What changed in this filing

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Item 1. Financial Statements

2020-11-06 compared with 2020-08-07 · 256 added, 165 removed, 524 unchanged (45% of the section changed)

Financial Statements.

June 28 , 20 20

March 29, 2020

(Unaudited)  

Sept ember 2 7 ,

ASSETS  

12 unchanged sentences

Intangible asset

Deferred income taxes

$ 106,332  

25 unchanged sentences

30,000,000 shares authorized;

9,368,792 shares issued;

and 4,114,711 and 4,141,387 shares outstanding at June 28, 2020 and March 29, 2020, respectively

9,369,015 and 9,368,792 shares issued;

and 4,114,934 and 4,141,387 shares outstanding at September 27, 2020 and March 29, 2020, respectively

Additional paid-in capital

7 unchanged sentences

16,868  

Treasury stock, at cost, 5,254,081 and 5,227,405 shares at June 28, 2020 and March 29, 2020

Treasury stock, at cost, 5,254,081 and 5,227,405 shares at September 27, 2020 and March 29, 2020

( 84,770 )  

8 unchanged sentences

CONSOLIDATED STATEMENTS OF EARNINGS

Thirteen weeks ended June 28, 2020 and June 30, 2019

Thirteen and Twenty-six weeks ended September 27, 2020 and September 29, 2019

(in thousands, except per share amounts)

June 28, 2020

June 30, 2019

$ 6,683  

$ 20,237  

Thirteen weeks ended

Twenty-six weeks ended

September 2 7 ,

September 29,

September 27,

September 29,

License royalties

10,523  

Franchise fees and royalties

1 unchanged sentence

Total revenues

17,686  

30,518  

COSTS AND EXPENSES

Cost of sales

15,422  

Restaurant operating expenses

3 unchanged sentences

Total costs and expenses

21,070  

Income from operations

Loss on disposal of property and equipment

Interest expense

( 2,650 )  

Interest income

2 unchanged sentences

Provision for income taxes

$ 4,000  

$ 5,369  

PER SHARE INFORMATION

1 unchanged sentence

Income per share:

$ 1.28  

Dividends declared per share

2 unchanged sentences

and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

Thirteen weeks ended September 27, 2020 and September 29, 2019

(in thousands, except share amounts)

Treasury Stock, at Cost

Stockholders’

Balance, June 28, 2020

Shares issued in connection with share-based compensation plans

Withholding tax on net share settlement of share-based compensation plans

Dividends on common stock

Share-based compensation

Balance, September 27 , 20 20

Treasury Stock, at Cost

Stockholders’

Balance, June 30, 2019

Shares issued in connection with share-based compensation plans

Withholding tax on net share settlement of share-based compensation plans

Dividends on common stock

Share-based compensation

Balance, September 29 , 201 9

The accompanying notes are an integral part of these consolidated financial statements .

Nathan’s Famous, Inc.

and Subsidiaries

CONSOLIDATED STATEMENT S OF STOCKHOLDERS’

Thirteen weeks ended June 28, 2020 and June 30, 2019

(in thousands, except share and per share amounts)

Twenty-six weeks ended September 27, 2020 and September 29, 2019

(in thousands, except share amounts)

Treasury Stock, at Cost

1 unchanged sentence

Balance, March 29, 2020

Shares issued in connection with share-based compensation plans

Withholding tax on net share settlement of share-based compensation plans

Repurchase of common stock

1 unchanged sentence

Share-based compensation

Balance, June 28 , 20 20

Balance, September 27 , 20 20

Treasury Stock, at Cost

2 unchanged sentences

Shares issued in connection with share-based compensation plans

Withholding tax on net share settlement of share-based compensation plans

Dividends on common stock

Share-based compensation

Balance, June 30, 2019

Balance, September 29 , 201 9

The accompanying notes are an integral part of th ese consolidated financial statement s .

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Thirteen weeks ended June 28, 2020 and June 30, 2019

(in thousands, except per share amounts)

June 28, 2020

June 30, 2019

Twenty-six weeks ended September 27, 2020 and September 29, 2019

(in thousands)

September 2 7 ,

September 29,

Cash flows from operating activities:

$ 4,000  

$ 5,369  

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

Loss on disposal of property and equipment

Non-cash rental expense

6 unchanged sentences

Accounts and other receivables, net

( 367 )  

Prepaid expenses and other current assets

Accounts payable, accrued expenses and other current liabilities

( 4,127 )  

Deferred franchise fees

( 61 )  

Other liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

Purchase of property and equipment

( 237 )  

Net cash used in investing activities

( 237 )  

Cash flows from financing activities:

Dividends paid to stockholders

( 1,440 )  

Proceeds from exercise of stock options

Payments of withholding tax on net share settlement of share-based compensation plans

