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Item 1. Financial Statements

2024-11-07 compared with 2024-08-08 · 201 added, 124 removed, 320 unchanged (50% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

June 30, 2024 and March 31, 2024

September 29, 2024 and March 31, 2024

(in thousands, except share and per share amounts)

June 30, 2024

March 31, 2024

September 29,

CURRENT ASSETS

9 unchanged sentences

CURRENT LIABILITIES

Current portion of long-term debt

Accounts payable

13 unchanged sentences

9,374,130 shares issued;

and 4,084,615 shares outstanding at June 30, 2024 and March 31, 2024

and 4,084,615 shares outstanding at September 29, 2024 and March 31, 2024

Additional paid-in capital

Accumulated deficit

Retained earnings (Accumulated deficit)

Stockholders’ equity before treasury stock

Treasury stock, at cost, 5,289,515 shares at June 30, 2024 and March 31, 2024

Treasury stock, at cost, 5,289,515 shares at September 29, 2024 and March 31, 2024

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

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

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

Nathan ’ s Famous, Inc.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF EARNINGS

Thirteen weeks ended June 30, 2024 and June 25, 2023

(in thousands, except per share amounts)

June 30, 2024

June 25, 2023

Thirteen weeks ended

Twenty-six weeks ended

September 29, 2024

September 24, 2023

September 29, 2024

September 24, 2023

Branded Products

13 unchanged sentences

Interest expense

Loss on debt extinguishment (Note P)

Interest and dividend income

5 unchanged sentences

Net income per share:

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

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

Nathan ’ s Famous, Inc.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ DEFICIT

Thirteen weeks ended June 30, 2024 and June 25, 2023

Thirteen weeks ended September 29, 2024 and September 24, 2023

(in thousands, except share and per share amounts)

1 unchanged sentence

Stockholders’

Balance, March 31, 2024

Balance, June 30, 2024

Dividends on common stock ($ 0.50 per share)

Share-based compensation

Balance, September 29, 2024

Treasury Stock, at Cost

Stockholders’

Balance, June 25, 2023

Dividends on common stock ($ 0.50 per share)

Share-based compensation

Balance, September 24, 2023

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

Nathan ’ s Famous, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ DEFICIT

Twenty-six weeks ended September 29, 2024 and September 24, 2023

(in thousands, except share and per share amounts)

Treasury Stock, at Cost

1 unchanged sentence

Balance, March 31, 2024

Dividends on common stock ($ 1.00 per share)

Share-based compensation

Balance, September 29, 2024

Treasury Stock, at Cost

Stockholders’

Balance, March 26, 2023

Cumulative effect of adoption of ASU 2016-13

1 unchanged sentence

Share-based compensation

Balance, June 25, 2023

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

Balance, September 24, 2023

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

Nathan ’ s Famous, Inc.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Thirteen weeks ended June 30, 2024 and June 25, 2023

(in thousands, except per share amounts)

June 30, 2024

June 25, 2023

Twenty-six weeks ended September 29, 2024 and September 24, 2023

(in thousands)

September 29,

September 24,

Cash flows from operating activities:

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

Loss on debt extinguishment

Depreciation and amortization

14 unchanged sentences

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from credit facility

Repayment of Senior Secured Notes

Debt issuance costs

Dividends paid to stockholders

Net cash used in financing activities

Net increase in cash and cash equivalents

2 unchanged sentences

Cash paid during the period for:

See Note S for supplemental cash flow information.

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

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

NATHAN'S FAMOUS, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 29, 2024

(in thousands, except per share amounts)

1 unchanged sentence

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 week periods ended June 30, 2024 and June 25, 2023 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

and subsidiaries (collectively “Nathan’s,” the “Company,” “we,” “us” or “our”) as of and for the thirteen and twenty-six week periods ended September 29, 2024 and September 24, 2023 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

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.

2 unchanged sentences

The 2025 fiscal year will end on March 30, 2025 and will contain 52 weeks.

Certain information and footnote disclosures normally included in financial statements in accordance with GAAP 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 GAAP have been omitted pursuant to the requirements of the U.S.

