6 unchanged sentences
Not applicable.
−Removed: Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
−Removed: Market Information and Dividend Policy
−Removed: Our common stock is quoted on the NASDAQ Global Market (“Nasdaq”) under the symbol “NATH.” As of June 5, 2025 we had approximately 290 shareholders of record, excluding shareholders whose shares were held by brokerage firms, depositories and other institutional firms in “street name” for their customers.
−Removed: The Company paid quarterly cash dividends of $0.50 per share of common stock during each of the first, second, third and fourth quarters of fiscal 2024 and 2025.
−Removed: Effective June 10, 2025, the Board declared its first quarterly cash dividend of $0.50 per share for fiscal year 2026 which is payable on July 1, 2025 to stockholders of record as of the close of business on June 23, 2025.
−Removed: Our ability to pay future dividends is limited by the terms of our Credit Agreement.
−Removed: In addition, the 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 and the terms of our Credit Agreement.
−Removed: In addition to the terms of the Credit Agreement, the payment of any cash dividends in the future will be dependent upon our earnings and financial requirements and the terms of any other indebtedness that we may incur in the future and there can be no assurance that we will declare and pay any dividends subsequent to the July 1, 2025 dividend.
−Removed: Issuer Purchases of Equity Securities
−Removed: The Company did not repurchase any of its common stock during the quarter ended March 30, 2025.
−Removed: Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.
−Removed: Recent Events Affecting Our Results of Operations
−Removed: Inflationary Pressures
−Removed: Inflationary pressures impacted our consolidated results of operations during fiscal 2025, and we anticipate continued inflationary pressures on commodity prices, including beef and beef trimmings, as well as labor inflation during fiscal 2026.
−Removed: In general, we have been able to offset some of these cost increases resulting from inflation by increasing prices at our Company-owned restaurants and entering into sales agreements with our Branded Product Program customers that are correlated to our cost of beef and beef trimmings.
−Removed: We continue to monitor these inflationary pressures and will attempt to implement mitigation measures as needed.
−Removed: Inherent volatility in commodity markets, including beef and beef trimmings, could have a significant impact on our results of operations.
−Removed: Delays in implementing price increases, competitive pressures, recession fears, a decline in consumer spending levels and other factors may limit our ability to implement further price increases in the future.
−Removed: Uncertainty in the current macroeconomic environment, including the impact of tariffs, may have an adverse impact on our sales or increase our cost of goods sold.
−Removed: Refinancing of Senior Secured Notes due 2025
−Removed: On July 10, 2024, the Company entered into a five-year unsecured Credit Agreement (the “Credit Agreement”) with Citibank, N.A.
−Removed: and borrowed $60,000,000 in Term Loan borrowings to refinance and redeem our outstanding 6.625% Senior Secured Notes due 2025 (the “2025 Notes”).
−Removed: See NOTE J – LONG TERM DEBT to the consolidated financial statements and “Liquidity and Capital Resources” for additional information on the Credit Agreement and refinancing.
−Removed: Our future results may be impacted by our debt service and repayment obligations under our Credit Agreement.
−Removed: Business Overview
−Removed: We are engaged primarily in the marketing of the “Nathan’s Famous” brand and the sale of products bearing the “Nathan’s Famous” trademarks through several different channels of distribution.
−Removed: Historically, our business has been the operation and franchising of quick-service restaurants featuring Nathan’s World Famous Beef Hot Dogs, crinkle-cut French fries, and a variety of other menu offerings.
−Removed: Our Company-owned and franchised restaurants operate under the name “Nathan’s Famous,” the name first used at our original Coney Island restaurant opened in 1916.
−Removed: Nathan’s product licensing program sells packaged hot dogs, frozen crinkle-cut French fries and additional products to retail customers through supermarkets, grocery channels and club stores for off-site consumption.
−Removed: Our Branded Product Program enables foodservice retailers and others to sell some of Nathan’s proprietary products outside of the realm of a traditional franchise relationship.
−Removed: In conjunction with this program, purchasers of Nathan’s products are granted a limited use of the Nathan’s Famous trademark with respect to the sale of the purchased products, including Nathan’s World Famous Beef Hot Dogs, certain other proprietary food items and paper goods.
−Removed: Our Branded Menu Program is a limited franchise program, under which foodservice operators may sell a greater variety of Nathan’s Famous menu items than under the Branded Product Program.
−Removed: Our revenues are generated primarily from selling products under Nathan’s Branded Product Program, operating Company-owned restaurants, licensing agreements for the sale of Nathan’s products within supermarkets, grocery stores and club stores, the manufacture of certain proprietary spices by third parties and the royalties, fees and other sums we can earn from franchising the Nathan’s restaurant concept (including the Branded Menu Program and virtual kitchens).
−Removed: The following summary reflects the openings and closings of the Nathan’s franchise system (including the Branded Menu Program) for the fiscal years ended March 30, 2025 and March 31, 2024.
−Removed: Beginning balance
−Removed: Ending balance (a)
−Removed: Units operating pursuant to our Branded Product Program and our virtual kitchens are excluded.
−Removed: At March 30, 2025, our franchise system consisted of 230 Nathan’s franchised locations, including 121 Branded Menu locations located in 17 states, and 12 foreign countries.
−Removed: We also operate four Company-owned restaurants (including one seasonal unit), within the New York metropolitan area.
