10-Q

UNITED STATES 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 May 21, 2007

OR

o 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 1-11313

CKE RESTAURANTS, INC.

(Exact name of registrant as specified in its charter)

Delaware	33-0602639
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
6307 Carpinteria Avenue, Ste. A, Carpinteria, California	93013
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (805) 745-7500

Former Name, Former Address and Former Fiscal Year, if changed since last report.

     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 o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     As of June 21, 2007, 63,143,989 shares of the registrant’s common stock were outstanding.

CKE RESTAURANTS, INC. AND SUBSIDIARIES
INDEX

	Page No.
Part I. Financial Information
Item 1    Condensed Consolidated Financial Statements (unaudited):
Condensed Consolidated Balance Sheets as of May 21, 2007 and January 31, 2007		3
Condensed Consolidated Statements of Income for the sixteen weeks ended May 21, 2007 and May 22, 2006		4
Condensed Consolidated Statement of Stockholders’ Equity for the sixteen weeks ended May 21, 2007		5
Condensed Consolidated Statements of Cash Flows for the sixteen weeks ended May 21, 2007 and May 22, 2006		6
Notes to Condensed Consolidated Financial Statements		7
Item 2    Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3    Quantitative and Qualitative Disclosures About Market Risk		41
Item 4    Controls and Procedures		42
Part II. Other Information
Item 1    Legal Proceedings		42
Item 1A Risk Factors		42
Item 2    Unregistered Sales of Equity Securities and Use of Proceeds		42
Item 3    Defaults Upon Senior Securities		43
Item 4    Submission of Matters to a Vote of Security Holders		43
Item 5    Other Information		43
Item 6    Exhibits		44
Signatures		45
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 10.3
EXHIBIT 10.4
EXHIBIT 10.5
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

2

PART 1. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CKE RESTAURANTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par values)

(Unaudited)

	May 21, 2007			January 31, 2007
ASSETS
Current assets:
Cash and cash equivalents	$	26,371		$	18,620
Accounts receivable, net of allowance for doubtful accounts of $1,029 as of May 21, 2007 and $821 as of January 31, 2007		36,452			42,485
Related party trade receivables		5,016			4,644
Inventories, net		26,140			21,708
Prepaid expenses		15,848			13,548
Assets held for sale		19,296			3,949
Advertising fund assets, restricted		17,539			17,896
Deferred income tax assets, net		19,300			25,450
Current assets of discontinued operations		2,096			2,007
Other current assets		3,465			1,971
Total current assets		171,523			152,278
Notes receivable, net of allowance for doubtful accounts of $1,837 as of May 21, 2007 and $2,786 as of January 31, 2007		1,305			775
Property and equipment, net of accumulated depreciation and amortization of $450,805 as of May 21, 2007 and $441,447 as of January 31, 2007		471,751			482,388
Property under capital leases, net of accumulated amortization of $45,572 as of May 21, 2007 and $44,885 as of January 31, 2007		23,774			25,153
Deferred income tax assets, net		87,554			85,997
Goodwill		22,649			22,649
Long-term assets of discontinued operations		19,777			18,859
Other assets, net		9,596			8,539
Total assets	$	807,929		$	796,638
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of bank indebtedness and other long-term debt	$	24,504		$	1,500
Current portion of capital lease obligations		5,423			5,323
Accounts payable		71,796			63,994
Advertising fund liabilities		17,539			17,896
Current liabilities of discontinued operations		2,466			1,749
Other current liabilities		87,573			94,677
Total current liabilities		209,301			185,139
Bank indebtedness and other long-term debt, less current portion		169,071			114,942
Convertible subordinated notes due 2023		15,167			15,167
Capital lease obligations, less current portion		39,310			41,123
Long-term liabilities of discontinued operations		5,247			5,746
Other long-term liabilities		56,999			55,675
Total liabilities		495,095			417,792
Commitments and contingencies (Notes 6 and 14)
Subsequent events (Notes 4 and 12)
Stockholders’ equity:
Preferred stock, $.01 par value; 5,000 shares authorized; none issued or outstanding		—			—
Series A Junior Participating Preferred stock, $.01 par value; 1,500 shares authorized; none issued or outstanding		—			—
Common stock, $.01 par value; 100,000 shares authorized; 63,166 shares issued and 63,157 shares outstanding as of May 21, 2007; 67,247 shares issued and 67,229 shares outstanding as of January 31, 2007		632			672
Common stock held in treasury, at cost; 9 shares as of May 21, 2007 and 18 shares as of January 31, 2007		(193	)		(360	)
Additional paid-in capital		424,468			501,437
Accumulated deficit		(112,073	)		(122,903	)
Total stockholders’ equity		312,834			378,846
Total liabilities and stockholders’ equity	$	807,929		$	796,638

See Accompanying Notes to Condensed Consolidated Financial Statements

3

CKE RESTAURANTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Sixteen Weeks Ended
	May 21, 2007			May 22, 2006
Revenue:
Company-operated restaurants	$	380,524		$	377,143
Franchised and licensed restaurants and other		101,278			96,905
Total revenue		481,802			474,048
Operating costs and expenses:
Restaurant operating costs:
Food and packaging		111,435			108,334
Payroll and employee benefits		110,479			109,490
Occupancy and other		81,874			78,491
Total restaurant operating costs		303,788			296,315
Franchised and licensed restaurants and other		79,492			74,347
Advertising		22,762			22,404
General and administrative		46,027			44,812
Facility action charges, net		(254	)		2,533
Total operating costs and expenses		451,815			440,411
Operating income		29,987			33,637
Interest expense		(5,295	)		(7,042	)
Other income, net		1,624			365
Income before income taxes and discontinued operations		26,316			26,960
Income tax expense		10,617			10,756
Income from continuing operations		15,699			16,204
Loss from discontinued operations (net of income tax benefit of $160 and expense of $32 for the sixteen weeks ended May 21, 2007 and May 22, 2006, respectively)		(348	)		(36	)
Net income	$	15,351		$	16,168
Basic income per common share:
Continuing operations	$	0.24		$	0.27
Discontinued operations		0.00			0.00
Net income	$	0.24		$	0.27
Diluted income per common share:
Continuing operations	$	0.23		$	0.23
Discontinued operations		0.00			0.00
Net income	$	0.23		$	0.23
Dividends per common share	$	0.06		$	0.04
Weighted-average common shares outstanding:
Basic		64,823			59,664
Dilutive effect of stock options, convertible notes and restricted stock		3,327			13,494
Diluted		68,150			73,158

See Accompanying Notes to Condensed Consolidated Financial Statements

4

CKE RESTAURANTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(In thousands, except per share amounts)

(Unaudited)

	Sixteen Weeks Ended May 21, 2007
							Common Stock						Additional						Total
	Common Stock						Held in Treasury						Paid-In			Accumulated			Stockholders’
	Shares			Amount			Shares			Amount			Capital			Deficit			Equity
Balance at January 31, 2007		67,247		$	672			(18	)	$	(360	)	$	501,437		$	(122,903	)	$	378,846
Cash dividends declared ($0.06 per share)		—			—			—			—			—			(3,750	)		(3,750	)
Issuance of restricted stock awards		1			—			—			—			—			—			—
Exercise of stock options		307			3			—			—			1,554			—			1,557
Tax benefit from exercise of stock options		—			—			—			—			1,800			—			1,800
Share-based compensation expense		—			—			—			—			3,101			—			3,101
Repurchase and retirement of common stock		(4,389	)		(43	)		9			167			(83,424	)		—			(83,300	)
Net income		—			—			—			—			—			15,351			15,351
FIN 48 transition amount		—			—			—			—			—			(771	)		(771	)
Balance at May 21, 2007		63,166		$	632			(9	)	$	(193	)	$	424,468		$	(112,073	)	$	312,834

See Accompanying Notes to Condensed Consolidated Financial Statements

5

CKE RESTAURANTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Sixteen Weeks Ended
	May 21, 2007			May 22, 2006
Cash flows from operating activities:
Net income	$	15,351		$	16,168
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		19,884			18,653
Amortization of loan fees		265			1,016
Share-based compensation expense		3,101			1,770
(Recovery of) provision for losses on accounts and notes receivable		(665	)		574
Loss on sales of property and equipment, capital leases and extinguishment of debt		618			569
Facility action charges, net		(463	)		2,562
Deferred income taxes		4,639			10,020
Other non-cash charges (credits)		24			(79	)
Net change in estimated liability for closing restaurants and estimated liability for self-insurance		(2,518	)		(1,797	)
Net change in receivables, inventories, prepaid expenses and other current and non-current assets		(3,247	)		(4,314	)
Net change in accounts payable and other current and long-term liabilities		2,146			1,810
Net cash provided by operating activities		39,135			46,952
Cash flows from investing activities:
Purchases of property and equipment		(35,495	)		(34,635	)
Proceeds from sales of property and equipment		12,118			181
Collections on notes receivable		67			415
Other investing activities		23			20
Net cash used in investing activities		(23,287	)		(34,019	)
Cash flows from financing activities:
Net change in bank overdraft		479			2,768
Borrowings under revolving credit facility		94,000			18,000
Repayments of borrowings under revolving credit facility		(117,000	)		(24,500	)
Borrowings under credit facility term loan		100,179			—
Repayment of credit facility term loan		—			(3,251	)
Repayment of other long-term debt		(52	)		(46	)
Borrowing by consolidated variable interest entity		5			33
Repayments of capital lease obligations		(1,539	)		(1,420	)
Payment of deferred loan fees		(1,022	)		—
Repurchase of common stock		(83,467	)		(1,999	)
Exercise of stock options		1,557			1,153
Tax benefit from exercise of stock options		1,457			244
Dividends paid on common stock		(2,694	)		(2,394	)
Net cash used in financing activities		(8,097	)		(11,412	)
Net increase in cash and cash equivalents		7,751			1,521
Cash and cash equivalents at beginning of period		18,680			21,343
Cash and cash equivalents at end of period	$	26,431		$	22,864

See Accompanying Notes to Condensed Consolidated Financial Statements

6

CKE RESTAURANTS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

Note 1 — Basis of Presentation and Description of Business

     CKE Restaurants, Inc. (“CKE” or the “Company”), through its wholly-owned subsidiaries, owns, operates, franchises and licenses the Carl’s Jr.^®, Hardee’s^®, Green Burrito^® and Red Burrito™ concepts. References to CKE Restaurants, Inc. throughout these Notes to Condensed Consolidated Financial Statements are made using the first person notations of “we,” “us” and “our.”

     Carl’s Jr. restaurants are primarily located in the Western United States. Hardee’s restaurants are located throughout the Southeastern and Midwestern United States. Green Burrito restaurants are primarily located in dual-branded Carl’s Jr. restaurants. The Red Burrito concept is located in dual-branded Hardee’s restaurants. As of May 21, 2007, our system-wide restaurant portfolio consisted of:

	Carl’s Jr.		Hardee’s		Other		Total
Company-operated		398		664		1		1,063
Franchised and licensed		703		1,241		15		1,959
Total		1,101		1,905		16		3,022

     Our accompanying unaudited Condensed Consolidated Financial Statements include the accounts of CKE, our wholly-owned subsidiaries, and certain variable interest entities for which we are the primary beneficiary and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the instructions to Form 10-Q, and Article 10 of Regulation S-X. These financial statements should be read in conjunction with the audited Consolidated Financial Statements presented in our Annual Report on Form 10-K for the fiscal year ended January 31, 2007. In our opinion, all adjustments considered necessary for a fair presentation of financial position and results of operations for this interim period have been included. The results of operations for such interim period are not necessarily indicative of results for the full year or for any future period.

     We operate on a retail accounting calendar. Our fiscal year has 13 four-week accounting periods and ends on the last Monday in January. The first quarter of our fiscal year has four periods, or 16 weeks. All other quarters have three periods, or 12 weeks. For clarity of presentation, we generally label all fiscal year ends as if the fiscal year ended January 31.

     Subsequent to the sixteen weeks ended May 21, 2007, we entered into an agreement to sell our La Salsa Fresh Mexican Grill^® (“La Salsa”) restaurants and the related franchise operations. The results of operations for La Salsa have been classified as discontinued operations for all periods presented (see Note 12) in the accompanying Condensed Consolidated Financial Statements. Certain other prior year amounts in the accompanying Condensed Consolidated Financial Statements have also been reclassified to conform to current year presentation. These reclassifications did not have any impact on net income and net income per common share.

Variable Interest Entities

     As required by Financial Accounting Standards Board (“FASB”) Interpretation 46R, Consolidation of Variable Interest Entities — an interpretation of ARB No. 51 (“FIN 46R”), we consolidate one franchise entity that operates five Hardee’s restaurants since we have concluded that we are the primary beneficiary of this variable interest entity (“VIE”). The assets and liabilities of, and minority interest in, this VIE have been included in our accompanying Condensed Consolidated Balance Sheets and are not significant to our consolidated financial position. The operating results of this VIE have been included in our accompanying Condensed Consolidated Statements of Income and are not significant to our consolidated results of operations.

     We also consolidate a national and approximately 80 local co-operative advertising funds (“Hardee’s Funds”). We have included $17,539 of advertising fund assets, restricted, and advertising fund liabilities in our accompanying Condensed Consolidated Balance Sheet as of May 21, 2007, and $17,896 of advertising fund assets, restricted, and advertising fund liabilities in our accompanying Condensed Consolidated Balance Sheet as of January 31, 2007. Advertising fund assets, restricted, are comprised primarily of cash and receivables. Advertising fund liabilities are comprised primarily of accounts payable and deferred obligations. The Hardee’s Funds have been included in our

7

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

accompanying Condensed Consolidated Statements of Income on a net basis, whereby, in accordance with Statement of Financial Accounting Standards (“SFAS”) 45, Accounting for Franchise Fee Revenue, we do not reflect franchisee contributions as revenue, but rather as an offset to reported advertising expenses.

     Although the VIEs referred to above have been included in our accompanying Condensed Consolidated Financial Statements, we have no rights to the assets, nor do we have any obligation with respect to the liabilities, of these VIEs. None of our assets serve as collateral for the creditors of these VIEs.

Note 2 — Accounting Pronouncements Not Yet Adopted

     In September 2006, the FASB issued SFAS 157, Fair Value Measurements. SFAS 157 establishes a framework for measuring fair value under GAAP and expands disclosures about fair value measurement. SFAS 157 also creates consistency and comparability in fair value measurements among the many accounting pronouncements that require fair value measurements but does not require any new fair value measurements. SFAS 157 is effective for fiscal years (including interim periods) beginning after November 15, 2007, which for us is the first quarter of fiscal 2009. We are currently evaluating the impact of SFAS 157 on our consolidated financial position and results of operations.

     In February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115. This standard amends SFAS 115, Accounting for Certain Investment in Debt and Equity Securities, with respect to accounting for a transfer to the trading category for all entities with available-for-sale and trading securities electing the fair value option. This standard allows companies to elect fair value accounting for many financial instruments and other items that currently are not required to be accounted as such, allows different applications for electing the option for a single item or groups of items, and requires disclosures to facilitate comparisons of similar assets and liabilities that are accounted for differently in relation to the fair value option. SFAS 159 is effective for fiscal years beginning after November 15, 2007, which for us is fiscal 2009. We are currently evaluating the impact of SFAS 159 on our consolidated financial position and results of operations.

Note 3 — Adoption of New Accounting Pronouncements

     In February 2006, the FASB issued SFAS 155, Accounting for Certain Hybrid Financial Instruments — an amendment of FASB Statements No. 133 and 140. SFAS 155 allows financial instruments that contain an embedded derivative and that otherwise would require bifurcation to be accounted for as a whole on a fair value basis, at the holders’ election. SFAS 155 also clarifies and amends certain other provisions of SFAS 133, Accounting for Derivative Instruments and Hedging Activities, and SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities — a replacement of FASB Statement 125. Our adoption of SFAS 155 at the beginning of fiscal 2008 had no impact on our consolidated financial position or results of operations.

     In March 2006, the FASB issued SFAS 156, Accounting for Servicing of Financial Assets — an amendment of FASB Statement No. 140. SFAS 156 provides guidance on the accounting for servicing assets and liabilities when an entity undertakes an obligation to service a financial asset by entering into a servicing contract. Our adoption of SFAS 156 at the beginning of fiscal 2008 had no impact on our consolidated financial position or results of operations.

     In June 2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109, which clarifies the accounting for uncertainty in income taxes recognized in financial statements. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires the recognition, in the financial statements, of the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. We adopted FIN 48 at the beginning of fiscal 2008. See Note 8 for a description of the impact of this adoption on our consolidated financial position and results of operations.

8

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

     In June 2006, the FASB ratified Emerging Issues Task Force (“EITF”) consensus 06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation). This EITF addresses the presentation of taxes in the income statement. Gross or net presentation may be elected for each different type of tax, but similar taxes should be presented consistently. Taxes within the scope of this EITF would include taxes that are imposed on a revenue transaction between a seller and a customer, for example, sales taxes, use taxes, value-added taxes, and some types of excise taxes. Our accounting policy is to present the taxes within the scope of EITF 06-3 on a net basis. Our adoption of EITF 06-3 at the beginning of fiscal 2008 had no impact on our consolidated results of operations.