Securities and Exchange Commission (“SEC”).

7 unchanged sentences

The purpose of the guidance is to enable investors to better understand an entity’s overall performance and assess potential future cash flows.

The guidance is effective for fiscal years beginning December 15, 2023, and interim periods within fiscal years beginning December 15, 2024.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning December 15, 2024.

For the Company, annual reporting requirements will be effective for our fiscal year 2025 beginning on April 1, 2024 and interim reporting requirements will be effective beginning with our fourth quarter of fiscal year 2025.

10 unchanged sentences

NOTE C – REVENUES

The Company’s disaggregated revenues for the thirteen weeks ended June 30, 2024 and June 25, 2023 are as follows (in thousands):

The Company’s disaggregated revenues for the thirteen and twenty-six weeks ended September 29, 2024 and September 24, 2023 are as follows (in thousands):

Thirteen weeks ended

June 30, 2024

June 25, 2023

Twenty-six weeks ended

September 29,

September 24,

September 29,

September 24,

Branded Products

7 unchanged sentences

Thirteen weeks ended

June 30, 2024

June 25, 2023

Twenty-six weeks ended

September 29, 2024

September 24, 2023

September 29, 2024

September 24, 2023

United States

3 unchanged sentences

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

June 30, 2024

September 29, 2024

March 31, 2024

2 unchanged sentences

“Accrued expenses and other current liabilities” (b)

Deferred franchise fees of $ 322 and $ 824 as of June 30, 2024 and $ 327 and $ 899 as of March 31, 2024 are included in Deferred franchise fees – current and long term, respectively.

Includes $ 473 of deferred license royalties and $ 250 of deferred advertising fund revenue as of June 30, 2024 and $ 875 of deferred license royalties and $ 500 of deferred advertising fund revenue as of March 31, 2024.

Deferred franchise fees of $ 318 and $ 783 as of September 29, 2024 and $ 327 and $ 899 as of March 31, 2024 are included in Deferred franchise fees – current and long term, respectively.

Includes $ 100 of deferred license royalties and $ 500 of deferred advertising fund revenue as of September 29, 2024 and $ 875 of deferred license royalties and $ 500 of deferred advertising fund revenue as of March 31, 2024.

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

Thirteen weeks ended

June 30, 2024

June 25, 2023

Twenty-six weeks ended

September 29, 2024

September 24, 2023

Deferred franchise fees at beginning of period

3 unchanged sentences

Significant changes in deferred revenues are as follows (in thousands):

Thirteen weeks ended

June 30, 2024

June 25, 2023

Twenty-six weeks ended

September 29, 2024

September 24, 2023

Deferred revenues at beginning of period

New deferrals due to cash received and other

Revenue recognized during the period

4 unchanged sentences

Represents franchise fees expected to be recognized for the remainder of the 2025 fiscal year, which includes international development fees expected to be recognized over the duration of one year or less.

Amount does not include $ 92 of franchise fee revenue recognized for the thirteen weeks ended June 30, 2024.

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

Amount does not include $ 200 of franchise fee revenue recognized for the twenty-six weeks ended September 29, 2024.

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

NOTE D – INCOME PER SHARE

2 unchanged sentences

Dilutive common shares used in the computation of diluted net income per common share result from the assumed exercise of stock options, 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 30, 2024 and June 25, 2023, respectively (in thousands, except per share amounts):

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 29, 2024 and September 24, 2023, respectively (in thousands, except per share amounts):

Thirteen weeks ended

Twenty-six weeks ended

September 29,

September 24,

September 29,

September 24,

Common Stock:

5 unchanged sentences

NOTE E – 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.

Cash equivalents at June 30, 2024 were $ 10,000 .

The Company considers money market funds or short term investments purchased with an original maturity of three months or less to be cash equivalents.

Cash equivalents at September 29, 2024 were $ 18,000 .

The Company did not have any cash equivalents at March 31, 2024.

The Company’s cash balances principally consist of cash in bank and money market accounts.

At June 30, 2024 and March 31, 2024, substantially all of the Company’s cash balances are in excess of Federal government insurance limits.

