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German Subsidy
12 Months Ended
Feb. 28, 2013
German Subsidy

Note 19: German Subsidy

In December 2006, our German subsidiary, MSC Europe GmbH, entered into a subsidy program with the State of Thüringen. The subsidy provided 335 thousand for investment in our Application Development Center in Eisenach, Germany, and required we increase our staff by five positions and maintain 45 total positions for a five year monitoring period, from February 2009 through February 2014. The monitoring period was subsequently extended to February 2017. Under the subsidy, if we did not maintain the specified staff levels during the monitoring period, we would be liable to pay back the subsidy, with interest. Because of the uncertainty of maintaining hiring levels, we have carried a liability on the German books in the amount of the subsidy.

As discussed in Note 14, “Restructuring,” in the fourth quarter of fiscal 2012, MSC executed a restructuring plan that eliminated eight production and two SG&A positions in our German subsidiary. As a consequence of this reduction, we determined we would not be in compliance with the staff level requirements of the subsidy. We entered into negotiations with the State of Thüringen to settle the subsidy, and agreed to repay approximately $62 thousand of the subsidy plus approximately $12 thousand of accumulated interest on the repaid amount. We also agreed to a revised target staff level of 34 employees until February 2014. We carry the remaining balance of the subsidy as a current liability and amortize it into income over the remaining life of the surveillance period. The total remaining liability for the subsidy was $251 thousand at February 28, 2013.