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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 10-Q
 
(Mark One)
 
 
[X]
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 9, 2002
 
OR
 
 
[_]
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                      to                     
 
 
Commission file number 0-19649
 
 
Checkers Drive-In Restaurants, Inc.
(Exact name of Registrant as specified in its charter)
 
 
Delaware
 
58-1654960
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. employer
identification no.)
4300 West Cypress Street
   
Suite 600
   
Tampa, FL
 
33607
(Address of principal executive offices)
 
(Zip code)
 
Registrant’s telephone number, including area code: (813) 283-7000
 
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 Registrant had 12,252,365 shares of Common Stock, par value $.001 per share, outstanding as of September 9, 2002.


Table of Contents
 
TABLE OF CONTENTS
 
PART  I
  
FINANCIAL INFORMATION
  
PAGE
Item  1
  
Financial Statements
    
       
3
       
4
       
5
       
6
Item 2
     
10
Item 3
     
17
Item 4
     
18
PART  II
  
OTHER INFORMATION
    
Item 1
     
18
Item 2
     
20
Item 3
     
20
Item 4
     
20
Item 5
     
20
Item 6
     
20

2


Table of Contents
ITEM 1.    FINANCIAL STATEMENTS
 
CHECKERS DRIVE-IN RESTAURANTS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(UNAUDITED)
 
    
September 9, 2002

    
December 31, 2001

 
Current Assets:
                 
Cash and cash equivalents
  
$
14,192
 
  
$
7,159
 
Restricted cash
  
 
3,818
 
  
 
3,482
 
Accounts, notes and leases receivable, net
  
 
2,922
 
  
 
3,420
 
Inventory
  
 
1,054
 
  
 
1,122
 
Prepaid expenses and other current assets
  
 
1,780
 
  
 
2,337
 
Property and equipment held for sale
  
 
2,174
 
  
 
3,230
 
    


  


Total current assets
  
 
25,940
 
  
 
20,750
 
Property and equipment, net
  
 
48,378
 
  
 
49,136
 
Notes receivable, net—less current portion
  
 
3,970
 
  
 
3,527
 
Leases receivable, net—less current portion
  
 
5,969
 
  
 
6,669
 
Intangible assets, net
  
 
44,933
 
  
 
45,189
 
Other assets, net
  
 
1,732
 
  
 
1,989
 
    


  


    
$
130,922
 
  
$
127,260
 
    


  


Current Liabilities:
                 
Current maturities of long-term debt and obligations under capital leases
  
$
3,204
 
  
$
4,743
 
Accounts payable
  
 
6,393
 
  
 
6,645
 
Reserves for restaurant relocations and abandoned sites
  
 
1,534
 
  
 
1,879
 
Accrued wages and benefits
  
 
2,466
 
  
 
2,271
 
Accrued liabilities
  
 
6,407
 
  
 
7,686
 
    


  


Total current liabilities
  
 
20,004
 
  
 
23,224
 
Long-term debt, less current maturities
  
 
22,258
 
  
 
25,192
 
Obligations under capital leases, less current maturities
  
 
6,454
 
  
 
6,981
 
Long-term reserves for restaurant relocations and abandoned sites
  
 
2,418
 
  
 
2,549
 
Minority interests in joint ventures
  
 
224
 
  
 
312
 
Deferred revenue
  
 
5,141
 
  
 
5,440
 
Other long-term liabilities
  
 
4,270
 
  
 
3,938
 
    


  


Total liabilities
  
 
60,769
 
  
 
67,636
 
Stockholders’ Equity:
                 
Preferred stock, $.001 par value, authorized 2,000,000 shares, none
issued at September 9, 2002 and December 31, 2001
  
 
—  
 
  
 
—  
 
Common stock, $.001 par value, authorized 175,000,000 shares, issued
12,300,607 at September 9, 2002 and 10,914,727 at December 31, 2001
  
 
12
 
  
 
11
 
Additional paid-in capital
  
 
145,581
 
  
 
143,004
 
Accumulated deficit
  
 
(74,908
)
  
 
(82,891
)
    


  


    
 
70,685
 
  
 
60,124
 
Less:    Treasury stock, 48,242 at September 9, 2002
            and December 31, 2001, at cost
  
 
(465
)
  
 
(400
)
            Note receivable—officer
  
 
(67
)
  
 
(100
)
    


  


Total stockholders’ equity
  
 
70,153
 
  
 
59,624
 
    


  


    
$
130,922
 
  
$
127,260
 
    


  


 
See accompanying notes to consolidated financial statements.

