Financial Analysis

NOTE M COMMITMENTS AND CONTINGENCIES Legal Proceedings The Company and its subsidiaries are from time to time involved in ordinary and routine litigation. Management presently believes that the ultimate outcome of these proceedings, individually or in the aggregate, will not have a material adverse effect on the Companys financial position, cash flows or results of operations. Nevertheless, litigation is subject to inherent uncertainties and unfavorable rulings could occur. An unfavorable ruling could include money damages and, in such event, could result in a material adverse impact on the Companys results of operations for the period in which the ruling occurs. Service Provider Agreement The Company engaged a financial advisor in connection with the Merger Agreement as defined and disclosed in NOTE N MERGER to assist the Company and to provide certain advisory services. In connection with this arrangement, the Company may be required to pay such financial advisor certain contingent fees related to their services to the extent that certain conditions are met. The contingent fees related to this arrangement are based on (i) a fixed fee that was due and paid upon the delivery of a fairness opinion in January 2026 and (ii) a percentage fee based upon the aggregate transaction value net of the fixed fee in (i) above payable upon the closing of the transaction contemplated by the Merger Agreement. …

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NOTE J LONG-TERM DEBT Long-term debt consists of the following: March 29, March 30, 2026 2025 SOFR Term Loan Borrowings with an effective interest rate of 5.175% and 5.825% at March 29, 2026 and March 30, 2025, respectively $ 48,400 $ 50,800 Less: unamortized debt issuance costs (257 ) (327 ) Total debt, net of debt issuance costs 48,143 50,473 Less: Current portion of long-term debt (2,400 ) (2,400 ) Long-term debt, net $ 45,743 $ 48,073 Credit Agreement 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 Companys mandatory debt principal repayments as of March 29, 2026 were as follows: Fiscal Year Amount 2027 2,400 2028 2,400 2029 2,400 2030 41,200 Total $ 48,400 Total debt repayments through 2030 exceed the total carrying amount of the Companys debt as of March 29, 2026 because the carrying amount reflects the unamortized portion of debt issuance costs. 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 Comp …

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March 29, 2026 March 30, 2025 Branded Products $ 105,768 $ 91,828 Company-owned restaurants 12,508 12,714 License royalties 37,417 37,418 Franchise royalties 3,897 3,767 Franchise fees 420 381 Advertising fund revenue 2,053 2,074 Total revenues $ 162,063 $ 148,182

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NOTE H INCOME TAXES In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public business entities to disclose consistent categories and greater disaggregation of information in the rate reconciliation and for income taxes paid. The Company adopted ASU 2023-09 on a retrospective basis for the years ended March 29, 2026 and March 30, 2025 for comparability and consistency purposes. The income tax provision consists of the following for the fiscal years ended March 29, 2026 and March 30, 2025: March 29, March 30, 2026 2025 Federal Current $ 6,493 $ 6,909 Deferred (115 ) (190 ) Total Federal income tax 6,378 6,719 State and local Current 1,765 2,060 Deferred 27 (44 ) Total State and local income tax 1,792 2,016 Total provision for income taxes $ 8,170 $ 8,735 The income tax provisions for the fiscal years ended March 29, 2026 and March 30, 2025 reflect effective tax rates of 28.9% and 26.7%, respectively. The total income tax provision for the fiscal years ended March 29, 2026 and March 30, 2025 differs from the amounts computed by applying the United States Federal income tax rate of 21% to income before income taxes as a result of the following: March 29, March 30, 2026 2025 Income tax provision at the U.S. Federal statutory rate $ 5,920 21.0 % $ 6,880 21.0 % State and local income taxes, net of U.S. Federal income tax benefit 1,425 5.0 % 1,527 4.7 % Effect of cross-border tax laws Foreign derived intang …

