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Note B - Summary of Significant Accounting Policies | 12 Months Ended
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Mar. 30, 2025
Notes to Financial Statements |
Significant Accounting Policies [Text Block] | NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following significant accounting policies have been applied in the preparation of the consolidated financial statements:
1. | Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and all of its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
2. | Fiscal Year
The Company’s fiscal year ends on the last Sunday in March, which results in a 52 or 53 week reporting period. The fiscal year ended March 30, 2025 was on the basis of a 52 week reporting period and the fiscal year ended March 31, 2024 was on the basis of a 53 week reporting period. All references to years and quarters relate to fiscal periods rather than calendar periods.
3. | Reclassifications
Certain prior year amounts have been reclassified in operating activities within the Consolidated Statements of Cash Flows to conform with the current year presentation. This reclassification does not affect previously reported cash flows from operating activities in the Consolidated Statements of Cash Flows.
4. | Use of Estimates
The preparation of financial statements in conformity with GAAP 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. Significant estimates made by management in preparing the consolidated financial statements include the valuation of long lived assets, the valuation of an intangible asset, the allowance for credit losses, customer rebates and the accounting for income taxes. On an ongoing basis, the Company evaluates its estimates based on historical experience, current conditions and other assumptions under the circumstances. Actual results could differ from those estimates.
5. | Cash and Cash Equivalents
Cash and cash equivalents principally consist of cash in bank accounts, money market accounts and money market funds. The Company considers money market accounts and money market funds to be cash equivalents. Cash equivalents were $19,400 and $11,330 at March 30, 2025 and March 31, 2024, respectively. At March 30, 2025 and March 31, 2024, substantially all of the Company’s cash balances are in excess of insurance limits of the Federal Deposit Insurance Corporation, or the FDIC. The Company has not experienced any losses in such accounts.
6. | Inventories
Inventories, which are stated at the lower of cost or net realizable value, consist primarily of food, beverages, and paper supplies. Cost is determined using the first-in, first-out method.
7. | 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 remaining 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
8. | 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, and the trade name and other intellectual property of $522 in connection with the Arthur Treacher’s brand. Goodwill is not amortized, but is tested for impairment annually during the fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. As of March 30, 2025 and March 31, 2024 the Company performed its annual quantitative impairment test of goodwill and has determined no impairment is deemed to exist. Based upon the review of the current Arthur Treacher’s co-branding agreements, the Company determined that the remaining useful lives of these agreements is three years concluding in fiscal year 2028, and the intangible asset is subject to annual amortization. The Company has recorded amortization expense of $173 for the fiscal year ending March 30, 2025 and estimates that our annual amortization expense will approximate $173 for each of the next three fiscal years. The Company’s definite-lived intangible asset is tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. The Company tested for recoverability of its definite-lived intangible asset based on the projected undiscounted cash flows to be derived from such co-branding agreements. Based on the quantitative test performed, the Company determined that the definite-lived intangible asset was recoverable and no impairment charge was recorded for the fiscal years ended March 30, 2025 and March 31, 2024. Cash flow projections require significant estimates and assumptions by management. Should the estimates and assumptions prove to be incorrect, the Company may be required to record an impairment charge in future periods and such impairment could be material.
9. | Long-lived Assets
Long-lived assets on Company-owned restaurants are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Long-lived assets include property, equipment and right-of-use assets for operating leases with finite useful lives. Assets are grouped at the individual restaurant level, which represents the lowest level for which cash flows can be identified largely independent of the cash flows of other assets and liabilities. The Company generally considers a history of restaurant operating losses to be its primary indicator of potential impairment for individual restaurant locations. The Company tests for recoverability based on the projected undiscounted cash flows to be derived from such assets. If the projected undiscounted future cash flows are less than the carrying value of the assets, the Company will record on a restaurant-by-restaurant basis, an impairment loss, if any, based on the difference between the estimated fair value and the carrying value of the assets. The Company generally measures fair value by considering discounted estimated future cash flows from such assets. 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 impairment charges in future periods and such impairments could be material. No long-lived assets were deemed impaired during the fiscal years ended March 30, 2025 and March 31, 2024.
