FRISCH'S RESTAURANTS, INC. CINCINNATI, April 8, 2015 /PRNewswire/ -- Frisch's Restaurants, Inc. (NYSE MKT: FRS) reported revenue of $47,073,000 during its fiscal 2015 third quarter ended March 10, 2015 (consisting of 12 weeks), a 4.2 percent increase from $45,161,000 as reported in the prior year's third quarter. Net earnings increased 43.1 percent in the third quarter to $2,338,000 ($0.45 diluted earnings per share (EPS)) up from $1,634,000 ($0.32 diluted EPS) in the comparable quarter last year.
Several factors contributed to the increase in net earnings. Operating income increased to $2,996,000, up from $1,090,000 in last year's third quarter. Leading the way was a same store sales increase of 4.8 percent on a 0.7 percent increase in customer counts. Improvements in food costs and payroll and related costs were also achieved during this year's third quarter, all of which resulted in an improvement of the restaurant operating margin to 12.1 percent compared to 7.9 percent in the prior year. In addition, the sales of certain excess properties were completed during the winter of 2015, which resulted in combined gains of $1,598,000.
Partly offsetting these advancements, however, were higher administrative costs driven principally by $1,730,000 in legal and audit costs associated with the forensic investigation of the previously disclosed embezzlement that was discovered in the quarter. In addition, this year's net earnings for the third quarter benefitted from an effective tax rate of 20.5 percent, well below 25.1 percent year-to-date. The lower tax rate for the third quarter resulted primarily from federal legislation that was enacted during the quarter to retroactively reinstate certain tax benefits commonly referred to as tax extenders.
Year-to-date revenue was $161,672,000 versus $155,614,000 in the prior year, a 3.9 percent increase, and year-to-date net earnings grew 25.4 percent to $7,425,000 ($1.45 diluted EPS) from $5,920,000, ($1.16 diluted EPS) in the prior year.
Craig F. Maier, President and Chief Executive Officer, said, "Our third quarter showed strong operating results on both the revenue and the cost side. New menu items and good third quarter growth on the drive-thru of 11.0 percent combined with better weather conditions in 2015 drove the revenue increase. On the cost side we are beginning to see some relief in beef prices from their historically high levels, which resulted in lower food cost in the quarter. Overall, we believe our business is in a strong position as we move into our fourth quarter."
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 95 company-owned Frisch's Big Boy restaurants and there are an additional 26 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
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March 10, March 4, March 10, March 4,
2015 2014 2015 2014
---- ---- ---- ----
Sales $161,672 $155,614 $47,073 $45,161
Cost of sales
Food and paper 54,596 51,866 15,719 15,163
Payroll and related 55,779 55,399 16,535 16,679
Other operating costs 32,294 32,745 9,132 9,752
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142,669 140,010 41,386 41,594
Restaurant operating income 19,003 15,604 5,687 3,567
Administrative and advertising 12,288 9,352 4,603 2,770
Franchise fees and other revenue, net (1,136) (1,076) (337) (293)
(Gain) on sale of real property (3,003) (67) (1,598) -
Impairment of long-lived assets 653 - 23 -
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Operating income 10,201 7,395 2,996 1,090
Interest expense 290 471 55 120
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Earnings before income taxes 9,911 6,924 2,941 970
Income taxes 2,486 1,004 603 (664)
----- ----- --- ----
NET EARNINGS $7,425 $5,920 $2,338 $1,634
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Earnings per share (EPS) of common stock:
Basic net earnings per share $1.45 $1.16 $.46 $.32
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Diluted net earnings per share $1.45 $1.16 $.45 $.32
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Diluted average shares outstanding 5,135 5,097 5,146 5,111
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Depreciation included above $8,017 $8,160 $2,395 $2,497
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Frisch's Restaurants, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands of dollars)
March 10, June 3,
2015 2014
(unaudited)
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Assets
Current assets
Cash and equivalents $4,621 $1,124
Trade and other receivables 1,886 1,900
Inventories 6,113 5,637
Other current assets 3,766 4,653
----- -----
16,386 13,314
Property and equipment 102,359 104,862
Other assets
Goodwill & other intangible assets 771 773
Real property not used in operations 6,028 6,744
Other 3,584 3,261
----- -----
10,383 10,778
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$129,128 $128,954
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Liabilities and shareholders' equity
Current liabilities
Long-term debt, current maturities $822 $1,996
Accounts payable 7,009 7,594
Accrued and other expenses 9,671 9,319
----- -----
17,502 18,909
Long-term obligations
Long-term debt 1,453 4,737
Other long-term obligations 11,785 12,055
------ ------
13,238 16,792
Shareholders' equity 98,388 93,253
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$129,128 $128,954
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SOURCE Frisch's Restaurants, Inc.
