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<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt"><b>1.  DESCRIPTION OF THE COMPANY</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Richardson Electronics, Ltd. is a leading global
provider of engineered solutions, power grid and microwave tubes and related consumables; power conversion and RF and microwave
components; high value displays, flat panel detector solutions and replacement parts for diagnostic imaging equipment; and customized
display solutions. We serve customers in the alternative energy, healthcare, aviation, broadcast, communications, industrial, marine,
medical, military, scientific and semiconductor markets. The Company’s strategy is to provide specialized technical expertise
and “engineered solutions” based on our core engineering and manufacturing capabilities. The Company provides solutions
and adds value through design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket
technical service and repair through its global infrastructure.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Our products include electron tubes and related
components, microwave generators, subsystems used in semiconductor manufacturing, and visual technology solutions. These products
are used to control, switch or amplify electrical power signals, or are used as display devices in a variety of industrial, commercial,
medical, and communication applications.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">We have three operating and reportable
segments, which we define as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Power and Microwave Technologies
Group (“PMT”) combines our core engineered solutions, power grid and microwave tube business with new RF and power
technologies. As a manufacturer and authorized distributor, PMT’s strategy is to provide specialized technical expertise
and engineered solutions based on our core engineering and manufacturing capabilities. We provide solutions and add value through
design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket technical service
and repair—all through our existing global infrastructure. PMT’s focus is on products for power, RF and microwave applications
for customers in alternative energy, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and
semiconductor markets. PMT focuses on various applications including broadcast transmission, CO2 laser cutting, diagnostic imaging,
dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion, radar, and radiation
oncology. PMT also offers its customers technical services for both microwave and industrial equipment.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Canvys provides customized display
solutions serving the corporate enterprise, financial, healthcare, industrial, and medical original equipment manufacturers (“OEM”)
markets.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Healthcare manufactures, distributes
and services high value replacement parts for the healthcare market including hospitals, medical centers, independent service organizations,
and multi-vendor service providers. Products include power grid tubes, hydrogen thyratrons, klystrons, magnetrons; Image Systems
medical displays and workstations for picture archiving and communication systems (“PACS”); visual solutions for operating
rooms/surgical environments; digital radiography solutions including replacement flat panel detectors and upgrades; and additional
replacement components currently under development for the diagnostic imaging service market. Through a combination of newly developed
products and partnerships, service offerings, and training programs, we believe we can help our customers improve efficiency and
deliver better clinical outcomes while lowering the cost of healthcare delivery.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-align: justify; text-indent: 0.5in">We currently
have operations in the following major geographic regions: North America, Asia/Pacific, Europe, and Latin America.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt"><b>2.  BASIS OF PRESENTATION</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">The accompanying unaudited consolidated
financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”)
for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all the information and notes required by GAAP for complete financial statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Our fiscal quarter ends on the
Saturday nearest the end of the quarter-ending month. The first three months of fiscal 2017 and 2016 contained 13 weeks, respectively.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">In the opinion of management,
all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results of interim periods
have been made. All inter-company transactions and balances have been eliminated. The unaudited consolidated financial statements
presented herein include the accounts of our wholly owned subsidiaries. Certain information and note disclosures normally included
in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.
The results of our operations for the three months ended August 27, 2016, are not necessarily indicative of the results that may
be expected for the fiscal year ending May 27, 2017. </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">The financial information contained
in this report should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended May 28, 2016, that
we filed on July 29, 2016.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in"><b>Revenue Recognition:</b> Our
product sales are recognized as revenue upon shipment, when title passes to the customer, when delivery has occurred or services
have been rendered, and when collectability is reasonably assured. We also record estimated discounts and returns based on our
historical experience. Our products are often manufactured to meet the specific design needs of our customers’ applications.
Our engineers work closely with customers to ensure that our products will meet their needs. Our customers are under no obligation
to compensate us for designing the products we sell.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in"><b>Loss Contingencies: </b>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.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in"><b>Intangible Assets:</b> Intangible
assets are initially recorded at their fair market values determined on quoted market prices in active markets, if available, or
recognized valuation models. Intangible assets that have finite useful lives are amortized over their useful lives either on a
straight-line basis or over their projected future cash flows and are tested for impairment when events or changes in circumstances
occur that indicate possible impairment.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in"><b>Income Taxes:</b> We recognize
deferred tax assets and liabilities based on the differences between financial statement carrying amounts and the tax bases of
assets and liabilities. We regularly review our deferred tax assets for recoverability and determine the need for a valuation allowance
based on a number of factors, including both positive and negative evidence. These factors include historical taxable income or
loss, projected future taxable income or loss, the expected timing of the reversals of existing temporary differences, and the
implementation of tax planning strategies. In circumstances where we, or any of our affiliates, have incurred three years of cumulative
losses which constitute significant negative evidence, positive evidence of equal or greater significance is needed to overcome
the negative evidence before a tax benefit is recognized for deductible temporary differences and loss carryforwards.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">In November 2015, the FASB issued
ASU 2015-17, “Balance Sheet Classification of Deferred Taxes.” ASU 2015-17 eliminates the prior US GAAP guidance in
Topic 740, Income Taxes, that required an entity to separate deferred tax liabilities and assets between current and noncurrent
amounts in a classified balance sheet. The amendments in ASU 2015-17 require that all deferred tax liabilities and assets of the
same tax jurisdiction or a tax filing group, as well as any related valuation allowance, be offset and presented as a single noncurrent
amount in a classified balance sheet. ASU 2015-17 is effective for annual periods beginning after December 15, 2016, and interim
periods within those annual periods. In order to simplify presentation of deferred tax balances, the Company adopted this standard
prospectively in the quarter ended August 27, 2016. Periods prior to August 27, 2016 were not retrospectively adjusted.</p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 9pt 0 7pt; text-indent: 0.5in"><b>Accrued Liabilities:</b> Accrued
liabilities consist of the following (<i>in thousands</i>):</p>
<table cellspacing="0" cellpadding="0" align="center" style="font: 10pt Times New Roman, Times, Serif; width: 93%; border-collapse: collapse">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="3" style="border-bottom: Black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: center"><font style="font-size: 8pt; line-height: 107%"><b>August 27, 2016</b></font></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="3" style="border-bottom: Black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: center"><font style="font-size: 8pt; line-height: 107%"><b>May 28, 2016</b></font></td></tr>
<tr style="background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 75%; font: 10pt/107% Times New Roman, Times, Serif">Compensation and payroll taxes</td>
<td style="vertical-align: bottom; width: 1%; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="vertical-align: bottom; width: 10%; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">3,510</td>
<td style="vertical-align: top; width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="vertical-align: bottom; width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="vertical-align: bottom; width: 1%; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="vertical-align: bottom; width: 10%; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">4,054</td>
<td style="vertical-align: top; width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif">Professional fees</td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">406</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">775</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif">Deferred revenue</td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,831</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,879</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt">Other accrued expenses</td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 1pt solid">2,253</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 1pt solid">2,427</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td></tr>
<tr style="background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt; padding-left: 20pt"><b>Accrued Liabilities</b></td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>$</b></td>
<td style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>8,000</b></td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>$</b></td>
<td style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>9,135</b></td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Accrued liabilities consist of the following (<i>in thousands</i>):</p>
