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

Revenue Growth - Company-owned restaurants generated $12,161,000 in revenue for fiscal 2023, a 12% increase from fiscal 2022, with customer traffic up approximately 12%[42] - Franchise operations contributed $4,292,000 in revenue for fiscal 2023, representing an 11% increase over fiscal 2022, driven by increased customer traffic in various locations[47] - Total revenue from international operations reached $5,898,000 in fiscal 2023, compared to $3,223,000 in fiscal 2022, indicating significant growth[70] - The Branded Product Program generated $78,884,000 in revenue for fiscal 2023, marking a 19% increase compared to fiscal 2022[73] - Royalties earned from the licensing agreement with Smithfield Foods, Inc. amounted to approximately $28,688,000 in fiscal 2023, representing 21.9% of total revenues[78] Franchise Operations - As of March 26, 2023, the franchise system included 232 locations across 17 states and 13 foreign countries, along with 267 virtual kitchens[46] - During fiscal 2023, 11 franchised locations opened while 18 closed, including 5 from the Branded Menu Program[52] - Franchisees are required to pay a one-time $30,000 franchise fee and a monthly royalty of 5.5% of restaurant sales[59] - The company plans to expand its presence in the Midwest through an agreement with Frisch's Big Boy restaurants to carry its signature hot dogs[49] - The company continues to pursue international expansion, opening franchised locations in Egypt and Mexico during fiscal 2023[68] Operational Highlights - The company operated four Company-owned restaurants as of March 26, 2023, including one seasonal unit on Coney Island[37] - As of March 26, 2023, the company operated a total of 236 locations, including 74 international locations[72] - The Coney Island flagship location achieved over one million viewers for the annual Hot Dog Eating Contest in fiscal 2023[43] Marketing and Promotions - Nathan's marketing efforts in fiscal 2023 focused on the July 4th Hot Dog Eating Contest and sports sponsorships, alongside digital and social media initiatives[90] - The Company anticipates expanding its internal marketing resources and broker network in fiscal 2024[94] Employee and Corporate Governance - The company employed 138 people as of March 26, 2023, with approximately 47% being female and 69% comprising racial and ethnic minorities[95] - The Company has a commitment to high standards of ethical business conduct, supported by a Code of Conduct and annual training on sexual harassment[100] - The Company maintains an anonymous hotline for employees to report theft or fraudulent behavior[100] - The Company offers performance-based cash incentive bonuses to management employees based on the attainment of certain financial metrics[101] Financial Management - As of March 26, 2023, Nathan's cash balance totaled $29,861,000, with earnings on this cash potentially increasing or decreasing by approximately $75,000 per annum for each 0.25% change in interest rates[324] - The Company has historically matched contributions to its 401(k) savings plan at a rate of $0.25 per dollar contributed by the employee, up to a maximum of 3% of the employee's annual salary[102] - The Company has historically invested cash in money market funds or short-term, fixed rate instruments, which are generally reinvested upon maturity[324] - As of March 26, 2023, the company has $80,000,000 of 6.625% 2025 Notes outstanding, due in November 2025, with interest expense fluctuating by approximately $200,000 per annum for each 0.25% change in interest rates[325] Cost and Pricing - The average cost of hot dogs in fiscal 2023 was approximately 1.4% higher than in fiscal 2022, following a 19% increase from fiscal 2021 to fiscal 2022[74] - The average cost of hot dogs during fiscal 2023 was approximately 1.4% higher than in fiscal 2022, with expectations of continued inflationary pressures into fiscal 2024[326] - The company expects to continue experiencing price volatility for beef products during fiscal 2024[74] - The company anticipates price volatility for beef products in fiscal 2024, influenced by factors such as supply and demand, inflation, and weather[327] - A short-term increase or decrease of 10% in the cost of food and paper products for the year ended March 26, 2023, would have impacted the cost of sales by approximately $6,934,000[328] Regulatory Environment - The Company is subject to various federal and state regulations, including the FTC