Nathan's Famous, Inc. Reports Third Quarter Results

Authorizes Increase Share in Buy-Back

Nathan's Famous, Inc. (NASDAQ:NATH) today reported results for the third quarter of its 2011 fiscal year that ended December 26, 2010.

For the quarter ended December 26, 2010:

• Net loss was $153,000 or $0.03 per share, as compared to net income $1,052,000 or $0.19 per share for the quarter ended December 27, 2009;
• Non-GAAP earnings, which exclude the litigation expense items described below, were $1,090,000 or $0.20 per share; and
• Revenues increased by 16.5% to $13,079,000, as compared to $11,224,000 during the quarter ended December 27, 2009.

For the thirty-nine weeks ended December 26, 2010:

• Net income was $1,658,000 or $0.30 per share, as compared to $4,778,000 or $0.84 per share for the thirty-nine weeks ended December 27, 2009;
• Non-GAAP earnings, which exclude the litigation expense items described below, were $4,969,000 or $0.89 per share; and
• Revenues increased by 11.5% to $44,987,000, as compared to $40,352,000 during the thirty-nine weeks ended December 27, 2009.

A trial on the claims relating to Nathan’s termination of its License Agreement with SMG took place between October 6 and October 13, 2010. On October 13, 2010, an order was entered with the Court denying Nathan’s cross-motion and granting SMG’s motion for summary judgment with respect to SMG’s claims relating to the sale of Nathan’s proprietary seasonings to SMG. As a result of the Court’s order, Nathan's recorded a litigation accrual of $2,914,000 before taxes in its second fiscal quarter ended September 26, 2010. On December 17, 2010, the Court ruled that Nathan’s was not entitled to terminate the License Agreement.

On January 19, 2011, the parties submitted an agreed-upon order which, among other things, assessed damages against Nathan’s for the seasonings claims in the amount of $4,909,701.44, inclusive of pre-judgment interest. Accordingly, Nathan’s recorded an additional litigation accrual of $1,995,701 before tax, or $1,194,000 or $0.22 per share net of tax, as part of its results for the third quarter ended December 26, 2010. In total, Nathan’s recorded litigation accruals of $4,910,000 before tax, or $2,939,000 or $0.52 per share net of tax, during the thirty-nine weeks ended December 26, 2010. Nathan’s also incurred incremental legal expenses in connection with the SMG litigation of $82,000 and $364,000 during the thirteen and thirty-nine week-periods ended December 26, 2010.

The agreed-upon order is expected to be entered on February 3, 2011. Nathan’s is considering whether to appeal the court orders.

Nathan’s also announced that its Board of Directors has authorized the purchase by Nathan’s of up to an additional 300,000 shares of its common stock. Purchases will be made from time to time, depending on market conditions, in open market or privately negotiated transactions, at prices deemed appropriate by management. There is no set time limit on the repurchases. After giving effect to the increase in the number of shares, an aggregate 581,822 shares remain available for purchase under Nathan’s stock buy-back programs. To date, pursuant to prior share repurchase programs authorized by the Board of Directors, Nathan’s has purchased a total of 3,718,178 shares of common stock at a cost of approximately $33,804,000.

Logos, product and company names mentioned are the property of their respective owners.

Reader Comments:

Be the first to leave a comment for this article

Tweet