0.55 | \r) | \r\r | $ | \r(0.53 | \r) | \r\r | $ | \r(0.53 | \r) |
| Class\r B common stock | \r\r | $ | \r0.27 | \r\r | \r | $ | \r0.27 | \r\r | \r | $ | \r(0.49 | \r) | \r\r | $ | \r(0.49 | \r) | \r\r | $ | \r(0.47 | \r) | \r\r | $ | \r(0.47 | \r) |
\r\r
Note:\rCommon stock options that were anti-dilutive and not included in diluted earnings per common share for fiscal 2017 and fiscal\r2016 were 848 and 890 respectively.
"}]},{"name":"rpt:f-337","factDimensions":{"xbrl:concept":"us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"New\rAccounting Pronouncements
\r\r\r\r
In\rMay 2014, the FASB issued ASU No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers, which amends guidance\rfor revenue recognition. ASU 2014-09 is principles based guidance that can be applied to all contracts with customers, enhancing\rcomparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. The core principle\rof the guidance is that entities should recognize revenue to depict the transfer of promised goods or services to customers in\ran amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.\rThe guidance details the steps entities should apply to achieve the core principle. In August 2015, the FASB issued an amendment\rto defer the effective date for all entities by one year. For public entities, ASU 2014-09 is effective for annual reporting periods\rbeginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted as of annual\rreporting periods beginning after December 15, 2016. Companies have the option of using either a full or modified retrospective\rapproach in applying this standard. During fiscal 2016 and 2017, the FASB issued four additional updates which further clarify\rthe guidance provided in ASU 2014-09. We have undertaken a detailed analysis of our various contracts with customers and revenue\rstreams, including engaging a third party to assist management in evaluating the impact of this new standard on our consolidated\rfinancial statements and related disclosures. The Company’s management has elected to adopt the amendments in ASU 2014-09\ron a modified retrospective basis; whereas any cumulative effect of adopting this guidance will be recognized as an adjustment\rto its opening balance of retained earnings. Prior periods will not be retrospectively adjusted. The Company does not expect the\rimplementation of ASU 2014-09 and the related amendments to have a material impact on the timing, amount or characterization of\rrevenue recognized by the Company. For most of our revenue, we will continue to recognize revenue when title to the goods transfers\rto the customer, as this is generally when control transfers to the customer. While we expect the impact of these new standards\rwill be immaterial to our financial statements, upon adoption, we will include the expanded disclosures required by the new standards.
\r\r\r\r
Pursuant\rto the Company’s adoption of the standard it anticipates expanding its disclosures in the consolidated financial statements\rfor revenue recognition, assets and liabilities relating to contracts with customers, the nature of the Company’s performance\robligations and the manner by which the Company determines and allocates transaction prices and variable consideration to its\rperformance obligations and the significant judgments inherent in its revenue recognition policies.
\r\r\r\r
In\rJuly 2015, the FASB issued ASU No. 2015-11 (“ASU 2015-11”), Simplifying the Measurement of Inventory. ASU 2015-11\rrequires inventory within the scope of the ASU (e.g., first-in, first-out (“FIFO”) or average cost) to be measured\rusing the lower of cost and net realizable value. Inventory excluded from the scope of the ASU (i.e., last-in, first-out (“LIFO”)\ror the retail inventory method) will continue to be measured at the lower of cost or market. The ASU also amends some of the other\rguidance in Topic 330, “Inventory,” to more clearly articulate the requirements for the measurement and disclosure\rof inventory. However, those amendments are not intended to result in any changes to current practice. ASU 2015-11 is effective\rfor annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted\rASU 2015-11 in fiscal 2018 and there was no material impact on the Company’s consolidated financial statements.
\r\r\r\r
In\rFebruary 2016, the FASB issued ASU 2016-02 (“ASU 2016-02”), Leases. ASU 2016-02 establishes a right-of-use (“ROU”)\rmodel that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer\rthan 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense\rrecognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim\rperiods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating\rleases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements,\rwith certain practical expedients available. The Company is currently evaluating the potential impact of the adoption of ASU 2016-02\ron the Company’s consolidated financial statements. Upon adoption, the Company expects that the amounts recognized for the\rROU asset and lease liability in the balance sheets may be material.
\r\r\r\r
In\rMarch 2016, the FASB issued ASU No. 2016-09 (“ASU 2016-09”), Compensation - Stock Compensation (Topic 718): Improvements\rto Employee Share-Based Payment Accounting, a new accounting standard update intended to simplify several aspects of the\raccounting for share-based payment transactions including: income tax consequences, classification of awards as either equity\ror liabilities and classification on the statement of cash flows. Specifically, the ASU 2016-09 requires that excess tax benefits\rand tax deficiencies (the difference between the deduction for tax purposes and the compensation cost recognized for financial\rreporting purposes) be recognized as income tax expense or benefit in the consolidated statements of comprehensive income (loss),\rintroducing a new element of volatility to the provision for income taxes. This update is effective for fiscal years beginning\rafter December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The Company adopted ASU\r2016-09 on May 28, 2017. Effective with the adoption of the ASU all share-based awards continue to be accounted for as equity\rawards, excess tax benefits recognized on stock-based compensation expense are reflected in the consolidated statements of comprehensive\rincome (loss) as a component of the provision for income taxes on a prospective basis, excess tax benefits recognized on stock-based\rcompensation expense are classified as an operating activity in the consolidated statements of cash flows on a prospective basis\rand the Company has elected to continue to estimate expected forfeitures over the course of a vesting period. The adoption\rof ASU 2016-09 had no impact on the retained earnings, other components of equity or net assets as of the beginning of the period\rof adoption.
\r\r\r\r
In\rJune 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit\rLosses on Financial Instruments. ASU 2016-13 introduces a new forward-looking approach, based on expected losses, to estimate\rcredit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will\rrequire entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts.\rThis ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions,\rmodels and methods for estimating expected credit losses. For public business entities, ASU 2016-13 is effective for annual and\rinterim reporting periods beginning after December 15, 2019, and the guidance is to be applied using the modified-retrospective\rapproach. Earlier adoption is permitted for annual and interim reporting periods beginning after December 15, 2018. The Company\ris currently in the process of evaluating the impact of adoption on its consolidated financial statements.
\r\r\r\r
In\rAugust 2016, the FASB issued ASU No. 2016-15 (“ASU 2016-15”), Statement of Cash Flows (Topic 230): Classification\rof Certain Cash Receipts and Cash Payments. ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments\rare presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December\r15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it\rwould be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently in the process\rof evaluating the impact of adoption on its consolidated financial statements.
\r\r\r\r
In\r February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects\r from Accumulated Other Comprehensive Income. The guidance permits entities to reclassify\r tax effects stranded in Accumulated Other Comprehensive Income as a result of tax reform\r to retained earnings. This new guidance is effective for annual and interim periods in\r fiscal years beginning after December 15, 2018. Early adoption is permitted in annual\r and interim periods and can be applied retrospectively or in the period of adoption.\r The Company is currently in the process of evaluating the impact of adoption on its consolidated\r financial statements. \r\r In\rMay 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting\rBulletin No. 118, regarding the accounting implications of the recently issued Tax Cuts and Jobs Act (the “Act”).\rThis standard is effective immediately. The update clarifies that in a company’s financial statements that include the reporting\rperiod in which the Act was enacted, the company must first reflect the income tax effects of the Act in which the accounting\runder GAAP is complete. These amounts would not be provisional amounts. The company would also report provisional amounts for\rthose specific income tax effects for which the accounting under GAAP is incomplete but a reasonable estimate can be determined.\rThe Company has recorded a provisional amount which it believes is a reasonable estimate of the effects of the Act on the Company’s\rfinancial statements as of June 2, 2018. Technical corrections or other forthcoming guidance could change how the Company interprets\rprovisions of the Act, which may impact its effective tax rate and could affect its deferred tax assets, tax positions and/or\rits tax liabilities. |
Property, plant and equipment consist of\rthe following (in thousands):
\r\r\r\r
| \r | \r | June 2, 2018 | \r \r | \r | May 27, 2017 | \r |||
| Land and improvements | \r\r | $ | \r1,301 | \r\r | \r | $ | \r1,301 | \r|
| Buildings and improvements | \r\r | \r | 21,673 | \r\r | \r | \r | 19,885 | \r|
| Computer, communications equipment and software | \r\r | \r | 9,652 | \r\r | \r | \r | 8,551 | \r|
| Construction in progress | \r\r | \r | 1,582 | \r\r | \r | \r | 2,063 | \r|
| Machinery and other equipment | \r\r | \r | 12,004 | \r\r | \r | \r | 10,387 | \r|
| \r | \r | $ | \r46,212 | \r\r | \r | $ | \r42,187 | \r|
| Accumulated depreciation | \r\r | \r | (27,980 | \r) | \r\r | \r | (26,374 | \r) |
| Property, plant, and equipment, net | \r\r | $ | \r18,232 | \r\r | \r | $ | \r15,813 | \r
Supplemental disclosure information of the\restimated useful life of the assets:
\r\r\r\r
| Land improvements | \r10 years |
| Buildings and improvements | \r10 - 30 years |
| Computer and communications equipment | \r3 - 10 years |
| Machinery and other equipment | \r3 - 20 years |
Accrued liabilities consist of the following\r(in thousands):
\r\r\r\r
| \r | \r | June 2, 2018 | \r\r | \r | May 27, 2017 | \r|||
| Compensation and payroll taxes | \r\r | $ | \r3,449 | \r\r | \r | $ | \r3,250 | \r|
| Accrued severance(1) | \r\r | \r | 454 | \r\r | \r | \r | 706 | \r|
| Professional fees | \r\r | \r | 527 | \r\r | \r | \r | 535 | \r|
| Deferred revenue | \r\r | \r | 2,395 | \r\r | \r | \r | 1,460 | \r|
| Other accrued expenses | \r\r | \r | 3,518 | \r\r | \r | \r | 2,360 | \r|
| Accrued Liabilities | \r\r | $ | \r10,343 | \r\r | \r | $ | \r8,311 | \r
\r\r
\r\r
| (1) | \r\r | In the second quarter of fiscal 2017, the Company executed a reduction in headcount to streamline operations and reduce costs and recorded $1.3 million of expense included in selling, general and administrative expenses for employee termination costs payable to terminated employees with employment and/or separation agreements with the Company. The changes in the severance accrual for fiscal 2018 included provisions and payments of $0.1 million and $0.3 million, respectively. The changes in the severance accrual for fiscal 2017 included provisions and payments of $1.3 million and $1.2 million, respectively. |
Changes in the warranty reserve during fiscal\r2018 and 2017 were as follows (in thousands):
\r\r\r\r
| \r | \r | Warranty Reserve | \r||
| Balance at May 30, 2016 | \r\r | $ | \r210 | \r|
| Accruals for products sold | \r\r | \r | 89 | \r|
| Utilization | \r\r | \r | (78 | \r) |
| Recovery | \r\r | \r | (115 | \r) |
| Balance at May 27, 2017 | \r\r | $ | \r106 | \r|
| Accruals for products sold | \r\r | \r | 65 | \r|
| Utilization | \r\r | \r | (22 | \r) |
| Balance at June 2, 2018 | \r\r | $ | \r149 | \r
Stock options granted generally vest over\ra period of five years and have contractual terms to exercise of 10 years. A summary of stock option activity is as follows (in\rthousands, except option prices and years):
\r\r\r\r
| \r | \r | \r | Number of Options | \r \r | \r | Weighted Average Exercise Price | \r \r | \r | Weighted Average Remaining Contractual Life | \r \r | \r | Aggregate Intrinsic Value | \r |||||
| Options Outstanding at May 30, 2015 | \r\r | \r | \r | 1,137 | \r\r | \r | $ | \r10.35 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Granted | \r\r | \r | \r | 122 | \r\r | \r | \r | 5.88 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Exercised | \r\r | \r | \r | (28 | \r) | \r\r | \r | 5.18 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Forfeited | \r\r | \r | \r | (105 | \r) | \r\r | \r | 10.98 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Cancelled | \r\r | \r | \r | (107 | \r) | \r\r | \r | 9.97 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Options Outstanding at May 28, 2016 | \r\r | \r | \r | 1,019 | \r\r | \r | $ | \r9.93 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Granted | \r\r | \r | \r | 190 | \r\r | \r | \r | 6.90 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Exercised | \r\r | \r | \r | (5 | \r) | \r\r | \r | 5.61 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Forfeited | \r\r | \r | \r | (43 | \r) | \r\r | \r | 8.39 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Cancelled | \r\r | \r | \r | (88 | \r) | \r\r | \r | 11.17 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Options Outstanding at May 27, 2017 | \r\r | \r | \r | 1,073 | \r\r | \r | $ | \r9.38 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Granted | \r\r | \r | \r | 200 | \r\r | \r | \r | 6.08 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Exercised | \r\r | \r | \r | (16 | \r) | \r\r | \r | 5.85 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Forfeited | \r\r | \r | \r | (11 | \r) | \r\r | \r | 8.05 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Cancelled | \r\r | \r | \r | (51 | \r) | \r\r | \r | 9.36 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Options Outstanding at June 2, 2018 | \r\r | \r | \r | 1,195 | \r\r | \r | $ | \r8.89 | \r\r | \r | \r | 5.8 | \r\r | \r | $ | \r2,033 | \r|
| Options Vested at June 2, 2018 | \r\r | \r | \r | 746 | \r\r | \r | $ | \r9.87 | \r\r | \r | \r | 4.5 | \r\r | \r | $ | \r876 | \r
The fair value of stock options is estimated\rusing the Black-Scholes option-pricing model with the following weighted average assumptions:
\r\r\r\r\r\r
| \r | \r | Fiscal Year Ended | \r||||||||||
| \r | \r | June 2, 2018 | \r \r | \r | May 27, 2017 | \r \r | \r | May 28, 2016 | \r ||||
| Expected volatility | \r\r | \r | 21.92 | \r% | \r\r | \r | 25.41 | \r% | \r\r | \r | 32.21 | \r% |
| Risk-free interest rate | \r\r | \r | 2.22 | \r% | \r\r | \r | 1.46 | \r% | \r\r | \r | 1.78 | \r% |
| Expected lives (years) | \r\r | \r | 6.31 | \r\r | \r | \r | 6.50 | \r\r | \r | \r | 6.50 | \r|
| Annual cash dividend | \r\r | $ | \r0.24 | \r\r | \r | $ | \r0.24 | \r\r | \r | $ | \r0.24 | \r
The following table summarizes information\rabout stock options outstanding at June 2, 2018 (in thousands, except option prices and years):
\r\r\r\r
| \r | \r | \r | Outstanding | \r\r | \r | Vested | \r|||||||||||||||||||||||||||
| Exercise Price Range | \r\r | \r | Shares | \r\r | \r | Weighted Average Exercise Price | \r \r | \r | Weighted Average Life | \r \r | \r | Aggregate Intrinsic Value | \r \r | \r | Shares | \r\r | \r | Weighted Average Exercise Price | \r \r | \r | Weighted Average Life | \r \r | \r | Aggregate Intrinsic Value | \r |||||||||
| $5.03 to $6.47 | \r\r | \r | \r | 383 | \r\r | \r | $ | \r5.76 | \r\r | \r | \r | 6.4 | \r\r | \r | $ | \r1,508 | \r\r | \r | \r | 190 | \r\r | \r | $ | \r5.63 | \r\r | \r | \r | 4.0 | \r\r | \r | $ | \r772 | \r|
| $6.90 to $10.85 | \r\r | \r | \r | 385 | \r\r | \r | $ | \r8.48 | \r\r | \r | \r | 7.3 | \r\r | \r | $ | \r525 | \r\r | \r | \r | 159 | \r\r | \r | $ | \r9.31 | \r\r | \r | \r | 6.4 | \r\r | \r | $ | \r104 | \r|
| $11.14 to $13.76 | \r\r | \r | \r | 427 | \r\r | \r | $ | \r12.05 | \r\r | \r | \r | 4.1 | \r\r | \r | $ | \r— | \r\r | \r | \r | 397 | \r\r | \r | $ | \r12.12 | \r\r | \r | \r | 4.0 | \r\r | \r | $ | \r— | \r|