<table cellspacing="0" cellpadding="0" align="center" style="font: 10pt Times New Roman, Times, Serif; width: 93%; border-collapse: collapse">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="3" style="border-bottom: Black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: center"><font style="font-size: 8pt; line-height: 107%"><b>August 27, 2016</b></font></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="3" style="border-bottom: Black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: center"><font style="font-size: 8pt; line-height: 107%"><b>May 28, 2016</b></font></td></tr>
<tr style="background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 75%; font: 10pt/107% Times New Roman, Times, Serif">Compensation and payroll taxes</td>
<td style="vertical-align: bottom; width: 1%; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="vertical-align: bottom; width: 10%; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">3,510</td>
<td style="vertical-align: top; width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="vertical-align: bottom; width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="vertical-align: bottom; width: 1%; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="vertical-align: bottom; width: 10%; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">4,054</td>
<td style="vertical-align: top; width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif">Professional fees</td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">406</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">775</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif">Deferred revenue</td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,831</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,879</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt">Other accrued expenses</td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 1pt solid">2,253</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 1pt solid">2,427</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td></tr>
<tr style="background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt; padding-left: 20pt"><b>Accrued Liabilities</b></td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>$</b></td>
<td style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>8,000</b></td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>$</b></td>
<td style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>9,135</b></td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt"><b>4.  ACQUISITION</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">On June 15, 2015, Richardson Electronics, Ltd
(“the Company”), acquired certain assets of International Medical Equipment and Services, Inc. (“IMES”),
for a purchase price of $12.2 million. This includes the purchase of inventory, receivables, fixed assets, and certain other assets
of the Company. The Company did not acquire any liabilities of IMES. The total consideration paid excludes transaction costs.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">IMES, based in South Carolina, provides reliable,
cost-saving solutions worldwide for major brands of CT and MRI equipment. This acquisition positions Richardson Healthcare to provide
cost effective diagnostic imaging replacement parts and training to hospitals, diagnostic imaging centers, medical institutions,
and independent service organizations. IMES offers an extensive selection of replacement parts, as well as an interactive training
center, on-site test bays and experienced technicians who provide 24/7 customer support. Replacement parts are readily available
and triple tested to provide peace of mind when uptime is critical. IMES core operations have remained in South Carolina. Richardson
Healthcare plans to expand IMES’ replacement parts and training offerings geographically to leverage the Company’s
global infrastructure. During the fourth quarter of fiscal 2016, IMES opened up their first foreign location in Amsterdam.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">The consideration paid by the Company
to IMES at closing was $12.2 million in cash. The following table summarizes the fair values of the assets acquired at the date
of the closing of the acquisition <i>(in thousands)</i>:</p>
<table cellspacing="0" cellpadding="0" align="center" style="font: 10pt Times New Roman, Times, Serif; width: 93%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="width: 87%; font: 10pt/107% Times New Roman, Times, Serif">Accounts receivable</td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="width: 10%; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">737</td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">Inventories</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,420</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">Property, plant and equipment</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">230</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">Goodwill</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">6,332</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">Other intangibles</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: right">3,490</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-left: 20pt"><b>Net assets acquired</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2.25pt double; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2.25pt double; font: 10pt/107% Times New Roman, Times, Serif; text-align: right">12,209</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Intangible assets include trade names with an
estimated life of 3 years for $0.6 million, customer relationships with an estimated life of 20 years for $2.5 million, non-compete
agreements with an estimated life of 5 years for $0.2 million, and technology with an estimated life of 10 years for $0.2 million.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> 	</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Goodwill recognized represents value the Company
expects to be created by combining the operations of IMES with the Company’s operations, including the expansion into markets
within existing business segments and geographic regions, access to new customers and potential cost savings and synergies.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">Goodwill related to the acquisition is deductible
for tax purposes.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 6pt; text-indent: 0.5in">In connection with the acquisition
of IMES, the Company also entered into an Employment, Non-Disclosure, and Non-Compete Agreement (“Employment Agreement”)
with Lee A. McIntyre III as the Company’s Executive Vice President, IMES. During the term of his employment, Mr. McIntyre
will earn an annual base salary of $300,000. In addition to his base salary, he will be entitled to an annual bonus equal to 20%
of the EBITDA of IMES provided that the EBITDA of the business is at least $2.0 million inclusive of the bonus payment. The annual
bonus payment will terminate after five years. For fiscal year 2016, Mr. McIntyre did not receive a bonus as the minimum EBITDA
needed was not achieved.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 6pt; text-indent: 0.5in">The financial results for the three
months ended August 29, 2015, includes the financial results for IMES from June 15, 2015, through August 29, 2015. The financial
transactions for IMES from May 31, 2015, through June 14, 2015, were deemed immaterial for illustrating pro forma financial statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">The following table summarizes the fair values of the assets acquired at the date
of the closing of the acquisition <i>(in thousands)</i>:</p>
<table cellspacing="0" cellpadding="0" align="center" style="font: 10pt Times New Roman, Times, Serif; width: 93%; border-collapse: collapse">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="width: 87%; font: 10pt/107% Times New Roman, Times, Serif">Accounts receivable</td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="width: 10%; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">737</td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">Inventories</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,420</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">Property, plant and equipment</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">230</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">Goodwill</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">6,332</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">Other intangibles</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: right">3,490</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-left: 20pt"><b>Net assets acquired</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2.25pt double; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2.25pt double; font: 10pt/107% Times New Roman, Times, Serif; text-align: right">12,209</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 8pt 0; text-indent: 0.5in">The amortization expense associated
with the intangible assets subject to amortization for the next five years is presented in the following table <i>(in thousands)</i>:</p>
<table cellspacing="0" cellpadding="0" align="center" style="font: 10pt Times New Roman, Times, Serif; width: 93%; border-collapse: collapse">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="border-bottom: Black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif"><b>Fiscal Year</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: center"><b>Amortization</b><br />
<b>Expense</b></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="width: 87%; font: 10pt/107% Times New Roman, Times, Serif">Remaining 2017</td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="width: 10%; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">270</td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2018</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">432</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2019</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">245</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2020</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">257</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2021</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">245</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">Thereafter</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: right">2,265</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif"><b>Total amortization expense</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2.25pt double; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2.25pt double; font: 10pt/107% Times New Roman, Times, Serif; text-align: right">3,714</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr></table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt"><b>6.  INVESTMENTS</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">As of August 27, 2016, we had approximately
$8.2 million invested in time deposits and certificates of deposit (“CD”). Of these, $6.4 million mature in less than
twelve months and $1.8 million mature in more than twelve months. The fair value of these investments is equal to the face value
of each time deposit and CD.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">As of May 28, 2016, we have invested
in time deposits and certificates of deposit (“CD”) in the amount of $9.5 million. Of this, $2.3 million mature in
less than twelve months and $7.2 million mature in greater than twelve months. The fair value of these investments is the face
value of each time deposit and CD.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 7pt; text-indent: 0.5in">We also have investments in equity
securities, all of which are classified as available-for-sale and are carried at their fair value based on quoted market prices.