−Removed: Our primary focus is to expand the market penetration of the Nathan’s Famous brand by increasing the number of distribution points for our products across all of our business platforms, including our Licensing Program for distribution of Nathan’s Famous branded consumer packaged goods, our Branded Products Program for distribution of Nathan’s Famous branded bulk products to the foodservice industry, and our namesake restaurant system comprised of both Company-owned and franchised restaurants, including virtual kitchens.
−Removed: The primary drivers of our growth have been our Licensing and Branded Product Programs, which are the largest contributors to the Company’s revenues and profits.
−Removed: While we do not expect to significantly increase the number of Company-owned restaurants, we may opportunistically and strategically invest in a small number of new units as showcase locations for prospective franchisees and master developers as we seek to grow our franchise system.
−Removed: As described in Item 1A.
−Removed: “Risk Factors” and other sections in this Annual Report on Form 10-K for the year ended March 30, 2025, our future results could be impacted by many developments including the impact of the inflationary pressures on our business, as well as our dependence on Smithfield Foods, Inc.
−Removed: as our principal supplier, and the dependence of our licensing revenue and overall profitability on our agreement with Smithfield Foods, Inc.
−Removed: Our future operating results could be impacted by supply constraints on beef or by increased costs of beef, beef trimmings and other commodities due to inflationary pressures compared to earlier periods.
−Removed: Critical Accounting Estimates
−Removed: Our consolidated financial statements and the notes to our consolidated financial statements contain information that is pertinent to management’s discussion and analysis.
−Removed: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities.
−Removed: These estimates and assumptions are inherently uncertain and require additional management judgment.
−Removed: Results can materially differ when varying assumptions are applied.
−Removed: We consider the following estimates to be the most critical in understanding the assumptions used by management in preparing the consolidated financial statements due to the subjectivity and sensitivity of the methods used in determining the related estimates.
−Removed: The following discussion should be read in conjunction with the consolidated financial statements included in Part IV, Item 15 of this Form 10-K.
−Removed: Impairment of Long-Lived Assets
−Removed: Long-lived assets include property, equipment and right-of-use assets for operating leases with finite useful lives.
−Removed: Impairment losses are recorded on long-lived assets whenever impairment factors are determined to be present.
−Removed: The Company considers a history of restaurant operating losses to be its primary indicator of potential impairment for individual restaurant locations.
−Removed: The Company tests the recoverability of its long-lived assets with finite useful lives whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.
−Removed: The Company tests for recoverability based on the projected undiscounted cash flows to be generated by our individual Company-owned restaurants.
−Removed: If the projected undiscounted future cash flows are less than the carrying value of the assets, the Company will record an impairment loss, if any, based on the difference between the estimated fair value and the carrying value of the assets.
−Removed: The Company generally measures fair value by considering discounted estimated future cash flows from such assets.
−Removed: Key inputs to determine estimated future cash flows include forecasted sales growth at individual Company-owned restaurants and a discount rate.
−Removed: We use a weighted average cost of capital discount rate to calculate future cash flows.
−Removed: During recent years, we have faced periods of inflation, led by labor inflation and commodity inflation.
−Removed: Some of the impacts of inflation have been offset by menu price increases.
−Removed: Whether we are able and/or choose to offset the effects of inflation may affect our forecasted sales growth at individual Company-owned restaurants.
−Removed: No long-lived assets were deemed impaired during the fiscal years ended March 30, 2025 and March 31, 2024.
−Removed: Cash flow projections and fair value estimates require significant estimates and assumptions by management.
−Removed: 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.
−Removed: Impairment of Intangible Asset
−Removed: The Company’s intangible asset consists of the trademarks, and the trade name and other intellectual property in connection with the Arthur Treacher’s Fish & Chips brand.
−Removed: The Company determined its intangible asset to have a finite useful life based on the expected future use of this intangible asset.
−Removed: Based upon the review of its Arthur Treacher’s Fish & Chips co-branding agreements, the Company determined that the remaining useful lives of these agreements is three years concluding in fiscal 2028 and the intangible asset is subject to annual amortization.
−Removed: The Company’s definite-lived intangible asset is tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired.
−Removed: 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.
−Removed: Assumptions used to determine projected undiscounted cash flows include future trends and projected sales.
−Removed: 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 fiscal years ended March 30, 2025 and March 31, 2024.
−Removed: Cash flow and sales projections require significant estimates and assumptions by management.
−Removed: 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.
−Removed: Current Expected Credit Losses ( “ CECL ” )
−Removed: The CECL reserve methodology requires companies to measure expected credit losses on financial instruments based on the total estimated amount to be collected over the lifetime of the instrument.
−Removed: Under CECL, reserves may be established against financial asset balances even if the risk of loss is remote.
−Removed: The Company is exposed to credit losses through its trade accounts receivable.
−Removed: The Company calculates an allowance for credit losses by pooling its trade accounts receivable based on similar risk characteristics and delinquency status under an aging method at the measurement date.
−Removed: The risk characteristics the Company generally reviews when analyzing its trade accounts receivable pools include the type of receivable (for example, franchise receivable, license receivable, Branded Product Program receivable), payment terms, the Company’s previous loss history, current and future economic conditions and the length of time accounts receivables are past due.
−Removed: For those trade accounts receivable that no longer share similar risk characteristics with its pool and potential loss is evident, a specific reserve is recorded.