| Total | \r\r | \r | \r | 1,195 | \r\r | \r | $ | \r8.89 | \r\r | \r | \r | 5.8 | \r\r | \r | $ | \r2,033 | \r\r | \r | \r | 746 | \r\r | \r | $ | \r9.87 | \r\r | \r | \r | 4.5 | \r\r | \r | $ | \r876 | \r
The earnings per share (“EPS”)\rpresented in our consolidated statements of comprehensive income (loss) are based on the following (in thousands, except per\rshare amounts):
\r\r\r\r
| \r | \r | For the Fiscal Year Ended | \r||||||||||||||||||||||
| \r | \r | June 2, 2018 | \r\r | \r | May 27, 2017 | \r\r | \r | May 28, 2016 | \r||||||||||||||||
| \r | \r | Basic | \r\r | \r | Diluted | \r\r | \r | Basic | \r\r | \r | Diluted | \r\r | \r | Basic | \r\r | \r | Diluted | \r|||||||
| Numerator for Basic and Diluted EPS: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Income (loss) from continuing operations | \r\r | $ | \r2,326 | \r\r | \r | $ | \r2,326 | \r\r | \r | $ | \r(6,928 | \r) | \r\r | $ | \r(6,928 | \r) | \r\r | $ | \r(6,766 | \r) | \r\r | $ | \r(6,766 | \r) |
| Less dividends: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common stock | \r\r | \r | 2,586 | \r\r | \r | \r | 2,586 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,615 | \r\r | \r | \r | 2,615 | \r|
| Class B common stock | \r\r | \r | 462 | \r\r | \r | \r | 462 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r|
| Undistributed losses | \r\r | $ | \r(722 | \r) | \r\r | $ | \r(722 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,845 | \r) | \r\r | $ | \r(9,845 | \r) |
| Common stock undistributed losses | \r\r | $ | \r(613 | \r) | \r\r | $ | \r(613 | \r) | \r\r | $ | \r(8,440 | \r) | \r\r | $ | \r(8,440 | \r) | \r\r | $ | \r(8,367 | \r) | \r\r | $ | \r(8,367 | \r) |
| Class B common stock undistributed losses | \r\r | \r | (109 | \r) | \r\r | \r | (109 | \r) | \r\r | \r | (1,519 | \r) | \r\r | \r | (1,519 | \r) | \r\r | \r | (1,478 | \r) | \r\r | \r | (1,478 | \r) |
| Total undistributed losses | \r\r | $ | \r(722 | \r) | \r\r | $ | \r(722 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,845 | \r) | \r\r | $ | \r(9,845 | \r) |
| Income from discontinued operations | \r\r | $ | \r1,496 | \r\r | \r | $ | \r1,496 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| Less dividends: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common stock | \r\r | \r | 2,586 | \r\r | \r | \r | 2,586 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,615 | \r\r | \r | \r | 2,615 | \r|
| Class B common stock | \r\r | \r | 462 | \r\r | \r | \r | 462 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r|
| Undistributed losses | \r\r | $ | \r(1,552 | \r) | \r\r | $ | \r(1,552 | \r) | \r\r | $ | \r(3,031 | \r) | \r\r | $ | \r(3,031 | \r) | \r\r | $ | \r(3,079 | \r) | \r\r | $ | \r(3,079 | \r) |
| Common stock undistributed losses | \r\r | $ | \r(1,317 | \r) | \r\r | $ | \r(1,318 | \r) | \r\r | $ | \r(2,567 | \r) | \r\r | $ | \r(2,567 | \r) | \r\r | $ | \r(2,615 | \r) | \r\r | $ | \r(2,615 | \r) |
| Class B common stock undistributed losses | \r\r | \r | (235 | \r) | \r\r | \r | (234 | \r) | \r\r | \r | (464 | \r) | \r\r | \r | (464 | \r) | \r\r | \r | (464 | \r) | \r\r | \r | (464 | \r) |
| Total undistributed losses | \r\r | $ | \r(1,552 | \r) | \r\r | $ | \r(1,552 | \r) | \r\r | $ | \r(3,031 | \r) | \r\r | $ | \r(3,031 | \r) | \r\r | $ | \r(3,079 | \r) | \r\r | $ | \r(3,079 | \r) |
| Net income (loss) | \r\r | $ | \r3,822 | \r\r | \r | $ | \r3,822 | \r\r | \r | $ | \r(6,928 | \r) | \r\r | $ | \r(6,928 | \r) | \r\r | $ | \r(6,766 | \r) | \r\r | $ | \r(6,766 | \r) |
| Less dividends: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common stock | \r\r | \r | 2,586 | \r\r | \r | \r | 2,586 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,615 | \r\r | \r | \r | 2,615 | \r|
| Class B common stock | \r\r | \r | 462 | \r\r | \r | \r | 462 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r|
| Undistributed income (losses) | \r\r | $ | \r774 | \r\r | \r | $ | \r774 | \r\r | \r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,845 | \r) | \r\r | $ | \r(9,845 | \r) |
| Common stock undistributed income (losses) | \r\r | $ | \r657 | \r\r | \r | $ | \r657 | \r\r | \r | $ | \r(8,440 | \r) | \r\r | $ | \r(8,440 | \r) | \r\r | $ | \r(8,367 | \r) | \r\r | $ | \r(8,367 | \r) |
| Class B common stock undistributed income (losses) | \r\r | \r | 117 | \r\r | \r | \r | 117 | \r\r | \r | \r | (1,519 | \r) | \r\r | \r | (1,519 | \r) | \r\r | \r | (1,478 | \r) | \r\r | \r | (1,478 | \r) |
| Total undistributed income (losses) | \r\r | $ | \r774 | \r\r | \r | $ | \r774 | \r\r | \r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,845 | \r) | \r\r | $ | \r(9,845 | \r) |
| Denominator for Basic and Diluted EPS: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common stock weighted average shares | \r\r | \r | 10,765 | \r\r | \r | \r | 10,765 | \r\r | \r | \r | 10,705 | \r\r | \r | \r | 10,705 | \r\r | \r | \r | 10,908 | \r\r | \r | \r | 10,908 | \r|
| Class B common stock weighted average shares, and shares under if-converted method for diluted EPS | \r\r | \r | 2,137 | \r\r | \r | \r | 2,137 | \r\r | \r | \r | 2,140 | \r\r | \r | \r | 2,140 | \r\r | \r | \r | 2,141 | \r\r | \r | \r | 2,141 | \r|
| Effect of dilutive securities | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Dilutive stock options | \r\r | \r | \r | \r | \r | \r | 59 | \r\r | \r | \r | \r | \r | \r | \r | — | \r\r | \r | \r | \r | \r | \r | \r | — | \r|
| Denominator for diluted EPS adjusted for weighted average shares and assumed conversions | \r\r | \r | \r | \r | \r | \r | 12,961 | \r\r | \r | \r | \r | \r | \r | \r | 12,845 | \r\r | \r | \r | \r | \r | \r | \r | 13,049 | \r|
| Income (loss) from continuing operations per share: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common stock | \r\r | $ | \r0.18 | \r\r | \r | $ | \r0.18 | \r\r | \r | $ | \r(0.55 | \r) | \r\r | $ | \r(0.55 | \r) | \r\r | $ | \r(0.53 | \r) | \r\r | $ | \r(0.53 | \r) |
| Class B common stock | \r\r | $ | \r0.16 | \r\r | \r | $ | \r0.16 | \r\r | \r | $ | \r(0.49 | \r) | \r\r | $ | \r(0.49 | \r) | \r\r | $ | \r(0.47 | \r) | \r\r | $ | \r(0.47 | \r) |
| Income from discontinued operations per share: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common stock | \r\r | $ | \r0.12 | \r\r | \r | $ | \r0.12 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| Class B common stock | \r\r | $ | \r0.11 | \r\r | \r | $ | \r0.11 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| Net income (loss) per share: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common stock | \r\r | $ | \r0.30 | \r\r | \r | $ | \r0.30 | \r\r | \r | $ | \r(0.55 | \r) | \r\r | $ | \r(0.55 | \r) | \r\r | $ | \r(0.53 | \r) | \r\r | $ | \r(0.53 | \r) |
| Class B common stock | \r\r | $ | \r0.27 | \r\r | \r | $ | \r0.27 | \r\r | \r | $ | \r(0.49 | \r) | \r\r | $ | \r(0.49 | \r) | \r\r | $ | \r(0.47 | \r) | \r\r | $ | \r(0.47 | \r) |
\r\r
Note: Common stock options that were anti-dilutive\rand not included in diluted earnings per common share for fiscal 2017 and fiscal 2016 were 848 and 890 respectively.
"}]},{"name":"rpt:f-346","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfBusinessAcquisitionsByAcquisitionTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"The consideration paid by the Company to\rIMES at closing was $12.2 million in cash. The following table summarizes the fair values of the assets acquired at the date of\rthe closing of the acquisition (in thousands):
\r\r\r\r
| Accounts receivable | \r\r | $ | \r737 | \r|
| Inventories | \r\r | \r | 1,420 | \r|
| Property, plant and equipment | \r\r | \r | 230 | \r|
| Goodwill | \r\r | \r | 6,332 | \r|
| Other intangibles | \r\r | \r | 3,490 | \r|
| Net assets acquired | \r\r | $ | \r12,209 | \r
Our intangible assets represent the fair\rvalue for trade name, customer relationships, non-compete agreements and technology acquired in connection with our acquisitions.\rIntangible assets subject to amortization were as follows (in thousands):
\r\r\r\r
| \r | \r | \r | ||||||
| \r | \r | June 2, 2018 | \r \r | \r | May 27, 2017 | \r |||
| Gross Amounts: | \r\r | \r | \r | \r | \r | \r | \r | |
| Trade Name | \r\r | $ | \r659 | \r\r | \r | $ | \r659 | \r|
| Customer Relationships(1) | \r\r | \r | 3,408 | \r\r | \r | \r | 3,397 | \r|
| Non-compete Agreements | \r\r | \r | 177 | \r\r | \r | \r | 177 | \r|
| Technology | \r\r | \r | 230 | \r\r | \r | \r | 230 | \r|
| Total Gross Amounts | \r\r | $ | \r4,474 | \r\r | \r | $ | \r4,463 | \r|
| Accumulated Amortization: | \r\r | \r | \r | \r | \r | \r | \r | |
| Trade Name | \r\r | $ | \r651 | \r\r | \r | $ | \r441 | \r|
| Customer Relationships | \r\r | \r | 617 | \r\r | \r | \r | 446 | \r|
| Non-compete Agreements | \r\r | \r | 115 | \r\r | \r | \r | 84 | \r|
| Technology | \r\r | \r | 77 | \r\r | \r | \r | 51 | \r|
| Total Accumulated Amortization | \r\r | $ | \r1,460 | \r\r | \r | $ | \r1,022 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | |
| Net Intangibles | \r\r | $ | \r3,014 | \r\r | \r | $ | \r3,441 | \r
\r\r\r\r
| \r | (1) | \rChange from prior periods reflect impact of foreign currency translation. |
The amortization expense associated with\rthe intangible assets subject to amortization for the next five years is presented in the following table (in thousands):
\r\r\r\r
| Fiscal Year | \r\r | \r | Amortization Expense | \r ||
| 2019 | \r\r | \r | $ | \r245 | \r|
| 2020 | \r\r | \r | \r | 257 | \r|
| 2021 | \r\r | \r | \r | 245 | \r|
| 2022 | \r\r | \r | \r | 253 | \r|
| 2023 | \r\r | \r | \r | 246 | \r|
| Thereafter | \r\r | \r | \r | 1,768 | \r|
| Total amortization expense | \r\r | \r | $ | \r3,014 | \r
\r\r
The amortization expense associated with\rthe intangible assets totaled approximately $0.4 million during fiscal 2018, fiscal 2017 and fiscal 2016. The weighted average\rnumber of years of amortization expense remaining is 15.1 years.
"}]},{"name":"rpt:f-349","factDimensions":{"xbrl:concept":"us-gaap:OperatingLeasesOfLesseeDisclosureTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"Our future lease commitments for minimum\rrentals, including common area maintenance charges and property taxes during the next five years are as follows (in thousands):
\r\r\r\r
| Fiscal Year | \r\r | \r | Payments | \r||
| 2019 | \r\r | \r | $ | \r1,629 | \r|
| 2020 | \r\r | \r | \r | 1,132 | \r|
| 2021 | \r\r | \r | \r | 792 | \r|
| 2022 | \r\r | \r | \r | 142 | \r|
| 2023 | \r\r | \r | \r | 19 | \r|
| Thereafter | \r\r | \r | \r | 76 | \r
Income (loss) from continuing operations\rbefore income taxes included the following components (in thousands):
\r\r\r\r\r\r
| \r | \r | Fiscal Year Ended | \r||||||||||
| \r | \r | June 2, 2018 | \r \r | \r | May 27, 2017 | \r \r | \r | May 28, 2016 | \r ||||
| United States | \r\r | $ | \r(211 | \r) | \r\r | $ | \r(8,150 | \r) | \r\r | $ | \r(7,274 | \r) |
| Foreign | \r\r | \r | 4,071 | \r\r | \r | \r | 2,034 | \r\r | \r | \r | 1,054 | \r|
| Income (loss) before income taxes | \r\r | $ | \r3,860 | \r\r | \r | $ | \r(6,116 | \r) | \r\r | $ | \r(6,220 | \r) |
The provision for income taxes for fiscal\r2018, 2017 and 2016 consisted of the following (in thousands):
\r\r\r\r\r\r
| \r | \r | Fiscal Year Ended | \r||||||||||
| \r | \r | June 2, 2018 | \r \r | \r | May 27, 2017 | \r \r | \r | May 28, 2016 | \r ||||
| Current: | \r\r | \r | \r | \r | \r | \r | \r | \r | ||||
| Federal | \r\r | $ | \r— | \r\r | \r | $ | \r(117 | \r) | \r\r | $ | \r— | \r|
| State | \r\r | \r | (12 | \r) | \r\r | \r | 3 | \r\r | \r | \r | 17 | \r|
| Foreign | \r\r | \r | 1,220 | \r\r | \r | \r | 1,035 | \r\r | \r | \r | 441 | \r|
| Total current | \r\r | $ | \r1,208 | \r\r | \r | $ | \r921 | \r\r | \r | $ | \r458 | \r|
| Deferred: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Federal | \r\r | $ | \r124 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| State | \r\r | \r | — | \r\r | \r | \r | — | \r\r | \r | \r | — | \r|
| Foreign | \r\r | \r | 202 | \r\r | \r | \r | (109 | \r) | \r\r | \r | 88 | \r|
| Total deferred | \r\r | $ | \r326 | \r\r | \r | $ | \r(109 | \r) | \r\r | $ | \r88 | \r|
| Income tax provision | \r\r | $ | \r1,534 | \r\r | \r | $ | \r812 | \r\r | \r | $ | \r546 | \r
The differences between income taxes at\rthe U.S. federal statutory income tax rate of 29.2% for fiscal 2018 and 34% for fiscal 2017 and 2016 and the reported income tax\rprovision for fiscal 2018, 2017 and 2016 are summarized as follows:
\r\r\r\r
| \r | \r | Fiscal Year Ended | \r||||||||||
| \r | \r | June 2, 2018 | \r \r | \r | May 27, 2017 | \r \r | \r | May 28, 2016 | \r ||||
| Federal statutory rate | \r\r | \r | 29.2 | \r% | \r\r | \r | 34.0 | \r% | \r\r | \r | 34.0 | \r% |
| Effect of: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| State income taxes, net of federal tax benefit | \r\r | \r | 0.3 | \r\r | \r | \r | 4.8 | \r\r | \r | \r | 4.2 | \r|
| Deemed repatriation tax | \r\r | \r | (50.0 | \r) | \r\r | \r | — | \r\r | \r | \r | — | \r|
| Foreign income inclusion | \r\r | \r | — | \r\r | \r | \r | (20.7 | \r) | \r\r | \r | (0.4 | \r) |
| Foreign taxes at other rates | \r\r | \r | (0.1 | \r) | \r\r | \r | 1.0 | \r\r | \r | \r | 0.6 | \r|
| Permanent tax differences | \r\r | \r | 6.7 | \r\r | \r | \r | (0.5 | \r) | \r\r | \r | (0.8 | \r) |
| Deferred remeasurement | \r\r | \r | 45.1 | \r\r | \r | \r | — | \r\r | \r | \r | — | \r|
| Tax reserves | \r\r | \r | 3.6 | \r\r | \r | \r | 0.9 | \r\r | \r | \r | (6.0 | \r) |
| Additional U.S. tax on undistributed foreign earnings | \r\r | \r | (12.5 | \r) | \r\r | \r | 15.8 | \r\r | \r | \r | (32.7 | \r) |
| Change in valuation allowance for deferred tax assets | \r\r | \r | 15.1 | \r\r | \r | \r | (46.6 | \r) | \r\r | \r | (11.4 | \r) |
| Return to provision adjustments | \r\r | \r | 0.1 | \r\r | \r | \r | (2.0 | \r) | \r\r | \r | 3.9 | \r|
| Closure of foreign audits | \r\r | \r | 2.2 | \r\r | \r | \r | — | \r\r | \r | \r | — | \r|
| Other | \r\r | \r | — | \r\r | \r | \r | — | \r\r | \r | \r | (0.2 | \r) |
| Effective tax rate | \r\r | \r | 39.7 | \r% | \r\r | \r | (13.3 | \r)% | \r\r | \r | (8.8 | \r)% |
| Our deferred tax assets and liabilities reflect continuing operations as of June 2, 2018 and May 27, 2017. Significant components were as follows (in thousands): |
\r\r
| \r | \r | Fiscal Year Ended | \r||||||
| \r | \r | June 2, | \r\r | \r | May 27, | \r|||
| \r | \r | 2018 | \r\r | \r | 2017 | \r|||
| Deferred tax assets: | \r\r | \r | \r | \r | \r | \r | \r | |
| NOL carryforwards - foreign and domestic | \r\r | $ | \r7,883 | \r\r | \r | $ | \r7,870 | \r|
| Inventory valuations | \r\r | \r | 978 | \r\r | \r | \r | 1,141 | \r|
| Goodwill | \r\r | \r | 294 | \r\r | \r | \r | 325 | \r|
| Foreign tax credits | \r\r | \r | 465 | \r\r | \r | \r | 3,808 | \r|
| Severance reserve | \r\r | \r | 119 | \r\r | \r | \r | 227 | \r|
| Foreign capital loss | \r\r | \r | 1,143 | \r\r | \r | \r | 1,142 | \r|
| Other | \r\r | \r | 1,632 | \r\r | \r | \r | 2,048 | \r|
| Subtotal | \r\r | $ | \r12,514 | \r\r | \r | $ | \r16,561 | \r|
| Valuation allowance - foreign and domestic | \r\r | \r | (9,148 | \r) | \r\r | \r | (8,557 | \r) |
| Net deferred tax assets after valuation allowance | \r\r | $ | \r3,366 | \r\r | \r | $ | \r8,004 | \r|
| Deferred tax liabilities: | \r\r | \r | \r | \r | \r | \r | \r | |
| Accelerated depreciation | \r\r | $ | \r(2,474 | \r) | \r\r | $ | \r(1,356 | \r) |
| Tax on undistributed earnings | \r\r | \r | (274 | \r) | \r\r | \r | (5,738 | \r) |
| Other | \r\r | \r | 28 | \r\r | \r | \r | 35 | \r|
| Subtotal | \r\r | $ | \r(2,720 | \r) | \r\r | $ | \r(7,059 | \r) |
| Net deferred tax assets | \r\r | $ | \r646 | \r\r | \r | $ | \r945 | \r|
| Supplemental disclosure of deferred tax assets (liabilities) information: | \r\r | \r | \r | \r | \r | \r | \r | |
| Domestic | \r\r | $ | \r7,394 | \r\r | \r | $ | \r6,937 | \r|
| Foreign | \r\r | $ | \r2,401 | \r\r | \r | $ | \r2,565 | \r|
| Total | \r\r | $ | \r9,795 | \r\r | \r | $ | \r9,502 | \r
The\rfollowing table summarizes the activity related to the unrecognized tax benefits (in thousands):
\r\r\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r |||
| Unrecognized\r tax benefits, beginning of period | \r\r | $ | \r1,883 | \r\r | \r | $ | \r2,000 | \r|
| Increase\r in positions taken in prior period | \r\r | \r | 138 | \r\r | \r | \r | 75 | \r|
| Decrease\r in positions due to settlements | \r\r | \r | (1,883 | \r) | \r\r | \r | (75 | \r) |
| Decrease\r related to the expiration of statute of limitations | \r\r | \r | — | \r\r | \r | \r | (117 | \r) |
| Unrecognized\r tax benefits, end of period | \r\r | $ | \r138 | \r\r | \r | $ | \r1,883 | \r
\r\r
Unrecognized\rtax benefits for continuing and discontinued operations were as follows (in thousands):
\r\r\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r |||
| Continuing\r operations | \r\r | $ | \r138 | \r\r | \r | $ | \r— | \r|
| Discontinued\r operations(1) | \r\r | \r | — | \r\r | \r | \r | 1,883 | \r|
| \r | \r | $ | \r138 | \r\r | \r | $ | \r1,883 | \r
\r\r
| (1) | \rRelates to an amended\r Illinois state income tax return related to the sale of RFPD. |
