NOTE

–

SEGMENT

FORMATION

Nathan’s considers itself to be a brand marketer of the Nathan’s Famous signature products to the foodservice industry pursuant to its various business structures. Nathan’s sells its products directly to consumers through its Restaurant operations segment consisting of Company-operated and franchised restaurants, to distributors that resell our products to the foodservice industry through the Branded Product Program (“BPP”) and by

third

party manufacturers pursuant to license agreements that sell our products to club stores and grocery stores nationwide. Historically, Nathan’s determined it was comprised of

one

segment using the management approach whereby the Company’s Chief Operating Decision Maker (“CODM”) responsibility was shared between the CEO and COO and considered itself to be solely in the foodservice segment. As a result of management changes that culminated during fiscal

2017

along with the implementation of a new executive incentive program aligning such compensation solely based on segment results, Nathan’s recognized its reporting structure into

three

segments to align with the current year organizational changes. Under our current structure, the Company's Chief Executive Officer has been identified as the CODM. The CODM evaluates performance and allocates resources for the Branded Product Program, Product Licensing and Restaurant Operations segments based upon a number of factors, the primary profit measure being income from operations. Certain costs are

not

allocated to the segments and are reported within Corporate. Prior year information has been presented to reflect the changes.

Revenues from operating segments are from transactions with unaffiliated

third

parties and do

not

include any intersegment revenues.

Income from operations attributable to Corporate consists principally of administrative expenses

not

allocated to the operating segments such as executive management, finance, information technology, legal, insurance, corporate office costs, corporate incentive compensation and compliance costs.

Interest expense, interest income, impairment charge – long-term investment and other income, net are managed centrally at the corporate level, and, accordingly, such items are

not

presented by segment since they are excluded from the measure of profitability reviewed by the CODM.

Corporate assets consist primarily of cash and long-lived assets.

Operating segment information is as follows:

	Fifty- Two			Fifty-Two			Fifty-Two
	weeks ended			weeks ended			weeks ended
	March 26, 2017			March 27, 2016			March 29, 2015
Revenues
Branded Product Program	$	56,174		$	59,367		$	59,646
Product licensing		20,368			19,815			18,011
Restaurant operations		20,110			21,708			21,455
Corporate		-			-			-
Total revenues	$	96,652		$	100,890		$	99,112

Income from operations
Branded Product Program	$	10,257		$	8,394		$	4,497
Product licensing		20,186			19,812			18,000
Restaurant operations		4,101			5,253			5,604
Corporate		(8,264	)		(8,496	)		(8,143	)
Income from operations	$	26,280		$	24,963		$	19,958
Interest expense		(14,665	)		(14,630	)		(816	)
Interest income		104			52			176
Impairment charge – long-term investment (Note G)		-			(100	)		-
Other income, net		85			99			87
Income before provision for income taxes	$	11,804		$	10,384		$	19,405

Total assets
Branded Product Program	$	7,113	$	6,827	$	7,802
Product licensing		2,003		1,832		1,822
Restaurant operations		8,740		9,054		9,284
Corporate		60,269		53,836		65,481
Total assets	$	78,125	$	71,549	$	84,389

Depreciation & amortization expense
Branded Product Program	$	316	$	370	$	389
Product licensing		-		-		-
Restaurant operations		762		710		644
Corporate		219		175		220
Total depreciation & amortization expense	$	1,297	$	1,255	$	1,253