FRISCH'S RESTAURANTS, INC. 
By 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.