Note 4 — Share-Based Compensation

     We have various share-based compensation plans that provide restricted stock awards and stock options for certain employees and non-employee directors to acquire shares of our common stock. We record share-based compensation using the fair value method prescribed in SFAS 123 (Revised 2004), Share-Based Payment (“SFAS 123R”). Total share-based compensation expense recognized under SFAS 123R for the sixteen weeks ended May 21, 2007 and May 22, 2006 was $3,138 and $1,770, with associated tax benefits of $867 and $710, respectively, and was included in general and administrative expense in our accompanying Condensed Consolidated Statements of Income.

  Stock Incentive Plans

     The 2005 Omnibus Incentive Compensation Plan (“2005 Plan”) was approved by our stockholders in June 2005 and is an “omnibus” stock plan consisting of a variety of equity vehicles to provide flexibility in implementing equity awards, including incentive stock options, non-qualified stock options, restricted stock awards, unrestricted stock grants, stock appreciation rights and stock units. Participants in the 2005 Plan may be granted any one of the equity awards or any combination thereof, as determined by the Compensation Committee of our Board of Directors. A total of 2,500,000 shares were initially available for grant under the 2005 Plan. The number of shares available for grant under the 2005 Plan was subsequently increased to 5,500,000 shares on June 11, 2007. Options generally have a term of ten years from the date of grant and vest as prescribed by the Compensation Committee. Options are generally granted at a price equal to or greater than the fair market value of the underlying common stock on the date of grant. Restricted stock awards are generally awarded with an exercise price of $0. The 2005 Plan will terminate on March 22, 2015, unless the Board of Directors, at its discretion, terminates the Plan at an earlier date. As of May 21, 2007, 1,182,500 shares are available for future grants of options or other awards under the 2005 Plan, which was increased to 4,182,500 shares available for future grants of options or restricted awards on June 11, 2007.

     Our 2001 Stock Incentive Plan (“2001 Plan”) was approved by our Board of Directors in September 2001. The 2001 Plan has been established as a “broad based plan” as defined by the New York Stock Exchange, whereby at least a majority of the options awarded under the 2001 Plan must be awarded to employees of CKE who are not executive officers or directors within the first three years of the 2001 Plan’s existence. Awards granted to eligible employees under the 2001 Plan are not restricted as to any specified form or structure, with such form, vesting and pricing provisions determined by the Compensation Committee of our Board of Directors. Options generally have a term of ten years from the date of grant. Options are generally granted at a price equal to or greater than the fair market value of the underlying common stock on the date of grant. As of May 21, 2007, 132,656 shares are available for future grants of options or other awards under the 2001 Plan.

9

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

     Our 1999 Stock Incentive Plan (“1999 Plan”) was approved by stockholders in June 1999 and amended and again approved in June 2000. Awards granted to eligible employees under the 1999 Plan are not restricted as to any specified form or structure, with such form, vesting and pricing provisions determined by the Compensation Committee of our Board of Directors. Options generally have a term of ten years from the date of grant, except for incentive stock options granted to 10% or greater stockholders of CKE, which have a term of five years from the date of grant. Options are generally at a price equal to or greater than the fair market value of the underlying common stock on the date of grant, except that incentive stock options granted to 10% or greater stockholders of CKE may not be granted at less than 110% of the fair market value of the common stock on the date of grant. Restricted stock awards are generally awarded with an exercise price of $0 per share. As of May 21, 2007, 244,862 shares are available for future grants of options or other awards under the amended 1999 Plan, with such amount of available shares increased by 350,000 shares on the date of each annual meeting of stockholders.

     Our 1994 Stock Incentive Plan expired in April 1999, and all outstanding options under this plan are fully vested. Outstanding options generally have a term of five years from the date of grant for the non-employee directors and ten years from the date of grant for employees and were priced at the fair market value of the shares on the date of grant. As of May 21, 2007, there were no shares available for future grants of options or other awards under this plan.

     In general, options issued under our stock incentive plans have a term of ten years and vest over a period of three years. We generally issue new shares of common stock for option exercises. The grant date fair value is calculated using a Black-Scholes option valuation model. We did not grant any options under any of our stock incentive plans during the sixteen weeks ended May 21, 2007 and May 22, 2006.

     Transactions under all stock incentive plans, for the sixteen weeks ended May 21, 2007, are as follows:

  Stock options outstanding:

						Weighted-Average		Aggregate
				Weighted-Average		Remaining		Intrinsic
	Shares			Exercise Price		Contractual Life		Value
Outstanding at January 31, 2007		5,374,306		$	13.36		5.38
Exercised		(306,911	)		5.07
Forfeited		(24,707	)		21.19
Expired		(33,180	)		18.07
Outstanding at May 21, 2007		5,009,508		$	13.80		5.13	$	39,736
Exercisable at May 21, 2007		3,669,848		$	13.27		3.89	$	32,252
Expected to vest at May 21, 2007		1,219,653		$	15.19		8.48	$	6,878

  Restricted stock awards:

			Weighted-Average
			Grant Date
	Shares		Fair Value
Restricted stock awards at January 31, 2007		616,012	$	17.36
Granted		775	$	19.34
Restricted stock awards at May 21, 2007		616,787	$	17.36

     Unvested restricted stock awards as of May 21, 2007 consist of 376,787 restricted stock awards that have vesting periods ranging from one to four years and 240,000 performance-vested restricted stock awards that were awarded to certain key executives, pursuant to their amended employment agreements. Performance-vested awards vest upon the achievement of specific performance goals over specified performance periods. Such awards are subject to adjustment based on the final performance relative to the goals, resulting in a minimum award of no shares and a maximum award of 240,000 shares. We begin recognizing the share-based compensation expense related to these awards when we deem the achievement of performance goals to be probable. During the sixteen weeks ended May 21, 2007, we recognized $706 of share-based compensation expense related to performance-vested restricted stock

10

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

awards. There was no share-based compensation expense related to performance-vested restricted stock awards during the sixteen weeks ended May 22, 2006.

     The aggregate intrinsic value of the stock options exercised during the sixteen weeks ended May 21, 2007 and May 22, 2006 was $4,696 and $1,025, respectively. As of May 21, 2007, there was $6,553 of unamortized compensation expense related to stock options. We expect to recognize this expense over a weighted-average period of 1.53 years. As of May 21, 2007, there was $7,499 of unrecognized compensation expense related to restricted stock awards. We expect to recognize this expense over a weighted-average period of 2.08 years.

  Employee Stock Purchase Plan

     In fiscal 1996, our stockholders approved an Employee Stock Purchase Plan (“ESPP”). Under the terms of the ESPP and subsequent amendments, eligible employees may voluntarily purchase, at current market prices, up to a total of 3,907,500 shares of our common stock through payroll deductions. Pursuant to the ESPP, employees may contribute an amount between 3% and 15% of their eligible compensation. The ESPP is considered to be a noncompensatory plan under SFAS 123R.

Note 5 — Other Assets

Other assets as of May 21, 2007 and January 31, 2007 consist of the following:

	May 21,		January 31,
	2007		2007
Intangible assets (see table below)	$	2,837	$	2,922
Deferred financing costs		4,441		3,697
Net investment in lease receivables, less current portion		588		610
Other		1,730		1,310
	$	9,596	$	8,539

     As of May 21, 2007 and January 31, 2007, intangible assets with finite useful lives were primarily comprised of intangible assets obtained through our acquisition of Santa Barbara Restaurant Group, Inc. in fiscal 2003 and our Hardee’s acquisition transactions in fiscal 1998 and 1999. Such intangible assets have amortization periods ranging from 15 to 44 years and are included in other assets, net, in our accompanying Condensed Consolidated Balance Sheets.

     The table below presents identifiable, definite-lived intangible assets as of May 21, 2007 and January 31, 2007:

	Weighted-		May 21, 2007							January 31, 2007
	Average		Gross					Net		Gross					Net
	Life		Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
Intangible Assets	(Years)		Amount		Amortization			Amount		Amount		Amortization			Amount
Trademarks		20	$	3,166	$	(825	)	$	2,341	$	3,166	$	(776	)	$	2,390
Favorable lease agreements		21		1,467		(971	)		496		1,491		(959	)		532
			$	4,633	$	(1,796	)	$	2,837	$	4,657	$	(1,735	)	$	2,922

     Amortization expense related to identifiable, definite-lived intangible assets was $72 and $100 for the sixteen weeks ended May 21, 2007 and May 22, 2006, respectively.

Note 6 — Indebtedness and Interest Expense

     We amended and restated our senior credit facility (“Facility”) on March 27, 2007 and amended the Facility again on May 3, 2007. The Facility provides for a $370,000 senior secured credit facility consisting of a $200,000 revolving credit facility and a $170,000 term loan. The revolving credit facility matures on March 27, 2012, and includes an $85,000 letter of credit sub-facility. The principal amount of the term loan is scheduled to be repaid in 19 quarterly installments of $425, beginning in the second quarter of fiscal 2008; three quarterly payments of $40,375, beginning on April 1, 2012; and a final payment of $40,800 due on January 1, 2013.

     During the sixteen weeks ended May 21, 2007, we did not make any principal payments on the term loan. As of May 21, 2007, we had (i) borrowings outstanding under the term loan portion of the Facility of $170,000, (ii) borrowings outstanding under the revolving portion of the Facility of $22,500, (iii) outstanding letters of credit under the revolving portion of the Facility of $46,310, and (iv) availability under the revolving portion of the Facility of $131,190.

11

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

     The terms of the Facility include certain restrictive covenants. Among other things, these covenants restrict our ability to incur debt, incur liens on our assets, make any significant change in our corporate structure or the nature of our business, prepay certain debt, engage in a change of control transaction without the member banks’ consents and make investments or acquisitions. The Facility is collateralized by a lien on all of our personal property assets and liens on certain restaurant properties.

     As of May 21, 2007, the applicable interest rate on the term loan was the London Inter Bank Offering Rate (“LIBOR”) plus 1.375%, or 6.75%, per annum. For the revolving loan portion of the Facility, the applicable interest rate is Prime plus 0.50% per annum. However, under the terms of the Facility, we are permitted to lock in interest rates for the revolving portion based on LIBOR plus 1.50% for fixed terms ranging from 7 to 90 days. As of May 21, 2007, the applicable interest rate on the revolving loan portion of the Facility was 6.875%. We also incur fees on outstanding letters of credit under the Facility at a per annum rate equal to 1.50% times the stated amounts.

     The Facility permits us to repurchase our common stock and/or pay cash dividends in an aggregate amount up to $288,377 as of May 21, 2007. In addition, the amount that we may spend to repurchase our common stock and/or pay dividends is increased each year by a portion of excess cash flow (as defined in the Facility) during the term of the Facility. Based on the amount of cumulative repurchases of our common stock and payment of cash dividends, we are permitted to make additional common stock repurchases and/or cash dividend payments of $94,489, as of May 21, 2007.

      The Facility permits us to make annual capital expenditures in the amount of $85,000, plus 80% of the amount of actual Adjusted EBITDA (as defined in the Facility) in excess of $150,000. We may also carry forward certain unused capital expenditure amounts to the following year. Based on these terms, and assuming that Adjusted EBITDA in fiscal 2008 is equal to our trailing-13 period Adjusted EBITDA, as defined by our Facility, as of May 21, 2007, the Facility would permit us to make capital expenditures of $143,255 in fiscal 2008, which could increase or decrease based on our performance versus the Adjusted EBITDA formula described above. The Facility contains financial performance covenants, which include a maximum leverage ratio. We were in compliance with these covenants and all other requirements of the Facility as of May 21, 2007.

     The full text of the contractual requirements imposed by the Facility is set forth in the Seventh Amended and Restated Credit Agreement, dated as of March 27, 2007, and the amendment thereto, which we have filed with the Securities and Exchange Commission (“SEC”), and in the ancillary loan documents described therein. Subject to cure periods in certain instances, the lenders under our Facility may demand repayment of borrowings prior to stated maturity upon certain events of default, including, but not limited to, if we breach the terms of the agreement, suffer a material adverse change, engage in a change of control transaction, suffer certain adverse legal judgments, in the event of specified events of insolvency or if we default on other significant obligations. In the event the Facility is declared accelerated by the lenders (which can occur only upon certain events of default under the Facility), our Convertible Subordinated Notes due 2023 (“2023 Convertible Notes”) (described below) may also become accelerated under certain circumstances and after all cure periods have expired.

     The 2023 Convertible Notes bear interest at 4.0% annually, payable in semiannual installments due April 1 and October 1 each year, are unsecured general obligations of ours, and are contractually subordinate in right of payment to certain other of our obligations, including the Facility. On October 1 of 2008, 2013 and 2018, the holders of the 2023 Convertible Notes have the right to require us to repurchase all or a portion of the notes at 100% of the face value plus accrued interest. On October 1, 2008 and thereafter, we have the right to call all or a portion of the notes at 100% of the face value plus accrued interest. The 2023 Convertible Notes became convertible into our common stock effective July 1, 2004, and will remain convertible throughout the remainder of their term.

     During the sixteen weeks ended May 21, 2007, the cumulative dividends declared since the most recent conversion rate adjustment have resulted in a change in the conversion rate per $1 of the notes of 1.2290%, from the previous conversion rate of 113.8160 to an adjusted conversion rate of 115.2148. As a result of the conversion rate adjustment, the previous conversion price of approximately $8.79 has been adjusted to a conversion price of approximately $8.68.

12

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

     The terms of the Facility and the 2023 Convertible Notes are not dependent on any change in our credit rating. We believe the key Company-specific factors affecting our ability to maintain our existing debt financing relationships and to access such capital in the future are our present and expected levels of profitability and cash flows from operations, asset collateral bases and the level of our equity capital relative to our debt obligations. In addition, as noted above, our existing debt agreements include significant restrictions on future financings including, among others, limits on the amount of indebtedness we may incur or which may be secured by any of our assets.

     Interest expense consisted of the following:

	Sixteen Weeks Ended
	May 21, 2007		May 22, 2006
Facility	$	2,943	$	2,125
Capital lease obligations		1,561		1,738
2023 Convertible Notes		187		1,292
Amortization of loan fees		265		1,016
Letter of credit fees and other		339		871
	$	5,295	$	7,042

Note 7 — Facility Action Charges, Net

     The following transactions have been recorded in our accompanying Condensed Consolidated Statements of Income as facility action charges, net:

(i)	impairment of long-lived assets for under-performing restaurants to be disposed of or held and used;
(ii)	store closure costs, including sublease of closed facilities at amounts below our primary lease obligation;
(iii)	gain (loss) on the sale of restaurants and refranchising transactions; and
(iv)	amortization of discount related to estimated liability for closing restaurants.

     The components of facility action charges, net are as follows:

	Sixteen Weeks Ended
	May 21, 2007			May 22, 2006
Carl’s Jr.
Unfavorable dispositions of leased and fee surplus properties, net	$	320		$	667
Impairment of assets to be held and used		—			36
Loss on sales of restaurants and surplus properties, net		4			9
Amortization of discount related to estimated liability for closing restaurants		51			78
		375			790
Hardee’s
New decisions regarding closing restaurants		51			1,776
Unfavorable dispositions of leased and fee surplus properties, net		152			66
Impairment of assets to be disposed of		17			186
Impairment of assets to be held and used		2			4
Gain on sales of restaurants and surplus properties, net		(1,117	)		(601	)
Amortization of discount related to estimated liability for closing restaurants		132			152
		(763	)		1,583
Other
Loss on sales of restaurants and surplus properties, net		134			160

13

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

	Sixteen Weeks Ended
	May 21, 2007			May 22, 2006
Total
New decisions regarding closing restaurants	$	51		$	1,776
Unfavorable dispositions of leased and fee surplus properties, net		472			733
Impairment of assets to be disposed of		17			186
Impairment of assets to be held and used		2			40
Gain on sales of restaurants and surplus properties, net		(979	)		(432	)
Amortization of discount related to estimated liability for closing restaurants		183			230
	$	(254	)	$	2,533

     The following table summarizes the activity in our estimated liability for closing restaurants for the sixteen weeks ended May 21, 2007:

	Carl’s Jr.			Hardee’s			Total
Balance at January 31, 2007	$	3,186		$	9,173		$	12,359
New decisions regarding closing restaurants		—			51			51
Usage		(458	)		(1,236	)		(1,694	)
Unfavorable dispositions of leased and fee surplus properties, net		320			152			472
Amortization of discount		51			132			183
Balance at May 21, 2007		3,099			8,272			11,371
Less current portion		957			2,566			3,523
Long-term portion	$	2,142		$	5,706		$	7,848

     The current and long-term portions of our estimated liability for closing restaurants are included in other current liabilities and other long-term liabilities, respectively, in our accompanying Condensed Consolidated Balance Sheets.

Note 8 — Income Taxes

     Income tax expense consisted of the following:

	Sixteen Weeks Ended
	May 21, 2007			May 22, 2006
Federal and state income taxes	$	10,301		$	10,431
Foreign income taxes		316			325
Income tax expense	$	10,617		$	10,756
Effective income tax rate		40.4	%		39.9	%

     Our effective income tax rates for the sixteen weeks ended May 21, 2007 and May 22, 2006 differ from the federal statutory rate primarily as a result of state income taxes and certain expenses that are nondeductible for income tax purposes.