−Removed: Reserves can be subject to a degree of judgment and can be subject to macroeconomic factors, including inflation and forecasts of future economic conditions.
−Removed: A change in these factors could have a material impact on the allowance for credit losses.
−Removed: Customer Rebates
−Removed: The Company recognizes Branded Product Program revenue at the net sales price, which includes certain estimates for customer rebates.
−Removed: The provision for Branded Product Program rebates is recorded as a reduction from gross sales and reserves for customer rebates are shown as an increase in accrued customer rebates, which is included in current liabilities.
−Removed: Our estimates are based on historical experience, contractual provisions and other factors that we believe are reasonable under the circumstances.
−Removed: Historically, actual customer rebates have not differed materially from estimated amounts.
−Removed: The Company’s current provision for income taxes is based upon its estimated taxable income in each of the jurisdictions in which it operates, after considering the impact on taxable income of temporary differences resulting from different treatment of items for tax and financial reporting purposes.
−Removed: Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and any operating loss or tax credit carryforwards.
−Removed: Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled.
−Removed: The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary differences become deductible.
−Removed: Should management determine that it is more likely than not that some portion of the deferred tax assets will not be realized, a valuation allowance against the deferred tax assets would be established in the period such determination was made.
−Removed: We believe that the judgments and estimates made are reasonable.
−Removed: However, if actual results differ from estimated amounts recorded, such differences will impact the income tax provision in the period in which the determination is made.
−Removed: Uncertain Tax Positions
−Removed: The Company has recorded liabilities for underpayment of income taxes and related interest and penalties for uncertain tax positions based on the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements.
−Removed: The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.
−Removed: The tax benefits recognized in the consolidated financial statements from such position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.
−Removed: Nathan’s recognizes accrued interest and penalties associated with unrecognized tax benefits as part of the income tax provision.
−Removed: New Accounting Standards Not Yet Adopted
−Removed: See Note B item 24 to the consolidated financial statements included in Part IV, Item 15 of this Form 10-K for a summary of new accounting standards applicable to us.
−Removed: Results of Operations
−Removed: Fiscal year ended March 30, 2025 compared to fiscal year ended March 31, 2024
−Removed: Total revenues increased by approximately 7% to $148,182,000 for the fifty-two weeks ended March 30, 2025 (“fiscal 2025”) as compared to $138,610,000 for the fifty-three weeks ended March 31, 2024 (“fiscal 2024”).
−Removed: Foodservice sales from the Branded Product Program increased by approximately 6% to $91,828,000 for the fiscal 2025 period as compared to $86,489,000 for the fiscal 2024 period.
−Removed: We estimate that the additional week of operations during fiscal 2024 represented approximately $1,202,000 of additional Branded Product Program sales.
−Removed: During the fiscal 2025 period, the total volume of hot dogs sold in the Branded Product Program increased by approximately 1.2% as compared to the fiscal 2024 period.
−Removed: Our average selling prices increased by approximately 5% as compared to the fiscal 2024 period.
−Removed: Total Company-owned restaurant sales increased by approximately 5% to $12,714,000 during the fiscal 2025 period as compared to $12,103,000 during the fiscal 2024 period.
−Removed: We estimate that the additional week of operations during fiscal 2024 represented approximately $120,000 of additional sales.
−Removed: Restaurant sales were primarily impacted by higher sales at our Coney Island locations due to an increase in our average check.
−Removed: License royalties increased by approximately 11% to $37,418,000 in the fiscal 2025 period as compared to $33,581,000 in the fiscal 2024 period.
−Removed: We do not believe that the additional week of operations during fiscal 2024 had a significant impact on license royalties as our licensees continued to report based upon their fiscal reporting periods.
−Removed: Total royalties earned on sales of hot dogs from our license agreement with Smithfield Foods, Inc.
−Removed: at retail and foodservice, increased to $33,589,000 for the fiscal 2025 period as compared to $30,068,000 for the fiscal 2024 period.
−Removed: The increase is due to an 11% increase in retail volume.
−Removed: The net selling price at retail was comparable year over year.
−Removed: The foodservice business earned higher royalties of $109,000 as compared to the fiscal 2024 period.
−Removed: Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increased by $316,000 during the fiscal 2025 period as compared to the fiscal 2024 period primarily due to higher royalties earned on sales of French fries, onion rings, proprietary spices, franks-in-a-blanket, mozzarella sticks and bottled mustard offset, in part, by lower royalties earned on sales of pickles.
−Removed: Franchise fees and royalties decreased by $208,000 to $4,148,000 in the fiscal 2025 period as compared to $4,356,000 in the fiscal 2024 period.
−Removed: Total royalties were $3,767,000 in the fiscal 2025 period as compared to $3,886,000 in the fiscal 2024 period.
−Removed: Royalties earned under the Branded Menu Program were $744,000 in the fiscal 2025 and 2024 periods.
−Removed: Royalties earned under the Branded Menu Program are not based upon a percentage of restaurant sales but are based upon product purchases.
−Removed: Virtual kitchen royalties were $61,000 in the fiscal 2025 period as compared to $81,000 in the fiscal 2024 period.
−Removed: Traditional franchise royalties were $2,962,000 in the fiscal 2025 period as compared to $3,061,000 in the fiscal 2024 period.
−Removed: Franchise restaurant sales declined to $66,905,000 in the fiscal 2025 period as compared to $68,417,000 in the fiscal 2024 period.
