NATHANS FAMOUS, INC. 10-Q

Item 1. Financial Statements.       Sept ember 2 7 , 2020     March 29, 2020       (Unaudited)           ASSETS                 CURRENT ASSETS                 Cash and cash equivalents (Note F)   $ 81,519     $ 77,117   Accounts and other receivables, net (Note H)     8,967       11,108   Inventories     557       378   Prepaid expenses and other current assets (Note I)     621       1,181   Total current assets     91,664       89,784                     Property and equipment, net of accumulated depreciation of $ 10,024 and $ 9,468 , respectively     4,372       4,610   Operating lease assets (Note R)     8,648       9,181   Goodwill     95       95   Intangible asset     1,212       1,269   Deferred income taxes     7       -   Other assets     334       343                     Total assets   $ 106,332     $ 105,282                     LIABILITIES AND STOCKHOLDERS’ DEFICIT                                   CURRENT LIABILITIES                 Accounts payable   $ 3,088     $ 3,509   Accrued expenses and other current liabilities (Note L)     7,552       9,297   Current portion of operating lease liabilities (Note R)     1,821       1,583   Deferred franchise fees     225       230   Total current liabilities     12,686       14,619                     Long-term debt, net of unamortized debt issuance costs of $ 3,514 and $ 3,860 , respectively (Note Q)     146,486       146,140   Operating lease liabilities (Note R)     7,887       8,532   Other liabilities (Note L)     739       696   Deferred franchise fees     1,609       1,687   Deferred income taxes     -       9                     Total liabilities     169,407       171,683                     COMMITMENTS AND CONTINGENCIES (Note S)                                       STOCKHOLDERS’ DEFICIT                 Common stock, $ .01 par value; 30,000,000 shares authorized; 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     94       94   Additional paid-in capital     62,182       62,130   (Accumulated deficit)     ( 40,581 )     ( 45,356 ) Stockholders’ equity before treasury stock     21,695       16,868                     Treasury stock, at cost, 5,254,081 and 5,227,405 shares at September 27, 2020 and March 29, 2020     ( 84,770 )     ( 83,269 ) Total stockholders’ deficit     ( 63,075 )     ( 66,401 )                   Total liabilities and stockholders’ deficit   $ 106,332     $ 105,282     The accompanying notes are an integral part of these consolidated financial statements.   3       Nathan’s Famous, Inc. and Subsidiaries   CONSOLIDATED STATEMENTS OF EARNINGS Thirteen and Twenty-six weeks ended September 27, 2020 and September 29, 2019 (in thousands, except per share amounts) (Unaudited)       Thirteen weeks ended     Twenty-six weeks ended       September 2 7 , 20 20     September 29, 2019     September 27, 2020     September 29, 2019                                     REVENUES                                 Sales   $ 12,692     $ 22,106     $ 19,375     $ 42,343   License royalties     8,268       5,425       18,791       14,147   Franchise fees and royalties     476       1,498       667       2,575   Advertising fund revenue     403       697       692       1,179   Total revenues     21,839       29,726       39,525       60,244                                     COSTS AND EXPENSES                                 Cost of sales     9,927       16,289       15,224       31,711   Restaurant operating expenses     1,011       1,108       1,863       2,027   Depreciation and amortization     302       337       612       647   General and administrative expenses     2,612       3,559       5,456       7,496   Advertising fund expense     403       1,067       692       1,549   Total costs and expenses     14,255       22,360       23,847       43,430                                     Income from operations     7,584       7,366       15,678       16,814                                     Loss on disposal of property and equipment     -       ( 2 )     -       ( 2 ) Interest expense     ( 2,651 )     ( 2,651 )     ( 5,301 )     ( 5,301 ) Interest income     103       370       220       736   Other income, net     22       20       22       41                                     Income before provision for income taxes     5,058       5,103       10,619       12,288   Provision for income taxes     1,403       1,445       2,964       3,261   Net income   $ 3,655     $ 3,658     $ 7,655     $ 9,027                                     PER SHARE INFORMATION                                 Weighted average shares used in computing income per share:                                 Basic     4,115       4,227       4,118       4,216   Diluted     4,115       4,227       4,118       4,216                                     Income per share:                                 Basic   $ .89     $ .87     $ 1.86     $ 2.14   Diluted   $ .89     $ .87     $ 1.86     $ 2.14                                     Dividends declared per share   $ .35     $ .35     $ .70     $ .70     The accompanying notes are an integral part of these consolidated financial statements.   