Rescission Offer

3 Months Ended

Sep. 29, 2012

Rescission Offer

Rescission Offer

Note 19. Rescission Offer

During the first quarter of fiscal 2013, the Company discovered that it inadvertently failed to register with the Securities and Exchange Commission certain shares previously authorized for issuance by the Company’s stockholders under the Company’s 1998 Amended and Restated Employee Stock Purchase Plan (the “ESPP”).  As a result, certain purchasers of securities under the ESPP may have the right to rescind their purchases for an amount equal to the purchase price paid for the securities, plus interest from the date of purchase, limited to the unregistered shares purchased in the last twelve months and still held by the original purchasers, which is the applicable federal statute of limitations. These shares have always been treated as issued and outstanding for financial reporting purposes. The Company intends to make a registered rescission offer in the second quarter of fiscal 2013 to eligible plan participants who purchased shares in the past twelve months.

As of September 29, 2012, there were approximately 553,000 shares issued under the ESPP in the past twelve months and held by the original purchasers of such shares which may be subject to the recissionary rights. Of these, approximately 235,000 shares were originally purchased for $12.06 per share and the remaining shares were originally purchased for $9.35 per share.   If holders of all of these shares seek to rescind their purchases, the Company could be required to make aggregate payments of up to approximately $6.2 million, which includes estimated statutory interest. However, the actual impact to the Company’s cash position may be lower depending on the number of holders who accept the rescission offer and tender their shares. Pursuant to the authoritative accounting guidance, the shares are considered mandatorily redeemable as the redemption may be outside of the Company’s control. However, the Company has not reclassified them outside of permanent equity for prior and current periods due to their immateriality to the consolidated financial statements. The Company also may be subject to civil and other penalties by regulatory authorities as a result of the failure to register these shares. The Company does not believe that the failure to register the shares or the planned rescission offer will have a material impact on its consolidated financial statements.