Franchise Rule, which requires disclosure of certain information to prospective franchisees[107] - Foreign franchisees primarily conduct business in United States dollars, mitigating risks from foreign currency fluctuations, which are not expected to materially impact financial results[329] Business Environment - The Company’s restaurant system competes with numerous restaurants and drive-in units, including major national chains with greater financial resources[125] - The Company’s routine business pattern is affected by seasonal fluctuations, with the first two fiscal quarters typically representing the highest sales periods[123] - The Company operates in three segments: Branded Product Program, Product licensing, and Restaurant operations[130]

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 25, 2022. 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 ju ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements show an increase in total assets to $84.0 million and a reduction in the total stockholders' deficit to $(47.5) million as of September 25, 2022, with total revenues growing 20.3% year-over-year to $77.2 million and net income increasing by 40.7% to $13.1 million, while net cash provided by operating activities was $9.8 million and financing activities used $5.6 million [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of September 25, 2022, total assets were $84.0 million, an increase from $78.5 million at March 27, 2022, driven by higher cash and accounts receivable, with total liabilities decreasing slightly to $131.4 million and the total stockholders' deficit improving from $(55.0) million to $(47.5) million Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 25, 2022 (Unaudited) | Mar 27, 2022 | | :--- | :--- | :--- | | **Total current assets** | $71,619 | $65,400 | | **Total assets** | $83,973 | $78,516 | | **Total current liabilities** | $15,031 | $16,412 | | **Total liabilities** | $131,430 | $133,504 | | **Total stockholders' deficit** | $(47,457) | $(54,988) | [Consolidated Statements of Earnings](index=4&type=section&id=Consolidated%20Statements%20of%20Earnings) For the thirteen weeks ended September 25, 2022, total revenues increased 14.0% to $37.5 million and net income rose 68.1% to $6.0 million, while for the twenty-six-week period, total revenues grew 20.3% to $77.2 million and net income increased 40.7% to $13.1 million with diluted EPS reaching $3.20 Statement of Earnings Summary (in thousands, except per share amounts) | Metric | Thirteen Weeks Ended Sep 25, 2022 | Thirteen Weeks Ended Sep 26, 2021 | Twenty-six Weeks Ended Sep 25, 2022 | Twenty-six Weeks Ended Sep 26, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | $37,497 | $32,878 | $77,217 | $64,197 | | **Income from operations** | $9,914 | $7,439 | $21,694 | $18,141 | | **Net income** | $5,958 | $3,545 | $13,095 | $9,308 | | **Diluted EPS** | $1.46 | $0.86 | $3.20 | $2.26 | | **Dividends declared per share** | $0.45 | $0.35 | $0.90 | $0.70 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the twenty-six weeks ended September 25, 2022, net cash provided by operating activities was $9.8 million, increasing from $8.9 million in the prior-year period, while net cash used in financing activities rose to $5.6 million due to higher dividend payments and treasury stock repurchases Cash Flow Summary (in thousands) | Cash Flow Activity | Twenty-six weeks ended Sep 25, 2022 | Twenty-six weeks ended Sep 26, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $9,772 | $8,922 | | Net cash used in investing activities | $(398) | $(343) | | Net cash used in financing activities | $(5,580) | $(2,887) | | **Net increase in cash and cash equivalents** | **$3,794** | **$5,692** | | **Cash and cash equivalents, end of period** | **$53,857** | **$86,756** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, COVID-19 and inflation impacts, revenue disaggregation showing strong growth in Branded Products, segment performance highlighting Product Licensing as most profitable, and information on debt, leases, and shareholder activities like dividends and stock repurchases - The company experienced pandemic and inflationary pressures, with the average cost of hot dogs for the twenty-six weeks ended Sep 25, 2022, being approximately **8% higher** than the prior-year period[25](index=25&type=chunk) Disaggregated Revenues (Twenty-six weeks ended, in thousands) | Revenue Source | Sep 25, 2022 | Sep 26, 2021 | | :--- | :--- | :--- | | Branded Products | $45,201 | $35,059 | | Company-owned restaurants | $8,994 | $7,766 | | License royalties | $19,727 | $18,340 | | Franchise fees and royalties | $2,292 | $2,074 | Income from Operations by Segment (Twenty-six weeks ended, in thousands) | Segment | Sep 25, 2022 | Sep 26, 2021 | | :--- | :--- | :--- | | Branded Product Program | $4,552 | $3,415 | | Product licensing | $19,636 | $18,249 | | Restaurant operations | $2,117 | $692 | | Corporate | $(4,611) | $(4,215) | | **Total Income from operations** | **$21,694** | **$18,141** | - The company declared quarterly cash dividends of **$0.45 per share** for the first two quarters of fiscal 2023, an increase from $0.35 per share in the prior year[71](index=71&type=chunk)[72](index=72&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management attributes the 14% revenue growth in Q2 FY2023 to increased customer traffic and higher Branded Product Program sales, with gross profit margins improving despite inflationary pressures, while strong liquidity of $53.9 million supports operations, debt service, increased dividends, and stock repurchases [Results of Operations - Thirteen Weeks Ended September 25, 2022](index=24&type=section&id=Results%20of%20Operations%20-%20Thirteen%20Weeks%20Ended%20September%2025%2C%202022) In Q2 FY2023, total revenues rose 14% to $37.5 million, driven by increases in Branded Product Program and Company-owned restaurant sales, with license royalties growing 10% and gross profit improving to 20% of sales due to stabilized beef prices, leading to a 33.3% surge in income from operations to $9.9 million Q2 FY2023 vs Q2 FY2022 Revenue Performance (in thousands) | Revenue Category | Q2 FY2023 | Q2 FY2022 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $37,497 | $32,878 | 14.0% | | Branded Product Program Sales | $22,030 | $19,063 | 15.6% | | Company-owned Restaurant Sales | $5,271 | $4,437 | 18.8% | | License Royalties | $8,413 | $7,658 | 9.9% | - The volume of hot dogs sold in the Branded Product Program increased by approximately **9% YoY**, with average selling prices increasing by about **4%**[113](index=113&type=chunk) - Gross profit as a percentage of sales improved to **20%** from 14% YoY, as beef prices stabilized and declined slightly compared to the significantly higher costs in the prior-year quarter[121](index=121&type=chunk)[122](index=122&type=chunk) [Results of Operations - Twenty-six Weeks Ended September 25, 2022](index=28&type=section&id=Results%20of%20Operations%20-%20Twenty-six%20Weeks%20Ended%20September%2025%2C%202022) For the first half of FY2023, total revenues increased 20% to $77.2 million, with Branded Product Program sales growing 29% driven by a 19% increase in hot dog volume and a 9% rise in average selling prices, while gross profit as a percentage of sales improved slightly to 18% despite an 8% increase in hot dog costs First Half FY2023 vs First Half FY2022 Performance (in thousands) | Metric | H1 FY2023 | H1 FY2022 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $77,217 | $64,197 | 20.3% | | Branded Product Program Sales | $45,201 | $35,059 | 28.9% | | License Royalties | $19,727 | $18,340 | 7.6% | | Gross Profit | $9,630 | $7,329 | 31.4% | - The volume of hot dogs sold in the Branded Product Program increased by approximately **19% YoY** for the 26-week period[135](index=135&type=chunk) - Cost of sales in the Branded Product Program increased **29%**, driven by the **19% volume increase** and an **8% increase** in the average cost per pound of hot dogs[143](index=143&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash position increased by $3.8 million to $53.9 million in the first half of FY2023, with operating activities generating $9.8 million in cash, while $3.7 million was used for dividend payments and $1.9 million for stock repurchases, and management believes current cash and operating cash flow are sufficient to fund operations and capital returns for at least the next 12 months - Cash and cash equivalents increased by **$3.8 million** during the first half of fiscal 2023 to a total of **$53.9 million**[155](index=155&type=chunk) - During the period, the company paid two quarterly dividends of **$0.45 per share**, totaling **$3.7 million**[159](index=159&type=chunk)[162](index=162&type=chunk) - The company repurchased **35,434 shares** of common stock for **$1.9 million** under its 10b5-1 Plan[159](index=159&type=chunk)[161](index=161&type=chunk) - Management believes cash on hand and cash from operations will be sufficient to finance operations, debt service, and