Repurchase of treasury stock

( 1,501 )  

Proceeds from the exercise of stock options

Net cash used in financing activities

( 2,941 )  

Net decrease in cash and cash equivalents

( 176 )  

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

77,117  

75,446  

Cash and cash equivalents, end of period

$ 76,941  

$ 73,903  

Cash paid during the period for:

$ 4,969  

Noncash financing activity:

Non-cash financing activity:

Dividends declared per share

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 28, 2020

September 27, 2020

NOTE A - BASIS OF PRESENTATION

4 unchanged sentences

“us”

or “our”) as of and for the thirteen week periods ended June 28, 2020 and June 30, 2019 have been prepared in accordance with accounting principles generally accepted in the United States of America.

or “our”) as of and for the thirteen and twenty-six week periods ended September 27, 2020 and September 29, 2019 have been prepared in accordance with accounting principles generally accepted in the United States of America.

The unaudited financial statements include all adjustments (consisting of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of financial condition, results of operations and cash flows for the periods presented.

However, our results of operations are seasonal in nature, and the results of any interim period are not necessarily indicative of results for any other interim period or the full fiscal year.

Certain information and footnote disclosures normally included in financial statements in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the requirements of the Securities and Exchange Commission.

Management believes that the disclosures included in the accompanying consolidated interim financial statements and footnotes are adequate to make the information not misleading, but should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Nathan’s Annual Report on Form 10 -K for the fiscal year ended March 29, 2020.

2 unchanged sentences

In March 2020, the World Health Organization declared the novel strain of coronavirus (COVID- 19 ) a global pandemic.

The COVID- 19 pandemic has had an impact on the Company’s business, financial condition, cash flows and results of operations for the thirteen weeks ended June 28, 2020 ( “fiscal 2021 period”) and continues into the second quarter of fiscal 2021.

The COVID- 19 pandemic has had an impact on the Company’s business, financial condition, cash flows and results of operations for the thirteen and twenty-six weeks ended September 27, 2020 ( “fiscal 2021 period”) and continues into the third quarter of fiscal 2021.

Governmental restrictions and public perceptions of the risks associated with COVID- 19 have caused consumers to avoid or limit nonessential travel, gatherings in public places and other social interactions, which has adversely affected, and could continue to adversely affect, our business.

The COVID- 19 pandemic, has and may continue to impact customer traffic at our Company-owned restaurants and franchised restaurants, as well as our Branded Product Program customers.

The COVID- 19 pandemic, has and may continue to impact customer traffic at our Company-owned restaurants and franchised restaurants, as well as sales to our Branded Product Program customers.

We cannot predict whether, when or the manner in which the conditions surrounding the pandemic will change and cannot currently estimate the impact on our business in the short or long-term.

As of the date of this filing, all of our Company-owned restaurants continue to operate.

However, our Company-owned restaurants have only been able to offer food through take-out or delivery or limited dine-in seating and service based on governmental restrictions.

This has negatively impacted sales at our Company-owned restaurants during the fiscal 2021 period and may negatively impact sales until the COVID- 19 pandemic moderates.

A majority of our franchise locations closed temporarily during the fiscal 2021 period due to their locations being in venues that were closed (such as shopping malls and movie theaters) or venues operating at reduced traffic levels (such as airports and highway travel plazas).

As of the date of this filing, three of our Company-owned restaurants continue to operate.

Our seasonal location on the Coney Island Boardwalk closed on September 13, 2020.

Beginning in the second quarter fiscal 2021, the Company re-opened the dining rooms at our Company-owned restaurants located in Oceanside, New York and Yonkers, New York.

Although these dining rooms are open, they are operating at reduced capacity, as stipulated under government orders, as well as due to social distancing protocols that are also mandated by the same government orders.

Even without governmental restrictions, customers may continue to choose to reduce or to eliminate in-restaurant dining because of the rise in the number of COVID- 19 cases.

A majority of our franchised locations closed temporarily during the fiscal 2021 period due to their locations being in venues that were closed (such as movie theaters) or venues operating at reduced traffic levels (such as airports, highway travel plazas and shopping malls).

As a result, franchise system sales have been significantly impacted.

1 unchanged sentence

As of the date of this filing, approximately 60 % of our franchise locations are open.

The sales and profits from our Branded Product Program have been impacted as many of our customers operate in venues that are currently closed and may be slow to reopen, such as professional sports venues, amusement parks, shopping malls and movie theaters.

The sales and profits from our Branded Product Program have been adversely impacted as many of our customers operate in venues that are currently closed (such as movie theaters) or venues operating at significantly reduced traffic, such as professional sports arenas, amusement parks and shopping malls.