−Removed: We estimate that the additional week of operations during fiscal 2024 resulted in $1,215,000 of additional franchise restaurant sales or royalties of approximately $60,000.
−Removed: Comparable domestic franchise sales (consisting of 58 Nathan’s locations, excluding sales under the Branded Menu Program) were $51,250,000 during the fiscal 2025 period as compared to $53,108,000 during the fiscal 2024 period.
−Removed: At March 30, 2025, 230 franchised locations, including domestic, international and Branded Menu Program units were operating.
−Removed: Total franchise fee income was $381,000 in the fiscal 2025 period as compared to $470,000 in the fiscal 2024 period.
−Removed: Domestic franchise fee income was $108,000 in the fiscal 2025 period as compared to $106,000 in the fiscal 2024 period.
−Removed: International franchise fee income was $237,000 in the fiscal 2025 period as compared to $241,000 in the fiscal 2024 period.
−Removed: We recognized $36,000 and $123,000 of forfeited fees in the fiscal 2025 and fiscal 2024 periods, respectively.
−Removed: During the fiscal 2025 period, 25 franchise locations opened and 25 franchised locations closed.
−Removed: During the fiscal 2024 period, 17 franchised locations opened and 19 franchised locations closed.
−Removed: Advertising fund revenue, after eliminating Company contributions, was $2,074,000 in the fiscal 2025 period as compared to $2,081,000 during the fiscal 2024 period.
−Removed: Costs and Expenses
−Removed: Overall, our cost of sales increased by approximately 8% to $89,707,000 in the fiscal 2025 period as compared to $83,182,000 in the fiscal 2024 period.
−Removed: Our gross profit (calculated as total Branded Product sales plus total Company-owned restaurants sales less cost of sales) was $14,835,000 or 14% of sales during the fiscal 2025 period as compared to $15,410,000 or 16% of sales during the fiscal 2024 period.
−Removed: Cost of sales in the Branded Product Program increased by 9% to $82,462,000 during the fiscal 2025 period as compared to $75,966,000 in the fiscal 2024 period, primarily due to the 1.2% increase in the volume of hot dogs sold, as well as a 7% increase in the average cost per pound of our hot dogs.
−Removed: A shrinking supply of cattle, combined with industry demand and inflationary pressures have resulted in higher commodity prices, including beef and beef trimmings, contributing to the increase in the average cost per pound of our hot dogs.
−Removed: We did not make any purchase commitments for beef during the fiscal 2025 and 2024 periods.
−Removed: If the cost of beef and beef trimmings increases and we are unable to pass on these higher costs through price increases or otherwise reduce any increase in our costs through the use of purchase commitments, our margins will be adversely impacted.
−Removed: With respect to Company-owned restaurants, our cost of sales during the fiscal 2025 period was $7,245,000 or 57% of restaurant sales, as compared to $7,216,000 or 60% of restaurant sales in the fiscal 2024 period.
−Removed: Food and paper costs as a percentage of Company-owned restaurant sales were 25%, down from 28% in the fiscal 2024 period driven, in part, by price increases across most menu offerings.
−Removed: Labor and related expenses as a percentage of Company-owned restaurant sales were 32%, which was comparable to the fiscal 2024 period.
−Removed: Higher wage rates during fiscal 2025 as a result of legislative increases in the New York State minimum wage were offset by price increases across most menu offerings.
−Removed: Restaurant operating expenses increased by $202,000 to $4,379,000 in the fiscal 2025 period as compared to $4,177,000 in the fiscal 2024 period.
−Removed: The increase is due primarily to higher occupancy expenses of $203,000, higher repairs and maintenance expenses of $41,000, and higher insurance costs of $31,000 which were offset, in part, by lower delivery charges of $62,000.
−Removed: Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, and the amortization of a definite-lived intangible asset, was $957,000 in the fiscal 2025 period as compared to $1,135,000 in the fiscal 2024 period.
−Removed: General and administrative expenses decreased by $1,082,000 to $14,530,000 in the fiscal 2025 period as compared to $15,612,000 in the fiscal 2024 period.
−Removed: The reduction in general and administrative expenses was primarily attributable to higher share-based compensation expense of $259,000, and a higher provision for credit losses of $119,000 which were offset by lower professional fees of $291,000 and a cash bonus payout of $1,000,000 to the Company’s Executive Chairman of the Board in fiscal 2024.
−Removed: Advertising fund expense, after eliminating Company contributions, was $2,112,000 in the fiscal 2025 period as compared to $1,998,000 in the fiscal 2024 period.
−Removed: Interest expense of $4,106,000 in the fiscal 2025 period represented interest expense of $1,449,000 and $2,504,000 on the 2025 Notes and the Term Loan borrowings under the Credit Agreement, respectively, and amortization of debt issuance costs of $104,000 and $49,000 on the 2025 Notes and the Term Loan borrowings, respectively.
−Removed: Interest expense of $5,355,000 in the fiscal 2024 period represented interest expense of $5,010,000 on the 2025 Notes and amortization of debt issuance costs of $345,000.
−Removed: The reduction in interest expense of $1,249,000 is due primarily to lower outstanding long-term debt and a lower interest rate associated with our Credit Agreement.
−Removed: During fiscal 2025, the Company refinanced and redeemed the 2025 Notes.