At September 29, 2024 and March 31, 2024, substantially all of the Company’s cash balances are in excess of Federal government insurance limits.

The Company has not experienced any losses in such accounts.

6 unchanged sentences

● Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability and reflect the Company’s own assumptions

The face value and fair value of long-term debt as of June 30, 2024 and March 31, 2024 were as follows (in thousands):

June 30, 2024

March 31, 2024

Long-term debt

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 nature of those items.

The carrying amounts reported in the Company’s Consolidated Balance Sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term nature of those items.

The carrying amount of our long-term debt (see NOTE P – LONG TERM DEBT to the unaudited consolidated financial statements in the Quarterly Report on Form 10-Q) also approximates fair value since such borrowings bear interest at variable market rates and is categorized as Level 2.

The face and fair value of the 6.625% Senior Secured Notes due 2025 (“2025 Notes”) as of March 31, 2024 was $ 60,000 and $ 59,903 , respectively, and was based upon review of observable pricing in secondary markets as of March 31, 2024.

Accordingly, the Company classified it as Level 2.

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 June 30, 2024, no fair value adjustment or material fair value measurements were required for non-financial assets or liabilities.

At September 29, 2024, no fair value adjustment or material fair value measurements were required for non-financial assets or liabilities.

NOTE G – ACCOUNTS AND OTHER RECEIVABLES, NET

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

September 29,

Branded product sales

10 unchanged sentences

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

Changes in the Company’s allowance for credit losses for the thirteen week period ended June 30, 2024 and the fiscal year ended March 31, 2024 are as follows (in thousands):

Changes in the Company’s allowance for credit losses for the twenty-six week period ended September 29, 2024 and the fiscal year ended March 31, 2024 are as follows (in thousands):

September 29,

Beginning balance

5 unchanged sentences

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

September 29,

Real estate taxes

Deferred financing costs

Total prepaid expenses and other current assets

6 unchanged sentences

Should the estimates and assumptions prove to be incorrect, the Company may be required to record an impairment charge in future periods and such impairment could be material.

There have been no significant events or changes in circumstances during the thirteen weeks ended June 30, 2024 that would indicate that the carrying amount of the Company’s intangible asset may be impaired as of June 30, 2024.

There have been no significant events or changes in circumstances during the thirteen and twenty-six week periods ended September 29, 2024 that would indicate that the carrying amount of the Company’s intangible asset may be impaired as of September 29, 2024.

NOTE J - LONG LIVED ASSETS

8 unchanged sentences

Should the estimates and assumptions prove to be incorrect, the Company may be required to record impairment charges in future periods and such impairments could be material.

There have been no significant events or changes in circumstances during the thirteen weeks ended June 30, 2024 that would indicate that the carrying amount of the Company’s long-lived assets may be impaired as of June 30, 2024.

There have been no significant events or changes in circumstances during the thirteen and twenty-six week periods ended September 29, 2024 that would indicate that the carrying amount of the Company’s long-lived assets may be impaired as of September 29, 2024.

NOTE K – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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

Dividend payable

September 29,

Payroll and other benefits

7 unchanged sentences

NOTE L – INCOME TAXES

The income tax provisions for the thirteen week periods ended June 30, 2024 and June 25, 2023 reflect effective tax rates of 27.4 % and 27.1 %, respectively.

The effective income tax rate for the thirteen weeks ended June 30, 2024 reflected $ 3,507 of income tax expense recorded on $ 12,784 of pre-tax income.

The effective income tax rate for the thirteen weeks ended June 25, 2023 reflected $ 2,744 of income tax expense recorded on $ 10,132 of pre-tax income.

The effective tax rates are higher than the United States Federal statutory rates primarily due to state and local taxes.

The amount of unrecognized tax benefits included in Other liabilities at June 30, 2024 and March 31, 2024 was $ 485 and $ 465 , respectively, all of which would impact the Company’s effective rate, if recognized.

As of June 30, 2024 and March 31, 2024, the Company had approximately $ 367 and $ 345 , respectively, of accrued interest and penalties in connection with unrecognized tax benefits.

