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Summary of Accounting Policies | 3 Months Ended
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Aug. 30, 2025
Accounting Policies [Abstract] |
Summary of Accounting Policies | 4. SUMMARY OF ACCOUNTING POLICIES Inventories, net: Our consolidated inventories were stated at the lower of cost and net realizable value, generally using a weighted-average cost method. Our net inventories include approximately $88.6 million of finished goods, $11.8 million of raw materials and $4.2 million of work-in-progress as of August 30, 2025, as compared to approximately $86.4 million of finished goods, $11.5 million of raw materials and $4.9 million of work-in-progress as of May 31, 2025. Provisions for obsolete or slow-moving inventories are recorded based upon regular analysis of stock rotation privileges, obsolescence, the exiting of certain markets and assumptions about future demand and market conditions. If future demand changes in the industry or market conditions differ from management’s estimates, additional provisions may be necessary. Inventory reserves were approximately $7.7 million as of August 30, 2025 and $7.6 million as of May 31, 2025. Intangible Assets: Our intangible assets represent the fair value for customer relationships and technology acquired in connection with prior acquisitions. Intangible assets subject to amortization were as follows (in thousands):
|  | August 30, 2025 |  |  | May 31, 2025 |
Gross Amounts: |  |  |  |  |  |
Customer Relationships (1) |  | $ | 912 |  |  | $ | 911 |
Technology |  |  | 150 |  |  |  | 150 |
Total Gross Amounts |  | $ | 1,062 |  |  | $ | 1,061 |
Accumulated Amortization: |  |  |  |  |  |
Customer Relationships |  | $ | 662 |  |  | $ | 652 |
Technology |  |  | 70 |  |  |  | 64 |
Total Accumulated Amortization |  | $ | 732 |  |  | $ | 716 |
Intangible Assets, Net |  | $ | 330 |  |  | $ | 345 |
(1) Change from prior per period reflects the impact of foreign currency translation. The amortization expense associated with intangible assets subject to amortization for the next five years is presented in the following table (in thousands):
Fiscal Year |  | Amortization Expense |
Remaining 2026 |  | $ | 45 |
2027 |  |  | 60 |
2028 |  |  | 59 |
2029 |  |  | 59 |
2030 |  |  | 37 |
Thereafter |  |  | 70 |
Total amortization expense |  | $ | 330 |
The weighted average number of years of amortization expense remaining is 6.6 years. Accrued Liabilities: Accrued liabilities consisted of the following (in thousands):
|  | August 30, 2025 |  |  | May 31, 2025 |
Compensation and payroll taxes |  | $ | 4,182 |  |  | $ | 4,303 |
Accrued severance |  |  | 556 |  |  |  | 593 |
Professional fees |  |  | 689 |  |  |  | 522 |
Contract liabilities |  |  | 4,722 |  |  |  | 4,545 |
Other accrued expenses |  |  | 4,211 |  |  |  | 4,313 |
Accrued Liabilities |  | $ | 14,360 |  |  | $ | 14,276 |
Warranties: We offer assurance-type warranties for specific products we manufacture. We estimate the cost to perform under the warranty obligation and recognize this estimated cost at the time of the related product sale. We record expenses related to our warranty obligations as cost of sales in our Consolidated Statements of Comprehensive Income. Each quarter, we assess the actual warranty costs incurred on a product-by-product basis and compare the warranty costs to our estimated warranty obligation. With respect to new products, estimates are based generally on knowledge of the products and warranty experience. Warranty reserves are established for costs that are expected to be incurred after the sale and delivery of products under warranty. Warranty reserves are included in accrued liabilities on our Consolidated Balance Sheets. The warranty reserves are determined based on known product failures, historical experience and other available evidence. Warranty reserves were approximately $0.9 million as of August 30, 2025 and approximately $0.8 million as of May 31, 2025. Common and Class B Common Stock: We have authorized 17,000,000 shares of common stock and 3,000,000 shares of Class B common stock. The Class B common stock has 10 votes per share and has transferability restrictions; however, Class B common stock may be converted into common stock on a share-for-share basis at any time. With respect to dividends and distributions, shares of common stock and Class B common stock rank equally and have the same rights, except that Class B common stock cash dividends are limited to 90% of the amount of Class A common stock cash dividends. Revenue Recognition: We sell our products to customers in diversified industries and perform periodic credit evaluations of our customers’ financial condition. Terms are generally open account, payable net 30 days in North America, and vary throughout Asia/Pacific, Europe and Latin America. Estimates of credit losses are recorded in the financial statements based on monthly reviews of outstanding accounts. Our customers are generally not resellers, but rather businesses that incorporate our products into their processes from which they generate an economic benefit. The goods are also distinct in that each item sold to the customer is clearly identified on both the purchase order and resulting invoice. Each product we sell benefits the customer independently of the other products. Each item on each purchase order from the customer can be used by the customer