Our investments, which are included in non-current assets, had a carrying amount of $0.6 million as of August 27, 2016, and May 28,
2016. Proceeds from the sale of securities were $0.1 million during the first quarter of fiscal 2017 and fiscal 2016. We reinvested
proceeds from the sale of securities, and the cost of the equity securities sold was based on a specific identification method.
Gross realized gains on those sales were less than $0.1 million during the first quarter of fiscal 2017 and fiscal 2016. Net unrealized
holding gains of less than $0.1 million during the first quarter of fiscal 2017 and loss of $0.1 million during the first quarter
of fiscal 2016, have been included in accumulated other comprehensive income.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 7pt; text-indent: 0.5in"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 6pt"><b>7.  WARRANTIES</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 6pt; text-indent: 0.5in">We offer warranties for the limited
number of specific products we manufacture. We also provide extended warranties for some products we sell that lengthen the period
of coverage specified in the manufacturer’s original warranty. Our warranty terms generally range from one to three years.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 6pt; text-indent: 0.5in">We estimate the cost to perform
under the warranty obligation and recognize this estimated cost at the time of the related product sale. We record expense related
to our warranty obligations as cost of sales in our consolidated statements of comprehensive loss. Each quarter, we assess actual
warranty costs incurred on a product-by-product basis and compare the warranty costs to our estimated warranty obligation. With
respect to new products, estimates are based generally on knowledge of the products, the extended warranty period, and warranty
experience.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 7pt; text-indent: 0.5in">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 $0.2 million as of August 27, 2016, and
as of May 28, 2016.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 6pt"><b>8.  LEASE OBLIGATIONS, OTHER COMMITMENTS,
AND CONTINGENCIES</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">We lease certain warehouse and
office facilities and office equipment under non-cancelable operating leases. Rent expense during the first three months of fiscal
2017 and fiscal 2016 was $0.5 million. Our future lease commitments for minimum rentals, including common area maintenance charges
and property taxes during the next five years are as follows <i>(in thousands)</i>:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in"></p>
<table cellspacing="0" cellpadding="0" align="center" style="font: 10pt Times New Roman, Times, Serif; width: 93%; border-collapse: collapse">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif"><b>Fiscal Year</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: center"><b>Payments</b></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="width: 87%; font: 10pt/107% Times New Roman, Times, Serif">Remaining 2017 </td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="width: 10%; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,256</td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2018</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,344</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2019</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,288</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2020</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,126</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2021</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">809</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">Thereafter </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">470</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 6pt">Our future lease commitments for minimum rentals,
including common area maintenance charges and property taxes during the next five years are as follows <i>(in thousands)</i>:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in"></p>
<table cellspacing="0" cellpadding="0" align="center" style="font: 10pt Times New Roman, Times, Serif; width: 93%; border-collapse: collapse">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif"><b>Fiscal Year</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: center"><b>Payments</b></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="width: 87%; font: 10pt/107% Times New Roman, Times, Serif">Remaining 2017 </td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="width: 10%; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,256</td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2018</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,344</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2019</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,288</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2020</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,126</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2021</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">809</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">Thereafter </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">470</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt"><b>10.  CALCULATION OF EARNINGS PER SHARE</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">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.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">In accordance with ASC 260-10,
<i>Earnings Per Share </i>(“ASC 260”), our Class B common stock is considered a participating security requiring the
use of the two-class method for the computation of basic and diluted earnings per share. The two-class computation method for
each period reflects the cash dividends paid per share for each class of stock, plus the amount of allocated undistributed earnings
per share computed using the participation percentage which reflects the dividend rights of each class of stock. Basic and diluted
earnings per share were computed using the two-class method as prescribed in ASC 260. The shares of Class B common stock are considered
to be participating convertible securities since the shares of Class B common stock are convertible on a share-for-share basis
into shares of common stock and may participate in dividends with common stock according to a predetermined formula which is 90%
of the amount of Class A common stock cash dividends. </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.35in">The earnings per share (“EPS”)
presented in our unaudited consolidated statements of comprehensive loss are based on the following amounts (<i>in thousands,
except per share amounts</i>):</p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="15" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">For the Three Months Ended</td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="7" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">August 27, 2016</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="7" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">August 29, 2015</td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1pt; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">Basic</td><td style="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">Diluted</td><td style="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">Basic</td><td style="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">Diluted</td><td style="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: italic 10pt Times New Roman, Times, Serif; text-align: left">Numerator for Basic and Diluted EPS:</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="width: 48%; font: bold 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 20pt">Net loss</td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">(2,850</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">(2,850</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">(1,399</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">(1,399</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Less dividends:</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 40pt; font: 10pt Times New Roman, Times, Serif">Common stock</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">641</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">641</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">690</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">690</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 40pt; font: 10pt Times New Roman, Times, Serif">Class B common stock</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">116</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">116</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">116</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">116</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Undistributed losses</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(3,607</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(3,607</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,205</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,205</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Common stock undistributed losses</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">(3,057</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">(3,057</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">(1,888</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">(1,888</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Class B common stock undistributed losses</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(550</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(550</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(317</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(317</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Total undistributed losses</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(3,607</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(3,607</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,205</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,205</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: italic 10pt Times New Roman, Times, Serif; text-align: left">Denominator for basic and diluted EPS:</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2.5pt; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Common stock weighted average shares</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">10,703</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">10,703</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">11,486</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">11,486</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 30pt; text-indent: -10pt; font: 10pt Times New Roman, Times, Serif">Class B common stock weighted average shares, and shares under if-converted method for diluted EPS</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">2,141</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">2,141</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">2,141</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">2,141</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Effect of dilutive securities</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 40pt; font: 10pt Times New Roman, Times, Serif">Dilutive stock options</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">—  </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">—  </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 30pt; text-indent: -10pt; font: 10pt Times New Roman, Times, Serif">Denominator for diluted EPS adjusted for weighted average shares and assumed conversions</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">12,844</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">13,627</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif">Net loss per share:</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif">Common stock</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.23</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.23</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.10</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.10</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif">Class B common stock</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.20</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.20</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.10</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.10</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 8pt 0"><i>Note: Common stock options that were anti-dilutive