10. | Leases
Determination of Whether a Contract Contains a Lease We determine if an arrangement is a lease at inception or modification of a contract and classify each lease as either an operating or finance lease at commencement. The Company only reassesses lease classifications subsequent to commencement upon a change to the expected lease term or the contract being modified. Operating leases represent the Company’s right to use an underlying asset as lessee for the lease term, and lease obligations represent the Company’s obligation to make lease payments arising from the lease. ROU Model and Determination of Lease Term The Company uses the right-of-use (“ROU”) model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, as both lessee and lessor, the Company includes option periods when it is reasonably certain that those options will be exercised. Significant Assumptions and Judgement Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income would vary if different estimates and assumptions were used. Operating Leases For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, rent expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other Assets” where the Company is a lessor. The Company recorded $15 and $22 in Other Assets at March 30, 2025 and March 31, 2024, respectively. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Certain leases may include rent escalations based on inflation indexes. Subsequent escalations subject to such an index and contingent rental payments are recognized as variable lease expense in the period incurred. Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense relating to the operating lease liability. Variable lease cost for operating leases include Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Leases with an initial expected term of 12 months or less are not recorded in the Consolidated Balance Sheets and the related lease expense is recognized on a straight-line basis over the lease term. Lease costs are recorded in the Consolidated Statements of Earnings based on the nature of the underlying leases as follows: (1) rental expense related to leases for Company-owned restaurants is recorded to “Restaurant operating expenses,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Other income, net” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative expenses.” Rental income for operating leases on properties subleased to franchisees is recorded net of associated lease costs to “Other income, net.” At March 30, 2025, the Company leases one site which it in turn subleases to a franchisee, which expires in April 2027 exclusive of renewal options. The Company remains liable for all lease costs when property is subleased to a franchisee.
11. | 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 1 - inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market
| ● | Level 2 - 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 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability and reflect the Company’s own assumptions
The use of observable market inputs (quoted market prices) when measuring fair value and, specifically, the use of Level 1 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. At March 30, 2025 and March 31, 2024, we did not have any assets or liabilities that were recorded at fair value. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term nature of those items. The carrying amount of our long-term debt (see NOTE J – LONG TERM DEBT) also approximates fair value since such borrowings bear interest at variable market rates and is categorized as Level 2. The face and fair value of the 6.625% Senior Secured Notes due 2025 (“2025 Notes”) as of March 31, 2024 was $60,000 and $59,903, respectively, and was based upon review of observable pricing in secondary markets as of March 31, 2024. Accordingly, the Company classified it as Level 2. 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 its other definite-lived asset and long-lived assets. The Company utilized the income approach (Level 3 inputs) which utilized projected undiscounted cash flows in performing its annual impairment testing of the Company’s intangible asset and long-lived assets.
12. | Start-up Costs
Pre-opening and similar restaurant costs are expensed as incurred and are included in “Restaurant operating expenses” in the accompanying Consolidated Statement of Earnings.
13. | 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.
14. | Revenue Recognition - Company-owned Restaurants
Sales by Company-owned restaurants, which are typically paid in cash or with credit card by the customer, are recognized at the point of sale when food and beverage items are sold. Sales are presented net of sales tax collected from customers and remitted to governmental taxing authorities.
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, and is recognized on a monthly basis when it is earned and deemed collectible.
16. | 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. 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.
The services provided in exchange for these upfront restaurant franchise fees do not contain separate and distinct performance obligations from the franchising right and these initial franchise fees, renewal fees and transfer fees are deferred and recognized over the term of each respective agreement, or upon termination of the franchise agreement. The services provided in exchange for these international development fees do not contain separate and distinct performance obligations from the franchising right and these international development fees are deferred and recognized over the term of each respective agreement, or upon termination of the franchise agreement. Certain other costs, such as legal expenses, are expensed as incurred. The Company recognizes franchise royalties on a monthly basis, which are generally based upon a percentage of sales made by the Company’s franchisees, including virtual kitchens, 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 distributors 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 collectability is deemed to be reasonably assured. The following is a summary of franchise openings and closings (excluding virtual kitchens) for the Nathan’s franchise restaurant system for the fiscal years ended March 30, 2025 and March 31, 2024:
|  | March 30, |  |  | March 31, |
|  | 2025 |  |  | 2024 |
Franchised restaurants operating at the beginning of the period |  |  | 230 |  |  |  | 232 |
Franchised restaurants opened during the period |  |  | 25 |  |  |  | 17 |
Franchised restaurants closed during the period |  |  | (25 | ) |  |  | (19 | )
Franchised restaurants operating at the end of the period |  |  | 230 |  |  |  | 230 |
Contract balances The following table provides information about contract liabilities from contracts with customers:
|  | March 30, |  |  | March 31, |
|  | 2025 |  |  | 2024 |
Deferred franchise fees (a) |  | $ | 1,006 |  |  | $ | 1,226 |
Deferred revenues, which are included in |  |  |  |  |  |  |  |
“Accrued expenses and other current liabilities” (b) |  | $ | 1,392 |  |  | $ | 1,375 |
| (a) | Deferred franchise fees of $309 and $697 as of March 30, 2025 and $327 and $899 as of March 31, 2024 are included in Deferred franchise fees – current and long term, respectively.
