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Restatement | 12 Months Ended
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Jun. 02, 2012
Restatement [Abstract] |
RESTATEMENT | 3. RESTATEMENT During the second quarter of fiscal 2012, in connection with an ongoing IRS examination, we determined that a deduction taken on our fiscal year 2006 federal tax return was taken in error. As a result, the tax impact of the Net Operating Loss (“NOL”) carry forward from fiscal 2006 was overstated by approximately $2.1 million. The NOL from fiscal 2006 was fully utilized and the reversal of all associated valuation allowances was recorded in our results from discontinued operations during fiscal 2011. The deferred tax asset related to the NOL was fully reserved prior to the fourth quarter of fiscal 2011. The Securities and Exchange Commission (the “SEC” or “Commission”) Staff Accounting Bulletin 108 (“SAB 108”) provides guidance on quantifying and evaluating the materiality of errors. SAB 108 requires that a company considers the “iron curtain” and the “rollover” approach when quantifying misstatement amounts. Under the rollover approach, the error is quantified as the amount by which the current year income statement is misstated. The iron curtain approach quantifies the error using both a balance sheet and an income statement approach and evaluates whether either of these approaches results in quantifying a misstatement that is material, considering all relevant quantitative and qualitative factors. Materiality was also assessed from a qualitative perspective based on whether it was probable that the judgment of a reasonable person relying upon the report would have been changed or influenced by the inclusion or correction of the item. We do not believe the effect of this error would have changed or influenced the judgment of a reasonable person. We have performed an analysis of this error using both the rollover and iron curtain methods and have concluded that this error is material to our current period’s financial statements and immaterial to fiscal 2011 financial statements. Accordingly, we restated our fiscal 2011 financial statements to correct the error in this Form 10-K. This error did not impact the financial statements prior to fiscal 2011, as the NOL was fully reserved prior to the fourth quarter of fiscal 2011. During fiscal 2012, the effect on retained earnings and net income were as follows (in thousands):
|  | Effect on Retained Earnings |  |  | Effect on Net Income |
Recording of prior year’s income tax expense |  | $ | (2,126 | ) |  | $ | — |
Income tax effect on the above |  | $ | — |  |  | $ | — |
Net SAB 108 Effect |  | $ | (2,126 | ) |  | $ | — |
The understatement of our income tax accrual as of our fiscal year ended May 28, 2011, affected our consolidated balance sheet as follows (in thousands):
|  | As Reported |  |  | Restated |
Discontinued Liabilities |  | $ | 13,771 |  |  | $ | 15,897 |
Retained Earnings |  | $ | 101,053 |  |  | $ | 98,927 |
The understatement of income tax expense for our fiscal year ended May 28, 2011, affected our consolidated statement of operations as follows (in thousands, except per share data):
|  | As Reported |  |  | Restated |
Income from discontinued operations, net of tax |  | $ | 88,092 |  |  | $ | 85,966 |
Net Income |  | $ | 90,074 |  |  | $ | 87,948 |
Income from discontinued operations per diluted share |  | $ | 4.84 |  |  | $ | 4.72 |
Net Income per diluted share |  | $ | 4.95 |  |  | $ | 4.83 |

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- Definition The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6801783&loc=d3e22499-107794 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 1.N.Q3) -URI http://asc.fasb.org/extlink&oid=6369664&loc=d3e30840-122693 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=6801783&loc=d3e22644-107794 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 1 -Section N Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 45 -Paragraph 23 -URI http://asc.fasb.org/extlink&oid=6368906&loc=d3e21914-107793 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6801783&loc=d3e22595-107794 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 154 -Paragraph 17, 22, 25, 26 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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