To help mitigate the impact of the COVID- 19 pandemic, we have taken the following decisive actions which are on-going:

4 unchanged sentences

Introduced “ghost kitchens”

whereby well-known restaurants will have the ability to market our products for pick-up or in the form of meal-kits for at home preparation

whereby well-known restaurants have the ability to market our products for pick-up or in the form of meal-kits for at home preparation

Implemented enhanced health and safety protocols across the Company

1 unchanged sentence

See Note J for a further discussion related to Goodwill and Intangible Assets and Note K for a further discussion related to Long-lived Assets.

We intend to continue to actively monitor the evolving situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our team members, customers, suppliers and shareholders.

We continue to actively monitor the evolving situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our team members, customers, suppliers and shareholders.

NOTE B –

24 unchanged sentences

NOTE D –

The Company’s disaggregated revenues for the thirteen weeks ended June 28, 2020 and June 30, 2019 are as follows (in thousands):

Thirteen weeks ended  

June 28 , 20 20

June 30, 2019

The Company’s disaggregated revenues for the thirteen and twenty-six weeks ended September 27, 2020 and September 29, 2019 are as follows (in thousands):

Thirteen weeks ended

Twenty-six weeks ended

September 2 7 , 20 20

September 29, 2019

September 27, 2020

September 29, 2019

Branded Products

1 unchanged sentence

$ 16,182  

$ 14,447  

$ 32,295  

Company-operated restaurants

10,048  

12,692  

22,106  

19,375  

42,343  

License royalties

18,791  

14,147  

Franchise royalties

Franchise fees

4 unchanged sentences

$ 29,726  

$ 39,525  

$ 60,244  

The following table disaggregates revenues by primary geographical market (in thousands):

Thirteen weeks ended  

June 28 , 20 20

June 30, 2019

Thirteen weeks ended

Twenty-six weeks ended

September 27 , 20 20

September 29, 2019

September 27 , 20 20

September 29, 2019

United States

1 unchanged sentence

$ 28,235  

$ 38,913  

$ 57,622  

International

2 unchanged sentences

$ 29,726  

$ 39,525  

$ 60,244  

Contract balances

The following table provides information about contract liabilities (Deferred franchise fees) from contracts with customers (in thousands):

June 28 , 20 20

March 29, 2020

September 2 7 ,

Deferred franchise fees (a)

1 unchanged sentence

$ 1,917  

Deferred franchise fees of $ 229 and $ 1,627 as of June 28, 2020 and $ 230 and $ 1,687 as of March 29, 2020 are included in Deferred franchise fees –

Deferred franchise fees of $ 225 and $ 1,609 as of September 27, 2020 and $ 230 and $ 1,687 as of March 29, 2020 are included in Deferred franchise fees –

current and long term, respectively.

Significant changes in Deferred franchise fees are as follows (in thousands):

Thirteen weeks ended

June 28 , 20 20

June 30, 2019

Twenty-six weeks ended

September 2 7 ,

September 29,

Deferred franchise fees at beginning of period

$ 1,917  

$ 3,005  

Additions to deferred revenue

9 unchanged sentences

Represents franchise fees expected to be recognized for the remainder of the 2021 fiscal year, which includes international development fees expected to be recognized over the duration of one year or less.

Amount does not include $ 81 of franchise fee revenue recognized for the thirteen weeks ended June 28, 2020.

Amount does not include $ 148 of franchise fee revenue recognized for the twenty-six weeks ended September 27, 2020.

We have applied the optional exemption, as provided for under Topic 606, which allows us not to disclose the transaction price allocated to unsatisfied performance obligations when the transaction price is a sales-based royalty.

NOTE E –

INCOME PER SHARE       

Basic income per common share is calculated by dividing income by the weighted-average number of common shares outstanding and excludes any dilutive effect of stock options.

1 unchanged sentence

Dilutive common shares used in the computation of diluted income per common share result from the assumed exercise of stock options and warrants, as determined using the treasury stock method.

The following chart provides a reconciliation of information used in calculating the per-share amounts for the thirteen week periods ended June 28, 2020 and June 30, 2019, respectively.

The following chart provides a reconciliation of information used in calculating the per-share amounts for the thirteen and twenty-six week periods ended September 27, 2020 and September 29, 2019, respectively.

Thirteen weeks

6 unchanged sentences

$ 0.89  

$ 0.87  

Effect of dilutive employee stock options

3 unchanged sentences

$ 0.89  

Options to purchase 10,000 shares of common stock in the thirteen week periods ended June 28, 2020 and June 30, 2019 were not included in the computation of diluted EPS because the exercise price exceeded the average market price of common shares during these periods.

