PART I. FINANCIAL INFORMATION Presents the company's financial statements, notes, management's discussion, market risks, and controls [Item 1. Financial Statements.](index=3&type=section&id=Item%201.%20Financial%20Statements.) Presents Nathan's Famous, Inc.'s unaudited consolidated financial statements and accompanying notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets detail the company's financial position, showing changes in assets, liabilities, and equity Consolidated Balance Sheets (in millions) | Metric | Dec 26, 2021 (in millions) | Mar 28, 2021 (in millions) | Change (Dec 2021 vs Mar 2021) (in millions) | | :--- | :--- | :--- | :--- | | Total Assets | $114.455 | $108.809 | +$5.646 | | Total Liabilities | $169.756 | $171.287 | -$1.531 | | Total Stockholders' Deficit | $(55.301) | $(62.478) | +$7.177 (reduction in deficit) | | Cash and cash equivalents | $86.168 | $81.064 | +$5.104 | | Current maturities of long-term debt | $40.000 | $- | +$40.000 | | Long-term debt, net | $107.349 | $146.831 | -$39.482 | [Consolidated Statements of Earnings](index=5&type=section&id=Consolidated%20Statements%20of%20Earnings) The consolidated statements of earnings show significant revenue and net income growth for both periods Consolidated Statements of Earnings (in millions) | Metric (in millions) | 13 Weeks Ended Dec 26, 2021 | 13 Weeks Ended Dec 27, 2020 | YoY Change (%) | 39 Weeks Ended Dec 26, 2021 | 39 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $25.913 | $18.030 | 43.7% | $90.110 | $57.555 | 56.6% | | Income from operations | $5.613 | $4.403 | 27.5% | $23.754 | $20.081 | 18.3% | | Net income | $2.130 | $1.359 | 56.7% | $11.438 | $9.014 | 26.9% | | Basic EPS | $0.52 | $0.33 | 57.6% | $2.78 | $2.19 | 26.9% | | Diluted EPS | $0.52 | $0.33 | 57.6% | $2.78 | $2.19 | 26.9% | | Dividends declared per share | $0.35 | $0.35 | 0.0% | $1.05 | $1.05 | 0.0% | [Consolidated Statements of Stockholders' Deficit (Thirteen weeks)](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Deficit%20(Unaudited)%20%E2%80%93%20Thirteen%20Weeks%20Ended%20December%2026,%202021%20and%20December%2027,%202020) For the thirteen weeks, the company's total stockholders' deficit decreased due to net income offsetting dividends Consolidated Statements of Stockholders' Deficit (Thirteen weeks, in millions) | Metric (in millions) | Balance, Sep 26, 2021 | Dividends on common stock | Share-based compensation | Net income | Balance, Dec 26, 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Stockholders' Deficit | $(55.999) | $(1.440) | $0.008 | $2.130 | $(55.301) | [Consolidated Statements of Stockholders' Deficit (Thirty-nine weeks)](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Deficit%20(Unaudited)%20%E2%80%93%20Thirty-nine%20Weeks%20Ended%20December%2026,%202021%20and%20December%2027,%202020) For the thirty-nine weeks, the company's total stockholders' deficit decreased, driven by net income Consolidated Statements of Stockholders' Deficit (Thirty-nine weeks, in millions) | Metric (in millions) | Balance, Mar 28, 2021 | Shares issued (share-based comp) | Withholding tax (share-based comp) | Dividends on common stock | Share-based compensation | Net income | Balance, Dec 26, 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Stockholders' Deficit | $(62.478) | $- | $(0.007) | $(4.320) | $0.066 | $11.438 | $(55.301) | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the thirty-nine weeks, the company generated positive net cash from operating activities Consolidated Statements of Cash Flows (in millions) | Cash Flow Activity (in millions) | 39 Weeks Ended Dec 26, 2021 | 39 Weeks Ended Dec 27, 2020 | YoY Change (in millions) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $9.896 | $5.710 | +$4.186 | | Net cash used in investing activities | $(0.465) | $(0.398) | -$0.067 | | Net cash used in financing activities | $(4.327) | $(5.827) | +$1.500 | | Net increase (decrease) in cash and cash equivalents | $5.104 | $(0.515) | +$5.619 | | Cash and cash equivalents, end of period | $86.168 | $76.602 | +$9.566 | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed disclosures and explanations for the consolidated financial statements [NOTE A - BASIS OF PRESENTATION](index=9&type=section&id=NOTE%20A%20-%20BASIS%20OF%20PRESENTATION) Financial statements are unaudited, GAAP-compliant, seasonal, and impacted by COVID-19 - Financial statements are unaudited and prepared in accordance with GAAP, with results being **seasonal**[20](index=20&type=chunk) - COVID-19 pandemic continues to impact the business, but the company experienced **higher revenues in fiscal 2022** compared to fiscal 2021[24](index=24&type=chunk)[25](index=25&type=chunk) - Uncertainty remains regarding the ultimate duration and impact of **COVID-19 variants (Omicron, Delta)** on the business[25](index=25&type=chunk) [NOTE B – ADOPTION OF NEW ACCOUNTING STANDARD](index=9&type=section&id=NOTE%20B%20%E2%80%93%20ADOPTION%20OF%20NEW%20ACCOUNTING%20STANDARD) The company adopted ASU 2019-12 on March 29, 2021, simplifying income tax accounting with no material impact - Adopted **ASU 2019-12** on March 29, 2021, simplifying income tax accounting[26](index=26&type=chunk) - The adoption did not materially impact the consolidated financial statements[26](index=26&type=chunk) [NOTE C – NEW ACCOUNTING STANDARD NOT YET ADOPTED](index=10&type=section&id=NOTE%20C%20%E2%80%93%20NEW%20ACCOUNTING%20STANDARD%20NOT%20YET%20ADOPTED) The company is evaluating ASU 2016-13 (CECL model) for credit losses, effective in Q1 fiscal year 2024 - Evaluating **ASU 2016-13 (CECL model)** for credit losses on financial instruments[27](index=27&type=chunk) - Standard effective for Nathan's in **Q1 fiscal year ending March 31, 2024**[27](index=27&type=chunk) [NOTE D – REVENUES](index=10&type=section&id=NOTE%20D%20%E2%80%93%20REVENUES) Total revenues significantly increased for both periods, driven by Branded Products and franchise fees Revenue by Source (in millions) | Revenue Source (in millions) | 13 Weeks Ended Dec 26, 2021 | 13 Weeks Ended Dec 27, 2020 | YoY Change (%) | 39 Weeks Ended Dec 26, 2021 | 39 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Branded Products | $16.901 | $10.003 | 69.0% | $51.960 | $24.450 | 112.5% | | Company-operated restaurants | $1.736 | $1.319 | 31.6% | $9.502 | $6.247 | 52.1% | | License royalties | $5.878 | $5.898 | -0.3% | $24.218 | $24.689 | -1.9% | | Franchise fees and royalties | $0.919 | $0.420 | 118.8% | $2.993 | $1.087 | 175.3% | | Advertising fund revenue | $0.479 | $0.390 | 22.8% | $1.437 | $1.082 | 32.8% | | **Total revenues** | **$25.913** | **$18.030** | **43.7%** | **$90.110** | **$57.555** | **56.6%** | Revenue by Geographical Market (in millions) | Geographical Market (in millions) | 13 Weeks Ended Dec 26, 2021 | 13 Weeks Ended Dec 27, 2020 | YoY Change (%) | 39 Weeks Ended Dec 26, 2021 | 39 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | United States | $25.066 | $17.810 | 40.7% | $87.545 | $56.723 | 54.3% | | International | $0.847 | $0.220 | 285.0% | $2.565 | $0.832 | 208.3% | | **Total revenues** | **$25.913** | **$18.030** | **43.7%** | **$90.110** | **$57.555** | **56.6%** | - Deferred franchise fees increased from **$1.773 million** at the beginning of the 39-week period to **$2.022 million** at the end, with **$0.661 million** in new deferrals[32](index=32&type=chunk) [NOTE E – INCOME PER SHARE](index=12&type=section&id=NOTE%20E%20%E2%80%93%20INCOME%20PER%20SHARE) Basic and diluted EPS for both periods increased significantly, reflecting higher net income Income Per Share | Metric | 13 Weeks Ended Dec 26, 2021 | 13 Weeks Ended Dec 27, 2020 | YoY Change (%) | 39 Weeks Ended Dec 26, 2021 | 39 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Basic EPS | $0.52 | $0.33 | 57.6% | $2.78 | $2.19 | 26.9% | | Diluted EPS | $0.52 | $0.33 | 57.6% | $2.78 | $2.19 | 26.9% | - Options to purchase **20,000 shares (2021)** and **10,000 shares (2020)** were excluded from diluted EPS calculation as their exercise price exceeded the average market price[36](index=36&type=chunk)[37](index=37&type=chunk) [NOTE F – CASH AND CASH EQUIVALENTS](index=13&type=section&id=NOTE%20F%20%E2%80%93%20CASH%20AND%20CASH%20EQUIVALENTS) Cash and cash equivalents increased to $86.168 million, with no significant risk Cash and Cash Equivalents (in millions) | Metric | Dec 26, 2021 (in millions) | Mar 28, 2021 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $86.168 | $81.064 | +$5.104 | - Substantially all cash balances exceed Federal government insurance limits, but the Company does not believe it is exposed to **significant risk**[38](index=38&type=chunk) [NOTE G – FAIR VALUE MEASUREMENTS](index=13&type=section&id=NOTE%20G%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENTS) The company uses a three-level fair value hierarchy, classifying long-term debt as Level 2 - Long-term debt is classified as **Level 2** in the fair value hierarchy, with fair value estimated from observable secondary market pricing[39](index=39&type=chunk) Long-Term Debt Fair Value (in millions) | Metric (in millions) | Dec 26, 2021 Face Value | Dec 26, 2021 Fair Value | Mar 28, 2021 Face Value | Mar 28, 2021 Fair Value | | :--- | :--- | :--- | :--- | :--- | | Long-term debt | $150.000 | $152.961 | $150.000 | $154.420 | [NOTE H – ACCOUNTS AND OTHER RECEIVABLES, NET](index=14&type=section&id=NOTE%20H%20%E2%80%93%20ACCOUNTS%20AND%20OTHER%20RECEIVABLES,%20NET) Accounts and other receivables, net, increased to $14.175 million, driven by branded product sales Accounts and Other Receivables, Net (in millions) | Metric (in millions) | Dec 26, 2021 | Mar 28, 2021 | Change (in millions) | | :--- | :--- | :--- | :--- | | Branded product sales | $10.185 | $6.480 | +$3.705 | | Franchise and license royalties | $2.992 | $5.224 | -$2.232 | | Other | $1.183 | $0.293 | +$0.890 | | Total receivables | $14.360 | $11.997 | +$2.363 | | Less: allowance for doubtful accounts | $0.185 | $0.345 | -$0.160 | | **Accounts and other receivables, net** | **$14.175** | **$11.652** | **+$2.523** | - The allowance for doubtful accounts is determined by reviewing past due accounts, loss history, customer ability to pay, and economic conditions[43](index=43&type=chunk) [NOTE I – PREPAID EXPENSES AND OTHER CURRENT ASSETS](index=14&type=section&id=NOTE%20I%20%E2%80%93%20PREPAID%20EXPENSES%20AND%20OTHER%20CURRENT%20ASSETS) Prepaid expenses and other current assets decreased to $821 thousand Prepaid Expenses and Other Current Assets (in millions) | Metric (in millions) | Dec 26, 2021 | Mar 28, 2021 | Change (in millions) | | :--- | :--- | :--- | :--- | | Income taxes | $- | $0.280 | -$0.280 | | Real estate taxes | $0.140 | $0.087 | +$0.053 | | Insurance | $0.257 | $0.388 | -$0.131 | | Marketing | $0.181 | $0.196 | -$0.015 | | Other | $0.243 | $0.374 | -$0.131 | | **Total prepaid expenses and other current assets** | **$0.821** | **$1.325** | **-$0.504** | [NOTE J – GOODWILL AND INTANGIBLE ASSETS](index=15&type=section&id=NOTE%20J%20%E2%80%93%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Impairment tests for goodwill and intangible assets showed no charges were necessary - COVID-19 triggered interim impairment tests for goodwill and definite-lived intangible assets[46](index=46&type=chunk)[47](index=47&type=chunk) - No impairment charges were recorded for goodwill or intangible assets for the thirteen and thirty-nine-week periods ended December 26, 2021, and December 27, 2020[46](index=46&type=chunk)[47](index=47&type=chunk) [NOTE K - LONG LIVED ASSETS](index=15&type=section&id=NOTE%20K%20-%20LONG%20LIVED%20ASSETS) The company reviewed long-lived assets for impairment due to COVID-19, finding no charges required - Long-lived assets were reviewed for impairment due to COVID-19 impact, with restaurant operating losses being a primary indicator[49](index=49&type=chunk) - No impairment charges were recorded for long-lived assets for the thirteen and thirty-nine-week periods ended December 26, 2021, and December 27, 2020[50](index=50&type=chunk) [NOTE L – ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES](index=15&type=section&id=NOTE%20L%20%E2%80%93%20ACCRUED%20EXPENSES,%20OTHER%20CURRENT%20LIABILITIES%20AND%20OTHER%20LIABILITIES) Accrued expenses and other current liabilities decreased to $5.410 million Accrued Expenses and Other Current Liabilities (in millions) | Metric (in millions) | Dec 26, 2021 | Mar 28, 2021 | Change (in millions) | | :--- | :--- | :--- | :--- | | Payroll and other benefits | $2.207 | $2.793 | -$0.586 | | Accrued rebates | $0.288 | $0.132 | +$0.156 | | Interest | $1.552 | $4.057 | -$2.505 | | Deferred revenue | $- | $0.841 | -$0.841 | | **Total accrued expenses and other current liabilities** | **$5.410** | **$8.478** | **-$3.068** | Other Liabilities (in millions) | Metric (in millions) | Dec 26, 2021 | Mar 28, 2021 | Change (in millions) | | :--- | :--- | :--- | :--- | | Reserve for uncertain tax positions | $0.733 | $0.653 | +$0.080 | | Other | $- | $0.121 | -$0.121 | | **Total other liabilities** | **$0.733** | **$0.774** | **-$0.041** | [NOTE M – INCOME TAXES](index=16&type=section&id=NOTE%20M%20%E2%80%93%20INCOME%20TAXES) Effective tax rates for the thirty-nine-week periods were 28.1% and 27.7% - Effective tax rates were **28.1%** for fiscal 2022 period and **27.7%** for fiscal 2021 period[54](index=54&type=chunk) - Unrecognized tax benefits totaled **$0.445 million**, with **$0.307 million** in accrued interest and penalties as of December 26, 2021[54](index=54&type=chunk) [NOTE N – SEGMENT INFORMATION](index=16&type=section&id=NOTE%20N%20%E2%80%93%20SEGMENT%20INFORMATION) Nathan's operates through three segments, with Branded Product and Licensing driving growth - Company operates in three segments: **Branded Product Program**, **Product Licensing**, and **Restaurant Operations**[55](index=55&type=chunk) - Branded Product Program and Product Licensing are the largest contributors to the Company's profits and primary drivers of growth[111](index=111&type=chunk) Segment Revenues (in millions) | Segment Revenues (in millions) | 13 Weeks Ended Dec 26, 2021 | 13 Weeks Ended Dec 27, 2020 | YoY Change (%) | 39 Weeks Ended Dec 26, 2021 | 39 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Branded Product Program | $16.901 | $10.003 | 69.0% | $51.960 | $24.450 | 112.5% | | Product licensing | $5.878 | $5.898 | -0.3% | $24.218 | $24.689 | -1.9% | | Restaurant operations | $2.655 | $1.739 | 52.7% | $12.495 | $7.334 | 70.4% | | Corporate (Advertising fund revenue) | $0.479 | $0.390 | 22.8% | $1.437 | $1.082 | 32.8% | | **Total revenues** | **$25.913** | **$18.030** | **43.7%** | **$90.110** | **$57.555** | **56.6%** | Segment Income from Operations (in millions) | Segment Income from Operations (in millions) | 13 Weeks Ended Dec 26, 2021 | 13 Weeks Ended Dec 27, 2020 | YoY Change (%) | 39 Weeks Ended Dec 26, 2021 | 39 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Branded Product Program | $1.681 | $1.550 | 8.5% | $5.096 | $3.074 | 65.8% | | Product licensing | $5.832 | $5.852 | -0.3% | $24.081 | $24.552 | -1.9% | | Restaurant operations | $(0.069) | $(1.162) | 94.1% | $0.623 | $(2.193) | 128.4% | | Corporate | $(1.831) | $(1.837) | 0.3% | $(6.046) | $(5.352) | -13.0% | | **Income from operations** | **$5.613** | **$4.403** | **27.5%** | **$23.754** | **$20.081** | **18.3%** | [NOTE O – SHARE-BASED COMPENSATION](index=17&type=section&id=NOTE%20O%20%E2%80%93%20SHARE-BASED%20COMPENSATION) Total share-based compensation decreased for both periods, with new stock options granted Share-Based Compensation Cost (in millions) | Compensation Cost (in millions) | 13 Weeks Ended Dec 26, 2021 | 13 Weeks Ended Dec 27, 2020 | YoY Change (%) | 39 Weeks Ended Dec 26, 2021 | 39 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Stock options | $0.008 | $0.021 | -61.9% | $0.052 | $0.064 | -18.8% | | Restricted stock | $- | $0.008 | -100.0% | $0.014 | $0.023 | -39.1% | | **Total compensation cost** | **$0.008** | **$0.029** | **-72.4%** | **$0.066** | **$0.087** | **-24.2%** | - As of December 26, 2021, **$0.122 million** of unamortized compensation expense remains, expected to be recognized over approximately **twenty-two months**[62](index=62&type=chunk) - During the thirty-nine-week period ended December 26, 2021, **10,000 stock options** were granted at an exercise price of **$68.50 per share**, vesting ratably over **four years**[64](index=64&type=chunk) [NOTE P – STOCKHOLDERS' EQUITY](index=19&type=section&id=NOTE%20P%20%E2%80%93%20STOCKHOLDERS'%20EQUITY) The Board declared quarterly cash dividends and maintains a stock incentive and repurchase program - Board declared three quarterly cash dividends of **$0.35 per share** for fiscal 2022, totaling **$1.440 million** each[70](index=70&type=chunk)[71](index=71&type=chunk) - Board authorized an increase in the regular dividend from **$0.35 to $0.45 per quarter**, effective **February 4, 2022**[72](index=72&type=chunk) - As of December 26, 2021, **198,584 shares** were available for future option grants or **181,683 shares** for restricted stock grants under the 2019 Plan[75](index=75&type=chunk) - As of December 26, 2021, **133,550 shares** remained to be repurchased under the sixth stock repurchase plan, which has no set expiration date[77](index=77&type=chunk) [NOTE Q – LONG-TERM DEBT](index=21&type=section&id=NOTE%20Q%20%E2%80%93%20LONG-TERM%20DEBT) The company's long-term debt consists of $150 million of Senior Secured Notes, with a $40 million partial redemption Long-Term Debt, Net (in millions) | Metric (in millions) | Dec 26, 2021 | Mar 28, 2021 | Change (in millions) | | :--- | :--- | :--- | :--- | | 6.625% Senior Secured Notes due 2025 | $150.000 | $150.000 | $0 | | Less: unamortized debt issuance costs | $(2.651) | $(3.169) | +$0.518 | | Less: Current maturities of long-term debt | $(40.000) | $- | -$40.000 | | **Long-term debt, net** | **$107.349** | **$146.831** | **-$39.482** | - On December 15, 2021, the company announced a partial redemption of **$40 million** of the 2025 Notes, completed on January 26, 2022, at **101.656% of principal**[90](index=90&type=chunk) - The redemption resulted in a loss on early extinguishment of approximately **$1.4 million** and is expected to reduce future cash interest exposure by **$2.65 million per annum**[90](index=90&type=chunk)[114](index=114&type=chunk) [NOTE R – LEASES](index=24&type=section&id=NOTE%20R%20%E2%80%93%20LEASES) The company acts as both lessee and lessor, with future lease commitments detailed Lease Cost (in millions) | Lease Cost (in millions) | 13 Weeks Ended Dec 26, 2021 | 13 Weeks Ended Dec 27, 2020 | YoY Change (%) | 39 Weeks Ended Dec 26, 2021 | 39 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating lease cost | $0.378 | $0.370 | 2.2% | $1.223 | $1.181 | 3.6% | | Variable lease cost | $0.057 | $0.292 | -80.5% | $1.023 | $1.007 | 1.6% | | Less: Sublease income, net | $(0.041) | $(0.009) | 355.6% | $(0.062) | $(0.031) | 100.0% | | **Total net lease cost** | **$0.394** | **$0.653** | **-39.7%** | **$2.184** | **$2.157** | **1.2%** | - Weighted average remaining lease term for operating leases is **6.5 years**, with a weighted average discount rate of **8.875%** as of December 26, 2021[98](index=98&type=chunk) Future Lease Commitments (in millions) | Future Lease Commitments (in millions) | Payments (Operating Leases) | Receipts (Subleases) | Net Leases (in millions) | | :--- | :--- | :--- | :--- | | Fiscal year 2022 (remainder) | $0.381 | $0.038 | $0.343 | | Fiscal year 2023 | $1.849 | $0.168 | $1.681 | | Fiscal year 2024 | $1.774 | $0.169 | $1.605 | | Fiscal year 2025 | $1.678 | $0.169 | $1.509 | | Fiscal year 2026 | $1.712 | $0.169 | $1.543 | | Thereafter | $3.762 | $0.183 | $3.579 | | **Total lease commitments** | **$11.156** | **$0.896** | **$10.260** | [NOTE S – COMMITMENTS AND CONTINGENCIES](index=26&type=section&id=NOTE%20S%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) The company settled a lease guaranty and expects no material adverse effect from litigation - Company settled a Guaranty of Lease for a Brooklyn restaurant, paying a **$37,500 termination fee** in January 2022[101](index=101&type=chunk) - Management believes ongoing ordinary litigation will not materially affect financial position, cash flows, or results of operations[102](index=102&type=chunk) [NOTE T – SUBSEQUENT EVENTS](index=27&type=section&id=NOTE%20T%20%E2%80%93%20SUBSEQUENT%20EVENTS) The company evaluated subsequent events, finding no other events requiring recognition or disclosure - No other subsequent events requiring recognition or disclosure were identified through the filing date[104](index=104&type=chunk) - Financial statements are unaudited and include normal recurring adjustments. Results are **seasonal** and not necessarily indicative of full fiscal year performance[20](index=20&type=chunk) - Disclosures are adequate but should be read with the Annual Report on Form 10-K for the fiscal year ended March 28, 2021[22](index=22&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the company's financial performance, condition, and outlook, covering revenues, costs, and liquidity [Forward-Looking Statements](index=28&type=section&id=Forward-Looking%20Statements) This section highlights forward-looking statements, subject to risks where actual results may differ - Forward-looking statements are identified by words like "believes," "expects," "projects," and relate to strategy, plans, and financial results[105](index=105&type=chunk) - Risks include the impact of COVID-19, licensing agreements (especially with John Morrell & Co.), debt service, economic conditions, commodity prices, and labor laws[106](index=106&type=chunk) [Introduction](index=28&type=section&id=Introduction) Nathan's Famous, Inc. markets its brand and sells products through restaurants, licensing, and branded programs - Nathan's primarily markets its brand and sells products through company-owned restaurants, franchising, product licensing, and the Branded Product Program[108](index=108&type=chunk)[109](index=109&type=chunk) - As of December 26, 2021, the restaurant system included **242 franchised units (120 Branded Menu Program)** and **4 company-owned units**, operating in **18 states and 14 foreign countries**[110](index=110&type=chunk) - Strategic emphasis is on increasing distribution points across all business platforms, with **Licensing and Branded Product Programs** being the primary growth and profit drivers[111](index=111&type=chunk) [Impact of COVID-19 pandemic on our business](index=29&type=section&id=Impact%20of%20COVID-19%20pandemic%20on%20our%20business) While revenues increased in fiscal 2022, uncertainty persists from COVID-19 variants, labor, and supply - Revenues increased in the first nine months of fiscal 2022 as COVID-19 cases stabilized and restrictions eased[116](index=116&type=chunk) - Uncertainty remains due to the **Omicron variant**, evolving government restrictions, challenges in attracting and retaining employees, and intermittent product shortages from suppliers[116](index=116&type=chunk) - The full impact of the pandemic on financial condition, liquidity, operations, and workforce is still evolving and cannot be reasonably estimated[118](index=118&type=chunk) [Critical Accounting Policies and Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's financial statements rely on estimates for revenue, leases, impairment, compensation, and taxes - Key accounting policies and estimates include revenue recognition, leases, impairment of goodwill and other intangible assets, impairment of long-lived assets, share-based compensation, and income taxes[119](index=119&type=chunk) - No significant changes to accounting policies since March 28, 2021, except for the adoption of **ASU 2019-12**[119](index=119&type=chunk) [Adoption of New Accounting Standard](index=31&type=section&id=Adoption%20of%20New%20Accounting%20Standard) The company adopted ASU 2019-12 on March 29, 2021, which did not materially impact its financial statements - Refer to Note B for details on the adoption of **ASU 2019-12**, which had no material impact[120](index=120&type=chunk) [New Accounting Standards Not Yet Adopted](index=31&type=section&id=New%20Accounting%20Standards%20Not%20Yet%20Adopted) The company is evaluating ASU 2016-13 (CECL model) for credit losses, effective in Q1 fiscal year 2024 - Refer to Note C for details on new accounting standards not yet adopted, specifically **ASU 2016-13 (CECL model)**[121](index=121&type=chunk) - The **CECL model** is required for Nathan's in **Q1 fiscal year ending March 31, 2024**[27](index=27&type=chunk) [EBITDA and Adjusted EBITDA](index=31&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) The company provides EBITDA and Adjusted EBITDA as non-GAAP measures to assess operating performance - EBITDA and Adjusted EBITDA are **non-GAAP measures** used to assess operating performance and underlying business trends[122](index=122&type=chunk) - EBITDA is defined as net income excluding interest expense, provision for income taxes, and depreciation and amortization. Adjusted EBITDA further excludes **share-based compensation**[124](index=124&type=chunk) EBITDA and Adjusted EBITDA (in millions) | Metric (in millions) | 13 Weeks Ended Dec 26, 2021 | 13 Weeks Ended Dec 27, 2020 | YoY Change (%) | 39 Weeks Ended Dec 26, 2021 | 39 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net income | $2.130 | $1.359 | 56.7% | $11.438 | $9.014 | 26.9% | | EBITDA | $5.899 | $4.789 | 23.2% | $24.673 | $21.321 | 15.7% | | Adjusted EBITDA | $5.907 | $4.818 | 22.6% | $24.739 | $21.408 | 15.6% | [Results of Operations (Thirteen weeks ended December 26, 2021 compared to December 27, 2020)](index=32&type=section&id=Results%20of%20Operations%20(Thirteen%20weeks%20ended%20December%2026,%202021%20compared%20to%20thirteen%20weeks%20ended%20December%2027,%202020)) For Q3 fiscal 2022, total revenues increased by 44%, driven by Branded Product Program and restaurants [Revenues (Thirteen weeks)](index=32&type=section&id=Revenues%20(Thirteen%20weeks)) Branded Product Program sales surged, restaurant sales rose, franchise fees doubled, and license royalties decreased Revenue by Source (Thirteen weeks, in millions) | Revenue Source (in millions) | 13 Weeks Ended Dec 26, 2021 | 13 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Branded Product Program Sales | $16.901 | $10.003 | 69.0% | | Company-owned restaurant sales | $1.736 | $1.319 | 31.6% | | License royalties | $5.878 | $5.898 | -0.3% | | Franchise fees and royalties | $0.919 | $0.420 | 118.8% | | Advertising fund revenue | $0.479 | $0.390 | 22.8% | - Branded Product Program hot dog volume increased by approximately **40%**, and average selling prices increased by **19%**[129](index=129&type=chunk) - Franchise restaurant sales increased to **$12.280 million** from **$6.178 million**, with **88%** of the franchise system open compared to **62%** in the prior year[132](index=132&type=chunk) - **39 ghost kitchens** opened during the third quarter fiscal 2022[135](index=135&type=chunk) [Costs and Expenses (Thirteen weeks)](index=34&type=section&id=Costs%20and%20Expenses%20(Thirteen%20weeks)) Total cost of sales increased by 79%, decreasing gross profit margin due to higher costs Costs and Expenses (Thirteen weeks, in millions) | Expense (in millions) | 13 Weeks Ended Dec 26, 2021 | 13 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Cost of sales | $16.040 | $8.937 | 79.5% | | Restaurant operating expenses | $0.547 | $0.759 | -27.9% | | Depreciation and amortization | $0.259 | $0.288 | -10.1% | | General and administrative expenses | $2.975 | $3.253 | -8.5% | | Advertising fund expense | $0.479 | $0.390 | 22.8% | - Gross profit margin decreased from **21% to 14%** due to a **31% increase** in the