<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
FOR QUARTER ENDED MARCH 5, 1995 COMMISSION FILE NUMBER 1-7323
FRISCH'S RESTAURANTS, INC.
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
OHIO 31-0523213
- - ---------------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2800 GILBERT AVENUE, CINCINNATI, OHIO 45206
- - -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 513-961-2660.
-------------------------
Not Applicable
- - -------------------------------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
----- -----
The total number of shares outstanding of the issuer's no par common stock, as
of March 31, 1995 was:
6,618,952
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF EARNINGS ................. 3
CONSOLIDATED BALANCE SHEET ......................... 4 - 5
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY ..... 6
CONSOLIDATED STATEMENT OF CASH FLOWS ............... 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ......... 8 - 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS .................. 13
PART II - OTHER INFORMATION 13 - 14
</TABLE>
<PAGE> 3
<TABLE>
FRISCH'S RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
<CAPTION>
Forty Weeks Ended Twelve Weeks Ended
------------------------------- ----------------------------------
March 5, March 6, March 5, March 6,
1995 1994 1995 1994
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
REVENUE
Sales $123,095,656 $121,119,807 $34,323,812 $33,457,933
Other 1,283,290 1,633,994 346,208 627,283
------------ ------------ ------------- -------------
Total revenue 124,378,946 122,753,801 34,670,020 34,085,216
COSTS AND EXPENSES
Cost of sales
Food and paper 39,348,615 39,239,605 11,400,622 11,105,656
Payroll and related 42,744,513 40,290,881 12,486,542 11,545,283
Other operating costs 31,400,516 28,923,172 9,645,570 8,622,277
------------ ------------ ------------- -------------
113,493,644 108,453,658 33,532,734 31,273,216
General and administrative 3,737,557 4,476,015 1,209,019 1,082,955
Advertising 3,048,821 2,951,511 847,580 830,145
Interest 1,506,513 1,179,867 530,901 377,046
------------ ------------ ------------- -------------
Total costs and expenses 121,786,535 117,061,051 36,120,234 33,563,362
------------ ------------ ------------- -------------
Earnings (loss) before income taxes 2,592,411 5,692,750 (1,450,214) 521,854
INCOME TAXES 778,000 2,078,000 (698,000) 191,000
------------ ------------ ------------- -------------
NET EARNINGS (LOSS) $ 1,814,411 $ 3,614,750 ($ 752,214) $ 330,854
============ ============ ============= =============
Primary and fully diluted net earnings (loss)
per share of common stock $.27 $.55 ($.11) $.05
============ ============ ============= =============
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
3
<PAGE> 4
<TABLE>
FRISCH'S RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<CAPTION>
ASSETS
March 5, May 29,
1995 1994
(unaudited)
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 496,286 $ 200,900
Receivables
Trade 1,299,108 1,194,231
Other 583,044 1,210,287
Inventories 4,109,991 3,571,655
Prepaid expenses and sundry deposits 2,115,616 1,788,928
Prepaid and deferred income taxes 760,992 465,181
----------- -----------
Total current assets 9,365,037 8,431,182
PROPERTY, EQUIPMENT AND CAPITALIZED LEASES - AT COST
Land and improvements 22,494,107 20,297,436
Buildings 50,168,003 47,006,784
Equipment and fixtures 51,485,990 49,265,878
Leasehold improvements and buildings on leased land 23,814,895 22,658,295
Capitalized leases 10,195,505 10,775,208
Construction in progress 4,563,427 2,471,385
----------- -----------
162,721,927 152,474,986
Less accumulated depreciation and amortization 68,474,776 66,225,550
----------- -----------
94,247,151 86,249,436
OTHER ASSETS
Intangible assets 766,032 769,167
Investments in land - at cost 665,074 665,074
Property held for sale 2,004,237 2,329,004
Net cash surrender value-life insurance policies 3,102,253 2,849,223
Deferred income taxes 282,722 282,722
