SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 22, 2004
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 þ No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b - 2). Yes þ No ¨
The Registrant had 12,134,364 shares of Common Stock, par value $.001 per share, outstanding as of March 22, 2004 (excludes 500,000 shares held in treasury).
TABLE OF CONTENTS
| PAGE | ||||
| PART I |
FINANCIAL INFORMATION |
|||
| Item 1 |
Financial Statements |
|||
|
Consolidated Balance Sheets |
3 | |||
| 4 | ||||
|
Consolidated Statements of Cash Flows |
5 | |||
| 6 | ||||
| Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
10 | ||
| Item 3 |
16 | |||
| Item 4 |
16 | |||
| PART II |
OTHER INFORMATION |
|||
| Item 1 |
17 | |||
| Item 2 |
19 | |||
| Item 3 |
19 | |||
| Item 4 |
19 | |||
| Item 5 |
19 | |||
| Item 6 |
19 | |||
2
CHECKERS DRIVE-IN RESTAURANTS, INC.
AND SUBSIDIARIES
(Dollars in thousands)
(UNAUDITED)
| March 22, 2004 |
December 29, 2003 |
|||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 16,592 | $ | 13,566 | ||||
| Accounts, notes and leases receivable, net |
3,346 | 3,182 | ||||||
| Inventory |
1,016 | 1,112 | ||||||
| Prepaid rent |
167 | 1,522 | ||||||
| Deferred income tax assets |
3,585 | 3,585 | ||||||
| Property and equipment held for sale |
1,047 | 1,313 | ||||||
| Other current assets |
765 | 498 | ||||||
| Total current assets |
26,518 | 24,778 | ||||||
| Restricted cash |
4,429 | 4,141 | ||||||
| Property and equipment, net |
48,377 | 47,270 | ||||||
| Notes receivable, net - less current portion |
4,030 | 4,325 | ||||||
| Leases receivable, net - less current portion |
5,256 | 5,371 | ||||||
| Intangible assets, net |
20,876 | 20,940 | ||||||
| Deferred income tax assets |
19,810 | 21,104 | ||||||
| Other assets |
1,457 | 1,506 | ||||||
| $ | 130,753 | $ | 129,435 | |||||
| Current Liabilities: |
||||||||
| Current maturities of long-term debt and obligations under capital leases |
$ | 2,956 | $ | 3,071 | ||||
| Accounts payable |
4,941 | 5,110 | ||||||
| Reserves for restaurant relocations and abandoned sites |
898 | 999 | ||||||
| Accrued wages and benefits |
2,505 | 2,166 | ||||||
| Accrued self insurance |
1,133 | 1,327 | ||||||
| Accrued liabilities |
3,769 | 4,832 | ||||||
| Total current liabilities |
16,202 | 17,505 | ||||||
| Long-term debt, less current maturities |
19,560 | 19,974 | ||||||
| Obligations under capital leases, less current maturities |
4,720 | 4,982 | ||||||
| Long-term reserves for restaurant relocations and abandoned sites |
4,411 | 4,602 | ||||||
| Deferred revenue |
3,882 | 4,249 | ||||||
| Accrued self insurance |
3,931 | 3,366 | ||||||
| Other long-term liabilities |
1,369 | 1,290 | ||||||
| Total liabilities |
54,075 | 55,968 | ||||||
| Stockholders’ Equity: |
||||||||
| Preferred stock, $.001 par value, authorized 2,000,000 shares, none issued at March 22, 2004 and December 29, 2003 |
— | — | ||||||
| Common stock, $.001 par value, authorized 175,000,000 shares, issued 12,634,364 at March 22, 2004 and 12,541,588 at December 29, 2003 |
13 | 12 | ||||||
| Additional paid-in capital |
148,464 | 147,733 | ||||||
| Accumulated deficit |
(68,104 | ) | (70,583 | ) | ||||
| 80,373 | 77,162 | |||||||
| Less: Treasury stock, 500,000 shares at March 22, 2004 shares at December 29, 2003, at cost |
(3,695 | ) | (3,695 | ) | ||||
| Total stockholders’ equity |
76,678 | 73,467 | ||||||
| $ | 130,753 | $ | 129,435 | |||||
See accompanying notes to the consolidated financial statements
3
CHECKERS DRIVE-IN RESTAURANTS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Dollars in thousands except per share amounts)
(UNAUDITED)
| Quarter Ended |
||||||||
| March 22, 2004 |
March 24, 2003 |
|||||||
| REVENUES: |
||||||||
| Restaurant sales |
$ | 39,226 | $ | 39,719 | ||||
| Franchise royalty revenue |
3,739 | 3,308 | ||||||
| Franchise fees and other income |
46 | 54 | ||||||
| Total revenues |
43,011 | 43,081 | ||||||
