EX-99.1 2 cd3776ex991.htm EXHIBIT 99.1

Exhibit 99.1

Message

Message

CHECKERS DRIVE-IN RESTAURANTS, INC.

4300 West Cypress Street, Suite 600 * Tampa, FL 33607 * (813) 283-7000 * (813) 283-7001

NEWS RELEASE               

Checkers Drive-In Restaurants, Inc. Reports Third Quarter 2005 Earnings

          TAMPA, Fla., Oct. 19 /PRNewswire-FirstCall/ -- Checkers Drive-In Restaurants, Inc. (Nasdaq: CHKR) today announced earnings for the fiscal third quarter ended September 12, 2005.

          Highlights for the third quarter of 2005 compared to the year ago quarter are as follows:

          Total revenue was $43.2 million, while operating 7 fewer restaurants

          Company-owned and franchised same-store sales were 0.2% and negative 2.0%, respectively

          Diluted earnings per share were $0.10

          Highlights for the first three quarters of 2005 compared to the year ago period are as follows:

          Company-owned and franchised same-store sales grew 3.7% and 2.3%, respectively

          Diluted earnings per share were $0.55

          Third quarter 2005 results:

          Total revenue, including franchise royalty and fee income, was $43.2 million for the quarter ended September 12, 2005, compared to  $45.0 million for the quarter ended September 6, 2004.  Company-owned restaurants generated sales of $38.4 million versus $40.7 million in the third quarter of 2004, as the Company operated 7 fewer restaurants this year.  The reduction in restaurants was primarily due to the sale of Company-owned restaurants to franchisees.  The Company estimates that Company-owned restaurant sales were impacted by $800,000 during the third quarter of 2005 due to store closures related to Hurricane Katrina.  During the third quarter of 2005, Company-owned same-store sales increased 0.2%, marking positive same-store sales results for the Company in eighteen of the last nineteen quarters.

          Franchise royalty revenue increased to $4.7 million from $3.9 million in the third quarter of 2004, while franchise same-store sales declined 2.0%.  The franchise royalty increase includes $770,000 due to a favorable legal settlement.  Franchise fees and other income were $52,000, compared to $411,000 in the same quarter last year.

          Net income for the third quarter of 2005 was $1.2 million, or $0.10 per diluted share, compared to $1.6 million, or $0.13 per diluted share in the same quarter last year.  The third quarter of 2005 included compensation expense for the independent members of the Board of Directors of $840,000, up from $544,000 in the prior year, hurricane-related insurance deductible expense of $250,000, costs of $189,000 associated with exploring previously announced strategic alternatives and impairment charges of $158,000.  The Company recorded $746,000 in income tax expense for the third quarter of 2005, although only minimal income taxes are expected to be paid in 2005, as net operating loss carry forwards will be used to offset the majority of taxable income.

          Keith Sirois, Checkers Drive-In Restaurants, Inc.’s Chief Executive Officer and President, stated, “Our core operations are solid and the underlying fundamentals remain positive.  We dedicated significant resources this quarter to assess and address the disruption caused by Hurricane Katrina to our Company-owned and franchised operations in New Orleans and other affected regions. While the hurricane initially closed all 20 of our  company-operated stores in New Orleans, we are pleased that we already have eight units back in operation and expect additional stores to open throughout the fourth quarter.  Earnings for the third quarter of 2005 were negatively impacted by the loss of sales in New Orleans and the continuation of occupancy and other operating expenses.  Eight stores have re-opened in New Orleans with sales presently exceeding pre-hurricane sales by over 15%, despite restricted operating hours in these locations.  The Company has property damage and business interruption insurance coverage, however the recovery and recording of insurance proceeds will occur in subsequent quarters. 


          Mr. Sirois continued, “In this cost conscious environment, our ability to convey a compelling price/value proposition is critical to our performance.  While we understand the effect high gasoline prices are having on our guests, we also recognize the opportunity it offers us to attract new customers to our brand, as they trade out of full service to quick service restaurants.”

          At the end of the third quarter, Checkers had a system-wide total of 793 stores, of which 203 were Company-owned and 590 were franchised.