Operating\rresults by segment are summarized in the following table (in thousands):
\r\r\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||||||
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r \r | \r | May\r 28, 2016 | \r ||||
| PMT | \r\r | \r | \r | \r | \r | \r | \r | \r | ||||
| Net Sales | \r\r | $ | \r128,296 | \r\r | \r | $ | \r104,226 | \r\r | \r | $ | \r105,554 | \r|
| Gross Profit | \r\r | \r | 43,254 | \r\r | \r | \r | 33,382 | \r\r | \r | \r | 33,088 | \r|
| Canvys | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Net Sales | \r\r | $ | \r26,683 | \r\r | \r | $ | \r20,534 | \r\r | \r | $ | \r23,453 | \r|
| Gross Profit | \r\r | \r | 8,410 | \r\r | \r | \r | 5,752 | \r\r | \r | \r | 6,017 | \r|
| Healthcare | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Net Sales | \r\r | $ | \r8,233 | \r\r | \r | $ | \r12,112 | \r\r | \r | $ | \r13,009 | \r|
| Gross Profit | \r\r | \r | 3,418 | \r\r | \r | \r | 4,749 | \r\r | \r | \r | 5,730 | \r
"}]},{"name":"rpt:f-356","factDimensions":{"xbrl:concept":"us-gaap:ReconciliationOfAssetsFromSegmentToConsolidatedTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"
A\rreconciliation of assets to the relevant consolidated amount is as follows (in thousands):
\r\r\r\r
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r |||
| Segment\r assets | \r\r | $ | \r90,981 | \r\r | \r | $ | \r80,105 | \r|
| Cash\r and cash equivalents | \r\r | \r | 60,465 | \r\r | \r | \r | 55,327 | \r|
| Investments\r - current | \r\r | \r | — | \r\r | \r | \r | 6,429 | \r|
| Other\r current assets(1) | \r\r | \r | 3,830 | \r\r | \r | \r | 3,330 | \r|
| Net\r property, plant and equipment | \r\r | \r | 10,126 | \r\r | \r | \r | 8,752 | \r|
| Investments\r - non-current | \r\r | \r | — | \r\r | \r | \r | 2,419 | \r|
| Other\r assets - non-current deferred income taxes | \r\r | \r | 927 | \r\r | \r | \r | 1,102 | \r|
| Total\r assets | \r\r | $ | \r166,329 | \r\r | \r | $ | \r157,464 | \r
\r\r
| (1) | \rOther\r current assets include miscellaneous receivables and prepaid expenses. |
Net\rsales and gross profit by geographic region are summarized in the following table (in thousands):
\r\r\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||||||
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r \r | \r | May\r 28, 2016 | \r ||||
| Net\r Sales | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| North America | \r\r | $ | \r67,662 | \r\r | \r | $ | \r55,963 | \r\r | \r | $ | \r66,365 | \r|
| Asia/Pacific | \r\r | \r | 32,607 | \r\r | \r | \r | 27,997 | \r\r | \r | \r | 24,564 | \r|
| Europe | \r\r | \r | 53,818 | \r\r | \r | \r | 44,296 | \r\r | \r | \r | 44,634 | \r|
| Latin America | \r\r | \r | 9,123 | \r\r | \r | \r | 8,552 | \r\r | \r | \r | 6,347 | \r|
| Other(1) | \r\r | \r | 2 | \r\r | \r | \r | 64 | \r\r | \r | \r | 106 | \r|
| Total | \r\r | $ | \r163,212 | \r\r | \r | $ | \r136,872 | \r\r | \r | $ | \r142,016 | \r|
| Gross\r Profit | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| North America | \r\r | $ | \r25,996 | \r\r | \r | $ | \r20,597 | \r\r | \r | $ | \r23,506 | \r|
| Asia/Pacific | \r\r | \r | 10,794 | \r\r | \r | \r | 9,630 | \r\r | \r | \r | 8,212 | \r|
| Europe | \r\r | \r | 18,071 | \r\r | \r | \r | 14,418 | \r\r | \r | \r | 13,541 | \r|
| Latin America | \r\r | \r | 3,602 | \r\r | \r | \r | 3,250 | \r\r | \r | \r | 2,397 | \r|
| Other(1) | \r\r | \r | (3,381 | \r) | \r\r | \r | (4,012 | \r) | \r\r | \r | (2,821 | \r) |
| Total | \r\r | $ | \r55,082 | \r\r | \r | $ | \r43,883 | \r\r | \r | $ | \r44,835 | \r
\r\r
| (1) | \rOther includes primarily\r net sales not allocated to a specific geographical region, unabsorbed value-add costs and other unallocated expenses. |
Net assets by geographic region are summarized\rin the following table (in thousands):
\r\r\r\r
| \r | \r | Fiscal Year Ended | \r||||||||||
| \r | \r | June 2, 2018 | \r \r | \r | May 27, 2017 | \r \r | \r | May 28, 2016 | \r ||||
| Net Assets | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| North America | \r\r | $ | \r77,857 | \r\r | \r | $ | \r62,085 | \r\r | \r | $ | \r65,832 | \r|
| Asia/Pacific | \r\r | \r | 17,254 | \r\r | \r | \r | 34,990 | \r\r | \r | \r | 42,547 | \r|
| Europe | \r\r | \r | 37,911 | \r\r | \r | \r | 32,794 | \r\r | \r | \r | 31,495 | \r|
| Latin America | \r\r | \r | 2,159 | \r\r | \r | \r | 2,458 | \r\r | \r | \r | 1,801 | \r|
| Total | \r\r | $ | \r135,181 | \r\r | \r | $ | \r132,327 | \r\r | \r | $ | \r141,675 | \r
Investments\rmeasured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of June 2, 2018 and May 27,\r2017 were as follows (in thousands):
\r\r\r\r
| \r | \r | Level 1 | \r\r | \r | Level 2 | \r\r | \r | Level 3 | \r||||
| June\r 2, 2018 | \r\r | \r | \r | \r | \r | \r | \r | \r | ||||
| Time deposits/CDs | \r\r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| Equity securities | \r\r | — | \r\r | \r | — | \r\r | \r | — | \r||||
| Total | \r\r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| May 27, 2017 | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Time deposits/CDs | \r\r | $ | \r8,226 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| Equity\r securities | \r\r | \r | 622 | \r\r | \r | \r | — | \r\r | \r | \r | — | \r|
| Total | \r\r | $ | \r8,848 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r
The\rfollowing table presents the valuation and qualifying account activity for fiscal years ended June 2, 2018, May 27, 2017\rand May 28, 2016, (in thousands):
\r\r\r\r
| Description | \r\r | Balance at beginning\r of period | \r \r | \r | Charged to expense | \r \r | \r | Deductions | \r\r | \r | Balance at end\r of period | \r |||||
| Year\r ended June 2, 2018 | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |||||
| Allowance\r for doubtful accounts | \r\r | $ | \r398 | \r\r | \r | $ | \r223 | \r(1) | \r\r | $ | \r(312) | \r(2) | \r\r | $ | \r309 | \r|
| Inventory\r provisions | \r\r | \r | 3,456 | \r\r | \r | \r | 773 | \r(3) | \r\r | \r | (202) | \r(4) | \r\r | \r | 4,027 | \r|
| Year\r ended May 27, 2017 | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Allowance\r for doubtful accounts | \r\r | $ | \r364 | \r\r | \r | $ | \r226 | \r(1) | \r\r | $ | \r(192) | \r(2) | \r\r | $ | \r398 | \r|
| Inventory\r provisions | \r\r | \r | 3,380 | \r\r | \r | \r | 456 | \r(3) | \r\r | \r | (380) | \r(4) | \r\r | \r | 3,456 | \r|
| Year\r ended May 28, 2016 | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Allowance\r for doubtful accounts | \r\r | $ | \r283 | \r\r | \r | $ | \r228 | \r(1) | \r\r | $ | \r(147) | \r(2) | \r\r | $ | \r364 | \r|
| Inventory\r provisions | \r\r | \r | 2,991 | \r\r | \r | \r | 690 | \r(3) | \r\r | \r | (301) | \r(4) | \r\r | \r | 3,380 | \r
\r\r
Notes:
\r\r(1)\rCharges to bad debt expense, net of bad debt recoveries.
\r\r(2)\rUncollectible amounts written off, net of recoveries and foreign currency translation.
\r\r(3)\rCharges to cost of sales. Included in fiscal 2018 were inventory write-downs of $0.6 million for PMT, $0.1 million for Canvys\rand $0.1 million for Healthcare.
\r\r(4)\rInventory disposed of or sold, net of foreign currency translation.
"}]},{"name":"rpt:f-361","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfQuarterlyFinancialInformationTableTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"| Description | \r\r | First Quarter | \r \r | \r | Second Quarter | \r \r | \r | Third Quarter | \r \r | \r | Fourth Quarter | \r |||||
| Fiscal 2018 | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Net\r sales | \r\r | $ | \r36,995 | \r\r | \r | $ | \r39,082 | \r\r | \r | $ | \r41,645 | \r\r | \r | $ | \r45,490 | \r|
| Gross\r profit | \r\r | \r | 12,148 | \r\r | \r | \r | 13,374 | \r\r | \r | \r | 14,067 | \r\r | \r | \r | 15,493 | \r|
| (Loss)\r income from continuing operations | \r\r | \r | (112 | \r) | \r\r | \r | 172 | \r\r | \r | \r | 527 | \r\r | \r | \r | 1,739 | \r|
| Income\r from discontinued operations | \r\r | \r | — | \r\r | \r | \r | 1,496 | \r\r | \r | \r | — | \r\r | \r | \r | — | \r|
| Net\r (loss) income | \r\r | \r | (112 | \r) | \r\r | \r | 1,668 | \r\r | \r | \r | 527 | \r\r | \r | \r | 1,739 | \r|
| (Loss)\r income from continuing operations | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock - basic | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.01 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.14 | \r|
| Class\r B common stock - basic | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.01 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.12 | \r|
| Common\r stock - diluted | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.01 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.14 | \r|
| Class\r B common stock - diluted | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.01 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.12 | \r|
| Income\r from discontinued operations | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock - basic | \r\r | $ | \r0.00 | \r\r | \r | $ | \r0.12 | \r\r | \r | $ | \r0.00 | \r\r | \r | $ | \r0.00 | \r|
| Class\r B common stock - basic | \r\r | $ | \r0.00 | \r\r | \r | $ | \r0.11 | \r\r | \r | $ | \r0.00 | \r\r | \r | $ | \r0.00 | \r|
| Common\r stock - diluted | \r\r | $ | \r0.00 | \r\r | \r | $ | \r0.12 | \r\r | \r | $ | \r0.00 | \r\r | \r | $ | \r0.00 | \r|
| Class\r B common stock - diluted | \r\r | $ | \r0.00 | \r\r | \r | $ | \r0.11 | \r\r | \r | $ | \r0.00 | \r\r | \r | $ | \r0.00 | \r|
| Net\r (loss) income | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock - basic | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.13 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.14 | \r|
| Class\r B common stock - basic | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.12 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.12 | \r|
| Common\r stock - diluted | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.13 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.14 | \r|
| Class\r B common stock - diluted | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.12 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.12 | \r|
| Fiscal 2017 | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Net\r sales | \r\r | $ | \r33,373 | \r\r | \r | $ | \r33,827 | \r\r | \r | $ | \r32,313 | \r\r | \r | $ | \r37,359 | \r|
| Gross\r profit | \r\r | \r | 10,240 | \r\r | \r | \r | 10,964 | \r\r | \r | \r | 10,692 | \r\r | \r | \r | 11,987 | \r|
| Loss\r from continuing operations | \r\r | \r | (2,850 | \r) | \r\r | \r | (2,522 | \r) | \r\r | \r | (1,431 | \r) | \r\r | \r | (125 | \r) |
| Net\r loss | \r\r | \r | (2,850 | \r) | \r\r | \r | (2,522 | \r) | \r\r | \r | (1,431 | \r) | \r\r | \r | (125 | \r) |
| Net\r loss | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock - basic | \r\r | $ | \r(0.23 | \r) | \r\r | $ | \r(0.20 | \r) | \r\r | $ | \r(0.11 | \r) | \r\r | $ | \r(0.01 | \r) |
| Class\r B common stock - basic | \r\r | $ | \r(0.20 | \r) | \r\r | $ | \r(0.18 | \r) | \r\r | $ | \r(0.10 | \r) | \r\r | $ | \r(0.01 | \r) |
| Common\r stock - diluted | \r\r | $ | \r(0.23 | \r) | \r\r | $ | \r(0.20 | \r) | \r\r | $ | \r(0.11 | \r) | \r\r | $ | \r(0.01 | \r) |
| Class\r B common stock - diluted | \r\r | $ | \r(0.20 | \r) | \r\r | $ | \r(0.18 | \r) | \r\r | $ | \r(0.10 | \r) | \r\r | $ | \r(0.01 | \r
As of June 2, 2018, a summary of restricted\rstock award transactions was as follows (in thousands):
\r\r\r\r
| \r | \r | \r | \r | \r | |
| \r | \r | \r | Unvested Restricted Shares | \r ||
| Unvested at May 27, 2017 | \r\r | \r | \r | — | \r|
| Granted | \r\r | \r | \r | 78 | \r|
| Unvested at June 2, 2018 | \r\r | \r | \r | 78 | \r
| 1. | \rDESCRIPTION OF THE COMPANY |
\r\r
Richardson\rElectronics, Ltd. is a leading global provider of engineered solutions, power grid and microwave tubes and related consumables;\rpower conversion and RF and microwave components; high value flat panel detector solutions, replacement parts, tubes and service\rtraining for diagnostic imaging equipment; and customized display solutions. We serve customers in the alternative energy, healthcare,\raviation, broadcast, communications, industrial, marine, medical, military, scientific and semiconductor markets. The Company’s\rstrategy is to provide specialized technical expertise and “engineered solutions” based on our core engineering and\rmanufacturing capabilities. The Company provides solutions and adds value through design-in support, systems integration, prototype\rdesign and manufacturing, testing, logistics and aftermarket technical service and repair through its global infrastructure.
\r\r\r\r
Our\rproducts include electron tubes and related components, microwave generators, subsystems used in semiconductor manufacturing and\rvisual technology solutions. These products are used to control, switch or amplify electrical power signals, or are used as display\rdevices in a variety of industrial, commercial, medical and communication applications.
\r\r\r\r
We\rhave three operating and reportable segments, which we define as follows:
\r\r\r\r
Power\rand Microwave Technologies Group (“PMT”) combines our core engineered solutions, power grid and microwave tube business\rwith new RF and power technologies. As a manufacturer and authorized distributor, PMT’s strategy is to provide specialized\rtechnical expertise and engineered solutions based on our core engineering and manufacturing capabilities. We provide solutions\rand add value through design-in support, systems integration, prototype design and manufacturing, testing, logistics and aftermarket\rtechnical service and repair—all through our existing global infrastructure. PMT’s focus is on products for power,\rRF and microwave applications for customers in alternative energy, aviation, broadcast, communications, industrial, marine, medical,\rmilitary, scientific and semiconductor markets. PMT focuses on various applications including broadcast transmission, CO2 laser\rcutting, diagnostic imaging, dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion,\rradar and radiation oncology. PMT also offers its customers technical services for both microwave and industrial equipment.
\r\r\r\r
Canvys\rprovides customized display solutions serving the corporate enterprise, financial, healthcare, industrial and medical original\requipment manufacturers markets. Our engineers design, manufacture, source and support a full spectrum of solutions to match the\rneeds of our customers. We offer long term availability and proven custom display solutions that include touch screens, protective\rpanels, custom enclosures, all-in-ones, specialized cabinet finishes and application specific software packages and certification\rservices. We partner with both private label manufacturing companies and leading branded hardware vendors to offer the highest\rquality display and touch solutions and customized computing platforms.
\r\r\r\r
Healthcare\rmanufactures, refurbishes and distributes high value replacement parts for the healthcare market including hospitals, medical\rcenters, asset management companies, independent service organizations and multi-vendor service providers. Products include Diagnostic\rImaging replacement parts for CT and MRI systems; replacement CT and MRI tubes; CT service training; MRI coils, cold heads and\rRF amplifiers; hydrogen thyratrons, klystrons, magnetrons; flat panel detector upgrades; and additional replacement solutions\rcurrently under development for the diagnostic imaging service market. Through a combination of newly developed products and partnerships,\rservice offerings and training programs, we believe we can help our customers improve efficiency and deliver better clinical outcomes\rwhile lowering the cost of healthcare delivery.
\r\r\r\r
We\rcurrently have operations in the following major geographic regions: North America, Asia/Pacific, Europe and Latin America.
\r\r\r\r
Customer\rConcentration: No one customer represented more than 10 percent of our total accounts receivable balance as of June 2,\r2018 or May 27, 2017. LAM Research Corporation individually accounted for 11 percent of the Company’s consolidated net sales\rin fiscal 2018. No other customer accounted for more than 10 percent of the Company’s consolidated net sales in fiscal 2018.\rNo one customer accounted for more than 10 percent of the Company’s consolidated net sales in fiscal 2017.
\r\r\r\r
Supplier\rConcentration: One of our suppliers represented 15 percent of our total cost of sales as of June 2, 2018 and 14 percent\ras of May 27, 2017. The amount owed to this supplier was approximately $1.9 million as of June 2, 2018 and $2.3 million as of\rMay 27, 2017.
"}]},{"name":"rpt:f-453","factDimensions":{"xbrl:concept":"us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"| 2. | \rBASIS OF PRESENTATION |
\r\r
The\raccompanying consolidated financial statements have been prepared in accordance with U.S. GAAP for all fiscal years presented.
\r\r\r\r
The\rconsolidated financial statements include our wholly owned subsidiaries. All intercompany transactions and account balances have\rbeen eliminated in consolidation.