The income tax provisions for the thirteen weeks ended September 29, 2024 and September 24, 2023 reflect effective tax rates of 25.5 % and 27.4 %, respectively.

The effective income tax rate for the thirteen weeks ended September 29, 2024 reflected $ 2,069 of income tax expense recorded on $ 8,099 of pre-tax income.

The effective income tax rate for the thirteen weeks ended September 24, 2023 reflected $ 2,153 of income tax expense recorded on $ 7,864 of pre-tax income.

The income tax provisions for the twenty-six weeks ended September 29, 2024 and September 24, 2023 reflect effective tax rates of 26.7 % and 27.2 %, respectively.

The effective income tax rate for the twenty-six weeks ended September 29, 2024 reflected $ 5,576 of income tax expense recorded on $ 20,883 of pre-tax income.

The effective income tax rate for the twenty-six weeks ended September 24, 2023 reflected $ 4,897 of income tax expense recorded on $ 17,996 of pre-tax income.

The effective income tax rates for the thirteen and twenty-six week periods ended September 29, 2024 and September 24, 2023 were higher than the United States statutory income tax rate primarily due to state and local taxes as well as non-deductible compensation under the Internal Revenue Code Section 162(m).

The amount of unrecognized tax benefits included in Other liabilities at September 29, 2024 and March 31, 2024 was $ 494 and $ 465 , respectively, all of which would impact the Company’s effective rate, if recognized.

As of September 29, 2024 and March 31, 2024, the Company had approximately $ 379 and $ 345 , respectively, accrued for the payment of interest and penalties in connection with unrecognized tax benefits.

NOTE M – SEGMENT INFORMATION

7 unchanged sentences

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 and dividend 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.

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, compliance costs and the operating results of the Advertising Fund.

Interest expense, loss on debt extinguishment, interest and dividend 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

June 30, 2024

June 25, 2023

Twenty-six weeks ended

September 29,

September 24,

September 29,

September 24,

Branded Product Program

9 unchanged sentences

Interest expense

Loss on debt extinguishment

Interest and dividend income

3 unchanged sentences

NOTE N – SHARE-BASED COMPENSATION

Total share-based compensation expense during the thirteen week periods ended June 30, 2024 and June 25, 2023 was $ 188 and $ 177 , respectively.

Total share-based compensation expense during the thirteen and twenty-six week periods ended September 29, 2024 and September 24, 2023 was $ 229 and $ 182 , and $ 417 and $ 359 , respectively.

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

As of June 30, 2024, there was $ 2,473 of unamortized compensation expense related to share-based awards.

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

As of September 29, 2024, there was $ 3,857 unamortized compensation expense related to share-based awards.

We expect to recognize this expense over approximately 42 months, which represents the weighted average remaining requisite service periods for such awards.

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

Compensation expense recognized under all share-based awards is as follows (in thousands):

Compensation expense under all share-based awards is as follows (in thousands):

Thirteen weeks ended

June 30, 2024

June 25, 2023

Twenty-six weeks ended

September 29,

September 24,

September 29,

September 24,

Stock options

2 unchanged sentences

Stock options

There were no new share-based awards granted during the thirteen week period ended June 30, 2024.

Transactions with respect to stock options for the thirteen weeks ended June 30, 2024 are as follows:

During the twenty-six week period ended September 29, 2024, the Company granted options to purchase 110,000 shares at an exercise price of $ 74.47 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 19, 2024.

The weighted average option fair value, 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 29, 2024 are as follows:

Weighted average option fair values

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 29, 2024 are as follows :

Contractual Life

1 unchanged sentence

Options outstanding at March 31, 2024

Options outstanding at June 30, 2024

Options exercisable at June 30, 2024

Options outstanding at September 29, 2024

Options exercisable at September 29, 2024

Restricted stock units

Transactions with respect to restricted stock units for the thirteen weeks ended June 30, 2024 are as follows:

Transactions with respect to restricted stock units for the twenty-six weeks ended September 29, 2024 are as follows:

Unvested restricted stock units at March 31, 2024

Unvested restricted stock units at June 30, 2024

Unvested restricted stock units at September 29, 2024

NOTE O – STOCKHOLDERS’ EQUITY

Effective June 12, 2024, the Company’s Board of Directors (the “Board”) declared its first quarterly cash dividend of $ 0.50 per share for fiscal 2025 which was paid on July 2, 2024 to stockholders of record as of the close of business on June 24, 2024 .