$ 0.87  

Twenty-six weeks

Number of Shares

(in thousands)

Basic calculation

$ 7,655  

$ 9,027  

$ 1.86  

$ 2.14  

Effect of dilutive employee stock options

Diluted calculation

$ 7,655  

$ 9,027  

$ 1.86  

$ 2.14  

Options to purchase 10,000 shares of common stock in the thirteen and twenty-six week periods ended September 27, 2020 and September 29, 2019 were not included in the computation of diluted EPS because the exercise price exceeded the average market price of common shares during the period.

NOTE F –

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.

The Company did not have any cash equivalents at June 28, 2020 and March 29, 2020.

At June 28, 2020 and March 29, 2020, substantially all of the Company’s cash balances are in excess of Federal government insurance limits.

The Company did not have any cash equivalents at September 27, 2020 and March 29, 2020.

At September 27, 2020 and March 29, 2020, substantially all of the Company’s cash balances are in excess of Federal government insurance limits.

The Company does not believe that it is exposed to any significant risk on these balances.

6 unchanged sentences

The three levels are defined as follows:

Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market

Level 2 - inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability

The face value and fair value of long-term debt as of June 28, 2020 and March 29, 2020 were as follows (in thousands):

June 28 , 20 20

●     Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market

●     Level 2 - inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability

●     Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability

The face value and fair value of long-term debt as of September 27, 2020 and March 29, 2020 were as follows (in thousands):

September 2 7 , 20 20

March 29, 2020

9 unchanged sentences

that is, the assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when evidence of impairment exists.

At June 28, 2020, no fair value adjustment or material fair value measurements were required for non-financial assets or liabilities.

At September 27, 2020, no fair value adjustment or material fair value measurements were required for non-financial assets or liabilities.

NOTE H –

1 unchanged sentence

Accounts and other receivables, net, consist of the following (in thousands):

September 2 7 ,

Branded product sales

13 unchanged sentences

After the Company has used reasonable collection efforts, it writes off accounts receivable through a charge to the allowance for doubtful accounts.

Changes in the Company’s allowance for doubtful accounts for the thirteen -week period ended June 28, 2020 and the fiscal year ended March 29, 2020 are as follows (in thousands):     

Changes in the Company’s allowance for doubtful accounts for the twenty-six week period ended September 27, 2020 and the fiscal year ended March 29, 2020 are as follows (in thousands): 

September 2 7 ,

Beginning balance

Bad debt expense

Accounts written off

( 30 )  

Write-offs and other

Ending balance

2 unchanged sentences

Prepaid expenses and other current assets consist of the following (in thousands):

September 2 7 ,

Real estate taxes

1 unchanged sentence

$ 1,181  

NOTE J - GOODWILL AND INTANGIBLE ASSETS

2 unchanged sentences

Adoption of New Accounting Standard.

Based on the quantitative assessment performed, management determined that the Company’s goodwill has not been impaired as of June 28, 2020 and, as a result, no impairment charge was recorded for the thirteen - week period ended June 28, 2020.

The Company also determined that the impact of COVID- 19 was a triggering event that prompted the need to perform interim impairment testing of its finite lived intangible asset.

The Company elected to assess qualitative factors to determine whether it was more likely than not that the fair value was less than the carrying amount.

No impairment was identified as a result of the Company’s annual impairment test performed at March 29, 2020.

Considering this and other factors, the Company determined qualitatively that its finite lived intangible asset, which has a remaining useful life based upon its current Arthur Treacher’s co-branding agreements, is recoverable.

As a result, no impairment charge was recorded for the thirteen -week period ended June 28, 2020.

Based on the quantitative assessment performed, management determined that the Company’s goodwill has not been impaired as of September 27, 2020 and, as a result, no impairment charge was recorded for the thirteen and twenty-six week periods ended September 27, 2020.

The Company's definite-lived intangible asset consists of trademarks, tradenames and other intellectual property in connection with its Arthur Treacher's co-branding agreements. 

The Company reviews its definite-lived intangible asset for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. 

The Company determined that the impact of COVID- 19 on its business was a sufficient indicator that the carrying value may not be recoverable. 

The Company tested for recoverability of its definite-lived intangible asset based on the projected undiscounted cash flows to be derived from such co-branding agreements, which has a remaining useful life based upon the term of its agreements.

Based on the quantitative test performed and other qualitative factors, the Company determined that the definite-lived intangible asset was recoverable and no impairment charge was recorded for the thirteen and twenty-six week periods ended September 27, 2020.

NOTE K - LONG LIVED ASSETS

Long-lived assets on a restaurant-by-restaurant basis are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

As a result of the impact of the COVID- 19 pandemic on its business, the Company determined that sufficient indicators existed to trigger the performance of an interim impairment analysis as of June 28, 2020.

The Company tests for recoverability based on the projected undiscounted cash flows to be derived from such assets.

4 unchanged sentences

The Company considers a history of restaurant operating losses to be its primary indicator of potential impairment for individual restaurant locations.