−Removed: In connection with the refinancing, the Company recorded a loss on extinguishment of debt of $334,000 that reflected the write-off of the remainder of the debt issuance costs on the 2025 Notes.
−Removed: Additionally, the Company made a voluntary principal prepayment of $8,000,000 of its Term Loan borrowings under the Credit Agreement and recorded a loss on debt extinguishment of $55,000 related to the write-off of a portion of previously recorded debt issuance costs on the Term Loan borrowings.
−Removed: During fiscal 2024, the Company completed the partial redemption, in the principal amount of $20,000,000 of the 2025 Notes.
−Removed: In connection with this transaction, the Company recorded a loss on extinguishment of debt of $169,000 that reflected the write-off of a portion of previously recorded debt issuance costs.
−Removed: See NOTE J – LONG-TERM DEBT in the accompanying consolidated financial statements for further information.
−Removed: Interest and dividend income of $672,000 in the fiscal 2025 period represented amounts earned by the Company on its interest bearing bank and money market accounts and money market funds as compared to $383,000 in the fiscal 2024 period.
−Removed: The increase is due to higher levels of invested cash earning interest at higher rates in the fiscal 2025 period as compared to the fiscal 2024 period.
−Removed: Other income, net was $87,000 in the fiscal 2025 period, which primarily relates to sublease income from a franchised restaurant as compared to $86,000 in the fiscal 2024 period.
−Removed: Provision for Income Taxes
−Removed: The effective income tax rate for the fiscal 2025 period was 26.7% compared to 28.5% for the fiscal 2024 period.
−Removed: The effective income tax rate for the fiscal 2025 period reflected income tax expense of $8,735,000 recorded on $32,761,000 of pre-tax income.
−Removed: The effective income tax rate for the fiscal 2024 period reflected income tax expense of $7,835,000 recorded on $27,451,000 of pre-tax income.
−Removed: The effective tax rates are higher than the U.S.
−Removed: Federal statutory rates primarily due to state and local taxes, as well as non-deductible executive compensation under the Internal Revenue Code Section 162(m).
−Removed: The American Rescue Plan Act of 2021 (“ARPA”), among other things, includes provisions to expand the IRC Section 162(m) disallowance for deduction of certain compensation paid by publicly held corporations.
−Removed: Effective for tax years starting after December 31, 2026 (March 29, 2027 for the Company), ARPA expands the limitations to cover the next five most highly compensated employees.
−Removed: We continue to evaluate the potential impact ARPA may have on our operations and consolidated financial statements in future periods.
−Removed: The amount of unrecognized tax benefits at March 30, 2025 was $532,000 all of which would impact Nathan’s effective tax rate, if recognized.
−Removed: As of March 30, 2025, Nathan’s had $395,000 accrued interest and penalties in connection with unrecognized tax benefits.
−Removed: Nathan’s estimates that its unrecognized tax benefit excluding accrued interest and penalties could be further reduced by up to $55,000 during the fiscal year ending March 29, 2026, due primarily to the lapse of statutes of limitations which would favorably impact the Company’s effective tax rate, although no assurances can be given in this regard.
−Removed: Reconciliation of GAAP and Non-GAAP Measures
−Removed: In addition to disclosing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America ("US GAAP"), the Company has provided EBITDA, a non-GAAP financial measure, which is defined as net income excluding (i) interest expense;
−Removed: (ii) provision for income taxes and (iii) depreciation and amortization expense.
−Removed: The Company has also provided Adjusted EBITDA, a non-GAAP financial measure, which is defined as EBITDA, excluding (i) loss on debt extinguishment;
−Removed: and (ii) share-based compensation that the Company believes will impact the comparability of its results of operations.
−Removed: The Company believes that EBITDA and Adjusted EBITDA, which are non-GAAP financial measures, are useful to investors to assist in assessing and understanding the Company's operating performance and underlying trends in the Company's business because EBITDA and Adjusted EBITDA are (i) among the measures used by management in evaluating performance and (ii) are frequently used by securities analysts, investors and other interested parties as a common performance measure.
−Removed: EBITDA and Adjusted EBITDA are not recognized terms under US GAAP and should not be viewed as alternatives to net income or other measures of financial performance or liquidity in conformity with US GAAP.
−Removed: Additionally, our definitions of EBITDA and Adjusted EBITDA may differ from other companies.
−Removed: Analysis of results and outlook on a non-US GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with US GAAP.
−Removed: (In thousands)
−Removed: Interest expense
−Removed: Provision for income taxes
−Removed: Depreciation and amortization
−Removed: Loss on debt extinguishment
−Removed: Share-based compensation
−Removed: ADJUSTED EBITDA
−Removed: Liquidity and Capital Resources
−Removed: Sources and uses of cash
−Removed: Cash and cash equivalents at March 30, 2025 aggregated $27,802,000, a $6,775,000 increase during the fiscal 2025 period as compared to cash and cash equivalents of $21,027,000 at March 31, 2024.
−Removed: Net working capital increased to $28,371,000 at March 30, 2025 as compared to $23,203,000 at March 31, 2024.
−Removed: Our primary sources of liquidity are cash flows from operations.
−Removed: Our primary cash requirements are to fund our quarterly dividends, to satisfy the debt service under our credit facility, capital expenditures, working capital and general corporate needs.
−Removed: On May 1, 2024, we paid our first semi-annual interest payment on the 2025 Notes of $1,987,500 for the fiscal 2025 period.