\r\r\r\r
Our\rfiscal year 2018 began on May 28, 2017 and ended on June 2, 2018, our fiscal year 2017 began on May 29, 2016 and ended on\rMay 27, 2017 and our fiscal year 2016 began on May 31, 2015 and ended on May 28, 2016. Unless otherwise noted, all references\rto a particular year in this document shall mean our fiscal year.
"}]},{"name":"rpt:f-454","factDimensions":{"xbrl:concept":"us-gaap:SignificantAccountingPoliciesTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"| 3. | \rSIGNIFICANT ACCOUNTING POLICIES AND DISCLOSURES |
\r\r
Use\rof Estimates: The preparation of financial statements in conformity with GAAP requires management to make significant estimates\rand assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities\rat the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management\rcontinuously evaluates its critical accounting policies and estimates, including the allowance for doubtful accounts, revenue\rrecognition, inventory obsolescence, goodwill and other intangible assets, loss contingencies and income taxes. Management bases\rthe estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances, however,\ractual results could differ from those estimates.
\r\r\r\r
Fair\rValues of Financial Instruments: The fair values of financial instruments are determined based on quoted market prices and\rmarket interest rates as of the end of the reporting period. Our financial instruments include investments, accounts receivable,\raccounts payable and accrued liabilities. The fair values of these financial instruments approximate carrying values at June\r2, 2018 and May 27, 2017.
\r\r\r\r
Cash\rand Cash Equivalents: We consider short-term, highly liquid investments that are readily convertible to known amounts\rof cash, and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates,\rand that have a maturity of three months or less, when purchased, to be cash equivalents. The carrying amounts reported in the\rbalance sheet for cash and cash equivalents approximate the fair market value of these assets.
\r\r\r\r
Allowance\rfor Doubtful Accounts: Our allowance for doubtful accounts includes estimated losses that result from uncollectible receivables.\rThe estimates are influenced by the following: continuing credit evaluation of customers’ financial conditions; aging of\rreceivables, individually and in the aggregate; a large number of customers which are widely dispersed across geographic areas;\rand collectability and delinquency history by geographic area. Significant changes in one or more of these considerations may\rrequire adjustments affecting net income and net carrying value of accounts receivable. The allowance for doubtful accounts was\rapproximately $0.3 million as of June 2, 2018 and $0.4 million as of May 27, 2017.
\r\r\r\r
Loss\rContingencies: We accrue a liability for loss contingencies when it is probable that a liability has been incurred and the\ramount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range\ris accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in\rthe range is accrued. If we determine that there is at least a reasonable possibility that a loss may have been incurred, we will\rinclude a disclosure describing the contingency.
\r\r\r\r
Revenue\rRecognition: Our product sales are recognized as revenue upon shipment, when title passes to the customer, when delivery\rhas occurred or services have been rendered and when collectability is reasonably assured. We also record estimated discounts\rand returns based on our historical experience. Our products are often manufactured to meet the specific design needs of our customers’\rapplications. Our engineers work closely with customers to ensure that our products will meet their needs. Our customers are under\rno obligation to compensate us for designing the products we sell.
\r\r\r\r
Foreign\rCurrency Translation: The functional currency is the local currency at all foreign locations, with the exception of Hong\rKong, which the functional currency is the US dollar. Balance sheet items for our foreign entities, included in our consolidated\rbalance sheets, are translated into U.S. dollars at end-of-period spot rates. Gains and losses resulting from translation of foreign\rsubsidiary financial statements are credited or charged directly to accumulated other comprehensive income/(loss), a component\rof stockholders’ equity. Revenues and expenses are translated at the current rate on the date of the transaction. Gains\rand losses resulting from foreign currency transactions are included in income. Foreign exchange losses reflected in our\rconsolidated statements of comprehensive income (loss) were a loss of $0.2 million during fiscal 2018, a loss of $0.6 million\rduring fiscal 2017 and a loss of $0.2 million during fiscal 2016.
\r\r\r\r
Shipping\rand Handling Fees and Costs: Shipping and handling costs billed to customers are reported as revenue and the related\rcosts are reported as a component of cost of sales.
\r\r\r\r
Inventories,\rnet: Our consolidated inventories are stated at the lower of cost and net realizable value, generally using a weighted-average\rcost method. Our net inventories include approximately $42.6 million of finished goods, $5.7 million of raw materials and $2.4\rmillion of work-in-progress as of June 2, 2018 as compared to approximately $36.0 million of finished goods, $5.3 million of raw\rmaterials and $1.4 million of work-in-progress as of May 27, 2017. The inventory reserve as of June 2, 2018 was $4.0 million compared\rto $3.5 million as of May 27, 2017.
\r\r\r\r
Provisions\rfor obsolete or slow moving inventories are recorded based upon regular analysis of stock rotation privileges, obsolescence, the\rexiting of certain markets and assumptions about future demand and market conditions. If future demand changes in the industry\ror market conditions differ from management’s estimates, additional provisions may be necessary.
\r\r\r\r
We\rrecorded provisions to our inventory reserves of $0.8 million, $0.5 million and $0.7 million during fiscal 2018, 2017 and 2016,\rrespectively, which were included in cost of sales. The provisions were primarily for obsolete and slow moving parts. The parts\rwere written down to estimated realizable value.
\r\r\r\r
Income\rTaxes: We recognize deferred tax assets and liabilities based on the differences between financial statement carrying\ramounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and determine\rthe need for a valuation allowance based on a number of factors, including both positive and negative evidence. These factors\rinclude historical taxable income or loss, projected future taxable income or loss, the expected timing of the reversals of existing\rtemporary differences, and the implementation of tax planning strategies. In circumstances where we, or any of our affiliates,\rhave incurred three years of cumulative losses which constitute significant negative evidence, positive evidence of equal or greater\rsignificance is needed to overcome the negative evidence before a tax benefit is recognized for deductible temporary differences\rand loss carryforwards.
\r\r\r\r
Investments:\rAs of June 2, 2018, we had no investments. As of May 27, 2017, we have invested in time deposits and certificates of deposit\r(“CD”) in the amount of $8.2 million. Of this, $6.4 million mature in less than twelve months and $1.8 million mature\rin greater than twelve months.
\r\r\r\r
We\rliquidated our investments in equity securities in fiscal 2018. Proceeds from the liquidation were $0.9 million with gross realized\rgains of $0.2 million for fiscal 2018. Prior to the liquidation of our investment in equity securities, our investments in equity\rsecurities were classified as available-for-sale and were carried at their fair value based on quoted market prices. Our investments,\rwhich were included in non-current assets, had a carrying amount of $0.6 million at May 27, 2017. Proceeds from the sale of securities\rwere $0.3 million during fiscal 2017 and $0.3 million during fiscal 2016. Prior to liquidation of the equity securities, we reinvested\rproceeds from the sale of securities, and the cost of the equity securities sold was based on a specific identification method.\rGross realized gains and losses on those sales were less than $0.1 million during fiscal 2017 and 2016. Net unrealized holding\rgain (loss) during fiscal 2017 and 2016 were less than $0.1 million and have been included in accumulated comprehensive loss during\rits respective fiscal year.
\r\r\r\r
Discontinued\rOperations: On September 12, 2017, the Company received an income tax refund from the State of Illinois of approximately $2.0\rmillion, which included interest earned. The refund was a result of the conclusion of the Illinois amended return related to the\rsale of the RF, Wireless and Power Division (“RFPD”) in 2011. A net benefit of $1.5 million, which included $0.5 million\rof professional fee costs incurred to pursue the refund, was recognized in the second quarter of fiscal 2018 in discontinued operations.
\r\r\r\r
During\rfiscal 2017, the Company disposed of, by sale, the PACS Display business in the Healthcare segment. Based on our assessment of\rthe criteria that must be met to qualify a disposal transaction as a discontinued operation set forth in Accounting Standards\rUpdate 2014-08, the disposal of the PACS Display business does not qualify as a discontinued operation.
\r\r\r\r
Goodwill\rand Intangible Assets: We test goodwill for impairment annually and whenever events or circumstances indicate an impairment\rmay have occurred, such as a significant adverse change in the business climate, loss of key personnel or a decision to sell or\rdispose of a reporting unit.
\r\r\r\r
In\rJanuary 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)\rNo. 2017-04 (“ASU 2017-04”), Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates step 2 from the\rgoodwill impairment test. As amended, the goodwill impairment test will consist of one-step comparing the fair value of a reporting\runit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the carrying amount\rexceeds the reporting unit’s fair value. An entity may still perform the optional qualitative assessment for a reporting\runit to determine if it is more likely than not that goodwill is impaired. ASU 2017-04 will be effective for fiscal years and\rinterim periods beginning after December 15, 2019. ASU 2017-04 is required to be applied prospectively and early adoption is permitted\rfor interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company elected to early\radopt ASU 2017-04 for our fiscal 2018 annual impairment test.
\r\r\r\r
During\rthe fourth quarter of each fiscal year, our goodwill balances are reviewed for impairment using the first day of our fourth quarter\ras the measurement date. If after reviewing the totality of events or circumstances, we determine that it is more likely than\rnot that the fair value of a reporting unit is less than its carrying amount, then we test for impairment through the application\rof a fair value based test. We estimate the fair value of each of our reporting units based on projected future operating results,\rmarket approach and discounted cash flows.
\r\r\r\r
After\rreviewing the totality of events or circumstances as provided in FASB ASC 350-20-35, we determined that it was more likely than\rnot that the fair value for the IMES reporting unit was less than its carrying value. Accordingly, the quantitative goodwill impairment\rtest as described in FASB ASC 350-20-35 was performed. We performed the quantitative impairment test using the income method,\rwhich is based on a discounted future cash flow approach that uses the significant assumptions of projected revenue, projected\roperational profit, terminal growth rates and the cost of capital. Refer to Note 7 “Goodwill and Intangible Assets”\rof the notes to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.
\r\r\r\r
Intangible\rassets are initially recorded at their fair market values determined on quoted market prices in active markets, if available,\ror recognized valuation models. Intangible assets that have finite useful lives are amortized over their useful lives either on\ra straight-line basis or over their projected future cash flows and are tested for impairment when events or changes in circumstances\roccur that indicate possible impairment. Our intangible assets represent the fair value for trade name, customer relationships,\rnon-compete agreements and technology acquired in connection with the acquisition.
\r\r\r\r
Property,\rPlant and Equipment: Property, plant and equipment are stated at cost, net of accumulated depreciation. Improvements\rand replacements are capitalized while expenditures for maintenance and repairs are charged to expense as incurred. Provisions\rfor depreciation are computed using the straight-line method over the estimated useful life of the asset. Depreciation expense\rwas approximately $2.6 million, $2.4 million and $2.0 million during fiscal 2018, 2017 and 2016, respectively. Property, plant\rand equipment consist of the following (in thousands):
\r\r\r\r
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r |||
| Land\r and improvements | \r\r | $ | \r1,301 | \r\r | \r | $ | \r1,301 | \r|
| Buildings\r and improvements | \r\r | \r | 21,673 | \r\r | \r | \r | 19,885 | \r|
| Computer,\r communications equipment and software | \r\r | \r | 9,652 | \r\r | \r | \r | 8,551 | \r|
| Construction\r in progress | \r\r | \r | 1,582 | \r\r | \r | \r | 2,063 | \r|
| Machinery\r and other equipment | \r\r | \r | 12,004 | \r\r | \r | \r | 10,387 | \r|
| \r | \r | $ | \r46,212 | \r\r | \r | $ | \r42,187 | \r|
| Accumulated\r depreciation | \r\r | \r | (27,980 | \r) | \r\r | \r | (26,374 | \r) |
| Property,\r plant, and equipment, net | \r\r | $ | \r18,232 | \r\r | \r | $ | \r15,813 | \r
\r\r
Construction\rin progress at June 2, 2018 includes $0.7 million related to our Healthcare growth initiatives. All projects are expected to be\rcompleted before the end of fiscal 2019.
\r\r\r\r
Supplemental\rdisclosure information of the estimated useful life of the assets:
\r\r\r\r
| Land\r improvements | \r10 years |
| Buildings and improvements | \r10 - 30 years |
| Computer and communications\r equipment | \r3 - 10 years |
| Machinery and other\r equipment | \r3 - 20 years |
\r\r
We\rreview all property, plant and equipment for impairment when events or changes in circumstances occur which indicate a possible\rimpairment may exist. We have concluded that our property, plant and equipment as of June 2, 2018 were not impaired.
\r\r\r\r
Accrued\rLiabilities: Accrued liabilities consist of the following (in thousands):
\r\r\r\r
| \r | \r | June\r 2, 2018 | \r\r | \r | May\r 27, 2017 | \r|||
| Compensation\r and payroll taxes | \r\r | $ | \r3,449 | \r\r | \r | $ | \r3,250 | \r|
| Accrued\r severance(1) | \r\r | \r | 454 | \r\r | \r | \r | 706 | \r|
| Professional\r fees | \r\r | \r | 527 | \r\r | \r | \r | 535 | \r|
| Deferred\r revenue | \r\r | \r | 2,395 | \r\r | \r | \r | 1,460 | \r|
| Other\r accrued expenses | \r\r | \r | 3,518 | \r\r | \r | \r | 2,360 | \r|
| Accrued\r Liabilities | \r\r | $ | \r10,343 | \r\r | \r | $ | \r8,311 | \r
\r\r\r\r
| (1) | \r\r | In the second\r quarter of fiscal 2017, the Company executed a reduction in headcount to streamline operations and reduce costs and recorded\r $1.3 million of expense included in selling, general and administrative expenses for employee termination costs payable to\r terminated employees with employment and/or separation agreements with the Company. The changes in the severance accrual\r for fiscal 2018 included provisions and payments of $0.1 million and $0.3 million, respectively. The changes in the severance\r accrual for fiscal 2017 included provisions and payments of $1.3 million and $1.2 million, respectively. |
\r\r
Warranties:\rWe offer warranties for the limited number of specific products we manufacture. We also provide extended warranties for some\rproducts we sell that lengthen the period of coverage specified in the manufacturer’s original warranty. Our warranty terms\rgenerally range from one to three years.
\r\r\r\r
We\restimate the cost to perform under the warranty obligation and recognize this estimated cost at the time of the related product\rsale. We record expense related to our warranty obligations as cost of sales in our consolidated statements of comprehensive income\r(loss). Each quarter, we assess actual warranty costs incurred on a product-by-product basis and compare the warranty costs to\rour estimated warranty obligation. With respect to new products, estimates are based generally on knowledge of the products, the\rextended warranty period and warranty experience.
\r\r\r\r
Warranty\rreserves are established for costs that are expected to be incurred after the sale and delivery of products under warranty. Warranty\rreserves are included in accrued liabilities on our consolidated balance sheets. The warranty reserves are determined based on\rknown product failures, historical experience and other available evidence.
\r\r\r\r
Changes\rin the warranty reserve during fiscal 2018 and 2017 were as follows (in thousands):
\r\r\r\r
| \r | \r | Warranty\r Reserve | \r||
| Balance\r at May 30, 2016 | \r\r | $ | \r210 | \r|
| Accruals\r for products sold | \r\r | \r | 89 | \r|
| Utilization | \r\r | \r | (78 | \r) |
| Recovery | \r\r | \r | (115 | \r) |
| Balance\r at May 27, 2017 | \r\r | $ | \r106 | \r|
| Accruals\r for products sold | \r\r | \r | 65 | \r|
| Utilization | \r\r | \r | (22 | \r) |
| Balance\r at June 2, 2018 | \r\r | $ | \r149 | \r
\r\r
Other\rNon-Current Liabilities: Other non-current liabilities of $0.9 million at June 2, 2018 and $0.7 million at May 27,\r2017, primarily represent employee-benefits obligations in various non-US locations.
\r\r\r\r
Share-Based\rCompensation: We measure and recognize share-based compensation cost at fair value for all share-based payments, including\rstock options. We estimate fair value using the Black-Scholes option-pricing model, which requires assumptions such as expected\rvolatility, risk-free interest rate, expected life and dividends. Compensation cost is recognized using a graded-vesting schedule\rover the applicable vesting period. Share-based compensation expense totaled approximately $0.5 million during fiscal 2018, $0.4\rmillion during fiscal 2017 and $0.5 million during fiscal 2016.
\r\r\r\r
Stock\roptions granted generally vest over a period of five years and have contractual terms to exercise of 10 years. A summary of stock\roption activity is as follows (in thousands, except option prices and years):
\r\r\r\r
| \r | \r | \r | Number of Options | \r \r | \r | Weighted Average\r Exercise Price | \r \r | \r | Weighted Average\r Remaining Contractual\r Life | \r \r | \r | Aggregate Intrinsic\r Value | \r |||||
| Options\r Outstanding at May 30, 2015 | \r\r | \r | \r | 1,137 | \r\r | \r | $ | \r10.35 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Granted | \r\r | \r | \r | 122 | \r\r | \r | \r | 5.88 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Exercised | \r\r | \r | \r | (28 | \r) | \r\r | \r | 5.18 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Forfeited | \r\r | \r | \r | (105 | \r) | \r\r | \r | 10.98 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Cancelled | \r\r | \r | \r | (107 | \r) | \r\r | \r | 9.97 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Options\r Outstanding at May 28, 2016 | \r\r | \r | \r | 1,019 | \r\r | \r | $ | \r9.93 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Granted | \r\r | \r | \r | 190 | \r\r | \r | \r | 6.90 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Exercised | \r\r | \r | \r | (5 | \r) | \r\r | \r | 5.61 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Forfeited | \r\r | \r | \r | (43 | \r) | \r\r | \r | 8.39 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Cancelled | \r\r | \r | \r | (88 | \r) | \r\r | \r | 11.17 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Options\r Outstanding at May 27, 2017 | \r\r | \r | \r | 1,073 | \r\r | \r | $ | \r9.38 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Granted | \r\r | \r | \r | 200 | \r\r | \r | \r | 6.08 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Exercised | \r\r | \r | \r | (16 | \r) | \r\r | \r | 5.85 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Forfeited | \r\r | \r | \r | (11 | \r) | \r\r | \r | 8.05 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Cancelled | \r\r | \r | \r | (51 | \r) | \r\r | \r | 9.36 | \r\r | \r | \r | \r | \r | \r | \r | \r | |
| Options\r Outstanding at June 2, 2018 | \r\r | \r | \r | 1,195 | \r\r | \r | $ | \r8.89 | \r\r | \r | \r | 5.8 | \r\r | \r | $ | \r2,033 | \r|
| Options\r Vested at June 2, 2018 | \r\r | \r | \r | 746 | \r\r | \r | $ | \r9.87 | \r\r | \r | \r | 4.5 | \r\r | \r | $ | \r876 | \r
\r\r
There\rwere 16,000 stock options exercised during fiscal 2018, with cash received of $0.1 million. The total intrinsic value of options\rexercised totaled less than $0.1 million during fiscal 2018, fiscal 2017 and fiscal 2016. The weighted average fair value of stock\roption grants was $0.85 during fiscal 2018, $1.14 during fiscal 2017 and $1.21 during fiscal 2016. As of June 2, 2018, total unrecognized\rcompensation costs related to unvested stock options was approximately $0.6 million, which is expected to be recognized over the\rremaining weighted average period of approximately three to four years. The total grant date fair value of stock options vested\rduring fiscal 2018 was $0.4 million.