| (b) | Includes $892 of deferred license royalties and $500 of deferred advertising fund revenue as of March 30, 2025 and $875 of deferred license royalties and $500 of deferred advertising fund revenue as of March 31, 2024.
Significant changes in deferred franchise fees for the fiscal years ended March 30, 2025 and March 31, 2024 are as follows:
|  | March 30, |  |  | March 31, |
|  | 2025 |  |  | 2024 |
Deferred franchise fees at beginning of period |  | $ | 1,226 |  |  | $ | 1,608 |
New deferrals due to cash received and other |  |  | 161 |  |  |  | 88 |
Revenue recognized during the period |  |  | (381 | ) |  |  | (470 | )
Deferred franchise fees at end of period |  | $ | 1,006 |  |  | $ | 1,226 |
Significant changes in deferred revenues for the fiscal years ended March 30, 2025 and March 31, 2024 are as follows:
|  | March 30, |  |  | March 31, |
|  | 2025 |  |  | 2024 |
Deferred revenues at beginning of period |  | $ | 1,375 |  |  | $ | 1,406 |
New deferrals due to cash received and other |  |  | 2,577 |  |  |  | 2,340 |
Revenue recognized during the period |  |  | (2,560 | ) |  |  | (2,371 | )
Deferred revenues at end of period |  | $ | 1,392 |  |  | $ | 1,375 |
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 |
2026 |  | $ | 309 |
2027 |  |  | 195 |
2028 |  |  | 107 |
2029 |  |  | 71 |
2030 |  |  | 51 |
Thereafter |  |  | 273 |
Total |  | $ | 1,006 |
We have applied the optional exemption, as provided for under ASC Topic 606, “Revenues from Contracts with Customers,” which allows us not to disclose the transaction price allocated to unsatisfied performance obligations when the transaction price is a sales-based royalty.
17. | 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. 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. | Business Concentrations and Geographical Information
The Company’s accounts receivable consists principally of receivables from franchisees, including virtual kitchens, for royalties and advertising contributions, from sales under the Branded Product Program, and from royalties from retail licensees. At March 30, 2025, three Branded Product customers represented 18%, 14% and 12%, of accounts receivable. At March 31, 2024, three Branded Product customers represented 21%, 15% and 13%, of accounts receivable. One Branded Product customer accounted for 20% and 18% of total revenue for each of the fiscal years ended March 30, 2025 and March 31, 2024, respectively. One retail licensee accounted for 24% and 23% of the total revenue for the fiscal years ended March 30, 2025 and March 31, 2024, respectively. The Company’s primary supplier of hot dogs represented 96% and 95% of product purchases for each of the fiscal years ended March 30, 2025 and March 31, 2024, respectively. The Company’s primary distributor of products to its Company-owned restaurants represented 3% of product purchases for each of the fiscal years ended March 30, 2025 and March 31, 2024. If a disruption of service from a primary supplier or distributor was to occur, we could experience short-term increases in our costs while supply or distribution channels were adjusted. The Company’s revenues for the fiscal years ended March 30, 2025 and March 31, 2024 were derived from the following geographic areas:
|  | March 30, 2025 |  |  | March 31, 2024 |
United States |  | $ | 144,318 |  |  | $ | 133,205 |
International |  |  | 3,864 |  |  |  | 5,405 |
Total revenues |  | $ | 148,182 |  |  | $ | 138,610 |
The Company’s revenues for the fiscal years ended March 30, 2025 and March 31, 2024 were derived from the following:
|  | March 30, 2025 |  |  | March 31, 2024 |
Branded Products |  | $ | 91,828 |  |  | $ | 86,489 |
Company-owned restaurants |  |  | 12,714 |  |  |  | 12,103 |
License royalties |  |  | 37,418 |  |  |  | 33,581 |
Franchise royalties |  |  | 3,767 |  |  |  | 3,886 |
Franchise fees |  |  | 381 |  |  |  | 470 |
Advertising fund revenue |  |  | 2,074 |  |  |  | 2,081 |
Total revenues |  | $ | 148,182 |  |  | $ | 138,610 |
19. | 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 restaurants 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 2.5%. Company-owned restaurant advertising expense, which is expensed as incurred, was $94 and $117, for the fiscal years ended March 30, 2025 and March 31, 2024, respectively, and has been included in “Restaurant operating expenses” in the accompanying Consolidated Statements of Earnings.
20. | Share-Based Compensation
At March 30, 2025, the Company had one share-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 units and stock options, is recognized in the consolidated 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.
21. | Classification of Operating Expenses
Cost of sales consists of the following:
| ● | The cost of food and other products sold by Company-owned restaurants, through the
| ● | Branded Product Program and through other distribution channels.
| ● | The cost of labor and associated costs of Company-owned restaurants.
| ● | The cost of paper products used in Company-owned restaurants.
| ● | Other direct costs such as fulfillment, commissions, freight and samples.
Restaurant operating expenses consist of the following:
| ● | Occupancy costs of Company-owned restaurants.
| ● | Utility costs of Company-owned restaurants.
| ● | Repair and maintenance and other incidental expenses of Company-owned restaurants.
| ● | Marketing and advertising expenses done locally and contributions to advertising funds for Company-owned restaurants.
| ● | Insurance costs directly related to Company-owned restaurants.
General and administrative expenses consist of the following:
| ● | Payroll and related benefits, incentive compensation expense and share-based compensation.
| ● | Travel expense, marketing, trade show expense and certain other overhead expenses of the various departments that support our operations.
| ● | Corporate administrative functions such as executive management, finance, information technology, legal and professional fees, insurance, corporate rent and certain other overhead expenses of our Corporate office.
22. | 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. 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 consolidated 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 consolidated 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 H for a further discussion of our income taxes.
23. | Adoption of New Accounting Standard
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which provides guidance to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment and contains other disclosure requirements. The purpose of the guidance is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. The Company adopted ASU 2023-07 during the fourth quarter of fiscal year 2025. The adoption did not have a material impact on our consolidated financial statements. Refer to NOTE I – SEGMENT INFORMATION for the expanded reportable segment disclosures added as a result of the adoption of ASU 2023-07.
24. | New Accounting Standards Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which updates income tax disclosure requirements primarily by requiring specific categories and greater disaggregation within the rate reconciliation table and disaggregation of income taxes paid, net of refunds, by jurisdiction. All entities are required to apply the guidance prospectively, with the option to apply it retrospectively. The guidance is effective for fiscal years beginning after December 15, 2024, which for us is our fiscal year 2026 beginning on March 31, 2025. Early adoption is permitted. We are currently evaluating the impact that the new guidance will have on our consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which requires the disaggregation of certain expenses in the notes to the financial statements, to provide enhanced transparency into the expense captions presented on the face of the statement of earnings. Additionally, in January 2025, the FASB issued ASU 2025-01, “Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date”, which clarified the effective date for non-calendar year-end entities such as us. The guidance is effective for the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this Update should be applied either (1) prospectively to financial statements for reporting periods after the effective date of this Update or (2) retrospectively to any or all prior periods presented in the financial statements. For the Company, annual reporting requirements will be effective for our fiscal year 2028 beginning on March 29, 2027 and interim reporting requirements will be effective beginning with our first quarter of fiscal year 2029. The Company is currently evaluating the impact that the new guidance will have on our consolidated financial statements. The Company does not believe that any recently issued, but not yet effective accounting standards, when adopted, will have a material effect on our consolidated financial statements.

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