−Removed: On August 13, 2024, in connection with the redemption of all of the outstanding $60,000,000 principal amount of its 2025 Notes, the Company paid its final required interest payment of $1,137,000 on the redeemed 2025 Notes.
−Removed: Credit Agreement
−Removed: On September 30, 2024 and December 31, 2024, we paid our quarterly mandatory debt principal repayments of $600,000 each, or $1,200,000 in the aggregate, on our Term Loan borrowings under the Credit Agreement.
−Removed: On October 10, 2024, we made a voluntary principal prepayment of $8,000,000 on our outstanding Term Loan borrowings under the Credit Agreement.
−Removed: The prepayment was primarily funded by operating cash flows.
−Removed: As of March 30, 2025, the Company has made cash interest payments of approximately $2,356,000 on the Term Loan borrowings under the Credit Agreement.
−Removed: Subsequent to the year ending March 30, 2025, on March 31, 2025, the Company paid its next quarterly mandatory debt principal repayment of $600,000.
−Removed: Summary of Cash Flows
−Removed: The following table presents a summary of our cash flows from operating, investing and financing activities:
−Removed: (In thousands)
−Removed: Net cash provided by operating activities
−Removed: Net cash used in investing activities
−Removed: Net cash used in financing activities
−Removed: Net increase (decrease) in cash and cash equivalents
−Removed: Operating activities
−Removed: Cash provided by operations is primarily attributable to net income of $24,026,000 in addition to other non-cash operating items of $2,532,000, offset by changes in other operating assets and liabilities of $1,318,000.
−Removed: Non-cash operating expenses consist principally of a loss on debt extinguishment of $389,000, depreciation and amortization of $957,000, amortization of debt issuance costs of $153,000, share-based compensation expense of $993,000 and a provision for credit losses of $275,000.
−Removed: In the fiscal 2025 period, inventories increased by $379,000 due to timing and Branded Product Program inventory in transit.
−Removed: Prepaid expenses and other current assets decreased by $128,000 due primarily to a decrease in prepaid income taxes of $365,000 which were offset, in part, by an increase in prepaid marketing and insurance expenses of $347,000.
−Removed: Accounts payable, accrued expenses and other current liabilities decreased by $1,227,000 due principally to lower incentive compensation accruals of $253,000 as well as a decrease in accrued interest expense of $1,528,000 resulting from the timing of our debt service payments under our Credit Agreement.
−Removed: Accounts payable increased by $419,000 due to the timing of product purchases for our Branded Product Program and Company-owned restaurants.
−Removed: Investing activities
−Removed: Cash used in investing activities of $225,000 is primarily attributable to capital expenditures incurred for our Branded Product Program and our Coney Island restaurants.
−Removed: Financing activities
−Removed: In connection with the Company’s refinancing of the 2025 Notes, the Company borrowed $60,000,000 in Term Loan borrowings pursuant to the Credit Agreement and simultaneously redeemed the 2025 Notes.
−Removed: We incurred $431,000 of debt issuance costs in connection with this refinancing.
−Removed: During fiscal 2025, we made $1,200,000 of mandatory principal repayments, as well as an $8,000,000 voluntary principal repayment on our Term Loan borrowings under the Credit Agreement.
−Removed: Further, the Company paid its four quarterly cash dividends of $0.50 per share totaling $8,172,000.
−Removed: The Company also paid $437,000 for withholding taxes on the net share vesting of 10,000 restricted stock units.
−Removed: Credit Agreement
−Removed: On July 10, 2024 (the “Effective Date”), the Company entered into a five-year unsecured 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.
−Removed: The Credit Agreement provides for a term loan facility (“Term Loan”) of $60,000,000 and a revolving credit facility (“Revolving Loan”) of up to $10,000,000.
−Removed: 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 $10,000,000 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.
−Removed: The Credit Agreement matures on July 10, 2029.
−Removed: The Company borrowed $60,000,000 in Term Loan borrowings under the Credit Agreement on the Effective Date to refinance and redeem its 2025 Notes.
−Removed: The Company will use any Revolving Loan borrowings under the Credit Agreement for working capital and general corporate purposes.
−Removed: As of March 30, 2025, there were no outstanding borrowings under the Revolving Loan.
−Removed: See NOTE J – LONG TERM DEBT in the accompanying consolidated financial statements for additional information on the Credit Agreement.
−Removed: Share Repurchases
−Removed: In 2016, the Board authorized increases to the sixth stock repurchase plan for the repurchase of up to 1,200,000 shares of its common stock on behalf of the Company.
−Removed: As of March 30, 2025, Nathan’s has repurchased 1,101,884 shares at a cost of approximately $39,000,000 under the sixth stock repurchase plan.
−Removed: At March 30, 2025, there were 98,116 shares remaining to be repurchased pursuant to the sixth stock repurchase plan.
−Removed: The plan does not have a set expiration date.
−Removed: 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.
−Removed: There is no set time limit on the repurchases.
−Removed: There were no stock repurchases during the fiscal 2025 period.
−Removed: We may return capital to our stockholders through stock repurchases, subject to any restrictions in our Credit Agreement, although there is no assurance that the Company will make any repurchases under its existing stock repurchase plan.
−Removed: Common Stock Dividends
−Removed: As discussed above, we had cash and cash equivalents at March 30, 2025 aggregating $27,802,000.
