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. 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 administrative expenses 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 the sale of our products at Company-owned restaurants 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.

Loss on debt extinguishment, interest expense, interest income, impairment charge 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 25, 2018			March 26, 2017			March 27, 2016

Revenues
Branded Product Program	$	62,623		$	56,174		$	59,367
Product licensing		23,020			20,368			19,815
Restaurant operations		18,558			19,714			21,267
Corporate		-			-			-
Total revenues	$	104,201		$	96,256		$	100,449

Income from operations
Branded Product Program	$	9,469		$	10,257		$	8,394
Product licensing		22,838			20,186			19,812
Restaurant operations		2,730			4,101			5,253
Corporate		(7,937	)		(8,264	)		(8,496	)
Income from operations	$	27,100		$	26,280		$	24,963
Interest expense		(13,591	)		(14,665	)		(14,630	)
Loss on debt extinguishment (Note L)		(8,872	)		-			-
Impairment charge – long lived assets (Note B)		(790	)		-			-
Impairment charge – long-term investment		-			-			(100	)
Interest income		166			104			52
Other income, net		99			85			99
Income before provision for income taxes	$	4,112		$	11,804		$	10,384

Total assets
Branded Product Program	$	8,174		$	7,113		$	6,827
Product licensing		2,269			2,003			1,832
Restaurant operations		7,537			8,740			9,054
Corporate		62,111			60,269			53,836
Total assets	$	80,091		$	78,125		$	71,549

Depreciation & amortization expense
Branded Product Program	$	298		$	316		$	370
Product licensing		-			-			-
Restaurant operations		786			762			710
Corporate		268			219			175
Total depreciation & amortization expense	$	1,352		$	1,297		$	1,255