4       Nathan’s Famous, Inc. and Subsidiaries   CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT Thirteen weeks ended September 27, 2020 and September 29, 2019 (in thousands, except share amounts) (Unaudited)                       Additional                             Total       Common     Common     Paid-in     (Accumulated     Treasury Stock, at Cost     Stockholders’       Shares     Stock     Capital     Deficit)     Shares     Amount     Deficit                                                             Balance, June 28, 2020     9,368,792     $ 94     $ 62,159     $ ( 42,796 )     5,254,081     $ ( 84,770 )   $ ( 65,313 )                                                           Shares issued in connection with share-based compensation plans     223       -       -       -       -       -       -   Withholding tax on net share settlement of share-based compensation plans     -       -       ( 6 )     -       -       -       ( 6 ) Dividends on common stock     -       -       -       ( 1,440 )     -       -       ( 1,440 ) Share-based compensation     -       -       29       -       -       -       29   Net income     -       -       -       3,655       -       -       3,655   Balance, September 27 , 20 20     9,369,015     $ 94     $ 62,182     $ ( 40,581 )     5,254,081     $ ( 84,770 )   $ ( 63,075 )                           Additional                             Total       Common     Common     Paid-in     (Accumulated     Treasury Stock, at Cost     Stockholders’       Shares     Stock     Capital     Deficit)     Shares     Amount     Deficit                                                             Balance, June 30, 2019     9,368,572     $ 94     $ 62,050     $ ( 48,989 )     5,141,763     $ ( 78,303 )   $ ( 65,148 )                                                           Shares issued in connection with share-based compensation plans     220       -       -       -       -       -       -   Withholding tax on net share settlement of share-based compensation plans     -       -       ( 8 )     -       -       -       ( 8 ) Dividends on common stock     -       -       -       ( 1,479 )     -       -       ( 1,479 ) Share-based compensation     -       -       30       -       -       -       30   Net income     -       -       -       3,658       -       -       3,658   Balance, September 29 , 201 9     9,368,792     $ 94     $ 62,072     $ ( 46,810 )     5,141,763     $ ( 78,303 )   $ ( 62,947 )                   The accompanying notes are an integral part of these consolidated financial statements .   5     Nathan’s Famous, Inc. and Subsidiaries   CONSOLIDATED STATEMENT S OF STOCKHOLDERS’ DEFICIT Twenty-six weeks ended September 27, 2020 and September 29, 2019 (in thousands, except share amounts) (Unaudited)                       Additional                             Total       Common     Common     Paid-in     (Accumulated     Treasury Stock, at Cost     Stockholders’       Shares     Stock     Capital     Deficit)     Shares     Amount     Deficit                                                             Balance, March 29, 2020     9,368,792     $ 94     $ 62,130     $ ( 45,356 )     5,227,405     $ ( 83,269 )   $ ( 66,401 )                                                           Shares issued in connection with share-based compensation plans     223       -       -       -       -       -       -   Withholding tax on net share settlement of share-based compensation plans     -       -       ( 6 )     -       -       -       ( 6 ) Repurchase of common stock     -       -       -       -       26,676       ( 1,501 )     ( 1,501 ) Dividends on common stock     -       -       -       ( 2,880 )     -       -       ( 2,880 ) Share-based compensation     -       -       58       -       -       -       58   Net income     -       -       -       7,655       -       -       7,655   Balance, September 27 , 20 20     9,369,015     $ 94     $ 62,182     $ ( 40,581 )     5,254,081     $ ( 84,770 )   $ ( 63,075 )                           Additional                             Total       Common     Common     Paid-in     (Accumulated     Treasury Stock, at Cost     Stockholders’       Shares     Stock     Capital     Deficit)     Shares     Amount     Deficit                                                             Balance, March 31, 2019     9,336,338     $ 93     $ 60,945     $ ( 52,879 )     5,141,763     $ ( 78,303 )   $ ( 70,144 )                                                           Shares issued in connection with share-based compensation plans     32,454       1       1,077       -       -       -       1,078   Withholding tax on net share settlement of share-based compensation plans     -       -       ( 8 )     -       -       -       ( 8 ) Dividends on common stock     -       -       -       ( 2,958 )     -       -       ( 2,958 ) Share-based compensation     -       -       58       -       -       -       58   Net income     -       -       -       9,027       -       -       9,027   Balance, September 29 , 201 9     9,368,792     $ 94     $ 62,072     $ ( 46,810 )     5,141,763     $ ( 78,303 )   $ ( 62,947 )   The accompanying notes are an integral part of th ese consolidated financial statement s .   