−Removed: Our Board routinely monitors and assesses its cash position and our current and potential capital requirements.
−Removed: During the fiscal 2025 period, the Company declared and paid four quarterly dividends of $0.50 per share aggregating $8,172,000.
−Removed: Effective June 10, 2025, the Board declared its first quarterly cash dividend of $0.50 per share for fiscal 2026 which is payable on July 1, 2025 to stockholders of record as of the close of business on June 23, 2025.
−Removed: If the Company pays regular quarterly cash dividends for fiscal 2026 at the same rate as declared in the first quarter of fiscal 2026, the Company’s total cash requirement for dividends for all of fiscal 2026 would be approximately $8,179,000 based on the number of shares of common stock outstanding at June 5, 2025.
−Removed: The Company intends to declare and pay quarterly cash dividends;
−Removed: however, there can be no assurance that any additional quarterly dividends will be declared or paid or of the amount or timing of such dividends, if any.
−Removed: Our ability to pay future dividends is limited by the terms of our Credit Agreement.
−Removed: In addition, the 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 and the terms of our Credit Agreement.
−Removed: Purchase Commitments
−Removed: At March 30, 2025 and March 31, 2024, Nathan’s did not have any open purchase commitments to purchase hot dogs.
−Removed: Nathan’s may enter into purchase commitments in the future as favorable market conditions become available.
−Removed: Cash Flow Outlook
−Removed: We expect that in the future we will make investments in certain existing restaurants, support the growth of the Branded Product and Branded Menu Programs, service the principal and interest obligations under the Credit Agreement, fund our dividend program and may continue our stock repurchase programs, funding those investments from our operating cash flow.
−Removed: We may also incur capital and other expenditures or engage in investing activities in connection with opportunistic situations that may arise on a case-by-case basis.
−Removed: While our Credit Agreement bears interest at a fluctuating interest rate based on SOFR plus a spread adjustment, if the Company makes its fiscal year 2026 cash interest payments on its outstanding Term Loan borrowings at the interest rate effective at March 30, 2025, then during the fiscal year ended March 29, 2026, we expect to make cash interest payments of approximately $2,895,000 on the Term Loan borrowings.
−Removed: We may from time to time seek to make voluntary principal prepayments of Term Loan borrowings under our Credit Agreement.
−Removed: Such voluntary prepayments, if any, will depend on market conditions, our liquidity requirements, satisfactory compliance of covenants and conditions pursuant to our Credit Agreement and other factors.
−Removed: Management believes that available cash and cash equivalents and cash generated from operations should provide sufficient capital to finance our operations, satisfy our debt service requirements, fund dividend distributions and, if any, stock repurchases for at least the next 12 months.
−Removed: Contractual Obligations
−Removed: At March 30, 2025, we sublet one property to a franchisee that we lease from a third party.
−Removed: We remain contingently liable for all costs associated with this property including rent, property taxes and insurance.
−Removed: We may incur future cash payments with respect to such property, consisting primarily of future lease payments, including costs and expenses associated with terminating such lease.
−Removed: At March 30, 2025, our contractual obligations primarily consist of the Term Loan borrowings under our Credit Agreement and the mandatory debt principal repayments and the related interest payments, operating leases, and employment agreements with certain executive officers.
−Removed: These contractual obligations impact our short-term and long-term liquidity and capital resource needs.
−Removed: See NOTE J – LONG TERM DEBT and NOTE L – STOCKHOLDERS’ EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS in the accompanying consolidated financial statements for further information.
−Removed: Inflationary Pressures
−Removed: Inflationary pressures on labor and rising commodity prices, most notably for beef and beef trimmings, have impacted our consolidated results of operations during the fiscal 2025 period, and this trend may continue into fiscal 2026.
−Removed: Our average cost of hot dogs during the fiscal 2025 period was approximately 7% higher than during the fiscal 2024 period.
−Removed: Our average cost of hot dogs during the fiscal 2024 period was approximately 10% higher than during the fiscal 2023 period.
−Removed: Inherent volatility experienced in certain commodity markets, such as those for beef and beef trimmings due to seasonal shifts, climate conditions, industry demand, inflationary pressures and other macroeconomic factors could have an adverse effect on our results of operations.
−Removed: This impact will depend on our ability to manage such volatility through price increases and product mix.
−Removed: We are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during fiscal 2026.
−Removed: To the extent that beef prices increase as compared to earlier periods, it could impact our results of operations.
−Removed: In the past, we entered into purchase commitments for a portion of our hot dogs to reduce the impact of increasing market prices.
−Removed: We may attempt to enter into similar purchase arrangements for hot dogs and other products in the future.
−Removed: We have experienced competitive pressure on labor rates as a result of the increase in the minimum hourly wage for fast food workers where our Company-owned restaurants are located.
−Removed: On January 1, 2025, the minimum wage increased from $16.00 to $16.50 in New York City, Long Island and Westchester which will be followed by an additional $0.50 increase in 2026.
−Removed: Further, beginning in 2027, the minimum wage across New York State will increase annually according to the Consumer Price Index.
−Removed: There has also been an increased demand for labor at all levels which has resulted in greater challenges retaining adequate staffing levels at our Company-owned restaurants;
−Removed: our franchised restaurants and Branded Menu Program locations;
−Removed: as well as for certain vendors in our supply chain that we depend on for our commodities.
