Note 9 - Gain on Life Insurance Policies

6 Months Ended

Apr. 01, 2017

Notes to Financial Statements

Life Insurance, Corporate or Bank Owned [Text Block]

9.

   GAIN ON LIFE INSURANCE PROCEEDS

In

February

2017,

we received approximately

$3.4

million in life insurance proceeds upon the passing of our founder and former chief executive officer, Donald C. Spann. We had retirement and resignation agreements with Mr. Spann in place since

1993

when he retired from the Company. These agreements provided for 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 owned and was the beneficiary of

three

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

1981

through

1993.

These policies had a total cash value of approximately

$2.6

million recorded in “Other assets” on our balance sheet. The difference between the total life insurance proceeds and the total cash values of the policies was approximately

$732,000,

or

$0.26

per diluted share after taxes, which was recorded as non-operating income. The life insurance proceeds are not subject to federal or state income taxes.

As of

April

1,

2017,

we had a liability balance of approximately

$357,000,

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.

See Notes

3

- Fair Value of Financial Instruments,

7

- Other Assets and

11

- Income Taxes.