6       Nathan’s Famous, Inc. and Subsidiaries   CONSOLIDATED STATEMENTS OF CASH FLOWS Twenty-six weeks ended September 27, 2020 and September 29, 2019 (in thousands) (Unaudited)       September 2 7 , 20 20     September 29, 2019   Cash flows from operating activities:                 Net income   $ 7,655     $ 9,027   Adjustments to reconcile net income to net cash provided by operating activities                 Depreciation and amortization     612       647   Loss on disposal of property and equipment     -       2   Non-cash rental expense     127       -   Amortization of debt issuance costs     346       346   Share-based compensation expense     58       58   Income tax benefit on stock option exercises     -       228   Provision for doubtful accounts     27       23   Deferred income taxes     ( 16 )     ( 16 ) Changes in operating assets and liabilities:                 Accounts and other receivables, net     2,114       ( 2,020 ) Inventories     ( 179 )     ( 80 ) Prepaid expenses and other current assets     560       412   Other assets     9       5   Accounts payable, accrued expenses and other current liabilities     ( 2,166 )     ( 2,171 ) Deferred franchise fees     ( 83 )     ( 489 ) Other liabilities     43       123                     Net cash provided by operating activities     9,107       6,095                     Cash flows from investing activities:                 Purchase of property and equipment     ( 318 )     ( 182 )                   Net cash used in investing activities     ( 318 )     ( 182 )                   Cash flows from financing activities:                 Dividends paid to stockholders     ( 2,880 )     ( 2,958 ) Proceeds from exercise of stock options     -       1,078   Payments of withholding tax on net share settlement of share-based compensation plans     ( 6 )     ( 8 ) Repurchase of treasury stock     ( 1,501 )     -                     Net cash used in financing activities     ( 4,387 )     ( 1,888 )                   Net increase in cash and cash equivalents     4,402       4,025                     Cash and cash equivalents, beginning of period     77,117       75,446                     Cash and cash equivalents, end of period   $ 81,519     $ 79,471                     Cash paid during the period for:                 Interest   $ 4,969     $ 4,969   Income taxes   $ 2,743     $ 2,955                     Non-cash financing activity:                 Dividends declared per share   $ .70     $ .70     The accompanying notes are an integral part of these consolidated financial statements.   7     NATHAN'S FAMOUS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 27, 2020 (Unaudited)     NOTE A - BASIS OF PRESENTATION   The accompanying consolidated financial statements of Nathan's Famous, Inc. and subsidiaries (collectively “Nathan’s,” the “Company,” “we,” “us” 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.   A summary of the Company’s significant accounting policies is identified in Note B of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10 -K for the fiscal year ended March 29, 2020.   Covid- 19 Pa ndemic   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 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 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, 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. Even after these restrictions are lifted, customers may still be reluctant to return to in-restaurant dining. 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 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.   8     To help mitigate the impact of the COVID- 19 pandemic, we have taken the following decisive actions which are on-going:     ● Reduced payroll costs, through salary reductions and furloughs   ● Reduced discretionary operating expenses, including marketing and travel   ● Postponed non-essential capital spending   ● Launched curbside delivery at three of our four Company-owned restaurants   ● Introduced “ghost kitchens” 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   The Company also assessed the impact of the COVID- 19 pandemic on the estimates and assumptions used in preparing these consolidated financial statements, including, but not limited to the carrying values of Goodwill, Intangible Assets, and other Long-lived Assets. 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 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 – ADOPTION OF NEW ACCOUNTING STANDARD   In January 2017, the FASB issued an update to the accounting guidance to simplify the testing for goodwill impairment. The update removes the requirement to determine the implied fair value of goodwill to measure the amount of impairment loss, if any, under the second step of the current goodwill impairment test. A company will perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. A goodwill impairment charge will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of the goodwill. The Company adopted this guidance on March 30, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.     NOTE C – NEW ACCOUNTING STANDARDS NOT YET ADOPTED   In June 2016, the FASB issued new guidance on the measurement of credit losses, which significantly changes the impairment model for most financial instruments. Current guidance requires the recognition of credit losses based on an incurred loss impairment methodology that reflects losses once the losses are probable. Under the new standard, the Company will be required to use a current expected credit loss model (“CECL”) that will immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of this update, including trade receivables. The CECL model uses a broader range of reasonable and supportable information in the development of credit loss estimates. In November 2019, the FASB deferred the effective date for smaller reporting companies for annual reporting periods beginning after December 15, 2022. This standard is required to take effect in Nathan’s first quarter ( June 2023) of our fiscal year ending March 31, 2024. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and related disclosures.   