          First three quarters of fiscal 2005 results:

          Total revenue, including franchise royalty and fee income, for the three quarters ended September 12, 2005 was $133.2 million compared to $133.6 million for the same three quarters ended September 6, 2004.  Company-owned stores generated sales of $120.3 million in the first three quarters of 2005 versus $121.2 million for the same period in 2004, while year-to-date same-store sales increased 3.7%.

          During the first three quarters of 2005, franchise royalty revenues increased to $12.8 million from $11.7 million a year ago, including $770,000 in royalties this year relating to a legal settlement.  Franchise fees and other income were $148,000 compared to $730,000 in the same period of the prior year.  Franchise same-store sales grew 2.3% on a year-to-date basis.

          Net income for the first three quarters of 2005 was $6.8 million, or  $0.55 per diluted share, compared with net income of $7.3 million, or $0.58 per diluted share for the first three quarters of 2004.  The first three quarters of 2005 included $251,000 in audit fees relating to our former auditors, $261,000 in costs associated with exploring strategic alternatives and a $300,000 income tax credit, in addition to the compensation expense, insurance deductible and impairment charges noted for the third quarter of 2005.

          Mr. Sirois concluded, “Our exploration of strategic alternatives with the intention of enhancing long-term shareholder value is ongoing, and we are currently in discussions to ensure that our Company’s full potential is maximized. The improvements to our operations are making a real difference to our business, and we are proud of the recognition we have received by leading industry publications, including QSR Magazine ranking our Rally’s(R) brand as Best Drive-Thru in America 2005.  Overall, our ability to deliver consistently positive same-store sales growth and healthy cash flow generation, while broadening and deepening our franchisee relationships, make us excited about the future of our Company.”

          About Checkers Drive-In Restaurants, Inc.

          Checkers Drive-In Restaurants, Inc. ( http://www.checkers.com ) is the largest double drive-thru restaurant chain in the United States. The Company develops, owns, operates and franchises quick-service Checkers and Rally’s double drive-thru restaurants. Checkers/Rally’s is the Official Burger and Drive-Thru Restaurant of NASCAR(R).  In 2005, the Company received the Nation’s Restaurant News Hot! Again Award for its sizzling business performance.


          Checkers Drive-In Restaurants, Inc. will host its quarterly call to discuss the Company’s financial results for the fiscal third quarter ended September 12, 2005 today at 5:00 p.m. Eastern time.  Individual investors can listen to the call at http://www.checkers.com , while institutional investors can access the call via CCBN’s password-protected event management site at http://www.streetevents.com .  The discussion can also be listened to live, toll free by dialing (888) 688-7966, or for international callers (706) 679-8587.  A conference call replay will be available from 7:00 p.m. Eastern time on October 19, 2005 until 7:00 p.m. Eastern time on November 2, 2005 by dialing (800) 633-8625 or for international callers (402) 977-9141.  The Conference ID for the replay is 21264731.  

          Except for historical information, this announcement contains “forward-looking” and “Safe Harbor” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended and the Private Securities Litigation Reform Act of 1995. These forward-looking and Safe Harbor statements reflect management’s expectations based upon currently available information and data; however, actual results are subject to future events and uncertainties, which could cause actual results to materially differ from those projected in these statements. Factors that can cause actual results to materially differ include, but are not limited to: the uncertainties associated with litigation; increased advertising, promotions and discounting by competitors which may adversely affect sales; the ability of the Company and its franchisees to open new restaurants and operate new and existing restaurants profitably; increases in food, labor, utilities, employee benefits and similar costs; economic and political conditions where the Company or its franchisees operate; and new product and concept developments by food industry competitors. Further information regarding factors that could affect the Company’s financial and other results is included in the Company’s Forms 10Q and 10K, filed with the Securities and Exchange Commission.

 

Contacts:

 

Investor Relations

 

Brad Cohen

 

Integrated Corporate Relations, Inc.

 

(203) 682-8211

 

 

 

Media Relations:

 

Kim Francis

 

Checkers Drive-In Restaurants, Inc.