and not included in diluted earnings per common share for the first quarter of fiscal 2017 and fiscal 2016 were 838 and 888, respectively.</i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.35in">The earnings per share (“EPS”)
presented in our unaudited consolidated statements of comprehensive loss are based on the following amounts (<i>in thousands,
except per share amounts</i>):</p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="15" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">For the Three Months Ended</td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="7" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">August 27, 2016</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="7" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">August 29, 2015</td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1pt; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">Basic</td><td style="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">Diluted</td><td style="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">Basic</td><td style="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt; text-align: center"> </td>
<td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td><td style="border-bottom: Black 1pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">Diluted</td><td style="padding-bottom: 1pt; font: bold 10pt Times New Roman, Times, Serif; text-align: center"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: italic 10pt Times New Roman, Times, Serif; text-align: left">Numerator for Basic and Diluted EPS:</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="width: 48%; font: bold 10pt Times New Roman, Times, Serif; text-align: left; padding-left: 20pt">Net loss</td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">(2,850</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">(2,850</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">(1,399</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">(1,399</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Less dividends:</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 40pt; font: 10pt Times New Roman, Times, Serif">Common stock</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">641</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">641</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">690</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">690</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 40pt; font: 10pt Times New Roman, Times, Serif">Class B common stock</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">116</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">116</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">116</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">116</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Undistributed losses</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(3,607</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(3,607</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,205</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,205</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Common stock undistributed losses</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">(3,057</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">(3,057</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">(1,888</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">(1,888</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Class B common stock undistributed losses</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(550</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(550</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(317</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(317</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Total undistributed losses</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(3,607</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(3,607</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,205</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(2,205</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: italic 10pt Times New Roman, Times, Serif; text-align: left">Denominator for basic and diluted EPS:</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2.5pt; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Common stock weighted average shares</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">10,703</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">10,703</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">11,486</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">11,486</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 30pt; text-indent: -10pt; font: 10pt Times New Roman, Times, Serif">Class B common stock weighted average shares, and shares under if-converted method for diluted EPS</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">2,141</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">2,141</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">2,141</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">2,141</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Effect of dilutive securities</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 40pt; font: 10pt Times New Roman, Times, Serif">Dilutive stock options</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">—  </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">—  </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 30pt; text-indent: -10pt; font: 10pt Times New Roman, Times, Serif">Denominator for diluted EPS adjusted for weighted average shares and assumed conversions</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">12,844</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">13,627</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif">Net loss per share:</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif">Common stock</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.23</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.23</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.10</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.10</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif">Class B common stock</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.20</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.20</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.10</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">(0.10</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 8pt 0"><i>Note: Common stock options that were anti-dilutive
and not included in diluted earnings per common share for the first quarter of fiscal 2017 and fiscal 2016 were 838 and 888, respectively.</i></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt"><b>11.  SEGMENT REPORTING</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">In accordance with ASC 280-10,
Segment Reporting, we have identified three operating and reportable segments as follows:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Power and Microwave Technologies
Group (“PMT”) combines our core engineered solutions, power grid and microwave tube business with new RF and power
technologies. As a manufacturer and authorized distributor, PMT’s strategy is to provide specialized technical expertise
and engineered solutions based on our core engineering and manufacturing capabilities. We provide solutions and add value through
design-in support, systems integration, prototype design and manufacturing, testing, logistics, and aftermarket technical service
and repair—all through our existing global infrastructure. PMT’s focus is on products for power, RF and microwave applications
for customers in alternative energy, aviation, broadcast, communications, industrial, marine, medical, military, scientific, and
semiconductor markets. PMT focuses on various applications including broadcast transmission, CO2 laser cutting, diagnostic imaging,
dielectric and induction heating, high energy transfer, high voltage switching, plasma, power conversion, radar, and radiation
oncology. PMT also offers its customers technical services for both microwave and industrial equipment.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Canvys provides customized display
solutions serving the corporate enterprise, financial, healthcare, industrial, and medical original equipment manufacturers (“OEM”)
markets.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Healthcare manufactures, distributes
and services high value replacement parts for the healthcare market including hospitals, medical centers, independent service organizations,
and multi-vendor service providers. Products include power grid tubes, hydrogen thyratrons, klystrons, magnetrons; Image Systems
medical displays and workstations for picture archiving and communication systems (“PACS”); visual solutions for operating
rooms/surgical environments; digital radiography solutions including replacement flat panel detectors and upgrades; and additional
replacement components currently under development for the diagnostic imaging service market. Through a combination of newly developed
products and partnerships, service offerings, and training programs, we believe we can help our customers improve efficiency and
deliver better clinical outcomes while lowering the cost of healthcare delivery.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">The CEO evaluates performance and
allocates resources primarily based on the gross profit of each segment.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Operating results by segment are