In December 2019, the FASB issued ASU 2019 - 12, “Income Taxes (Topic 740 ): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019 - 12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019 - 12 is effective for fiscal years beginning after December 15, 2020. This standard is required to take effect in Nathan’s first quarter ( June 2021) of our fiscal year ending March 27, 2022. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and related disclosures.   The Company does not believe that any other recently issued, but not yet effective accounting standards, when adopted, will have a material effect on the accompanying consolidated financial statements.   9       NOTE D – REVENUES   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   $ 9,698     $ 16,182     $ 14,447     $ 32,295   Company-operated restaurants     2,994       5,924       4,928       10,048   Total sales     12,692       22,106       19,375       42,343                                     License royalties     8,268       5,425       18,791       14,147                                     Franchise royalties     409       1,047       519       2,027   Franchise fees     67       451       148       548   Total franchise fees and royalties     476       1,498       667       2,575                                     Advertising fund revenue     403       697       692       1,179                                     Total revenues   $ 21,839     $ 29,726     $ 39,525     $ 60,244     The following table disaggregates revenues by primary geographical market (in thousands):       Thirteen weeks ended     Twenty-six weeks ended       September 27 , 20 20     September 29, 2019     September 27 , 20 20     September 29, 2019                                     United States   $ 21,501     $ 28,235     $ 38,913     $ 57,622   International     338       1,491       612       2,622   Total revenues   $ 21,839     $ 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):       September 2 7 , 20 20     March 29, 2020   Deferred franchise fees (a)   $ 1,834     $ 1,917       (a) 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):       Twenty-six weeks ended       September 2 7 , 20 20     September 29, 2019   Deferred franchise fees at beginning of period     1,917       3,005   Additions to deferred revenue     65       59   Revenue recognized during the period     ( 148 )     ( 548 ) Deferred franchise fees at end of period   $ 1,834     $ 2,516     10     Anticipated Future Recognition of Deferred Franchise Fees   The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period (in thousands):       Estimate for fiscal year   2021 (a)   $ 114   2022     218   2023     195   2024     183   2025     175   Thereafter     949   Total   $ 1,834       (a) 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 $ 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. Diluted income per common share gives effect to all potentially dilutive common shares that were outstanding during the period. 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 and twenty-six week periods ended September 27, 2020 and September 29, 2019, respectively.   Thirteen weeks                                                     Net Income     Number of Shares     Net Income Per Share       20 20     2019     20 20     2019     20 20     2019       (in thousands)     (in thousands)                   Basic EPS                                                 Basic calculation   $ 3,655     $ 3,658       4,115       4,227     $ 0.89     $ 0.87   Effect of dilutive employee stock options     -       -       -       -       -       -   Diluted EPS                                                 Diluted calculation   $ 3,655     $ 3,658       4,115       4,227     $ 0.89     $ 0.87     Twenty-six weeks                                                     Net Income     Number of Shares     Net Income Per Share       20 20     2019     20 20     2019     20 20     2019       (in thousands)     (in thousands)                   Basic EPS                                                 Basic calculation   $ 7,655     $ 9,027       4,118       4,216     $ 1.86     $ 2.14   Effect of dilutive employee stock options     -       -       -       -       -       -   Diluted EPS                                                 Diluted calculation   $ 7,655     $ 9,027       4,118       4,216     $ 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.   11       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 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.     NOTE G – FAIR VALUE MEASUREMENTS   Nathan’s follows a three -level fair value hierarchy that prioritizes the inputs to measure fair value. This hierarchy requires entities to maximize the use of “observable inputs” and minimize the use of “unobservable inputs.” The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. 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 September 27, 2020 and March 29, 2020 were as follows (in thousands):       September 2 7 , 20 20     March 29, 2020       Face value     Fair value     Face Value     Fair value                                     Long-term debt   $ 150,000     $ 152,250     $ 150,000     $ 138,000     The Company estimates the fair value of its long-term debt based upon review of observable pricing in secondary markets as of the last trading day of the fiscal period. Accordingly, the Company classifies its long-term debt as Level 2.   The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of the instruments.   