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Carl Karcher Enterprises Posts Loss for Fiscal 1992


ANAHEIM — Citing the unappetizing economy, Carl Karcher Enterprises Inc. said Thursday that it lost $5.5 million, or 31 cents a share, for its fiscal year ended Jan. 25. For the previous year, the company showed a profit of $13 million, or 72 cents a share.

The parent of the Carl's Jr. fast-food chain rang up $502.6 million worth in sales during the latest year, a 7% drop in revenue from the previous year's $540.4 million.

For the fourth quarter, Karcher saw a loss of $13.2 million, or 73 cents a share, contrasted with earnings of $4.7 million, or 26 cents a share, for the same period a year earlier. Three-month sales fell to $105.7 million from $117.3 million.

Results were affected by a onetime charge of $9.1 million, which included severance payments to 60 corporate employees laid off in January. The company, which is self-insured, also added $5 million to its pool of money set aside for possible workers' compensation losses "to bring the reserves to an appropriate level," said Loren Pannier, chief financial officer.

Heavy rains during January also affected fourth-quarter results, Pannier said, explaining: "Fewer people dine out when it's raining."

The company has experienced some turmoil during the past year. In December, its outside board members rejected a leveraged buyout bid by Karcher founder Carl N. Karcher and Freeman Spogli & Co., a Los Angeles investment group. Shortly afterward, the company hired Donald E. Doyle as president and chief executive officer. Doyle, who took the reins in January, set about cutting fat out of the company.

The final quarter's poor showing came as little surprise.

"We had the makings of a difficult year, which ended in a disappointing fourth quarter," Pannier said.

The company--which has 640 Carl's Jr. restaurants in California, Nevada, Oregon, Arizona, Japan, Malaysia and Mexico--had told investors to expect a loss.

"It was anticipated that sales would be down," said Douglas Christopher, an analyst with the brokerage Crowell, Weedon in Los Angeles. "But it looks like they're making the right moves to reposition themselves as a solid competitor here in Southern California."

Pannier said the company plans to "aggressively price certain menu items." Karcher has fostered its image as a purveyor of high-quality charbroiled hamburgers and chicken sandwiches that cost more than entrees offered by other fast-food chains.

In Thursday's trading on the NASDAQ market, Karcher's stock closed at $8.125, down 25 cents.

Lean Times for Fast-Food Chain

For its fourth fiscal quarter, ended Jan. 25, Carl Karcher Enterprises reported a loss of $13.2 million as its revenue fell 10%, to $105.7 million. Figures in thousands of dollars except per-share data:

4th qtr. 4th qtr. 12 months 12 months 1991 1992 1991 1992 Revenue $117,302 $105,745 $540,370 $502,632 Net income (loss) 4,665 (13,214) 13,038 (5,507) Per share (loss) 0.26 (0.73) 0.72 (0.31)

Source: Carl Karcher Enterprises Inc.

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