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Form 10-K
Concentrations of Credit Risk
The Company monitors the creditworthiness of its customers to which it grants credit terms in
the normal course of business. As of June 30, 2010 the Company had one customer that represented
more than 10% of total receivables. The individual customer accounted for 11% of the Company’s
total accounts receivable at June 30, 2010.
The Company maintains an allowance for doubtful accounts for potential credit losses based
upon specific customer accounts and historical trends, and such losses to date in the aggregate have
not materially exceeded the Company’s expectations.
Recently Adopted Accounting Pronouncements
The Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification
(“ASC”) became effective for the Company at the beginning of fiscal 2010. The Codification brings
together in one place all authoritative GAAP and substantially retains existing GAAP. This change did
not affect the Company’s consolidated financial statements.
Effective July 1, 2009, the Company adopted the revisions to FASB ASC Topic 805 Business
Combinations that requires all assets and liabilities of an acquired business to be recorded at their fair
values in all business combinations (whether full, partial or step acquisitions). Certain forms of
contingent consideration and certain acquired contingencies are also required to be recorded at fair
value at the acquisition date. Acquisition costs are now expensed as incurred and restructuring costs
will be expensed in periods after the acquisition date in accordance with the Company’s existing
accounting policy for restructuring costs. Finally, post-acquisition changes in deferred tax asset
valuation allowances and acquired income tax uncertainties are recognized as income tax expense or
benefit. The acquisition of Soft Sight during the period was accounted for under the new
requirements.
Effective July 1, 2009, the Company adopted the revisions to FASB ASC Topic 810
Consolidation that requires the Company to clearly identify and present ownership interests in
subsidiaries held by parties other than the company in the consolidated financial statements within
the equity section but separate from the company’s equity. The amount of consolidated net income
attributable to the parent and to the non-controlling interest is required to be clearly identified and
presented on the face of the consolidated statement of income; changes in ownership interest be
accounted for similarly, as equity transactions. When a subsidiary is deconsolidated, any retained
non-controlling equity investment in the former subsidiary and the gain or loss on the deconsolidation
of the subsidiary is to be measured at fair value. The revisions also require the Company to revise
evaluations of whether entities represent variable interest entities, ongoing assessments of control
over such entities, and additional disclosures for variable interests. The adoption of these
requirements did not have a material impact on the Company’s consolidated financial statements.
Effective July 1, 2009, the Company adopted the updated provisions issued by the FASB for
earnings per share. The new guidance provides that unvested share-based payment awards that
contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are
participating securities and shall be included in the computation of earnings per share pursuant to the
two-class method. The two-class method determines earnings per share for each class of common
stock and participating security according to their respective participation rights in undistributed
earnings. The adoption of these requirements did not have a material impact on the Company’s
consolidated financial statements.
Accounting Standards Update (“ASU”) 2009-05, Fair Value Measurements and Disclosures
(Topic 820)—Measuring Liabilities at Fair Value allows entities determining the fair value of a liability
to use the perspective of an investor that holds the related obligation as an asset. The ASU is
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