\r\r\r\r
The\rfair value of stock options is estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:
\r\r\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||||||
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r \r | \r | May\r 28, 2016 | \r ||||
| Expected\r volatility | \r\r | \r | 21.92 | \r% | \r\r | \r | 25.41 | \r% | \r\r | \r | 32.21 | \r% |
| Risk-free\r interest rate | \r\r | \r | 2.22 | \r% | \r\r | \r | 1.46 | \r% | \r\r | \r | 1.78 | \r% |
| Expected\r lives (years) | \r\r | \r | 6.31 | \r\r | \r | \r | 6.50 | \r\r | \r | \r | 6.50 | \r|
| Annual\r cash dividend | \r\r | $ | \r0.24 | \r\r | \r | $ | \r0.24 | \r\r | \r | $ | \r0.24 | \r
\r\r
The\rexpected volatility assumptions are based on historical experience commensurate with the expected term. The risk-free interest\rrate is based on the yield of a treasury note with a remaining term equal to the expected life of the stock option.
\r\r\r\r
The\rexpected stock option life assumption is based on the Securities and Exchange Commission’s (“SEC”) guidance\rin Staff Accounting Bulletin (“SAB”) No. 107 (“SAB No. 107”). For stock options granted during\rfiscal 2018, fiscal 2017 and fiscal 2016, we believe that our historical stock option experience does not provide a reasonable\rbasis upon which to estimate expected term. We utilized the Safe Harbor option, or Simplified Method, to determine the expected\rterm of these options in accordance with SAB No. 107 for options granted. We intend to continue to utilize the Simplified\rMethod for future grants in accordance with SAB No. 110 until such time that we believe that our historical stock option\rexperience will provide a reasonable basis to estimate an expected term.
\r\r\r\r
The\rfollowing table summarizes information about stock options outstanding at June 2, 2018 (in thousands, except option prices\rand years):
\r\r\r\r
| \r | \r | \r | Outstanding | \r\r | \r | Vested | \r|||||||||||||||||||||||||||
| Exercise\r Price Range | \r\r | \r | Shares | \r\r | \r | Weighted\r Average Exercise Price | \r \r | \r | Weighted\r Average Life | \r \r | \r | Aggregate\r Intrinsic Value | \r \r | \r | Shares | \r\r | \r | Weighted\r Average Exercise Price | \r \r | \r | Weighted\r Average Life | \r \r | \r | Aggregate\r Intrinsic Value | \r |||||||||
| $5.03 to\r $6.47 | \r\r | \r | \r | 383 | \r\r | \r | $ | \r5.76 | \r\r | \r | \r | 6.4 | \r\r | \r | $ | \r1,508 | \r\r | \r | \r | 190 | \r\r | \r | $ | \r5.63 | \r\r | \r | \r | 4.0 | \r\r | \r | $ | \r772 | \r|
| $6.90 to $10.85 | \r\r | \r | \r | 385 | \r\r | \r | $ | \r8.48 | \r\r | \r | \r | 7.3 | \r\r | \r | $ | \r525 | \r\r | \r | \r | 159 | \r\r | \r | $ | \r9.31 | \r\r | \r | \r | 6.4 | \r\r | \r | $ | \r104 | \r|
| $11.14\r to $13.76 | \r\r | \r | \r | 427 | \r\r | \r | $ | \r12.05 | \r\r | \r | \r | 4.1 | \r\r | \r | $ | \r— | \r\r | \r | \r | 397 | \r\r | \r | $ | \r12.12 | \r\r | \r | \r | 4.0 | \r\r | \r | $ | \r— | \r|
| Total | \r\r | \r | \r | 1,195 | \r\r | \r | $ | \r8.89 | \r\r | \r | \r | 5.8 | \r\r | \r | $ | \r2,033 | \r\r | \r | \r | 746 | \r\r | \r | $ | \r9.87 | \r\r | \r | \r | 4.5 | \r\r | \r | $ | \r876 | \r
\r\r
As\rof June 2, 2018, a summary of restricted stock award transactions was as follows (in thousands):
\r\r\r\r
| \r | \r | \r | Unvested Restricted Shares | \r ||
| Unvested at May\r 27, 2017 | \r\r | \r | \r | — | \r|
| Granted | \r\r | \r | \r | 78 | \r|
| Unvested\r at June 2, 2018 | \r\r | \r | \r | 78 | \r
\r\r
Compensation\reffects arising from issuing stock awards have been charged against income and recorded as additional paid-in-capital in the consolidated\rstatements of stockholders’ equity during fiscal years 2018, 2017 and 2016.
\r\r\r\r
The\rEmployees’ 2011 Long-Term Incentive Compensation Plan authorizes the issuance of up to 1,500,000 shares as incentive stock\roptions, non-qualified stock options or stock awards. Under this plan, 524,000 shares are reserved for future issuance. The\rPlan authorizes the granting of stock options at the fair market value at the date of grant. Generally, these options become exercisable\rover five years and expire up to 10 years from the date of grant.
\r\r\r\r
Earnings\rper Share: We have authorized 17,000,000 shares of common stock, and 3,000,000 shares of Class B common stock. The Class B\rcommon stock has 10 votes per share and has transferability restrictions; however, Class B common stock may be converted into\rcommon stock on a share-for-share basis at any time. With respect to dividends and distributions, shares of common stock and Class\rB common stock rank equally and have the same rights, except that Class B common stock cash dividends are limited to 90% of the\ramount of Class A common stock cash dividends.
\r\r\r\r
In\raccordance with ASC 260-10, Earnings Per Share (“ASC 260”), our Class B common stock is considered a participating\rsecurity requiring the use of the two-class method for the computation of basic and diluted earnings per share. The two-class\rcomputation method for each period reflects the cash dividends paid per share for each class of stock, plus the amount of allocated\rundistributed earnings per share computed using the participation percentage which reflects the dividend rights of each class\rof stock. Basic and diluted earnings per share were computed using the two-class method as prescribed in ASC 260. The shares of\rClass B common stock are considered to be participating convertible securities since the shares of Class B common stock are convertible\ron a share-for-share basis into shares of common stock and may participate in dividends with common stock according to a predetermined\rformula which is 90% of the amount of Class A common stock cash dividends.
\r\r\r\r
The\rearnings per share (“EPS”) presented in our consolidated statements of comprehensive income (loss) are based on the\rfollowing (in thousands, except per share amounts):
\r\r\r\r
| \r | \r | For\r the Fiscal Year Ended | \r||||||||||||||||||||||
| \r | \r | June\r 2, 2018 | \r\r | \r | May\r 27, 2017 | \r\r | \r | May\r 28, 2016 | \r||||||||||||||||
| \r | \r | Basic | \r\r | \r | Diluted | \r\r | \r | Basic | \r\r | \r | Diluted | \r\r | \r | Basic | \r\r | \r | Diluted | \r|||||||
| Numerator\r for Basic and Diluted EPS: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Income\r (loss) from continuing operations | \r\r | $ | \r2,326 | \r\r | \r | $ | \r2,326 | \r\r | \r | $ | \r(6,928 | \r) | \r\r | $ | \r(6,928 | \r) | \r\r | $ | \r(6,766 | \r) | \r\r | $ | \r(6,766 | \r) |
| Less\r dividends: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock | \r\r | \r | 2,586 | \r\r | \r | \r | 2,586 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,615 | \r\r | \r | \r | 2,615 | \r|
| Class\r B common stock | \r\r | \r | 462 | \r\r | \r | \r | 462 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r|
| Undistributed\r losses | \r\r | $ | \r(722 | \r) | \r\r | $ | \r(722 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,845 | \r) | \r\r | $ | \r(9,845 | \r) |
| Common\r stock undistributed losses | \r\r | $ | \r(613 | \r) | \r\r | $ | \r(613 | \r) | \r\r | $ | \r(8,440 | \r) | \r\r | $ | \r(8,440 | \r) | \r\r | $ | \r(8,367 | \r) | \r\r | $ | \r(8,367 | \r) |
| Class\r B common stock undistributed losses | \r\r | \r | (109 | \r) | \r\r | \r | (109 | \r) | \r\r | \r | (1,519 | \r) | \r\r | \r | (1,519 | \r) | \r\r | \r | (1,478 | \r) | \r\r | \r | (1,478 | \r) |
| Total\r undistributed losses | \r\r | $ | \r(722 | \r) | \r\r | $ | \r(722 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,845 | \r) | \r\r | $ | \r(9,845 | \r) |
| Income\r from discontinued operations | \r\r | $ | \r1,496 | \r\r | \r | $ | \r1,496 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| Less\r dividends: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock | \r\r | \r | 2,586 | \r\r | \r | \r | 2,586 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,615 | \r\r | \r | \r | 2,615 | \r|
| Class\r B common stock | \r\r | \r | 462 | \r\r | \r | \r | 462 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r|
| Undistributed\r losses | \r\r | $ | \r(1,552 | \r) | \r\r | $ | \r(1,552 | \r) | \r\r | $ | \r(3,031 | \r) | \r\r | $ | \r(3,031 | \r) | \r\r | $ | \r(3,079 | \r) | \r\r | $ | \r(3,079 | \r) |
| Common\r stock undistributed losses | \r\r | $ | \r(1,317 | \r) | \r\r | $ | \r(1,318 | \r) | \r\r | $ | \r(2,567 | \r) | \r\r | $ | \r(2,567 | \r) | \r\r | $ | \r(2,615 | \r) | \r\r | $ | \r(2,615 | \r) |
| Class\r B common stock undistributed losses | \r\r | \r | (235 | \r) | \r\r | \r | (234 | \r) | \r\r | \r | (464 | \r) | \r\r | \r | (464 | \r) | \r\r | \r | (464 | \r) | \r\r | \r | (464 | \r) |
| Total\r undistributed losses | \r\r | $ | \r(1,552 | \r) | \r\r | $ | \r(1,552 | \r) | \r\r | $ | \r(3,031 | \r) | \r\r | $ | \r(3,031 | \r) | \r\r | $ | \r(3,079 | \r) | \r\r | $ | \r(3,079 | \r) |
| Net\r income (loss) | \r\r | $ | \r3,822 | \r\r | \r | $ | \r3,822 | \r\r | \r | $ | \r(6,928 | \r) | \r\r | $ | \r(6,928 | \r) | \r\r | $ | \r(6,766 | \r) | \r\r | $ | \r(6,766 | \r) |
| Less\r dividends: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock | \r\r | \r | 2,586 | \r\r | \r | \r | 2,586 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,567 | \r\r | \r | \r | 2,615 | \r\r | \r | \r | 2,615 | \r|
| Class\r B common stock | \r\r | \r | 462 | \r\r | \r | \r | 462 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r\r | \r | \r | 464 | \r|
| Undistributed\r income (losses) | \r\r | $ | \r774 | \r\r | \r | $ | \r774 | \r\r | \r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,845 | \r) | \r\r | $ | \r(9,845 | \r) |
| Common\r stock undistributed income (losses) | \r\r | $ | \r657 | \r\r | \r | $ | \r657 | \r\r | \r | $ | \r(8,440 | \r) | \r\r | $ | \r(8,440 | \r) | \r\r | $ | \r(8,367 | \r) | \r\r | $ | \r(8,367 | \r) |
| Class\r B common stock undistributed income (losses) | \r\r | \r | 117 | \r\r | \r | \r | 117 | \r\r | \r | \r | (1,519 | \r) | \r\r | \r | (1,519 | \r) | \r\r | \r | (1,478 | \r) | \r\r | \r | (1,478 | \r) |
| Total\r undistributed income (losses) | \r\r | $ | \r774 | \r\r | \r | $ | \r774 | \r\r | \r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,959 | \r) | \r\r | $ | \r(9,845 | \r) | \r\r | $ | \r(9,845 | \r) |
| Denominator\r for Basic and Diluted EPS: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock weighted average shares | \r\r | \r | 10,765 | \r\r | \r | \r | 10,765 | \r\r | \r | \r | 10,705 | \r\r | \r | \r | 10,705 | \r\r | \r | \r | 10,908 | \r\r | \r | \r | 10,908 | \r|
| Class\r B common stock weighted average shares, and shares under if-converted method for diluted EPS | \r\r | \r | 2,137 | \r\r | \r | \r | 2,137 | \r\r | \r | \r | 2,140 | \r\r | \r | \r | 2,140 | \r\r | \r | \r | 2,141 | \r\r | \r | \r | 2,141 | \r|
| Effect\r of dilutive securities | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Dilutive\r stock options | \r\r | \r | \r | \r | \r | \r | 59 | \r\r | \r | \r | \r | \r | \r | \r | — | \r\r | \r | \r | \r | \r | \r | \r | — | \r|
| Denominator\r for diluted EPS adjusted for weighted average shares and assumed conversions | \r\r | \r | \r | \r | \r | \r | 12,961 | \r\r | \r | \r | \r | \r | \r | \r | 12,845 | \r\r | \r | \r | \r | \r | \r | \r | 13,049 | \r|
| Income\r (loss) from continuing operations per share: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock | \r\r | $ | \r0.18 | \r\r | \r | $ | \r0.18 | \r\r | \r | $ | \r(0.55 | \r) | \r\r | $ | \r(0.55 | \r) | \r\r | $ | \r(0.53 | \r) | \r\r | $ | \r(0.53 | \r) |
| Class\r B common stock | \r\r | $ | \r0.16 | \r\r | \r | $ | \r0.16 | \r\r | \r | $ | \r(0.49 | \r) | \r\r | $ | \r(0.49 | \r) | \r\r | $ | \r(0.47 | \r) | \r\r | $ | \r(0.47 | \r) |
| Income\r from discontinued operations per share: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock | \r\r | $ | \r0.12 | \r\r | \r | $ | \r0.12 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| Class\r B common stock | \r\r | $ | \r0.11 | \r\r | \r | $ | \r0.11 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| Net\r income (loss) per share: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock | \r\r | $ | \r0.30 | \r\r | \r | $ | \r0.30 | \r\r | \r | $ | \r(0.55 | \r) | \r\r | $ | \r(0.55 | \r) | \r\r | $ | \r(0.53 | \r) | \r\r | $ | \r(0.53 | \r) |
| Class\r B common stock | \r\r | $ | \r0.27 | \r\r | \r | $ | \r0.27 | \r\r | \r | $ | \r(0.49 | \r) | \r\r | $ | \r(0.49 | \r) | \r\r | $ | \r(0.47 | \r) | \r\r | $ | \r(0.47 | \r) |
\r\r\r\r
Note:\rCommon stock options that were anti-dilutive and not included in diluted earnings per common share for fiscal 2017 and fiscal\r2016 were 848 and 890 respectively.
\r\r\r\r
New\rAccounting Pronouncements
\r\r\r\r
In\rMay 2014, the FASB issued ASU No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers, which amends guidance\rfor revenue recognition. ASU 2014-09 is principles based guidance that can be applied to all contracts with customers, enhancing\rcomparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. The core principle\rof the guidance is that entities should recognize revenue to depict the transfer of promised goods or services to customers in\ran amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.\rThe guidance details the steps entities should apply to achieve the core principle. In August 2015, the FASB issued an amendment\rto defer the effective date for all entities by one year. For public entities, ASU 2014-09 is effective for annual reporting periods\rbeginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted as of annual\rreporting periods beginning after December 15, 2016. Companies have the option of using either a full or modified retrospective\rapproach in applying this standard. During fiscal 2016 and 2017, the FASB issued four additional updates which further clarify\rthe guidance provided in ASU 2014-09. We have undertaken a detailed analysis of our various contracts with customers and revenue\rstreams, including engaging a third party to assist management in evaluating the impact of this new standard on our consolidated\rfinancial statements and related disclosures. The Company’s management has elected to adopt the amendments in ASU 2014-09\ron a modified retrospective basis; whereas any cumulative effect of adopting this guidance will be recognized as an adjustment\rto its opening balance of retained earnings. Prior periods will not be retrospectively adjusted. The Company does not expect the\rimplementation of ASU 2014-09 and the related amendments to have a material impact on the timing, amount or characterization of\rrevenue recognized by the Company. For most of our revenue, we will continue to recognize revenue when title to the goods transfers\rto the customer, as this is generally when control transfers to the customer. While we expect the impact of these new standards\rwill be immaterial to our financial statements, upon adoption, we will include the expanded disclosures required by the new standards.
\r\r\r\r
Pursuant\rto the Company’s adoption of the standard it anticipates expanding its disclosures in the consolidated financial statements\rfor revenue recognition, assets and liabilities relating to contracts with customers, the nature of the Company’s performance\robligations and the manner by which the Company determines and allocates transaction prices and variable consideration to its\rperformance obligations and the significant judgments inherent in its revenue recognition policies.
\r\r\r\r
In\rJuly 2015, the FASB issued ASU No. 2015-11 (“ASU 2015-11”), Simplifying the Measurement of Inventory. ASU 2015-11\rrequires inventory within the scope of the ASU (e.g., first-in, first-out (“FIFO”) or average cost) to be measured\rusing the lower of cost and net realizable value. Inventory excluded from the scope of the ASU (i.e., last-in, first-out (“LIFO”)\ror the retail inventory method) will continue to be measured at the lower of cost or market. The ASU also amends some of the other\rguidance in Topic 330, “Inventory,” to more clearly articulate the requirements for the measurement and disclosure\rof inventory. However, those amendments are not intended to result in any changes to current practice. ASU 2015-11 is effective\rfor annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted\rASU 2015-11 in fiscal 2018 and there was no material impact on the Company’s consolidated financial statements.
