What changed in this filing

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Item 1. Financial Statements

2021-11-05 compared with 2021-08-06 · 256 added, 173 removed, 503 unchanged (46% of the section changed)

4 unchanged sentences

CONSOLIDATED BALANCE SHEETS

June 27, 2021 and March 28, 2021

September 26, 2021 and March 28, 2021

(in thousands, except share and per share amounts)

June 27, 2021

September 26, 2021

March 28, 2021

(Unaudited)  

ASSETS  

27 unchanged sentences

14,593  

Long-term debt, net of unamortized debt issuance costs of $2,996 and $3,169 , respectively (Note Q)

Long-term debt, net of unamortized debt issuance costs of $ 2,823  

and $ 3,169 , respectively (Note Q)

147,177  

10 unchanged sentences

30,000,000 shares authorized;

9,369,015 shares issued;

and 4,114,934 shares outstanding at June 27, 2021 and March 28, 2021, respectively

9,369,235 and 9,369,015 shares issued;

and 4,115,154 and 4,114,934 shares outstanding at September 26, 2021 and March 28, 2021, respectively

Additional paid-in capital

7 unchanged sentences

22,292  

Treasury stock, at cost, 5,254,081 shares at June 27, 2021 and March 28, 2021, respectively

Treasury stock, at cost, 5,254,081 shares at September 26, 2021 and March 28, 2021

( 84,770 )  

9 unchanged sentences

CONSOLIDATED STATEMENTS OF EARNINGS

Thirteen weeks ended June 27, 2021 and June 28, 2020

Thirteen and Twenty-six weeks ended September 26, 2021 and September 27, 2020

(in thousands, except per share amounts)

June 27, 2021

June 28, 2020

$ 19,325  

$ 6,683  

Thirteen weeks ended

Twenty-six weeks ended

September 26,

September 27,

September 26,

September 27,

License royalties

10,682  

10,523  

Franchise fees and royalties

1 unchanged sentence

Total revenues

31,319  

17,686  

COSTS AND EXPENSES

Cost of sales

15,365  

Restaurant operating expenses

3 unchanged sentences

Total costs and expenses

20,617  

Income from operations

10,702  

Interest expense

( 2,650 )  

Interest income

2 unchanged sentences

Provision for income taxes

$ 5,763  

$ 4,000  

PER SHARE INFORMATION

1 unchanged sentence

Income per share:

$ 1.40  

Dividends declared per share

4 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’

Thirteen weeks ended June 27, 2021 and June 28, 2020

(in thousands, except share and per share amounts)

Thirteen weeks ended September 26, 2021 and September 27, 2020

(in thousands, except share amounts)

Treasury Stock, at Cost

Stockholders’

Balance, March 28, 2021

9,369,015  

$ 62,240  

$ ( 40,042 )  

5,254,081  

$ ( 84,770 )  

Balance, June 27, 2021

Shares issued in connection with share-based compensation plans

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

Dividends on common stock

( 1,440 )  

Share-based compensation

Balance, September 26, 2021

Treasury Stock, at Cost

Stockholders’

Balance, June 28, 2020

9,369,015  

$ 62,269  

$ ( 35,719 )  

5,254,081  

$ ( 84,770 )  

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, 2020

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

Nathan ’

s Famous, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’

Twenty-six weeks ended September 26, 2021 and September 27, 2020

(in thousands, except share amounts)

Treasury Stock, at Cost

1 unchanged sentence

Balance, March 28, 2021

9,368,792  

$ 62,130  

$ ( 45,356 )  

5,227,405  

$ ( 83,269 )  

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 26, 2021

Treasury Stock, at Cost

Stockholders’

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

26,676  

( 1,501 )  

Dividends on common stock

( 1,440 )  

Share-based compensation

Balance, June 28, 2020

9,368,792  

$ 62,159  

$ ( 42,796 )  

5,254,081  

$ ( 84,770 )  

Balance, September 27, 2020

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

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Thirteen weeks ended June 27, 2021 and June 28, 2020

(in thousands, except per share amounts)