average cost per pound of hot dogs in the Branded Product Program[137](index=137&type=chunk)[138](index=138&type=chunk) - Company-owned restaurant cost of sales increased due to higher commodity and labor costs, impacted by **New York State minimum wage increases**[139](index=139&type=chunk) [Other Items (Thirteen weeks)](index=34&type=section&id=Other%20Items%20(Thirteen%20weeks)) Interest expense remained constant, interest income decreased, and other income was minimal Other Items (Thirteen weeks, in millions) | Item (in millions) | 13 Weeks Ended Dec 26, 2021 | 13 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Interest expense | $(2.650) | $(2.650) | 0.0% | | Interest income | $0.024 | $0.089 | -73.0% | | Other income, net | $0.003 | $0.009 | -66.7% | [Provision for Income Taxes (Thirteen weeks)](index=35&type=section&id=Provision%20for%20Income%20Taxes%20(Thirteen%20weeks)) The income tax provision for Q3 fiscal 2022 reflected an effective tax rate of 28.8% - Effective tax rate for Q3 fiscal 2022 was **28.8%**, unfavorably impacted by a **0.2% return to provision adjustment**[145](index=145&type=chunk) - Unrecognized tax benefits of **$0.445 million** and accrued interest/penalties of **$0.307 million** as of December 26, 2021[146](index=146&type=chunk) - Total revenues increased by **44% to $25.913 million**, and total sales increased by **65% to $18.637 million**, primarily due to easing COVID-19 restrictions[128](index=128&type=chunk)[129](index=129&type=chunk) - Net income increased by **56.7% to $2.130 million**[11](index=11&type=chunk) [Results of Operations (Thirty-nine weeks ended December 26, 2021 compared to December 27, 2020)](index=35&type=section&id=Results%20of%20Operations%20(Thirty-nine%20weeks%20ended%20December%2026,%202021%20compared%20to%20thirty-nine%20weeks%20ended%20December%2027,%202020)) For the thirty-nine weeks, total revenues increased by 57%, and total sales doubled [Revenues (Thirty-nine weeks)](index=35&type=section&id=Revenues%20(Thirty-nine%20weeks)) Branded Product Program sales more than doubled, restaurant sales increased, and franchise fees surged Revenue by Source (Thirty-nine weeks, in millions) | Revenue Source (in millions) | 39 Weeks Ended Dec 26, 2021 | 39 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Branded Product Program Sales | $51.960 | $24.450 | 112.5% | | Company-owned restaurant sales | $9.502 | $6.247 | 52.1% | | License royalties | $24.218 | $24.689 | -1.9% | | Franchise fees and royalties | $2.993 | $1.087 | 175.3% | | Advertising fund revenue | $1.437 | $1.082 | 32.8% | - Branded Product Program hot dog volume increased by approximately **98%**, and average selling prices increased by **7%**[148](index=148&type=chunk) - Franchise restaurant sales increased to **$40.910 million** from **$15.366 million**, with **242 franchised outlets** operating compared to **215** in the prior year[151](index=151&type=chunk)[152](index=152&type=chunk) - **164 ghost kitchens** opened during the fiscal 2022 period, compared to **75** in the fiscal 2021 period[153](index=153&type=chunk) [Costs and Expenses (Thirty-nine weeks)](index=36&type=section&id=Costs%20and%20Expenses%20(Thirty-nine%20weeks)) Total cost of sales more than doubled, decreasing gross profit margin due to higher costs Costs and Expenses (Thirty-nine weeks, in millions) | Expense (in millions) | 39 Weeks Ended Dec 26, 2021 | 39 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Cost of sales | $51.536 | $24.161 | 113.3% | | Restaurant operating expenses | $2.874 | $2.622 | 9.6% | | Depreciation and amortization | $0.807 | $0.900 | -10.3% | | General and administrative expenses | $9.702 | $8.709 | 11.4% | | Advertising fund expense | $1.437 | $1.082 | 32.8% | - Gross profit margin decreased from **21% to 16%** due to a **14% increase** in the average cost per pound of hot dogs in the Branded Product Program[155](index=155&type=chunk)[156](index=156&type=chunk) - General and administrative expenses increased by **$0.993 million**, driven by higher incentive compensation (**$0.324 million**), insurance (**$0.159 million**), and marketing/trade show expenses (**$0.360 million**)[160](index=160&type=chunk) [Other Items (Thirty-nine weeks)](index=36&type=section&id=Other%20Items%20(Thirty-nine%20weeks)) Interest expense remained constant, interest income decreased, and other income was minimal Other Items (Thirty-nine weeks, in millions) | Item (in millions) | 39 Weeks Ended Dec 26, 2021 | 39 Weeks Ended Dec 27, 2020 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Interest expense | $(7.951) | $(7.951) | 0.0% | | Interest income | $0.088 | $0.309 | -71.5% | | Other income, net | $0.024 | $0.031 | -22.6% | [Provision for Income Taxes (Thirty-nine weeks)](index=37&type=section&id=Provision%20for%20Income%20Taxes%20(Thirty-nine%20weeks)) The income tax provision for the fiscal 2022 period reflected an effective tax rate of 28.1% - Effective tax rate for fiscal 2022 period was **28.1%**, compared to **27.7%** in fiscal 2021 period[163](index=163&type=chunk) - Unrecognized tax benefits of **$0.445 million** and accrued interest/penalties of **$0.307 million** as of December 26, 2021[163](index=163&type=chunk) - Total revenues increased by **57% to $90.110 million**, and total sales increased by **100% to $61.462 million**, driven by COVID-19 recovery[147](index=147&type=chunk)[148](index=148&type=chunk) - Net income increased by **26.9% to $11.438 million**[11](index=11&type=chunk) [Off-Balance Sheet Arrangements](index=37&type=section&id=Off-Balance%20Sheet%20Arrangements) As of December 26, 2021, Nathan's had no open hot dog purchase commitments - No open purchase commitments for hot dogs as of December 26, 2021, or December 27, 2020[165](index=165&type=chunk) - The company may enter into future purchase commitments if market conditions are favorable[165](index=165&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents increased to $86.168 million, but net working capital decreased Liquidity and Capital Resources (in millions) | Metric (in millions) | Dec 26, 2021 | Mar 28, 2021 | Change (in millions) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $86.168 | $81.064 | +$5.104 | | Net working capital | $48.204 | $80.072 | -$31.868 | - Net working capital decreased due to the reclassification of **$40 million** of 2025 Notes as a current liability for partial redemption[166](index=166&type=chunk) - Management believes available cash, cash equivalents, and cash from operations will be sufficient to finance operations, debt service, dividends, and stock repurchases for at least the **next 12 months**[179](index=179&type=chunk) - The company paid quarterly dividends of **$0.35 per share** totaling **$4.320 million** during the fiscal 2022 period and increased the quarterly dividend to **$0.45 per share** effective **February 4, 2022**[171](index=171&type=chunk)[176](index=176&type=chunk) [Inflationary Impact](index=39&type=section&id=Inflationary%20Impact) The company experienced significant cost volatility for hot dogs, food products, and utilities - Average cost of hot dogs increased by approximately **14%** between April 2021 and December 2021 compared to the prior year[183](index=183&type=chunk) - Hot dog costs increased significantly since July 2021 due to higher beef, labor, packaging, transportation, and supply chain challenges[184](index=184&type=chunk) - Minimum wage increases in New York State have impacted labor costs at company-owned restaurants and franchisees, potentially affecting margins and growth[188](index=188&type=chunk)[190](index=190&type=chunk) - The report contains forward-looking statements subject to known and unknown risks, including the impact of COVID-19, licensing agreements, debt obligations, economic conditions, and changes in consumer tastes[105](index=105&type=chunk)[106](index=106&type=chunk) - Strategic emphasis is on increasing distribution points across all business platforms: **Licensing**, **Branded Products**, and **Restaurant System (including ghost kitchens)**[111](index=111&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company is exposed to market risks from interest rates, commodity costs, and foreign currency [Cash](index=42&type=section&id=Cash) Earnings on $86.168 million cash could change by $215,000 per annum for interest rate changes - Earnings on **$86.168 million** cash and cash equivalents could change by **$0.215 million per annum** for every **0.25% interest rate change**[193](index=193&type=chunk) [Borrowings](index=42&type=section&id=Borrowings) Interest expense on $150 million of 2025 Notes could change by $375,000 per annum - Interest expense on **$150 million** of 2025 Notes could change by **$0.375 million per annum** for every **0.25% interest rate change**[194](index=194&type=chunk) - The company does not anticipate entering into interest rate swaps or other financial instruments to hedge its borrowings[194](index=194&type=chunk) [Commodity Costs](index=42&type=section&id=Commodity%20Costs) The company faces significant volatility in hot dog and food product costs - Average cost of hot dogs increased by approximately **14%** between April 2021 and December 2021 compared to the prior year[195](index=195&type=chunk) - Hot dog costs have significantly increased since July 2021 due to higher beef, labor, packaging, and transportation costs, and supply chain challenges[196](index=196&type=chunk) - The company may use purchase commitments and pass through price increases to customers to mitigate commodity cost volatility[197](index=197&type=chunk)[198](index=198&type=chunk) [Foreign Currencies](index=42&type=section&id=Foreign%20Currencies) Foreign franchisees primarily transact in USD, reducing foreign currency exposure - Foreign franchisees transact in USD, reducing foreign currency risk[199](index=199&type=chunk) - The company does not hedge against foreign currency fluctuations and does not expect a material impact on financial results[199](index=199&type=chunk) - The company is exposed to market risks from interest rates (cash and borrowings), commodity costs (hot dogs, food products), and foreign currencies[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[199](index=199&type=chunk) - A **10% change** in food and paper product costs would impact cost of sales by approximately **$4.714 million** for the thirty-nine-week period ended December 26, 2021[198](index=198&type=chunk) [Item 4. Controls and Procedures.](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and procedures were effective [Evaluation of Disclosure Controls and Procedures](index=43&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, with CEO and CFO, concluded that disclosure controls and procedures were effective - Disclosure controls and procedures were evaluated and deemed **effective** by management, CEO, and CFO[201](index=201&type=chunk) [Changes in Internal Controls](index=43&type=section&id=Changes%20in%20Internal%20Controls) No material changes in internal controls over financial reporting occurred during the quarter - No material changes in internal controls over financial reporting during the quarter[202](index=202&type=chunk) - The company is monitoring and assessing the impact of the hybrid working environment on internal controls[203](index=203&type=chunk) [Limitations on the Effectiveness of Controls](index=43&type=section&id=Limitations%20on%20the%20Effectiveness%20of%20Controls) The company acknowledges that no control system can provide absolute assurance - Control systems provide reasonable, not absolute, assurance[204](index=204&type=chunk) - Disclosure controls and procedures are effective at the reasonable assurance level[204](index=204&type=chunk) - CEO and CFO concluded that disclosure controls and procedures were **effective** as of December 26, 2021[201](index=201&type=chunk) - No material changes in internal controls over financial reporting occurred during the quarter, despite a hybrid working environment due to COVID-19[202](index=202&type=chunk)[203](index=203&type=chunk) - Control systems provide reasonable, not absolute, assurance of meeting objectives[204](index=204&type=chunk) PART II. OTHER INFORMATION This section provides additional information, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings.](index=44&type=section&id=Item%201.%20Legal%20Proceedings.) The company reported no legal proceedings - No legal proceedings to report[206](index=206&type=chunk) [Item 1A. Risk Factors.](index=44&type=section&id=Item%201A.%20Risk%20Factors.) The company refers to risk factors discussed in its Annual Report on Form 10-K - Refer to the Annual Report on Form 10-K for a comprehensive discussion of risk factors[206](index=206&type=chunk) - Additional unknown or currently immaterial risks may also adversely affect the business[206](index=206&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company reported no unregistered sales of equity securities or use of proceeds - No unregistered sales of equity securities or use of proceeds to report[207](index=207&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) The company reported no defaults upon senior securities - No defaults upon senior securities to report[209](index=209&type=chunk) [Item 4. Mine Safety Disclosures.](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) The company reported no mine safety disclosures - No mine safety disclosures to report[210](index=210&type=chunk) [Item 5. Other Information.](index=44&type=section&id=Item%205.%20Other%20Information.) The Board declared a quarterly cash dividend of $0.45 per share, payable on March 4, 2022 - Board declared a quarterly cash dividend of **$0.45 per share**, payable March 4, 2022[211](index=211&type=chunk) [Item 6. Exhibits.](index=45&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q - Includes certifications by CEO and CFO (Sarbanes-Oxley Act Sections 302 and 906)[215](index=215&type=chunk) - Contains the Cover Page Interactive Data File (iXBRL) and financial statements formatted in iXBRL[213](index=213&type=chunk)[215](index=215&type=chunk) [SIGNATURES](index=46&type=section&id=SIGNATURES) The report is duly signed by Eric Gatoff, CEO, and Robert Steinberg, CFO, on February 4, 2022 - Report signed by Eric Gatoff (CEO) and Robert Steinberg (CFO) on **February 4, 2022**[218](index=218&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 26, 2021. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 For the transition period from to . Commission File No. 001-35962 NATHAN'S FAMOUS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorpora ...

Revenue Growth - Total revenues increased by 77% to $31,319,000 for the thirteen weeks ended June 27, 2021, compared to $17,686,000 for the same period in 2020[113]. - Total sales increased by 189% to $19,325,000 for the fiscal 2022 period, compared to $6,683,000 for the fiscal 2021 period[114]. - Foodservice sales from the Branded Product Program increased by 237% to $15,996,000 for the fiscal 2022 period, compared to $4,749,000 in the fiscal 2021 period[114]. - Total Company-owned restaurant sales increased by 72% to $3,329,000 during the fiscal 2022 period, compared to $1,934,000 during the fiscal 2021 period[115]. - Franchise restaurant sales increased significantly to $12,985,000 in fiscal 2022 from $2,218,000 in fiscal 2021, as approximately 80% of franchise locations were open compared to 52% in the prior year[117]. EBITDA and Profitability - EBITDA for the thirteen weeks ended June 27, 2021, was $11,032,000, compared to $8,521,000 for the same period in 2020[112]. - Adjusted EBITDA for the thirteen weeks ended June 27, 2021, was $11,061,000, compared to $8,550,000 for the same period in 2020[112]. - Overall cost of sales increased by 190% to $15,365,000 in fiscal 2022, while gross profit was $3,960,000, representing 20.5% of sales[121]. Expenses and Costs - General and administrative expenses rose by $614,000 or 22% to $3,458,000 in fiscal 2022, primarily due to higher corporate payroll and legal fees[126]. - Average selling prices decreased by approximately 4.5% compared to the fiscal 2021 period[114]. - The minimum hourly wage for fast food workers in New York State increased to $15.00 on July 1, 2021, significantly affecting Nathan's Company-owned restaurants[152]. - Continued increases in labor, food, and other operating expenses could adversely affect Nathan's operations and pricing strategy[155]. Cash Flow and Financial Position - Cash and cash equivalents decreased by $1,538,000 to $79,526,000 during fiscal 2022, while net working capital increased to $84,994,000[134]. - Cash provided by operations was $77,000 in fiscal 2022, attributed to net income of $5,763,000 and non-cash operating items[137]. - The company incurred $1,440,000 in cash used for financing activities related to dividend payments in fiscal 2022[138]. - Management believes available cash and cash generated from operations will be sufficient to finance operations and satisfy debt service requirements for at least the next 12 months[146]. Strategic Focus and Future Plans - The strategic emphasis continues to focus on increasing distribution points across all business platforms, including Licensing and Branded Product Programs[97]. - The company plans to invest in existing restaurants and support the growth of Branded Product and Branded Menu Programs in the future[145]. Market and Commodity Risks - The company expects to experience price volatility for beef products during fiscal 2022, which could impact operational results[151]. - Nathan's has not attempted to hedge against fluctuations in commodity prices, leading to exposure to market changes in future purchases[163]. - A short-term increase or decrease of 10.0% in the cost of food and paper products for the thirteen-week period ended June 27, 2021, would have increased or decreased the cost of sales by approximately $1,385,000[163]. - Nathan's has recorded a liability of $113,000 in connection with the Brooklyn Guaranty, which does not include potential additional costs that are not reasonably determinable at this time[149]. Debt and Interest Rates - As of June 27, 2021, Nathan's cash and cash equivalents totaled $79,526,000, with earnings on this cash expected to fluctuate by approximately $199,000 per annum for each 0.25% change in interest rates[159]. - The company has $150,000,000 of 2025 Notes outstanding, with interest expense on these borrowings expected to change by approximately $375,000 per annum for each 0.25% change in interest rates[160].

Franchise Operations - As of March 28, 2021, Nathan's franchise system included 213 units operating in 19 states and eight foreign countries[38] - Approximately 77% of the Company's franchise system is currently open, with many locations having temporarily closed due to the COVID-19 pandemic[29] - During fiscal 2021, franchisees opened seven new Nathan's Famous units and closed ten units, including one international unit[52] - The Nathan's Branded Menu Program allows foodservice operators to offer Nathan's products without the same reporting requirements as standard franchises[55] Financial Performance - Total revenue for fiscal 2021 was $1,102,000, a decrease from $4,872,000 in fiscal 2020, representing a decline of approximately 77.6%[67] - Gross profit for fiscal 2021 was $383,000, down from $1,962,000 in fiscal 2020, indicating a decrease of about 80.5%[67] - The licensing agreement with John Morrell & Co. generated royalties of approximately $27,778,000 in fiscal 2021, accounting for 36.6% of total revenues[82] - The licensing agreement for Nathan's Famous frozen French fries and onion rings generated royalties of $1,137,000 in fiscal 2021, up from $719,000 in fiscal 2020[84] Marketing and Brand Development - The company plans to expand its retail licensing program with John Morrell & Co. to penetrate grocery and mass merchandising channels further[75] - The company continues to explore co-branding opportunities within its restaurant system and with other restaurant concepts[81] - In fiscal 2021, Nathan's marketing efforts focused on online media spending and third-party delivery platforms due to COVID-19[95] - Nathan's continues to upgrade its social media platforms to enhance brand awareness among younger demographics[96] Technology and Operations - The Company upgraded its technology resources by migrating to the PAR Brink Point-of-Sale application and partnering with Restaurant Magic for inventory and food management[47] - Nathan's maintains a cooperative distribution system with UniPro Foodservice, Inc. to enhance market expansion and cost efficiency[90] Employee and Workforce Management - Nathan's employs 146 people as of March 28, 2021, with 55% being female and 73% comprising racial and ethnic minorities[100] - The company has not experienced any strike or work stoppage for over 47 years, indicating effective workforce management[102] - The company has historically matched 401(k) contributions at a rate of $0.25 per dollar contributed by employees, up to 3% of their annual salary[106] Safety and Health Measures - The company has implemented various safety measures during COVID-19, including providing PPE and promoting social distancing[108] Cost and Pricing Strategy - Nathan's expects to experience price volatility for beef products during fiscal 2022, which could impact operational results[340] - The company has not attempted to hedge against fluctuations in commodity prices, leading to exposure to market changes in future purchases[341] - A short-term increase or decrease of 10% in the cost of food and paper products for the year ended March 28, 2021 would have increased or decreased Nathan's cost of sales by approximately $2,877,000[341] Revenue Trends - Revenues from company-owned locations and franchised restaurants are historically highest during the first two fiscal quarters, with the fourth quarter typically being the slowest[126] Product and Menu Development - The Company launched the Wings of New York virtual concept, offering a variety of chicken wing options and sides, during fiscal 2021[42] - Nathan's has developed various restaurant designs, including carts and kiosks, suitable for non-traditional sites like airports and stadiums[37] - Nathan's emphasizes its signature products and value pricing strategy to compete effectively in the fast food industry[129] Cash and Debt Management - As of March 28, 2021, Nathan's cash and cash equivalents totaled $81,064,000, with earnings on this cash expected to change by approximately $203,000 per annum for each 0.25% change in interest rates[336] - Nathan's had $150.0 million of 2025 Notes outstanding, with interest expense on these borrowings expected to change by approximately $375,000 per annum for each 0.25% change in interest rates[337] Cost Analysis - The average cost of hot dogs between October 2019 and March 2020 was approximately 11.2% higher than the average cost between October 2018 and March 2019[338] - The average cost of hot dogs between April 2020 and March 2021 was approximately 0.8% lower than the average cost between April 2019 and March 2020[338]

Business Operations - As of December 27, 2020, the restaurant system consisted of 215 franchised units and 4 company-owned units, a decrease from 226 franchised units and 4 company-owned units as of December 29, 2019[112]. - The company has expanded into 75 ghost kitchens, including 37 domestically and 38 internationally, to enhance product distribution[115]. - Approximately 60% of franchised locations have reopened as of the date of the report, following temporary closures due to COVID-19[120]. - The company has taken actions to mitigate COVID-19 impacts, including reducing payroll costs and postponing non-essential capital spending[121]. - The company expects to continue investing in existing restaurants and support the growth of its Branded Product and Branded Menu Programs[183]. Financial Performance - The primary drivers of recent growth have been the Licensing and Branded Product Programs, which are now the largest contributors to the company's revenues and profits[113]. - Total sales decreased by 26% to $11,322,000 for the third quarter fiscal 2021 compared to $15,356,000 for the third quarter fiscal 2020[133]. - Foodservice sales from the Branded Product Program decreased by 27% to $10,003,000 for the third quarter fiscal 2021 compared to $13,694,000 in the third quarter fiscal 2020[133]. - License royalties increased by 34% to $5,898,000 in the third quarter fiscal 2021 compared to $4,412,000 in the third quarter fiscal 2020[135]. - Franchise restaurant sales declined to $6,178,000 in the third quarter fiscal 2021 compared to $14,587,000 in the third quarter fiscal 2020[136]. - Total sales decreased by 47% or $27,002,000 to $30,697,000 for the thirty-nine weeks ended December 27, 2020 compared to $57,699,000 for the thirty-nine weeks ended December 29, 2019[152]. - Foodservice sales from the Branded Product Program decreased by 47% to $24,450,000 for the fiscal 2021 period compared to $45,989,000 for the fiscal 2020 period[152]. - License royalties increased by 33% to $24,689,000 in the fiscal 2021 period compared to $18,559,000 in the fiscal 2020 period[154]. - Franchise fees and royalties were $1,087,000 in the fiscal 2021 period compared to $3,610,000 in the fiscal 2020 period[154]. - The company's cost of sales decreased by 45% to $24,161,000 in fiscal 2021 compared to $43,973,000 in fiscal 2020[158]. - Gross profit for fiscal 2021 was $6,536,000, representing 21% of sales, down from $13,726,000 or 24% of sales in fiscal 2020[158]. - General and administrative expenses decreased by $2,407,000 or 22% to $8,709,000 in fiscal 2021 compared to $11,116,000 in fiscal 2020[164]. - Cash provided by operations was $5,710,000 in fiscal 2021, primarily due to net income of $9,014,000[173]. - The company paid three quarterly dividends totaling $4,320,000 during fiscal 2021[170]. Economic Impact - The company expects continued negative impacts on revenue and net income for the remainder of fiscal 2021 due to the ongoing effects of the COVID-19 pandemic[122]. - The sales and profits from the Branded Product Program have been adversely impacted due to many customers operating in closed or reduced traffic venues[121]. - The company's future results could be materially impacted by supply constraints on beef and increased costs compared to earlier periods[116]. - The Company expects to experience price volatility for beef products during the remainder of fiscal 2021 due to market conditions[205]. - Continued increases in labor, food, and other operating expenses could adversely affect Nathan's operations and necessitate a reconsideration of pricing strategies[198]. Tax and Interest - The effective tax rate for the third quarter fiscal 2021 was 26.6% compared to 22.9% for the third quarter fiscal 2020[149]. - The effective tax rate for fiscal 2021 was 27.7%, compared to 26.1% for fiscal 2020[167]. - The company incurred annual interest expense of $9,937,500 from the issuance of $150,000,000 of 6.625% Senior Secured Notes due 2025, reducing cash interest expense by $3,562,500 compared to previous notes[117]. - The Company had $150,000,000 of 2025 Notes outstanding due in November 2025, with interest expense on these borrowings increasing or decreasing by approximately $375,000 per annum for each 0.25% change in interest rates[202]. Cost and Pricing - The average selling prices increased by approximately 2.9% during the fiscal 2021 period compared to the fiscal 2020 period[152]. - The average cost of hot dogs between October 2019 and March 2020 was approximately 11.2% higher than the average cost between October 2018 and March 2019[203]. - The average cost of hot dogs between April 2020 and December 2020 was approximately 2.7% higher than the average cost between April 2019 and December 2019[203]. - A short-term increase or decrease of 10.0% in the cost of food and paper products for the thirty-nine week period ended December 27, 2020 would have increased or decreased the cost of sales by approximately $2,124,000[206]. Internal Controls and Risk Management - The Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the reporting period[208]. - There were no changes in internal controls over financial reporting during the quarter ended December 27, 2020, that materially affected internal control[209]. - The company acknowledges that no control system can provide absolute assurance that all control issues and instances of fraud have been detected[210]. - The company advises stakeholders to consider risk factors that could materially affect its business and financial condition, as detailed in the Annual Report on Form 10-K[211].

Business Performance - As of September 27, 2020, the restaurant system consisted of 214 franchised units, a decrease from 241 units in the previous year, with 93 Branded Menu units[106]. - The primary drivers of recent growth have been the Licensing and Branded Product Programs, which are now the largest contributors to the Company's revenues and profits[107]. - Approximately 60% of franchised locations have reopened as of the date of the report, with many closures impacting franchise fees and royalties[113]. - The COVID-19 pandemic has negatively impacted revenue and net income, with expectations of continued adverse effects for the remainder of fiscal 2021[115]. - Total sales decreased by 43% to $12,692,000 for the thirteen weeks ended September 27, 2020, compared to $22,106,000 for the same period in 2019[126]. - Foodservice sales from the Branded Product Program decreased by 40% to $9,698,000 for the second quarter fiscal 2021, impacted by the COVID-19 pandemic[126]. - Total Company-owned restaurant sales decreased by 49% to $2,994,000 during the second quarter fiscal 2021 compared to $5,924,000 in the same period of 2020[127]. - Franchise restaurant sales declined to $6,969,000 in the second quarter fiscal 2021, down from $18,323,000 in the second quarter fiscal 2020[130]. - Comparable domestic franchise sales were $5,638,000 in the second quarter fiscal 2021, down from $10,112,000 in the second quarter fiscal 2020[130]. Financial Performance - The Company incurred annual interest expense of $9,937,500 from the issuance of $150,000,000 of 6.625% Senior Secured Notes due 2025, reducing cash interest expense by $3,562,500 compared to previous notes[110]. - General and administrative expenses decreased by $947,000 or 27% to $2,612,000 in the second quarter fiscal 2021 compared to $3,559,000 in the same period of 2020[138]. - Overall cost of sales decreased by 39% to $9,927,000 in the second quarter fiscal 2021 compared to $16,289,000 in the second quarter fiscal 2020[133]. - Adjusted EBITDA for the second quarter fiscal 2021 was $8,040,000, compared to $8,123,000 for the same period in 2019[125]. - Cost of sales decreased by 52% to $15,224,000 in fiscal 2021 compared to $31,711,000 in fiscal 2020, with gross profit at $4,151,000 or 21.4% of sales[152]. - General and administrative expenses decreased by $2,040,000 or 27% to $5,456,000 in fiscal 2021 from $7,496,000 in fiscal 2020[158]. - Cash and cash equivalents increased to $81,519,000 at September 27, 2020, up by $4,402,000 from $77,117,000 at March 29, 2020[164]. - Cash provided by operations was $9,107,000 in fiscal 2021, primarily from net income of $7,655,000[167]. - Cash used in investing activities was $318,000 in fiscal 2021 for capital expenditures related to the Branded Product Program[168]. - Cash used in financing activities totaled $4,387,000 in fiscal 2021, including $2,880,000 for quarterly dividends[169]. Cost Management - The Company has implemented cost-saving measures, including reduced payroll costs and postponed non-essential capital spending[122]. - The sales and profits from the Branded Product Program have been adversely affected due to many customers operating in closed venues[114]. - The company is developing strategies to minimize the financial impact of increased labor costs and has recently raised certain selling prices to offset cost increases[185]. - Future results could be materially impacted by supply constraints on beef and increased costs compared to earlier periods[109]. - The average cost of hot dogs between October 2019 and March 2020 was approximately 11.2% higher than the same period in the previous year, and 9.4% higher between October 2019 and September 2020 compared to the prior year[180]. - A short-term increase or decrease of 10.0% in the cost of food and paper products for the twenty-six week period ended September 27, 2020 would have impacted the cost of sales by approximately $1,310,000[199]. - The company expects to experience price volatility for beef products during fiscal 2021 due to market conditions and the impact of the COVID-19 pandemic on the meat processing industry[182]. Operational Strategies - The Company has launched curbside delivery at three of its four Company-owned restaurants and introduced "ghost kitchens" for product marketing[122]. - The Company aims to improve the performance of the existing restaurant system and grow through franchising efforts, focusing on core items and higher quality menu offerings[108]. - The company expects to make investments in existing restaurants and support the growth of Branded Product and Menu Programs[175]. Risk Management - The company highlights the importance of considering risk factors that could materially affect its business and financial condition, as detailed in the Annual Report on Form 10-K[203]. - The minimum hourly wage for fast food workers in New York State is set to increase to $14.50 on December 31, 2020, and $15.00 on July 1, 2021, which could significantly affect the company's operations[184]. - The company has not attempted to hedge against fluctuations in commodity prices, which may expose it to market volatility in future purchases[198]. - The company has not purchased future contracts or options to hedge against foreign currency fluctuations, as payments are generally made in United States dollars[200]. - There were no changes in internal controls over financial reporting during the quarter ended September 27, 2020, that materially affected internal control[201]. - The Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective at a reasonable assurance level[202]. - The company acknowledges that no control system can provide absolute assurance against fraud or control issues[202]. - There are no legal proceedings currently affecting the company[203]. Tax and Liabilities - As of September 27, 2020, the company had unrecognized tax benefits of $333,000, with a potential decrease of $16,000 expected within the next year[179]. - The company recorded a liability of $110,000 related to the Brooklyn Guaranty, which does not include potential additional costs that are not reasonably determinable[179]. - The company had $150,000,000 of 2025 Notes outstanding, with interest expense expected to change by approximately $375,000 per annum for each 0.25% change in interest rates[194]. - Cash and cash equivalents totaled $81,519,000 as of September 27, 2020, with earnings on this cash expected to change by approximately $204,000 per annum for each 0.25% change in interest rates[193].