Effective August 8, 2024, the Board declared its second quarterly cash dividend of $ 0.50 per share for fiscal 2025 payable on September 6, 2024 to stockholders of record as of the close of business on August 26, 2024 .

Our ability to pay future dividends is limited by the terms of our debt instruments.

In addition to the terms of our debt instruments, 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.

Effective August 8, 2024, the Board declared its second quarterly cash dividend of $ 0.50 per share for fiscal 2025 which was paid on September 6, 2024 to stockholders of record as of the close of business on August 26, 2024 .

Effective November 7, 2024, the Board declared its third quarterly cash dividend of $ 0.50 per share for fiscal 2025 payable on December 6, 2024 to stockholders of record as of the close of business on November 25, 2024 .

Our ability to pay future dividends is limited by the terms of our Credit Agreement (as defined in NOTE P – LONG TERM DEBT to the unaudited consolidated financial statements in the Quarterly Report on Form 10-Q).

In addition to the terms of our Credit Agreement, 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.

Stock Repurchase Programs

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 June 30, 2024, Nathan’s had repurchased 1,101,884 shares at a cost of $ 39,000 under the sixth stock repurchase plan.

At June 30, 2024 there were 98,116 shares remaining to be repurchased pursuant to the sixth stock repurchase plan.

As of September 29, 2024, Nathan’s had repurchased 1,101,884 shares at a cost of $ 39,000 under the sixth stock repurchase plan.

At September 29, 2024 there were 98,116 shares remaining to be repurchased pursuant to the sixth stock repurchase plan.

The plan does not have a set expiration date.

2 unchanged sentences

NOTE P – LONG-TERM DEBT

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

June 30, 2024

March 31, 2024

The carrying amounts of the Company’s long-term debt were as follows (in thousands):

September 29,

6.625 % Senior Secured Notes due 2025

SOFR Term Loan Borrowings with an effective interest rate of 6.805 %

Unamortized debt issuance costs

Total debt, net of debt issuance costs

Current portion of long-term debt

Long-term debt, net

Subsequent to the quarter ending June 30, 2024, on July 10, 2024, the Company entered into a new five-year unsecured Credit Agreement with Citibank, N.A., (the “Credit Agreement”) that includes a term loan facility and revolving credit facility and used $60,000 of term loan borrowings under the Credit Agreement to refinance and redeem its outstanding Senior Secured Notes due 2025.

The transaction did not add any additional new debt to the Company’s Consolidated Balance Sheet.

See NOTE T – SUBSEQUENT EVENTS in the accompanying consolidated financial statements for additional information on the Credit Agreement.

The Company’s mandatory debt principal repayments as of September 29, 2024 were as follows (in thousands):

Remainder of 2025

On July 10, 2024 (the “Effective Date”), the Company entered into a five-year unsecured Credit Agreement (the “Credit Agreement”) among the Company, as borrower, direct and indirect subsidiaries of the Company, as guarantors, the lenders from time to time party thereto (the “Lenders”) and Citibank, N.A., as administrative agent, swing line lender, L/C issuer and a Lender (capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Credit Agreement).

The Credit Agreement provides for a term loan facility (“Term Loan”) of $ 60,000 and a revolving credit facility (“Revolving Loan”) of up to $ 10,000 .

The Credit Agreement also provides that the Company has the right from time to time during the term of the Credit Agreement to request the Lenders for incremental revolving loan borrowing increases of up to an additional $ 10,000 in the aggregate, subject to, among other items, the Lenders agreeing to lend any such additional amounts and compliance with terms specified in the Credit Agreement.

The Credit Agreement matures on July 10, 2029.

The Company borrowed $ 60,000 in Term Loan borrowings on the Effective Date to refinance and redeem its outstanding 2025 Notes.

The Company will use any Revolving Loan borrowings under the Credit Agreement for working capital and general corporate purposes.