June 27, 2021

June 28, 2020

Twenty-six weeks ended September 26, 2021 and September 27, 2020

(in thousands)

September 26,

September 27,

Cash flows from operating activities:

$ 5,763  

$ 4,000  

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

7 unchanged sentences

Accounts and other receivables, net

( 7,532 )  

( 127 )  

Prepaid expenses and other current assets

5 unchanged sentences

Purchase of property and equipment

( 175 )  

Net cash used in investing activities

( 175 )  

Cash flows from financing activities:

Dividends paid to stockholders

( 1,440 )  

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

Repurchase of treasury stock

Net cash used in financing activities

( 1,440 )  

Net decrease in cash and cash equivalents

( 1,538 )  

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

81,064  

77,117  

Cash and cash equivalents, end of period

$ 79,526  

$ 76,941  

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 27, 2021

September 26, 2021

NOTE A - BASIS OF PRESENTATION

4 unchanged sentences

“us”

or “our”) as of and for the thirteen week periods ended June 27, 2021 and June 28, 2020 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 26, 2021 and September 27, 2020 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 U.S.

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

Securities and Exchange Commission.

4 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 27, 2021 ( “fiscal 2022 period”) and continues into the second quarter of fiscal 2022.

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 26, 2021 ( “fiscal 2022 period”) and continues into the third quarter of fiscal 2022.

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 the ultimate duration, scope and severity of the COVID- 19 pandemic or its ultimate impact on our business in the short or long-term.

During the fiscal 2022 period, the number of COVID- 19 cases continued to stabilize with approved vaccines being more widely distributed and administered and, as a result, more regions continued to loosen restrictions, adhering to state and local guidelines.

We cannot predict the ultimate duration, scope and severity of the COVID- 19 pandemic or its ultimate impact on our business in the short or long-term, which may be impacted by variants of the COVID- 19 virus and the adoption rate of the COVID- 19 vaccines in the areas in which the Company operates.

NOTE B –

22 unchanged sentences

NOTE D –

The Company’s disaggregated revenues for the thirteen weeks ended June 27, 2021 and June 28, 2020 are as follows (in thousands):

Thirteen weeks ended                  

June 27, 2021

June 28, 2020

The Company’s disaggregated revenues for the thirteen and twenty-six weeks ended September 26, 2021 and September 27, 2020 are as follows (in thousands):

Thirteen weeks ended

Twenty-six weeks ended

September 26,

September 27,

September 26,

September 27,

Branded Products

1 unchanged sentence

$ 9,698  

$ 35,059  

$ 14,447  

Company-operated restaurants

23,500  

12,692  

42,825  

19,375  

License royalties

1 unchanged sentence

18,791  

Franchise royalties

Franchise fees

4 unchanged sentences

$ 21,839  

$ 64,197  

$ 39,525  

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

Thirteen weeks ended  

June 27, 2021

June 28, 2020

Thirteen weeks ended

Twenty-six weeks ended

September 26,

September 27,

September 26,

September 27,

United States

1 unchanged sentence

$ 21,501  

$ 62,479  

$ 38,913  

International

2 unchanged sentences

$ 21,839  

$ 64,197  

$ 39,525  

Contract balances

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

June 27, 2021

March 28, 2021

Receivables, which are included in “Accounts and other receivables, net”

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

September 26,

Receivables, which are included in “Accounts and other receivables, net”

Deferred franchise fees (b)

3 unchanged sentences

Deferred franchise fees of $ 351 and $ 1,768  

as of June 27, 2021 and $ 237 and $ 1,536 as of March 28, 2021 are included in Deferred franchise fees – current and long term, respectively.

as of September 26, 2021 and $ 237 and $ 1,536 as of March 28, 2021 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, 2020

Twenty-six weeks ended

September 26,

September 27,

Deferred franchise fees at beginning of period

$ 1,773  

$ 1,917  

Additions to deferred revenue

8 unchanged sentences

$ 2,119  

(a) Represents franchise fees expected to be recognized for the remainder of the 2022 fiscal year, which includes international development fees expected to be recognized over the duration of one year or less.