Certain non-financial assets and liabilities are measured at fair value on a non-recurring basis; 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 September 27, 2020, no fair value adjustment or material fair value measurements were required for non-financial assets or liabilities.     NOTE H – ACCOUNTS AND OTHER RECEIVABLES, NET             Accounts and other receivables, net, consist of the following (in thousands):       September 2 7 ,     March 29,       20 20     2020                     Branded product sales   $ 5,632     $ 6,789   Franchise and license royalties     3,130       4,299   Other     460       257         9,222       11,345                     Less: allowance for doubtful accounts     255       237   Accounts and other receivables, net   $ 8,967     $ 11,108     Accounts receivable are due within 30 days and are stated at amounts due from franchisees, retail licensees and Branded Product Program customers, net of an allowance for doubtful accounts. Accounts that are outstanding longer than the contractual payment terms are generally considered past due. The Company does not recognize franchise and license royalties that are not deemed to be realizable.   12     The Company individually reviews each past due account and determines its allowance for doubtful accounts by considering a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, the customer’s current and expected future ability to pay its obligation to the Company, the condition of the general economy and the industry as a whole. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings. 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 twenty-six week period ended September 27, 2020 and the fiscal year ended March 29, 2020 are as follows (in thousands):        September 2 7 , 20 20     March 29, 2020                     Beginning balance   $ 237     $ 585   Bad debt expense     27       71   Write-offs and other     ( 9 )     ( 419 ) Ending balance   $ 255     $ 237       NOTE I – PREPAID EXPENSES AND OTHER CURRENT ASSETS   Prepaid expenses and other current assets consist of the following (in thousands):       September 2 7 ,     March 29,       20 20     2020                     Real estate taxes   $ 73     $ 75   Insurance     184       263   Marketing     -       369   Other     364       474   Total prepaid expenses and other current assets   $ 621     $ 1,181       NOTE J - GOODWILL AND INTANGIBLE ASSETS   The Company determined that the impact of COVID- 19 was a triggering event that required the Company to perform a quantitative interim goodwill impairment test. The Company’s impairment assessment was performed in accordance with the accounting guidance adopted in the first quarter of fiscal 2021 that simplifies the testing for goodwill impairment, as discussed in Note B – Adoption of New Accounting Standard. 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 September 27, 2020.   The Company tests for recoverability based on the projected undiscounted cash flows to be derived from such assets. If the projected undiscounted future cash flows are less than the carrying value of the asset, the Company will record an impairment loss, if any, based on the difference between the estimated fair value and the carrying value of the asset. The Company generally measures fair value by considering discounted estimated future cash flows from such assets. Cash flow projections and fair value estimates require significant estimates and assumptions by management. Should the estimates and assumptions prove to be incorrect, the Company may be required to record impairments in future periods and such impairments could be material. 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 and twenty-six week periods ended September 27, 2020 based upon quantitative analysis.   13       NOTE L – ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES   Accrued expenses and other current liabilities consist of the following (in thousands):       September 27 ,     March 29,       20 20     2020   Payroll and other benefits   $ 1,541     $ 3,075   Accrued rebates     212       514   Rent and occupancy costs     440       84   Deferred revenue     303       797   Construction costs     66       105   Interest     4,070       4,084   Professional fees     134       194   Sales, use and other taxes     57       17   Corporate income taxes     371       176   Other     358       251   Total accrued expenses and other current liabilities   $ 7,552     $ 9,297     Other liabilities consist of the following (in thousands):       September 2 7 ,     March 29,       20 20     2020   Reserve for uncertain tax positions   $ 610     $ 567   Other     129       129   Total other liabilities   $ 739     $ 696       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 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 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. The audit is ongoing.     NOTE N – 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.   14     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 hot dogs, 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.   