Other 2,270,689 2,532,324
----------- -----------
9,091,007 9,427,514
----------- -----------
$112,703,195 $104,108,132
=========== ===========
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
4
<PAGE> 5
<TABLE>
LIABILITIES
<CAPTION>
March 5, May 29,
1995 1994
(unaudited)
------------- ------------
<S> <C> <C>
CURRENT LIABILITIES
Long-term obligations due within one year
Long-term debt $ 1,904,563 $ 337,045
Obligations under capitalized leases 511,521 546,951
Self insurance 1,394,936 1,239,652
Accounts payable 8,091,348 8,409,909
Accrued expenses 5,577,004 5,630,561
Income taxes -- 36,102
------------- ------------
Total current liabilities 17,479,372 16,200,220
LONG-TERM OBLIGATIONS
Long-term debt 17,049,568 10,717,691
Obligations under capitalized leases 6,633,163 7,021,974
Self insurance 5,129,154 4,546,152
Other 2,172,522 2,033,207
------------- ------------
30,984,407 24,319,024
COMMITMENTS -- --
SHAREHOLDERS' EQUITY
Capital stock
Preferred stock - authorized, 3,000,000 shares
without par value; none issued -- --
Common stock - authorized, 12,000,000 shares
without par value; issued, 6,808,939 and
6,548,201 shares - stated value - $1 6,808,939 6,548,201
Additional contributed capital 54,624,224 52,188,112
------------- ------------
61,433,163 58,736,313
Retained earnings 6,234,399 8,299,729
------------- ------------
67,667,562 67,036,042
Less cost of treasury stock (189,987 and 183,457 shares) 3,428,146 3,447,154
------------- ------------
64,239,416 63,588,888
------------- ------------
$112,703,195 $104,108,132
============= ============
</TABLE>
5
<PAGE> 6
<TABLE>
FRISCH'S RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FORTY WEEKS ENDED MARCH 5, 1995 AND MARCH 6, 1994
(UNAUDITED)
<CAPTION>
Common stock
at $1 per share - Additional
Shares and contributed Retained Treasury
amount capital earnings shares Total
------------ ------------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at May 30, 1993 $6,297,536 $48,591,962 $8,597,646 ($3,429,035) $60,058,109
Net earnings for forty weeks -- -- 3,614,750 -- 3,614,750
Treasury shares reissued -- (8,327) -- 52,578 44,251
Treasury shares acquired -- -- -- (20,670) (20,670)
Dividends
Cash - $.18 per share -- -- (1,136,262) -- (1,136,262)
Stock - 4% 250,665 3,604,563 (3,855,228) -- --
------------ ------------- ------------ ----------- -------------
Balance at March 6, 1994 6,548,201 52,188,198 7,220,906 (3,397,127) 62,560,178
Net earnings for twelve weeks -- -- 1,460,824 -- 1,460,824
Treasury shares reissued -- (86) -- 395 309
Treasury shares acquired -- -- -- (50,422) (50,422)
Dividends
Cash - $.06 per share -- -- (382,001) -- (382,001)
------------ ------------- ------------ ----------- -------------
Balance at May 29,1994 6,548,201 52,188,112 8,299,729 (3,447,154) 63,588,888
Net earnings for forty weeks -- -- 1,814,411 -- 1,814,411
Treasury shares reissued -- (9,610) -- 23,771 14,161
Treasury shares acquired -- -- -- (4,763) (4,763)
Dividends
Cash - $.18 per share -- -- (1,173,281) -- (1,173,281)
Stock - 4% 260,738 2,445,722 (2,706,460) -- --
------------ ------------- ------------ ----------- -------------
Balance at March 5, 1995 $6,808,939 $54,624,224 $6,234,399 ($3,428,146) $64,239,416
============ ============= ============ =========== =============
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
6
<PAGE> 7
<TABLE>
FRISCH'S RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FORTY WEEKS ENDED MARCH 5, 1995 AND MARCH 6, 1994
(UNAUDITED)
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income $ 1,814,411 $ 3,614,750
Adjustments to reconcile net income
to net cash from operating activities:
Depreciation and amortization 7,510,907 7,075,886
(Gain) Loss on disposition of assets (190,030) 498,998
Write off Texas goodwill -- 886,447
Changes in assets and liabilities:
Decrease (increase) in receivables 522,366 (672,417)
(Increase) decrease in inventories (538,336) 93,653
(Increase) decrease in prepaid expenses and sundry deposits (326,688) 336,392