Amount does not include $ 107 of franchise fee revenue recognized for the thirteen weeks ended June 27, 2021.

Represents franchise fees expected to be recognized for the remainder of the 2022 fiscal year, which includes international development fees expected to be recognized over the duration of one year or less.

Amount does not include $ 237 of franchise fee revenue recognized for the twenty-six weeks ended September 26, 2021.

NOTE E –

3 unchanged sentences

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 27, 2021 and June 28, 2020, 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 26, 2021 and September 27, 2020, respectively.

Thirteen weeks

6 unchanged sentences

$ 0.86  

Effect of dilutive employee stock options

$ 0.89  

Effect of dilutive employee stock options

Diluted calculation

2 unchanged sentences

$ 0.86  

Options to purchase 10,000 shares of common stock in the thirteen week periods ended June 27, 2021 and June 28, 2020 were not included in the computation of diluted EPS because the exercise price exceeded the average market price of common shares during these periods.

$ 0.89  

Twenty-six weeks

Number of Shares

(in thousands)

Basic calculation

$ 9,308  

$ 7,655  

$ 2.26  

$ 1.86  

Effect of dilutive employee stock options

Diluted calculation

$ 9,308  

$ 7,655  

$ 2.26  

$ 1.86  

Options to purchase 20,000 shares of common stock in the thirteen and twenty-six week periods ended September 26, 2021 were not included in the computation of diluted EPS because the exercise price exceeded the average market price of common shares during the period.

Options to purchase 10,000 shares of common stock in the thirteen and twenty-six week periods ended September 27, 2020 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 –

1 unchanged sentence

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 27, 2021 and March 28, 2021.

At June 27, 2021 and March 28, 2021, 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 26, 2021 and March 28, 2021.

At September 26, 2021 and March 28, 2021, 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 27, 2021 and March 28, 2021 were as follows (in thousands):

June 27, 2021

The face value and fair value of long-term debt as of September 26, 2021 and March 28, 2021 were as follows (in thousands):

September 26, 2021

March 28, 2021

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 27, 2021 no fair value adjustment or material fair value measurements were required for non-financial assets or liabilities.

At September 26, 2021, 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 26,

Branded product sales

15 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 27, 2021 and the fiscal year ended March 28, 2021 are as follows (in thousands):

Changes in the Company’s allowance for doubtful accounts for the twenty-six week period ended September 26, 2021 and the fiscal year ended March 28, 2021 are as follows (in thousands):

September 26,

Beginning balance

6 unchanged sentences

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

September 26,

Real estate taxes

1 unchanged sentence

$ 1,325  

NOTE J - GOODWILL AND INTANGIBLE ASSETS

NOTE J - GOODWILL AND INTANGIBLE ASSET

The Company has continued to monitor the economic uncertainty as a result of COVID- 19 and has determined that the impact of COVID- 19 was a triggering event that required the Company to perform a quantitative interim goodwill impairment test.

Based on the quantitative test performed, management determined that the Company’s goodwill has not been impaired as of June 27, 2021 and, as a result, no impairment charge was recorded for the thirteen week periods ended June 27, 2021 and June 28, 2020.

Based on the quantitative test performed, management determined that the Company’s goodwill has not been impaired as of September 26, 2021 and September 27, 2020, and as a result, no impairment charge was recorded for the thirteen and twenty-six week periods ended September 26, 2021 and 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.

2 unchanged sentences

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, the Company determined that the definite-lived intangible asset was recoverable and no impairment charge was recorded for the thirteen week periods ended June 27, 2021 and June 28, 2020.

Based on the quantitative test performed, 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 26, 2021 and September 27, 2020.

NOTE K - LONG LIVED ASSETS

3 unchanged sentences

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

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 27, 2021.

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

3 unchanged sentences

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.

As a result of the Company’s analysis, no long-lived assets were deemed to be permanently impaired as of June 27, 2021 and June 28, 2020.