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22. Adoption of New Accounting Standard In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which updates income tax disclosure requirements primarily by requiring specific categories and greater disaggregation within the rate reconciliation table and disaggregation of income taxes paid, net of refunds, by jurisdiction. All entities are required to apply the guidance prospectively, with the option to apply it retrospectively. The Company adopted ASU 2023-09 on a retrospective basis during the fourth quarter of fiscal year 2026. The adoption did not have a material impact on our consolidated financial statements. Refer to NOTE H INCOME TAXES for further details. 23. New Accounting Standards Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires the disaggregation of certain expenses in the notes to the financial statements, to provide enhanced transparency into the expense captions presented on the face of the statement of earnings. Additionally, in January 2025, the FASB issued ASU 2025-01, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date , which clarified the effective date for non-calendar year-end entities such as us. The guidance is effective for the first annua …

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NOTE I SEGMENT INFORMATION Nathans considers itself to be a brand marketer of the Nathans Famous signature products to the foodservice industry pursuant to its various business structures. Nathans sells its products directly to consumers through its Restaurant Operations segment consisting of Company-owned and franchised restaurants, including virtual kitchens, to distributors that resell our products to the foodservice industry through the Branded Product Program and by third party manufacturers pursuant to license agreements that sell our products to supermarkets, club stores and grocery stores nationwide. The Companys Chief Executive Officer has been identified as the Chief Operating Decision Maker (CODM) who regularly reviews operating results, evaluates performance and allocates resources for the Branded Product Program, Product Licensing and Restaurant Operations segments based upon a number of factors, the primary profit measure being income from operations as reported on the Consolidated Statement of Earnings. The CODM regularly reviews revenues, gross profit and income from operations by segment when evaluating the financial performance of each segment. Significant segment expenses are monitored by the CODM and included in the tables below. Segment asset information is not used by the CODM to assess performance and allocate resources and therefore is not presented. Certain administrative expenses are not allocated to the segments and are reported within the Corporate …

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NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following significant accounting policies have been applied in the preparation of the consolidated financial statements: 1. Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and applicable rules and regulations of the Securities and Exchange Commission and include the accounts of the Company and all of its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. 2. Fiscal Year The Companys fiscal year ends on the last Sunday in March, which results in a 52 or 53 week reporting period. The fiscal years ended March 29, 2026 and March 30, 2025 were on the basis of a 52-week reporting period. All references to years and quarters relate to fiscal periods rather than calendar periods. 3. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management in preparing the consolidated financial statements include the valuation of long lived assets, the valuation of an intangible asset, the …

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"NOTE L STOCKHOLDERS EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS 1. Dividends On July 1, 2025, September 5, 2025, December 5, 2025 and February 27, 2026, the Company paid quarterly dividends of $0.50 per share. Additionally, the Company paid a special cash dividend of $2.50 per share on December 5, 2025. For the year ending March 29, 2026, the Company paid dividends aggregating $18,403. Our ability to pay future dividends is limited by the terms of our Merger Agreement (as defined in NOTE N MERGER). Pursuant to the Merger Agreement, the Company is permitted to declare and pay two regular quarterly cash dividends each in the amount of $0.50 per share of the Companys common stock during the period pending the closing of the proposed transaction with Smithfield Foods, Inc. Effective June 9 , 2026, as permitted under the Merger Agreement, the Board declared its first quarterly cash dividend of $0.50 per share for fiscal year 2027, which is payable on June 30, 2026 to stockholders of record as of the close of business on June 22, 2026. 2. Stock Incentive Plan On September 18, 2019, the Companys shareholders approved the Nathans Famous, Inc. 2019 Stock Incentive Plan (the 2019 Plan). The 2019 Plan became effective as of July 1, 2020 (the ""Effective Date""). Following the Effective Date, (i) no additional stock awards were granted under the 2010 Plan and (ii) all outstanding stock awards previously granted under the 2010 Plan remained subject to the terms of the 2010 Plan. …

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NOTE O SUBSEQUENT EVENTS The Company evaluated subsequent events through the date the consolidated financial statements were issued and filed with the U.S. Securities and Exchange Commission. There were no subsequent events that required recognition or disclosure. …

SubsequentEventsTextBlock · excerpt; the full note is in the filing