unrelated to any other products we provide to the customer. We derive revenue from the sale of products. Generally, the performance obligation under contracts are satisfied when there is a transfer of control of the products to our customer, which is primarily upon shipment or, in certain instances, upon the delivery of the products to the named customer location. We also generate revenue from repair, installation or training activities. The services we provide are relatively short in duration and are typically completed in one or two weeks. Therefore, at each reporting date, the amount of unbilled work is insignificant. The services revenue has consistently accounted for less than 5% of the Company’s total revenues and is expected to continue at that level. We record discounts taken based on historical experience. The policy varies by business unit. The Company allows returns with prior written authorization. We estimate returns based on historical experience. The Company maintains a reserve for returns based on historical trends that cover all contracts and revenue streams using the expected value method because we have a large number of contracts with similar characteristics, which is considered variable consideration. The reserve for returns creates a refund liability on our balance sheet as a contra trade accounts receivable as well as an asset in inventory. We value the inventory at cost due to there being minimal or no costs to the Company as we generally require the customer to pay freight and we typically do not have costs associated with activities such as relabeling or repackaging. The reserve is considered immaterial at each balance sheet date. Returns for defective product are typically covered by our suppliers’ warranty, thus, returns for defective product are not factored into our reserve. Principal versus agent guidance was considered for products that are provided by our suppliers versus manufactured by the Company. The Company acts as the principal as we are responsible for satisfying the performance obligation. We have primary responsibility for fulfilling the contract, we have inventory risk prior to delivery to our customer, we establish prices, our consideration is not in the form of a commission and we bear the credit risk. The Company recognizes revenue in the gross amount of consideration. Contracts with customers: A revenue contract exists once a customer purchase order is received, reviewed and accepted. Each accepted purchase order identifies a distinct good or service as a performance obligation. The goods include standard products purchased from a supplier and stocked on our shelves, customized products purchased from a supplier, products that are customized or have value added to them in house prior to shipping to the customer and manufactured products. Prior to accepting a customer purchase order, we review the credit worthiness of the customer. Purchase orders are deemed to meet the collectability criterion once the customer’s credit is approved. The Company receives advance payments or deposits from our customers before revenue is recognized resulting in contract liabilities. Contract liabilities are included in accrued liabilities in the Consolidated Balance Sheets. On occasion, the Company enters bill-and-hold arrangements. Each bill-and-hold arrangement is reviewed and revenue is recognized only when the control has transferred to our customer and certain criteria have been met: (i) the reason for the bill-and-hold arrangement is substantive; (ii) the product is segregated from the Company’s other inventory items held for sale; (iii) the product is ready for shipment to the customer; and (iv) the Company does not have the ability to use the product or direct it to another customer. The bill and hold revenue recognized was $1.1 million for the first quarter of fiscal 2026 and $3.1 million for the first quarter of fiscal 2025. Contract Balances: Contract balances were as follows (in thousands):
|  | August 30, 2025 |  |  | May 31, 2025 |  |  | June 1, 2024 |
Accounts receivable |  | $ | 27,039 |  |  | $ | 24,117 |  |  | $ | 24,845 |
Contract liabilities |  |  | 4,722 |  |  |  | 4,545 |  |  |  | 4,520 |
During the three months ended August 30, 2025, the Company recognized $1.6 million of revenue upon satisfaction of the performance obligations related to the amounts included in the contract liabilities balance as of May 31, 2025. During the three months ended August 31, 2024, the Company recognized $0.9 million of revenue upon satisfaction of the performance obligations related to the amounts included in the contract liabilities balance as of June 1, 2024. Refer to Note 9, Segment Information for a disaggregation of revenue by reportable segment which represents how our CODM reviews information internally to evaluate our financial performance and to make resource allocation and other decisions for the Company. Loss Contingencies: We accrue a liability for loss contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. If we determine that there is at least a reasonable possibility that a loss may have been incurred, we will include a disclosure describing the contingency.

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- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/235/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147483426/235-10-50-1 + Details
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