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CKE Restaurants Misses Estimates

Rob Lenihan

CKE Restaurants(CKR Quote) reported a 93% drop in fourth-quarter earnings Friday, as comparisons were hurt by a big tax gain in the year-ago quarter, but the company still missed Wall Street's expectations.

The Carpinteria, Calif.-based company, which operates restaurant brands such as Carl's Jr., Hardee's, La Salsa Fresh Mexican Grill and Green Burrito, earned $10.3 million, or 15 cents a share, down from $140.9 million, or $1.95 a share, a year ago. Analysts polled by Thomson Financial were looking for earnings of 18 cents a share.

The latest quarter includes a $600,000 income tax benefit, which includes the impact of a $4.9 million reduction of the company's deferred tax asset valuation allowance. Last year's results include an income tax benefit of $125.6 million, or $1.73 a share, primarily related to a reduction of the company's previously recorded deferred tax asset valuation allowance.

Sales increased 3% to $359 million. Same-store sales, or sales at restaurants opened at least a year, increased 2.8% and 4.8% at Carl's Jr. and Hardee's, respectively. Analysts polled by Thomson Financial had forecasted revenue of $366 million.

Restaurant operating costs declined 150 basis points to 82.9% of company-operated revenue. The improvement was due to lower food and labor costs, which more than offset a $2.5 million or 170-basis-point increase in workers' compensation and general liability claims expense, as a result of favorable claims expense adjustments during the year-ago quarter.

For the full year, the company posted net income of $50.2 million, or 72 cents a share, down from $181.1 million, or $2.51 a share, in the prior year. Revenue increased $70.1 million, or 4.6%, to $1.6 billion.

Shares were trading down 17 cents, or nearly 1%, to $18.85, in recent trading.