NOTE B – ADOPTION OF NEW ACCOUNTING STANDARDS

Leases

February 2016,

the Financial Accounting Standards Board (“FASB”) issued new guidance on leases, Topic

842,

which outlines principles for the recognition, measurement, presentation and disclosure of leases applicable to both lessors and lessees. 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. The Company adopted the new guidance during the

first

quarter of fiscal

2020

using the effective date of

April 1, 2019

as the date of initial application; therefore, the comparative period has

not

been adjusted and continues to be reported under the previous lease guidance.

The new standard provides for a number of practical expedients upon adoption. The Company elected the package of practical expedients, which permits the Company

not

to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. For those leases that fall under the definition of a short-term lease, the Company elected the short-term lease recognition exemption. Under this practical expedient, for those leases that qualify, we did

not

recognize right-of-use (“ROU”) assets or liabilities. The Company also elected the practical expedient for lessees to account for lease components and non-lease components as a single lease component for all underlying classes of assets. The Company did

not

elect the use-of-hindsight practical expedient.

As a result of adopting this new guidance on the

first

day of fiscal year

2020,

substantially all of the Company's operating lease commitments were subject to the new guidance and were recognized as operating lease assets and liabilities, initially measured as the present value of future lease payments for the remaining lease term discounted using the Company’s incremental borrowing rate based on the remaining lease term as of the adoption date. The Company recognized operating lease assets and liabilities of

$7,804,000

and

$8,533,000,

respectively, as of the

first

day of fiscal year

2020.

The difference between the assets and liabilities is attributable to the reclassification of certain existing lease-related assets and liabilities as an adjustment to the right-of-use assets.

The effects of the changes made to the Company's consolidated balance sheet as of

April 1, 2019

for the adoption of the new lease guidance were as follows (in thousands):

	Balance at March 31, 2019		Adjustments due to adoption of the new lease guidance			Reclassifications		Balance at April 1, 2019
Other Assets
Operating lease assets		-		7,804			-		7,804
Other assets		465		-			31		496

Current Liabilities
Current portion of operating lease liabilities		-		1,162			-		1,162

Long Term Liabilities
Long-term operating lease liabilities		-		7,371			-		7,371
Other liabilities		1,390		(729	)		31		692

The adoption of the new guidance is non-cash in nature and had

impact on net cash flows from operating, investing, or financing activities.

See Note P

for additional information regarding our lease arrangements and the Company's updated lease accounting policies.