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 June 14, 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 x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b - 2). Yes x No ¨
The Registrant had 11,758,205 shares of Common Stock, par value $.001 per share, outstanding as of June 14, 2004 (excludes 944,000 shares held in treasury).
| PAGE | ||||
| PART I |
FINANCIAL INFORMATION | |||
| Item 1 |
Financial Statements | |||
| Consolidated Balance Sheets June 14, 2004 and December 29, 2003 |
3 | |||
| 4 | ||||
| Consolidated Statements of Cash Flows Two Quarters ended June 14, 2004 and June 16, 2003 |
5 | |||
| 6 | ||||
| Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 10 | ||
| Item 3 |
Quantitative and Qualitative Disclosures About Market Risk | 17 | ||
| Item 4 |
Controls and Procedures | 18 | ||
| PART II |
OTHER INFORMATION | |||
| Item 1 |
Legal proceedings | 18 | ||
| Item 2 |
Changes in Securities, Use of Proceeds and Issuer Repurchases of Equity Securities | 20 | ||
| Item 3 |
Defaults Upon Senior Securities | 20 | ||
| Item 4 |
Submission of Matters to a Vote of Security Holders | 20 | ||
| Item 5 |
Other Information | 21 | ||
| Item 6 |
Exhibits and Reports on Form 8-K | 21 | ||
2
CHECKERS DRIVE-IN RESTAURANTS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(UNAUDITED)
| June 14, 2004 |
December 29, 2003 |
|||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 13,097 | $ | 13,566 | ||||
| Accounts, notes and leases receivable, net |
2,962 | 3,182 | ||||||
| Inventory |
1,033 | 1,112 | ||||||
| Prepaid rent |
318 | 1,522 | ||||||
| Deferred income tax assets |
3,910 | 3,585 | ||||||
| Property and equipment held for sale |
1,027 | 1,313 | ||||||
| Other current assets |
433 | 498 | ||||||
| Total current assets |
22,780 | 24,778 | ||||||
| Restricted cash |
4,429 | 4,141 | ||||||
| Property and equipment, net |
52,007 | 47,270 | ||||||
| Notes receivable, net - less current portion |
4,909 | 4,325 | ||||||
| Leases receivable, net - less current portion |
4,786 | 5,371 | ||||||
| Intangible assets, net |
17,286 | 20,940 | ||||||
| Deferred income tax assets |
21,607 | 21,104 | ||||||
| Other assets |
1,405 | 1,506 | ||||||
| $ | 129,209 | $ | 129,435 | |||||
| Current Liabilities: |
||||||||
| Current maturities of long-term debt and obligations under capital leases |
$ | 2,574 | $ | 3,071 | ||||
| Accounts payable |
4,590 | 5,110 | ||||||
| Reserves for restaurant relocations and abandoned sites |
1,168 | 999 | ||||||
| Accrued wages and benefits |
2,452 | 2,166 | ||||||
| Accrued self insurance |
1,517 | 1,327 | ||||||
| Accrued liabilities |
5,941 | 4,832 | ||||||
| Total current liabilities |
18,242 | 17,505 | ||||||
| Long-term debt, less current maturities |
18,080 | 19,974 | ||||||
| Obligations under capital leases, less current maturities |
4,486 | 4,982 | ||||||
| Long-term reserves for restaurant relocations and abandoned sites |
4,729 | 4,602 | ||||||
| Deferred revenue |
3,403 | 4,249 | ||||||
| Accrued self insurance |
3,243 | 3,366 | ||||||
| Other long-term liabilities |
1,371 | 1,290 | ||||||
| Total liabilities |
53,554 | 55,968 | ||||||
| Stockholders’ Equity: |
||||||||
| Preferred stock, $.001 par value, authorized 2,000,000 shares, none issued at June 14, 2004 and December 29, 2003 |
— | — | ||||||
| Common stock, $.001 par value, authorized 175,000,000 shares, issued 12,702,205 at June 14, 2004 and 12,541,588 at December 29, 2003 |
13 | 12 | ||||||
| Additional paid-in capital |
148,899 | 147,733 | ||||||
| Accumulated deficit |
(64,915 | ) | (70,583 | ) | ||||
