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 ...

FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) 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 Delaware 11-3166443 (I.R.S. Employer Identification No.) One Jericho Plaza, Second Floor – Wing A, Jericho, New York 11753 (Address of principal executive offices) (Zip Code) (516) 338-8500 (Registrant's telephone number, including area code) (Former name, former ...

Franchise Operations - The franchise system consisted of 255 Nathan's franchised units located in 22 states and 14 foreign countries as of March 31, 2019, down from 276 units the previous year, reflecting a net decrease of 21 units [227]. - During the fiscal year ended March 31, 2019, Nathan's opened 13 franchised restaurants but closed 34, resulting in a net loss of 21 units [227]. - The company had 276 franchised restaurants operating at the beginning of the fiscal year ended March 31, 2018, indicating a decline in franchise operations over the subsequent year [227]. - Franchise restaurant sales decreased to $65,607,000 in fiscal 2019 from $69,838,000 in fiscal 2018, primarily due to unit closures [282]. - Comparable domestic franchise sales for fiscal 2019 were $51,038,000, a slight increase from $50,253,000 in fiscal 2018, reflecting a 0.4% decline on a 52-week basis [282]. - Franchise restaurant sales decreased to $69,838,000 in the fiscal 2018 period from $74,553,000 in the fiscal 2017 period, primarily due to unit closures [307]. Revenue Generation - The company generated revenues primarily from the Branded Product Program, restaurant operations, and product licensing agreements, with a focus on selling Nathan's products in supermarkets and club stores [225]. - The Branded Product Program allows foodservice retailers to sell Nathan's proprietary products, which has been a significant revenue source since its introduction in 1998 [224]. - License royalties increased to $23,615,000 in fiscal 2019 from $23,020,000 in fiscal 2018, driven by a 2.2% increase in volume [281]. - License royalties rose to $23,020,000 in the fiscal 2018 period, compared to $20,368,000 in the fiscal 2017 period, driven by a 9.3% increase in volume [306]. Financial Performance - Total sales for fiscal 2019 were $71,561,000, a decrease from $76,708,000 in fiscal 2018, with foodservice sales from the Branded Product Program dropping from $62,623,000 to $57,960,000 [278]. - Gross profit for fiscal 2019 was $18,782,000, representing 26.2% of sales, an improvement from $17,956,000 or 23.4% of sales in fiscal 2018 [287]. - Total cost of sales decreased by $5,973,000 to $52,779,000 in fiscal 2019 compared to $58,752,000 in fiscal 2018 [287]. - General and administrative expenses increased by $360,000 or 2.7% to $13,851,000 in fiscal 2019, primarily due to higher marketing and professional fees [292]. - Interest expense for fiscal 2019 was $10,792,000, down from $13,591,000 in fiscal 2018, reflecting changes in debt structure [296]. - Cash provided by operations for fiscal 2019 was $11,156,000, driven by net income of $21,493,000 and non-cash operating items of $2,561,000 [324]. Debt and Interest Expenses - Nathan's expects to incur annual interest expense of $9,937,500 and approximately $690,000 in annual amortization of debt issuance costs due to the issuance of $150 million in 6.625% Senior Secured Notes due 2025 [234]. - The company made required semi-annual interest payments of $4,968,750 on the 2025 Notes during the fiscal year ended March 31, 2019 [231]. - Nathan's has no scheduled principal amortization payments on the 2025 Notes prior to its final maturity on November 1, 2025 [232]. - The company expects to incur interest payments of $9,937,500 for the fiscal year ending March 29, 2020 [331]. - As of March 31, 2019, the company had $150.0 million of 2025 Notes outstanding, with interest expense fluctuating by approximately $375,000 per annum for each 0.25% change in interest rates [350]. Asset Management - The company recorded an impairment charge of $790,000 for long-lived assets at one restaurant during the fiscal year ended March 25, 2018 [268]. - Upon adopting new lease accounting standards, the company expects to recognize additional operating lease liabilities of approximately $8,500,000 and a Right of Use asset of approximately $7,800,000 [275]. - The company recorded a gain on the sale of property and equipment of $11,177,000 in fiscal 2019, related to the sale of a restaurant and a regional office [294]. Cash Flow and Dividends - Cash and cash equivalents increased to $75,446,000 as of March 31, 2019, up by $18,107,000 from $57,339,000 at March 25, 2018 [323]. - Net working capital rose to $72,237,000 from $53,702,000 at March 25, 2018 [323]. - The company declared and paid four regular dividends of $0.25 per common share, totaling $4,187,000 during the fiscal year ended March 31, 2019 [323]. - Cash provided by investing activities was $12,328,000, primarily from the sale of a restaurant in Bay Ridge, Brooklyn, NY for $11,445,000 [325]. - Cash used in financing activities totaled $5,377,000, including regular cash dividends of $4,187,000 and stock repurchases of 14,390 shares for $1,000,000 [326]. Market Conditions and Risks - The company has a critical dependency on its agreement with John Morrell & Co. for the manufacturing and sale of hot dogs, sausage, and corned beef, which poses risks related to product quality and supply availability [228]. - The company anticipates continued volatility in beef prices, which could impact operational results [339]. - The company expects to experience price volatility for beef products during fiscal 2020, which could impact operational results [352]. - A short-term increase or decrease of 10.0% in the cost of food and paper products for the year ended March 31, 2019 would have increased or decreased the cost of sales by approximately $4,706,000 [353]. - Foreign franchisees generally conduct business in United States dollars, reducing risks from foreign currency fluctuations, which are not expected to materially impact financial results [355].