No long-lived assets were deemed to be permanently impaired during the thirteen -week period ended June 28, 2020 based upon quantitative analysis.

No long-lived assets were deemed to be permanently impaired during the thirteen and twenty-six week periods ended September 27, 2020 based upon quantitative analysis.

NOTE L –

1 unchanged sentence

Accrued expenses and other current liabilities consist of the following (in thousands):

September 27 ,

Payroll and other benefits

12 unchanged sentences

Other liabilities consist of the following (in thousands):

September 2 7 ,

Reserve for uncertain tax positions

1 unchanged sentence

NOTE M –

INCOME TAXES         

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief and Economic Security (the “CARES Act”) into law which among other provisions increases the limitation on the allowed business interest expense deduction from 30 percent to 50 percent of adjusted taxable income for tax years beginning January 1, 2019 and 2020.

Additionally, the CARES Act allows businesses to immediately expense the full cost of Qualified Improvement Property, retroactive to tax years beginning on or after January 1, 2018.

The income tax provisions for the thirteen -week periods ended June 28, 2020 and June 30, 2019 reflect effective tax rates of 28.1 % and 25.3 %, respectively.

Nathan’s effective tax rate for the thirteen -week period ended June 30, 2019 was reduced by 3.2 %, as a result of the tax benefits associated with stock compensation.

For the thirteen -week period ended June 30, 2019, excess tax benefits of $ 228,000 were reflected in the Consolidated Statements of Earnings as a reduction in determining the provision for income taxes.

The income tax provisions for the twenty-six periods ended September 27, 2020 and September 29, 2019 reflect effective tax rates of 27.9 % and 26.5 %, respectively.

Nathan’s effective tax rate for the twenty-six week period September 29, 2019 was reduced by 1.9 % as a result of the tax benefits associated with stock compensation.

For the twenty-six week period ended September 29, 2019, excess tax benefits of $ 228,000 were reflected in the Consolidated Statements of Earnings as a reduction in determining the provision for income taxes.

Nathan’s effective tax rate without this adjustment would have been 28.4 % for the fiscal 2020 period.

The amount of unrecognized tax benefits at June 28, 2020 was $ 321,000 all of which would impact Nathan’s effective tax rate, if recognized.

As of June 28, 2020, Nathan’s had $ 274,000 of accrued interest and penalties in connection with unrecognized tax benefits.

The amount of unrecognized tax benefits at September 27, 2020 was $ 333,000 all of which would impact Nathan’s effective tax rate, if recognized.

As of September 27, 2020, Nathan’s had $ 289,000 of accrued interest and penalties in connection with unrecognized tax benefits.

In November 2019, the State of New Jersey notified Nathan’s that our tax returns for the fiscal years ended March 27, 2016, March 26, 2017 and March 25, 2018 will be audited.

16 unchanged sentences

Operating segment information is as follows (in thousands):

Thirteen weeks ended  

June 28 , 20 20  

June 30, 2019  

Thirteen weeks ended

Twenty-six weeks ended

Branded Product Program

1 unchanged sentence

$ 16,182  

$ 14,447  

$ 32,295  

Product licensing

18,791  

14,147  

Restaurant operations

12,623  

Corporate (1)

2 unchanged sentences

$ 29,726  

$ 39,525  

$ 60,244  

Income from operations

1 unchanged sentence

$ 1,252  

$ 2,124  

$ 1,524  

$ 4,327  

Product licensing

18,700  

14,056  

Restaurant operations

1 unchanged sentence

( 1,031 )  

( 1,753 )  

( 2,241 )  

( 3,515 )  

Income from operations

1 unchanged sentence

$ 7,366  

$ 15,678  

$ 16,814  

Loss on disposal of property and equipment

Interest expense

( 2,651 )  

( 5,301 )  

Interest income

3 unchanged sentences

$ 5,103  

$ 10,619  

$ 12,288  

Represents advertising fund revenue

1 unchanged sentence

SHARE-BASED COMPENSATION

Total share-based compensation during the thirteen -week periods ended June 28, 2020 and June 30, 2019 was $ 29,000 and $ 28,000 , respectively.

Total share-based compensation during the thirteen week periods ended September 27, 2020 and September 29, 2019 was $ 29,000 and $ 30,000 , respectively.

Total share-based compensation during the twenty-six week periods ended September 27, 2020 and September 29, 2019 was $ 58,000 .

Total share-based compensation is included in general and administrative expenses in our accompanying Consolidated Statements of Earnings.

As of June 28, 2020, there was $ 140,000 of unamortized compensation expense related to share-based incentive awards.

We expect to recognize this expense over approximately fourteen months, which represents the weighted average remaining requisite service periods for such awards.

As of September 27, 2020, there was $ 111,000 of unamortized compensation expense related to share-based incentive awards.