\r\r\r\r
In\rFebruary 2016, the FASB issued ASU 2016-02 (“ASU 2016-02”), Leases. ASU 2016-02 establishes a right-of-use (“ROU”)\rmodel that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer\rthan 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense\rrecognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim\rperiods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating\rleases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements,\rwith certain practical expedients available. The Company is currently evaluating the potential impact of the adoption of ASU 2016-02\ron the Company’s consolidated financial statements. Upon adoption, the Company expects that the amounts recognized for the\rROU asset and lease liability in the balance sheets may be material.
\r\r\r\r
In\rMarch 2016, the FASB issued ASU No. 2016-09 (“ASU 2016-09”), Compensation - Stock Compensation (Topic 718): Improvements\rto Employee Share-Based Payment Accounting, a new accounting standard update intended to simplify several aspects of the\raccounting for share-based payment transactions including: income tax consequences, classification of awards as either equity\ror liabilities and classification on the statement of cash flows. Specifically, the ASU 2016-09 requires that excess tax benefits\rand tax deficiencies (the difference between the deduction for tax purposes and the compensation cost recognized for financial\rreporting purposes) be recognized as income tax expense or benefit in the consolidated statements of comprehensive income (loss),\rintroducing a new element of volatility to the provision for income taxes. This update is effective for fiscal years beginning\rafter December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The Company adopted ASU\r2016-09 on May 28, 2017. Effective with the adoption of the ASU all share-based awards continue to be accounted for as equity\rawards, excess tax benefits recognized on stock-based compensation expense are reflected in the consolidated statements of comprehensive\rincome (loss) as a component of the provision for income taxes on a prospective basis, excess tax benefits recognized on stock-based\rcompensation expense are classified as an operating activity in the consolidated statements of cash flows on a prospective basis\rand the Company has elected to continue to estimate expected forfeitures over the course of a vesting period. The adoption\rof ASU 2016-09 had no impact on the retained earnings, other components of equity or net assets as of the beginning of the period\rof adoption.
\r\r\r\r
In\rJune 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit\rLosses on Financial Instruments. ASU 2016-13 introduces a new forward-looking approach, based on expected losses, to estimate\rcredit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will\rrequire entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts.\rThis ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions,\rmodels and methods for estimating expected credit losses. For public business entities, ASU 2016-13 is effective for annual and\rinterim reporting periods beginning after December 15, 2019, and the guidance is to be applied using the modified-retrospective\rapproach. Earlier adoption is permitted for annual and interim reporting periods beginning after December 15, 2018. The Company\ris currently in the process of evaluating the impact of adoption on its consolidated financial statements.
\r\r\r\r
In\rAugust 2016, the FASB issued ASU No. 2016-15 (“ASU 2016-15”), Statement of Cash Flows (Topic 230): Classification\rof Certain Cash Receipts and Cash Payments. ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments\rare presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December\r15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it\rwould be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently in the process\rof evaluating the impact of adoption on its consolidated financial statements.
\r\r\r\r
In\r February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects\r from Accumulated Other Comprehensive Income. The guidance permits entities to reclassify\r tax effects stranded in Accumulated Other Comprehensive Income as a result of tax reform\r to retained earnings. This new guidance is effective for annual and interim periods in\r fiscal years beginning after December 15, 2018. Early adoption is permitted in annual\r and interim periods and can be applied retrospectively or in the period of adoption.\r The Company is currently in the process of evaluating the impact of adoption on its consolidated\r financial statements. \r\r In\rMay 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting\rBulletin No. 118, regarding the accounting implications of the recently issued Tax Cuts and Jobs Act (the “Act”).\rThis standard is effective immediately. The update clarifies that in a company’s financial statements that include the reporting\rperiod in which the Act was enacted, the company must first reflect the income tax effects of the Act in which the accounting\runder GAAP is complete. These amounts would not be provisional amounts. The company would also report provisional amounts for\rthose specific income tax effects for which the accounting under GAAP is incomplete but a reasonable estimate can be determined.\rThe Company has recorded a provisional amount which it believes is a reasonable estimate of the effects of the Act on the Company’s\rfinancial statements as of June 2, 2018. Technical corrections or other forthcoming guidance could change how the Company interprets\rprovisions of the Act, which may impact its effective tax rate and could affect its deferred tax assets, tax positions and/or\rits tax liabilities. |
| 4. | \rACQUISITION |
\r\r
On\rJune 15, 2015, Richardson Electronics, Ltd (“the Company”), acquired certain assets of International Medical Equipment\rand Services, Inc. (“IMES”), for a purchase price of $12.2 million. This includes the purchase of inventory, receivables,\rfixed assets and certain other assets of the Company. The Company did not acquire any liabilities of IMES. The total consideration\rpaid excludes transaction costs.
\r\r\r\r
IMES,\rbased in South Carolina, provides reliable, cost-saving solutions worldwide for major brands of CT and MRI equipment. This acquisition\rpositions Richardson Healthcare to provide cost effective diagnostic imaging replacement parts and training to hospitals, diagnostic\rimaging centers, medical institutions and independent service organizations. IMES offers an extensive selection of replacement\rparts, as well as an interactive training center, on-site test bays and experienced technicians who provide 24/7 customer support.\rReplacement parts are readily available and triple tested to provide peace of mind when uptime is critical. IMES core operations\rhave remained in South Carolina. Richardson Healthcare plans to expand IMES’ replacement parts and training offerings geographically\rto leverage the Company’s global infrastructure. During the fourth quarter of fiscal 2016, IMES opened up their first foreign\rlocation in Amsterdam.
\r\r\r\r
The\rconsideration paid by the Company to IMES at closing was $12.2 million in cash. The following table summarizes the fair values\rof the assets acquired at the date of the closing of the acquisition (in thousands):
\r\r\r\r
| Accounts\r receivable | \r\r | $ | \r737 | \r|
| Inventories | \r\r | \r | 1,420 | \r|
| Property,\r plant and equipment | \r\r | \r | 230 | \r|
| Goodwill | \r\r | \r | 6,332 | \r|
| Other\r intangibles | \r\r | \r | 3,490 | \r|
| Net\r assets acquired | \r\r | $ | \r12,209 | \r
\r\r
Intangible\rassets include trade names with an estimated life of 3 years for $0.6 million, customer relationships with an estimated life of\r20 years for $2.5 million, non-compete agreements with an estimated life of 5 years for $0.2 million and technology with an estimated\rlife of 10 years for $0.2 million.
\r\r\r\r
Goodwill\rrecognized represents value the Company expects to be created by combining the operations of IMES with the Company’s operations,\rincluding the expansion into markets within existing business segments and geographic regions, access to new customers and potential\rcost savings and synergies.
\r\r\r\r
Goodwill\rrelated to the acquisition is deductible for tax purposes.
\r\r\r\r
In\rconnection with the acquisition of IMES, the Company also entered into an Employment, Non-Disclosure and Non-Compete Agreement\r(“Employment Agreement”) with Lee A. McIntyre III as the Company’s Executive Vice President, IMES. During the\rterm of his employment, Mr. McIntyre will earn an annual base salary of $300,000. In addition to his base salary, he will be entitled\rto an annual bonus equal to 20% of the EBITDA of IMES provided that the EBITDA of the business is at least $2.0 million inclusive\rof the bonus payment. The annual bonus payment will terminate after five years. For fiscal 2018, Lee McIntyre did not receive\ra bonus as the minimum EBITDA needed was not achieved. Effective June 2, 2018, the Company and Lee A. McIntyre III amended the\rEmployment Agreement, stating Mr. McIntyre will earn an annual base salary of $150,000. There were no changes to the bonus structure\rin the Employment Agreement.
\r\r\r\r
IMES\rnet sales were $8.2 million, $7.9 million and $7.6 million for fiscal 2018, fiscal 2017 and fiscal 2016, respectively. The gross\rprofit was $3.5 million, $3.7 million and $4.4 million, or 42.3%, 46.5% and 57.2% of net sales during fiscal 2018, fiscal 2017\rand fiscal 2016, respectively.
"}]},{"name":"rpt:f-456","factDimensions":{"xbrl:concept":"us-gaap:DisposalGroupsIncludingDiscontinuedOperationsDisclosureTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"| 5. | \rDISCONTINUED OPERATIONS |
\r\r\r\r
On\rSeptember 12, 2017, the Company received an income tax refund from the State of Illinois of approximately $2.0 million, which\rincluded interest earned. The refund was a result of the conclusion of the Illinois amended return related to the sale of the\rRF, Wireless and Power Division in 2011. A net benefit of $1.5 million, which included $0.5 million of professional fee costs\rincurred to pursue the refund, was recognized in the second quarter of fiscal 2018 in discontinued operations.
"}]},{"name":"rpt:f-457","factDimensions":{"xbrl:concept":"us-gaap:RelatedPartyTransactionsDisclosureTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"| 6. | \rRELATED PARTY TRANSACTION |
\r\r
On\rJune 15, 2015, the Company entered into a lease agreement for the IMES facility with LDL, LLC. The Executive Vice President of\rIMES, Lee A. McIntyre III (former owner of IMES), has an ownership interest in LDL, LLC. The lease agreement provides for monthly\rpayments over five years with total future minimum lease payments of $0.3 million. Rental expense related to this lease amounted\rto $0.1 million for the fiscal years ended June 2, 2018, May 27, 2017 and May 28, 2016. The Company shall be entitled to extend\rthe term of the lease for a period of an additional five years by notifying the landlord in writing of its intention to do so\rwithin nine months of the expiration of the initial term.
"}]},{"name":"rpt:f-458","factDimensions":{"xbrl:concept":"us-gaap:GoodwillAndIntangibleAssetsDisclosureTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"| 7. | \rGOODWILL AND INTANGIBLE ASSETS |
\r\r
Goodwill
\r\r\r\r
There\rwas $6.3 million of goodwill reported on our balance sheet at both June 2, 2018 and May 27, 2017. The goodwill balance in its\rentirety relates to our IMES reporting unit that is included in the Healthcare segment.
\r\r\r\r
We\rtest goodwill for impairment annually and whenever events or circumstances indicate an impairment may have occurred, such as a\rsignificant adverse change in the business climate, an adverse action or assessment by a regulator, unanticipated competition,\rloss of key personnel or a decision to sell or dispose of a reporting unit.
\r\r\r\r
In\rJanuary 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)\rNo. 2017-04 (“ASU 2017-04”), Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates step 2 from the\rgoodwill impairment test as defined in ASU 2011-08. As amended, the goodwill impairment test will consist of one-step comparing\rthe fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount\rby which the carrying amount exceeds the reporting unit’s fair value. An entity may still perform the optional qualitative\rassessment for a reporting unit to determine if it is more likely than not that goodwill is impaired. ASU 2017-04 will be effective\rfor fiscal years and interim periods beginning after December 15, 2019. ASU 2017-04 is required to be applied prospectively and\rearly adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.\rThe Company elected to early adopt ASU 2017-04 for our fiscal 2018 annual impairment test.
\r\r\r\r
On\rMarch 4, 2018, our goodwill balance was reviewed for impairment on a qualitative basis. We determined that it was more likely\rthan not that the fair value of our IMES reporting unit was less than its carrying amount after reviewing the totality of events\ror circumstances as provided in FASB ASC 350-20-35. Accordingly, the quantitative goodwill impairment test as described in FASB\rASC 350-20-35 was performed. We performed the quantitative impairment test using the income method, which is based on a discounted\rfuture cash flow approach that uses the significant assumptions of projected revenue, projected operational profit, terminal growth\rrates and the cost of capital. The Guideline\rPublic Company Method was also included in the goodwill impairment study.
\r\r\r\r
The\rCompany engaged a third party to assist with the goodwill impairment testing. Management concluded that the results of our goodwill\rimpairment test as of March 4, 2018 indicated that the value of goodwill attributed to our IMES reporting unit was not impaired\rdue to its fair value exceeded its carrying value. In the three years since the acquisition, the Company has made significant\rinvestments in the IMES business, including capital expenditures, new product development and inventory, that are expected to\rincrease IMES’ product offerings and result in increased future sales, operating profits and cash flows.
\r\r\r\r
Although\rwe believe our projected future operating results and cash flows and related estimates regarding fair values were based on reasonable\rassumptions, historically, projected operating results and cash flows have not always been achieved. As of the first day of our\rfourth quarter, we determined that our IMES reporting unit had an estimated fair value in excess of its carrying value of at least\r8.0%. Factors considered in calculating the fair value of the reporting unit were the historical performance of the reporting\runit, forecasted financials for the following ten years and comparable publically held companies. Management’s projections\rused to estimate cash flows included increasing sales volumes from new product offerings, expanded sales into new geographies,\rand operational improvements designed to reduce costs. While all product lines are expected to grow, new product offerings are\rthe largest component of the sales growth with more than 50% of future sales projected to be from new product offerings. The Company\rused a weighted average cost of capital of 19% for these cash flows. Changes in any of the significant assumptions used, including\rif the Company does not successfully achieve its operating plan, which is largely dependent on sales from new product offerings,\rcan materially affect the expected cash flows, and such impacts could result in a material non-cash impairment charge of goodwill\rand potentially other long lived assets.
\r\r\r\r
Potential\revents or changes in circumstances that could reasonably be expected to negatively affect key assumptions are deterioration in\rgeneral market conditions or the environment in which the reporting unit or entity operates, an increased competitive environment\rin which the reporting unit or entity operates or other relevant entity-specific events such as market acceptance of our new CT\rtubes and other new product offerings, approvals to sell in foreign markets, and changes in management or key personnel.
\r\r\r\r
Intangible\rAssets
\r\r\r\r
Intangible\rassets are initially recorded at their fair market values determined on quoted market prices in active markets, if available,\ror recognized valuation models. Intangible assets that have finite useful lives are amortized over their useful lives and are\rtested for impairment when events or changes in circumstances occur that indicate possible impairment.
\r\r\r\r
Our\rintangible assets represent the fair value for trade name, customer relationships, non-compete agreements and technology acquired\rin connection with our acquisitions. Intangible assets subject to amortization were as follows (in thousands):
\r\r\r\r
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r |||
| Gross\r Amounts: | \r\r | \r | \r | \r | \r | \r | \r | |
| Trade\r Name | \r\r | $ | \r659 | \r\r | \r | $ | \r659 | \r|
| Customer\r Relationships(1) | \r\r | \r | 3,408 | \r\r | \r | \r | 3,397 | \r|
| Non-compete\r Agreements | \r\r | \r | 177 | \r\r | \r | \r | 177 | \r|
| Technology | \r\r | \r | 230 | \r\r | \r | \r | 230 | \r|
| Total\r Gross Amounts | \r\r | $ | \r4,474 | \r\r | \r | $ | \r4,463 | \r|
| Accumulated\r Amortization: | \r\r | \r | \r | \r | \r | \r | \r | |
| Trade\r Name | \r\r | $ | \r651 | \r\r | \r | $ | \r441 | \r|
| Customer\r Relationships | \r\r | \r | 617 | \r\r | \r | \r | 446 | \r|
| Non-compete\r Agreements | \r\r | \r | 115 | \r\r | \r | \r | 84 | \r|
| Technology | \r\r | \r | 77 | \r\r | \r | \r | 51 | \r|
| Total\r Accumulated Amortization | \r\r | $ | \r1,460 | \r\r | \r | $ | \r1,022 | \r|
| \r | \r | \r | \r | \r | \r | \r | \r | |
| Net\r Intangibles | \r\r | $ | \r3,014 | \r\r | \r | $ | \r3,441 | \r
\r\r
| \r | (1) | \rChange from prior periods reflect impact of\r foreign currency translation. |
\r\r
We\rdetermined that intangible assets were not impaired as of June 2, 2018 on the basis that no adverse events or changes in circumstances\rwere identified that could indicate that the carrying amounts of such assets may not be recoverable.
\r\r\r\r
The\ramortization expense associated with the intangible assets subject to amortization for the next five years is presented in the\rfollowing table (in thousands):
\r\r\r\r
| Fiscal\r Year | \r\r | \r | Amortization Expense | \r ||
| 2019 | \r\r | \r | $ | \r245 | \r|
| 2020 | \r\r | \r | \r | 257 | \r|
| 2021 | \r\r | \r | \r | 245 | \r|
| 2022 | \r\r | \r | \r | 253 | \r|
| 2023 | \r\r | \r | \r | 246 | \r|
| Thereafter | \r\r | \r | \r | 1,768 | \r|
| Total\r amortization expense | \r\r | \r | $ | \r3,014 | \r
\r\r
The\ramortization expense associated with the intangible assets totaled approximately $0.4 million during fiscal 2018, fiscal 2017\rand fiscal 2016. The weighted average number of years of amortization expense remaining is 15.1 years.