Increase in prepaid income taxes (295,811) (786,264)
Decrease in accounts payable (318,561) (448,039)
Decrease in accrued expenses (53,557) (846,447)
Decrease in income taxes (36,102) (235,393)
Decrease (increase) in other assets 266,305 (336,435)
Increase in self insured obligations 738,286 755,866
Increase in other liabilities 302,035 292,908
-------------- --------------
Net cash provided by operating activities 9,395,225 10,229,905
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Additions to property (16,968,507) (13,735,828)
Proceeds from disposition of property 1,829,572 1,282,435
Increase in other assets (272,175) (426,902)
-------------- --------------
Net cash (used in) investing activities (15,411,110) (12,880,295)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from borrowings 8,135,000 4,000,000
Payment of long-term obligations (659,846) (587,956)
Cash dividends paid (1,173,281) (1,136,262)
Treasury share transactions 9,398 23,581
-------------- --------------
Net cash provided by financing activities 6,311,271 2,299,363
-------------- --------------
Net increase (decrease) in cash and equivalents 295,386 (351,027)
Cash and equivalents at beginning of year 200,900 546,677
-------------- --------------
Cash and equivalents at end of quarter $ 496,286 $ 195,650
============== ==============
Supplemental disclosures:
Stock dividends issued $ 2,706,460 $ 3,855,228
Interest paid 1,499,593 1,149,882
Income taxes paid 1,243,233 3,102,322
Income tax refunds received (133,320) (2,665)
Lease transactions capitalized -- 179,640
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
7
<PAGE> 8
Frisch's Restaurants, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - ACCOUNTING POLICIES
A summary of the Company's significant accounting policies consistently applied
in the preparation of the accompanying consolidated financial statements
follows:
CONSOLIDATION PRACTICES
The consolidated financial statements include the accounts of Frisch's
Restaurants, Inc. and all of its subsidiaries.
CASH AND CASH EQUIVALENTS
Highly liquid investments with original maturities of three months or less are
considered to be cash equivalents. Outstanding checks in the amount of $888,109
at May 29, 1994 were included in accounts payable.
RECEIVABLES
The Company values its trade notes and accounts receivable on the reserve
method. The reserve balance was $62,736 at March 5, 1995 and $36,349 at May 29,
1994.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined by
the first-in, first-out (FIFO) method. During the quarter ended September 18,
1994 the Company changed its method of accounting for its commissary
inventories from the last-in, first-out (LIFO) method to the FIFO method with
an immaterial effect on the annual financial statements.
INCOME TAXES
Taxes are provided on all items included in the statement of earnings
regardless of when such items are reported for tax purposes.
PROPERTY AND EQUIPMENT
Depreciation is provided principally on the straight-line method over the
estimated service lives of the assets.
INTANGIBLE ASSETS
The excess of cost over equity in net assets of subsidiaries acquired prior to
November 1, 1970, is not currently being amortized because, in the opinion of
management, the value has not decreased.
Due to changed business conditions, plans for the development of Company
operated or franchised Big Boy restaurants in the state of Texas ceased during
the year ended May 29, 1994. Accordingly, the remaining goodwill of $886,447
ascribed to the acquisition of Big Boy licensing rights for Texas was charged
against earnings during the quarter ended September 19, 1993.
NEW STORE OPENING COSTS
New store opening costs are capitalized and amortized over a one year period
from the date each new store opened. Items capitalized include new employee
training costs, the cost of an employee team to coordinate the opening and the
cost of certain replacement items such as uniforms and china.