As a result of the Company’s analysis, no long-lived assets were deemed to be impaired as of September 26, 2021 and September 27, 2020, and, as a result, no impairment charge was recorded for the thirteen and twenty-six week periods ended September 26, 2021 and September 27, 2020.

NOTE L –

1 unchanged sentence

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

September 26,

Payroll and other benefits

12 unchanged sentences

Other liabilities consist of the following (in thousands):

September 26,

Reserve for uncertain tax positions

3 unchanged sentences

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 27, 2021 and June 28, 2020 reflect effective tax rates of 28.9 % and 28.1 %, respectively.

The amount of unrecognized tax benefits at June 27, 2021 was $ 422,000 all of which would impact Nathan’s effective tax rate, if recognized.

As of June 27, 2021, Nathan’s had $ 282,000 of accrued interest and penalties in connection with unrecognized tax benefits.

The income tax provisions for the twenty-six week periods ended September 26, 2021 and September 27, 2020 reflect effective tax rates of 28.0 % and 27.9 %, respectively.

The amount of unrecognized tax benefits at September 26, 2021 was $ 433,000 all of which would impact Nathan’s effective tax rate, if recognized.

As of September 26, 2021, Nathan’s had $ 293,000 of accrued interest and penalties in connection with unrecognized tax benefits.

NOTE N –

1 unchanged sentence

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.

Nathan’s sells its products directly to consumers through its restaurant operations segment consisting of Company-operated and franchised restaurants, including virtual or “ghost”

kitchens, 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.

11 unchanged sentences

Thirteen weeks ended

June 27, 2021

June 28, 2020

Twenty-six weeks ended  

September 26, 2021

September 27, 2020

September 26, 2021

September 27, 2020

Branded Product Program

$ 19,063  

$ 9,698  

$ 35,059  

$ 14,447  

Product licensing

18,340  

18,791  

Restaurant operations

1 unchanged sentence

Total revenues

$ 32,878  

$ 21,839  

$ 64,197  

$ 39,525  

Income from operations

Branded Product Program

$ 1,161  

$ 1,252  

$ 3,415  

$ 1,524  

Product licensing

18,249  

18,700  

Restaurant operations

( 138 )  

( 2,028 )  

( 1,753 )  

( 4,215 )  

Income from operations

$ 7,439  

$ 7,584  

$ 18,141  

$ 15,678  

Interest expense

( 2,651 )  

( 5,301 )  

Interest income

1 unchanged sentence

Income before provision for income taxes

( 1 )  

$ 4,821  

$ 5,058  

$ 12,925  

$ 10,619  

Represents advertising fund revenue

1 unchanged sentence

SHARE-BASED COMPENSATION

Total share-based compensation during the thirteen week periods ended June 27, 2021 and June 28, 2020 was $ 29,000 .

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

As of June 27, 2021, there was $ 25,000 of unamortized compensation expense related to share-based incentive awards.

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

Total share-based compensation during each of the thirteen week periods ended September 26, 2021 and September 27, 2020 was $ 29,000 .

Total share-based compensation during each of the twenty-six week periods ended September 26, 2021 and September 27, 2020 was $ 58,000 .

As of September 26, 2021, there was $ 126,000 of unamortized compensation expense related to share-based incentive awards.

We expects to recognize this expense over approximately twenty-three 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 27, 2021

June 28, 2020

Twenty-six weeks ended  

September 26,

September 27,

September 26,

September 27,

Stock options

2 unchanged sentences

Stock options:

There were no new share-based awards granted during the thirteen week period ended June 27, 2021.

Transactions with respect to stock options for the thirteen weeks ended June 27, 2021 are as follows:

During the twenty-six week period ended September 26, 2021, the Company granted options to purchase 10,000 shares at an exercise price of $ 68.50 per share, all of which expire five years from the date of grant.

All such options vest ratably over a four -year period commencing August 10, 2021.

The weighted-average option fair values, as determined using the Black-Scholes option valuation model, and the assumptions used to estimate these values for stock options granted during the twenty-six week period ended September 26, 2021 are as follows:

Weighted-average option fair values

$ 13.04  

Expected life (years)

Interest rate

Dividend yield

The expected dividend yield is based on historical and projected dividend yields.

The Company estimates volatility based primarily on historical monthly price changes of the Company’s stock equal to the expected life of the option.

The risk-free interest rate is based on the U.S.

Treasury yield in effect at the time of grant.

The expected option term is the number of years the Company estimates the options will be outstanding prior to exercise based on expected historical exercise patterns and employment termination behavior.

Transactions with respect to stock options for the twenty-six weeks ended September 26, 2021 are as follows :

Contractual Life

3 unchanged sentences

$ 89.90  

Options outstanding at June 27, 2021

10,000  

$ 68.50  

Options exercisable at June 27, 2021

Options outstanding at September 26, 2021

20,000  

$ 79.20  

Options exercisable at September 26, 2021

10,000  

$ 89.90  

Restricted stock:

Transactions with respect to restricted stock for the thirteen weeks ended June 27, 2021 are as follows:

Transactions with respect to restricted stock for the twenty-six weeks ended September 26, 2021 are as follows:

Unvested restricted stock at March 28, 2021

$ 89.90  

Unvested restricted stock at June 27, 2021

( 333 )  

$ 89.90  

Unvested restricted stock at September 26, 2021

NOTE P –

STOCKHOLDERS’

Effective June 11, 2021, the Board declared its first quarterly cash dividend of $ 0.35 per share for fiscal year 2022, aggregating $ 1,440,000 , which was paid on June 25, 2021 to stockholders of record as of the close of business on June 21, 2021.

Effective August 6, 2021, the Board declared its second quarterly cash dividend of $ 0.35 per share for fiscal year 2022 payable on September 3, 2021 to stockholders of record as of the close of business on August 23, 2021.

Effective June 11, 2021, the Board of Directors (the “Board”) declared its first quarterly cash dividend of $ 0.35 per share for fiscal year 2022, aggregating $ 1,440,000 , which was paid on June 25, 2021 to stockholders of record as of the close of business on June 21, 2021.

Effective August 6, 2021, the Board declared its second quarterly cash dividend of $ 0.35 per share for fiscal year 2022, aggregating $ 1,440,000 , which was paid on September 3, 2021 to stockholders of record as of the close of business on August 23, 2021.

Effective November 5, 2021 the Board declared its third quarterly cash dividend of $ 0.35 per share payable on December 3, 2021 to stockholders of record as of the close of business on November 22, 2021.

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

9 unchanged sentences

(a) 369,584 shares of common stock under the 2019 Plan which includes:

(i) shares that had 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 expired unexercised, or were otherwise forfeited, up to a maximum of an additional 11,000 shares.

As of June 27, 2021, 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 2019 Plan.

(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 26, 2021, there were up to 198,584 shares available to be issued for future option grants or up to 181,683 shares of restricted stock that may be granted under the 2019 Plan.

Stock Repurchase Programs

During the period from October 2001 through June 27, 2021, 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 27, 2021, we did not repurchase any shares of common stock.

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 27, 2021, Nathan’s had repurchased 1,066,450 shares at a cost of $ 37,108,000 under the sixth stock repurchase plan.

At June 27, 2021 there were 133,550 shares remaining to be repurchased pursuant to the sixth stock repurchase plan.

During the period from October 2001 through September 26, 2021, 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.

During the twenty-six week period ended September 26, 2021, we did not repurchase any shares of common stock.

In 2016, the Board 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 26, 2021, Nathan’s had repurchased 1,066,450 shares at a cost of $ 37,108,000 under the sixth stock repurchase plan.

At September 26, 2021 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 expired on August 12, 2020.

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

During the fiscal 2021 period, 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.

2 unchanged sentences

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

September 26,

6.625% Senior Secured Notes due 2025

9 unchanged sentences

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 redeemed such notes (the "Redemption"), paid a portion of a special $ 5.00 per share cash dividend to Nathan's stockholders of record, and used 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, 2021 the Company paid its first semi-annual interest payment of fiscal 2022.

The Company made its required semi-annual interest payments of $ 4,968,750 on May 1, 2021 and November 1, 2021.

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 27, 2021, Nathan’s was in compliance with all covenants associated with the 2025 Notes.

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

As of September 26, 2021, 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:

36 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.

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.

Effective June 1, 2020, the Board 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.

2 unchanged sentences

Company as lessee

The components of the net lease cost for the thirteen week periods ended June 27, 2021 and June 28, 2020 were as follows (in thousands):

The components of the net lease cost for the thirteen and twenty-six week periods ended September 26, 2021 and September 27, 2020 were as follows (in thousands):

Thirteen weeks ended

June 27, 2021

June 28, 2020

Twenty-six weeks ended

September 26,

September 27,

September 26,

September 27,

Statement of Earnings

Operating lease cost

Short term lease cost

Variable lease cost

1 unchanged sentence

( 22 )  

( 21 )  

Total net lease cost (a)

the thirteen week periods ended June 27, 2021 and June 28, 2020 include $ 700 and $ 579 , net recorded to “Restaurant Operating Expenses” for leases for Company-operated restaurants, $ 174 and $ 174 recorded to “General and administrative expenses” for leases for corporate offices and equipment, and $ 16 and $ - recorded to “Other income, net” for leased properties that are leased to franchisees.

$ 1,790  

$ 1,504  

The thirteen and twenty-six week periods ended September 26, 2021 and September 27, 2020 include $ 770 , net and $ 1,470 , net and $ 614 , net and $ 1,194 , net, respectively, recorded to “Restaurant Operating Expenses” for leases for Company-operated restaurants;

$ 167 and $ 341 , and $ 159 and $ 332 , respectively, recorded to “General and administrative expenses” for leases for corporate offices and equipment;

and $ 5 and $ 21 , and $ 22 and $ 22 , 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 27, 2021

June 28, 2020

Twenty-six weeks ended

September 26,

September 27,

September 26,

September 27,

Operating cash flows from operating leases

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

27, 2021  were as follows:

The weighted average remaining lease term and weighted-average discount rate for operating leases as of September 26, 2021 

were as follows:

Weighted average remaining lease term (years):

Operating leases

Weighted average discount rate:

Operating leases

Future lease commitments to be paid and received by the Company as of June 27, 2021 were as follows (in thousands):

Future lease commitments to be paid and received by the Company as of September 26, 2021 were as follows (in thousands):

Operating Leases

$ 1,298  

$ 1,127  

Total lease commitments

1 unchanged sentence

$ 10,600  

$ 11,044  

Amount representing interest

2 unchanged sentences

Represents future lease commitments to be paid and received by the Company for the remainder of the 2022 fiscal year.

Amount does not include $ 457 of lease commitments paid and received by the Company for the thirteen week period ended June 27, 2021.

(b) The present value of minimum operating lease payments of $ 1,842 and $ 7,214  

Amount does not include $ 890  

of lease commitments paid and received by the Company for the twenty-six week period ended September 26, 2021.

The present value of minimum operating lease payments of $ 1,846 and $ 6,867  

are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively on the Consolidated Balance Sheet.

Company as lessor

The components of lease income for the thirteen week periods ended June 27, 2021 and June 28, 2020 were as follows (in thousands):

The components of net lease income for the thirteen week and twenty-six week periods ended September 26, 2021 and September 27, 2020 were as follows (in thousands):

Thirteen weeks ended

June 27, 2021

June 28, 2020

Twenty-six weeks ended

September 26,

September 27,

September 26,

September 27,

Operating lease income, net

1 unchanged sentence

COMMITMENTS AND CONTINGENCIES

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.

The Brooklyn Guaranty has an initial term of 10 years and one 5 -year renewal 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 June 27, 2021, Nathan’s has recorded a liability of $ 113,000 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 26, 2021, Nathan’s has recorded a liability of $ 113,000 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.

Contingencies

7 unchanged sentences

Securities and Exchange Commission.

There were no subsequent events that required recognition or disclosure.

There were no subsequent events that require recognition or disclosure.

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