In connection with the refinancing, the Company recorded a loss on extinguishment of debt of $ 334 during the quarter ending September 29, 2024 that reflected the write-off of the remainder of the debt issuance costs on the 2025 Notes.

Additionally, in connection with the refinancing, the Company incurred $ 431 of debt issuance costs on the Term Loan borrowings that were capitalized and will be amortized over the term of the Credit Agreement.

Term Loan and Revolving Loan borrowings under the Credit Agreement will bear interest at a rate per annum, at the Company’s option, of (a) for Base Rate Loans, the Base Rate plus the Applicable Rate of 0.00 % or (b) for Term SOFR Loans, Term SOFR plus the Applicable Rate of 1.40 % for one (1), three (3) or six (6) month periods, as selected by the Company in its Loan Notice.

The Company will be subject to a commitment fee of 0.20 % per annum on the daily amount of the undrawn portion of the Revolving Committed Amount.

The interest rate on the Term Loan borrowings at September 29, 2024 was 6.805 %.

The Credit Agreement contains customary affirmative covenants and negative covenants and requires the Company to maintain a Consolidated Fixed Charge Ratio not to exceed 1.20 to 1.00 and a Consolidated Net Leverage Ratio not to exceed 3.00 to 1.00, in each case, beginning with the fiscal quarter ending September 29, 2024.

The Company was in compliance with the covenants of the Credit Agreement at September 29, 2024.

The outstanding Term Loan borrowings under the Credit Agreement are payable in equal quarterly installments of 1.0 % of the original principal amount of the Term Loan, or $ 600 , beginning September 30, 2024, with the balance payable on the final maturity date.

The outstanding Term Loan borrowings and the Revolving Loan borrowings under the Credit Agreement are voluntarily prepayable by the Company without penalty or premium, provided, that each of the following shall require a mandatory prepayment of outstanding Term Loan borrowings and Revolving Loan borrowings by the Company as follows:

(i) 100 % of any Net Cash Proceeds in excess of $ 2,000 individually or in the aggregate over the term of the Credit Agreement in respect of any Extraordinary Receipt provided that the Company shall be permitted to reinvest such Net Cash Proceeds in accordance with the Credit Agreement, (ii) 100 % of any Net Cash Proceeds of an Equity Issuance, (iii) 100 % of any Net Cash Proceeds from a Debt Issuance and (iv) 100 % of any Net Cash Proceeds from the Disposition of certain assets individually, or in the aggregate, in excess of $ 2,000 in any fiscal year provided that the Company shall be permitted to reinvest such Net Cash Proceeds in accordance with the Credit Agreement.

Subsequent to the quarter ending September 29, 2024, on October 10, 2024, the Company made a voluntary principal prepayment of $ 8,000 of its Term Loan borrowings and expects to incur a loss on debt extinguishment of approximately $ 55 in the third quarter of fiscal 2025 related to the write-off of a portion of previously recorded debt issuance costs on the Term Loan borrowings.

NOTE Q – LEASES

1 unchanged sentence

Company as lessee

The components of the net lease cost for the thirteen week periods ended June 30, 2024 and June 25, 2023 were as follows (in thousands):

The components of the net lease cost for the thirteen and twenty-six week periods ended September 29, 2024 and September 24, 2023 were as follows (in thousands):

Thirteen weeks ended

June 30, 2024

June 25, 2023

Twenty-six weeks ended

September 29,

September 24,

September 29,

September 24,

Operating lease cost

2 unchanged sentences

Total net lease cost

The components of the net lease cost on the Consolidated Statement of Earnings for the thirteen week periods ended June 30, 2024 and June 25, 2023 were as follows (in thousands):

The components of the net lease cost on the Consolidated Statements of Earnings for the thirteen and twenty-six week periods ended September 29, 2024 and September 24, 2023 (in thousands):

Thirteen weeks ended

June 30, 2024

June 25, 2023

Twenty-six weeks ended

September 29,

September 24,

September 29, 2024

September 24,

Restaurant operating expenses

2 unchanged sentences

Total net lease cost

Cash paid for amounts included in the measurement of lease liabilities for the thirteen week periods ended June 30, 2024 and June 25, 2023 were as follows (in thousands):