     We adopted FIN 48 (see Note 3) at the beginning of fiscal 2008. The adoption of FIN 48 resulted in a decrease of $176 in income taxes receivable, an increase of $642 in income tax liabilities, a decrease of $4,948 in deferred income tax assets, a decrease of $4,995 in valuation allowance against deferred income tax assets and an increase of $771 in accumulated deficit. As of the date of adoption and May 21, 2007, we had $6,246 of unrecognized tax benefits, all of which would affect our effective tax rate, if recognized in any future period. We do not expect significant changes in our unrecognized tax benefits in the next twelve months.

     Our policy on the classification of interest and penalties related to the underpayment of income taxes and uncertain tax positions is to record interest in interest expense, and to record penalties, if any, in general and administrative expense, in our condensed consolidated statements of income. During the sixteen weeks ended May 21, 2007, we recognized $6 of interest expense, and we had approximately $65 and $71 of interest accrued as of the

14

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

date of adoption and May 21, 2007, respectively. We had no penalties accrued as of the date of adoption and May 21, 2007.

     We or our subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. We have carried forward various federal and state net operating losses and income tax credits to income tax years that remain open by statute. As a result, such net operating loss and income tax credit carryforwards remain subject to adjustment by the respective tax authorities. The Internal Revenue Service has commenced an examination of our U.S. income tax returns for fiscal 2003 through fiscal 2005. At this time, we do not anticipate this audit to result in a material impact on our condensed consolidated financial statements.

Note 9 — Income Per Share

     We present “basic” and “diluted” income per share. Basic income per share represents net income divided by weighted-average shares outstanding. Diluted income per share represents net income plus the interest and fees relating to any dilutive convertible debt outstanding, divided by weighted-average shares outstanding, including all potentially dilutive securities and excluding all potentially anti-dilutive securities.

     The dilutive effect of stock options is determined using the “treasury stock” method, whereby exercise is assumed at the beginning of the reporting period and proceeds from such exercise, unamortized compensation on share-based awards, and tax benefits arising in connection with share-based compensation, are assumed to be used to purchase our common stock at the average market price during the period. The dilutive effect of convertible debt is determined using the “if-converted” method, whereby interest charges and amortization of debt issuance costs, net of taxes, applicable to the convertible debt are added back to income and the convertible debt is assumed to have been converted at the beginning of the reporting period, with the resulting common shares being included in weighted-average shares.

     The table below presents the computation of basic and diluted earnings per share for the sixteen weeks ended May 21, 2007 and May 22, 2006:

	Sixteen Weeks Ended
	May 21, 2007			May 22, 2006
	(In thousands except per share amounts)
Basic earnings per share:
Income from continuing operations	$	15,699		$	16,204
Loss from discontinued operations		(348	)		(36	)
Net income	$	15,351		$	16,168
Weighted-average shares for computation of basic earnings per share		64,823			59,664
Basic income per share from continuing operations	$	0.24		$	0.27
Basic income per share from discontinued operations		0.00			0.00
Basic net income per share	$	0.24		$	0.27
Diluted earnings per share:
Income from continuing operations	$	15,699		$	16,204
Add: Interest and amortization costs for 2023 Convertible Notes, net of related tax effect		137			917
Income from continuing operations for computation of diluted earnings per share	$	15,836		$	17,121
Loss from discontinued operations	$	(348	)	$	(36	)
Net income	$	15,351		$	16,168
Add: Interest and amortization costs for 2023 Convertible Notes, net of related tax effect		137			917
Net income for computation of diluted earnings per share	$	15,488		$	17,085

15

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

	Sixteen Weeks Ended
	May 21, 2007		May 22, 2006
	(In thousands except per share amounts)
Weighted-average shares for computation of basic earnings per share		64,823		59,664
Dilutive effect of stock options and restricted stock		1,580		1,543
Dilutive effect of 2023 Convertible Notes		1,747		11,951
Weighted-average shares for computation of diluted earnings per share		68,150		73,158
Diluted income per share from continuing operations	$	0.23	$	0.23
Diluted income per share from discontinued operations		0.00		0.00
Diluted net income per share	$	0.23	$	0.23

     The following table presents the number of potentially dilutive shares, in thousands, of our common stock equivalents excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive for the sixteen weeks ended May 21, 2007 and May 22, 2006:

	Sixteen Weeks Ended
	May 21, 2007		May 22, 2006
Stock options and restricted stock		1,208		2,174

Note 10 — Segment Information

     We are principally engaged in developing, operating and franchising our Carl’s Jr. and Hardee’s quick-service restaurants, each of which is considered an operating segment that is managed and evaluated separately. Management evaluates the performance of our segments and allocates resources to them based on several factors, of which the primary financial measure is segment operating income or loss. General and administrative expenses are allocated to each segment based on management’s analysis of the resources applied to each segment. Interest expense related to the Facility and the 2023 Convertible Notes have been allocated based on the use of funds. Certain amounts that we do not believe would be proper to allocate to the operating segments are included in “Other” (i.e., gains or losses on sales of long-term investments and the results of operations of consolidated VIEs). The accounting policies of the segments are the same as those described in our summary of significant accounting policies (see Note 1 of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended January 31, 2007).

	Carl’s Jr.		Hardee’s		Other			Total
Sixteen Weeks Ended May 21, 2007
Revenue	$	258,145	$	222,435	$	1,222		$	481,802
Operating income (loss)		21,427		8,596		(36	)		29,987
Income (loss) before income taxes and discontinued operations		21,231		6,207		(1,122	)		26,316
Goodwill (as of May 21, 2007)		22,649		—		—			22,649

	Carl’s Jr.		Hardee’s		Other			Total
Sixteen Weeks Ended May 22, 2006
Revenue	$	260,114	$	212,630	$	1,304		$	474,048
Operating income (loss)		26,731		7,034		(128	)		33,637
Income (loss) before income taxes and discontinued operations		25,847		1,960		(847	)		26,960
Goodwill (as of May 22, 2006)		22,649		—		—			22,649

Note 11 — Net Assets Held For Sale

     Surplus restaurant properties and company-operated restaurants that we expect to sell within one year are classified in our accompanying Condensed Consolidated Balance Sheets as assets held for sale. As of May 21, 2007, total net assets held for sale were $19,296. This was comprised of one surplus property in our Carl’s Jr. operating segment with a carrying value of $1,316; five surplus properties and a parcel of land collectively valued at $1,952 in our Hardee’s operating segment; and 56 company-operated restaurants, for which

16

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

the sale to three franchisees was deemed probable at May 21, 2007, valued at $16,028 in our Hardee’s operating segment. As of January 31, 2007, total net assets held for sale were $3,949. This was comprised of one surplus property in our Carl’s Jr. operating segment with a carrying value of $1,316 and seven company-operated restaurants and other real property with a collective carrying value of $2,633 in our Hardee’s operating segment.

Note 12 — Discontinued Operations

     Consistent with our strategy to focus on growing Carl’s Jr. and Hardee’s, including dual-branding them with our Mexican brands, Green Burrito and Red Burrito, subsequent to the sixteen weeks ended May 21, 2007, we entered into an agreement to sell our La Salsa restaurants and the related franchise operations. Under the agreement, Santa Barbara Restaurant Group, Inc., a wholly-owned subsidiary of the Company, is expected to sell its 100 percent equity interest in La Salsa, Inc. and La Salsa of Nevada, Inc. We expect the sale of La Salsa to be completed during the second quarter of fiscal 2008. La Salsa was previously reported as a separate operating segment.

     In accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the divestiture of La Salsa qualifies as discontinued operations, and accordingly, we have reported the results of operations and financial position of this segment in discontinued operations in the accompanying Condensed Consolidated Financial Statements for all periods presented. There were certain general and administrative expenses that had previously been allocated to La Salsa that we expect to continue to incur after the divestiture. As such, those expenses have been reallocated to our continuing operations in the accompanying Condensed Consolidated Financial Statements.

     The current and long-term assets and liabilities of the discontinued operations were as follows:

	May 21, 2007		January 31, 2007
Cash and cash equivalents	$	60	$	60
Accounts receivable, net		263		319
Inventories, net		282		257
Prepaid expenses		807		626
Deferred income tax assets, net		548		548
Other current assets		136		197
Current assets of discontinued operations	$	2,096	$	2,007
Notes receivable, net	$	19	$	—
Property and equipment, net		7,393		6,202
Other assets, net		12,365		12,657
Long-term assets of discontinued operations	$	19,777	$	18,859
Accounts payable	$	854	$	293
Other current liabilities		1,612		1,456
Current liabilities of discontinued operations	$	2,466	$	1,749
Deferred income tax liabilities, net	$	2,216	$	2,216
Other long-term liabilities		3,031		3,530
Long-term liabilities of discontinued operations	$	5,247	$	5,746

     The results from discontinued operations were as follows:

	Sixteen Weeks Ended
	May 21, 2007			May 22, 2006
Revenue	$	14,032		$	14,509
Operating loss		(502	)		(3	)
Interest expense		(15	)		(7	)
Other income, net		9			6
Income tax benefit (expense)		160			(32	)
Loss from discontinued operations	$	(348	)	$	(36	)

17

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

     Pursuant to our agreement to sell La Salsa, we will retain contingent liabilities related to tax matters arising prior to the completion of the sale of La Salsa and certain litigation matters existing as of the balance sheet date.

Note 13 — Purchase and Sale of Assets

     During fiscal 2008, we launched a refranchising program that is expected to involve approximately 200 Hardee’s restaurant locations in a number of markets across the Midwest and Southeast United States. During the sixteen weeks ended May 21, 2007, we sold 28 company-operated Hardee’s restaurants and other real property with a net book value of $9,805 to three franchisees. In connection with these transactions, we received aggregate consideration of $10,749 and recognized a net gain of $832, which is included in facility action charges, net in our accompanying Condensed Consolidated Statement of Income for the sixteen weeks ended May 21, 2007 in our Hardee’s segment. As part of these transactions, the franchisees acquired the real property and/or subleasehold interest in the real property related to the restaurant locations.

Note 14 — Commitments and Contingent Liabilities

     In prior years, as part of a refranchising program, we sold restaurants to franchisees. In some cases, these restaurants were on leased sites. We entered into sublease agreements with these franchisees but remained principally liable for the lease obligations. We account for the sublease payments received as franchising rental income and the payments on the leases as rental expense in franchised and licensed restaurants and other expense. As of May 21, 2007, the present value of the lease obligations under the remaining master leases’ primary terms is $106,979. Franchisees may, from time to time, experience financial hardship and may cease payment on the sublease obligation to us. The present value of the exposure to us from franchisees characterized as under financial hardship is $2,798, of which $1,280 is reserved for in our estimated liability for closing restaurants as of May 21, 2007.

     Pursuant to the Facility, a letter of credit sub-facility in the amount of $85,000 was established (see Note 6). Several standby letters of credit are outstanding under this sub-facility, which secure our potential workers’ compensation, general and auto liability obligations. We are required to provide letters of credit each year, or set aside a comparable amount of cash or investment securities in a trust account, based on our existing claims experience. As of May 21, 2007, we had outstanding letters of credit of $46,310, expiring at various dates through July 2008.

     As of May 21, 2007, we had unconditional purchase obligations in the amount of $54,048, which primarily include contracts for goods and services related to restaurant operations and contractual commitments for marketing and sponsorship arrangements.

     We have employment agreements with certain key executives (“Agreements”). These Agreements include provisions for lump sum payments to the executives that may be triggered by the termination of employment under certain conditions, as defined in each Agreement. If such provisions were triggered, each affected executive would receive an amount ranging from one to three times his base salary for the remainder of his employment term plus, in some instances, either all of or a pro-rata portion of the bonus in effect for the year in which the termination occurs. Additionally, all options and restricted stock awarded to the affected executives which have not vested as of the date of termination would vest immediately, and restricted stock awards which have not yet been awarded would be awarded immediately. If all of these Agreements had been triggered as of May 21, 2007, we would have been required to make cash payments of approximately $16,275.

     We are, from time to time, the subject of complaints or litigation from customers alleging illness, injury or other food quality, health or operational concerns. Adverse publicity resulting from such allegations may materially adversely affect us and our restaurants, regardless of whether such allegations are valid or whether we are liable. We are also, at times, the subject of complaints or allegations from current or former employees, franchisees, vendors, landlords and others.

     As of May 21, 2007, we had recorded an accrued liability for contingencies related to litigation in the amount of $910, which relates to certain employment, real estate and other business disputes. Certain of the matters for which

18

CKE RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

we maintain an accrued liability for litigation pose risk of loss significantly above the accrued amounts. In addition, as of May 21, 2007, we estimated the contingent liability of those losses related to other litigation claims that, in accordance with SFAS 5, Accounting for Contingencies, are not accrued, but that we believe are reasonably possible to result in an adverse outcome, to be in the range of $25 to $50.

Note 15 — Stockholders’ Equity

Repurchase of Common Stock

     Pursuant to a program (“Stock Repurchase Plan”) authorized by our Board of Directors, as modified during the sixteen weeks ended May 21, 2007, we are allowed to repurchase up to an aggregate of $250,000 of our common stock. During the sixteen weeks ended May 21, 2007, we repurchased 4,380,020 shares of our common stock at an average price of $19.02 per share, for a total cost, including trading commissions, of $83,300, and we retired 4,370,620 shares. As of May 21, 2007, we had 9,400 shares of common stock that had been repurchased, but not yet retired and are shown as common stock held in treasury in the accompanying Condensed Consolidated Balance Sheet. These shares were retired subsequent to May 21, 2007. As of January 31, 2007, we had 18,300 shares of common stock that had been repurchased, but not yet retired and are shown as common stock held in treasury in the accompanying Condensed Consolidated Balance Sheet. These shares were retired subsequent to January 31, 2007.

     Based on the Board of Directors’ authorization and the amount of cumulative repurchases of our common stock that we have already made thereunder (9,803,757 shares at an average price of $17.74 per share, for a total cost, including trading commissions of $173,913), we are permitted to make additional repurchases of our common stock up to $76,087 under the Stock Repurchase Plan as of May 21, 2007. As part of our Stock Repurchase Plan, we have implemented a share repurchase plan pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), under which we are allowed to repurchase $5,000 of our common stock in the open market each fiscal quarter through the quarter ending January 28, 2008. Rule 10b5-1 allows us to repurchase our common stock when we might otherwise be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods.

Dividends

     During the sixteen weeks ended May 21, 2007, we declared cash dividends of $0.06 per share of common stock, for a total of $3,750. Dividends payable of $3,750 and $2,694 have been included in other current liabilities in our accompanying Condensed Consolidated Balance Sheets as of May 21, 2007 and January 31, 2007, respectively. The dividends declared during the sixteen weeks ended May 21, 2007 were subsequently paid on June 11, 2007.

Note 16 — Supplemental Cash Flow Information

	Sixteen Weeks Ended
	May 21, 2007		May 22, 2006
Cash paid for:
Interest, net of amounts capitalized	$	5,259	$	6,613
Income taxes, net of refunds received	$	525	$	558
Non-cash investing and financing activities:
Gain recognized on sale and leaseback transactions	$	107	$	107
Dividends declared, not paid	$	3,750	$	2,394

     The cash used in financing activities related to the repurchase of common stock for the sixteen weeks ended May 21, 2007 differs from the repurchase of common stock in the statement of stockholders’ equity by $167, reflecting the timing difference between the recognition of common stock repurchase transactions and their settlement for cash. The $193 liability for unsettled repurchases of common stock is included in other current liabilities in the accompanying Condensed Consolidated Balance Sheet as of May 21, 2007.

19

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction and Safe Harbor Disclosure

           CKE Restaurants, Inc. and its subsidiaries (collectively referred to as the “Company”) is comprised of the operations of Carl’s Jr., Hardee’s, Green Burrito (which is primarily operated as a dual-branded concept with Carl’s Jr. quick-service restaurants) and Red Burrito (which is operated as a dual-branded concept with Hardee’s quick-service restaurants). The following Management’s Discussion and Analysis should be read in conjunction with the unaudited Condensed Consolidated Financial Statements contained herein, and our Annual Report on Form 10-K for the fiscal year ended January 31, 2007.

     Matters discussed in this Form 10-Q contain forward-looking statements relating to future plans and developments, financial goals and operating performance that are based on our current beliefs and assumptions. Such statements are subject to risks and uncertainties that are often difficult to predict, are beyond our control and which may cause results to differ materially from expectations. Factors that could cause our results to differ materially from those described include, but are not limited to, whether or not restaurants will be closed and the number of restaurant closures, consumers’ concerns or adverse publicity regarding our products, the effectiveness of operating initiatives and advertising and promotional efforts (particularly at the Hardee’s brand), changes in economic conditions or prevailing interest rates, changes in the price or availability of commodities, availability and cost of energy, workers’ compensation and general liability premiums and claims experience, changes in our suppliers’ ability to provide quality and timely products, delays in opening new restaurants or completing remodels, severe weather conditions, the operational and financial success of our franchisees, franchisees’ willingness to participate in our strategies, the availability of financing for us and our franchisees, unfavorable outcomes in litigation, changes in accounting policies and practices, effectiveness of internal control over financial reporting, new legislation or government regulation (including environmental laws), the availability of suitable locations and terms for the sites designated for development, and other factors as discussed in our filings with the SEC.

     Forward-looking statements speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law or the rules of the New York Stock Exchange.