The Company expects to recognize this expense over approximately eleven months, which represents the weighted average remaining requisite service periods for such awards.

The Company recognizes compensation cost for unvested stock-based incentive awards on a straight-line basis over the requisite service period.

Compensation cost charged to expense under all stock-based incentive awards is as follows (in thousands):

Thirteen weeks ended  

June 28 , 20 20

June 30, 2019

Twenty-six weeks ended  

Stock options

1 unchanged sentence

Total compensation cost

Stock option s :

There were no new share-based awards granted during the thirteen -week period ended June 28, 2020.

Transactions with respect to stock options for the thirteen weeks ended June 28, 2020 are as follows:

Stock options:

There were no new share-based awards granted during the twenty-six week period ended September 27, 2020.

During the fiscal year March 31, 2019, the Company granted options to purchase 10,000 shares at an exercise price of $ 89.90 per share, all of which expire five years from the date of grant.

All such stock options vest ratably over a three -year period commencing September 12, 2019.

Transactions with respect to stock options for the twenty-six weeks ended September 27, 2020 are as follows :

Contractual Life

3 unchanged sentences

$ 89.90  

Options outstanding at June 28, 2020

Options outstanding at September 27, 2020

10,000  

$ 89.90  

Options exercisable at June 28, 2020

Options exercisable at September 27, 2020

$ 89.90  

Restricted stock:

Transactions with respect to restricted stock for the thirteen weeks ended June 28, 2020 are as follows:

Transactions with respect to restricted stock for the twenty-six weeks ended September 27, 2020 are as follows:

Unvested restricted stock at March 29, 2020

$ 89.90  

Unvested restricted stock at June 28, 2020

( 334 )  

$ 89.90  

Unvested restricted stock at September 27, 2020

$ 89.90  

NOTE P –

1 unchanged sentence

Effective June 12, 2020, the Board declared its first quarterly cash dividend of $ 0.35 per share for fiscal year 2021, aggregating $ 1,440,000 , which was paid on June 26, 2020 to stockholders of record as of the close of business on June 22, 2020.

Effective August 7, 2020, the Board declared its second quarterly cash dividend of $ 0.35 per share payable on September 4, 2020 to stockholders of record as of the close of business on August 24, 2020.

Effective August 7, 2020, the Board declared its second quarterly cash dividend of $ 0.35 per share for fiscal year 2021, aggregating $ 1,440,000 , which was paid on September 4, 2020 to stockholders of record as of the close of business on August 24, 2020.

Effective November 6, 2020 the Board declared its third quarterly cash dividend of $ 0.35 per share payable on December 4, 2020 to stockholders of record as of the close of business on November 23, 2020.

Our ability to pay future dividends is limited by the terms of the Indenture with U.S.

10 unchanged sentences

The 2019 Plan became effective as of July 1, 2020 ( the "Effective Date").

Following the Effective Date, (i) no additional stock awards will be granted under the 2010 Plan and (ii) all outstanding stock awards previously granted under the 2010 Plan remained subject to the terms of the 2010 Plan.

All awards granted on or after the Effective Date shall be subject to the terms of the 2019 Plan.

Following the Effective Date, (i) no additional stock awards were granted under the 2010 Plan and (ii) all outstanding stock awards previously granted under the 2010 Plan remained subject to the terms of the 2010 Plan.

All awards granted on or after the Effective Date of the 2019 Plan shall be subject to the terms of the 2019 Plan.

As of the Effective Date, we were able to issue up to:

1 unchanged sentence

(i) shares that have been authorized but not issued pursuant to the 2010 Plan as of the Effective Date up to a maximum of an additional 208,584 shares and (ii) any shares subject to any outstanding options or restricted stock grants under any plan of the Company that were outstanding as of the Effective Date and that subsequently expire unexercised, or are otherwise forfeited, up to a maximum of an additional 11,000 shares.

As of June 28, 2020, there were up to 208,584 shares available to be issued for future option grants or up to 184,808 shares of restricted stock that may be granted under the 2010 Plan.

As of September 27, 2020, there were up to 208,584 shares available to be issued for future option grants or up to 184,808 shares of restricted stock that may be granted under the 2010 Plan.

Stock Repurchase Programs

During the period from October 2001 through June 28, 2020, Nathan’s purchased 5,254,081 shares of common stock at a cost of $ 84,770,000 pursuant to various stock repurchase plans previously authorized by the Board of Directors.

During the thirteen -week period ended June 28, 2020, we repurchased 26,676 shares of common stock at a cost of $ 1,501,000 .

During the period from October 2001 through September 27, 2020, Nathan’s purchased 5,254,081 shares of common stock at a cost of $ 84,770,000 pursuant to various stock repurchase plans previously authorized by the Board of Directors.

