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 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 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.

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.

Operating segment information is as follows (in thousands):

	Thirteen weeks ended						Twenty-six weeks ended
	Sept. 2 3 , 201 8			Sept. 24, 2017			Sept. 2 3 , 201 8			Sept. 24, 2017

Revenues
Branded Product Program	$	15,410		$	18,130		$	31,855		$	36,067
Product licensing		5,746			5,764			13,844			13,165
Restaurant operations		7,402			7,577			12,532			13,042
Corporate (1)		772			-			1,267			-
Total revenues	$	29,330		$	31,471		$	59,498		$	62,274

Income from operations
Branded Product Program	$	2,730		$	2,692		$	5,261		$	4,964
Product licensing		5,700			5,719			13,753			13,075
Restaurant operations		2,095			2,335			2,845			3,230
Corporate		(2,045	)		(2,012	)		(4,292	)		(4,085	)
Income from operations	$	8,480		$	8,734		$	17,567		$	17,184
Interest expense		(2,651	)		(3,663	)		(5,301	)		(7,326	)
Interest income		115			35			176			70
Other income, net		519			21			540			42
Income before provision for income taxes	$	6,463		$	5,127		$	12,982		$	9,970

(

)

Represents advertising fund revenue