New Accounting Pronouncements Not Yet Adopted

     See Note 2 of Notes to Condensed Consolidated Financial Statements for a description of the new accounting pronouncements that we have not yet adopted.

Adoption of New Accounting Pronouncements

     See Note 3 of Notes to Condensed Consolidated Financial Statements for a description of the new accounting pronouncements that we have adopted.

Critical Accounting Policies

     Our reported results are impacted by the application of certain accounting policies that require us to make subjective or complex judgments. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact our consolidated financial position and results of operations. Specific risks associated with these critical accounting policies are described in the following paragraphs.

     For all of these policies, we caution that future events rarely develop exactly as expected, and the best estimates routinely require adjustment. Our most significant accounting policies require:

• estimation of future cash flows used to assess the recoverability of long-lived assets and to establish the estimated liability for closing restaurants and subsidizing lease payments of franchisees;

20

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

• estimation, using actuarially determined methods, of our self-insured claim losses under our workers’ compensation, general and auto liability insurance programs;

• determination of appropriate estimated liabilities for loss contingencies;

• determination of appropriate assumptions to use in evaluating leases for capital versus operating lease treatment, establishing depreciable lives for leasehold improvements and establishing straight-line rent expense periods;

• estimation of the appropriate allowances associated with franchise and license receivables and liabilities for franchise subleases;

• determination of the appropriate assumptions to use to estimate the fair value of share-based compensation; and

• estimation of our net deferred income tax asset valuation allowance, liabilities related to uncertain tax positions and effective tax rate.

     Descriptions of these critical accounting policies follow.

Impairment of Property and Equipment and Other Amortizable Long-Lived Assets Held and Used, Held for Sale or To Be Disposed of Other Than By Sale

     During the second and fourth quarter of each fiscal year, and whenever events and/or circumstances indicate that the carrying value of assets may be impaired, we perform an asset recoverability analysis. In connection with this analysis, we estimate future cash flows for each of our restaurants based upon experience gained, current intentions about refranchising restaurants and closures, expected sales trends, internal plans and other relevant information. We generally estimate the useful life of restaurants on owned property to be 20 to 35 years and estimate the remaining useful life of restaurants subject to leases to range from the end of the lease term then in effect to the end of such lease term including all option periods. We also make assumptions about future same-store sales and operating expenses. We then estimate the future cash flows from operating the restaurant over its estimated useful life. In reaching a conclusion as to whether or not impairment has occurred, we consider the period of time since the restaurant was opened or remodeled, trends in operating results and expectations for future sales growth. Our analysis incorporates a probability-weighted approach wherein we estimate the effectiveness of future sales and marketing efforts on same-store sales. If an estimate of the fair value of our assets becomes necessary, we typically base such estimate on forecasted cash flows discounted at an estimated weighted-average cost of capital.

     Same-store sales and the rates at which restaurant operating costs will increase in the future are key assumptions used to estimate future cash flow for evaluating recoverability. If our same-store sales do not perform at or above our forecasted level, or if restaurant operating cost increases exceed our forecast and we are unable to recover such costs through price increases, the carrying value of certain of our restaurants may prove to be unrecoverable and we may incur additional impairment charges in the future.

     As of May 21, 2007, we had a total of 68 restaurants among our two major restaurant concepts that generated negative cash flows on a trailing-13 period basis. These restaurants had combined net book values of $19,552. If these negative cash flow restaurants were not to begin generating positive cash flows within a reasonable period of time, the carrying value of these restaurants may prove to be unrecoverable and we may recognize additional impairment charges in the future.

21

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

Impairment of Goodwill

     In accordance with SFAS 142, goodwill is tested annually for impairment, or more frequently if events or circumstances indicate that the asset might be impaired. We perform our annual impairment test during the first quarter of our fiscal year. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. The impairment test is performed at the reporting unit level. We consider the reporting unit level to be the brand level as the components (e.g., restaurants) within each brand have similar economic characteristics, including products and services, production processes, types or classes of customers and distribution methods. The impairment test consists of two steps. First, we determine the fair value of a reporting unit and compare it to its carrying amount. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with SFAS 141, Business Combinations. The residual fair value after this allocation is the implied fair value of the reporting unit’s goodwill.

     During the first quarter of fiscal 2008, we evaluated the Carl’s Jr. brand, the only one of our brands for which goodwill is recorded. As a result of our evaluation, we concluded that the fair value of the net assets of Carl’s Jr. exceeded the carrying value, and thus no impairment charge was required. As of May 21, 2007, we had $22,649 in goodwill recorded in our accompanying Condensed Consolidated Balance Sheet, all of which relates to Carl’s Jr.

Estimated Liability for Closing Restaurants

     We typically make decisions to close restaurants based on prospects for estimated future profitability. However, sometimes we are forced to close restaurants due to circumstances beyond our control (e.g., a landlord’s refusal to negotiate a new lease). Our restaurant operators evaluate each restaurant’s performance no less frequently than the second and fourth quarter of each fiscal year. When restaurants continue to perform poorly, we consider a number of factors, including the demographics of the location and the likelihood of being able to improve an unprofitable restaurant. Based on the operators’ judgment and a financial review, we estimate the future cash flows. If we determine that the restaurant will not, within a reasonable period of time, operate at break-even cash flow or be profitable, and we are not contractually obligated to continue operating the restaurant, we may decide to close the restaurant.

     The estimated liability for closing restaurants on properties vacated is based on the terms of the lease and the lease termination fee, if any, that we expect to pay, as well as estimated maintenance costs until the lease has been abated. The amount of the estimated liability established is the present value of these estimated future payments, net of the present value of expected lease or sublease income, which approximates the fair value of such obligations. The interest rate used to calculate the present value of these liabilities is based on an estimated credit-adjusted risk-free rate at the time the liability is established. The related discount is amortized and shown in facility action charges, net in our accompanying Condensed Consolidated Statements of Income.

     A significant assumption used in determining the amount of the estimated liability for closing restaurants is the amount of the estimated liability for future lease payments on vacant restaurants. We estimate the cost to maintain leased and owned vacant properties until the lease can be abated or the owned property can be sold. If the costs to maintain properties increase, or it takes longer than anticipated to sell properties or sublease or terminate leases, we may need to record additional estimated liabilities. If the leases on the vacant restaurants are not terminated or subleased on the terms that we used to estimate the liabilities, we may be required to record losses in future periods.

22

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

Conversely, if the leases on the vacant restaurants are terminated or subleased on more favorable terms than we used to estimate the liabilities, we reverse previously established estimated liabilities, resulting in an increase in operating income. As of May 21, 2007, the present value of our operating lease payment obligations on all closed restaurants was approximately $5,892, which represents the discounted amount we would be required to pay if we are unable to enter into sublease agreements or terminate the leases prior to the terms required in the lease agreements. However, it is our experience that we can often terminate those leases for less than that amount, or sublease the property and accordingly, we have recorded an estimated liability for operating lease obligations of $2,783 as of May 21, 2007.

Estimated Liability for Self-Insurance

     We are self-insured for a portion of our current and prior years’ losses related to workers’ compensation, general and auto liability insurance programs. We have obtained stop loss insurance for individual workers’ compensation, general and auto liability claims over $500. Accrued liabilities for self-insurance are recorded based on the present value of actuarial estimates of the amounts of incurred and unpaid losses, based on an estimated risk-free interest rate of 4.5% as of May 21, 2007. In determining our estimated liability, management, with the assistance of our actuary, develops assumptions based on the average historical losses on claims we have incurred and on actuarial observations of historical claim loss development. Our actual future loss development may be better or worse than the development we estimated in conjunction with the actuary, in which case our reserves would require adjustment. As such, if we experience a higher than expected number of claims or the costs of claims rise more than expected, then we would be required to adjust the expected losses upward and increase our future self-insurance expense.

     Our actuary provides us with estimated unpaid losses for each loss category, upon which our analysis is based. As of May 21, 2007, our estimated liability for self-insured workers’ compensation, general and auto liability losses was $36,499.

Loss Contingencies

     We maintain accrued liabilities for contingencies related to litigation. We account for contingent obligations in accordance with SFAS 5, which requires that we assess each loss contingency to determine estimates of the degree of probability and range of possible settlement. Those contingencies that are deemed to be probable and for which the amount of such settlement is reasonably estimable are accrued in our Condensed Consolidated Financial Statements. If only a range of loss can be determined, with no amount in the range representing a better estimate than any other amount within the range, we record an accrued liability equal to the low end of the range. In accordance with SFAS 5, as of May 21, 2007, we have recorded an accrued liability for contingencies related to litigation in the amount of $910 (see Note 14 of Notes to Condensed Consolidated Financial Statements for further information). The assessment of contingencies is highly subjective and requires judgments about future events. Contingencies are reviewed at least quarterly to determine the adequacy of the recorded liabilities and related Condensed Consolidated Financial Statement disclosure. The ultimate resolution of such loss contingencies may differ materially from amounts we have accrued in our Condensed Consolidated Financial Statements.

     In addition, as of May 21, 2007, we estimated our potential exposure for those loss contingencies related to other litigation claims that we believe are reasonably possible to result in an adverse outcome, to be in the range of $25 to $50. In accordance with SFAS 5, we have not recorded a liability for these contingent losses.

Accounting for Lease Obligations

     We lease a substantial number of our restaurant properties. At the inception of the lease, each property is evaluated to determine whether the lease is an operating or capital lease. The lease accounting evaluation may require significant exercise of judgment in estimating the fair value and useful life of the leased property and to establish the appropriate lease term. The lease term used for this evaluation includes renewal option periods only in instances in which the exercise of the renewal option can be reasonably assured because failure to exercise such option would result in an economic penalty. Such economic penalty would typically result from our having to abandon buildings and other non-detachable improvements upon vacating the property. The lease term used for this

23

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

evaluation also provides the basis for establishing depreciable lives for buildings subject to lease and leasehold improvements, as well as the period over which we recognize straight-line rent expense.

     In addition, the lease term is calculated from the date we are given control of the leased premises through the end of the lease term. There is potential for variability in the “rent holiday” period, which begins on the date we are given control of the leased premises and typically ends upon restaurant opening. Factors that may affect the length of the rent holiday period include construction-related delays. Extension of the rent holiday period due to such delays would result in greater rent expense recognized during the rent holiday period.

Franchised and Licensed Operations

     We monitor the financial condition of certain franchisees and record provisions for estimated losses on receivables when we believe that our franchisees are unable to make their required payments to us. Each quarter, we perform an analysis to estimate bad debts for each franchisee. We then compare the aggregate result of that analysis to the amount recorded in our Condensed Consolidated Financial Statements as the allowance for doubtful accounts and adjust the allowance as appropriate. Additionally, we cease accruing royalties and rental income from franchisees that are materially delinquent in paying or in default for other reasons and reverse any royalties and rent income accrued during the fiscal quarter in which such delinquency or default occurs. Over time, our assessment of individual franchisees may change. For instance, we have had some franchisees, who in the past we had determined required an estimated loss equal to the total amount of the receivable, who have paid us in full or established a consistent record of payments (generally six months) such that we determined an allowance was no longer required.

     Depending on the facts and circumstances, there are a number of different actions we and/or our franchisees may take to resolve franchise collections issues. These actions may include the purchase of franchise restaurants by us or by other franchisees, a modification to the franchise agreement (which may include a provision to defer certain royalty payments or reduce royalty rates in the future), a restructuring of the franchisee’s business and/or finances (including the restructuring of leases for which we are the primary obligee — see further discussion below) or, if necessary, the termination of the franchise agreement. The allowance established is based on our assessment of the most likely course of action that will occur.

     Many of the restaurants that we sold to Hardee’s and Carl’s Jr. franchisees as part of a refranchising program were on leased sites. Generally, we remain principally liable for the lease and have entered into a sublease with the franchisee on the same terms as the primary lease. In such cases, we account for the sublease payments received as franchising rental income and the lease payments we make as rental expense in franchised and licensed restaurants and other expense in our Condensed Consolidated Statements of Income. As of May 21, 2007, the present value of our total obligation on lease arrangements with Hardee’s and Carl’s Jr. franchisees (including subsidized leases — see further discussion below) was $22,855 and $84,124, respectively. We do not expect Carl’s Jr. franchisees to experience the same level of financial difficulties as Hardee’s franchisees have encountered in the past, however, we can provide no assurance that this will not occur.

     In addition to the sublease arrangements with franchisees described above, we also lease land and buildings to franchisees. As of May 21, 2007, the net book value of property under lease to Hardee’s and Carl’s Jr. franchisees was $13,555 and $4,903, respectively. Financially troubled franchisees include those with whom we have entered into workout agreements and who may have liquidity problems in the future. In the event that a financially troubled franchisee closes a restaurant for which we own the property, our options are to operate the restaurant as a company-operated restaurant, transfer the restaurant to another franchisee, lease the property to another tenant or sell the property. These circumstances would cause us to consider whether the carrying value of the land and building was impaired. If we determined the property’s carrying value was impaired, we would record a charge to operations for the amount the carrying value of the property exceeds its fair value. As of May 21, 2007, the net book value of property under lease to Hardee’s franchisees that are considered to be financially troubled franchisees was approximately $334 and is included in the amount above.

     In accordance with SFAS 146, Accounting for Costs Associated with Exit or Disposal Activities, an estimated liability for future lease obligations on restaurants operated by franchisees for which we are the primary obligee is established on the date the franchisee closes the restaurant. Also, we record an estimated liability for subsidized

24

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

lease payments when we sign a sublease agreement committing us to the subsidy. The liability includes an estimation related to the risk that certain lease payments from the franchisee may ultimately be uncollectible.

     The amount of the estimated liability is established using the methodology described in “Estimated Liability for Closing Restaurants” above. Because losses are typically not probable and/or able to be reasonably estimated, we have not established an additional estimated liability for potential losses not yet incurred under a significant portion of our franchise sublease arrangements. The present value of future sublease obligations from financially troubled franchisees is approximately $1,517 (three financially troubled franchisees represent approximately 93.4% of this amount). If sales trends or economic conditions worsen for our franchisees, their financial health may worsen, our collection rates may decline and we may be required to assume the responsibility for additional lease payments on franchised restaurants. The likelihood of needing to increase the estimated liability for future lease obligations is primarily related to the success of our Hardee’s concept.

Share-Based Compensation

     We have various share-based compensation plans that provide restricted stock awards and stock options for certain employees and non-employee directors to acquire shares of our common stock. During the sixteen weeks ended May 21, 2007 and May 22, 2006, we recorded share-based compensation expense of $3,138 and $1,770, respectively. (See Note 23 of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended January 31, 2007, for analysis of the effect of certain changes in assumptions used to determine the fair value of share-based compensation.)

     Pursuant to our employment agreements with certain key executives, we are required to grant an additional 450,000 shares of restricted stock (of which 360,000 will be performance-vested and 90,000 will be time-vested) to the executives in October 2007. If we were to achieve the relevant performance goals for fiscal 2008 and if our stock price on the date of the award were to be the same as May 21, 2007 ($20.83 per share), we would expect to record additional share-based compensation expense of $2,644 between the date of the grant and the end of fiscal 2008. The actual charge will be dependent upon the stock price on the grant date and upon whether or not the specified performance goals for fiscal 2008 are met.

Income Taxes

     When necessary, we record a valuation allowance to reduce our net deferred tax assets to the amount that is more likely than not to be realized. In considering the need for a valuation allowance against some portion or all of our deferred tax assets, we must make certain estimates and assumptions regarding future taxable income, the feasibility of tax planning strategies and other factors. Changes in facts and circumstances or in the estimates and assumptions that are involved in establishing and maintaining a valuation allowance against deferred tax assets could result in adjustments to the valuation allowance in future quarterly or annual periods.

     As of May 21, 2007, we maintained a valuation allowance of $22,262 for deferred tax assets related to federal and state capital loss carryforwards and certain state NOL and tax credit carryforwards. Realization of the tax benefit of such deferred tax assets may remain uncertain for the foreseeable future, even though we expect to generate taxable income, since they are subject to various limitations and may only be used to offset income of certain entities or of a certain character.

     FIN 48 requires us to maintain a liability for underpayment of income taxes and related interest and penalties, if any, for uncertain income tax positions. In considering the need for and magnitude of a liability for uncertain income tax positions, we must make certain estimates and assumptions regarding the amount of income tax benefit that will ultimately be realized. The ultimate resolution of an uncertain tax position may not be known for a number of years, during which time we may be required to adjust these reserves, in light of changing facts and circumstances.

     We use an estimate of our annual income tax rate to recognize a provision for income taxes in financial statements for interim periods. However, changes in facts and circumstances could result in adjustments to our effective tax rate in future quarterly or annual periods.

25

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

Significant Known Events, Trends, or Uncertainties Expected to Impact Fiscal 2008 Comparisons with Fiscal 2007

     The factors discussed below impact comparability of operating performance for the sixteen weeks ended May 21, 2007 and May 22, 2006, or could impact comparisons for the remainder of fiscal 2008.

Fiscal Year and Seasonality

     We operate on a retail accounting calendar. Our fiscal year has 13 four-week accounting periods and ends the last Monday in January. The first quarter of our fiscal year has four periods, or 16 weeks. All other quarters have three periods, or 12 weeks.

     Our restaurant sales, and therefore our profitability, are subject to seasonal fluctuations and are traditionally higher during the spring and summer months because of factors such as increased travel upon school vacations and improved weather conditions, which affect the public’s dining habits.

Business Strategy

     We remain focused on vigorously pursuing a comprehensive business strategy. The main components of our strategy are as follows:

• increase revenues, average unit volumes and operating income at our major brands;

• remain focused on restaurant fundamentals — quality, service and cleanliness;

• capitalize on our unique brand positioning and cutting-edge advertising;

• offer premium products that compete on quality, innovation and taste;

• continue to capitalize on dual-branding opportunities available with Green Burrito and Red Burrito;

• control costs and improve capital structure while increasing stockholder distributions;

• leverage our infrastructure and marketing presence to build out existing core markets;

• remodel our existing store base to remain competitive;

• focus on the strategic growth of the Hardee’s brand through our new refranchising program; and

• strengthen our franchise system and pursue further franchising opportunities, including new franchisees.

Franchise Operations

     Like others in the quick-service restaurant industry, some of our franchisees experience financial difficulties from time to time with respect to their operations. Our approach to dealing with financial and operational issues that arise from these situations is described under Critical Accounting Policies above, under the heading “Franchised and Licensed Operations.” Some franchisees in the Hardee’s system have experienced significant financial problems and, as discussed above, there are a number of potential resolutions of these financial issues.

     We continue to work with franchisees in an attempt to maximize our future franchising income. Our franchising income is dependent on both the number of restaurants operated by franchisees and their operational and financial success, such that they can make their royalty and lease payments to us. Although we review the allowance for doubtful accounts and the estimated liability for closed franchise restaurants, there can be no assurance that the number of franchisees or franchised restaurants experiencing financial difficulties will not increase from our current assessments, nor can there be any assurance that we will be successful in resolving financial issues relating to any specific franchisee. As of May 21, 2007, our consolidated allowance for doubtful accounts on notes receivable was 64.7% of the gross balance of notes receivable and our consolidated allowance for doubtful accounts on accounts

26

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

receivable was 0.8% of the gross balance of accounts receivable. When appropriate, we establish notes receivable pursuant to completing workout agreements with financially troubled franchisees. As of May 21, 2007, we have not recognized, on a cumulative basis, $366 in accounts receivable and $5,437 in notes receivable, nor the royalty and rent revenue associated with these accounts and notes receivable, due from franchisees that are in default under the terms of their franchise agreements. We still experience specific problems with troubled franchisees (see Critical Accounting Policies — Franchise and Licensed Operations) and may be required to increase the amount of our allowances for doubtful accounts and/or increase the amount of our estimated liability for future lease obligations.

27

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

Operating Review

     The following tables are presented to facilitate Management’s Discussion and Analysis of Financial Condition and Results of Operations and are classified in the same way as we present segment information (see Note 10 of Notes to Condensed Consolidated Financial Statements).

	Sixteen Weeks Ended May 21, 2007
	Carl’s Jr.			Hardee’s			Other(A)			Eliminations(B)			Total
Company-operated restaurants revenue	$	181,229		$	199,192		$	103		$	—		$	380,524
Restaurant operating costs:
Food and packaging		52,923			58,479			33			—			111,435
Payroll and employee benefits		48,535			61,902			42			—			110,479
Occupancy and other		38,898			42,943			33			—			81,874
Total restaurant operating costs		140,356			163,324			108			—			303,788
Franchised and licensed restaurants and other revenue:
Royalties		9,753			12,992			165			1			22,911
Distribution centers		59,770			7,707			—			(3	)		67,474
Rent		7,010			2,335			—			—			9,345
Retail sales of variable interest entity		—			—			956			—			956
Other		383			209			—			—			592
Total franchised and licensed restaurants and other revenue		76,916			23,243			1,121			(2	)		101,278
Franchised and licensed restaurants and other expenses:
Administrative expense (including provision for bad debts)		1,858			1,742			—			—			3,600
Distribution centers		59,927			7,726			—			—			67,653
Rent and other occupancy		5,900			1,393			—			—			7,293
Operating costs of variable interest entity		—			—			968			(22	)		946
Total franchised and licensed restaurants and other expenses		67,685			10,861			968			(22	)		79,492
Advertising		10,601			12,159			2			—			22,762
General and administrative		17,701			28,258			68			—			46,027
Facility action charges, net		375			(763	)		134			—			(254	)
Operating income (loss)	$	21,427		$	8,596		$	(56	)	$	20		$	29,987
Company-operated average unit volume (trailing-13 periods)	$	1,461		$	923
Franchise-operated average unit volume (trailing-13 periods)	$	1,204		$	961
Company-operated same-store sales increase		—			1.8	%
Franchise-operated same-store sales increase		0.1	%		1.1	%
Company-operated same-store transaction (decrease) increase		(5.3	)%		1.2	%
Average check (actual $)	$	6.77		$	4.93
Restaurant operating costs as a % of company-operated restaurants revenue:
Food and packaging		29.2	%		29.4	%
Payroll and employee benefits		26.8	%		31.0	%
Occupancy and other		21.5	%		21.6	%
Total restaurant operating costs		77.5	%		82.0	%
Advertising as a percentage of company-operated restaurants revenue		5.9	%		6.1	%

28

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

	Sixteen Weeks Ended May 22, 2006
	Carl’s Jr.			Hardee’s			Other(A)			Eliminations(B)			Total
Company-operated restaurants revenue	$	187,097		$	189,939		$	107		$	—		$	377,143
Restaurant operating costs:
Food and packaging		53,237			55,062			35			—			108,334
Payroll and employee benefits		48,846			60,601			43			—			109,490
Occupancy and other		38,443			40,014			34			—			78,491
Total restaurant operating costs		140,526			155,677			112			—			296,315
Franchised and licensed restaurants and other revenue:
Royalties		8,646			13,636			138			(11	)		22,409
Distribution centers		57,823			5,850			—			(2	)		63,671
Rent		6,229			2,998			—			—			9,227
Retail sales of variable interest entity		—			—			1,072			—			1,072
Other		319			207			—			—			526
Total franchised and licensed restaurants and other revenue		73,017			22,691			1,210			(13	)		96,905
Franchised and licensed restaurants and other expenses:
Administrative expense (including provision for bad debts)		1,643			1,696			—			—			3,339
Distribution centers		56,293			6,123			—			—			62,416
Rent and other occupancy		5,566			1,949			—			—			7,515
Operating costs of variable interest entity		—			—			1,084			(7	)		1,077
Total franchised and licensed restaurants and other expenses		63,502			9,768			1,084			(7	)		74,347
Advertising		11,051			11,351			2			—			22,404
General and administrative		17,514			27,216			82			—			44,812
Facility action charges, net		790			1,584			159			—			2,533
Operating income (loss)	$	26,731		$	7,034		$	(122	)	$	(6	)	$	33,637
Company-operated average unit volume (trailing-13 periods)	$	1,365		$	892
Franchise-operated average unit volume (trailing-13 periods)	$	1,187		$	905
Company-operated same-store sales increase		5.6	%		5.6	%
Franchise-operated same-store sales increase		4.7	%		5.5	%
Company-operated same-store transaction increase		2.9	%		1.7	%
Average check (actual $)	$	6.32		$	4.91
Restaurant operating costs as a % of company-operated restaurants revenue:
Food and packaging		28.5	%		29.0	%
Payroll and employee benefits		26.1	%		31.9	%
Occupancy and other operating costs		20.5	%		21.1	%
Total restaurant operating costs		75.1	%		82.0	%
Advertising as a percentage of company-operated restaurants revenue		5.9	%		6.0	%

(A)	“Other” consists of Green Burrito and amounts that we do not believe would be proper to allocate to the operating segments.
(B)	“Eliminations” consists of the elimination of royalty revenues and expenses generated between Hardee’s and a consolidated variable interest entity franchisee included in our accompanying Condensed Consolidated Financial Statements.

29

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

Presentation of Non-GAAP Measurements

Adjusted EBITDA

     Adjusted EBITDA is a non-GAAP measure used by our senior lenders under our Facility to evaluate our ability to service debt and fund capital expenditures. Adjusted EBITDA is not a recognized term under GAAP and does not purport to be an alternative to income from operations, an indicator of cash flow from operations or a measure of liquidity. As shown in the table below and defined in the Facility, Adjusted EBITDA is calculated as earnings before cumulative effect of accounting changes, discontinued operations, interest expense, income taxes, depreciation and amortization, facility action charges, share-based compensation expense, impairment of goodwill and impairment of assets held for sale. Because not all companies calculate Adjusted EBITDA identically, this presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest expense, income taxes, debt service payments and cash costs arising from facility actions.

      Our maximum annual capital expenditures are limited by the Facility, based on a sliding scale driven by our Adjusted EBITDA. The Adjusted EBITDA amounts for the sixteen weeks ended May 22, 2006 are calculated using the definition in our current Facility and are presented for comparative purposes.

     As previously discussed, subsequent to the sixteen weeks ended May 21, 2007, we entered into an agreement to sell our La Salsa restaurants and the related franchise operations. In accordance with SFAS 144, the divestiture of La Salsa qualifies as discontinued operations, and accordingly, we have reported the results of operations and financial position of this segment in discontinued operations in the accompanying Condensed Consolidated Financial Statements for all periods presented. There were certain general and administrative expenses that had previously been allocated to La Salsa that we expect to continue to incur after the divestiture. As such, those expenses have been reallocated to our continuing operations in the accompanying Condensed Consolidated Financial Statements and the Adjusted EBITDA calculations presented below.

	Sixteen Weeks Ended May 21, 2007
									Discontinued
	Carl’s Jr.		Hardee’s			Other			Operations			Total
Net income (loss)	$	12,659	$	3,701		$	(661	)	$	(348	)	$	15,351
Interest expense		924		2,900			1,471			15			5,310
Income tax expense (benefit)		8,572		2,506			(461	)		(160	)		10,457
Depreciation and amortization		9,030		9,891			59			904			19,884
Facility action charges, net		375		(763	)		134			(209	)		(463	)
Share-based compensation expense		1,202		1,936			—			—			3,138
Adjusted EBITDA	$	32,762	$	20,171		$	542		$	202		$	53,677

	Sixteen Weeks Ended May 22, 2006
								Discontinued
	Carl’s Jr.		Hardee’s		Other			Operations			Total
Net income (loss)	$	15,515	$	1,176	$	(487	)	$	(36	)	$	16,168
Interest expense		1,390		5,652		—			7			7,049
Income tax expense (benefit)		10,332		784		(360	)		32			10,788
Depreciation and amortization		7,678		9,940		51			984			18,653
Facility action charges, net		790		1,584		159			29			2,562
Share-based compensation expense		678		1,092		—			—			1,770
Adjusted EBITDA	$	36,383	$	20,228	$	(637	)	$	1,016		$	56,990

	Trailing-13 Periods Ended May 21, 2007
								Discontinued
	Carl’s Jr.		Hardee’s		Other			Operations			Total
Net income (loss)	$	45,503	$	9,024	$	(837	)	$	(4,335	)	$	49,355
Interest expense (income)		3,525		12,739		1,757			(9	)		18,012
Income tax expense (benefit)		28,582		5,799		(501	)		(2,312	)		31,568
Depreciation and amortization		27,680		32,772		227			2,970			63,649
Facility action charges, net		249		147		360			4,765			5,521
Share-based compensation expense		3,729		6,007		—			—			9,736
Adjusted EBITDA	$	109,268	$	66,488	$	1,006		$	1,079		$	177,841

30

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

     The following tables reconcile Adjusted EBITDA (a non-GAAP measure) to net cash provided by operating activities (a GAAP measure):

	Sixteen Weeks Ended
	May 21, 2007			May 22, 2006
Net cash provided by operating activities	$	39,135		$	46,952
Interest expense		5,310			7,049
Income tax expense		10,457			10,788
Amortization of loan fees		(265	)		(1,016	)
Recovery of (provision for) losses on accounts and notes receivable		665			(574	)
Loss on sales of property and equipment, capital leases and extinguishment of debt		(618	)		(569	)
Deferred income taxes		(4,639	)		(10,020	)
Other non-cash (charges) credits		(24	)		79
Change in estimated liability for closing restaurants and estimated liability for self-insurance		2,518			1,797
Net change in receivables, inventories, prepaid expenses and other current and non-current assets		3,247			4,314
Net change in accounts payable and other current and long-term liabilities		(2,146	)		(1,810	)
Dividends on unvested restricted stock awards		37			—
Adjusted EBITDA	$	53,677		$	56,990

	Trailing-13 Periods
	Ended May 21, 2007
Net cash provided by operating activities	$	156,328
Interest expense		18,012
Income tax expense		31,568
Amortization of loan fees		(2,346	)
Recovery of losses on accounts and notes receivable		1,431
Loss on sales of property and equipment, capital leases and extinguishment of debt		(3,498	)
Deferred income taxes		(20,580	)
Other non-cash charges		(180	)
Change in estimated liability for closing restaurants and estimated liability for self-insurance		5,925
Net change in receivables, inventories, prepaid expenses and other current and non-current assets		7,028
Net change in accounts payable and other current and long-term liabilities		(15,944	)
Dividends on unvested restricted stock awards		97
Adjusted EBITDA	$	177,841

Carl’s Jr.

     During the sixteen weeks ended May 21, 2007, we opened five company-operated restaurants, and Carl’s Jr. franchisees and licensees closed five and opened 14 restaurants. The following tables show the change in the Carl’s Jr. restaurant portfolio for the trailing-13 periods, as well as the change in revenue, for the current quarter:

	Restaurant Portfolio							Revenue
	First Fiscal Quarter							First Fiscal Quarter
	2008		2007		Change			2008		2007		Change
Company-operated		398		430		(32	)	$	181,229	$	187,097	$	(5,868	)
Franchised and licensed(a)		703		632		71			76,916		73,017		3,899
Total		1,101		1,062		39		$	258,145	$	260,114	$	(1,969	)

(a) Includes $59,770 and $57,823 of revenues from distribution of food, packaging and supplies to franchised and licensed restaurants during the sixteen weeks ended May 21, 2007, and May 22, 2006, respectively.

31

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

Company-Operated Restaurants

     Revenue from company-operated Carl’s Jr. restaurants decreased $5,868, or 3.1%, to $181,229 during the sixteen weeks ended May 21, 2007, as compared to the sixteen weeks ended May 22, 2006. This decrease was primarily due to the net impact of the divestiture of 40 restaurants to franchisees, the closing of two restaurants and the opening of ten new company-operated restaurants. This decrease was partially offset by an increase in average unit volume, which reached $1,461. We believe this increase is due to the successful promotion of the Chipotle Chicken Salad™, the latest Hand-Scooped Ice Cream Shakes and Malts™ flavor featuring Mint Chip™, and the introduction of the Buffalo Chicken Sandwich and Boneless Buffalo Wings dipped in Franks ^® RedHot ^® buffalo wing sauce.

     The changes in the restaurant operating costs as a percentage of company-operated restaurants revenue are explained as follows:

	Sixteen
	Weeks
Restaurant operating costs as a percentage of company-operated restaurants revenue for the period ended May 22, 2006		75.1	%
Increase in food and packaging costs		0.8
Increase in depreciation and amortization expense		0.6
Increase in rent expense		0.5
Increase in workers’ compensation expense		0.4
Decrease in general liability expense		(0.4	)
Increase in repairs and maintenance		0.2
Increase in labor costs, excluding workers’ compensation		0.2
Decrease in utilities expense		(0.2	)
Increase in asset retirement expense		0.1
Other, net		0.2
Restaurant operating costs as a percentage of company-operated restaurants revenue for the period ended May 21, 2007		77.5	%

     Food and packaging costs as a percent of company-operated restaurants revenue increased during the sixteen weeks ended May 21, 2007, as compared to the prior year period, due primarily to increases in distribution costs, related to the relocation of our main distribution center and simultaneous installation of a new overall distribution management system and increased soft drink syrup and pork costs.

     Depreciation and amortization expense as a percent of company-operated restaurants revenue increased during the sixteen weeks ended May 21, 2007, from the comparable prior year period, mainly due to the addition of new assets related to the rollout of new POS software and related hardware, and asset additions from increased restaurant remodel activity.

     Rent expense as a percent of company-operated restaurants revenue increased during the sixteen weeks ended May 21, 2007, as compared to the prior year period, due mainly to rental rate increases resulting from Consumer Price Index adjustments and the refranchising of a number of company-operated restaurants that were on owned property.

     Workers’ compensation expense increased as a percent of company-operated restaurants revenue during the sixteen weeks ended May 21, 2007, due to the impact of a favorable claims reserves adjustment recorded in the first quarter of fiscal 2007, as a result of a quarterly actuarial analysis of outstanding claims reserves, that did not recur to the same extent in the current year quarter.

     General liability expense decreased as a percent of company-operated restaurants revenue during the sixteen weeks ended May 21, 2007, due to the impact of favorable claims reserves adjustments recorded in the first quarter of fiscal 2008, as a result of a quarterly actuarial analysis of outstanding claims reserves, compared to a slightly unfavorable adjustment recorded in the first quarter of fiscal 2007.