| COSTS AND EXPENSES: |
||||||||
| Restaurant food and paper costs |
12,148 | 12,441 | ||||||
| Restaurant labor costs |
12,181 | 12,048 | ||||||
| Restaurant occupancy expenses |
2,745 | 2,986 | ||||||
| Restaurant depreciation and amortization |
1,369 | 1,288 | ||||||
| Other restaurant operating expenses |
4,528 | 4,700 | ||||||
| General and administrative expenses |
3,278 | 3,189 | ||||||
| Advertising |
2,303 | 2,501 | ||||||
| Bad debt expense |
54 | 163 | ||||||
| Non-cash compensation |
— | 23 | ||||||
| Other depreciation and amortization |
266 | 182 | ||||||
| Restaurant retirement costs, net |
(27 | ) | 14 | |||||
| Gain on sale of assets, net |
(121 | ) | (176 | ) | ||||
| Total costs and expenses |
38,724 | 39,359 | ||||||
| Operating income |
4,287 | 3,722 | ||||||
| OTHER INCOME (EXPENSE): |
||||||||
| Interest income |
244 | 261 | ||||||
| Interest expense |
(551 | ) | (695 | ) | ||||
| Income before minority interest, income tax expense and cumulative effect of a change in accounting principle |
3,980 | 3,288 | ||||||
| Minority interests in operations of joint ventures |
— | (18 | ) | |||||
| Income before income tax expense and cumulative effect of a change in accounting principle |
3,980 | 3,270 | ||||||
| Income tax expense |
1,501 | — | ||||||
| Income before cumulative effect of a change in accounting principle |
2,479 | 3,270 | ||||||
| Cumulative effect of a change in accounting principle - net of income tax effect |
— | (51 | ) | |||||
| Net income |
$ | 2,479 | $ | 3,219 | ||||
| Comprehensive income |
$ | 2,479 | $ | 3,219 | ||||
| Basic net earnings per share |
$ | 0.21 | $ | 0.26 | ||||
| Diluted net earnings per share |
$ | 0.19 | $ | 0.25 | ||||
| Weighted average number of common shares outstanding: |
||||||||
| Basic |
12,071 | 12,274 | ||||||
| Diluted |
12,879 | 13,001 | ||||||
See accompanying notes to consolidated financial statements.
4
CHECKERS DRIVE-IN RESTAURANTS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(UNAUDITED)
| Quarter Ended |
||||||||
| March 22, 2004 |
March 24, 2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 2,479 | $ | 3,219 | ||||
| Adjustments to reconcile net earnings to cash provided by operating activities: |
||||||||
| Cumulative effect of a change in accounting principle |
— | 51 | ||||||
| Deferred tax expense |
1,447 | — | ||||||
| Depreciation and amortization |
1,635 | 1,470 | ||||||
| Amortization of deferred loan costs |
30 | 51 | ||||||
| Bad debt expense |
54 | 163 | ||||||
| Non-cash compensation |
— | 23 | ||||||
| Gain on sale of assets |
(121 | ) | (176 | ) | ||||
| Minority interest in operations of joint ventures |
— | 18 | ||||||
| Change in assets and liabilities: |
||||||||
| Decrease in receivables |
191 | 298 | ||||||
| (Increase), decrease in inventory |
96 | (66 | ) | |||||
| Decrease in prepaid expenses and other current assets |
1,088 | 942 | ||||||
| (Increase), decrease in other assets |
19 | (12 | ) | |||||
| Decrease in accounts payable |
(170 | ) | (2,522 | ) | ||||
| Decrease in accrued liabilities |
(797 | ) | (1,335 | ) | ||||
| Net cash provided by operating activities |
5,951 | 2,124 | ||||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
(2,476 | ) | (2,555 | ) | ||||
| Proceeds from sale of property and equipment |
50 | 478 | ||||||
| Net cash used in investing activities |
(2,426 | ) | (2,077 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Principal payments on long-term debt and capital lease obligations |
(791 | ) | (765 | ) | ||||
| Increase in restricted cash |
(288 | ) | (355 | ) | ||||
| Proceeds from exercise of stock options and warrants |
580 | 7 | ||||||
| Repayment of note receivable - officer |
— | 67 | ||||||
| Net cash used in financing activities |
(499 | ) | (1,046 | ) | ||||
| Net (decrease), increase in cash |
3,026 | (999 | ) | |||||
| Cash at beginning of period |
13,566 | 14,323 | ||||||
| Cash at end of period |
$ | 16,592 | $ | 13,324 | ||||