NOTE L – 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 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 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, certain executive compensation, compliance costs and the operating results of the advertising fund.

Interest expense, interest income, gain on disposal of property and equipment, 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.

Operating segment information is as follows (in thousands):

	Thirteen weeks ended						Thirty-nine weeks ended
	December 2 9 , 201 9			December 23, 2018			December 2 9 , 201 9			December 23, 2018

Revenues
Branded Product Program	$	13,694		$	12,453		$	45,989		$	44,308
Product licensing		4,412			4,316			18,559			18,160
Restaurant operations		2,697			2,862			15,320			15,394
Corporate (1)		573			591			1,752			1,858
Total revenues	$	21,376		$	20,222		$	81,620		$	79,720

Income from operations
Branded Product Program	$	1,917		$	2,464		$	6,244		$	7,725
Product licensing		4,367			4,270			18,423			18,023
Restaurant operations		(599	)		(112	)		2,254			2,733
Corporate		(1,822	)		(1,726	)		(6,244	)		(6,018	)
Income from operations	$	3,863		$	4,896		$	20,677		$	22,463

Gain on disposal of property and equipment		-			10,821			-			11,177
Interest expense		(2,650	)		(2,650	)		(7,951	)		(7,951	)
Interest income		338			277			1,074			453
Other income, net		22			5			61			189
Income before provision for income taxes	$	1,573		$	13,349		$	13,861		$	26,331

(

)

Represents advertising fund revenue