NOTE K – SEGMENT INFORMATION

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 system 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. The Company’s Chief Executive Officer has been identified as the Chief Operating Decision Maker (“CODM”) who 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.

Branded Product Program

– This segment derives revenue principally from the sale of hot dog products either directly to foodservice operators or to various foodservice distributors who resell the products to foodservice operators.

Product licensing

– This segment derives revenue, primarily in the form of royalties, from licensing a broad variety of Nathan’s Famous branded products, including our hotdogs, sausage and corned beef products, frozen French fries and additional products through retail grocery channels and club stores throughout the United States.

Restaurant operations

– This segment derives revenue from sale of our products at Company-owned and earns fees and royalties from its franchised restaurants.

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 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.

NOTE K – SEGMENT INFORMATION (continued)

Operating segment information is as follows (in thousands):

	Thirteen weeks ended
	June 25, 2017			June 26, 2016

Revenues
Branded Product Program	$	17,937		$	16,419
Product licensing		7,401			6,824
Restaurant operations		5,580			6,173
Corporate		-			-
Total revenues	$	30,918		$	29,416

Income from operations
Branded Product Program	$	2,272		$	2,953
Product licensing		7,356			6,778
Restaurant operations		895			1,433
Corporate		(2,073	)		(2,340	)
Income from operations	$	8,450		$	8,824
Interest expense		(3,663	)		(3,676	)
Interest income		35			-
Other income, net		21			22
Income before provision for income taxes	$	4,843		$	5,170