During the twenty-six week period ended September 27, 2020, we repurchased 26,676 shares of common stock at a cost of $ 1,501,000 .

In 2016, the Company’s Board of Directors authorized increases to the sixth stock repurchase plan for the purchase of up to 1,200,000 shares of its common stock on behalf of the Company.

As of June 28, 2020, Nathan’s had repurchased 1,066,450 shares at a cost of $ 37,108,000 under the sixth stock repurchase plan.

At June 28, 2020 there were 133,550 shares remaining to be repurchased pursuant to the sixth stock repurchase plan.

As of September 27, 2020, Nathan’s had repurchased 1,066,450 shares at a cost of $ 37,108,000 under the sixth stock repurchase plan.

At September 27, 2020 there were 133,550 shares remaining to be repurchased pursuant to the sixth stock repurchase plan.

The plan does not have a set expiration date.

1 unchanged sentence

There is no set time limit on the repurchases.

On March 13, 2020, the Company’s Board of Directors approved a 10b5 - 1 stock plan (the “10b5 - 1 Plan”) which will expire on the earlier of (a) August 12, 2020 or (b) the earlier of when (i) the aggregate purchase price of all shares of common stock purchased under the 10b5 - 1 Plan equals $ 5,550,000 and (ii) the aggregate purchases under the 10b5 - 1 Plan equals 100,000 shares unless terminated earlier by the Company’s Board of Directors.

During the thirteen -week period ended June 28, 2020, the Company repurchased in open market transactions 

26,676 shares of the Company’s common stock at an average share price of $ 56.26 for a total cost of $ 1,501,000 under the 10b5 - 1 Plan.

At June 28, 2020, $ 1,322,000 or 22,406 shares were available for repurchase under the 10b5 - 1 Plan.

On March 13, 2020, the Company’s Board of Directors approved a 10b5 - 1 stock plan (the “10b5 - 1 Plan”) which expired on August 12, 2020.

During the twenty-six week period ended September 27, 2020, the Company repurchased in open market transactions 26,676 shares of the Company’s common stock at an average share price of $ 56.26 for a total cost of $ 1,501,000 under the 10b5 - 1 Plan.

NOTE Q –

1 unchanged sentence

Long-term debt consists of the following (in thousands):

September 27 ,

6.625 % Senior Secured Notes due 2025

$ 150,000  

unamortized debt issuance costs

( 3,514 )  

Long-term debt, net

$ 146,486  

$ 146,140  

On November 1, 2017, the Company issued $ 150,000,000 of 6.625% Senior Secured Notes due 2025 (the "2025 Notes") in a private offering in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).

1 unchanged sentence

Bank National Association (the “Indenture”).

The Company used the net proceeds of the 2025 Notes offering to satisfy and discharge the Indenture relating to the $ 135,000,000 of 10.000% Senior Secured Notes due 2020 and redeem the 2020 Notes (the "Redemption"), paid a portion of a special $ 5.00 per share cash dividend to Nathan's stockholders of record, with the remaining net proceeds for general corporate purposes, including working capital.

The Company used the net proceeds of the 2025 Notes offering to satisfy and discharge the Indenture relating to the $ 135,000,000 of 10.000% Senior Secured Notes due 2020 and redeem such notes (the "Redemption"), paid a portion of a special $ 5.00 per share cash dividend to Nathan's stockholders of record, with the remaining net proceeds for general corporate purposes, including working capital.

The Company also funded the majority of the special dividend of $5.00 per share through its existing cash.

1 unchanged sentence

The 2025 Notes bear interest at 6.625% per annum, payable semi-annually on May 1 st and November 1 st of each year.

On May 1, 2020, the Company paid its first semi-annual interest payment of fiscal 2021.

The Company made its required semi-annual interest payments of $ 4,968,750 on May 1, 2020 and November 1, 2020.

The 2025 Notes have no scheduled principal amortization payments prior to its final maturity on November 1, 2025.

The terms and conditions of the 2025 Notes are as follows (terms not defined shall have the meanings set forth in the Indenture):

There are no ongoing financial maintenance covenants associated with the 2025 Notes.

As of June 28, 2020, Nathan’s was in compliance with all covenants associated with the 2025 Notes.

A summary of certain terms and conditions of the 2025 Notes is as follows (terms not defined shall have the meanings set forth in the Indenture):

There are no financial maintenance covenants associated with the 2025 Notes.

As of September 27, 2020, Nathan’s was in compliance with all covenants associated with the 2025 Notes.

The Indenture contains certain covenants limiting the Company’s ability and the ability of its restricted subsidiaries (as defined in the Indenture) to, subject to certain exceptions and qualifications:

44 unchanged sentences

In the Change of Control Offer, the Company will be required to offer payment in cash equal to 101 % of the aggregate principal amount of 2025 Notes repurchased plus accrued and unpaid interest, to the date of purchase.