32

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

Franchised and Licensed Restaurants

     Total franchised and licensed restaurants revenue increased $3,899, or 5.3%, to $76,916 during the sixteen weeks ended May 21, 2007, as compared to the sixteen weeks ended May 22, 2006. Franchise royalties grew $1,107, or 12.8%, during the sixteen weeks ended May 21, 2007, as compared to the sixteen weeks ended May 22, 2006 due to the net increase of 71 domestic and international franchised and licensed restaurants during the trailing-13 periods ended May 21, 2007. Food, paper and supplies sales to franchisees increased by $1,947, or 3.4%, due to the increase in the franchise store base over the comparable prior year period.

     Franchised and licensed operating and other expenses increased $4,183, or 6.6%, to $67,685 during the sixteen weeks ended May 21, 2007, as compared to the prior year period. This increase is mainly due to an increase in sales to franchisees due to an increase in the cost of food, paper and supplies, partially offset by a decrease in product shipped per restaurant and a $625 increase in costs related to the relocation of our main distribution center and simultaneous installation of a new overall distribution management system.

     As of May 21, 2007, approximately 84.8% of Carl’s Jr. franchised and licensed restaurants purchase food, paper and other supplies from us.

Hardee’s

     During the sixteen weeks ended May 21, 2007, we opened two and closed six company-operated restaurants, and Hardee’s franchisees and licensees opened ten and closed seven restaurants. During the same period, we divested 28 restaurants to three franchisees. The following table shows the change in the Hardee’s restaurant portfolio during the trailing-13 periods, as well as the change in revenue for the current quarter:

	Restaurant Portfolio							Revenue
	First Fiscal Quarter							First Fiscal Quarter
	2008		2007		Change			2008		2007		Change
Company-operated		664		705		(41	)	$	199,192	$	189,939	$	9,253
Franchised and licensed		1,241		1,258		(17	)		23,243		22,691		552
Total		1,905		1,963		(58	)	$	222,435	$	212,630	$	9,805

Company-Operated Restaurants

     Revenue from company-operated Hardee’s restaurants increased $9,253, or 4.9%, to $199,192 during the sixteen weeks ended May 21, 2007, as compared to the comparable prior year period. The increase is mostly due to the revenues from the 42 restaurants we acquired from a former franchisee at the end of the first quarter of fiscal 2007, partially offset by the decrease from the divestiture of 28 company-operated restaurants to franchisees and the closure of six other company-operated restaurants during the first quarter of fiscal 2008. Average unit volume for the trailing-13 periods ended May 21, 2007 reached $923 and same-store sales also increased 1.8%, mainly due to the introduction of the Buffalo Chicken Sandwich and Boneless Buffalo Wings dipped in Franks RedHot buffalo wing sauce, the Breakfast Club Sandwich™ and the continued promotion of premium products such as our Southwest Chicken Salad ™ and Monster Biscuit™ and promotional items such as the 2-for-$3 Big Twin^® burgers.

33

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

     The changes in the restaurant operating costs as a percentage of company-operated restaurants revenue are explained as follows:

	Sixteen
	Weeks
Restaurant operating costs as a percentage of company-operated restaurants revenue for the period ended May 22, 2006		82.0	%
Increase in repairs and maintenance expense		0.7
Decrease in labor costs, excluding workers’ compensation		(0.5	)
Increase in food and packaging costs		0.4
Decrease in workers’ compensation expense		(0.4	)
Decrease in rent expense		(0.2	)
Decrease in depreciation and amortization expense		(0.2	)
Other, net		0.2
Restaurant operating costs as a percentage of company-operated restaurants revenue for the period ended May 21, 2007		82.0	%

     Repairs and maintenance expense increased as a percent of company-operated restaurants revenue during the sixteen weeks ended May 21, 2007, as compared to the prior year period, mainly due to higher repairs and maintenance costs for the restaurants acquired in connection with the termination of a franchise agreement at the end of the first quarter of fiscal 2007. There were also higher maintenance costs for a new point-of-sale system support contract, as compared with the prior year period.

     Labor costs, excluding workers’ compensation, as a percent of company-operated restaurants revenue decreased during the sixteen weeks ended May 21, 2007, as compared to the prior year period, primarily attributable to the lower manager incentive compensation and the benefit of greater sales leverage.

     Food and packaging costs as a percent of company-operated restaurants revenue increased during the sixteen weeks ended May 21, 2007, compared to the comparable prior year period, due to higher costs for soft drink syrups and pork and cheese products.

     Workers’ compensation expense decreased as a percent of company-operated restaurants revenue during the sixteen weeks ended May 21, 2007, due to the impact of favorable claims reserves adjustments recorded in the current year period, as a result of actuarial analyses of outstanding claims reserves, that did not occur to the same extent in the prior year period, and, to a lesser extent, the benefit of sales leverage during the current year period.

Franchised and Licensed Restaurants

     Total franchised and licensed restaurants revenue increased $552, or 2.4%, to $23,243 during the sixteen weeks ended May 21, 2007, as compared to the prior year period. This increase is mainly due to an increase in distribution center revenues of $1,857, or 31.7%, due to an increase in remodel activity and new restaurant openings. This increase was partially offset by the decrease in royalty revenues of $644, or 4.7%, which is primarily due to prior year collections of previously unrecognized royalties from financially troubled franchisees that did not recur to the same extent in the current year period, and a decrease in rental income of $663, or 22.1%, due to the termination of a franchise agreement and related store closures that occurred at the end of the first quarter of fiscal 2007.

     Franchised and licensed operating and other expenses increased $1,093, or 11.2%, to $10,861, during the sixteen weeks ended May 21, 2007, as compared to the prior year period. This increase in costs is mainly due to an increase in cost of equipment sales due to an increase in equipment sales partially offset by the decrease in rent expense due to the closure of several restaurant locations that we acquired upon the termination of a franchise agreement at the end of the first quarter of fiscal 2007.

Discontinued Operations

     Consistent with our strategy to focus on growing Carl’s Jr. and Hardee’s, including dual-branding them with our Mexican brands, Green Burrito and Red Burrito, subsequent to the sixteen weeks ended May 21, 2007, we entered

34

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

into an agreement to sell our La Salsa restaurants and the related franchise operations. Under the agreement, Santa Barbara Restaurant Group, Inc., a wholly-owned subsidiary of the Company, is expected to sell its 100 percent equity interest in La Salsa, Inc. and La Salsa of Nevada, Inc. We expect the sale of La Salsa to be completed during the second quarter of fiscal 2008.

     In accordance with SFAS 144, the divestiture of La Salsa qualifies as discontinued operations, and accordingly, we have reported the results of operations and financial position of this segment in discontinued operations in the accompanying Condensed Consolidated Financial Statements for all periods presented.

     During the sixteen weeks ended May 21, 2007, La Salsa franchisees and licensees opened three restaurants. The following table shows the change in the La Salsa restaurant portfolio, as well as the change in revenue for the current quarter:

	Restaurant Portfolio							Revenue
	First Fiscal Quarter							First Fiscal Quarter
	2008		2007		Change			2008		2007		Change
Company-operated		55		56		(1	)	$	13,405	$	13,901	$	(496	)
Franchised and licensed		44		44		—			627		608		19
Total		99		100		(1	)	$	14,032	$	14,509	$	(477	)

     Same-store sales for company-operated La Salsa restaurants decreased 0.8% during the sixteen weeks ended May 21, 2007, as compared to the same period in the prior year. Revenue from company-operated La Salsa restaurants decreased $496, or 3.6%, as compared to the sixteen weeks ended May 22, 2006, primarily due to the closure of one company-operated restaurant in the trailing-13 periods ended May 21, 2007, and the temporary closure of two high-volume restaurants.

     Restaurant operating costs as a percentage of company-operated restaurants revenue were 94.6% and 92.5% for the sixteen weeks ended May 21, 2007 and May 22, 2006, respectively. Food and packaging costs increased by 0.8% as a percent of revenue for the sixteen weeks ended May 21, 2007, as compared to the same period in the prior year, primarily due to higher costs for beef, soft drink syrups, avocado and seafood products. Occupancy and other costs increased 2.2% as a percent of revenues for the sixteen weeks ended May 21, 2007, as compared to the same period in the prior year, mainly due to higher rent and repairs and maintenance costs. Labor costs decreased 0.9% as a percent of revenues for the sixteen weeks ended May 21, 2007, as compared to the same period in the prior year, mainly due to lower management incentive compensation expense.

Consolidated Expenses

Consolidated Variable Interest Entities

     We consolidate the results of one VIE, which operates five Hardee’s restaurants. We do not possess any ownership interest in the franchise VIE. Retail sales and operating expenses of the franchise VIE are included within franchised and licensed restaurants and other. The assets and liabilities of, and minority interest in, this entity are included in our accompanying Condensed Consolidated Balance Sheets, and are not significant to our consolidated financial position. The results of operations of this entity are included within our accompanying Condensed Consolidated Statements of Income and are not significant to our consolidated results of operations. The minority interest in the income or loss of this franchise entity is classified in other income, net, in our accompanying Condensed Consolidated Statements of Income, and in other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets. We have no rights to the assets, nor do we have any obligation with respect to the liabilities, of this franchise entity. None of our assets serve as collateral for the creditors of this franchisee or any of our other franchisees (see Note 1 of Notes to Condensed Consolidated Financial Statements for further discussion of the franchise VIE).

     We also consolidate the Hardee’s cooperative advertising funds, which consist of the Hardee’s National Advertising Fund and approximately 80 local advertising cooperative funds because we have determined we are the primary beneficiaries of these funds. Each of these funds is a separate non-profit association with all the proceeds segregated and managed by a third-party accounting service company. The group of funds has been reported in our

35

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

accompanying Condensed Consolidated Balance Sheets as advertising fund assets, restricted, and advertising fund liabilities within current assets and current liabilities, respectively. The funds are reported as of the latest practicable date, which is the last day of the calendar quarter immediately preceding the balance sheet date.

Advertising Expense

     Advertising expenses increased $358, or 1.6%, to $22,762, and also increased 0.1%, to 6.0%, as a percentage of company-operated restaurants revenue, during the sixteen weeks ended May 21, 2007, as compared to the comparable period in the prior year. The increase as a percentage of company-operated restaurants revenue is mainly due to slightly higher costs to produce advertising and marketing materials.

General and Administrative Expense

     General and administrative expenses increased $1,215, or 2.7%, to $46,027, and increased 0.1% to 9.6% of total revenue, for the sixteen weeks ended May 21, 2007, as compared to the sixteen weeks ended May 22, 2006. This increase was mainly due to an increase of $1,368 in share-based compensation expense, as a result of the issuance of additional stock options and restricted stock awards in fiscal 2007 that continue to vest in fiscal 2008; and increases in professional services and various other expenses. These increases were partially offset by a decrease of approximately $2,300 in management bonus expense based on our performance relative to executive management and operations bonus criteria.

Facility Action Charges

     Facility action charges arise from closure of company-operated restaurants, sublease of closed facilities at amounts below our primary lease obligation, impairment of long-lived assets to be disposed of or held and used, gains or losses upon disposal of surplus property and refranchising transactions, and discount amortization for obligations related to closed or subleased facilities to their future costs.

     Net facility action charges decreased $2,787, or 110.0%, to $(254) during the sixteen weeks ended May 21, 2007, as compared to the sixteen weeks ended May 22, 2006. This decrease is mainly due to a $1,725 decrease in new decisions regarding closing restaurants, a $547 increase in gains on the sales of restaurants and surplus properties and a $261 reduction in expense for unfavorable dispositions of leased and fee surplus properties, as compared with the prior year period.

     See Note 7 of Notes to Condensed Consolidated Financial Statements for additional detail of the components of facility action charges.

Interest Expense

     During the sixteen weeks ended May 21, 2007, interest expense decreased $1,747, or 24.8%, to $5,295, as compared to the sixteen weeks ended May 22, 2006, primarily as a result of the conversion of a significant portion of our 2023 Convertible Notes into shares of our common stock during fiscal 2007 and further reduction of our capital lease obligations since the prior year comparable period, partially offset by the impact of an increase in our average outstanding borrowings under our Facility.

     See Note 6 of Notes to Condensed Consolidated Financial Statements for additional detail of the components of interest expense.

36

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

Other Income, Net

     Other income, net, consisted of the following:

	Sixteen Weeks Ended
	May 21, 2007		May 22, 2006
Interest income on notes receivable from franchisees, disposition properties and capital leases	$	233	$	402
Rental income from properties leased to third parties, net		612		579
Other, net		779		(616	)
Total other income, net	$	1,624	$	365

Income Taxes

     Income tax expense consisted of the following:

	Sixteen Weeks Ended
	May 21, 2007			May 22, 2006
Federal and state income taxes	$	10,301		$	10,431
Foreign income taxes		316			325
Income tax expense	$	10,617		$	10,756
Effective income tax rate		40.4	%		39.9	%

      Our effective income tax rates for the sixteen weeks ended May 21, 2007 and May 22, 2006 differ from the federal statutory rate primarily as a result of state income taxes and certain expenses that are nondeductible for income tax purposes.

     As a result of our income tax credit carryforwards and expected reversals of temporary differences, we expect that our cash requirements for U.S. federal and state income taxes will be approximately 15% to 20% of our taxable earnings in fiscal 2008. This rate results primarily from U.S. federal tax reduced by available alternative minimum tax (“AMT”) and general business tax credits.

      Our actual cash requirements for income taxes could vary significantly from our expectations for a number of reasons, including, but not limited to, unanticipated fluctuations in our deferred income tax assets and liabilities, unexpected gains from significant transactions, unexpected outcomes of income tax audits, and changes in tax law. We expect to continue to incur foreign taxes on our income earned outside the U.S., which we expect to result in a credit against our U.S. federal income tax liability.

Liquidity and Capital Resources

     We currently finance our business through cash flows from operations and borrowings under our credit facility. We believe our most significant cash use during the next 12 months will be for capital expenditures. Based on our current capital spending projections, we expect capital expenditures for fiscal 2008 to be between $110,000 and $120,000. We amended and restated the Facility on March 27, 2007, and amended the Facility again on May 3, 2007 (see below). We anticipate that existing cash balances, borrowing capacity under the Facility, and cash provided by operations will be sufficient to service existing debt and to meet our operating and capital requirements for at least the next 12 months. We have no potential mandatory payments of principal on our 2023 Convertible Notes until October 1, 2008.

     During fiscal 2008, we launched a refranchising program that is expected to involve approximately 200 Hardee’s restaurant locations in a number of markets across the Midwest and Southeast. During the sixteen weeks ended May 21, 2007, we sold 28 company-operated Hardee’s restaurants and other real property with a net book value of $9,805 to three franchisees. In connection with these transactions, we received aggregate consideration of $10,749 and recognized a net gain of $832, which is included in facility action charges, net in our accompanying Condensed Consolidated Statement of Income for the sixteen weeks ended May 21, 2007 in our Hardee’s segment. As part of these transactions, the franchisees acquired the real property and/or subleasehold interest in the real property related to the restaurant locations.

     As of May 21, 2007, we had signed letters of intent with franchisees to sell 74 company-operated restaurants, for approximately $28,898, and we were in negotiations with other franchisees to sell an additional 81 company-operated restaurants for approximately $33,016. Of these restaurants, 56 are included in assets held for sale in the accompanying Condensed Consolidated Balance Sheet as of May 21, 2007.

37

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

     We, and the restaurant industry in general, maintain relatively low levels of accounts receivable and inventories, and vendors grant trade credit for purchases such as food and supplies. We also continually invest in our business through the addition of new sites and the refurbishment of existing sites, which are reflected as long-term assets and not as part of working capital. As a result, we typically maintain current liabilities in excess of current assets, resulting in a working capital deficit. As of May 21, 2007, our current ratio was 0.82 to 1.

     The Facility provides for a $370,000 senior secured credit facility consisting of a $200,000 revolving credit facility and a $170,000 term loan. The revolving credit facility matures on March 27, 2012, and includes an $85,000 letter of credit sub-facility. The principal amount of the term loan is scheduled to be repaid in 19 quarterly installments of $425, beginning in the second quarter of fiscal 2008; three quarterly payments of $40,375, beginning on April 1, 2012; and a final payment of $40,800 due on January 1, 2013.

     During the sixteen weeks ended May 21, 2007, we did not make any principal payments on the term loan. As of May 21, 2007, we had (i) borrowings outstanding under the term loan portion of the Facility of $170,000, (ii) borrowings outstanding under the revolving portion of the Facility of $22,500, (iii) outstanding letters of credit under the revolving portion of the Facility of $46,310, and (iv) availability under the revolving portion of the Facility of $131,190.

     The terms of the Facility include certain restrictive covenants. Among other things, these covenants restrict our ability to incur debt, incur liens on our assets, make any significant change in our corporate structure or the nature of our business, prepay certain debt, engage in a change of control transaction without the member banks’ consents and make investments or acquisitions. The Facility is collateralized by a lien on all of our personal property assets and liens on certain restaurant properties.

      As of May 21, 2007, the applicable interest rate on the term loan was LIBOR plus 1.375%, or 6.75%, per annum. For the revolving loan portion of the Facility, the applicable interest rate is Prime plus 0.50% per annum. However, under the terms of the Facility, we are permitted to lock in interest rates for the revolving portion based on LIBOR plus 1.50% for fixed terms ranging from 7 to 90 days. As of May 21, 2007, the applicable interest rate on the revolving loan portion of the Facility was 6.875%. We also incur fees on outstanding letters of credit under the Facility at a per annum rate equal to 1.50% times the stated amounts.