\r\r\r\r
\r\r
"}]},{"name":"rpt:f-459","factDimensions":{"xbrl:concept":"us-gaap:CommitmentsAndContingenciesDisclosureTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"
| 8. | \rLEASE OBLIGATIONS, OTHER COMMITMENTS AND\r CONTINGENCIES |
\r\r
We\rlease certain warehouse and office facilities and office equipment under non-cancelable operating leases. Rent expense for fiscal\r2018, 2017 and 2016 was $1.8 million, $1.9 million, and $2.0 million, respectively. Our future lease commitments for minimum rentals,\rincluding common area maintenance charges and property taxes during the next five years are as follows (in thousands):
\r\r\r\r
| Fiscal\r Year | \r\r | \r | Payments | \r||
| 2019 | \r\r | \r | $ | \r1,629 | \r|
| 2020 | \r\r | \r | \r | 1,132 | \r|
| 2021 | \r\r | \r | \r | 792 | \r|
| 2022 | \r\r | \r | \r | 142 | \r|
| 2023 | \r\r | \r | \r | 19 | \r|
| Thereafter | \r\r | \r | \r | 76 | \r
"}]},{"name":"rpt:f-460","factDimensions":{"xbrl:concept":"us-gaap:IncomeTaxDisclosureTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"
| 9. | \rINCOME TAXES |
\r\r
Income\r(loss) from continuing operations before income taxes included the following components (in thousands):
\r\r\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||||||
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r \r | \r | May\r 28, 2016 | \r ||||
| United\r States | \r\r | $ | \r(211 | \r) | \r\r | $ | \r(8,150 | \r) | \r\r | $ | \r(7,274 | \r) |
| Foreign | \r\r | \r | 4,071 | \r\r | \r | \r | 2,034 | \r\r | \r | \r | 1,054 | \r|
| Income\r (loss) before income taxes | \r\r | $ | \r3,860 | \r\r | \r | $ | \r(6,116 | \r) | \r\r | $ | \r(6,220 | \r) |
\r\r
The\rprovision for income taxes for fiscal 2018, 2017 and 2016 consisted of the following (in thousands):
\r\r\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||||||
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r \r | \r | May\r 28, 2016 | \r ||||
| Current: | \r\r | \r | \r | \r | \r | \r | \r | \r | ||||
| Federal | \r\r | $ | \r— | \r\r | \r | $ | \r(117 | \r) | \r\r | $ | \r— | \r|
| State | \r\r | \r | (12 | \r) | \r\r | \r | 3 | \r\r | \r | \r | 17 | \r|
| Foreign | \r\r | \r | 1,220 | \r\r | \r | \r | 1,035 | \r\r | \r | \r | 441 | \r|
| Total\r current | \r\r | $ | \r1,208 | \r\r | \r | $ | \r921 | \r\r | \r | $ | \r458 | \r|
| Deferred: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Federal | \r\r | $ | \r124 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| State | \r\r | \r | — | \r\r | \r | \r | — | \r\r | \r | \r | — | \r|
| Foreign | \r\r | \r | 202 | \r\r | \r | \r | (109 | \r) | \r\r | \r | 88 | \r|
| Total\r deferred | \r\r | $ | \r326 | \r\r | \r | $ | \r(109 | \r) | \r\r | $ | \r88 | \r|
| Income\r tax provision | \r\r | $ | \r1,534 | \r\r | \r | $ | \r812 | \r\r | \r | $ | \r546 | \r
\r\r
The\rdifferences between income taxes at the U.S. federal statutory income tax rate of 29.2% for fiscal 2018 and 34% for fiscal 2017\rand 2016 and the reported income tax provision for fiscal 2018, 2017 and 2016 are summarized as follows:
\r\r\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||||||
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r \r | \r | May\r 28, 2016 | \r ||||
| Federal\r statutory rate | \r\r | \r | 29.2 | \r% | \r\r | \r | 34.0 | \r% | \r\r | \r | 34.0 | \r% |
| Effect\r of: | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| State\r income taxes, net of federal tax benefit | \r\r | \r | 0.3 | \r\r | \r | \r | 4.8 | \r\r | \r | \r | 4.2 | \r|
| Deemed\r repatriation tax | \r\r | \r | (50.0 | \r) | \r\r | \r | — | \r\r | \r | \r | — | \r|
| Foreign\r income inclusion | \r\r | \r | — | \r\r | \r | \r | (20.7 | \r) | \r\r | \r | (0.4 | \r) |
| Foreign\r taxes at other rates | \r\r | \r | (0.1 | \r) | \r\r | \r | 1.0 | \r\r | \r | \r | 0.6 | \r|
| Permanent\r tax differences | \r\r | \r | 6.7 | \r\r | \r | \r | (0.5 | \r) | \r\r | \r | (0.8 | \r) |
| Deferred\r remeasurement | \r\r | \r | 45.1 | \r\r | \r | \r | — | \r\r | \r | \r | — | \r|
| Tax\r reserves | \r\r | \r | 3.6 | \r\r | \r | \r | 0.9 | \r\r | \r | \r | (6.0 | \r) |
| Additional\r U.S. tax on undistributed foreign earnings | \r\r | \r | (12.5 | \r) | \r\r | \r | 15.8 | \r\r | \r | \r | (32.7 | \r) |
| Change\r in valuation allowance for deferred tax assets | \r\r | \r | 15.1 | \r\r | \r | \r | (46.6 | \r) | \r\r | \r | (11.4 | \r) |
| Return\r to provision adjustments | \r\r | \r | 0.1 | \r\r | \r | \r | (2.0 | \r) | \r\r | \r | 3.9 | \r|
| Closure\r of foreign audits | \r\r | \r | 2.2 | \r\r | \r | \r | — | \r\r | \r | \r | — | \r|
| Other | \r\r | \r | — | \r\r | \r | \r | — | \r\r | \r | \r | (0.2 | \r) |
| Effective\r tax rate | \r\r | \r | 39.7 | \r% | \r\r | \r | (13.3 | \r)% | \r\r | \r | (8.8 | \r)% |
\r\r
| Deferred\r income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for\r financial reporting purposes and the amounts used for income tax purposes. Our deferred tax assets and liabilities reflect\r continuing operations as of June 2, 2018 and May 27, 2017. Significant components were as follows (in thousands): |
\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||
| \r | \r | June\r 2, | \r\r | \r | May\r 27, | \r|||
| \r | \r | 2018 | \r\r | \r | 2017 | \r|||
| Deferred\r tax assets: | \r\r | \r | \r | \r | \r | \r | \r | |
| NOL\r carryforwards - foreign and domestic | \r\r | $ | \r7,883 | \r\r | \r | $ | \r7,870 | \r|
| Inventory\r valuations | \r\r | \r | 978 | \r\r | \r | \r | 1,141 | \r|
| Goodwill | \r\r | \r | 294 | \r\r | \r | \r | 325 | \r|
| Foreign\r tax credits | \r\r | \r | 465 | \r\r | \r | \r | 3,808 | \r|
| Severance\r reserve | \r\r | \r | 119 | \r\r | \r | \r | 227 | \r|
| Foreign\r capital loss | \r\r | \r | 1,143 | \r\r | \r | \r | 1,142 | \r|
| Other | \r\r | \r | 1,632 | \r\r | \r | \r | 2,048 | \r|
| Subtotal | \r\r | $ | \r12,514 | \r\r | \r | $ | \r16,561 | \r|
| Valuation\r allowance - foreign and domestic | \r\r | \r | (9,148 | \r) | \r\r | \r | (8,557 | \r) |
| Net\r deferred tax assets after valuation allowance | \r\r | $ | \r3,366 | \r\r | \r | $ | \r8,004 | \r|
| Deferred\r tax liabilities: | \r\r | \r | \r | \r | \r | \r | \r | |
| Accelerated\r depreciation | \r\r | $ | \r(2,474 | \r) | \r\r | $ | \r(1,356 | \r) |
| Tax\r on undistributed earnings | \r\r | \r | (274 | \r) | \r\r | \r | (5,738 | \r) |
| Other | \r\r | \r | 28 | \r\r | \r | \r | 35 | \r|
| Subtotal | \r\r | $ | \r(2,720 | \r) | \r\r | $ | \r(7,059 | \r) |
| Net\r deferred tax assets | \r\r | $ | \r646 | \r\r | \r | $ | \r945 | \r|
| Supplemental\r disclosure of deferred tax assets (liabilities) information: | \r\r | \r | \r | \r | \r | \r | \r | |
| Domestic | \r\r | $ | \r7,394 | \r\r | \r | $ | \r6,937 | \r|
| Foreign | \r\r | $ | \r2,401 | \r\r | \r | $ | \r2,565 | \r|
| Total | \r\r | $ | \r9,795 | \r\r | \r | $ | \r9,502 | \r
\r\r\r\r
On\rDecember 22, 2017, the U.S. government enacted new tax legislation, Tax Cuts and Jobs Act (the “Act”). The primary\rprovisions of the Act expected to impact the Company in fiscal 2018 are a reduction to the U.S. corporate income tax rate from\r35% to 21% and a transition from a worldwide corporate tax system to a territorial tax system. The reduction in the corporate\rincome tax rate requires the Company to remeasure its net deferred tax assets to the new corporate tax rate and the transition\rto a territorial tax system requires payment of a one-time tax on deemed repatriation of undistributed and previously untaxed\rnon-U.S. earnings. Primarily as a result of those provisions of the Act, the Company recorded a deferred remeasurement impact\rof approximately $1.6 million, which was fully offset by the valuation allowance movement. Additionally, the estimated deemed\rearnings repatriation tax, net of available foreign tax credits brought back as part of the deemed repatriation, was $3.5 million.\rThe Company does not anticipate any cash tax payments due to the foreign tax credit carryforwards available to fully offset the\rprovisional deemed repatriation tax.
\r\r\r\r
The\r21% corporate income tax rate was effective January 1, 2018. Based on the Company’s June 2, 2018 fiscal year end, the U.S.\rstatutory income tax rate for fiscal 2018 will be approximately 29.2%.
\r\r\r\r
The\rtax impact recorded for the Act for fiscal 2018 is provisional as outlined below and may change. The Company completed a preliminary\rassessment of earnings that could be repatriated based on reinvestment needs of non-U.S. operations and earnings available for\rrepatriation. The estimated withholding tax that would be incurred from the repatriation of those earnings was included in fiscal\r2018 provisional income tax expense. The Company continues to analyze the provisions of the Act addressing the net deferred tax\rasset remeasurement and its calculations, the deemed earnings repatriation, including the determination of undistributed non-U.S.\rearnings, and evaluate potential Company actions. In addition, the Company continues to monitor potential legislative action and\rregulatory interpretations of the Act.
\r\r\r\r
Based\ron the effective date of certain provisions, the Company will be subject to additional requirements of the Act beginning in fiscal\r2019. Those provisions include a tax on global intangible low-taxed income (GILTI), a tax determined by base erosion and anti-avoidance\rtax (BEAT) related to certain payments between a U.S. corporation and foreign related entities, a limitation of certain executive\rcompensation, a deduction for foreign derived intangible income (FDII) and interest expense limitations. The Company has not completed\rits analysis of those provisions and the estimated impact. The Company also has not determined its accounting policy to treat\rthe taxes due on GILTI as a period cost or include in the determination of deferred taxes.
\r\r\r\r
In\rDecember 2017, the SEC issued Staff Accounting Bulletin No. 118 that allows for a measurement period up to one year after the\renactment date of the Act to complete the accounting requirements. The Company will complete the adjustments related to the Act\rwithin the allowed period.
\r\r\r\r
As\rof June 2, 2018, we had approximately $3.4 million of net deferred tax assets related to federal net operating loss (“NOL”)\rcarryforwards, compared to $4.2 million as of May 27, 2017. Net deferred tax assets related to domestic state NOL carryforwards\ramounted to approximately $3.9 million as of June 2, 2018, compared to $3.0 million as of May 27, 2017. Net deferred tax assets\rrelated to foreign NOL carryforwards as of June 2, 2018 totaled approximately $0.6 million with various or indefinite expiration\rdates. The amount of net deferred tax assets related to foreign NOL carryforwards was $0.7 million as of May 27, 2017. We also\rhave a domestic net deferred tax asset of $0.5 million of foreign tax credit carryforwards as of June 2, 2018, compared to $3.8\rmillion as of May 27, 2017. The changes in balances from prior year are generally due to the transition tax that was part of the\rTax Cuts and Jobs Act for which the deemed inclusion on foreign earnings utilized most of the foreign tax credit carryforwards\ravailable. We do not have any alternative minimum tax credit carryforward as of June 2, 2018.
\r\r\r\r
We\rhave historically determined that undistributed earnings of our foreign subsidiaries, to the extent of cash available, will be\rrepatriated to the U.S. We repatriated $21.2 million of foreign cash to our U.S. parent company in fiscal 2018, $17.7 million\rfrom our Hong Kong entity and the remainder from our entities in Singapore, Italy and Taiwan. Due to the deemed repatriation tax,\rthe untaxed outside basis difference for which the historic balance has primarily related has been reduced. The deferred tax liability\ron the outside basis difference is now primarily withholding tax on future dividend distributions. Accordingly, we have reduced\rthe deferred tax liability from $5.7 million in fiscal 2017 to be $0.3 million in fiscal 2018 on foreign earnings of $28.6 million.
\r\r\r\r
Management\rassesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use\rthe existing deferred tax assets. A significant component of objective evidence evaluated was the cumulative income or loss incurred\rin each jurisdiction over the three-year period ended June 2, 2018. Such objective evidence limits the ability to consider subjective\revidence such as future income projections. We considered other positive evidence in determining the need for a valuation allowance\rin the U.S. including the repatriation of foreign earnings which we do not consider permanently reinvested in certain of our foreign\rsubsidiaries. The weight of this positive evidence is not sufficient to outweigh other negative evidence in evaluating our need\rfor a valuation allowance in the U.S. jurisdiction.
\r\r\r\r
As\rof June 2, 2018, a valuation allowance of $9.1 million has been established to record only the portion of the deferred tax asset\rthat will more likely than not be realized. There has been an increase in the valuation allowance from May 27, 2017 in the amount\rof $0.6 million. The valuation allowance relates to deferred tax assets in foreign jurisdictions where historical taxable losses\rhave been incurred. We also recorded a valuation allowance for all domestic federal and state net deferred tax assets considering\rthe significant cumulative losses in the U.S. jurisdiction, the reversal of the deferred tax liability for foreign earnings and\rno forecast of additional U.S. income. The amount of the deferred tax asset considered realizable, however, could be adjusted\rif estimates of future taxable income during the carryforward period are increased, or if objective negative evidence in the form\rof cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for\rgrowth.
\r\r\r\r
Income\rtaxes paid, including foreign estimated tax payments, were $0.5 million, $0.4 million and $0.7 million, during fiscal 2018, 2017\rand 2016, respectively.
\r\r\r\r
In\rthe normal course of business, we are subject to examination by taxing authorities throughout the world. Generally, years prior\rto fiscal 2010 are closed for examination under the statute of limitation for U.S. federal, U.S. state and local or non-U.S. tax\rjurisdictions. We are currently under examination in Thailand (fiscal 2008 through 2011). We are also under examination in the\rstate of Illinois for fiscal years 2014 and 2015. Our primary foreign tax jurisdictions are Germany and the Netherlands. We have\rtax years open in Germany beginning in fiscal 2015 and the Netherlands beginning in fiscal 2012.
\r\r\r\r
The\runcertain tax positions from continuing operations as of June 2, 2018 and May 27, 2017 were $0.1 million and $0.0 million, respectively.\rWe record penalties and interest related to uncertain tax positions in the income tax expense line item within the consolidated\rstatements of comprehensive income (loss). Accrued interest and penalties are included within the related tax liability line in\rthe consolidated balance sheets. We have not recorded a liability for interest and penalties as of June 2, 2018 or May 27, 2017.\rIt is not expected that there will be a change in the unrecognized tax benefits due to the expiration of various statutes of limitations\rwithin the next 12 months.
\r\r\r\r
The\rfollowing table summarizes the activity related to the unrecognized tax benefits (in thousands):
\r\r\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r |||
| Unrecognized\r tax benefits, beginning of period | \r\r | $ | \r1,883 | \r\r | \r | $ | \r2,000 | \r|
| Increase\r in positions taken in prior period | \r\r | \r | 138 | \r\r | \r | \r | 75 | \r|
| Decrease\r in positions due to settlements | \r\r | \r | (1,883 | \r) | \r\r | \r | (75 | \r) |
| Decrease\r related to the expiration of statute of limitations | \r\r | \r | — | \r\r | \r | \r | (117 | \r) |
| Unrecognized\r tax benefits, end of period | \r\r | $ | \r138 | \r\r | \r | $ | \r1,883 | \r
\r\r
Unrecognized\rtax benefits for continuing and discontinued operations were as follows (in thousands):
\r\r\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r |||
| Continuing\r operations | \r\r | $ | \r138 | \r\r | \r | $ | \r— | \r|
| Discontinued\r operations(1) | \r\r | \r | — | \r\r | \r | \r | 1,883 | \r|
| \r | \r | $ | \r138 | \r\r | \r | $ | \r1,883 | \r
\r\r\r\r
| (1) | \rRelates to an amended\r Illinois state income tax return related to the sale of RFPD. |
| 10. | \rEMPLOYEE BENEFIT PLANS |
\r\r
| Employee\r Profit Sharing Plan: The employee profit sharing plan is a defined contribution profit sharing plan for employees. The profit\r sharing plan has a 401(k) provision whereby we match 50% of employee contributions up to 4.0% of pay. Charges to expense for\r matching contributions to this plan were $0.4 million, $0.0 million and $0.4 million, during fiscal 2018, 2017 and 2016, respectively.\r The Company suspended the match component for fiscal 2017. |
| 11. | \rSEGMENT AND GEOGRAPHIC INFORMATION |
\r\r
In\raccordance with ASC 280-10, Segment Reporting, we have identified three reportable segments: PMT, Canvys and Healthcare.
\r\r\r\r
PMT\rcombines our core engineered solutions, power grid and microwave tube business with new RF and power technologies. As a manufacturer\rand authorized distributor, PMT’s strategy is to provide specialized technical expertise and engineered solutions based\ron our core engineering and manufacturing capabilities. We provide solutions and add value through design-in support, systems\rintegration, prototype design and manufacturing, testing, logistics and aftermarket technical service and repair—all through\rour existing global infrastructure. PMT’s focus is on products for power, RF and microwave applications for customers in\ralternative energy, aviation, broadcast, communications, industrial, marine, medical, military, scientific and semiconductor markets.\rPMT focuses on various applications including broadcast transmission, CO2 laser cutting, diagnostic imaging, dielectric and induction\rheating, high energy transfer, high voltage switching, plasma, power conversion, radar and radiation oncology. PMT also offers\rits customers technical services for both microwave and industrial equipment.
\r\r\r\r
Canvys\rprovides customized display solutions serving the corporate enterprise, financial, healthcare, industrial and medical original\requipment manufacturers markets. Our engineers design, manufacture, source and support a full spectrum of solutions to match the\rneeds of our customers. We offer long term availability and proven custom display solutions that include touch screens, protective\rpanels, custom enclosures, all-in-ones, specialized cabinet finishes and application specific software packages and certification\rservices. Our volume commitments are lower than those of the large display manufacturers, making us the ideal choice for companies\rwith very specific design requirements. We partner with both private label manufacturing companies and leading branded hardware\rvendors to offer the highest quality display and touch solutions and customized computing platforms.
\r\r\r\r
Healthcare\rmanufactures, refurbishes and distributes high value replacement parts for the healthcare market including hospitals, medical\rcenters, asset management companies, independent service organizations and multi-vendor service providers. Products include Diagnostic\rImaging replacement parts for CT and MRI systems; replacement CT and MRI tubes; CT service training; MRI coils, cold heads and\rRF amplifiers; hydrogen thyratrons, klystrons, magnetrons; flat panel detector upgrades; and additional replacement solutions\rcurrently under development for the diagnostic imaging service market. Through a combination of newly developed products and partnerships,\rservice offerings and training programs, we believe we can help our customers improve efficiency and deliver better clinical outcomes\rwhile lowering the cost of healthcare delivery.
