Note B - Adoption of New Accounting Pronouncements

9 Months Ended

Dec. 25, 2016

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE B– ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

In

March

2016,

the Financial Accounting Standards Board (the “FASB”), issued new guidance which addresses how companies account for certain aspects of its share-based payments to employees. The update simplifies the accounting for the tax consequences. It also amends how excess tax benefits and a company’s payments to cover the tax bills for the shares’ recipients should be classified on the statement of cash flows related to share-based payments to employees. The amendments allow companies to estimate the number of stock awards they expect to vest, and the amendments revised the withholding requirements for classifying stock awards as equity. Previously, tax withholding was permitted only at the minimum statutory tax rates, which is being amended to permit higher income tax withholding as long as it does not exceed the maximum statutory tax rate for an employee in the applicable jurisdictions. This new standard is effective for public companies with fiscal years beginning after

December

15,

2016

which will be Nathan’s

first

quarter ending

(June

2017)

of our fiscal year ending on

March

25,

2018.

However, early adoption is permitted.

The Company elected to early adopt this standard in the quarter ended

June

26,

2016.

The impact of the early adoption resulted in the Company recording a tax benefit of

$38,000

and

$659,000

within income tax expense for the

thirteen

and

thirty

-

nine

weeks ended

December

25,

2016,

respectively, related to the excess tax benefit on stock incentive awards that settled during these periods. Prior to adoption of this guidance, these amounts would have increased additional paid-in capital. These items shall not be factored into the projected annual income tax rate, but will be treated as discrete items when they occur. Accordingly, this new treatment will add additional volatility in the Company’s effective tax rate.

The excess tax benefits for the

thirteen

and

thirty

-

nine

weeks ended

December

27,

2015

were

$77,000

and

$142,000,

respectively which increased additional paid-in-capital.

The Company accounts for forfeitures as they occur. Under the new guidance, excess tax benefits related to employee share-based payments of

$659,000

are classified as operating activities in the statement of cash flows for the

thirty

-

nine

weeks ended

December

25,

2016.

The Company applied the effect of the guidance to the presentation of excess tax benefits in the statement of cash flows prospectively and no prior periods have been adjusted. The Company did not record any cumulative-effect adjustment to accumulated deficit or net assets as a result of adopting this new accounting standard. The Company also modified its diluted earnings per share calculation by excluding the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of its diluted earnings per share for the

thirteen

and

thirty

-

nine

weeks ended

December

25,

2016.