−Removed: We remain in contact with our major suppliers and to date we have not experienced significant disruptions in our supply chain.
−Removed: We believe that these increases in the minimum wage and other changes in employment laws have had a significant financial impact on our financial results and the results of our franchisees that operate in New York State.
−Removed: Our business could be negatively impacted if the decrease in margins for our franchisees results in the potential loss of new franchisees or the closing of a significant number of franchised restaurants.
−Removed: We expect to continue experiencing volatility in oil and gas prices on our distribution costs for our food products and utility costs in the Company-owned restaurants and volatile insurance costs resulting from rising rates.
−Removed: Continued increases in labor costs, commodity prices and other operating expenses, including health care, could adversely affect our operations.
−Removed: We attempt to manage inflationary pressure, and rising commodity costs, at least in part, through raising prices.
−Removed: Delays in implementing price increases, competitive pressures, consumer spending levels and other factors may limit our ability to offset these rising costs.
−Removed: Volatility in commodity prices, including beef and beef trimmings, could have a significant adverse effect on our results of operations.
−Removed: The Company’s business, financial condition, operating results and cash flows can be impacted by a number of factors, including but not limited to those set forth above in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” any one of which could cause our actual results to vary materially from recent results or from our anticipated future results.
−Removed: For a discussion identifying additional risk factors and important factors that could cause actual results to differ materially from those anticipated, also see the discussions in “Forward-Looking Statements”, “Risk Factors”, and “Notes to Consolidated Financial Statements” in this Form 10-K.
−Removed: Quantitative and Qualitative Disclosures About Market Risk.
−Removed: Cash and Cash Equivalents
−Removed: We have historically invested our cash in money market accounts, money market funds or short-term, fixed rate, highly rated and highly liquid instruments which are generally reinvested when they mature.
−Removed: Although these existing investments are not considered at risk with respect to changes in interest rates or markets for these instruments, our rate of return on short-term investments could be affected at the time of reinvestment as a result of intervening events.
−Removed: As of March 30, 2025, Nathan’s cash and cash equivalents balance aggregated $27,802,000.
−Removed: Earnings on this cash would increase or decrease by approximately $70,000 per annum for each 0.25% change in interest rates.
−Removed: On July 10, 2024, we entered into the Credit Agreement and borrowed $60,000,000 in Term Loan borrowings to refinance and redeem the 2025 Notes.
−Removed: Borrowings under our Credit Agreement bear interest at a fluctuating interest rate based on SOFR or a base rate plus a spread adjustment.
−Removed: Accordingly, a rising interest rate environment would result in higher interest expense due on borrowings.
−Removed: A hypothetical 100 bps increase in the interest rate on our $50,800,000 of outstanding unsecured Term Loan borrowings at March 30, 2025 would lead to an increase of approximately $508,000 in cash interest costs over the next twelve months.
−Removed: We currently do not anticipate entering into interest rate swaps or other financial instruments to hedge our borrowings.
−Removed: Commodity Costs
−Removed: We are exposed to market price fluctuations in commodities, most notably beef and beef trimmings.
−Removed: Inflationary pressures on commodity prices have directly impacted our consolidated results of operations during fiscal 2025, most notably within our Restaurant Operations and Branded Product Program segments.
−Removed: We expect this trend to continue into fiscal 2026.
−Removed: Our average cost of hot dogs during fiscal 2025 was approximately 7% higher than during fiscal 2024.
−Removed: We are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during fiscal 2026.
−Removed: Factors that affect beef prices are outside of our control and include foreign and domestic supply and demand, inflation, weather and seasonality.
−Removed: To the extent that beef prices increase as compared to earlier periods, it could impact our results of operations.
−Removed: In the past, we have entered into purchase commitments for a portion of our hot dogs to reduce the impact of increasing market prices.
−Removed: We may attempt to enter into purchase arrangements for hot dogs and other products in the future.
−Removed: Additionally, we expect to continue experiencing volatility in oil and gas prices on our distribution costs for our food products and utility costs in the Company-owned restaurants and volatile insurance costs resulting from rising rates.
−Removed: We have not attempted to hedge against fluctuations in the prices of the commodities we purchase using future, forward, option or other instruments.
−Removed: As a result, we expect that the majority of our future commodity purchases will be subject to market changes in the prices of such commodities.
−Removed: We have attempted to enter sales agreements with our Branded Product Program customers that are correlated to our cost of beef, thus reducing our market volatility, or have passed through permanent increases in our commodity prices to our Branded Product Program customers that are not on formula pricing, thereby reducing the impact of long-term increases on our financial results.
−Removed: A short-term increase or decrease of 10% in the cost of our food and paper products for the year ended March 30, 2025 would have increased or decreased our cost of sales by approximately $8,338,000.
−Removed: Foreign Currencies
−Removed: Foreign franchisees generally conduct business with us and make payments in United States dollars, reducing the risks inherent with changes in the values of foreign currencies.
−Removed: As a result, we have not purchased future contracts, options or other instruments to hedge against changes in values of foreign currencies and we do not believe fluctuations in the value of foreign currencies would have a material impact on our financial results.
−Removed: Financial Statements and Supplementary Data.
−Removed: The consolidated financial statements are submitted as a separate section of this report beginning on Page F-1.
−Removed: Changes in and Disagreements With Accountants on Accounting and Financial 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.