summarized in the following table (<i>in thousands</i>):</p>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 55%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="7" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Three Months Ended</td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="3" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">August 27,<br /> 2016</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="3" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">August 29,<br /> 2015</td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-decoration: underline">PMT</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="width: 25%; text-align: left; font: 10pt Times New Roman, Times, Serif">Net Sales</td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">25,381</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">27,195</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Gross Profit</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">7,455</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">8,138</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-decoration: underline">Canvys</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Net Sales</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">4,620</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">6,681</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Gross Profit</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">1,348</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">1,709</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-decoration: underline">Healthcare</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Net Sales</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">3,372</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">3,195</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Gross Profit</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">1,437</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">1,415</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 8pt 0; text-indent: 0.5in">Geographic net sales information
is primarily grouped by customer destination into five areas: North America; Asia/Pacific; Europe; Latin America; and Other. </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Net sales and gross profit by
geographic region are summarized in the following table (<i>in thousands</i>):</p>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 55%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="7" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Three Months Ended</td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="3" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">August 27,<br /> 2016</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="3" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">August 29,<br /> 2015</td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-decoration: underline; text-align: left">Net Sales</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="width: 25%; text-align: left; font: 10pt Times New Roman, Times, Serif">North America</td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">13,049</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">17,792</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif">Asia/Pacific</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">7,655</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">6,132</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif">Europe</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">10,264</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">11,358</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Latin America</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">2,390</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">1,607</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif">Other (1)</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">15</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">182</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif">Total</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">33,373</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">37,071</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-decoration: underline; text-align: left">Gross Profit</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">North America</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">4,885</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">6,199</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif">Asia/Pacific</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">2,558</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">1,956</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif">Europe</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">3,029</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">3,341</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Latin America</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">917</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">625</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif">Other (1)</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(1,149</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(859</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif">Total</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">10,240</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">11,262</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 8pt 0"></p>
<div align="left" style="margin-top: 3pt; margin-bottom: 3pt; font: 10pt Times New Roman, Times, Serif"><div style="font: 10pt Times New Roman, Times, Serif; border-top: Black 1pt solid; width: 25%"> </div></div>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify; font: 10pt Times New Roman, Times, Serif">
<td style="width: 15pt; text-align: left; font: 10pt Times New Roman, Times, Serif">(1)</td><td style="width: 5pt; font: 10pt Times New Roman, Times, Serif"></td><td style="text-align: justify; font: 10pt Times New Roman, Times, Serif">Other includes primarily net sales not allocated to a specific geographical region,
unabsorbed value-add costs, and other unallocated expenses.</td>
</tr></table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 8pt 0; text-indent: 0.5in">We sell our products to customers
in diversified industries and perform periodic credit evaluations of our customers’ financial condition. Terms are generally
on 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.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Operating results by segment are
summarized in the following table (<i>in thousands</i>):</p>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 55%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="7" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Three Months Ended</td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="3" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">August 27,<br /> 2016</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="3" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">August 29,<br /> 2015</td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-decoration: underline">PMT</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="width: 25%; text-align: left; font: 10pt Times New Roman, Times, Serif">Net Sales</td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">25,381</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">27,195</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Gross Profit</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">7,455</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">8,138</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-decoration: underline">Canvys</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Net Sales</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">4,620</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">6,681</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Gross Profit</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">1,348</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">1,709</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-decoration: underline">Healthcare</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Net Sales</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">3,372</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">3,195</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Gross Profit</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">1,437</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">1,415</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Net sales and gross profit by
geographic region are summarized in the following table (<i>in thousands</i>):</p>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 55%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="7" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Three Months Ended</td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="3" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">August 27,<br /> 2016</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="3" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">August 29,<br /> 2015</td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-decoration: underline; text-align: left">Net Sales</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="width: 25%; text-align: left; font: 10pt Times New Roman, Times, Serif">North America</td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">13,049</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">17,792</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif">Asia/Pacific</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">7,655</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">6,132</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif">Europe</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">10,264</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">11,358</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Latin America</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">2,390</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">1,607</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif">Other (1)</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">15</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">182</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif">Total</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">33,373</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">37,071</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-decoration: underline; text-align: left">Gross Profit</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">North America</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">4,885</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">6,199</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif">Asia/Pacific</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">2,558</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">1,956</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif">Europe</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">3,029</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">3,341</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Latin America</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">917</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">625</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif">Other (1)</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(1,149</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">(859</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif">Total</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">10,240</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">11,262</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 8pt 0"></p>
<div align="left" style="margin-top: 3pt; margin-bottom: 3pt; font: 10pt Times New Roman, Times, Serif"><div style="font: 10pt Times New Roman, Times, Serif; border-top: Black 1pt solid; width: 25%"> </div></div>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify; font: 10pt Times New Roman, Times, Serif">