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 7 , 20 20     Sept. 29, 2019     Sept. 2 7 , 2 020     Sept. 29, 2019                                     Revenues                                 Branded Product Program   $ 9,698     $ 16,182     $ 14,447     $ 32,295   Product licensing     8,268       5,425       18,791       14,147   Restaurant operations     3,470       7,422       5,595       12,623   Corporate (1)     403       697       692       1,179   Total revenues   $ 21,839     $ 29,726     $ 39,525     $ 60,244                                     Income from operations                                 Branded Product Program   $ 1,252     $ 2,124     $ 1,524     $ 4,327   Product licensing     8,223       5,380       18,700       14,056   Restaurant operations     ( 138 )     2,103       ( 1,031 )     2,853   Corporate     ( 1,753 )     ( 2,241 )     ( 3,515 )     ( 4,422 ) Income from operations   $ 7,584     $ 7,366     $ 15,678     $ 16,814                                     Loss on disposal of property and equipment     -       ( 2 )     -       ( 2 ) Interest expense     ( 2,651 )     ( 2,651 )     ( 5,301 )     ( 5,301 ) Interest income     103       370       220       736   Other income, net     22       20       22       41   Income before provision for income taxes   $ 5,058     $ 5,103     $ 10,619     $ 12,288       ( 1 ) Represents advertising fund revenue     NOTE O – SHARE-BASED COMPENSATION   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 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.   15     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     Twenty-six weeks ended       Sept. 2 7 , 20 20     Sept. 29, 2019     Sept. 2 7, 20 20     Sept. 29, 2019                                     Stock options   $ 21     $ 22     $ 42     $ 43   Restricted stock     8       8       16       15   Total compensation cost   $ 29     $ 30     $ 58     $ 58     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 :       Shares     Weighted- Average Exercise Price     Weighted- Average Remaining Contractual Life     Aggregate Intrinsic Value (in thousands)                                     Options outstanding at March 29, 2020     10,000     $ 89.90       3.45       -   Granted     -       -       -       -   Exercised     -       -       -       -   Options outstanding at September 27, 2020     10,000     $ 89.90       2.96       -                                     Options exercisable at September 27, 2020     6,667     $ 89.90       2.96       -     Restricted stock:     Transactions with respect to restricted stock for the twenty-six weeks ended September 27, 2020 are as follows:       Shares     Weighted- Average Grant-date Fair value Per share   Unvested restricted stock at March 29, 2020     667     $ 89.90   Granted     -       -   Vested     ( 334 )   $ 89.90   Unvested restricted stock at September 27, 2020     333     $ 89.90       NOTE P – STOCKHOLDERS’ EQUITY   1. Dividend s   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 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. Bank National Association, as trustee and collateral trustee (see Note Q). In addition to the terms of the Indenture, the declaration and payment of any cash dividends in the future are subject to final determination of the Board and will be dependent upon our earnings and financial requirements.   16     2. Stock Incentive Plans   On September 13, 2012, the Company amended the Nathan’s Famous, Inc. 2010 Stock Incentive Plan (the “2010 Plan”) increasing the number of shares available for issuance by 250,000 shares. Shares to be issued under the 2010 Plan may be made available from authorized but unissued stock, common stock held by the Company in its treasury, or common stock purchased by the Company on the open market or otherwise. The number of shares issuable and the grant, purchase or exercise price of outstanding awards are subject to adjustment in the amount that the Company’s Compensation Committee considers appropriate upon the occurrence of certain events, including stock dividends, stock splits, mergers, consolidations, reorganizations, recapitalizations, or other capital adjustments. In the event that the Company issues restricted stock awards pursuant to the 2010 Plan, each share of restricted stock would reduce the amount of available shares for issuance by either 3.2 shares for each share of restricted stock granted or 1 share for each share of restricted stock granted.   On September 18, 2019, the Company’s shareholders approved the Nathan’s Famous, Inc. 2019 Stock Incentive Plan (the “2019 Plan”). The 2019 Plan became effective as of July 1, 2020 ( the "Effective Date"). 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: (a) 369,584 shares of common stock under the 2019 Plan which includes: (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 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.   3. Stock Repurchase Programs   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 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. Purchases under the Company’s stock repurchase program may be made from time to time, depending on market conditions, in open market or privately-negotiated transactions, at prices deemed appropriate by management. 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 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 – LONG-TERM DEBT   Long-term debt consists of the following (in thousands):       September 27 ,     March 29,       20 20     2020                     6.625 % Senior Secured Notes due 2025   $ 150,000     $ 150,000   Less: unamortized debt issuance costs     ( 3,514 )     ( 3,860 ) Long-term debt, net   $ 146,486     $ 146,140     17     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”). The 2025 Notes were issued pursuant to an indenture dated as of November 1, 2017 by and among the Company, certain of its wholly-owned subsidiaries and U.S. 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 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. The Redemption occurred on November 16, 2017.   The 2025 Notes bear interest at 6.625% per annum, payable semi-annually on May 1 st and November 1 st of each year. 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.   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: (i) incur additional indebtedness; (ii) pay dividends or make other distributions on, redeem or repurchase, capital stock; (iii) make investments or other restricted payments; (iv) create or incur certain liens; (v) incur restrictions on the payment of dividends or other distributions from its restricted subsidiaries; (vi) enter into certain transactions with affiliates; (vii) sell assets; or (viii) effect a consolidation or merger. Certain Restricted Payments which may be made or indebtedness incurred by Nathan’s or its Restricted Subsidiaries may require compliance with the following financial ratios:   Fixed Charge Coverage Ratio : the ratio of the Consolidated Cash Flow to the Fixed Charges for the relevant period, currently set at 2.0 to 1.0 in the Indenture. The Fixed Charge Coverage Ratio applies to determining whether additional Restricted Payments may be made, certain additional debt may be incurred and acquisitions may be made.   Priority Secured Leverage Ratio : the ratio of (a) Consolidated Net Debt outstanding as of such date that is secured by a Priority Lien to (b) Consolidated Cash Flow of Nathan’s for the Test Period then most recently ended, in each case with such pro forma adjustments as are appropriate; currently set at 0.40 to 1.00 in the Indenture.   Secured Leverage Ratio : the ratio of (a) Consolidated Net Debt outstanding as of such date that is secured by a Lien on any property of Nathan’s or any Guarantor to (b) Consolidated Cash Flow of Nathan’s for the Test Period then most recently ended, in each case with such pro forma adjustments as are appropriate. The Secured Leverage Ratio under the Indenture is 3.75 to 1.00 and applies if Nathan’s wants to incur additional debt on the same terms as the 2025 Notes.   The Indenture also contains customary events of default, including, among other things, failure to pay interest, failure to comply with agreements related to the Indenture, failure to pay at maturity or acceleration of other indebtedness, failure to pay certain judgments, and certain events of insolvency or bankruptcy. Generally, if any event of default occurs, the Trustee or the holders of at least 25 % in principal amount of the 2025 Notes may declare the 2025 Notes due and payable by providing notice to the Company. In case of default arising from certain events of bankruptcy or insolvency, the 2025 Notes will become immediately due and payable.   The 2025 Notes are general senior secured obligations, are fully and unconditionally guaranteed by substantially all of the Company’s wholly-owned subsidiaries and rank pari passu in right of payment with all of the Company’s existing and future indebtedness that is not subordinated, are senior in right of payment to any of the Company’s existing and future subordinated indebtedness, are structurally subordinated to any existing and future indebtedness and other liabilities of the Company’s subsidiaries that do not guarantee the 2025 Notes, and are effectively junior to all existing and future indebtedness that is secured by assets other than the collateral securing the 2025 Notes.   Pursuant to the terms of a collateral trust agreement, the liens securing the 2025 Notes and the guarantees will be contractually subordinated to the liens securing any future credit facility.   18     The 2025 Notes and the guarantees are the Company and the guarantors’ senior secured obligations and will rank:     ● senior in right of payment to all of the Company and the guarantors’ future subordinated indebtedness;         ● effectively senior to all unsecured senior indebtedness to the extent of the value of the collateral securing the 2025 Notes and the guarantees;         ● pari passu with all of the Company and the guarantors’ other senior indebtedness;         ● effectively junior to any future credit facility to the extent of the value of the collateral securing any future credit facility and the 2025 Notes and the guarantees and certain other assets;         ● effectively junior to any of the Company and the guarantors’ existing and future indebtedness that is secured by assets other than the collateral securing the 2025 Notes and the guarantees to the extent of the value of any such assets; and         ● structurally subordinated to the indebtedness of any of the Company’s current and future subsidiaries that do not guarantee the 2025 Notes.   The Company may redeem the 2025 Notes in whole or in part prior to November 1, 2020, at a redemption price of 100 % of the principal amount of the 2025 Notes redeemed plus the Applicable Premium, plus accrued and unpaid interest. An Applicable Premium is the greater of 1 % of the principal amount of the 2025 Notes; or the excess of the present value at such redemption date of (i) the redemption price of the 2025 Notes at November 1, 2020 plus (ii) all required interest payments due on the 2025 Notes through November 1, 2020 ( excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over the then outstanding principal amount of the 2025 Notes.   