capital returns for at least the next 12 months[167](index=167&type=chunk) [EBITDA and Adjusted EBITDA](index=23&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) The company uses non-GAAP measures EBITDA and Adjusted EBITDA to assess operating performance, with Adjusted EBITDA increasing to $10.3 million for the thirteen weeks ended September 25, 2022, and rising to $22.4 million for the twenty-six-week period Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Thirteen Weeks Ended Sep 25, 2022 | Thirteen Weeks Ended Sep 26, 2021 | Twenty-six Weeks Ended Sep 25, 2022 | Twenty-six Weeks Ended Sep 26, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net income | $5,958 | $3,545 | $13,095 | $9,308 | | EBITDA | $10,329 | $7,742 | $22,386 | $18,774 | | **Adjusted EBITDA** | **$10,323** | **$7,771** | **$22,388** | **$18,832** | [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company is exposed to market risks from interest rate changes on cash and debt, and significant volatility in commodity costs, particularly for beef, with a hypothetical 10% change in food and paper costs impacting cost of sales by approximately $4.1 million in the first half of FY2023, though no hedging instruments are used as foreign payments are in USD - The company faces significant commodity price risk, noting that the average cost of hot dogs in fiscal 2023 was **8% higher** than in fiscal 2022, and **19% higher** in fiscal 2022 than in fiscal 2021[179](index=179&type=chunk) - A hypothetical **10.0%** short-term increase or decrease in the cost of food and paper products for the twenty-six week period would have changed cost of sales by approximately **$4,095,000**[181](index=181&type=chunk) - The company has **$110 million** in fixed-rate debt, so it is not directly exposed to interest rate fluctuations on its borrowings, and foreign currency risk is minimal as payments are generally made in U.S. dollars[178](index=178&type=chunk)[182](index=182&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 25, 2022, with no material changes to internal controls over financial reporting occurring during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that as of the end of the reporting period, the company's disclosure controls and procedures were effective[183](index=183&type=chunk) - There were no changes in internal controls over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[184](index=184&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings.) The company reported no legal proceedings during the period - None[187](index=187&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors.) There are no new risk factors presented in this report, with the company referring to the risk factors discussed in its Annual Report on Form 10-K for the fiscal year ended March 27, 2022 - The report directs investors to carefully consider the risk factors discussed in the Annual Report on Form 10-K for the fiscal year ended March 27, 2022[187](index=187&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) Under its sixth stock repurchase plan, the company repurchased 15,064 shares during the quarter at an average price of $54.53 per share, with 98,116 shares remaining authorized for repurchase as of September 25, 2022 Issuer Purchases of Equity Securities (Q2 FY2023) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | June 27 - July 24, 2022 | 11,189 | $54.52 | | July 25 - Aug 21, 2022 | 3,875 | $54.56 | | Aug 22 - Sep 25, 2022 | - | - | | **Total** | **15,064** | **$54.53** | - As of September 25, 2022, there were **98,116 shares** remaining to be repurchased under the sixth stock repurchase plan[188](index=188&type=chunk) [Other Information](index=36&type=section&id=Item%205.%20Other%20Information.) On November 3, 2022, the Board of Directors declared a quarterly cash dividend of $0.45 per share, payable on December 2, 2022, to shareholders of record as of November 21, 2022 - The Board declared a quarterly cash dividend of **$0.45 per share** on November 3, 2022[194](index=194&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications (302 and 906) and the financial statements formatted in iXBRL - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and iXBRL data files[198](index=198&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 June 26, 2022. 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 jurisdicti ...

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 27, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________to__________ Commission Fi ...

