v3.26.1
Note N - Subsequent Event
6 Months Ended
Jul. 05, 2026
Notes to Financial Statements  
Subsequent Events [Text Block]

NOTE N - SUBSEQUENT EVENT

The Company evaluates events that occur through the financial statement filing date and discloses any material or significant events or transactions. 

 

On February 20, 2026, the United States Supreme Court determined that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were contrary to law.  Although the Court of International Trade (CIT) required customs to setup a mechanism for processing IEEPA refunds and the Company filed for refunds under that process, the order is still subject to appeal.  In response to the Supreme Court’s ruling, the Trump administration implemented new tariffs, which included a 10% tariff under section 122 of the Trade Act of 1974.  That statute deals with balance of trade deficits. That tariff was the subject of litigation and on May 7, the CIT ruled the tariff illegal. The ruling was appealed, and collections of tariffs under section 122 continued until it expired by operation of law on July 25, 2026.  Upon its expiration, the Trump administration instituted another new tariff under section 301, with rates ranging from 10% to 12.5%, ostensibly aimed at curtailing the importation of goods made from economies with forced labor, which is also the subject of litigation. The government has announced that there will be additional tariffs based on alternative statutory authorities, resulting in ongoing uncertainty regarding future tariff actions and their possible impact on the Company. The Company is continuing to monitor these developments and evaluate the potential effects on its business, financial condition, and results of operations.

 

During the quarter ended July 5, 2026, the Company received approximately $2,245,000 of refunds, including associated interest, which was included in Cost of Sales on the Company’s Statements of Comprehensive Income.  Tariffs are generally recognized as they are refunded or incurred, reflecting the segment’s LIFO inventory cost valuation method, and in keeping with guidance in ASC 450 Contingencies.

 

Subsequent to July 5, 2026, the Company received an additional  $7,553,000 of tariff refunds. As these refunds were not deemed realizable as of July 5, 2026, they will be recognized in the third quarter of 2026.

 

The ultimate amount, if any, and timing of additional recoveries remain subject to ongoing legal, regulatory, and administrative proceedings, and additional tariff refunds will be recognized when the applicable recognition criteria have been met.