\r\r\r\r
The\rCEO evaluates performance and allocates resources primarily based on the gross profit of each segment.
\r\r\r\r
Operating\rresults by segment are summarized in the following table (in thousands):
\r\r\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||||||
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r \r | \r | May\r 28, 2016 | \r ||||
| PMT | \r\r | \r | \r | \r | \r | \r | \r | \r | ||||
| Net Sales | \r\r | $ | \r128,296 | \r\r | \r | $ | \r104,226 | \r\r | \r | $ | \r105,554 | \r|
| Gross Profit | \r\r | \r | 43,254 | \r\r | \r | \r | 33,382 | \r\r | \r | \r | 33,088 | \r|
| Canvys | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Net Sales | \r\r | $ | \r26,683 | \r\r | \r | $ | \r20,534 | \r\r | \r | $ | \r23,453 | \r|
| Gross Profit | \r\r | \r | 8,410 | \r\r | \r | \r | 5,752 | \r\r | \r | \r | 6,017 | \r|
| Healthcare | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Net Sales | \r\r | $ | \r8,233 | \r\r | \r | $ | \r12,112 | \r\r | \r | $ | \r13,009 | \r|
| Gross Profit | \r\r | \r | 3,418 | \r\r | \r | \r | 4,749 | \r\r | \r | \r | 5,730 | \r
\r\r
A\rreconciliation of assets to the relevant consolidated amount is as follows (in thousands):
\r\r\r\r
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r |||
| Segment\r assets | \r\r | $ | \r90,981 | \r\r | \r | $ | \r80,105 | \r|
| Cash\r and cash equivalents | \r\r | \r | 60,465 | \r\r | \r | \r | 55,327 | \r|
| Investments\r - current | \r\r | \r | — | \r\r | \r | \r | 6,429 | \r|
| Other\r current assets(1) | \r\r | \r | 3,830 | \r\r | \r | \r | 3,330 | \r|
| Net\r property, plant and equipment | \r\r | \r | 10,126 | \r\r | \r | \r | 8,752 | \r|
| Investments\r - non-current | \r\r | \r | — | \r\r | \r | \r | 2,419 | \r|
| Other\r assets - non-current deferred income taxes | \r\r | \r | 927 | \r\r | \r | \r | 1,102 | \r|
| Total\r assets | \r\r | $ | \r166,329 | \r\r | \r | $ | \r157,464 | \r
\r\r
| (1) | \rOther\r current assets include miscellaneous receivables and prepaid expenses. |
\r\r
\r\r
Assets\rare not disclosed by reportable segment as the Company does not track assets by reportable segment and certain assets are not\rspecific to any reportable segment.
\r\r\r\r\r
Capital\rexpenditures for our Healthcare segment during fiscal 2018 and 2017 were approximately $1.9 million and $3.4 million, respectively.\rIn addition, we also had capital expenditures during fiscal 2018 related to the Company’s ERP system as well as facilities\rthat were not specific to any particular reportable segment and capital expenditures during fiscal 2017 related to the Company’s\rERP system that was not specific to any reportable segment.
\r\r\r\r
Geographic\rnet sales information is primarily grouped by customer destination into five areas: North America; Asia/Pacific; Europe; Latin\rAmerica; and Other.
\r\r\r\r
Net\rsales and gross profit by geographic region are summarized in the following table (in thousands):
\r\r\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||||||
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r \r | \r | May\r 28, 2016 | \r ||||
| Net\r Sales | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| North America | \r\r | $ | \r67,662 | \r\r | \r | $ | \r55,963 | \r\r | \r | $ | \r66,365 | \r|
| Asia/Pacific | \r\r | \r | 32,607 | \r\r | \r | \r | 27,997 | \r\r | \r | \r | 24,564 | \r|
| Europe | \r\r | \r | 53,818 | \r\r | \r | \r | 44,296 | \r\r | \r | \r | 44,634 | \r|
| Latin America | \r\r | \r | 9,123 | \r\r | \r | \r | 8,552 | \r\r | \r | \r | 6,347 | \r|
| Other(1) | \r\r | \r | 2 | \r\r | \r | \r | 64 | \r\r | \r | \r | 106 | \r|
| Total | \r\r | $ | \r163,212 | \r\r | \r | $ | \r136,872 | \r\r | \r | $ | \r142,016 | \r|
| Gross\r Profit | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| North America | \r\r | $ | \r25,996 | \r\r | \r | $ | \r20,597 | \r\r | \r | $ | \r23,506 | \r|
| Asia/Pacific | \r\r | \r | 10,794 | \r\r | \r | \r | 9,630 | \r\r | \r | \r | 8,212 | \r|
| Europe | \r\r | \r | 18,071 | \r\r | \r | \r | 14,418 | \r\r | \r | \r | 13,541 | \r|
| Latin America | \r\r | \r | 3,602 | \r\r | \r | \r | 3,250 | \r\r | \r | \r | 2,397 | \r|
| Other(1) | \r\r | \r | (3,381 | \r) | \r\r | \r | (4,012 | \r) | \r\r | \r | (2,821 | \r) |
| Total | \r\r | $ | \r55,082 | \r\r | \r | $ | \r43,883 | \r\r | \r | $ | \r44,835 | \r
\r\r\r\r
| (1) | \rOther includes primarily\r net sales not allocated to a specific geographical region, unabsorbed value-add costs and other unallocated expenses. |
\r\r
Major\rCustomers
\r\r\r\r
During\rfiscal 2018, LAM Research Corporation (“LAM”) individually accounted for 11 percent of the Company’s consolidated\rnet sales. No other customer accounted for more than 10 percent of the Company’s consolidated net sales in fiscal 2018.\rNo one customer accounted for more than 10 percent of the Company’s consolidated net sales in fiscal 2017 or fiscal 2016.\rLAM sales were included in the PMT segment.
\r\r\r\r
We\rsell our products to customers in diversified industries and perform periodic credit evaluations of our customers’ financial\rcondition. Terms are generally on open account, payable net 30 days in North America, and vary throughout Asia/Pacific, Europe\rand Latin America. Estimates of credit losses are recorded in the financial statements based on monthly reviews of outstanding\raccounts.
\r\r\r\r
Net\rassets by geographic region are summarized in the following table (in thousands):
\r\r\r\r
| \r | \r | Fiscal\r Year Ended | \r||||||||||
| \r | \r | June\r 2, 2018 | \r \r | \r | May\r 27, 2017 | \r \r | \r | May\r 28, 2016 | \r ||||
| Net\r Assets | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| North America | \r\r | $ | \r77,857 | \r\r | \r | $ | \r62,085 | \r\r | \r | $ | \r65,832 | \r|
| Asia/Pacific | \r\r | \r | 17,254 | \r\r | \r | \r | 34,990 | \r\r | \r | \r | 42,547 | \r|
| Europe | \r\r | \r | 37,911 | \r\r | \r | \r | 32,794 | \r\r | \r | \r | 31,495 | \r|
| Latin\r America | \r\r | \r | 2,159 | \r\r | \r | \r | 2,458 | \r\r | \r | \r | 1,801 | \r|
| Total | \r\r | $ | \r135,181 | \r\r | \r | $ | \r132,327 | \r\r | \r | $ | \r141,675 | \r
\r\r
The\rCompany had long-lived assets of $21.2 million as of June 2, 2018 and $19.3 million as of May 27, 2017. The long-lived assets,\rwhich include our fixed assets and intangibles, were primarily in the US. There were approximately $1.0 million of long-lived\rassets that belong to our foreign affiliates as of June 2, 2018 and $1.2 million as of May 27, 2017.
\r\r\r\r
The\rCompany had depreciation and amortization expense of $3.0 million, $2.7 million and $2.4 million for fiscal 2018, fiscal 2017\rand fiscal 2016, respectively. The depreciation and amortization, which includes our fixed assets and intangibles, were primarily\rin the US. Depreciation and amortization expense that belong to our foreign affiliates was approximately $0.3 million for fiscal\r2018, fiscal 2017 and fiscal 2016.
"}]},{"name":"rpt:f-463","factDimensions":{"xbrl:concept":"us-gaap:LegalMattersAndContingenciesTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"| 12. | \rLITIGATION |
\r\r
On\rDecember 5, 2017, Steven H. Busch filed a Verified Stockholder Derivative Complaint against Edward J. Richardson, Paul Plante,\rJacques Belin, James Benham, Kenneth Halverson, and the Company in the Delaware Court of Chancery, captioned Steven H. Busch\rv. Edward J. Richardson, et al., C.A. No. 2017-0868-AGB. The lawsuit alleges claims for breach of fiduciary duty by\rthe Company’s directors and challenges the decision of a special committee of the Company’s Board to refuse Mr. Busch’s\rdemand that the Company’s Board, among other things, rescind the Company’s May 2013 repurchase of stock from Mr. Richardson\rand May 2013 and October 2014 repurchases of Company stock from the Richardson Wildlife Foundation. On March 9, 2018, the defendants\rfiled motions to dismiss the lawsuit that are currently pending. The Company believes the lawsuit to be without merit and that\ra loss is not probable or estimable based on the information available at the time the financial statements were issued.
"}]},{"name":"rpt:f-464","factDimensions":{"xbrl:concept":"us-gaap:FairValueDisclosuresTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"| 13. | \rFAIR VALUE MEASUREMENTS |
\r\r
ASC\r820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring\rfair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair\rvalue measurements.
\r\r\r\r
ASC\r820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers\rinclude: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than\rquoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs\rin which little or no market data exists; therefore requiring an entity to develop its own assumptions.
\r\r\r\r
We\rliquidated our investments in fiscal 2018. Prior to the liquidation of our investments, we held investments that were required\rto be measured at fair value on a recurring basis. Our investments consist of time deposits and CDs, where face value is\requal to fair value, and as of May 27, 2017, also equity securities of publicly traded companies for which market prices are readily\ravailable.
\r\r\r\r
Investments\rmeasured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of June 2, 2018 and May 27,\r2017 were as follows (in thousands):
\r\r\r\r
| \r | \r | Level 1 | \r\r | \r | Level 2 | \r\r | \r | Level 3 | \r||||
| June\r 2, 2018 | \r\r | \r | \r | \r | \r | \r | \r | \r | ||||
| Time deposits/CDs | \r\r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| Equity securities | \r\r | — | \r\r | \r | — | \r\r | \r | — | \r||||
| Total | \r\r | $ | \r— | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| May 27, 2017 | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Time deposits/CDs | \r\r | $ | \r8,226 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r|
| Equity\r securities | \r\r | \r | 622 | \r\r | \r | \r | — | \r\r | \r | \r | — | \r|
| Total | \r\r | $ | \r8,848 | \r\r | \r | $ | \r— | \r\r | \r | $ | \r— | \r
| 14. | \rVALUATION AND QUALIFYING ACCOUNTS |
\r\r
The\rfollowing table presents the valuation and qualifying account activity for fiscal years ended June 2, 2018, May 27, 2017\rand May 28, 2016, (in thousands):
\r\r\r\r
| Description | \r\r | Balance at beginning\r of period | \r \r | \r | Charged to expense | \r \r | \r | Deductions | \r\r | \r | Balance at end\r of period | \r |||||
| Year\r ended June 2, 2018 | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |||||
| Allowance\r for doubtful accounts | \r\r | $ | \r398 | \r\r | \r | $ | \r223 | \r(1) | \r\r | $ | \r(312) | \r(2) | \r\r | $ | \r309 | \r|
| Inventory\r provisions | \r\r | \r | 3,456 | \r\r | \r | \r | 773 | \r(3) | \r\r | \r | (202) | \r(4) | \r\r | \r | 4,027 | \r|
| Year\r ended May 27, 2017 | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Allowance\r for doubtful accounts | \r\r | $ | \r364 | \r\r | \r | $ | \r226 | \r(1) | \r\r | $ | \r(192) | \r(2) | \r\r | $ | \r398 | \r|
| Inventory\r provisions | \r\r | \r | 3,380 | \r\r | \r | \r | 456 | \r(3) | \r\r | \r | (380) | \r(4) | \r\r | \r | 3,456 | \r|
| Year\r ended May 28, 2016 | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Allowance\r for doubtful accounts | \r\r | $ | \r283 | \r\r | \r | $ | \r228 | \r(1) | \r\r | $ | \r(147) | \r(2) | \r\r | $ | \r364 | \r|
| Inventory\r provisions | \r\r | \r | 2,991 | \r\r | \r | \r | 690 | \r(3) | \r\r | \r | (301) | \r(4) | \r\r | \r | 3,380 | \r
\r\r
Notes:
\r\r(1)\rCharges to bad debt expense, net of bad debt recoveries.
\r\r(2)\rUncollectible amounts written off, net of recoveries and foreign currency translation.
\r\r(3)\rCharges to cost of sales. Included in fiscal 2018 were inventory write-downs of $0.6 million for PMT, $0.1 million for Canvys\rand $0.1 million for Healthcare.
\r\r(4)\rInventory disposed of or sold, net of foreign currency translation.
"}]},{"name":"rpt:f-466","factDimensions":{"xbrl:concept":"us-gaap:QuarterlyFinancialInformationTextBlock","xbrl:period":"2017-05-28T00:00:00/2018-06-03T00:00:00","xbrl:entity":"cik:0000355948"},"factValues":[{"value":"| 15. | \rSELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) |
\r\r
| Description | \r\r | First Quarter | \r \r | \r | Second Quarter | \r \r | \r | Third Quarter | \r \r | \r | Fourth Quarter | \r |||||
| Fiscal 2018 | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Net\r sales | \r\r | $ | \r36,995 | \r\r | \r | $ | \r39,082 | \r\r | \r | $ | \r41,645 | \r\r | \r | $ | \r45,490 | \r|
| Gross\r profit | \r\r | \r | 12,148 | \r\r | \r | \r | 13,374 | \r\r | \r | \r | 14,067 | \r\r | \r | \r | 15,493 | \r|
| (Loss)\r income from continuing operations | \r\r | \r | (112 | \r) | \r\r | \r | 172 | \r\r | \r | \r | 527 | \r\r | \r | \r | 1,739 | \r|
| Income\r from discontinued operations | \r\r | \r | — | \r\r | \r | \r | 1,496 | \r\r | \r | \r | — | \r\r | \r | \r | — | \r|
| Net\r (loss) income | \r\r | \r | (112 | \r) | \r\r | \r | 1,668 | \r\r | \r | \r | 527 | \r\r | \r | \r | 1,739 | \r|
| (Loss)\r income from continuing operations | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock - basic | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.01 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.14 | \r|
| Class\r B common stock - basic | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.01 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.12 | \r|
| Common\r stock - diluted | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.01 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.14 | \r|
| Class\r B common stock - diluted | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.01 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.12 | \r|
| Income\r from discontinued operations | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock - basic | \r\r | $ | \r0.00 | \r\r | \r | $ | \r0.12 | \r\r | \r | $ | \r0.00 | \r\r | \r | $ | \r0.00 | \r|
| Class\r B common stock - basic | \r\r | $ | \r0.00 | \r\r | \r | $ | \r0.11 | \r\r | \r | $ | \r0.00 | \r\r | \r | $ | \r0.00 | \r|
| Common\r stock - diluted | \r\r | $ | \r0.00 | \r\r | \r | $ | \r0.12 | \r\r | \r | $ | \r0.00 | \r\r | \r | $ | \r0.00 | \r|
| Class\r B common stock - diluted | \r\r | $ | \r0.00 | \r\r | \r | $ | \r0.11 | \r\r | \r | $ | \r0.00 | \r\r | \r | $ | \r0.00 | \r|
| Net\r (loss) income | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock - basic | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.13 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.14 | \r|
| Class\r B common stock - basic | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.12 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.12 | \r|
| Common\r stock - diluted | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.13 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.14 | \r|
| Class\r B common stock - diluted | \r\r | $ | \r(0.01 | \r) | \r\r | $ | \r0.12 | \r\r | \r | $ | \r0.04 | \r\r | \r | $ | \r0.12 | \r|
| Fiscal 2017 | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Net\r sales | \r\r | $ | \r33,373 | \r\r | \r | $ | \r33,827 | \r\r | \r | $ | \r32,313 | \r\r | \r | $ | \r37,359 | \r|
| Gross\r profit | \r\r | \r | 10,240 | \r\r | \r | \r | 10,964 | \r\r | \r | \r | 10,692 | \r\r | \r | \r | 11,987 | \r|
| Loss\r from continuing operations | \r\r | \r | (2,850 | \r) | \r\r | \r | (2,522 | \r) | \r\r | \r | (1,431 | \r) | \r\r | \r | (125 | \r) |
| Net\r loss | \r\r | \r | (2,850 | \r) | \r\r | \r | (2,522 | \r) | \r\r | \r | (1,431 | \r) | \r\r | \r | (125 | \r) |
| Net\r loss | \r\r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | \r | |
| Common\r stock - basic | \r\r | $ | \r(0.23 | \r) | \r\r | $ | \r(0.20 | \r) | \r\r | $ | \r(0.11 | \r) | \r\r | $ | \r(0.01 | \r) |
| Class\r B common stock - basic | \r\r | $ | \r(0.20 | \r) | \r\r | $ | \r(0.18 | \r) | \r\r | $ | \r(0.10 | \r) | \r\r | $ | \r(0.01 | \r) |
| Common\r stock - diluted | \r\r | $ | \r(0.23 | \r) | \r\r | $ | \r(0.20 | \r) | \r\r | $ | \r(0.11 | \r) | \r\r | $ | \r(0.01 | \r) |
| Class\r B common stock - diluted | \r\r | $ | \r(0.20 | \r) | \r\r | $ | \r(0.18 | \r) | \r\r | $ | \r(0.10 | \r) | \r\r | $ | \r(0.01 | \r) |
Income\rTaxes: We recognize deferred tax assets and liabilities based on the differences between financial statement carrying\ramounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and determine\rthe need for a valuation allowance based on a number of factors, including both positive and negative evidence. These factors\rinclude historical taxable income or loss, projected future taxable income or loss, the expected timing of the reversals of existing\rtemporary differences, and the implementation of tax planning strategies. In circumstances where we, or any of our affiliates,\rhave incurred three years of cumulative losses which constitute significant negative evidence, positive evidence of equal or greater\rsignificance is needed to overcome the negative evidence before a tax benefit is recognized for deductible temporary differences\rand loss carryforwards.
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