BENEFIT PLANS
The Company has three defined benefit pension plans covering substantially all
of its employees. The benefits are based on years-of-service and other
factors. The Company's funding policy is to contribute annually the maximum
8
<PAGE> 9
Frisch's Restaurants, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE A - ACCOUNTING POLICIES (CONTINUED)
amount that can be deducted for federal income tax purposes. Contributions are
intended to provide not only for benefits attributed to service-to-date, but
also for those expected to be earned in the future.
SELF INSURANCE
The Company self-insures its casualty and a portion of its employee medical
coverages. The amounts shown on the balance sheet represent management's
estimate for future claims. There is insurance in place which provides for
catastrophic losses.
REVENUE RECOGNITION
Franchise fees, based on sales of franchisees, are recorded on the accrual
method as earned. There was no significant income from initial fees.
INVESTMENT IN SPORTS FRANCHISE
The Company's limited partnership investment in the Cincinnati Reds is carried
at cost. An income distribution of $210,000 was recorded in earnings when
received in the quarter ended March 6, 1994. A distribution has not been
received in 1995.
RECLASSIFICATION
Last year's financial statements have been reclassified to conform to the 1995
presentation.
<TABLE>
<CAPTION>
NOTE B - LONG-TERM DEBT
March 5, 1995 May 29, 1994
-------------------------- --------------------------
Payable Payable Payable Payable
within after within after
one year one year one year one year
-------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C>
Industrial revenue
bond financing $ 200 $ 600 $200 $ 600
Revolving credit loan - 6,000 - 10,000
Term loan 1,500 10,250 - -
Other 205 200 137 118
------ ------- ---- -------
$1,905 $17,050 $337 $10,718
====== ======= ==== =======
</TABLE>
<TABLE>
<CAPTION>
The portion payable after one year matures as follows:
March 5, May 29,
1995 1994
------------ -----------
(in thousands)
<S> <C> <C>
Period ending in 1996 $ - $ 275
1997 1,841 10,224
1998 7,759 219
1999 1,700 -
2000 1,500 -
Subsequent to 2000 4,250 -
------- -------
$17,050 $10,718
======= =======
</TABLE>
9
<PAGE> 10
Frisch's Restaurants, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE B - LONG-TERM DEBT (CONTINUED)
The revolving credit loan is a $10,000,000 line of credit, $6,000,000 of which
is outstanding at March 5, 1995. This credit loan matures on August 30, 1997,
unless extended. Interest is payable quarterly determined by various indices,
currently 7.28%. The term loan, converted from a revolving credit loan during
the quarter ended December 11, 1994, is payable in monthly installments of
$125,000 through December 31, 2002. Interest is also payable monthly at a rate
equal to the prime rate up to a maximum of 7.5% through December 31, 1997. The
rate for the final five years shall also be equal to the prime rate, not to
exceed 8.5%.
These agreements contain covenants relating to net worth, interest expense,
debt and capitalization changes, investments and leases. Compensating balances
are not required.
The Company also has a $2,694,000 outstanding letter of credit in support of
its self insurance.
The industrial revenue bonds, issued in 1978, are payable in annual
installments of $200,000 through 1998 and bear interest at 7.3% to 7.4%.
Property and equipment having a book value at March 5, 1995 of $2,804,000 is
pledged as collateral for the bonds.
NOTE C - LEASED PROPERTY
The Company has capitalized the leased property of 50% of its non-owned
restaurant locations. The majority of the leases are for fifteen or twenty
years and contain renewal options for ten to fifteen years. Delivery equipment
is held under capitalized leases expiring during periods to 2001. The Company
also occupies office space under an operating lease which expires during 2003.
An analysis of the leased property follows:
<TABLE>
<CAPTION>
Asset balances at
------------------------
Mar. 5, May 29,
1995 1994
------- ------
(in thousands)
<S> <C> <C>
Restaurant facilities $ 9,715 $ 9,715
Equipment 481 1,060
------- ------
10,196 10,775
Less accumulated amortization (5,402) (5,511)
------- -------
$ 4,794 $ 5,264
======= =======
</TABLE>
Total rental expense of operating leases for the forty weeks was:
<TABLE>
<CAPTION>
1995 1994
------ ------
(in thousands)
<S> <C> <C>
Minimum rentals $1,269 $1,307
Contingent rentals
(percent of excess sales) 27 90
------ ------
$1,296 $1,397
====== ======
</TABLE>
10
<PAGE> 11
Frisch's Restaurants, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE C - LEASED PROPERTY (CONTINUED)
Future minimum lease payments under capitalized leases and operating leases
having an initial or remaining term of one year or more follow:
<TABLE>
<CAPTION>
Capitalized Operating
Period ending March 5, leases leases
---------------------- ----------- ---------
(in thousands)
<S> <C> <C>
1996 $1,282 $1,368
1997 1,212 1,239
1998 1,085 1,118
1999 978 926
2000 902 780
2000 to 2010 8,096 3,655
------ ------
Total 13,555 $9,086
======
Amount representing interest (6,410)
------
Present value of obligations 7,145
Portion due within one year (512)
------
Long-term obligations $6,633
======
</TABLE>
NOTE D - INCOME TAXES
The provision for income taxes in all periods has been computed based on
management's estimate of the tax rate for the entire fiscal year. During the
quarter ended March 5, 1995, the estimated tax rate was changed from 36.5% to
30%.
NOTE E - CAPITAL STOCK
Shareholders approved the 1993 Stock Option Plan on October 4, 1993. The plan
authorizes the grant of stock options for up to 520,000 shares of the Common
Stock of the Company for a ten year period beginning May 9, 1994, the day after
the expiration of the 1984 Stock Option Plan. The shares may be optioned at not
less than seventy-five percent of the fair market value on the date granted and
may include stock appreciation rights. No options have been granted under the
1993 plan.
The 1984 Stock Option Plan expired on May 8, 1994. Outstanding options are
exercisable within ten years from the date of grant. The exercise price is the
fair market value as of the date granted.
The outstanding stock options for the 1984 plan follow:
<TABLE>
<CAPTION>
Option Price
------------------------------
Shares Per Share Total
------ --------- ------------
<S> <C> <C> <C>
Chairman 78,952 $18.18 $1,435,347
President 94,208 $15.55-$22.53 1,957,098
Other key employees 94,047 $18.18 1,709,774
</TABLE>
Shares reserved under these plans have been adjusted for stock dividends.
There are no other outstanding options, warrants or rights.
11
<PAGE> 12
Frisch's Restaurants, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE F - PENSION PLANS
<TABLE>
<CAPTION>
The following table sets forth the plans' funded status and amounts recognized in the Company's balance
sheet at May 29, 1994 and May 30, 1993 (latest available data, in thousands):
1994 1993
-------- ---------
<S> <C> <C>
Plan assets at fair market value, primarily marketable securities
and insurance funds $17,704 $18,016
------- -------
Actuarial present value of benefit obligations:
Vested benefits 9,591 10,454
Non vested benefits 814 299
------- -------
Accumulated benefit obligations 10,405 10,753
Effect of projected future salary increases 3,388 2,912
------- -------
Projected benefit obligations 13,793 13,665
------- -------
Plan assets in excess of projected benefit obligations (including approximately
$525 at 1994 and $549 at 1993 withdrawable by participants upon demand) 3,911 4,351
Unrecognized net gains (2,840) (3,206)
Unrecognized prior service cost 947 1,089
Unamortized net transition (assets) (1,895) (2,132)
------- -------
Net prepaid pension included in the balance sheet $ 123 $ 102
======= =======
</TABLE>
Assumptions used to develop net periodic pension cost and the
actuarial present value of projected benefit obligations:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Expected long-term rate of return on plan assets 8.5% 8.5%
Weighted average discount rate 7.25 7.5
Rate of increase in compensation levels 5.5 5.5
Pension expense for the forty weeks ended March 5, 1995 and March
6, 1994 was $261,113 and $244,884, respectively.
