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 the Corporate segment.

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 and expenses of the advertising fund.

Gain on sale of property and equipment, 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 cash equivalents, and long-lived assets.

Operating segment information is as follows:

	Fifty-T hree weeks ended			Fifty-Two weeks ended			Fifty-Two weeks ended
	March 31 , 201 9			March 25, 2018			March 26, 2017
Revenues
Branded Product Program	$	57,960		$	62,623		$	56,174
Product licensing		23,615			23,020			20,368
Restaurant operations		17,772			18,558			19,714
Corporate (1)		2,502			-			-
Total revenues	$	101,849		$	104,201		$	96,256

Income from operations
Branded Product Program	$	10,302		$	9,469		$	10,257
Product licensing		23,433			22,838			20,186
Restaurant operations		2,398			2,730			4,101
Corporate		(8,157	)		(7,937	)		(8,264	)
Income from operations	$	27,976		$	27,100		$	26,280

Gain on sale of property and equipment	$	11,177		$	-		$	-
Interest expense		(10,792	)		(13,591	)		(14,665	)
Loss on debt extinguishment (Note K)		-			(8,872	)		-
Impairment charge – long lived assets (Note B)		-			(790	)		-
Interest income		840			166			104
Other income, net		209			99			85
Income before provision for income taxes	$	29,410		$	4,112		$	11,804

Total assets
Branded Product Program	$	8,334		$	8,174		$	7,113
Product licensing		2,127			2,269			2,003
Restaurant operations		6,411			7,537			8,740
Corporate		77,434			62,111			60,269
Total assets	$	94,306		$	80,091		$	78,125

Depreciation & amortization expense
Branded Product Program	$	312		$	298		$	316
Restaurant operations		657			786			762
Corporate		243			268			219
Total depreciation & amortization expense	$	1,212		$	1,352		$	1,297

(

)

Represents advertising fund revenue