<td style="width: 15pt; text-align: left; font: 10pt Times New Roman, Times, Serif">(1)</td><td style="width: 5pt; font: 10pt Times New Roman, Times, Serif"></td><td style="text-align: justify; font: 10pt Times New Roman, Times, Serif">Other includes primarily net sales not allocated to a specific geographical region,
unabsorbed value-add costs, and other unallocated expenses.</td></tr></table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt"><b>12.  LITIGATION</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">We are involved in several pending
judicial proceedings concerning matters arising in the ordinary course of business. While the outcome of litigation is subject
to uncertainties, based on information available at the time the financial statements were issued, we determined disclosure of
contingencies relating to any of our pending judicial proceedings was not necessary because there is less than a reasonable possibility
that a material loss will be incurred.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt"><b>13.  FAIR VALUE MEASUREMENTS</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">ASC 820, <i>Fair Value Measurements
and Disclosures</i> (“ASC 820”), defines fair value, establishes a framework for measuring fair value in accordance
with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">ASC 820 establishes a three-tier
fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as
observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets
that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data
exists; therefore requiring an entity to develop its own assumptions.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">As of August 27, 2016, and May
28, 2016, we held investments that are required to be measured at fair value on a recurring basis. Our investments consist
of time deposits and CDs, where face value is equal to fair value, and equity securities of publicly traded companies for which
market prices are readily available. </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Investments measured at fair value
on a recurring basis subject to the disclosure requirements of ASC 820 as of August 27, 2016, and May 28, 2016, were as follows
(<i>in thousands</i>):</p>
<table cellspacing="0" cellpadding="0" align="center" style="font: 10pt Times New Roman, Times, Serif; width: 93%; border-collapse: collapse">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: center"><b>Level 1</b></td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="text-decoration: underline; font: 10pt/107% Times New Roman, Times, Serif"><b><u>August 27, 2016</u></b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="3" style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="width: 87%; font: 10pt/107% Times New Roman, Times, Serif">Time deposits/CDs</td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="width: 10%; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">8,239</td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt">Equity securities</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 1pt solid"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 1pt solid">563</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"><b>Total</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>$</b></td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>8,802</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-decoration: underline; font: 10pt/107% Times New Roman, Times, Serif"><b><u>May 28, 2016</u></b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">Time deposits/CDs</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">9,517</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt">Equity securities</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 1pt solid"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 1pt solid">550</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"><b>Total</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>$</b></td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>10,067</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 8pt 0"><b>14.  <font style="text-transform: uppercase">Related
Party Transaction</font></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">On June 15, 2015, the Company entered
into a lease agreement for the IMES facility with LDL, LLC. The Executive Vice President of IMES, Lee A. McIntyre III, has an ownership
interest in LDL, LLC.  The lease agreement provides for monthly payments over five years with total future minimum lease payments
of $0.6 million.  Rental expense related to this lease amounted to less than $0.1 million for the three months ended August
27, 2016, and August 29, 2015.  The Company shall be entitled to extend the term of the lease for a period of an additional
five years by notifying the landlord in writing of its intention to do so within nine months of the expiration of the initial term.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Investments measured at fair value
on a recurring basis subject to the disclosure requirements of ASC 820 as of August 27, 2016, and May 28, 2016, were as follows
(<i>in thousands</i>):</p>
<table cellspacing="0" cellpadding="0" align="center" style="font: 10pt Times New Roman, Times, Serif; width: 93%; border-collapse: collapse">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: center"><b>Level 1</b></td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="text-decoration: underline; font: 10pt/107% Times New Roman, Times, Serif"><b><u>August 27, 2016</u></b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="3" style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="width: 87%; font: 10pt/107% Times New Roman, Times, Serif">Time deposits/CDs</td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="width: 10%; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">8,239</td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt">Equity securities</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 1pt solid"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 1pt solid">563</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"><b>Total</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>$</b></td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>8,802</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-decoration: underline; font: 10pt/107% Times New Roman, Times, Serif"><b><u>May 28, 2016</u></b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">Time deposits/CDs</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">9,517</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt">Equity securities</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 1pt solid"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 1pt solid">550</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"><b>Total</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>$</b></td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>10,067</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td></tr></table>
10703000
2141000
10703000
2141000
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt"><b>3.  CRITICAL ACCOUNTING POLICIES AND ESTIMATES</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in"><b>Inventories:</b> Our consolidated
inventories are stated at the lower of cost or market, generally using a weighted-average cost method. Our inventories include
approximately $39.7 million of finished goods, $4.4 million of raw materials, and $1.1 million of work-in-progress as of August
27, 2016, as compared to approximately $40.0 million of finished goods, $4.4 million of raw materials, and $1.0 million of work-in-progress
as of May 28, 2016.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">At this time, we do not
anticipate any material risks or uncertainties related to possible future inventory write-downs. 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 $3.4 million as of August 27, 2016, and as of May 28, 2016.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in"><b>Revenue Recognition:</b> Our
product sales are recognized as revenue upon shipment, when title passes to the customer, when delivery has occurred or services
have been rendered, and when collectability is reasonably assured. We also record estimated discounts and returns based on our
historical experience. Our products are often manufactured to meet the specific design needs of our customers’ applications.
Our engineers work closely with customers to ensure that our products will meet their needs. Our customers are under no obligation
to compensate us for designing the products we sell.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in"><b>Loss Contingencies: </b>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.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in"><b>Intangible Assets:</b> Intangible
assets are initially recorded at their fair market values determined on quoted market prices in active markets, if available, or
recognized valuation models. Intangible assets that have finite useful lives are amortized over their useful lives either on a
straight-line basis or over their projected future cash flows and are tested for impairment when events or changes in circumstances
occur that indicate possible impairment.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in"><b>Income Taxes:</b> We recognize
deferred tax assets and liabilities based on the differences between financial statement carrying amounts and the tax bases of
assets and liabilities. We regularly review our deferred tax assets for recoverability and determine the need for a valuation allowance
based on a number of factors, including both positive and negative evidence. These factors include historical taxable income or
loss, projected future taxable income or loss, the expected timing of the reversals of existing temporary differences, and the
implementation of tax planning strategies. In circumstances where we, or any of our affiliates, have incurred three years of cumulative
losses which constitute significant negative evidence, positive evidence of equal or greater significance is needed to overcome
the negative evidence before a tax benefit is recognized for deductible temporary differences and loss carryforwards.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">In November 2015, the FASB issued
ASU 2015-17, “Balance Sheet Classification of Deferred Taxes.” ASU 2015-17 eliminates the prior US GAAP guidance in
Topic 740, Income Taxes, that required an entity to separate deferred tax liabilities and assets between current and noncurrent
amounts in a classified balance sheet. The amendments in ASU 2015-17 require that all deferred tax liabilities and assets of the
same tax jurisdiction or a tax filing group, as well as any related valuation allowance, be offset and presented as a single noncurrent
amount in a classified balance sheet. ASU 2015-17 is effective for annual periods beginning after December 15, 2016, and interim
periods within those annual periods. In order to simplify presentation of deferred tax balances, the Company adopted this standard
prospectively in the quarter ended August 27, 2016. Periods prior to August 27, 2016 were not retrospectively adjusted.</p>
<p style="font: 10pt/107% Times New Roman, Times, Serif; margin: 9pt 0 7pt; text-indent: 0.5in"><b>Accrued Liabilities:</b> Accrued