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)

Financial Performance - Total revenues increased by 51% to $32,878,000 for the thirteen weeks ended September 26, 2021, compared to $21,839,000 for the same period in 2020[125] - EBITDA for the thirteen weeks ended September 26, 2021, was $7,742,000, compared to $8,011,000 for the same period in 2020[124] - Adjusted EBITDA for the thirteen weeks ended September 26, 2021, was $7,771,000, compared to $8,040,000 for the same period in 2020[124] - Total sales increased by 85% to $23,500,000 for Q2 fiscal 2022 compared to $12,692,000 for Q2 fiscal 2021[126] - Total revenues increased by 62% to $64,197,000 for the 26 weeks ended September 26, 2021 compared to $39,525,000 for the same period in fiscal 2021[145] - Franchise restaurant sales increased to $28,630,000 in the fiscal 2022 period from $9,188,000 in fiscal 2021[149] Cost and Expenses - Overall cost of sales increased by 103% to $20,131,000 in Q2 fiscal 2022 from $9,927,000 in Q2 fiscal 2021[133] - Cost of sales increased by 133% to $35,496,000 in fiscal 2022 compared to $15,224,000 in fiscal 2021, with gross profit at $7,329,000 or 17.1% of sales[153] - Cost of sales in the Branded Product Program rose by 154% to $30,619,000 in fiscal 2022, driven by a 140% increase in product volume sold[154] - Company-owned restaurants' cost of sales was $4,877,000 or 62.8% of restaurant sales in fiscal 2022, down from 64.6% in fiscal 2021, despite a 58% increase in sales[155] - General and administrative expenses rose by 25% to $3,269,000 in Q2 fiscal 2022 from $2,612,000 in Q2 fiscal 2021[138] - General and administrative expenses increased by $1,271,000 or 23% to $6,727,000 in fiscal 2022, primarily due to higher corporate payroll and incentive compensation[158] Strategic Initiatives - The Company’s strategic emphasis is on increasing distribution points across all business platforms, particularly through Licensing and Branded Product Programs[110] - The Company plans to invest strategically in a small number of new units as showcase locations for prospective franchisees[111] - Nathan's expects to continue investing in existing restaurants and support the growth of the Branded Product and Branded Menu Programs[177] Market Conditions and Challenges - The impact of COVID-19 on the Company’s business remains uncertain, affecting employee retention and product supply[115] - The Company’s profitability is substantially dependent on its agreement with John Morrell & Co.[105] - The average cost of hot dogs increased by approximately 6% between April 2021 and September 2021 compared to the same period in 2020[182] - The company anticipates ongoing price volatility for beef products and distribution costs due to supply chain challenges and inflationary pressures[184] - Significant increases in hot dog costs began in July 2021 due to supply chain challenges and increased consumer demand post-COVID-19[195] - Ongoing increases in labor, food, and operating expenses may require the company to reconsider its pricing strategy to offset reduced operating margins[188] - Changes in minimum wage and employment law have significantly impacted the financial results of the company and its franchisees in New York State[189] - The company has tools in place to minimize the financial impact of new legislation affecting fast food workers in New York City[187] Financial Position - Cash and cash equivalents increased by $5,692,000 to $86,756,000 at September 26, 2021, compared to $81,064,000 at March 28, 2021[165] - Cash provided by operations was $8,922,000 in fiscal 2022, attributed to net income of $9,308,000 and non-cash operating items[168] - Interest expense remained stable at $5,301,000 for both fiscal 2022 and fiscal 2021, reflecting accrued interest on the 2025 Notes[160] - As of September 26, 2021, Nathan's cash and cash equivalents totaled $86,756,000, with earnings on this cash expected to change by approximately $217,000 per annum for each 0.25% change in interest rates[192] - 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[193] Franchise Operations - The restaurant system consisted of 224 franchised units and four Company-owned units as of September 26, 2021, compared to 214 franchised units and four Company-owned units as of September 27, 2020[109] - License royalties decreased by 7% to $7,658,000 in Q2 fiscal 2022 from $8,268,000 in Q2 fiscal 2021[128] - Franchise fees and royalties increased to $1,167,000 in Q2 fiscal 2022 compared to $476,000 in Q2 fiscal 2021[129] - Total franchise restaurant sales increased to $15,644,000 in Q2 fiscal 2022 from $6,969,000 in Q2 fiscal 2021[129]

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]