Index: wp-includes/category-template.php
===================================================================
--- wp-includes/category-template.php	(revision 19709)
+++ wp-includes/category-template.php	(working copy)
@@ -337,12 +337,12 @@
 	$class = esc_attr( $class );
 	$id = $id ? esc_attr( $id ) : $name;
 
+	$output = '';
 	if ( ! $r['hide_if_empty'] || ! empty($categories) )
 		$output = "<select name='$name' id='$id' class='$class' $tab_index_attribute>\n";
-	else
-		$output = '';
 
-	if ( empty($categories) && ! $r['hide_if_empty'] && !empty($show_option_none) ) {
+	if ( empty($categories) && ! $r['hide_if_empty'] ) {
+		$show_option_none = ! empty( $show_option_none ) ? $show_option_none : __( 'No Terms' );
 		$show_option_none = apply_filters( 'list_cats', $show_option_none );
 		$output .= "\t<option value='-1' selected='selected'>$show_option_none</option>\n";
 	}