If the Company sells certain collateralized assets and does not use the net proceeds as required, the Company will be required to use such net proceeds to repurchase the 2025 Notes at 100 % of the principal amount thereof, plus accrued and unpaid interest and additional interest penalty, if any, to the date of repurchase.

If the Company sells certain assets and does not use the net proceeds as required, the Company will be required to use such net proceeds to repurchase the 2025 Notes at 100 % of the principal amount thereof, plus accrued and unpaid interest and additional interest penalty, if any, to the date of repurchase.

The 2025 Notes may be traded between qualified institutional buyers pursuant to Rule 144A of the Securities Act.

5 unchanged sentences

Company as lessee

The components of the net lease cost for the thirteen -week period ended June 28, 2020 were as follows (in thousands):

Thirteen weeks ended

June 28, 2020

June 30, 2019

The components of the net lease cost for the thirteen and twenty-six week periods ended September 27, 2020 and September 29, 2019 were as follows (in thousands):

Th irteen weeks

Thirteen weeks

T wenty-six weeks

Twenty-six weeks

September 27 ,

September 29,

September 27 ,

September 29,

Statement of Earnings

3 unchanged sentences

Sublease income, net

( 22 )  

( 20 )  

( 22 )  

Total net lease cost (a)

the thirteen -week periods ended June 28, 2020 and June 30, 2019 include $ 579 and $ 550 , net recorded to “Restaurant Operating Expenses”

for leases for Company-operated restaurants, $ 174 and $ 170 recorded to “General and administrative expenses”

for leases for corporate offices and equipment and $- and $ 21 recorded to “Other income, net”

$ 1,504  

$ 1,489  

The thirteen and twenty-six week periods ended September 27, 2020 and September 29, 2019 include $ 614 , net and $ 1,194 , net and $ 669 , net and $ 1,209 , net, respectively, recorded to “Restaurant Operating Expenses”

for leases for Company-operated restaurants;

$ 159 and $ 332 , and $ 150 and $ 321 , respectively, recorded to “General and administrative expenses”

for leases for corporate offices and equipment;

and $ 22 and $ 22 , and $ 20 and $ 41 , respectively, recorded to “Other income, net”

for leased properties that are leased to franchisees.

Cash paid for amounts included in the measurement of lease liabilities were as follows (in thousands):

Thirteen weeks ended

June 28, 2020

June 30, 2019

T hirteen week s

Thirteen weeks

T wenty-six week s

Twenty-six weeks

September 27 ,

September 29,

September 27 ,

September 29,

Operating cash flows from operating leases

The weighted average remaining lease term and weighted-average discount rate for operating leases as of June 

28, 2020  were as follows:

The weighted average remaining lease term and weighted-average discount rate for operating leases as of September 27, 2020 

were as follows:

Weighted average remaining lease term (years):

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Operating leases

Future lease commitments to be paid and received by the Company as of June 28, 2020 were as follows (in thousands):

Future lease commitments to be paid and received by the Company as of September 27, 2020 were as follows (in thousands):

Operating Leases

$ 1,164  

Total lease commitments

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Amount does not include $ 633  

of lease commitments paid and received by the Company for the thirteen -week period ended June 28, 2020.

of lease commitments paid and received by the Company for the twenty-six week period ended September 27, 2020.

The present value of minimum operating lease payments of $ 1,821 and $ 7,887  

2 unchanged sentences

respectively.

Company as lessor

The components of lease income for the thirteen -week periods ended June 28, 2020 and June 30, 2019 were as follows (in thousands):

Thirteen weeks ended

June 28, 2020

June 30, 2019

Company as l essor

The components of lease income for the thirteen week and twenty-six week periods ended September 27, 2020 and September 29, 2019 were as follows (in thousands):

Thirteen weeks

September 27 ,

Thirteen weeks

September 29,

Twenty-six weeks

September 27 ,

Twenty-six weeks

September 29,

Operating lease income, net

6 unchanged sentences

For the remainder of the term, the Brooklyn Guaranty is limited to 12 months of rent plus reasonable costs of collection and attorney’s fees.

As of June 28, 2020, Nathan’s has recorded a liability of $ 110,000 in connection with the Brooklyn Guaranty which does not include potential percentage rent, real estate tax increases, attorney’s fees and other costs as these amounts are not reasonably determinable at this time.

As of September 27, 2020, Nathan’s has recorded a liability of $ 110,000 in connection with the Brooklyn Guaranty which does not include potential percentage rent, real estate tax increases, attorney’s fees and other costs as these amounts are not reasonably determinable at this time.

Nathan’s has received a personal guaranty from the franchisee for all obligations under the Brooklyn Guaranty.

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements