Frisch's Reports Third Quarter Fiscal 2014 Results

CINCINNATI, April 2, 2014 /PRNewswire/ -- Frisch's Restaurants, Inc. (NYSE MKT: FRS) reported revenue of $45,160,998 during its fiscal 2014 third quarter ended March 4, 2014 (consisting of 12 weeks), a 1.3 percent decline from the $45,771,994 reported in the prior year's third quarter.  Net earnings decreased 9.3 percent in the third quarter to $1,584,796 ($0.31 diluted earnings per share (EPS)) down from $1,747,850 ($0.34 diluted EPS) in the comparable quarter last year.   The decrease in earnings was due to lower gross profit, resulting from a weather related sales decline, favorably offset, in part, by a lower effective tax rate and the recognition of certain discrete tax benefits.

Year-to-date revenue was $155,614,358 versus $154,919,802 in the prior year, a 0.5 percent increase, and year-to-date net earnings grew 28.9 percent to $5,860,862 ($1.15 diluted EPS) from $4,548,521, ($0.90 diluted EPS) in the prior year. (Prior year net earnings included a small charge against income tax from discontinued operations.)

Same store sales decreased 3.6 percent in the third quarter of fiscal 2014 while overall sales decreased at a lower rate of 1.3 percent from the third quarter of fiscal 2013 reflecting the addition of two new restaurant openings.  Gross profit margin of 7.9 percent decreased from 10.9 percent in the prior year's third quarter, primarily as a result of lower sales volume and higher health care costs offset partly by lower pension costs.  At the Corporate level, administrative expense increased 5.6 percent in third quarter 2014 primarily as a result of higher consulting fees. 

The effective tax rate was a benefit of 14.1 percent in the quarter compared to expense of 26.2 percent in last year's third quarter.  The recognition of a tax rate benefit in this year's third quarter is due to the combination of much lower pretax earnings and the incorporation of anticipated tax benefits associated with the federal Domestic Production Activities Deduction (DPAD).  Income tax benefits were also recognized in this year's third quarter on a discrete basis for DPAD tax benefits not claimed in prior years and the release of a valuation allowance on certain deferred state tax assets.

Craig F. Maier, President and Chief Executive Officer, said, "Our third quarter was a struggle as our sales volume was negatively impacted by relentless severe weather events in our market areas which adversely reduced our customer counts.  We were able to partially offset the impact of the decline in customer counts with the addition of new stores combined with modest price increases.  On a positive note, we saw a 2.9 percent increase in the quarter in our drive-thru business driven by new ordering equipment and a focus on fast service. Lower revenues in the quarter along with higher health care costs and costs driven by the adverse weather resulted in significantly lower gross profit.  As we look forward to our fourth quarter, we believe our customer traffic will return to more normal trends."

Frisch's Restaurants, Inc. is a regional company that operates full service family-style restaurants under the name "Frisch's Big Boy." All Frisch's Big Boy restaurants are currently located in various regions of Ohio, Kentucky and Indiana.

The Company owns the trademark "Frisch's" and has exclusive, irrevocable ownership of the rights to the "Big Boy" trademark, trade name and service marks in the states of Kentucky and Indiana, and in most of Ohio and Tennessee.  All of the Frisch's Big Boy restaurants also offer "drive-thru" service.  The Company also licenses Frisch's Big Boy restaurants to other operators, currently in certain parts of Ohio, Kentucky and Indiana.

The Company currently operates 96 company-owned Frisch's Big Boy restaurants and there are an additional 25 franchised Frisch's Big Boy restaurants that are operated by licensees. 

The Company has reported a profit every year since going public in 1960, and paid cash dividends to shareholders every quarter over the same period.

Statements contained in this news release which are not historical facts are forward looking statements as that item is defined in the Private Securities Litigation Act of 1995. Such forward looking statements are subject to risks and uncertainties which could cause actual results to differ materially from estimated results. Such risks and uncertainties are detailed in the Company's filings with the Securities and Exchange Commission.

[See attached financial summary]

 

Frisch's Restaurants, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (unaudited)

(In thousands, except per share data)












40 weeks ended


12 weeks ended



March 4,


March 5,


March 4,


March 5,



2014


2013


2014


2013










Sales

$ 155,614


$ 154,920


$  45,161


$  45,772

Cost of sales









Food and paper

51,866


51,857


15,163


15,422


Payroll and related

55,399


54,367


16,679


16,281


Other operating costs

32,745


31,961


9,752


9,102



140,010


138,185


41,594


40,805

Gross profit

15,604


16,735


3,567


4,967


Administrative and advertising

9,443


10,109


2,846


2,695


Franchise fees and other revenue

(1,076)


(1,057)


(293)


(306)


(Gain) Loss on sale of assets

(67)


14


-


-


Impairment of long lived assets

-


71


-


-

Operating profit 

7,304


7,598


1,014


2,578


Interest expense

471


759


120


209

Earnings from continuing operations before income taxes

6,833


6,839


894


2,369

Income taxes

972


2,133


(691)


621

Earnings from continuing operations

5,861


4,706


1,585


1,748

(Loss) from discontinued operations, net of tax

-


(158)


-


-

NET EARNINGS 

$    5,861


$    4,548


$    1,585


$    1,748










Earnings per share (EPS) of common stock:









Basic net earnings per share:









Earnings from continuing operations

$      1.15


$      0.94


$      0.31


$      0.35


(Loss) from discontinued operations

-


(0.03)


-


-


Basic net earnings per share

$      1.15


$      0.91


$      0.31


$      0.35


Diluted net earnings per share:









Earnings from continuing operations

$      1.15


$      0.94


$      0.31


$      0.34


(Loss) from discontinued operations

-


(0.03)


-


-


Diluted net earnings per share

$      1.15


$      0.91


$      0.31


$      0.34

Diluted average shares outstanding

5,097


5,039


5,111


5,073

Depreciation included above

$    8,160


$    7,936


$    2,497


$    2,402

Opening expense included above

$       307


$       461


$       119


$       183










 

Frisch's Restaurants, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEET

(In thousands of dollars)




March 4,


May 28,





2014


2013





(unaudited)




Assets






Current assets







Cash and equivalents

$        1,796


$        4,256




Receivables

1,460


1,297




Inventories

6,403


5,765




Other current assets

2,639


3,103





12,298


14,421



Property and equipment

105,624


102,145



Other assets







Goodwill & other intangible assets

773


775




Property held for sale and land investments

7,637


8,405




Deferred income taxes and other

4,754


2,966





13,164


12,146












$    131,086


$    128,712









Liabilities and shareholders' equity






Current liabilities







Accounts payable

$        7,955


$        5,879




Accrued expenses

7,555


8,025




Other

2,746


5,357





18,256


19,261










Long-term obligations







Long-term debt

8,409


9,600




Other long-term obligations

16,532


16,195





24,941


25,795










Shareholders' equity

87,889


83,656












$    131,086


$    128,712


 

 

SOURCE Frisch's Restaurants, Inc.



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