liabilities consist of the following (<i>in thousands</i>):</p>
<table cellspacing="0" cellpadding="0" align="center" style="font: 10pt Times New Roman, Times, Serif; width: 93%; border-collapse: collapse">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="3" style="border-bottom: Black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: center"><font style="font-size: 8pt; line-height: 107%"><b>August 27, 2016</b></font></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="3" style="border-bottom: Black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: center"><font style="font-size: 8pt; line-height: 107%"><b>May 28, 2016</b></font></td></tr>
<tr style="background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; width: 75%; font: 10pt/107% Times New Roman, Times, Serif">Compensation and payroll taxes</td>
<td style="vertical-align: bottom; width: 1%; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="vertical-align: bottom; width: 10%; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">3,510</td>
<td style="vertical-align: top; width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="vertical-align: bottom; width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="vertical-align: bottom; width: 1%; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="vertical-align: bottom; width: 10%; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">4,054</td>
<td style="vertical-align: top; width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif">Professional fees</td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">406</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">775</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif">Deferred revenue</td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,831</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">1,879</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt">Other accrued expenses</td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 1pt solid">2,253</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 1pt solid">2,427</td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 1pt"> </td></tr>
<tr style="background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt; padding-left: 20pt"><b>Accrued Liabilities</b></td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>$</b></td>
<td style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>8,000</b></td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td>
<td style="vertical-align: bottom; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>$</b></td>
<td style="vertical-align: bottom; text-align: right; font: 10pt/107% Times New Roman, Times, Serif; border-bottom: Black 2.5pt double"><b>9,135</b></td>
<td style="vertical-align: top; font: 10pt/107% Times New Roman, Times, Serif; padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in"><b>Inventories:</b> Our consolidated
inventories are stated at the lower of cost or market, generally using a weighted-average cost method. Our inventories include
approximately $39.7 million of finished goods, $4.4 million of raw materials, and $1.1 million of work-in-progress as of August
27, 2016, as compared to approximately $40.0 million of finished goods, $4.4 million of raw materials, and $1.0 million of work-in-progress
as of May 28, 2016.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">At this time, we do not
anticipate any material risks or uncertainties related to possible future inventory write-downs. 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 $3.4 million as of August 27, 2016, and as of May 28, 2016.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt"><b>5.  GOODWILL AND INTANGIBLE ASSETS</b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">The carrying value of goodwill
was $6.3 million as of August 27, 2016, and May 28, 2016.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 8pt 0; text-indent: 0.5in">Goodwill is initially recorded based
on the premium paid for acquisitions and is subsequently tested for impairment, using the first day of our fourth quarter as the
measurement date. We test goodwill for impairment annually and whenever events or circumstances indicates an impairment may have
occurred, such as a significant adverse change in the business climate, loss of key personnel or a decision to sell or dispose
of a reporting unit. The goodwill balance in its entirety relates to our IMES reporting unit which is included in our Healthcare
segment.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Intangible assets are initially
recorded at their fair market values determined on quoted market prices in active markets, if available, or recognized valuation
models. Intangible assets that have finite useful lives are amortized over their useful lives either on a straight-line basis
or over their projected future cash flows and are tested for impairment when events or changes in circumstances occur that indicate
possible impairment. </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Our intangible assets represent
the fair value for trade name, customer relationships, non-compete agreements, and technology acquired in connection with our acquisitions.
Intangible assets subject to amortization are as follows <i>(in thousands)</i>:</p>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 93%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="7" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Intangible Assets Subject to<br /> Amortization as of</td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="3" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">August 27,<br /> 2016</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="3" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">May 28,<br /> 2016</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Gross Amounts:</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="width: 74%; text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Trade Name</td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">659</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">659</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Customer Relationships<sup>(1)</sup></td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">3,403</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">3,434</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Non-compete Agreements</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">177</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">177</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1pt; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Technology</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">230</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">230</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.5pt; padding-left: 30pt">Total Gross Amounts</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">4,469</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">4,500</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Accumulated Amortization:</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Trade Name</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">283</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">231</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Customer Relationships</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">380</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">374</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Non-compete Agreements</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">60</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">55</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1pt; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Technology</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">32</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">22</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.5pt; padding-left: 30pt">Total Accumulated Amortization</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">755</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">682</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.5pt; padding-left: 30pt">Net Intangibles</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">3,714</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">3,818</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in"></p>
<div align="left" style="margin-top: 3pt; margin-bottom: 3pt; font: 10pt Times New Roman, Times, Serif"><div style="font: 10pt Times New Roman, Times, Serif; border-top: Black 1pt solid; width: 25%"> </div></div>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify; font: 10pt Times New Roman, Times, Serif">
<td style="width: 15pt; text-align: left; font: 10pt Times New Roman, Times, Serif">(1)</td><td style="width: 5pt; font: 10pt Times New Roman, Times, Serif"></td><td style="text-align: justify; font: 10pt Times New Roman, Times, Serif">Change from prior periods reflect impact of foreign currency translation.</td>
</tr></table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 8pt 0; text-indent: 0.5in">The amortization expense associated
with the intangible assets subject to amortization for the next five years is presented in the following table <i>(in thousands)</i>:</p>
<table cellspacing="0" cellpadding="0" align="center" style="font: 10pt Times New Roman, Times, Serif; width: 93%; border-collapse: collapse">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="border-bottom: Black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif"><b>Fiscal Year</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: center"><b>Amortization</b><br />
<b>Expense</b></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="width: 87%; font: 10pt/107% Times New Roman, Times, Serif">Remaining 2017</td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="width: 10%; text-align: right; font: 10pt/107% Times New Roman, Times, Serif">270</td>
<td style="width: 1%; font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2018</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">432</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2019</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">245</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2020</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">257</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">2021</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font: 10pt/107% Times New Roman, Times, Serif">245</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif">Thereafter</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 1pt solid; font: 10pt/107% Times New Roman, Times, Serif; text-align: right">2,265</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt/107% Times New Roman, Times, Serif"><b>Total amortization expense</b></td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2.25pt double; font: 10pt/107% Times New Roman, Times, Serif">$</td>
<td style="border-bottom: black 2.25pt double; font: 10pt/107% Times New Roman, Times, Serif; text-align: right">3,714</td>
<td style="font: 10pt/107% Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 8pt 0">The weighted average number of years of amortization
expense remaining is 16.1 years.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">Our intangible assets represent
the fair value for trade name, customer relationships, non-compete agreements, and technology acquired in connection with our acquisitions.
