Insignia Systems, Inc. (Nasdaq: ISIG) today reported net income for the first quarter of 2011 of $53,873,000, or $3.37 per basic share ($3.17 per diluted share), compared to a net loss of $(435,000), or $(0.03) per basic and diluted share, for the first quarter of 2010. Net income for the first quarter of 2011 included a gain from the settlement of the litigation against News America Marketing In-Store, LLC (“News America”) of $89,762,000 before income taxes. The gain from the settlement included settlement proceeds from News America of $125,000,000, less contingent attorney’s fees of $31,250,000 to the Company’s lead litigation counsel and bonuses to certain employees of the Company of $3,988,000. The gain after taxes (federal and state incomes taxes of $34,700,000) was $55,062,000. Net sales were $4,947,000 for the first quarter ended March 31, 2011, a decrease of 15.9%, compared to net sales of $5,883,000 for the first quarter of 2010. Insignia Point-of-Purchase Services ® (POPS) revenue for the first quarter of 2011 was $4,374,000, a decrease of 14.9%, compared to first quarter 2010 POPS revenue of $5,137,000. The non-GAAP net loss before gain from litigation settlement (net of tax) and News America related legal expense was $(363,000) for the first quarter of 2011 as compared to $(31,000) for the first quarter of 2010. (See Non-GAAP versus GAAP Financial Statements table below.)
CEO Scott Drill commented, “The first quarter marks the beginning of significant transition for our Company. Our long running legal battle with News America was settled February 9, 2011, and we entered into a ten year business arrangement in which we will have access to thousands of stores from which we were previously foreclosed. This business arrangement is extremely important to our future in that Kroger dropped out of our retail network at the end of 2010. We expect the access to the News America network to more than offset the Kroger loss.