Karcher Sees 16% Drop in 2nd Quarter

Carl Karcher Enterprises Inc. reported a 16% drop in second-quarter net earnings, which the company attributed a decision to buy back a block of outstanding shares.

Despite the decline in net earnings to $4.7 million from $5.6 million, revenue for the period ended Aug. 14 totaled $122.9 million, up 17.6% from $104.5 million a year ago, Karcher executives said.

The Anaheim-based company, which owns and operates the Carl’s Jr. fast-food chain, reported that net income for the first half of fiscal 1990 was $10.4 million, a 16.1% drop from $12.4 million in the same period last year. Revenue for the first half totaled $271.7 million, a 19% climb from the comparable period last year.

Loren Pannier, chief financial officer, traced the slide in net income to the company’s decision to repurchase and retire nearly 25% of its outstanding shares in August, 1988. The company reduced its marketable securities portfolio and increased its bank borrowings to pay for this transaction--which, in turn, caused a drop in investment and other income but an increase in interest expense.

At the same time, Karcher Enterprises’ earnings per share increased because there were fewer shares outstanding.

Moreover, operating income improved in both the second-quarter and first-half results over the comparable periods last year, company officers said.

The company, which owns or franchises 511 Carl’s Jr. restaurants in four states, has opened 25 company-owned stores in 1989 and plans to open 35 more this year. Pannier said he expects a turnaround on net income “in the very near term.”