</TABLE>
NOTE G - EARNINGS PER SHARE
Earnings per common share are based on the weighted average number of common
and common equivalent shares outstanding during each period, which gives effect
to stock options.
<TABLE>
<CAPTION>
Weighted average
common shares
(Primary and
fully diluted)
----------------
<S> <C>
Quarter ending March 5, 1995 6,619,003
Year-to-date at March 5, 1995 6,618,679
Quarter ending March 6,1994 6,623,211
Year-to-date at March 6, 1994 6,622,855
</TABLE>
NOTE H - COMPANY REPRESENTATIONS
The financial information is unaudited but in the opinion of management
includes all adjustments (all of which were normal recurring adjustments)
necessary for a fair presentation of results of operations for such periods.
12
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- - ---------------------
Total revenue rose $1,625,000, or 1.3%, in the first three quarters of fiscal
1995. The increase came primarily from new Big Boy restaurants opened during
the past year. Same store sales for the third quarter declined more rapidly
than the first two quarters due to winter storms which swept the Company's
market areas for five weekends in January and February. Menu prices were
increased 2.4% in March 1995 and 2.3% in May 1994.
Cost of sales rose 4.6% over last year. Payroll and related expenses were 6.1%
higher than the prior year due to a number of factors. The average hourly rate
of pay for restaurant employees has risen significantly faster than inflation
throughout the year, reflecting the tightening of the labor market. Payroll
expense as a percentage of sales runs higher initially when opening new stores.
Also, staffing schedules could not be reduced quickly enough to avoid higher
payroll percentages during the severe weather weeks. In addition, last year's
expense was reduced by lowering of estimates for future obligations of
self-insured general and medical insurance plans. Other operating expenses
rose 8.6% due to higher manager training costs and depreciation which relate to
the new Big Boy restaurant expansion program.
General and administrative expense declined 16.5% because the Company wrote off
the remaining goodwill associated with Big Boy licensing rights in the state of
Texas in last year's first quarter.
Interest expense continued to rise due to higher rates combined with higher
debt levels incurred to finance new restaurant properties.
The estimated annual rate of income tax for the current year was reduced to 30%
in the third quarter due to the first-ever losing quarter since becoming a
publicly-held company in 1960. The resulting drop in probable full year
earnings, when combined with existing tax credits, should produce an effective
tax rate well below the preceding year.
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
During the first three quarters of fiscal 1995, cash provided by operating
activities was $9,400,000 and an additional $8,100,000 was borrowed. These
funds were primarily invested in new Big Boy restaurant construction and new
restaurant sites. Six new Big Boys - five new locations and one replacement
unit - were opened in the first half of this fiscal year, and constuction of
four more was started during the third quarter.
The Company has decided to cut back on new Big Boy openings for calendar 1995.
Plans now call for the opening of six Big Boys during calendar year 1995
(including the four which began construction in the third quarter). As of
March 5, 1995, restaurants under construction plus those scheduled to begin
during the fourth quarter totaled $4,600,000. Cash flow from operating
activities plus funds available from the revolving credit loan should be
adequate to complete the anticipated construction. It is the Company's
intention to operate within cash flow and avoid additional borrowing upon
completion of the current construction cycle.
PART II - OTHER INFORMATION
- - ---------------------------
Items 1, 2, 3, 4, and 5, the answers to which are either "none" or "not
applicable", are omitted.
Item 6. Exhibits and reports on Form 8-K.
a) Exhibits
None
b) Reports on Form 8-K.
The Company did not file a report on Form 8-K during the forty weeks
ended March 5, 1995.
13
<PAGE> 14
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRISCH'S RESTAURANTS, INC.
--------------------------
(registrant)
4/13/95
DATE________________________
/s/ Louis J. Ullman
BY________________________________
Louis J. Ullman Senior Vice
President-Finance and
Principal Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF EARNINGS OF FRISCH'S RESTAURANTS, INC. AND SUBSIDIARIES
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
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