3


Table of Contents
CHECKERS DRIVE-IN RESTAURANTS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Dollars in thousands except per share amounts)
(UNAUDITED)
 
    
Quarter Ended

    
Three Quarters Ended

 
    
Sept. 9, 2002

    
Sept. 10, 2001

    
Sept. 9, 2002

    
Sept. 10, 2001

 
REVENUES:
                                   
Restaurant sales
  
$
38,816
 
  
$
34,306
 
  
$
114,964
 
  
$
99,197
 
Franchise royalty revenue
  
 
3,485
 
  
 
3,655
 
  
 
10,287
 
  
 
10,932
 
Franchise fees and other income
  
 
103
 
  
 
28
 
  
 
278
 
  
 
392
 
    


  


  


  


Total revenues
  
$
42,404
 
  
$
37,989
 
  
$
125,529
 
  
$
110,521
 
    


  


  


  


COSTS AND EXPENSES:
                                   
Restaurant food and paper costs
  
 
12,040
 
  
 
11,245
 
  
 
35,211
 
  
 
32,891
 
Restaurant labor costs
  
 
12,093
 
  
 
11,346
 
  
 
35,784
 
  
 
32,560
 
Restaurant occupancy expenses
  
 
2,651
 
  
 
3,125
 
  
 
8,109
 
  
 
8,333
 
Restaurant depreciation and amortization
  
 
1,559
 
  
 
929
 
  
 
4,166
 
  
 
2,869
 
Other restaurant operating expenses
  
 
5,219
 
  
 
4,722
 
  
 
15,640
 
  
 
12,939
 
General and administrative expenses
  
 
2,598
 
  
 
2,976
 
  
 
8,405
 
  
 
8,700
 
Advertising
  
 
2,690
 
  
 
1,690
 
  
 
7,013
 
  
 
5,470
 
Bad debt expense
  
 
23
 
  
 
161
 
  
 
223
 
  
 
502
 
Non-cash compensation
  
 
23
 
  
 
30
 
  
 
69
 
  
 
76
 
Other depreciation and amortization
  
 
156
 
  
 
661
 
  
 
463
 
  
 
2,377
 
Impairment of long lived assets
  
 
429
 
  
 
223
 
  
 
921
 
  
 
223
 
Restaurant closure expense
  
 
449
 
  
 
98
 
  
 
867
 
  
 
(139
)
Gain on sale of assets
  
 
(609
)
  
 
(203
)
  
 
(712
)
  
 
(746
)
    


  


  


  


Total costs and expenses
  
 
39,321
 
  
 
37,003
 
  
 
116,159
 
  
 
106,055
 
    


  


  


  


Operating income
  
 
3,083
 
  
 
986
 
  
 
9,370
 
  
 
4,466
 
OTHER INCOME (EXPENSE):
                                   
Interest income
  
 
317
 
  
 
478
 
  
 
1,032
 
  
 
1,383
 
Interest expense
  
 
(705
)
  
 
(914
)
  
 
(2,349
)
  
 
(3,572
)
    


  


  


  


Income before minority interests and income tax expense
  
 
2,695
 
  
 
550
 
  
 
8,053
 
  
 
2,277
 
Minority interests in operations of joint ventures
  
 
(9
)
  
 
(7
)
  
 
(38
)
  
 
(43
)
    


  


  


  


Income before income tax expense
  
 
2,686
 
  
 
543
 
  
 
8,015
 
  
 
2,234
 
Income tax expense
  
 
—  
 
  
 
91
 
  
 
—  
 
  
 
163
 
    


  


  


  


Net income
  
$
2,686
 
  
$
452