CHECKERS DRIVE IN RESTAURANTS INC /DE - 10-Q Quarterly Report

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 6, 2004

¨	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 11,342,805 shares of Common Stock, par value $.001 per share, outstanding as of September 6, 2004 (excludes 1,418,400 shares held in treasury).

TABLE OF CONTENTS


		PAGE
PART I	FINANCIAL INFORMATION

Item 1	Financial Statements

	Consolidated Balance Sheets September 6, 2004 and December 29, 2003	3

	Consolidated Statements of Income and Comprehensive Income for the Quarters ended September 6, 2004 and September 8, 2003 and for the Three Quarters ended September 6, 2004 and September 8, 2003	4

	Consolidated Statements of Cash Flows Three Quarters ended September 6, 2004 and September 8, 2003	5

	Notes to Consolidated Financial Statements	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	Unregistered Sales of Equity Securities and Use of Proceeds	20

Item 3	Defaults Upon Senior Securities	21

Item 4	Submission of Matters to a Vote of Security Holders	21

Item 5	Other Information	21

Item 6	Exhibits and Reports on Form 8-K	21

ITEM 1. FINANCIAL STATEMENTS

CHECKERS DRIVE-IN RESTAURANTS, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(UNAUDITED)


	September 6, 2004			December 29, 2003
Current Assets:
Cash and cash equivalents	$	7,498		$	13,566
Accounts, notes and leases receivable, net		3,346			3,182
Inventory		847			1,112
Prepaid rent		465			1,522
Deferred income tax assets		3,562			3,585
Property and equipment held for sale		1,027			1,313
Other current assets		668			498

Total current assets		17,413			24,778

Restricted cash		4,429			4,141
Property and equipment, net		52,895			47,270
Notes receivable, net - less current portion		5,051			4,325
Leases receivable, net - less current portion		4,685			5,371
Intangible assets, net		17,231			20,940
Deferred income tax assets		20,665			21,104
Other assets		1,228			1,506

	$	123,597		$	129,435

Current Liabilities:
Current maturities of long-term debt and obligations under capital leases	$	2,172		$	3,071
Accounts payable		4,299			5,110
Reserves for restaurant relocations and abandoned sites		1,056			999
Accrued wages and benefits		2,481			2,166
Accrued self insurance		931			1,327
Accrued liabilities		6,034			4,832

Total current liabilities		16,973			17,505

Long-term debt, less current maturities		16,678			19,974
Obligations under capital leases, less current maturities		4,370			4,982
Long-term reserves for restaurant relocations and abandoned sites		4,529			4,602
Deferred revenue		3,548			4,249
Accrued self insurance		3,763			3,366
Other long-term liabilities		1,166			1,290

Total liabilities		51,027			55,968

Stockholders’ Equity:
Preferred stock, $.001 par value, authorized 2,000,000 shares, none issued at September 6, 2004 and December 29, 2003		—			—
Common stock, $.001 par value, authorized 175,000,000 shares, issued 12,761,205 at September 6, 2004 and 12,541,588 at December 29, 2003		13			12
Additional paid-in capital		149,448			147,733
Accumulated deficit		(63,274	)		(70,583	)

		86,187			77,162
Less: Treasury stock, 1,418,400 shares at September 6, 2004 500,000 shares at December 29, 2003, at cost		(13,617	)		(3,695	)

Total stockholders’ equity		72,570			73,467

	$	123,597		$	129,435

See accompanying notes to the consolidated financial statements

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
	September 6, 2004			September 8, 2003			September 6, 2004			September 8, 2003
REVENUES:
Restaurant sales	$	40,653		$	39,405		$	121,209		$	121,284
Franchise royalty revenue		3,911			3,584			11,675			10,607
Franchise fees and other income		411			17			730			201

Total revenues		44,975			43,006			133,614			132,092

COSTS AND EXPENSES:
Restaurant food and paper costs		13,265			12,397			38,698			38,109
Restaurant labor costs		11,710			12,355			36,014			36,903
Restaurant occupancy expenses		2,351			2,766			7,708			8,526
Restaurant depreciation and amortization		1,611			1,360			4,273			3,951
Other restaurant operating expenses		5,545			5,434			15,215			15,261
General and administrative expenses		3,405			2,955			10,285			9,846
Advertising		2,510			2,819			7,318			7,820
Bad debt expense		57			51			170			267
Non-cash compensation		544			—			544			46
Other depreciation and amortization		273			192			807			568
Impairment of long lived assets		—			131			—			196
Restaurant retirement costs, net		101			(123	)		(207	)		(91	)
Loss/(Gain) on sale of assets, net		265			(186	)		10			(449	)

Total costs and expenses		41,637			40,151			120,835			120,953

Operating income		3,338			2,855			12,779			11,139
OTHER INCOME (EXPENSE):
Interest income		233			260			698			795
Interest expense		(569	)		(553	)		(1,630	)		(1,892	)

Income before minority interest, income tax expense and cumulative effect of a change in accounting principle		3,002			2,562			11,847			10,042
Minority interests in operations of joint ventures		—			(54	)		—			(91	)

Income before income tax expense and cumulative effect of a change in accounting principle		3,002			2,508			11,847			9,951
Income tax expense		1,361			—			4,538			66

Income before cumulative effect of a change in accounting principle		1,641			2,508			7,309			9,885
Cumulative effect of a change in accounting principle - net of income tax effect		—			—			—			(51	)

Net income	$	1,641		$	2,508		$	7,309		$	9,834

Comprehensive income	$	1,641		$	2,508		$	7,309		$	9,834

Basic net earnings per share	$	0.14		$	0.21		$	0.62		$	0.82

Diluted net earnings per share	$	0.13		$	0.20		$	0.58		$	0.76

Weighted average number of common shares outstanding:
Basic		11,440			11,871			11,859			12,048
Diluted		12,228			12,827			12,654			12,872

See accompanying notes to consolidated financial statements.

CHECKERS DRIVE-IN RESTAURANTS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(UNAUDITED)

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents