Significant Accounting Policies (Policies)

12 Months Ended

Mar. 31, 2019

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation.

Fiscal Period, Policy [Policy Text Block]

Fiscal Year

The Company’s fiscal year ends on the last Sunday in

March,

which results in a

-week reporting period. The results of operations and cash flows for the fiscal year ended

March 31, 2019

is on the basis of a

-week reporting period. The fiscal years ended

March 25, 2018

and

March 26, 2017

are on the basis of a

-week reporting period.

Reclassification, Policy [Policy Text Block]

Reclassifications

We have reclassified

$238

of Deferred franchise fees from Other liabilities in the Consolidated Balance Sheet at

March 25, 2018

to conform with the presentation of Deferred franchise fees under Topic

606

which we adopted at the beginning of the fiscal year ending

March 31, 2019.

This reclassification had

effect on previously reported total assets, total liabilities or stockholders’ (deficit).

Use of Estimates, Policy [Policy Text Block]

. Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates made by management in preparing the consolidated financial statements include revenue recognition, the allowance for doubtful accounts, valuation of stock-based compensation, accounting for income taxes, and the valuation of goodwill, intangible assets and other long-lived assets.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of

three

months or less to be cash equivalents.

Cash equivalents at

March 31, 2019

were

$20,000.

The Company did

not

have any cash equivalents at

March 25, 2018.

Substantially all of the Company’s cash and cash equivalents are in excess of government insurance.

Inventory, Policy [Policy Text Block]

Inventories

Inventories, which are stated at the lower of cost or net realizable value, consist primarily of food items and supplies. Cost is determined using the

first

-in,

first

-out method.

Property, Plant and Equipment, Policy [Policy Text Block]

. Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Major improvements are capitalized and minor replacements, maintenance and repairs are charged to expense as incurred. Depreciation and amortization are calculated on the straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the estimated useful life or the lease term of the related asset. The estimated useful lives are as follows:

Building and improvements (years)	5	–	25
Machinery, equipment, furniture and fixtures (years)	3	–	15
Leasehold improvements (years)	5	–	20

Goodwill and Intangible Assets, Policy [Policy Text Block]

. Goodwill and Intangible Asset

Goodwill and intangible assets consist of (i) goodwill of

$95

resulting from the acquisition of Nathan’s in

1987;

and (ii) trademarks, trade names and other intellectual property of

$1,353

in connection with Arthur Treacher’s.

The Company’s goodwill and intangible assets are deemed to have indefinite lives and, accordingly, are

not

amortized, but are evaluated for impairment at least annually, but more often whenever changes in facts and circumstances occur which

may

indicate that the carrying value

may

not

be recoverable. As of

March 31, 2019

and

March 25, 2018,

the Company performed its required annual impairment test of goodwill and intangible assets and has determined

impairment is deemed to exist.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

. Lon

g-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value

may

not

be recoverable.

Each reporting period, management reviews the carrying value of its investments based upon the financial information provided by the investment’s management and considers whether indicators of an other-than-temporary impairment exists. If an impairment indicator exists, management evaluates the fair value of its investment to determine if an, other-than-temporary impairment in value has occurred. We are required to recognize an impairment on the investment if such impairment is considered to be other-than-temporary.

Impairment losses are recorded on long-lived assets on a restaurant-by-restaurant basis whenever impairment factors are determined to be present. The Company tests the recoverability of its long-lived assets with finite useful lives whenever events or changes in circumstances indicate that the carrying value of the asset

may

not

be recoverable. The Company tests for recoverability based on the projected undiscounted cash flows to be derived from such asset. If the projected undiscounted future cash flows are less than the carrying value of the asset, the Company will record an impairment loss, if any, based on the difference between the estimated fair value and the carrying value of the asset. The Company generally measures fair value by considering discounted estimated future cash flows from such asset. Cash flow projections and fair value estimates require significant estimates and assumptions by management. Should the estimates and assumptions prove to be incorrect, the Company

may

be required to record impairments in future periods and such impairments could be material. The Company considers a history of restaurant operating losses to be its primary indicator of potential impairment for individual restaurant locations. At

March 25, 2018,

we performed our annual impairment evaluation and recorded an impairment charge of

$790

to write down the value of the long-lived assets at

one

of our restaurants.

long-lived assets were deemed impaired during the fiscal years ended

March 31, 2019

and

March 26, 2017.

Fair Value of Financial Instruments, Policy [Policy Text Block]

. Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price).

The fair value hierarchy, as outlined in the applicable accounting guidance, is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions.

The fair value hierarchy consists of the following

three

levels:

●

Level

- inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market

●

Level

- inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability

●

Level

- inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability

The use of observable market inputs (quoted market prices) when measuring fair value and, specifically, the use of Level

quoted prices to measure fair value are required whenever possible. The determination of where an asset or liability falls in the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures quarterly and based on various factors, it is possible that an asset or liability

may

be classified differently from year to year.

March 31, 2019

and

March 25, 2018,

we did

not

have any assets or liabilities that were recorded at fair value.

The Company’s long-term debt had a face value of

$150,000

as of

March 31, 2019

and a fair value of

$145,688

as of

March 31, 2019.

The Company estimates the fair value of its long-term debt based upon review of observable pricing in secondary markets as of the last trading day of the fiscal period. Accordingly, the Company classifies its long-term debt as Level

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of the instruments.

The majority of the Company’s non-financial assets and liabilities are

not

required to be carried at fair value on a recurring basis. However, the Company is required on a non-recurring basis to use fair value measurements when analyzing asset impairment as it relates to goodwill and other indefinite-lived intangible assets and long-lived assets. The Company utilized the income approach (Level

inputs) which utilized cash flow forecasts for future income and were discounted to present value in performing its annual impairment testing of intangible assets.

Start-up Activities, Cost Policy [Policy Text Block]

Start-up Costs

Pre-opening and similar restaurant costs are expensed as incurred.

Revenue from Contract with Customer [Policy Text Block]

12.

Revenue Recognition

From

2014

through

2017,

the Financial Accounting Standards Board (“FASB”) issued new accounting standards to provide principles within a single framework for revenue recognition of transactions involving contracts with customers across all industries (“Topic

606”

). We adopted Topic

606

at the beginning of the fiscal year ended

March 31, 2019.

Below in items numbers

12,

13,

14,

and

are discussions of how our revenues are earned, and our accounting policies pertaining to revenue recognition prior to the adoption of Topic

606

(“Legacy GAAP”) and subsequent to the adoption of Topic

606

and other required disclosures. Also included in Item

are disclosures of the amounts by which each consolidated balance sheet, consolidated statement of earnings, and consolidated statement of cash flows line item was impacted in the current period reporting as compared to Legacy GAAP.

. Revenue Recognition - Branded Product

Program

The Company recognizes sales from the Branded Product Program and certain products sold from the Branded Menu Program upon delivery to Nathan’s customers via

third

party common carrier. Rebates provided to customers are classified as a reduction to sales.

The timing and amount of revenue recognized related to sales made by our Branded Product Program was

not

impacted by the adoption of Topic

606.

. Revenue Recognition - Company-owned Restaurants

Sales by Company-owned restaurants, which are typically paid in cash or credit card by the customer, are recognized at the point of sale. Sales are presented net of sales tax.

The timing and amount of revenue recognized related to our Company-owned restaurant sales was

not

impacted by the adoption of Topic

606.

15.

Revenue Recognition – License Royalties

The Company earns revenue from royalties on the licensing of the use of its intellectual property in connection with certain products produced and sold by outside vendors. The use of the Company’s intellectual property must be approved by the Company prior to each specific application to ensure proper quality and a consistent image. Revenue from license royalties is generally based on a percentage of sales, subject to certain annual minimum royalties, recognized on a monthly basis when it is earned and deemed collectible.

The timing and amount of revenue recognized related to our license royalties was

not

impacted by the adoption of Topic

606.

. Revenue Recognition - Franchising Operations

In connection with its franchising operations, the Company receives initial franchise fees, international development fees, royalties, and in certain cases, revenue from sub-leasing restaurant properties to franchisees.

Under Legacy GAAP, franchise fees, which are non-refundable, were recognized as income when substantially all services to be performed by Nathan’s and conditions relating to the sale of the franchise were performed or satisfied, which generally occurred when the franchise restaurant commenced operations.

The following services are typically provided by the Company prior to the opening of a franchised restaurant.

	●	Approval of all site selections to be developed.
	●	Provision of architectural plans suitable for restaurants to be developed.
	●	Assistance in establishing building design specifications, reviewing construction compliance and equipping the restaurant.
	●	Provision of appropriate menus to coordinate with the restaurant design and locations to be developed.
	●	Provision of management training for the new franchisee and selected staff.
	●	Assistance with the initial operations of restaurants being developed.

Under the adoption of Topic

606,

the Company determined that the services provided in exchange for these upfront restaurant franchise fees do

not

contain separate and distinct performance obligations from the franchising right and beginning

March 26, 2018,

these initial franchise fees, renewal fees and transfer fees shall be deferred and recognized over the term of each respective agreement, or upon termination of the franchise agreement.

Under Legacy GAAP, international development fees were recognized, net of direct expenses, upon the opening of the

first

restaurant within the territory. Under the adoption of Topic

606,

the Company determined that the services provided in exchange for these international development fees do

not

contain separate and distinct performance obligations from the franchise right and as of

March 26, 2018,

international development fees, net of certain incremental direct expenses, shall be recognized over the term of each respective agreement. Certain other costs, such as legal expenses, shall be expensed as incurred.

The following is a summary of franchise openings and closings for the Nathan’s franchise restaurant system for the fiscal years ended

March 31, 2019,

March 25, 2018

and

March 26, 2017:

	March 31,			March 25,			March 26,
	201 9			2018			2017

Franchised restaurants operating at the beginning of the period		276			279			259

New franchised restaurants opened during the period		13			40			53

Franchised restaurants closed during the period		(34	)		(43	)		(33	)

Franchised restaurants operating at the end of the period		255			276			279

The Company recognizes franchise royalties on a monthly basis, which are generally based upon a percentage of sales made by the Company’s franchisees, when they are earned and deemed collectible. The Company recognizes royalty revenue from its Branded Menu Program directly from the sale of Nathan’s products by its primary distributor or directly from the manufacturers.

Franchise fees and royalties that are subsequently deemed to be

not

collectible are recorded as bad debts until paid by the franchisee or until collectibility is deemed to be reasonably assured.

Revenue Recognition – National Advertising Fund

The Company maintains a national advertising fund (the “Advertising Fund”) established to collect and administer funds contributed for use in advertising and promotional programs for Company-owned and franchised restaurants. Under Legacy GAAP, the revenues, expenses and cash flows of the Advertising Fund were reported on the Company’s Consolidated Balance Sheets and

not

included in the Company’s Consolidated Statements of Earnings and Statements of Cash Flows because the contributions to the Advertising Fund were designed for specific purposes and the Company acted as an agent, in substance, with regard to these contributions as a result of industry-specific guidance.

Under the adoption of Topic

606,

the revenue, expenses and cash flows of the Advertising Fund are fully consolidated into the Company’s Consolidated Statements of Earnings and Statements of Cash Flows.

While this treatment impacts the gross amount of reported advertising fund revenue and related expenses, the impact is expected to approximately offset the increase to both revenue and expense, with minimal impact to income from operations or net income because the Company attempts to manage the Advertising Fund to breakeven over the course of the fiscal year. However, any surplus or deficit in the Advertising Fund will impact income from operations and net income.

18.

Revenue Recognition – Impact of Adopting New Revenue Recognition Standards

Under the adoption of Topic

606,

the Company used the modified retrospective method, whereby the cumulative effect of initially adopting the guidance was recognized as an adjustment to the opening balance of accumulated deficit at

March 26, 2018

in the amount of

$2,004,

net of tax. Pursuant to the modified retrospective method, the results of operations from the comparative periods have

not

been adjusted and continue to be reported under Legacy GAAP.

Impacts on Consolidated Financial Statements

The following tables summarize the impact of adopting Topic

606

on the Company’s condensed consolidated financial statements:

	Adjustments
	As Reported			Franchise Fees			Balance Sheet Reclassi- fications			Balances Without Adoption
Condensed Consolidated Balance Sheet
March 31, 2019
Deferred income taxes		343			(731	)		388			-
Total assets		94,306			(731	)		388			93,963
Accrued expenses and other current liabilities		9,384			(190	)		-			9,194
Deferred franchise fees		318			(378	)		369			309
Total current liabilities		14,924			(568	)		369			14,725
Deferred income taxes		-			-			388			388
Deferred franchise fees		2,687			(2,140	)		(369	)		178
Total liabilities		164,450			(2,708	)		388			162,130
(Accumulated deficit)		(52,879	)		1,977			-			(50,902	)
Stockholders’ equity before treasury stock		8,159			1,977			-			10,136
Total stockholders’ (deficit)		(70,144	)		1,977			-			(68,167	)
Total liabilities and stockholders’ (deficit)		94,306			(731	)		388			93,963

	Adjustments
	As Reported		Franchise Fees			Advertising F und			Balances Without Adoption
Condensed Consolidated Statement of Earnings
Year ended March 31, 2019
Franchise fees and royalties		4,171		(217	)		-			3,954
Advertising fund revenue		2,502		-			(2,502	)		-
Total revenues		101,849		(217	)		(2,502	)		99,130
General and administrative expenses		13,851		(162	)		-			13,689
Advertising fund expense		2,506		-			(2,506	)		-
Total costs and expenses		73,873		(162	)		(2,506	)		71,205
Income from operations		27,976		(55	)		4			27,925
Income before provision for income taxes		29,410		(55	)		4			29,359
Provision for income taxes		7,917		(24	)		-			7,893
Net income		21,493		(27	)		-			21,466

	Adjustments
	As Reported			Franchise Fees			Advertising Fund		Balances Without Adoption
Condensed Consolidated Statement of Cash Flows
Year e nded March 31, 2019
Cash flows from operating activities:
Net income		21,493			(27	)		-		21,466
Changes in operating assets and liabilities:
Accounts payable, accrued expenses and other Current liabilities		(3,367	)		(190	)		-		(3,557	)
Deferred franchise fees		(161	)		217			-		56
Net cash provided by operating activities		11,156			-			-		11,156
Net cash provided by investing activities		12,328			-			-		12,328
Net cash (used in) financing activities		(5,377	)		-			-		(5,377	)
Net increase in cash and cash equivalents		18,107			-			-		18,107

Contract balances

The following table provides information about receivables and contract liabilities (Deferred franchise fees) from contracts with customers (in thousands):

		March 31, 2019
Deferred franchise fees (a)		$	3,005

(a)

Deferred franchise fees of

$318

and

$2,687

are included in Deferred franchise fees – current and long term, respectively.

Significant changes in Deferred franchise fees are as follows:

	Fifty-three Weeks Ended
	March 31, 2019
Deferred franchise fees at beginning of period (a)	$	3,139
Additions to deferred revenue		371
Revenue recognized during the period		(505	)
Deferred franchise fees at end of period	$	3,005

(a)

Includes the cumulative effect of adopting Topic

606

$2,735,

excluding deferred income taxes.

Anticipated Future Recognition of Deferred Franchise Fees

The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:

	Estimate for fiscal year
2020		318
2021		309
2022		299
2023		262
2024		248
Thereafter		1,569
Total	$	3,005

We have applied the optional exemption, as provided for under Topic

606,

which allows us

not

to disclose the transaction price allocated to unsatisfied performance obligations when the transaction price is a sales-based royalty.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Business Concentrations and Geographical Information

March 31, 2019

and

March 25, 2018

the Company maintained cash balances which are in excess of Federal government insurance limits. The Company does

not

believe that it is exposed to any significant risk on these balances.

The Company’s accounts receivable consist principally of receivables from franchisees for royalties and advertising contributions, from sales under the Branded Product Program, and from royalties from retail licensees. At

March 31, 2019,

four

Branded Product customers represented

19%,

18%,

17%

and

13%,

of accounts receivable. At

March 25, 2018,

three

Branded Product customers represented

41%,

20%

and

8%,

of accounts receivable. One Branded Products customer accounted for

14%,

19%

and

12%

of total revenue for the years ended

March 31, 2019,

March 25, 2018

and

March 26, 2017,

respectively. One retail licensee accounted for

22%,

21%

and

20%

of the total revenue for the years ended

March 31, 2019,

March 25, 2018

and

March 26, 2017,

respectively.

The Company’s primary supplier of hot dogs represented

92%,

92%

and

91%

of product purchases for the fiscal years ended

March 31, 2019,

March 25, 2018

and

March 26, 2017,

respectively. The Company’s distributor of products to its Company-owned restaurants represented

5%,

and

of product purchases for each of the fiscal years ended

March 31, 2019,

March 25, 2018

and

March 26, 2017,

respectively.

The Company’s revenues for the fiscal years ended

March 31, 2019,

March 25, 2018

and

March 26, 2017

were derived from the following geographic areas:

	March 31, 2019		March 25, 2018		March 26, 2017

Domestic (United States)	$	97,871	$	97,661	$	90,070
Non-domestic		3,978		6,540		6,186
	$	101,849	$	104,201	$	96,256

The Company’s sales for the fiscal years ended

March 31, 2019,

March 25, 2018

and

March 26, 2017

were derived from the following:

	March 31, 2019		March 25, 2018		March 26, 2017

Branded Products	$	57,960	$	62,623	$	55,960
Company-owned restaurants		13,601		14,085		14,646
Other		-		-		214
Total sales	$	71,561	$	76,708	$	70,820

License royalties	$	23,615	$	23,020	$	20,368

Royalties		3,666		4,138		4,290
Franchise fees		505		335		778
Total franchise fees and royalties		4,171		4,473		5,068

Advertising fund revenue (A)		2,502		-		-

Total revenues	$	101,849		104,201		96,256

(A)

Prior to adoption of Topic

606,

inflows into the National Advertising Fund were

not

considered revenue.

Advertising Cost [Policy Text Block]

20.

Advertising

The Company administers an advertising fund on behalf of its restaurant system to coordinate the marketing efforts of the Company. Under this arrangement, the Company collects and disburses fees paid by manufacturers, franchisees and Company-owned stores for national and regional advertising, promotional and public relations programs. Contributions to the advertising fund are based on specified percentages of net sales, generally ranging up to

2%.

Company-owned store advertising expense, which is expensed as incurred, was

$107,

$117

and

$182,

for the fiscal years ended

March 31, 2019,

March 25, 2018

and

March 26, 2017,

respectively, and have been included within restaurant operating expenses in the accompanying Consolidated Statements of Earnings.

Share-based Payment Arrangement [Policy Text Block]

. Stock-Based Compensation

March 31, 2019,

the Company had

one

stock-based compensation plan in effect which is more fully described in Note

L.2.

The cost of all share-based payments, including grants of restricted stock and stock options, is recognized in the financial statements based on their fair values measured at the grant date, or the date of any later modification, over the requisite service period. The Company recognizes compensation cost for unvested stock awards on a straight-line basis over the requisite vesting period.

Cost of Goods and Service [Policy Text Block]

Classification of Operating Expenses

Cost of sales consists of the following:

	o	The cost of food and other products sold by Company-operated restaurants, through the Branded Product Program and through other distribution channels.
	o	The cost of labor and associated costs of in-store restaurant management and crew.
	o	The cost of paper products used in Company-operated restaurants.
	o	Other direct costs such as fulfillment, commissions, freight and samples.

Restaurant operating expenses consist of the following:

	o	Occupancy costs of Company-operated restaurants.
	o	Utility costs of Company-operated restaurants.
	o	Repair and maintenance expenses of Company-operated restaurant facilities.
	o	Marketing and advertising expenses done locally and contributions to advertising funds for Company-operated restaurants.
	o	Insurance costs directly related to Company-operated restaurants.

Income Tax, Policy [Policy Text Block]

. Income Taxes

The Company’s current provision for income taxes is based upon its estimated taxable income in each of the jurisdictions in which it operates, after considering the impact on taxable income of temporary differences resulting from different treatment of items for tax and financial reporting purposes and income tax benefits from share-based payments. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and any operating loss or tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary differences become deductible. Should management determine that it is more likely than

not

that some portion of the deferred tax assets will

not

be realized, a valuation allowance against the deferred tax assets would be established in the period such determination was made.

Uncertain Tax Positions

The Company has recorded liabilities for underpayment of income taxes and related interest and penalties for uncertain tax positions based on the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company

may

recognize the tax benefit from an uncertain tax position only if it is more likely than

not

that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such position should be measured based on the largest benefit that has a greater than

fifty

percent likelihood of being realized upon ultimate settlement. Nathan’s recognizes accrued interest and penalties associated with unrecognized tax benefits as part of the income tax provision.

See Note I for a further discussion of our income taxes.

New Accounting Pronouncements, Policy [Policy Text Block]

Adoption of Other New Accounting

Standard

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 guidance was effective for the Company beginning in the quarter ending

June 24, 2018

and did

not

have a material impact on its results of operations or financial position.

New Accounting Standard

Not

Yet Adopted

February 2016,

the FASB issued new guidance ASU

2016

02,

“Leases (Topic

842

),” which outlines principles for the recognition, measurement, presentation and disclosure of leases applicable to both lessors and lessees. In

January 2018,

the FASB issued ASU

2018

01,

Leases (Topic

842

): Land Easement Practical Expedient for Transition to Topic

842

, which affects the guidance in ASU

2016

02.

The standard permits the election of an optional transition practical expedient to

not

evaluate land easements that exist or expired before the adoption of Topic

842

and that were

not

previously accounted for as leases under Topic

840.

July 2018,

the FASB issued ASU

2018

10,

Codification Improvements to Topic

842

(Leases)

, and ASU

2018

11,

Leases (Topic

842

), Targeted Improvements

, which provide (i) narrow amendments to clarify how to apply certain aspects of the new lease standard, (ii) entities with an additional transition method to adopt the new standard, and (iii) lessors with a practical expedient for separating components of a contract. The new standard is effective for annual reporting periods beginning after

December 15, 2018,

including interim reporting periods within those annual reporting periods.

The new guidance will take effect at the beginning of Nathan’s

first

quarter (

April 1, 2019)

of our fiscal year ending

March 29, 2020.

The new guidance requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by finance and operating leases with lease terms of more than

months. The guidance requires either a modified retrospective transition approach with application in all comparative periods presented, or an alternative transition method, which permits the Company to use its effective date as the date of initial application without restating comparative period financial statements and recognizing any cumulative effect adjustment to the opening balance sheet of accumulated deficit at

April 1, 2019.

The new guidance also provides several practical expedients and policies that companies

may

elect under either transition method. Nathan’s expects to elect the modified retrospective method and use the effective date as the initial application. Nathan’s will also adopt the package of practical expedients including;

not

reassessing prior conclusions about lease identification, lease classification and initial direct costs. We will elect the short-term lease recognition exemption for qualifying leases of less than

months and

not

recognize a Right-of-Use Asset or lease liability, we will elect

not

to separate lease and non-lease components for all leases and we will

not

elect the use-of-hindsight practical expedient. We have completed the scoping analysis and data gathering process for our current lease portfolio. We are finalizing the review of information for completeness of the lease portfolio, analyzing the financial statement impact of adopting the standards, and evaluating the impact of adoption on our existing accounting policies and disclosures. Upon adoption, we expect to recognize additional operating lease liabilities of approximately

$8,500,

and a Right of Use asset of approximately

$7,800

based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases and derecognize

$700

of deferred rents. We do

not

expect the adoption of this guidance to have a material impact on our consolidated statements of earnings and statement of cash flows.

June 2016,

the FASB issued new guidance on the measurement of credit losses, which significantly changes the impairment model for most financial instruments. Current guidance requires the recognition of credit losses based on an incurred loss impairment methodology that reflects losses once the losses are probable. Under the new standard, the Company will be required to use a current expected credit loss model (“CECL”) that will immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of this update, including trade receivables. The CECL model uses a broader range of reasonable and supportable information in the development of credit loss estimates. This guidance is effective 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.

The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and related disclosures.

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 consolidated financial statements.