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Frisch's Reports Higher Sales and Earnings In Second Quarter of Fiscal 2012

2012-01-11

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Frisch's Restaurants, Inc. (NYSE Amex: FRS) reported higher earnings and revenue for its 12-week fiscal second quarter ended December 13, 2011. Net earnings for the quarter increased 12.2 percent to $2,788,106 compared to $2,484,877 last year, largely the result of a lower effective tax rate. Diluted net earnings per share increased 14.3 percent to $0.56 per share, from $0.49 per share last year.

Revenue increased modestly to $70,741,753 from $70,651,447 in last year's second quarter. However, negatively affecting the revenue comparison is the closure of six underperforming Golden Corral units on August 23, 2011. Excluding the impact of these closures, revenue increased 4.0 percent in the quarter on solid growth in the Golden Corral segment. Year-to-date revenue was $162,469,942 versus $163,577,281 in the prior year. Excluding the impact of the Golden Corral closures, year-to-date revenue grew 1.7 percent over the same period in fiscal 2011.

In our Big Boy segment, same store sales were up 0.4 percent while overall sales increased 2.3 percent as a result of new store openings. Gross profit in the Big Boy segment declined 6.6 percent in the quarter versus prior year primarily as a result of higher food and paper costs and depreciation expense. Higher food costs continue to reflect industry trends driven by increased costs of beef and other raw materials.

Same store sales in our Golden Corral segment increased 7.8 percent. Gross profit in the Golden Corral segment increased 39.1 percent in the quarter versus prior year as a result of increased same store revenue combined with the elimination of losses generated by the closed stores.

Craig F. Maier, President and Chief Executive Officer, commented on the results, "Although the restaurant industry continues to suffer from declining customer counts and over capacity driven by the soft economy, the strength of our company's brands allowed us to deliver solid results in the quarter. Our Golden Corral restaurants posted a strong same store sales increase during the quarter as the national marketing campaigns of Golden Corral drove revenue gains along with the migration of some customers from our six closed restaurants to nearby locations."

The company opened one new Big Boy restaurant in July in our first quarter and a second restaurant in October in our second quarter. Frisch's currently operates 95 company-owned Big Boy restaurants and there are an additional 25 franchised Big Boy restaurants operated by licensees. The company also operates 29 Golden Corral restaurants.

Frisch's Restaurants, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF EARNINGS (unaudited)
(In thousands, except per share data)

		Twenty-eight weeks ended		Twelve weeks ended
		December 13,	December 14,	December 13,	December 14,
		2011	2010	2011	2010

Sales		$ 162,470	$ 163,577	$ 70,742	$ 70,651
Cost of sales
	Food and paper	57,223	56,080	24,766	24,100
	Payroll and related	54,160	54,382	23,365	23,617
	Other operating costs	36,877	36,797	15,355	15,534
		148,260	147,259	63,486	63,251
Gross profit		14,210	16,318	7,256	7,400
	Administrative and advertising	9,484	8,805	3,890	3,992
	Franchise fees and other revenue	(694)	(696)	(304)	(296)
	Impairment of long-lived assets	4,000	-	-	-
Operating profit		1,420	8,209	3,670	3,704
	Interest expense	808	849	351	375
Earnings before income tax		612	7,360	3,319	3,329
Income taxes		98	2,134	531	844
NET EARNINGS		$ 514	$ 5,226	$ 2,788	$ 2,485

Earnings per share (EPS) of common stock:
	Basic net earnings per share	$.10	$1.03	$.57	$.49
	Diluted net earnings per share	$.10	$1.02	$.56	$.49
Diluted average shares outstanding		4,939	5,112	4,937	5,098
Depreciation included above		$ 8,113	$ 8,287	$ 3,429	$ 3,725
Opening expense included above		$ 398	$ 916	$ 115	$ 368

Frisch's Restaurants, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
(In thousands of dollars)
			December 13,	May 31,
			2011	2011
			(unaudited)
Assets
	Current assets
		Cash and equivalents	$ 1,744	$ 2,449
		Receivables	1,432	1,997
		Inventories	6,429	5,717
		Other current assets	4,841	4,697
			14,446	14,860
	Property and equipment		161,500	172,922
	Other assets
		Goodwill & other intangible assets	1,138	1,237
		Property held for sale and land investments	11,131	3,845
		Deferred income taxes and other	2,214	2,410
			14,483	7,492

			$ 190,429	$ 195,274

Liabilities and shareholders' equity
	Current liabilities
		Accounts payable	$ 10,035	$ 10,216
		Accrued expenses	10,254	10,083
		Other	9,650	8,801
			29,939	29,100

	Long-term obligations
		Long-term debt	19,205	22,573
		Other long-term obligations	16,234	18,073
			35,439	40,646

	Shareholders' equity		125,051	125,528

			$ 190,429	$ 195,274