Nathan's Famous, Inc. Reports Third Quarter Results

             Nathan's Famous, Inc. Reports Third Quarter Results

PR Newswire

JERICHO, N.Y., Feb. 1, 2013

JERICHO, N.Y., Feb. 1, 2013 /PRNewswire/ -- Nathan's Famous, Inc. (NASDAQ:
NATH) today reported results for the third quarter of its 2013 fiscal year
that ended December 23, 2012.

For the fiscal quarter ended December 23, 2012:

  o Net income was $1,062,000 as compared to $1,211,000 for the thirteen weeks
    ended December 25, 2011;
  o Earnings per diluted share was $0.23 as compared to $0.24 for the thirteen
    weeks ended December 25, 2011;
  o Non-GAAP earnings, which exclude the litigation expense items described
    below, were $1,130,000 or $0.24 per diluted share, as compared to
    $1,284,000 or $0.25 per diluted share for the thirteen weeks ended
    December 25, 2011; and
  o Revenues increased 1.5% to $15,025,000, as compared to $14,800,000 during
    the thirteen weeks ended December 25, 2011.

For the thirty-nine weeks ended December 23, 2012:

  o Net income increased 16.5% to $5,913,000 as compared to $5,076,000 for the
    thirty-nine weeks ended December 25, 2011;
  o Earnings per diluted share increased 31.6% to $1.29 as compared to $0.98
    for the thirty-nine weeks ended December 25, 2011;
  o Non-GAAP earnings, which exclude the litigation expense items described
    below, were $6,115,000 or $1.33 per diluted share, as compared to
    $5,292,000 or $1.02 per diluted share for the thirty-nine weeks ended
    December 25, 2011; and
  o Revenues increased 9.2% to $56,567,000, as compared to $51,815,000 during
    the thirty-nine weeks ended December 25, 2011.

On October 29, 2012, Hurricane Sandy struck the Northeastern United States,
which forced the closing of all of the Company-owned restaurants.
Seventy-eight franchised restaurants, including 18 Branded Menu locations,
also closed for varying periods of time, two of which remain closed. Our
flagship Coney Island restaurant and our new Boardwalk restaurant have been
closed since the storm. Our Company-owned restaurant in Oceanside, New York
was closed for approximately two weeks.  The new Coney Island Boardwalk
restaurant sustained minor damage and is anticipated to re-open in March 2013.
The Coney Island restaurant incurred significant damage. We are seeking to
re-open the restaurant during the spring of 2013. On November 25, 2012, we
closed the Company-owned restaurant in Yonkers, New York which was demolished
as a part of a redevelopment of the property which will include a new Nathan's
Company-owned restaurant that we anticipate opening in December 2013.

The Company also reported the following:

  o As previously disclosed, Nathan's entered into a definitive and binding
    letter agreement with John Morrell & Co, a subsidiary of Smithfield Foods,
    Inc. (NYSE:SFD) to become Nathan's exclusive licensee to manufacture and
    sell branded hot dog, sausage and corned beef products at retail. The
    agreement begins on March 2, 2014 for a term of 18 years providing
    royalties of 10.8% of net sales, subject to annual minimum royalties which
    start at $10 million in the first year and increase annually throughout
    the term.
  o Sales from the Branded Product Program, featuring the sale of Nathan's hot
    dogs to the foodservice industry, increased 12.1% to $33,464,000 during
    the thirty-nine weeks ended December 23, 2012, as compared to sales of
    $29,843,000 during the thirty-nine weeks ended December 25, 2011.
  o Sales and direct operating cash flows from the five Company-owned
    restaurants were $12,378,000 and $3,153,000, respectively, during the
    thirty-nine weeks ended December 23, 2012 as compared to $11,218,000 and
    $2,428,000, respectively during the thirty-nine weeks ended December 25,
    2011.
  o Gross profit increased to 22.1% of sales during the thirty-nine weeks
    ended December 23, 2012, as compared to 20.7% of sales during the
    thirty-nine weeks ended December 25, 2011 due primarily to improved
    margins from our Branded Product Program.
  o Retail license royalties increased 15.0% or $797,000 to $6,104,000 during
    the thirty-nine weeks ended December 23, 2012, as compared to $5,307,000
    during the thirty-nine weeks ended December 25, 2011.
  o Revenues from franchise operations were $4,247,000 during the thirty-nine
    weeks ended December 23, 2012, as compared to $4,265,000 during the
    thirty-nine weeks ended December 25, 2011. Twenty-nine new franchised
    units were opened during the thirty-nine weeks ended December 23, 2012,
    including our first two mobile trucks, our first location in Turkey, our
    sixth restaurant in the Dominican Republic and fifteen Branded Menu
    Program outlets.
  o Nathan's executed two Master Development Agreements comprising the
    Republic of Turkey, including the Turkish Republic of Northern Cyprus and
    Mexico City, Mexico.
  o In April 2012, we opened our newly relocated seasonal restaurant on the
    Boardwalk in Coney Island, New York.

As previously described with respect to our litigation with SMG, on April 7,
2011, the Court entered a stipulation and order which granted a stay of
enforcement of the final judgment which is in the amount of approximately
$4,910,000.

On March 4, 2011, Nathan's filed a notice of appeal seeking to appeal the
final judgment. On December 11, 2012, the Court heard oral arguments. On
January 25, 2013, the Appellate Court affirmed the trial court's ruling.
Nathan's is currently evaluating its options to further appeal this decision.
Throughout the duration of the appeal, Nathan's is required to deposit
post-judgment interest on the damages awarded at 9% per annum into a security
account. Nathan's has continued to make these deposits and recorded interest
expense of approximately $200,000, net of tax, during each of the thirty-nine
week periods ended December 23, 2012 and December 25, 2011.

Certain Non-GAAP Financial Information:

In addition to disclosing results that are determined in accordance with
Generally Accepted Accounting Principles in the United States of America
("GAAP"), the Company has provided its Non- GAAP earnings and earnings per
diluted share as adjusted for the litigation expenses described above,
including the interest expense that has accrued during the appeals process
through the end of the third quarter, that the Company believes impacts the
comparability of its results of operations.

The Company believes that such non-GAAP financial information is useful to
investors to assist in assessing and understanding the Company's operating
performance and underlying trends in the Company's business because management
considers the litigation expenses referred to above to be outside the
Company's normal operating results. This non-GAAP financial information is
among the indicators management uses as a basis for evaluating the Company's
financial and operating performance.

The presentation of this additional non-GAAP financial information is not
meant to be considered in isolation or as a substitute for, or alternative to,
earnings and earnings per diluted share determined in accordance with GAAP.
Analysis of results and outlook on a non-GAAP basis should be used as a
complement to, and in conjunction with, data presented in accordance with
GAAP.

About Nathan's Famous

Nathan's products are currently distributed in 50 states, the District of
Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, the Cayman Islands and
seven foreign countries through its restaurant system, foodservice sales
programs and product licensing activities. The Nathan's restaurant system
currently consists of 308 units, comprised of 303 franchised units and five
company-owned units (including two units temporarily closed due to Hurricane
Sandy and one restaurant closed for redevelopment). For additional information
about Nathan's please visit our website at www.nathansfamous.com.

Except for historical information contained in this news release, the matters
discussed are forward looking statements that involve risks and
uncertainties.  Words such as "anticipate", "believe", "estimate", "expect",
"intend", and similar expressions identify forward-looking statements, which
are based on the current belief of the Company's management, as well as
assumptions made by and information currently available to the Company's
management.  Among the factors that could cause actual results to differ
materially are the following: the effect of business and economic conditions;
the impact of competitive products and pricing; the ability to obtain an
adequate supply of beef and other food products at competitive prices; the
expiration of our current hot dog licensing agreement; the failure to reopen
our Coney Island restaurants in a timely manner; the regulatory and trade
environment; and the risk factors reported from time to time in the Company's
SEC reports. The Company does not undertake any obligation to update such
forward-looking statements.

 

 

Nathan's Famous, Inc.
Financial
Highlights
                         Thirteen weeks ended           Thirty-nine weeks
                                                        ended
                   Dec. 23, 2012       Dec. 25,     Dec. 23,       Dec. 25,
                                       2011         2012           2011
                             (unaudited)                  (unaudited)
Total revenues     $    15,025,000     $            $              $  
                                       14,800,000   56,567,000     51,815,000
Net income         $      1,062,000    $            $              $    
                                       1,211,000    5,913,000      5,076,000
Basic income per
share
     Net income    $                   $            $              $        
                   0.24                     0.24         1.35           1.01
Diluted income per
share
Net income         $                   $            $              $        
                   0.23                     0.24         1.29           0.98
Weighted-average
shares used in
   computing
income per share
      Basic        4,414,000           4,964,000    4,396,000      5,022,000
      Diluted      4,612,000           5,113,000    4,582,000      5,159,000

 

 

Nathan's Famous, Inc.
Reconciliation of GAAP and Non-GAAP Measures
                  Thirteen weeks ended                Thirty-nine weeks
                                                      ended
            Dec. 23, 2012         Dec. 25,      Dec. 23, 2012     Dec. 25,
                                  2011                            2011
                        (unaudited)                      (unaudited)
NET INCOME
Net income  $      1,062,000      $             $                 $    
                                  1,211,000     5,913,000         5,076,000
Legal
expense     1,000                 6,000         1,000             16,000
(a), (net
of tax)
Interest
expense     67,000                67,000        201,000           200,000
(b), (net
of tax)
Non-GAAP    $      1,130,000      $             $                 $    
income                            1,284,000     6,115,000         5,292,000
DILUTED
INCOME PER
SHARE
Net income  $                     $             $                 $          
            0.23                     0.24        1.29                0.98
Legal
expense     -                     -             -                 -
(a), (net
of tax)
Interest
expense     0.01                  0.01          0.04              0.04
(b), (net
of tax)
Non-GAAP    $                     $             $                 $          
income per  0.24                     0.25        1.33                1.02
share

                                                                                   

(a)     Represents legal expense incurred in connection with the SMG matter
        during the respective periods.
        Represents accrued interest expense incurred in connection with
(b)     Nathan's appeal of the SMG
        damages award.

COMPANY  Ronald G. DeVos, Vice President - Finance and CFO
CONTACT:  (516) 338-8500 ext. 229

SOURCE Nathan's Famous, Inc.

Website: http://www.nathansfamous.com