NOTE C – NEW ACCOUNTING PRONOUNCEMENTS

NOT

YET ADOPTED

May 2014,

the FASB issued a new accounting standard that attempts to establish a uniform basis for recording revenue to virtually all industries’ financial statements, under U.S. GAAP as further amended during

2016.

The FASB issued certain updates to the standard, including clarifying reporting revenue between Principle versus Agent and clarification in determining performance obligations and licenses guidance. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled.

In order to accomplish this objective, companies must evaluate the following

five

basic steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

There are

two

basic transition methods that are available – full retrospective, or modified retrospective transition methods. Early adoption is prohibited. Public companies were originally expected to apply the new standard for annual periods beginning after

December 15, 2016,

including interim periods therein, which for Nathan’s would have been its

first

quarter of fiscal

2018,

beginning on

March 27, 2017.

July 9, 2015,

the FASB agreed to delay the standard’s effective date to annual reporting periods beginning after

December 15, 2017

which will now be our

first

quarter (

June 2018)

of our fiscal year ending

March 31, 2019.

The Company does

not

believe that the standard will impact its recognition of revenue for its Branded Product Program, Company-operated restaurants or its recognition of royalties from its franchised restaurants or retail licenses, which are based on a percentage of sales. The Company is still assessing the impact of decisions reached by the FASB Transition Resource Group in

November 2016

on the treatment of minimum guarantees in licensing arrangements, which

may

affect the timing of the Company’s recognition of royalty revenues. Currently, franchise and international development fees are recognized when the Company has performed substantially all initial services required by the agreements, which is generally when the franchisee begins operations. Under the new guidance, these fees

may

be recognized over the term of the agreements. The Company plans to adopt this standard in the

first

quarter of fiscal

2019

using the modified retrospective method. The Company anticipates assigning internal resources to assist with the evaluation and implementation of the new standard, and will continue to provide updates during fiscal year

2018.

February 2016,

the FASB issued a new accounting standard on leases. The new standard, among other changes, will require lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases. The lease liability will be measured at the present value of the lease payments over the lease term. The right-of-use asset will be measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs (e.g. commissions). The new standard is effective for annual reporting periods beginning after

December 15, 2018,

including interim reporting periods within those annual reporting periods. This standard is required to take effect in Nathan’s

first

quarter (

June 2019)

of our fiscal year ending

March 29, 2020.

The adoption will require a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest period presented. The Company is currently evaluating the standard to determine the impact of the adoption on its consolidated financial statements but expects that the standard will result in a significant increase to its other assets and other liabilities.

January 2017,

the FASB issued a new accounting standard that narrows the definition of a business. The concept is fundamental in determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU revised the definition of a business to consist of the following key concepts:

●

A business is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants.

●

To be capable of being conducted and managed for the purposes described above, an integrated set of activities and assets requires

two

essential elements–inputs and a substantive process(es) applied to those inputs.

The amendments are effective prospectively for public business entities for annual reporting periods beginning after

December 15, 2017.

This standard is required to take effect in Nathan’s

first

quarter (

June 2018)

of our fiscal year ending

March 31, 2019.

The Company does

not

expect this new accounting standard will have a material effect on the Company’s results of operations, cash flows or financial position. Early adoption is permitted when certain criteria are met.

January 2017,

the FASB issued an update to the accounting guidance to simplify the testing for goodwill impairment. The update removes the requirement to determine the implied fair value of goodwill to measure the amount of impairment loss, if any, under the

second

step of the current goodwill impairment test. A company will perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. A goodwill impairment charge will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value,

not

to exceed the carrying amount of the goodwill. The guidance is effective prospectively for public business entities for annual reporting periods beginning after

December 15, 2019.

This standard is required to take effect in Nathan’s

first

quarter (

June 2020)

of our fiscal year ending

March 28, 2021.

Nathan’s does

not

expect the adoption of this new guidance to have a material impact on its results of operations or financial position.

The Company does

not

believe that any other recently issued, but

not

yet effective accounting standards, when adopted, will have a material effect on the accompanying financial statements.