 

(813) 283-7078


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 12,
2005

 

September 6,
2004

 

September 12,
2005

 

September 6,
2004

 

 

 

 

 

 

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant sales

 

$

38,417

 

$

40,655

 

$

120,332

 

$

121,209

 

Franchise royalty revenue

 

 

4,698

 

 

3,909

 

 

12,766

 

 

11,675

 

Franchise fees and other income

 

 

52

 

 

411

 

 

148

 

 

730

 

Total revenues

 

 

43,167

 

 

44,975

 

 

133,246

 

 

133,614

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant food and paper costs

 

 

12,580

 

 

13,265

 

 

38,868

 

 

38,698

 

Restaurant labor costs

 

 

11,306

 

 

11,710

 

 

34,904

 

 

36,014

 

Restaurant occupancy expenses

 

 

2,572

 

 

2,401

 

 

7,272

 

 

7,850

 

Restaurant depreciation and amortization

 

 

1,849

 

 

1,611

 

 

5,279

 

 

4,273

 

Other restaurant operating expenses

 

 

5,235

 

 

5,523

 

 

15,301

 

 

15,151

 

General and administrative expenses

 

 

3,578

 

 

3,434

 

 

11,061

 

 

10,379

 

Advertising

 

 

2,416

 

 

2,510

 

 

7,401

 

 

7,318

 

Non-cash compensation

 

 

840

 

 

544

 

 

840

 

 

544

 

Other depreciation and amortization

 

 

220

 

 

273

 

 

667

 

 

807

 

Impairment of long lived assets

 

 

158

 

 

—  

 

 

158

 

 

—  

 

Restaurant retirement costs, net

 

 

203

 

 

101

 

 

75

 

 

(207

)

Loss on sale of assets, net

 

 

73

 

 

265

 

 

260

 

 

10

 

Total costs and expenses

 

 

41,030

 

 

41,637

 

 

122,086

 

 

120,837

 

Operating income

 

 

2,137

 

 

3,338

 

 

11,160

 

 

12,777

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

303

 

 

233

 

 

813

 

 

698

 

Interest expense

 

 

(466

)

 

(569

)

 

(1,449

)

 

(1,629

)

Income before income tax expense

 

 

1,974

 

 

3,002

 

 

10,524

 

 

11,846

 

Income tax expense

 

 

746

 

 

1,361

 

 

3,711

 

 

4,537

 

Net income

 

$

1,228

 

$

1,641

 

$

6,813

 

$

7,309

 

Comprehensive income

 

$

1,228

 

$

1,641

 

$

6,813

 

$

7,309

 

Basic net earnings per share

 

$

0.11

 

$

0.14

 

$

0.61

 

$

0.62

 

Diluted net earnings per share

 

$

0.10

 

$

0.13

 

$

0.55

 

$

0.58

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

11,431

 

 

11,440

 

 

11,255

 

 

11,859

 

Diluted

 

 

12,393

 

 

12,228

 

 

12,280

 

 

12,654

 


CHECKERS DRIVE-IN RESTAURANTS, INC.
 AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(UNAUDITED)

 

 

September 12,
2005

 

January 3,
2005

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,551

 

$

7,075

 

Accounts, notes and leases receivable, net

 

 

3,862

 

 

2,633

 

Inventory

 

 

1,064

 

 

1,062

 

Prepaid rent

 

 

607

 

 

1,246

 

Deferred income tax assets

 

 

4,075

 

 

4,894

 

Property and equipment held for sale

 

 

1,554

 

 

1,560

 

Other current assets

 

 

951

 

 

383

 

Total current assets

 

 

25,664

 

 

18,853

 

Restricted cash

 

 

4,392

 

 

3,943

 

Property and equipment, net

 

 

55,083

 

 

55,309

 

Notes receivable, net - less current portion

 

 

6,039

 

 

5,082

 

Leases receivable, net - less current portion

 

 

4,293

 

 

4,555

 

Intangible assets, net

 

 

23,908

 

 

24,024

 

Deferred income tax assets

 

 

9,384

 

 

11,094

 

Other assets, net

 

 

1,024

 

 

1,170

 

 

 

$

129,787

 

$

124,030

 

Current Liabilities:

 

 

 

 

 

 

 

Current maturities of long-term debt and obligations under capital leases

 

$

1,858

 

$

2,064

 

Accounts payable

 

 

4,264

 

 

4,724

 

Reserves for restaurant relocations and abandoned sites

 

 

570

 

 

785

 

Accrued wages and benefits

 

 

2,264

 

 

2,890

 

Accrued self insurance

 

 

1,019

 

 

1,390

 

Accrued liabilities

 

 

5,278

 

 

6,180

 

Total current liabilities

 

 

15,253

 

 

18,033

 

Long-term debt, less current maturities

 

 

15,606

 

 

17,082

 

Obligations under capital leases, less current maturities

 

 

3,438

 

 

3,694

 

Long-term reserves for restaurant relocations and abandoned sites

 

 

3,025

 

 

3,326

 

Deferred revenue

 

 

4,912

 

 

4,895

 

Accrued self insurance

 

 

2,799

 

 

2,860

 

Other long-term liabilities

 

 

1,227

 

 

1,188

 

Total liabilities

 

 

46,260

 

 

51,078

 

Stockholders’ Equity:

 

 

 

 

 

 

 

Preferred stock, $.001 par value, authorized 2,000,000 shares, none  issued at September 12, 2005 and January 3, 2005

 

 

—  

 

 

—  

 

Common stock, $.001 par value, authorized 175,000,000 shares, issued 13,248,481 at September 12, 2005 and 12,812,826 at January 3, 2005

 

 

13

 

 

13

 

Additional paid-in capital

 

 

153,765

 

 

150,003

 

Accumulated deficit

 

 

(52,279

)

 

(59,092

)

 

 

 

101,499

 

 

90,924

 

Less:  Treasury stock, 1,785,900 shares at September 12, 2005 and January 3, 2005, at cost

 

 

(17,972

)

 

(17,972

)

Total stockholders’ equity

 

 

83,527

 

 

72,952

 

 

 

$

129,787

 

$

124,030

 


Restaurants Operating in the System
For the Quarters Ended

 

 

Dec. 29,

 

March  22,

 

June  14,

 

Sept. 6,

 

Jan. 3,

 

March  28,

 

June 20,

 

Sept. 12,

 

 

 

2003

 

2004

 

2004

 

2004

 

2005

 

2005

 

2005

 

2005

 

 

 

 

 

 

 

 

 

 

 

Company-operated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of quarter

 

 

242

 

 

222

 

 

222

 

 

221

 

 

210

 

 

207

 

 

205

 

 

206

 

Openings/transfers in

 

 

5

 

 

—  

 

 

7

 

 

2

 

 

1

 

 

1

 

 

2

 

 

1

 

Closings/transfers out

 

 

(25

)

 

—  

 

 

(8

)

 

(13

)

 

(4

)

 

(3

)

 

(1

)

 

(4

)

End of quarter

 

 

222

 

 

222

 

 

221

 

 

210

 

 

207

 

 

205

 

 

206

 

 

203

 

Franchise:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of quarter

 

 

540

 

 

562

 

 

565

 

 

566

 

 

581

 

 

581

 

 

587

 

 

585

 

Openings/transfers in

 

 

31

 

 

3

 

 

10

 

 

15

 

 

5

 

 

7

 

 

5

 

 

7

 

Closings/transfers out

 

 

(9

)

 

—  

 

 

(9

)

 

—  

 

 

(5

)

 

(1

)

 

(7

)

 

(2

)

End of quarter

 

 

562

 

 

565

 

 

566

 

 

581

 

 

581

 

 

587

 

 

585

 

 

590

 

 

 

 

784

 

 

787

 

 

787

 

 

791

 

 

788

 

 

792

 

 

791

 

 

793

 

SOURCE  Checkers Drive-In Restaurants, Inc.
           -0-                                                                      10/19/2005
           /CONTACT:  Investor Relations, Brad Cohen, Integrated Corporate Relations, Inc., +1-203-682-8211, for Checkers; or Media, Kim Francis, Checkers Drive-In Restaurants, Inc., +1-813-283-7078/
           /First Call Analyst: /
           /FCMN Contact: bundyh@checkers.com /