Cash paid for amounts included in the measurement of lease liabilities for the thirteen and twenty-six week periods ended September 29, 2024 and September 24, 2023 were as follows (in thousands):

Thirteen weeks ended

June 30, 2024

June 25, 2023

Twenty-six weeks ended

September 29,

September 24,

September 29,

September 24,

Operating cash flows from operating leases

The weighted average remaining lease term and weighted average discount rate for operating leases as of June 30, 2024 were as follows:

The weighted average remaining lease term and weighted average discount rate for operating leases as of September 29, 2024 were as follows:

Weighted average remaining lease term (years):

Weighted average discount rate:

Future lease commitments to be paid and received by the Company as of June 30, 2024 were as follows (in thousands):

Future lease commitments to be paid and received by the Company as of September 29, 2024 were as follows (in thousands):

Operating Leases

3 unchanged sentences

Represents future lease commitments to be paid and received by the Company for the remainder of the 2025 fiscal year.

Amount does not include $ 466 of lease commitments paid and received by the Company for the thirteen week period ended June 30, 2024.

Amount does not include $ 908 of lease commitments paid and received by the Company for the twenty-six week period ended September 29, 2024.

The present value of minimum operating lease payments of $ 1,907 and $ 4,084 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 30, 2024 and June 25, 2023 were as follows (in thousands):

The components of net lease income for the thirteen and twenty-six week periods ended September 29, 2024 and September 24, 2023 were as follows (in thousands):

Thirteen weeks ended

June 30, 2024

June 25, 2023

Twenty-six weeks ended

September 29,

September 24,

September 29,

September 24,

Operating lease income, net

5 unchanged sentences

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.

NOTE S – SUPPLEMENTAL CASH FLOW INFORMATION

Non-cash investing activities

Accruals for purchases of property and equipment of $ 27 are included in Accrued expenses and other current liabilities on the Consolidated Balance Sheet at June 30, 2024.

Non-cash financing activities

Dividends declared but not yet paid of $ 2,043 are included in Accrued expenses and other current liabilities on the Consolidated Balance Sheet at June 30, 2024.

NOTE T – SUBSEQUENT EVENTS

On July 10, 2024 (the “Effective Date”), the Company entered into a five-year unsecured Credit Agreement (the “Credit Agreement”) among the Company, as borrower, direct and indirect subsidiaries of the Company, as guarantors, the lenders from time to time party thereto (the “Lenders”) and Citibank, N.A., as administrative agent, swing line lender, L/C issuer and a Lender (capitalized terms used and not otherwise defined herein in NOTE T – SUBSEQUENT EVENTS shall have the meanings set forth in the Credit Agreement).

The Credit Agreement provides for a term loan facility (“Term Loan”) of $ 60,000 and a revolving credit facility (“Revolving Loan”) of up to $ 10,000 .

The Credit Agreement matures on July 10, 2029.

The Company borrowed $ 60,000 in Term Loan borrowings on the Effective Date to refinance and redeem its outstanding Senior Secured Notes due 2025.

The Company will use any Revolving Loan borrowings under the Credit Agreement for working capital and general corporate purposes.

Term Loan and Revolving Loan borrowings under the Credit Agreement will bear interest at a rate per annum, at the Company’s option, of (a) for Base Rate Loans, the Base Rate plus the Applicable Rate (as defined in the Credit Agreement) of 0.00 % or (b) for Term SOFR Loans, Term SOFR plus the Applicable Rate of 1.40 %.

The Company will be subject to a commitment fee of 0.20 % per annum on the daily amount of the undrawn portion of the Revolving Committed Amount.

NOTE S – SUBSEQUENT EVENTS

The Company evaluated subsequent events through the date the consolidated financial statements were issued and filed with the SEC.

Except for the voluntary principal prepayment of $ 8,000 of its Term Loan borrowings under the Credit Agreement (see NOTE P – LONG TERM DEBT to the unaudited consolidated financial statements in the Quarterly Report on Form 10-Q), there were no additional subsequent events that required 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