Note 11 - Subsequent Event

3 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Subsequent Events [Text Block]

11. SUBSEQUENT EVENT

Span-America’s founder and former Chief Executive Officer, Donald C. Spann, passed away on

January

6,

2017.

We have had retirement and resignation agreements with Mr. Spann since

1993

when he retired from the Company. These agreements provided for retirement payments of

$113,561

per year to Mr. Spann and his former wife. Mr. Spann’s former wife survives him, so in accordance with these agreements, we will continue to make the retirement payments to Ms. Spann for the remainder of her life. To help fund our payment obligations under the retirement arrangement, the Company owns and is the beneficiary of

three

life insurance policies on Mr. Spann that were put in place from

1981

through

1993.

These policies had a total death benefit of approximately

$3.3

million and a total cash value of approximately

$2.6

million as of

December

31,

2016.

The cash value of these policies has been recorded in “Other assets” on our balance sheet. As of

December

31,

2016,

we had a liability balance of approximately

$380,000,

which represents the present value of the expected future retirement payments to be made to Ms. Spann. This liability is recorded in “Accrued and sundry liabilities” and “Deferred compensation” on the Company’s balance sheet.

As a result of Mr. Spann’s death, we expect to receive the life insurance proceeds of approximately

$3.3

million in cash. We will remove from our balance sheet the associated cash value of the life insurance policies of approximately

$2.6

million. The difference between the total life insurance proceeds and the total cash values of the policies is approximately

$700,000,

which will be recorded as non-operating income in the

second

quarter of fiscal

2017.

See Note

2

- Fair Value of Financial Instruments and Note

6

- Other Assets.