| 83,997 | 77,162 | |||||||
| Less: Treasury stock, 944,000 shares at June 14, 2004 500,000 shares at December 29, 2003, at cost |
(8,342 | ) | (3,695 | ) | ||||
| Total stockholders’ equity |
75,655 | 73,467 | ||||||
| $ | 129,209 | $ | 129,435 | |||||
See accompanying notes to the consolidated financial statements
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CHECKERS DRIVE-IN RESTAURANTS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Dollars in thousands except per share amounts)
(UNAUDITED)
| Quarter Ended |
Two Quarters Ended |
|||||||||||||||
| June 14, 2004 |
June 16, 2003 |
June 14, 2004 |
June 16, 2003 |
|||||||||||||
| REVENUES: |
||||||||||||||||
| Restaurant sales |
$ | 41,330 | $ | 42,160 | $ | 80,556 | $ | 81,879 | ||||||||
| Franchise royalty revenue |
4,025 | 3,715 | 7,764 | 7,023 | ||||||||||||
| Franchise fees and other income |
273 | 130 | 319 | 184 | ||||||||||||
| Total revenues |
45,628 | 46,005 | 88,639 | 89,086 | ||||||||||||
| COSTS AND EXPENSES: |
||||||||||||||||
| Restaurant food and paper costs |
13,285 | 13,271 | 25,433 | 25,712 | ||||||||||||
| Restaurant labor costs |
12,123 | 12,500 | 24,304 | 24,548 | ||||||||||||
| Restaurant occupancy expenses |
2,702 | 2,851 | 5,447 | 5,837 | ||||||||||||
| Restaurant depreciation and amortization |
1,293 | 1,303 | 2,662 | 2,591 | ||||||||||||
| Other restaurant operating expenses |
5,100 | 5,097 | 9,628 | 9,797 | ||||||||||||
| General and administrative expenses |
3,554 | 3,655 | 6,832 | 6,844 | ||||||||||||
| Advertising |
2,505 | 2,500 | 4,808 | 5,001 | ||||||||||||
| Bad debt expense |
59 | 53 | 113 | 216 | ||||||||||||
| Non-cash compensation |
— | 23 | — | 46 | ||||||||||||
| Other depreciation and amortization |
268 | 194 | 534 | 376 | ||||||||||||
| Impairment of long lived assets |
— | 65 | — | 65 | ||||||||||||
| Restaurant retirement costs, net |
(281 | ) | 18 | (308 | ) | 32 | ||||||||||
| Gain on sale of assets, net |
(134 | ) | (87 | ) | (255 | ) | (263 | ) | ||||||||
| Total costs and expenses |
40,474 | 41,443 | 79,198 | 80,802 | ||||||||||||
| Operating income |
5,154 | 4,562 | 9,441 | 8,284 | ||||||||||||
| OTHER INCOME (EXPENSE): |
||||||||||||||||
| Interest income |
221 | 274 | 465 | 535 | ||||||||||||
| Interest expense |
(510 | ) | (644 | ) | (1,061 | ) | (1,339 | ) | ||||||||
| Income before minority interest, income tax expense and cumulative effect of a change in accounting principle |
4,865 | 4,192 | 8,845 | 7,480 | ||||||||||||
| Minority interests in operations of joint ventures |
— | (19 | ) | — | (37 | ) | ||||||||||
| Income before income tax expense and cumulative effect of a change in accounting principle |
4,865 | 4,173 | 8,845 | 7,443 | ||||||||||||
| Income tax expense |
1,676 | 66 | 3,177 | 66 | ||||||||||||
| Income before cumulative effect of a change in accounting principle |
3,189 | 4,107 | 5,668 | 7,377 | ||||||||||||
| Cumulative effect of a change in accounting principle - net of income tax effect |
— | — | — | (51 | ) | |||||||||||
| Net income |
$ | 3,189 | $ | 4,107 | $ | 5,668 | $ | 7,326 | ||||||||
| Comprehensive income |
$ | 3,189 | $ | 4,107 | $ | 5,668 | $ | 7,326 | ||||||||
| Basic net earnings per share |
$ | 0.26 | $ | 0.34 | $ | 0.47 | $ | 0.60 | ||||||||
| Diluted net earnings per share |
$ | 0.25 | $ | 0.32 | $ | 0.44 | $ | 0.57 | ||||||||
| Weighted average number of common shares outstanding: |
||||||||||||||||
| Basic |
12,065 | 12,000 | 12,068 | 12,136 | ||||||||||||
| Diluted |
12,855 | 12,790 | 12,867 | 12,895 | ||||||||||||
See accompanying notes to consolidated financial statements.
4