Prior to November 1, 2020, if using the net cash proceeds of certain equity offerings, the Company has the option to redeem up to 35 % of the aggregate principal amount of the 2025 Notes at a redemption price equal to 106.625% of the principal amount of the 2025 Notes redeemed, plus accrued and unpaid interest and any additional interest.   On or after November 1, 2020, the Company may redeem some or all of the 2025 Notes at a decreasing premium over time, plus accrued and unpaid interest as follows:       PERCENTAGE   YEAR         On or after November 1, 2020 and prior to November 1, 2021     103.313 % On or after November 1, 2021 and prior to November 1, 2022     101.656 % On or after November 1, 2022     100.000 %   In certain circumstances involving a change of control, the Company will be required to make an offer to repurchase all or, at the holder’s option, any part, of each holder’s 2025 Notes pursuant to the offer described below (the “Change of Control Offer”). 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 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. We have recorded the 2025 Notes at cost.   Effective June 1, 2020, Nathan’s Board of Directors authorized the repurchase of up to $ 10,000,000 of the 2025 Notes by the Company (at a price equal to or less than par) from time to time. There is no set time limit on the repurchases.     NOTE R – LEASES   The Company is party as lessee to various leases for its Company-operated restaurants and lessee/sublessor to one franchised location property, including land and buildings, as well as leases for its corporate office and certain office equipment.   19     Company as lessee   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 ended     Thirteen weeks ended     T wenty-six weeks ended     Twenty-six weeks ended       September 27 , 20 20     September 29, 2019     September 27 , 20 20     September 29, 2019   Statement of Earnings                                 Operating lease cost   $ 396     $ 278     $ 811     $ 560   Short term lease cost     -       4       -       10   Variable lease cost     377       537       715       960   Less: Sublease income, net     ( 22 )     ( 20 )     ( 22 )     ( 41 )                                   Total net lease cost (a)   $ 751     $ 799     $ 1,504     $ 1,489       (a) 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):       T hirteen week s ended     Thirteen weeks ended     T wenty-six week s ended     Twenty-six weeks ended       September 27 , 20 20     September 29, 2019     September 27 , 20 20     September 29, 2019                                     Operating cash flows from operating leases   $ 202     $ 131     $ 407     $ 291     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):         Operating leases     7.7             Weighted average discount rate:         Operating leases     8.883 %   Future lease commitments to be paid and received by the Company as of September 27, 2020 were as follows (in thousands):       Payments     Receipts               Operating Leases     Subleases     Net Leases                             Fiscal year:                         2021 (a)   $ 744     $ 77     $ 667   2022     1,837       247       1,590   2023     1,849       168       1,681   2024     1,774       169       1,605   2025     1,678       169       1,509   Thereafter     5,474       352       5,122   Total lease commitments   $ 13,356     $ 1,182     $ 12,174   Less: Amount representing interest     3,648                   Present value of lease liabilities (b)   $ 9,708                       (a) Represents future lease commitments to be paid and received by the Company for the remainder of the 2021 fiscal year. Amount does not include $ 633   of lease commitments paid and received by the Company for the twenty-six week period ended September 27, 2020.     (b) The present value of minimum operating lease payments of $ 1,821 and $ 7,887   are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively.   20     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 ended September 27 , 20 20     Thirteen weeks ended September 29, 2019     Twenty-six weeks ended September 27 , 20 20     Twenty-six weeks ended September 29, 2019                                     Operating lease income, net   $ 22     $ 20     $ 22     $ 41       NOTE S – COMMITMENTS AND CONTINGENCIES   1. Commitments    On February 27, 2017, a wholly-owned subsidiary of the Company executed a Guaranty of Lease (the “Brooklyn Guaranty”) in connection with its re-franchising of a restaurant located in Brooklyn, New York. The Company is obligated to make payments under the Brooklyn Guaranty in the event of a default by the tenant/franchisee. The Brooklyn Guaranty has an initial term of 10 years and one 5 -year option and is limited to 24 months of rent for the first three years of the term. 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 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.   2. Contingencies   The Company and its subsidiaries are from time to time involved in ordinary and routine litigation. Management presently believes that the ultimate outcome of these proceedings, individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, cash flows or results of operations. Nevertheless, litigation is subject to inherent uncertainties and unfavorable rulings could occur. An unfavorable ruling could include money damages and, in such event, could result in a material adverse impact on the Company’s results of operations for the period in which the ruling occurs.   21