Sales Performance - Total sales decreased by 13.8% to $14,404,000 for the thirteen weeks ended December 23, 2018, compared to $16,705,000 for the same period in 2017[128] - Total sales decreased by 10.9% to $56,448,000 for the thirty-nine weeks ended December 23, 2018, compared to $63,327,000 for the same period in 2017[149] - Foodservice sales from the Branded Product Program decreased by 15.1% to $12,453,000 for the third quarter fiscal 2019, down from $14,674,000 in the third quarter fiscal 2018[128] - Foodservice sales from the Branded Product Program decreased by 12.7% to $44,308,000 for the fiscal 2019 period compared to $50,741,000 in fiscal 2018[149] Profitability - EBITDA for the thirteen weeks ended December 23, 2018, was $16,277,000, compared to a loss of $3,116,000 for the same period in 2017[127] - Adjusted EBITDA for the thirty-nine weeks ended December 23, 2018, was $35,377,000, compared to $24,085,000 for the same period in 2017[127] - Gross profit decreased to $15,182,000 or 26.9% of sales during the fiscal 2019 period, compared to $15,474,000 or 24.4% of sales during fiscal 2018[157] Costs and Expenses - Average selling prices decreased by approximately 4.3%, correlating with a 5.5% decrease in the cost of beef during the third quarter fiscal 2019 compared to the same period in 2018[128] - Cost of sales decreased by 13.8% to $41,266,000 in the fiscal 2019 period compared to $47,853,000 in fiscal 2018[157] - Restaurant operating expenses increased to $2,817,000 in fiscal 2019 from $2,769,000 in fiscal 2018, primarily due to higher home delivery costs, occupancy costs, and insurance[160] - General and administrative expenses rose by $290,000 or 2.9% to $10,354,000 in fiscal 2019, attributed to higher marketing expenses and professional fees related to ASC 606[161] Franchise and Royalties - License royalties increased to $4,316,000 in the third quarter fiscal 2019, compared to $4,228,000 in the third quarter fiscal 2018[130] - Total royalties earned on sales of hot dogs from the license agreement with John Morrell & Co. were $3,741,000 for the third quarter fiscal 2019, up from $3,680,000 in the same period of 2018[130] - Franchise fees and royalties were $911,000 in the third quarter fiscal 2019, down from $1,088,000 in the third quarter fiscal 2018[131] - Traditional franchise royalties decreased to $638,000 in the third quarter fiscal 2019 from $704,000 in the third quarter fiscal 2018[131] - Comparable domestic franchise sales were $11,413,000 in the third quarter fiscal 2019, compared to $11,098,000 in the third quarter fiscal 2018[132] Cash Flow and Financing - Cash and cash equivalents increased by $15,493,000 to $72,832,000 as of December 23, 2018, compared to $57,339,000 at March 25, 2018[174] - Cash provided by operations was $7,373,000 in fiscal 2019, primarily driven by net income of $19,001,000[182] - Cash provided by investing activities totaled $12,449,000, mainly from the sale of the Company-owned restaurant in Bay Ridge, Brooklyn, NY, generating $11,445,000[183] - Cash used in financing activities was $4,329,000, primarily for dividend payments totaling $3,139,000[184] - The Company repurchased 14,390 shares of common stock for $1,000,000 during fiscal 2019, continuing its stock repurchase program[184] Tax and Interest - The income tax provision for the thirteen weeks ended December 23, 2018 was $3,627,000 or 27.2% of earnings before income taxes[147] - The effective tax rate for the thirty-nine week period ended December 23, 2018 was 27.8%, reflecting the impact of the Tax Cuts and Jobs Act[167] - Interest expense was $2,650,000 in the third quarter fiscal 2019, compared to $3,650,000 in the third quarter fiscal 2018[142] - Interest expense decreased to $7,951,000 in fiscal 2019 from $10,976,000 in fiscal 2018, reflecting a reduction in interest rates following the refinancing of the 2020 Notes[164] - Interest payments of $9,937,500 are required for the fiscal year ending March 31, 2019, and the same amount is expected for the fiscal year ending March 29, 2020[189] Market Conditions and Strategies - The market price for hot dogs during the fiscal 2019 period was approximately 8.7% lower than the fiscal 2018 period, reflecting volatility in commodity costs[206] - A short-term increase or decrease of 10.0% in the cost of food and paper products for the thirty-nine weeks ended December 23, 2018 would have impacted the cost of sales by approximately $3,656,000[208] - The minimum hourly wage for fast food workers in New York City increased to $15.00 effective December 31, 2018, with further increases planned for the rest of New York State[195][196] - The company is developing strategies to mitigate the financial impact of increased labor costs and other operating expenses[197] - The company has not hedged against fluctuations in commodity prices, exposing it to market volatility for future purchases[208]