Financial Performance - For the thirteen weeks ended June 28, 2020, net income was $4,000,000, a decrease from $5,369,000 for the same period in 2019[126] - EBITDA for the same period was $8,521,000, down from $10,145,000 in the prior year[126] - Adjusted EBITDA was $8,550,000 compared to $10,173,000 in the previous year, reflecting a decline in performance[126] - Total sales decreased by 67% to $6,683,000 for the thirteen weeks ended June 28, 2020, compared to $20,237,000 for the same period in 2019[127] - Foodservice sales from the Branded Product Program decreased by 70.5% to $4,749,000 during the fiscal 2021 period[127] - Total Company-owned restaurant sales decreased by 53.1% to $1,934,000 during the fiscal 2021 period[129] - Franchise restaurant sales declined to $2,218,000 in the fiscal 2021 period compared to $17,516,000 in the fiscal 2020 period[131] - The cost of sales decreased by 65.7% to $5,297,000 in the fiscal 2021 period compared to $15,422,000 in the fiscal 2020 period[134] COVID-19 Impact - Approximately 52% of franchised locations have reopened as of the report date, following temporary closures due to COVID-19[114] - The company has taken actions to mitigate COVID-19 impacts, including reduced payroll costs and the launch of curbside delivery[118] - The company expects continued negative impacts on revenue and net income for the remainder of fiscal 2021 due to the pandemic[116] - The company anticipates continued volatility in beef prices, which could impact operational results, as the cost of hot dogs has increased significantly due to the COVID-19 pandemic[165] Cash and Debt Management - Cash and cash equivalents at June 28, 2020, aggregated $76,941,000, a decrease of $176,000 compared to March 29, 2020[147] - Cash provided by operations was $3,002,000 in the fiscal 2021 period, primarily attributable to net income of $4,000,000[150] - The company incurred annual interest expense of $9,937,500 due to the issuance of $150,000,000 of Senior Secured Notes[111] - Nathan's plans to continue stock repurchase programs and invest in existing restaurants, funded from operating cash flow[160] - Nathan's total cash contractual obligations as of June 28, 2020, amounted to $167,667,000, with net cash contractual obligations of $166,392,000[162] Cost and Pricing Trends - The average cost of hot dogs between April 2020 and June 2020 was approximately 9.1% higher than the same period in 2019, reflecting significant cost volatility[164] - The average cost of hot dogs increased by approximately 11.2% between October 2019 and March 2020 compared to the same period in the previous year, and by approximately 9.1% between April 2020 and June 2020 compared to the same period in the previous year[179][181] - A short-term increase or decrease of 10.0% in the cost of food and paper products for the thirteen-week period ended June 28, 2020 would have resulted in a cost of sales change of approximately $439,000[182] Franchise and Business Strategy - The strategic emphasis has been on increasing distribution points through Licensing and Branded Product Programs, which are key profit contributors[107] - The company plans to strategically invest in a small number of new units to showcase to prospective franchisees[108] - There were no changes in internal controls over financial reporting during the quarter ended June 28, 2020 that materially affected internal control effectiveness[185] Tax and Regulatory Matters - The effective tax rate for the thirteen-week period ended June 28, 2020, was 28.1% compared to 25.3% for the same period in 2019[144] - Nathan's has unrecognized tax benefits of $321,000, with a reasonable possibility of a decrease by $16,000 within the next year[162] - The company incurred approximately $1,000 of additional costs due to the Fair Work Week Legislation during the fiscal 2021 period[173] Dividend and Shareholder Returns - Nathan's Board of Directors authorized a regular dividend of $1.00 per share per annum, with the first quarter fiscal 2021 dividend paid amounting to $1,440,000[158] - The company expects to incur interest payments of $9,937,500 during the fiscal year ending March 28, 2021, of which $4,968,750 has already been paid[161] Foreign Operations - Foreign franchisees conduct business in U.S. dollars, minimizing risks from foreign currency fluctuations, which are not expected to materially impact financial results[183]

Franchise Operations - As of March 29, 2020, the franchise system consisted of 216 franchised units, down from 255 units at the beginning of the period, reflecting a net closure of 55 units[245]. - Franchise restaurant sales decreased to $61,542,000 in fiscal 2020 from $65,607,000 in fiscal 2019, impacted by unit closures and a 2.3% decline in comparable domestic sales[306]. - The company recognized $951,000 of forfeited franchise fees in fiscal 2020, significantly higher than $192,000 in fiscal 2019, due to terminations of Master Franchise Agreements[308]. Financial Performance - Total sales for the fiscal year ended March 29, 2020, were $70,559,000, a decrease of approximately 1.4% compared to $71,561,000 for the fiscal year ended March 31, 2019[301]. - Foodservice sales from the Branded Product Program were $57,586,000 for fiscal 2020, down from $57,960,000 in fiscal 2019, reflecting a volume decrease of approximately 2.1%[301]. - Company-owned restaurant sales decreased to $12,973,000 in fiscal 2020 from $13,601,000 in fiscal 2019, with comparable sales increasing by approximately 4.5% when excluding the sold restaurant[303]. - License royalties increased to $25,859,000 in fiscal 2020, up from $23,615,000 in fiscal 2019, driven by an 11.0% increase in retail volume[305]. - Total cost of sales increased by $1,709,000 to $54,488,000 in fiscal 2020, resulting in a gross profit margin of 22.8%, down from 26.2% in fiscal 2019[310]. - General and administrative expenses rose by $928,000 or 6.7% to $14,779,000 in fiscal 2020, primarily due to transformation efforts within the restaurant business[315]. - Interest expense for fiscal 2020 was $10,601,000, compared to $10,792,000 in fiscal 2019, reflecting a decrease due to the shorter fiscal year[317]. Debt and Financing - The Company issued $150 million of 6.625% Senior Secured Notes due 2025, with annual interest expense expected to be $9.94 million[247][254]. - The 2025 Notes have no scheduled principal amortization payments prior to maturity on November 1, 2025[250]. - The Company authorized the repurchase of up to $10 million of the 2025 Notes effective June 1, 2020[252]. - The Company authorized the repurchase of up to $10 million of the 2025 Notes, with no set time limit on the repurchases[263]. - The Company recorded a loss on early extinguishment of debt of $8.87 million for the year ended March 25, 2018, related to the redemption of the 2020 Notes[248]. Cash Flow and Investments - Cash and cash equivalents increased to $77,117,000 as of March 29, 2020, up from $75,446,000 at March 31, 2019, representing a $1,671,000 increase[324]. - Cash provided by operations was $12,349,000 for the fiscal 2020 period, primarily driven by net income of $13,435,000[325]. - The company declared and paid four regular dividends of $0.35 per common share, totaling $5,912,000 during the fiscal 2020 period[324]. - The company repurchased 85,642 shares of common stock for $4,966,000 during the fiscal 2020 period[327]. - The company anticipates making investments in existing restaurants and supporting the growth of its Branded Product and Branded Menu Programs using operating cash flow[335]. Regulatory and Market Conditions - The Company expects declines in sales and profits from its Branded Product Program due to the closure of venues like sports arenas and amusement parks[240]. - The minimum hourly rate of pay in New York State will increase to $14.50 on December 31, 2020, and $15.00 on July 1, 2021, significantly affecting the company's operations[345]. - The company incurred approximately $6,000 in additional costs during fiscal 2020 due to the Fair Work Week Legislation, which requires predictable work schedules for fast food workers[348]. - The company expects future labor costs to be impacted by ongoing minimum wage increases in New York State and other labor regulations[312]. Revenue Recognition and Accounting - Revenue from license royalties is generally based on a percentage of sales, recognized on a monthly basis when earned and collectible[268]. - Franchise fees and royalties that are not collectible are recorded as bad debts until paid or collectibility is assured[279]. - The Company maintains a national advertising fund, with revenues and expenses fully consolidated into the financial statements under Topic 606[281]. - The adoption of Topic 606 did not impact the timing and amount of revenue recognized from the Branded Product Program and Company-owned restaurant sales[266][267]. - The Company recognizes revenue from sub-leasing properties as income when earned and collectible[283]. Asset Management - Goodwill amounts to $95,000 from the acquisition of Nathan's in 1987, and intangible assets related to Arthur Treacher's total $1,269,000[285]. - The Company recorded amortization expense of $84,000 for the fiscal year ending March 29, 2020, related to its intangible assets[286]. - Operating lease assets and liabilities recognized as of the first day of fiscal year 2020 were $7,804,000 and $8,533,000, respectively[294]. - The Company has determined that no impairment exists for goodwill and intangible assets as of March 29, 2020, and March 31, 2019[285]. Cost and Price Volatility - The average cost of hot dogs increased by approximately 11.4% between October 2019 and March 2020 compared to the previous year, impacting market prices which were about 6.7% higher[341]. - The company expects to continue experiencing price volatility for beef products and has previously entered into purchase commitments to mitigate rising costs[343]. - A short-term increase or decrease of 10.0% in the cost of food and paper products for the year ended March 29, 2020, would have altered the cost of sales by approximately $4,908,000[358]. - The company expects to experience price volatility for beef products during fiscal 2021 due to market conditions and the COVID-19 pandemic[357]. - The company has not hedged against fluctuations in commodity prices, exposing future purchases to market changes[358]. - Continued increases in labor, food, and operating expenses may necessitate a reconsideration of the pricing strategy to maintain margins[349]. Taxation - The effective tax rates for the fiscal year ended March 29, 2020, and March 31, 2019, were 25.4% and 26.9%, respectively, with adjustments reducing the rates by 1.3% and 1.1% due to tax benefits from stock compensation[321]. - Unrecognized tax benefits amounted to $311,000 as of March 29, 2020, with an estimated potential reduction of up to $16,000 in the next fiscal year[322]. Other Financial Metrics - The Fixed Charge Coverage Ratio is currently set at 2.0 to 1.0, which applies to determining additional restricted payments and debt incurrence[258]. - As of March 29, 2020, the company had total cash contractual obligations of $168,712,000, with net obligations of $167,362,000 after accounting for sublease income[338]. - As of March 29, 2020, the company's cash and cash equivalents totaled $77,117,000, with earnings affected by interest rate changes[353]. - The company had $150.0 million of 2025 Notes outstanding as of March 29, 2020, with interest expense sensitive to interest rate fluctuations[354]. - The company does not believe fluctuations in foreign currencies would materially impact financial results, as foreign franchisees conduct business in U.S. dollars[359].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 29, 2019. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 For the transition period from to . Commission File No. 001-35962 NATHAN'S FAMOUS, INC. (Exact name of registrant as specified in its charter) Delaware 11-3166443 (State or other jurisd ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 For the transition period from to . Commission File No. 001-35962 NATHAN'S FAMOUS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 11-3166443 (I.R.S. Employer Identification No.) FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SEC ...