CINCINNATI, Jan. 20, 2015 /PRNewswire/ -- Frisch's
Restaurants, Inc. (NYSE MKT: FRS), announced today that it has
filed a civil lawsuit against a former officer for allegedly
defrauding the Company and embezzling a currently estimated
$3.3 million over a multi-year
period. In the Company's view at this point in the investigation,
the fraud is not expected to have a material impact on previously
reported net income for fiscal years 2014, 2013, 2012, and the
first quarter of fiscal 2015. The Company has notified the
appropriate law enforcement agencies and is evaluating the impact
of the fraud on its reports on internal controls over financial
reporting.
The Company's lawsuit alleges that Michael Hudson, the former assistant treasurer,
forged payroll documents and created false documents and accounting
entries to divert Company funds into his personal accounts.
As a part of the civil complaint filed in the Court of Common
Pleas for Hamilton County, Ohio,
the Company is seeking full restitution of the diverted funds.
According to Company representatives, Mr. Hudson told them
that he has assumed full responsibility for his fraudulent actions;
he has resigned.
The Company's Audit Committee of the Board of Directors has
launched a special investigation and retained James Cummins, an attorney with the law firm of
Cummins & Brown LLC and forensic accountants at Deloitte
Financial Advisory Services LLP to assist with the investigation
which is expected to conclude in the next several weeks.
"While we were saddened to learn of these unlawful and
fraudulent acts carried out against the Company by a trusted and
long-time employee, we took swift action as soon as we discovered
the fraud," said Craig Maier,
Frisch's Chief Executive Officer. "As a precautionary measure, the
Company is implementing an additional layer of checks and balances
in our accounting systems to protect against this type of
fraudulent behavior in the future."
"Our employees and shareholders can take pride in the Company's
67-year history of success and its well-deserved reputation for
integrity and responsibility," Mr. Maier added. "We can assure them
that we will devote as much of our human and financial resources as
are necessary to conclude this episode promptly and efficiently.
The true quality and success of the Company's operations can be
measured by the Company's solid financial footing so that the
Company is now net debt free and experiencing continuing improved
financial performance and greater unrestricted cash flow."
About Frisch's Restaurants, Inc.
Frisch's Restaurants, Inc. is a regional company that operates
full service family-style restaurants under the name "Frisch's Big
Boy." All Frisch's Big Boy restaurants are currently
located in various regions of Ohio, Kentucky and Indiana.
The Company owns the trademark "Frisch's" and has exclusive,
irrevocable ownership of the rights to the "Big Boy" trademark,
trade name and service marks in the states of Kentucky and Indiana, and in most of Ohio and Tennessee. All of the Frisch's
Big Boy restaurants also offer "drive-thru" service. The
Company also licenses Frisch's Big Boy restaurants to other
operators, currently in certain parts of Ohio, Kentucky and Indiana.
The Company currently operates 95 company-owned Frisch's Big Boy
restaurants and there are an additional 26 franchised Frisch's Big
Boy restaurants that are operated by licensees.
The Company has reported a profit every year since going public
in 1960, and paid cash dividends to shareholders every quarter over
the same period.
Statements contained in this news release which are not
historical facts are forward looking statements as that item is
defined in the Private Securities Litigation Act of 1995. Such
forward looking statements are subject to risks and uncertainties
which could cause actual results to differ materially from
estimated results. Such risks and uncertainties are detailed in the
Company's filings with the Securities and Exchange Commission.
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SOURCE Frisch's Restaurants, Inc.