Intangible assets subject to amortization are as follows <i>(in thousands)</i>:</p>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 93%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="7" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">Intangible Assets Subject to<br /> Amortization as of</td></tr>
<tr style="vertical-align: bottom; font: 10pt Times New Roman, Times, Serif">
<td style="font: 10pt Times New Roman, Times, Serif"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="3" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">August 27,<br /> 2016</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1pt"> </td>
<td colspan="3" style="font: bold 10pt Times New Roman, Times, Serif; text-align: center; border-bottom: Black 1pt solid">May 28,<br /> 2016</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Gross Amounts:</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="width: 74%; text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Trade Name</td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">659</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="width: 1%; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="width: 10%; text-align: right; font: 10pt Times New Roman, Times, Serif">659</td><td style="width: 1%; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Customer Relationships<sup>(1)</sup></td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">3,403</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">3,434</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Non-compete Agreements</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">177</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">177</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1pt; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Technology</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">230</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">230</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.5pt; padding-left: 30pt">Total Gross Amounts</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">4,469</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">4,500</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">Accumulated Amortization:</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Trade Name</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">283</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif">$</td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">231</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Customer Relationships</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">380</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">374</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="text-align: left; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Non-compete Agreements</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">60</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="text-align: right; font: 10pt Times New Roman, Times, Serif">55</td><td style="text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1pt; padding-left: 20pt; font: 10pt Times New Roman, Times, Serif">Technology</td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">32</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">22</td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.5pt; padding-left: 30pt">Total Accumulated Amortization</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">755</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">682</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255); font: 10pt Times New Roman, Times, Serif">
<td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 1pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom; background-color: White; font: 10pt Times New Roman, Times, Serif">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.5pt; padding-left: 30pt">Net Intangibles</td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">3,714</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td><td style="padding-bottom: 2.5pt; font: 10pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">3,818</td><td style="padding-bottom: 2.5pt; text-align: left; font: 10pt Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in"></p>
<div align="left" style="margin-top: 3pt; margin-bottom: 3pt; font: 10pt Times New Roman, Times, Serif"><div style="font: 10pt Times New Roman, Times, Serif; border-top: Black 1pt solid; width: 25%"> </div></div>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify; font: 10pt Times New Roman, Times, Serif">
<td style="width: 15pt; text-align: left; font: 10pt Times New Roman, Times, Serif">(1)</td><td style="width: 5pt; font: 10pt Times New Roman, Times, Serif"></td><td style="text-align: justify; font: 10pt Times New Roman, Times, Serif">Change from prior periods reflect impact of foreign currency translation.</td></tr></table>
1300000
10000000
-3600000
4800000
-1200000
100000
1300000
100000
200000
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 8pt 0 7pt; text-align: justify"><b>9.  INCOME TAXES</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">We recorded an income tax provision of
$0.5 million and $0.4 million for the first three months of fiscal 2017 and the first three months of fiscal 2016, respectively.
The effective income tax rate during the first three months of fiscal 2017 was a tax provision of (21.1%), as compared to a tax
provision of (35.7%) during the first three months of fiscal 2016. The difference in rate during the first three months of fiscal
2017, as compared to the first three months of fiscal 2016, reflects the impact of changes in our geographical distribution of
income (loss), the recording of provision to return true-ups of various foreign jurisdictions, and our positions with respect to
ASC 740-30, Income Taxes - Other Considerations or Special Areas (“ASC 740-30”). The (21.1%) effective income tax rate
differs from the federal statutory rate of 34.0% as a result of our geographical distribution of income (loss), the recording of
various provision to return true-ups in foreign jurisdictions, the increase in uncertain tax positions as a result of an income
tax audit in France, and the recording of a valuation allowance against the increase in our U.S. state and federal net deferred
tax assets.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">During the first quarter of fiscal year 2017, we completed a distribution of cash from our Chinese entity to our U.S. parent
company which consisted of a return of capital for $10.0 million and a dividend of $1.3 million. The impact on our income
taxes recorded during the first quarter of fiscal 2017 was an increase to our foreign tax credits deferred tax asset of approximately
$3.6 million, a decrease to the U.S. federal net operating loss deferred tax asset of $4.8 million, and a decrease to our
deferred tax liability for earnings considered permanently reinvested of $1.2 million. In connection with the cash repatriation, we recorded and paid approximately $0.1 million of withholding tax.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">In the normal course of business, we are
subject to examination by taxing authorities throughout the world. Generally, years prior to fiscal 2006 are closed for examination
under the statute of limitation for U.S. federal, U.S. state and local, or non-U.S. tax jurisdictions. We are also currently under
examination in France (fiscal 2013 through 2015) and Thailand (fiscal 2008 through 2011). We are under examination in the state
of Illinois for fiscal years 2012 and 2013. Our primary foreign tax jurisdictions are Germany and the Netherlands. We have tax
years open in Germany beginning in fiscal 2012 and the Netherlands beginning in fiscal 2010.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">We have historically determined that
certain undistributed earnings of our foreign subsidiaries, to the extent of cash available, will be repatriated to the U.S. Accordingly,
we have provided a deferred tax liability totaling $5.5 million as of August 27, 2016, on foreign earnings of $38.2 million.
The change from year end May 28, 2016 of a deferred tax liability totaling $6.7 million on foreign earnings of $48.7 million relates
to reclassification of a deferred tax liability to an actual tax recognition of a dividend paid from China in the first quarter
of fiscal 2017, thereby reducing the deferred tax liability and also reducing gross U.S. deferred tax assets fully offset by a
valuation allowance.  In addition, as of August 27, 2016, the approximate $5.7 million balance of cumulative positive earnings
of some of our foreign subsidiaries from May 28, 2016 has not significantly changed and is still considered permanently reinvested
pursuant to ASC 740-30. Due to various tax attributes that are continuously changing, it is not practicable to determine what,
if any, tax liability might exist if such earnings were to be repatriated. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">As of August 27, 2016, our worldwide
liability, from continuing operations, for uncertain tax positions was $0.2 million, excluding interest and penalties, as compared
to $0.1 million of liabilities for uncertain tax positions as of May 28, 2016. The increase in uncertain tax positions relate
to the French tax audit. We record penalties and interest relating to uncertain tax positions in the income tax expense line item
within the unaudited consolidated statements of loss. It is not expected that there will be a change in the unrecognized tax benefits
within the next 12 months.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">The valuation allowance against the net deferred tax assets that will more likely than not be realized
was $5.9 million as of May 28, 2016. The valuation allowance against the net deferred tax assets has increased to $7.1 million
as of August 27, 2016 for additional domestic federal and state net deferred tax assets generated during the first quarter of
fiscal year 2017 due to additional losses in the U.S. jurisdiction. A full valuation allowance on the U.S. and state deferred
tax assets will be maintained until sufficient positive evidence related to sources of future taxable income exists to support
a reversal of the valuation allowance. The amount of the deferred tax asset considered realizable, however, could be adjusted
if estimates of future taxable income during the carryforward period are increased, or if objective negative evidence in the form
of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for
growth.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 8pt 0"><b>15.  <font style="text-transform: uppercase">Subsequent
event</font></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 0.5in">In September of fiscal 2017, we executed a plan to reduce our workforce as part of our cost savings initiatives
to permanently decrease fixed operating costs. As a result, we will be recording approximately $1.3 million of severance expense
during the second quarter of fiscal 2017.</p>
Other primarily includes net sales not allocated to a specific geographical region, unabsorbed value-add costs, and other unallocated expenses.
Change from prior periods reflect impact of foreign currency translation.