      The Facility permits us to repurchase our common stock and/or pay cash dividends in an aggregate amount up to $288,377 as of May 21, 2007. In addition, the amount that we may spend to repurchase our common stock and/or pay dividends is increased each year by a portion of excess cash flow (as defined in the Facility) during the term of the Facility. Based on the amount of cumulative repurchases of our common stock and payment of cash dividends, we are permitted to make additional common stock repurchases and/or cash dividend payments of $94,489, as of May 21, 2007.

     The Facility permits us to make annual capital expenditures in the amount of $85,000, plus 80% of the amount of actual Adjusted EBITDA (as defined in the Facility) in excess of $150,000. We may also carry forward certain unused capital expenditure amounts to the following year. Based on these terms, and assuming that Adjusted EBITDA in fiscal 2008 is equal to our trailing 13-period Adjusted EBITDA, as defined by our Facility, as of May 21, 2007, the Facility would permit us to make capital expenditures of $143,255 in fiscal 2008, which could increase or decrease based on our performance versus the Adjusted EBITDA formula described above.

     The Facility contains financial performance covenants, which include a maximum leverage ratio. We were in compliance with these covenants and all other requirements of the Facility as of May 21, 2007.

     The full text of the contractual requirements imposed by the Facility is set forth in the Seventh Amended and Restated Credit Agreement, dated as of March 27, 2007, and the amendment thereto, which we have filed with the SEC, and in the ancillary loan documents described therein. Subject to cure periods in certain instances, the lenders under our Facility may demand repayment of borrowings prior to stated maturity upon certain events of default,

38

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

including, but not limited to, if we breach the terms of the agreement, suffer a material adverse change, engage in a change of control transaction, suffer certain adverse legal judgments, in the event of specified events of insolvency or if we default on other significant obligations. In the event the Facility is declared accelerated by the lenders (which can occur only upon certain events of default under the Facility), our 2023 Convertible Notes (described below) may also become accelerated under certain circumstances and after all cure periods have expired.

     The 2023 Convertible Notes bear interest at 4.0% annually, payable in semiannual installments due April 1 and October 1 each year, are unsecured general obligations of ours, and are contractually subordinate in right of payment to certain other of our obligations, including the Facility. On October 1 of 2008, 2013 and 2018, the holders of the 2023 Convertible Notes have the right to require us to repurchase all or a portion of the notes at 100% of the face value plus accrued interest. On October 1, 2008 and thereafter, we have the right to call all or a portion of the notes at 100% of the face value plus accrued interest. The 2023 Convertible Notes became convertible into our common stock effective July 1, 2004, and will remain convertible throughout the remainder of their term.

     During the sixteen weeks ended May 21, 2007, the cumulative dividends declared since the most recent conversion rate adjustment have resulted in a change in the conversion rate per $1 of the notes of 1.2290%, from the previous conversion rate of 113.8160 to an adjusted conversion rate of 115.2148. As a result of the conversion rate adjustment, the previous conversion price of approximately $8.79 has been adjusted to a conversion price of approximately $8.68.

     The terms of the Facility and the 2023 Convertible Notes are not dependent on any change in our credit rating. We believe the key Company-specific factors affecting our ability to maintain our existing debt financing relationships and to access such capital in the future are our present and expected levels of profitability and cash flows from operations, asset collateral bases and the level of our equity capital relative to our debt obligations. In addition, as noted above, our existing debt agreements include significant restrictions on future financings including, among others, limits on the amount of indebtedness we may incur or which may be secured by any of our assets.

     Pursuant to the Stock Repurchase Plan authorized by our Board of Directors, as modified during the sixteen weeks ended May 21, 2007, we are allowed to repurchase up to an aggregate of $250,000 of our common stock. During the sixteen weeks ended May 21, 2007, we repurchased 4,380,020 shares of our common stock at an average price of $19.02 per share, for a total cost, including trading commissions, of $83,300, and we retired 4,370,620 shares. As of May 21, 2007, we had 9,400 shares of common stock that had been repurchased, but not yet retired and are shown as common stock held in treasury in the accompanying Condensed Consolidated Balance Sheet. These shares were retired subsequent to May 21, 2007. As of January 31, 2007, we had 18,300 shares of common stock that had been repurchased, but not yet retired and are shown as common stock held in treasury in the accompanying Condensed Consolidated Balance Sheet. These shares were retired subsequent to January 31, 2007.

      Based on the Board of Directors’ authorization and the amount of cumulative repurchases of our common stock that we have already made thereunder (9,803,757 shares at an average price of $17.74 per share, for a total cost, including trading commissions, of $173,913), we are permitted to make additional repurchases of our common stock up to $76,087 under the Stock Repurchase Plan as of May 21, 2007. As part of our Stock Repurchase Plan, we have implemented a share repurchase plan pursuant to Rule 10b5-1 of the Exchange Act, under which we are allowed to repurchase $5,000 of our common stock in the open market each fiscal quarter through the quarter ending January 28, 2008. Rule 10b5-1 allows us to repurchase our common stock when we might otherwise be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods.

     During the sixteen weeks ended May 21, 2007, we declared cash dividends of $0.06 per share of common stock, for a total of $3,750. Dividends payable of $3,750 and $2,694 have been included in other current liabilities in our accompanying Condensed Consolidated Balance Sheets as of May 21, 2007 and January 31, 2007, respectively. The dividends declared during the sixteen weeks ended May 21, 2007 were subsequently paid on June 11, 2007.

      During the sixteen weeks ended May 21, 2007, cash provided by operating activities was $39,135, a decrease of $7,817 or 16.6% from the prior year comparable period. This decrease is primarily attributable to decreases of $5,381 in deferred income taxes and $3,025 in facility action charges, net, which were partially offset by an increase of $1,331 in share-based compensation expense and higher depreciation and amortization. The remaining fluctuation is attributable primarily to changes in operating assets and liabilities, including accounts receivable, accounts

39

CKE RESTAURANTS, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
(Dollars in thousands, except per share amounts)

payable and other liability accounts. Working capital account balances can vary significantly from quarter to quarter, depending upon the timing of large customer receipts and payments to vendors, but they are not anticipated to be a significant source or use of cash over the long term.

     Cash used in investing activities during the sixteen weeks ended May 21, 2007 totaled $23,287, which principally consisted of purchases of property and equipment, partially offset by proceeds from the sale of property and equipment, and collections on notes receivable.

     Capital expenditures were as follows:

	Sixteen Weeks Ended
	May 21, 2007		May 22, 2006
New restaurants (including restaurants under development)
Carl’s Jr.	$	3,583	$	2,548
Hardee’s		4,872		928
Remodels/Dual-branding (including construction in process)
Carl’s Jr.		7,968		910
Hardee’s		4,133		2,011
Other restaurant additions
Carl’s Jr.		5,030		2,382
Hardee’s		3,896		21,081
Corporate/other		4,199		4,383
Capital expenditures – discontinued operations		1,814		392
Total	$	35,495	$	34,635

     Capital expenditures for the sixteen weeks ended May 21, 2007, increased $860, or 2.5%, over the comparable prior year period mainly due to increases in restaurant remodel/dual-branding activity and new restaurant construction, partially offset by a decrease in real property acquisitions, which were high in the prior year quarter and did not occur to the same extent in the current year.

      Cash used in financing activities during the sixteen weeks ended May 21, 2007 was $8,097, which principally consisted of net repayments of $23,000 under the revolving portion of our Facility, payment of $83,467 for the repurchase of common stock, payment of $2,694 of dividends and repayment of $1,539 of capital lease obligations, partially offset by borrowings under the term loan portion of our Facility of $100,179 and proceeds from exercises of stock options of $1,557.

Contractual Obligations

     We enter into purchasing contracts and pricing arrangements to control costs for commodities and other items that are subject to price volatility. We also enter into contractual commitments for marketing and sponsorship arrangements. These arrangements, in addition to any unearned supplier funding and distributor inventory obligations, result in unconditional purchase obligations, which totaled $54,048 as of May 21, 2007.

40

Item 3. Quantitative and Qualitative Disclosures About Market Risk
(Dollars in thousands)

Interest Rate Risk

      Our principal exposure to financial market risks relates to the impact that interest rate changes could have on the Facility. As of May 21, 2007, we had $192,500 of borrowings and $46,310 of letters of credit outstanding under the Facility. Borrowings under the Facility bear interest at the prime rate or LIBOR plus an applicable margin. A hypothetical increase of 100 basis points in short-term interest rates would result in a reduction in our annual pre-tax earnings of $1,925. The estimated reduction is based upon the outstanding balance of the borrowings under the Facility and the weighted-average interest rate for the fiscal year and assumes no change in the volume, index or composition of debt as in effect on May 21, 2007. As of May 21, 2007, a hypothetical increase of 100 basis points in short-term interest rates would also cause the fair value of our 2023 Convertible Notes to decrease approximately $198, and a hypothetical decrease of 100 basis points in short-term interest rates would cause the fair value of our 2023 Convertible Notes to increase approximately $202. The changes in fair value were determined by discounting the projected cash flows assuming redemption on October 1, 2008.

     Substantially all of our business is transacted in U.S. dollars. Accordingly, foreign exchange rate fluctuations have not had a significant impact on us and are not expected to in the foreseeable future.

Commodity Price Risk

     We purchase certain products which are affected by commodity prices and are, therefore, subject to price volatility caused by weather, market conditions and other factors which are not considered predictable or within our control. Although many of the products purchased are subject to changes in commodity prices, certain purchasing contracts or pricing arrangements contain risk management techniques designed to minimize price volatility. The purchasing contracts and pricing arrangements we use may result in unconditional purchase obligations, which are not reflected in the accompanying Condensed Consolidated Balance Sheets. Typically, we use these types of purchasing techniques to control costs as an alternative to directly managing financial instruments to hedge commodity prices. In many cases, we believe we will be able to address material commodity cost increases by adjusting our menu pricing or changing our product delivery strategy. However, increases in commodity prices, without adjustments to our menu prices, could increase restaurant operating costs as a percent of company-operated restaurants revenue for our restaurant concepts.

41

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

     We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

     In connection with the preparation of this Quarterly Report on Form 10-Q, as of May 21, 2007, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

(b) Changes in Internal Control

     There have been no changes in our internal control over financial reporting during the fiscal quarter ended May 21, 2007, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information.

Item 1. Legal Proceedings.

     See Note 14 of Notes to Condensed Consolidated Financial Statements for information regarding legal proceedings.

Item 1A. Risk Factors.

     None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(Dollars in thousands, except per share amounts)

Issuer Purchase of Equity Securities

     Pursuant to the Stock Repurchase Plan authorized by our Board of Directors, as modified during the sixteen weeks ended May 21, 2007, we are allowed to repurchase up to an aggregate of $250,000 of our common stock. During the sixteen weeks ended May 21, 2007, we repurchased 4,380,020 shares of our common stock at an average price of $19.02 per share, for a total cost, including trading commissions, of $83,300, and we retired 4,370,620 shares. As of May 21, 2007, we had 9,400 shares of common stock that had been repurchased, but not yet retired and are shown as common stock held in treasury in the accompanying Condensed Consolidated Balance Sheet. These shares were retired subsequent to May 21, 2007. As of January 31, 2007, we had 18,300 shares of common stock that had been repurchased, but not yet retired and are shown as common stock held in treasury in the accompanying Condensed Consolidated Balance Sheet. These shares were retired subsequent to January 31, 2007.

42

     Based on the Board of Directors’ authorization and the amount of cumulative repurchases of our common stock that we have already made thereunder (9,803,757 shares at an average price of $17.74 per share, for a total cost, including trading commissions, of $173,913), we are permitted to make additional repurchases of our common stock up to $76,087 under the Stock Repurchase Plan as of May 21, 2007. As part of our Stock Repurchase Plan, we have implemented a share repurchase plan pursuant to Rule 10b5-1 of the Exchange Act, under which we are allowed to repurchase $5,000 of our common stock in the open market each fiscal quarter through the quarter ending January 28, 2008. Rule 10b5-1 allows us to repurchase our common stock when we might otherwise be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods.

     The following table provides information as of May 21, 2007, with respect to shares of common stock repurchased by us during the fiscal quarter then ended (dollars in thousands, except per share amounts):

	(a)		(b)		(c)		(d)
							Maximum
							Dollar
							Value of
					Total		Shares that
					Number of Shares		May Yet Be
			Average		Purchased as Part		Purchased
	Total		Price		of Publicly		Under the
	Number of Shares		Paid per		Announced Plans		Plans or
Period	Purchased		Share		or Programs		Programs
January 30, 2007 — February 26, 2007		61,700	$	19.68		61,700	$	108,170
February 27, 2007 — March 26, 2007		67,200		19.05		67,200		106,889
March 27, 2007 — April 23, 2007		4,188,620		18.98		4,188,620		77,371
April 24, 2007 — May 21, 2007		62,500		20.52		62,500		76,087
Total		4,380,020	$	19.02		4,380,020	$	76,087

Item 3. Defaults Upon Senior Securities.

     None.

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

     None.

Item 5. Other Information.

     Not applicable.

43

Item 6. Exhibits.

Exhibit #
3.1	Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement Form S-4 filed with the Securities and Exchange Commission on March 7, 1994).
3.2	Certificate of Amendment of Certificate of Incorporation of the Company, as filed with the Delaware Secretary of State on December 9, 1997 (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 26, 1998 filed with the Securities and Exchange Commission on April 24, 1998).
3.3	Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement Form S-4 filed with the Securities and Exchange Commission on March 7, 1994).
3.4	Certificate of Amendment of Bylaws of the Company (incorporated by reference to Exhibit 3.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 26, 2004 filed with the Securities and Exchange Commission on April 7, 2004).
10.1	Employment Agreement, effective January 2004, by and between Hardee’s Food Systems, Inc. and Noah J. Griggs.
10.2	Amendment No. 1 to Employment Agreement between the Company and Noah J. Griggs, effective as of December 6, 2005.
10.3	Amendment No. 2 to Employment Agreement between the Company and Noah J. Griggs, effective as of March 20, 2007.
10.4	Amendment No. 3 to Employment Agreement between the Company and Noah J. Griggs, effective as of June 11, 2007.
10.5	Additional Loan and First Amendment to Seventh Amended and Restated Credit Agreement, dated as of May 3, 2007, by and among the Company, the Lenders party thereto, and BNP Paribas, a bank organized under the laws of France acting through its Chicago branch, as Administrative Agent.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

44

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CKE RESTAURANTS, INC. (Registrant)
Date: June 27, 2007	/s/ Theodore Abajian
	Theodore Abajian
	Executive Vice President
	Chief Financial Officer

45

Exhibit Index

Exhibit #
3.1	Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement Form S-4 filed with the Securities and Exchange Commission on March 7, 1994).
3.2	Certificate of Amendment of Certificate of Incorporation of the Company, as filed with the Delaware Secretary of State on December 9, 1997 (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 26, 1998 filed with the Securities and Exchange Commission on April 24, 1998).
3.3	Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement Form S-4 filed with the Securities and Exchange Commission on March 7, 1994).
3.4	Certificate of Amendment of Bylaws of the Company (incorporated by reference to Exhibit 3.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 26, 2004 filed with the Securities and Exchange Commission on April 7, 2004).
10.1	Employment Agreement, effective January 2004, by and between Hardee’s Food Systems, Inc. and Noah J. Griggs.
10.2	Amendment No. 1 to Employment Agreement between the Company and Noah J. Griggs, effective as of December 6, 2005.
10.3	Amendment No. 2 to Employment Agreement between the Company and Noah J. Griggs, effective as of March 20, 2007.
10.4	Amendment No. 3 to Employment Agreement between the Company and Noah J. Griggs, effective as of June 11, 2007.
10.5	Additional Loan and First Amendment to Seventh Amended and Restated Credit Agreement, dated as of May 3, 2007, by and among the Company, the Lenders party thereto, and BNP Paribas, a bank organized under the laws of France acting through its Chicago branch, as Administrative Agent.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

46

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of January ___, 2004 by and between HARDEE’S FOOD SYSTEMS, INC., a North Carolina corporation (the “Company”), and NOAH J. GRIGGS (the “Employee”).

R E C I T A L S:

     A. Employee is a key employee of the Company.

     B. The Company and Employee desire to enter into this Agreement to set forth the terms and provisions of Employee’s employment by the Company.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the parties agree as follows:

     1. Employment and Duties. Subject to the terms and conditions of this Agreement, the Company employs the Employee to serve in an executive and managerial capacity as Executive Vice President of Operations of the Company, and the Employee accepts such employment and agrees to perform such reasonable responsibilities and duties commensurate with the aforesaid positions as directed by the Company’s Board of Directors or as set forth in the Articles of Incorporation and the Bylaws of the Company. Any change in such titles or delegation of duties inconsistent with such titles without the consent of Employee, shall be deemed a termination without cause under Section 7(b) below.

     2. Term. The term of this Agreement shall commence on the first day of the Company’s fiscal year commencing in the year 2004 (the “Effective Date”) and shall terminate on the last day of the Company’s fiscal year ending in the year 2007, subject to prior termination as set forth in Section 7 below (the “Term”). The Term may be extended at any time upon mutual written agreement of the parties.

     3. Salary. Commencing on the Effective Date, and subject to the other provisions of this Agreement, the Company shall pay the Employee a minimum base annual salary of $250,000. The Chief Executive Officer of the Company may, from time to time, increase such salary in his sole discretion.

     4. Other Compensation and Fringe Benefits. In addition to any executive bonus, pension, deferred compensation and stock option grants which the Company may from time to time make available to the Employee upon mutual agreement, the Employee shall be entitled to the following:

          (a) The standard Company benefits enjoyed by the Company’s other top executives;

          (b) Provision by the Company during the Term and any extensions thereof to the Employee and his dependents of the medical and other insurance coverage provided by the Company to its other top executives;

          (c) Provision by the Company of supplemental disability insurance sufficient to provide two-thirds of the Employee’s pre-disability minimum base annual salary for a two-year period; and

          (d) For the fiscal years ending in January 2005, 2006 and 2007, Employee shall be entitled to a bonus in the amount determined by the Company’s Chief Executive Officer, in his sole discretion.

     The Company shall deduct from all compensation payable under this Agreement to the Employee any taxes or withholdings the Company is required to deduct pursuant to state and federal laws or by mutual agreement between the parties.

     5. Vacation. For and during each year of the Term and any extensions thereof, the Employee shall be entitled to reasonable paid vacation periods consistent with his positions with the Company and in accordance with the Company’s standard policies, or as the Company’s Board of Directors may approve. In addition, the Employee shall be entitled to such holidays consistent with the Company’s standard policies or as the Company’s Board of Directors may approve.

     6. Expense Reimbursement. In addition to the compensation and benefits provided herein, the Company shall, upon receipt of appropriate documentation, reimburse the Employee each month for his reasonable travel, lodging, entertainment, promotion and other ordinary and necessary business expenses in accordance with the Company’s policies then in effect.

     7. Termination.

          (a) For Cause. The Company may terminate this Agreement immediately for cause upon written notice to the Employee, in which event the Company shall be obligated only to pay the Employee that portion of the minimum base annual salary due him through the date of termination. Cause shall be limited to (i) the persistent failure to perform duties consistent with a commercially reasonable standard of care; (ii) the willful neglect of duties; (iii) criminal or other illegal activities involving dishonesty; or, (iv) a material breach of this Agreement.

          (b) Without Cause. Either party may terminate this Agreement immediately without cause by giving written notice to the other. If the Company terminates under this Section 7(b) , then it shall pay to the Employee the sum of (i) all amounts owed through the date of termination, plus (ii) an amount equal to the product of the Employee’s minimum base annual salary in effect as of the date of termination times the number of years (including partial years) remaining in the Term. Such payment to be made in a lump sum on or before the fifth day following the date of termination, and shall be in lieu of all further salary and bonus obligations under this Agreement. In addition, if the Company terminates under this Section 7(b), (i) all options granted to the Employee which had not vested as of the date of such termination shall vest concurrently with such termination, and, notwithstanding the terms of any option agreements, Employee may exercise any vested options, including by reason of acceleration, for a period after such termination which is the greater of what is provided in the respective option agreement or 30 days, and (ii) the Company shall maintain in full force and effect for the continued benefit of the Employee for the remainder of the Term, all employee benefit plans (except for the Company’s stock option plans) and programs in which the Employee was entitled to participate immediately prior to the date of termination, provided that the Employee’s continued participation is possible under the general terms and provisions of such plans and programs. In the event that the Employee’s participation in any such plan or program

2

is prohibited, the Company shall, at its expense, arrange to provide the Employee with benefits substantially similar to those which the Employee would otherwise have been entitled to receive under such plans and programs from which his continued participation is prohibited. If the Employee terminates under this Section 7(b), then the Company shall only be obligated to pay the Employee the minimum annual base salary due him through the date of termination.

          (c) Disability. If the Employee fails to perform his duties hereunder on account of illness or other incapacity for a period of six consecutive months, then the Company shall have the right upon written notice to the Employee to terminate this Agreement without further obligation by paying the Employee the minimum base annual salary, without offset, for the remainder of the Term in a lump sum or as otherwise directed by the Employee.

          (d) Death. If the Employee dies during the Term, then this Agreement shall terminate immediately and the Employee’s legal representatives shall be entitled to receive the minimum annual base salary for the remainder of the Term in a lump sum or as otherwise directed by the Employee’s legal representative. Executive’s outstanding Company options will immediately vest in full and be exercisable for a period of 90 days from Employee’s death.

          (e) Effect of Termination. Termination for any reason or for no reason shall not constitute a waiver of the Company’s rights under this Agreement nor a release of the Employee from any obligation hereunder except his obligation to perform his day-to-day duties as an employee.

          (f) Mitigation. Employee shall not be required to mitigate the amount of any payment provided for in this Section 7 by seeking other employment or otherwise, nor shall any compensation or other payments received by the Employee after the date of termination reduce any payments due under this Section 7.

     8. Non-Delegation of Employee’s Rights. The obligations, rights and benefits of the Employee hereunder are personal and may not be delegated, assigned or transferred in any manner whatsoever, nor are such obligations, rights or benefits subject to involuntary alienation, assignment or transfer.

     9. Confidential Information. The Employee acknowledges that in his capacity as an employee of the Company he will occupy a position of trust and confidence and he further acknowledges that he will have access to and learn substantial information about the Company and its operations that is confidential or not generally known in the industry, including, without limitation, information that relates to purchasing, sales, customers, marketing, and the Company’s financial position and financing arrangements. The Employee agrees that all such information is proprietary or confidential, or constitutes trade secrets and is the sole property of the Company. The Employee will keep confidential, and will not reproduce, copy or disclose to any other person or firm, any such information or any documents or information relating to the Company’s methods, processes, customers, accounts, analyses, systems, charts, programs, procedures, correspondence or records, or any other documents used or owned by the Company, nor will the Employee advise, discuss with or in any way assist any other person, firm or entity in obtaining or learning about any of the items described in this Section 9. Accordingly, the Employee agrees that during the Term and at all times thereafter he will not disclose, or permit or encourage anyone else to disclose, any such information, nor will he utilize any such information, either alone or with others, outside the scope of his duties and responsibilities with the Company.

3

     10. Non-Competition During Employment Term. The Employee agrees that, during the Term and any extensions thereof, he will devote substantially all his business time and effort, and give undivided loyalty, to the Company, and that he will not engage in any way whatsoever, directly or indirectly, in any business that is competitive with the Company or its affiliates, nor solicit, or in any other manner work for or assist any business which is competitive with the Company or its affiliates. In addition, during the Term and any extensions thereof, the Employee will undertake no planning for or organization of any business activity competitive with the work he performs as an employee of the Company, and the Employee will not combine or conspire with any other employee of the Company or any other person for the purpose of organizing any such competitive business activity.

     11. Non-Competition After Employment Term. The parties acknowledge that the Employee will acquire substantial knowledge and information concerning the business of the Company and its affiliates as a result of his employment. The parties further acknowledge that the scope of business in which the Company is engaged as of the Effective Date is national and very competitive and one in which few companies can successfully compete. Competition by the Employee in that business after this Agreement is terminated would severely injure the Company. Accordingly, for a period of two years after this Agreement is terminated or the Employee leaves the employment of the Company for any reason whatsoever, except as otherwise stated hereinbelow, the Employee agrees (i) not to become an employee, consultant, advisor, principal, partner or substantial shareholder of any firm or business that in any way competes with the Company or its affiliates in any of their presently-existing or then-existing products and markets; and (ii) not to solicit any person or business that was at the time of such termination and remains an executive employee of the Company or any of its affiliates. Notwithstanding any of the foregoing provisions to the contrary, the Employee shall not be subject to the restrictions set forth in this Section 11 under the following circumstances:

          (a) If the Employee’s employment with the Company is terminated by the Company without cause; or

          (b) If the Employee’s employment with the Company is terminated as a result of the Company’s unwillingness to extend the Term of this Agreement.

     12. Return of Company Documents. Upon termination of this Agreement, Employee shall return immediately to the Company all records and documents of or pertaining to the Company and shall not make or retain any copy or extract of any such record or document.

     13. Improvements and Inventions. Any and all improvements or inventions which the Employee may conceive, make or participate in during the period of his employment shall be the sole and exclusive property of the Company. The Employee will, whenever requested by the Company, execute and deliver any and all documents which the Company shall deem appropriate in order to apply for and obtain patents for improvements or inventions or in order to assign and convey to the Company the sole and exclusive right, title and interest in and to such improvements, inventions, patents or applications.

     14. Actions. The parties agree and acknowledge that the rights conveyed by this Agreement are of a unique and special nature and that the Company will not have an adequate remedy at law in the event of a failure by the Employee to abide by its terms and conditions nor will money damages adequately compensate for such injury. It is therefore agreed between the parties

4

that, in the event of a breach by the Employee of any of his obligations contained in this Agreement, the Company shall have the right, among other rights, to damages sustained thereby and to obtain an injunction or decree of specific performance from any court of competent jurisdiction to restrain or compel the Employee to perform as agreed herein. The Employee agrees that this Section 14 shall survive the termination of his employment and he shall be bound by its terms at all times subsequent to the termination of his employment for so long a period as Company continues to conduct the same business or businesses as conducted during the Term or any extensions thereof. Nothing herein contained shall in any way limit or exclude any other right granted by law or equity to the Company.

     15. Amendment; Integration. This Agreement contains, and its terms constitute, the entire agreement of the parties, and it may be amended only by a written document signed by both parties to this Agreement.

     16. Governing Law. California law shall govern the construction and enforcement of this Agreement and the parties agree that any litigation pertaining to this Agreement shall be adjudicated in courts located in California.

     17. Attorneys’ Fees. If any party finds it necessary to employ legal counsel or to bring an action at law or other proceedings against the other party to enforce any of the terms hereof, the party prevailing in any such action or other proceeding shall be paid by the other party its reasonable attorneys’ fees as well as court costs, all as determined by the court and not a jury.

     18. Severability. If any section, subsection or provision hereof is found for any reason whatsoever, to be invalid or inoperative, that section, subsection or provision shall be deemed severable and shall not affect the force and validity of any other provision of this Agreement. If any covenant herein is determined by a court to be overly broad thereby making the covenant unenforceable, the parties agree and it is their desire that such court shall substitute a reasonable judicially enforceable limitation in place of the offensive part of the covenant and that as so modified the covenant shall be as fully enforceable as if set forth herein by the parties themselves in the modified form. The covenants of the Employee in this Agreement shall each be construed as an agreement independent of any other provision in this Agreement, and the existence of any claim or cause of action of the Employee against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants in this Agreement.

     19. Notices. Any notice, request, or instruction to be given hereunder shall be in writing and shall be deemed given when personally delivered or three days after being sent by United States certified mail, postage prepaid, with return receipt requested, to the parties at their respective addresses set for the below:

To the Company:

Hardee’s Food Systems, Inc.
One US Bank Plaza
Suite 2000
St. Louis, MO 63101
Attention: General Counsel

5

To the Employee:

Noah J. Griggs
7457 Cromwell Drive
Clayton, MO 63105

     20. Waiver of Breach. The waiver by any party of any provisions of this Agreement shall not operate or be construed as a waiver of any prior or subsequent breach by the other party.

     IN WITNESS WHEREOF the parties have executed this Agreement to be effective as of the date first set forth above.

HARDEE’S FOOD SYSTEMS, INC.
By:	/s/ E. Michael Murphy
Its:	EVP
EMPLOYEE
/s/ Noah J. Griggs
Noah J. Griggs

6

EX-10.2

Exhibit 10.2

CKE Restaurants, Inc.

Amendment No. 1
To
Employment Agreement

     This Amendment No. 1 (the “Amendment”) to Employment Agreement is made effective as of December 6, 2005, by and between CKE Restaurants, Inc. (the “Company”) and Noah J. Griggs (the “Employee”).

R E C I T A L S:

     A. The Company and the Employee entered into an Employment Agreement, dated as of January 2004 (the “Agreement”).

     B. The Company and Employee now desire to amend the Agreement as set forth below.

AGREEMENT

     1. Term. Section 2 of the Agreement shall read in its entirety as follows:

     “2. Term. The term of this Agreement (the “Term”) shall commence on the Effective Date and, subject to prior termination as set forth in Section 7 below, shall terminate three (3) years following the date on which notice of non-renewal or termination of this Agreement is given by either party to the other. Thus, the Term shall be renewed automatically on a daily basis so that the outstanding Term is always three (3) years following the date on which notice of non-renewal or termination is given by either party to the other. The Term may be extended at any time upon mutual written agreement of the parties.”

     2. Definitions. Terms used but not defined in this Amendment shall have the respective meanings assigned to them in the Agreement.

     3. Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, and all of which shall constitute one Amendment.

     4. Terms and Conditions of Agreement. Except as specifically amended by this Amendment, all terms and conditions of the Agreement shall remain in full force and effect.

[Signature Page Follows]

     IN WITNESS WHEREOF, this Amendment is executed by the undersigned as of the date first written above.

/s/ Noah J. Griggs
Noah J. Griggs
CKE Restaurants, Inc.
By:	/s/ Peter Churm
	Peter Churm
	Director and Chairman of the Compensation Committee of the Board of Directors

2

EX-10.3

Exhibit 10.3

CKE Restaurants, Inc.

Amendment No. 2
To
Employment Agreement

     This Amendment No. 2 (the “Amendment”) to Employment Agreement is made effective as of March 20, 2007, by and between CKE Restaurants, Inc. (the “Company”) and Noah J. Griggs (the “Employee”).

RECITALS:

     A. The Company and the Employee entered into an Employment Agreement dated as of January 2004, and amended on December 6, 2005 (the “Agreement”).

     B. The Company and Employee now desire to amend the Agreement as set forth below.

AGREEMENT

     1. Other Compensation and Fringe Benefits. Section 4(d) of the Agreement is hereby amended to extend the bonus provided for therein to fiscal years 2008, 2009 and 2010.

     2. Definitions. Terms used but not defined in this Amendment shall have the respective meanings assigned to them in the Agreement.

     3. Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, and all of which shall constitute one Amendment.

     4. Terms and Conditions of Agreement. Except as specifically amended by this Amendment, all terms and conditions of the Agreement shall remain in full force and effect.

[Signature Page Follows]

     IN WITNESS WHEREOF, this Amendment is executed by the undersigned as of the date first written above.

/s/ Noah J. Griggs
Noah J. Griggs
CKE Restaurants, Inc.
By:	/s/ Andrew F. Puzder
	Andrew F. Puzder
	President and Chief Executive Officer

2

EX-10.4

Exhibit 10.4

CKE Restaurants, Inc.

Amendment No. 3
To
Employment Agreement

     This Amendment No. 3 (the “Amendment”) to Employment Agreement is made effective as of June 11, 2007, by and between CKE Restaurants, Inc. (the “Company”) and Noah J. Griggs (the “Employee”).

R E C I T A L S:

     A. The Employee initially entered into an Employment Agreement, dated as of January 2004, with Hardee’s Food Systems, Inc., which Employment Agreement has been amended on December 6, 2005 and March 20, 2007, and all of which have been assumed by the Company (the “Agreement”).

     B. The Company and Employee now desire to amend the Agreement as set forth below.

AGREEMENT

     1. Employment and Duties. Section 1 of the Agreement shall read in its entirety as follows:

     “1. Employment and Duties. Subject to the terms and conditions of this Agreement, the Company employs the Employee to serve in an executive and managerial capacity as Executive Vice President and Director of Training of the Company, and the Employee accepts such employment and agrees to perform such reasonable responsibilities and duties commensurate with the aforesaid positions as directed by the Company’s Board of Directors or as set forth in the Articles of Incorporation and the Bylaws of the Company. Any change in such titles or delegation of duties inconsistent with such titles without the consent of Employee, shall be deemed a termination without cause under Section 7(b) below.”

     2. Definitions. Terms used but not defined in this Amendment shall have the respective meanings assigned to them in the Agreement.

     3. Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, and all of which shall constitute one Amendment.

     4. Terms and Conditions of Agreement. Except as specifically amended by this Amendment, all terms and conditions of the Agreement shall remain in full force and effect.

[Signature Page Follows]

     IN WITNESS WHEREOF, this Amendment is executed by the undersigned as of the date first written above.

/s/ Noah J. Griggs
Noah J. Griggs
CKE Restaurants, Inc.
By:	/s/ Andrew F. Puzder
	Andrew F. Puzder,
	President and Chief Executive Officer

2

EX-10.5

Exhibit 10.5

ADDITIONAL LOAN AND FIRST AMENDMENT TO
SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT

     This ADDITIONAL LOAN AND FIRST AMENDMENT TO SEVENTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May 3, 2007 (this “Amendment”), is made and entered into by and among CKE Restaurants, Inc., a Delaware corporation (the “Borrower”), BNP Paribas, as administrative agent (in such capacity, the “Administrative Agent”), the lender signatory hereto (the “Additional Term Lender”) in connection with that certain Seventh Amended and Restated Credit Agreement, dated as of March 27, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the Borrower, the Administrative Agent, the lenders party thereto and the other parties thereto. Capitalized terms used herein and not otherwise defined herein shall have the meaning assigned to such terms in the Credit Agreement (as amended hereby).

RECITALS

     Pursuant to Section 2.23 of the Credit Agreement, the Borrower may from time to time request Additional Loans in an aggregate principal amount not to exceed $100,000,000, subject to the terms and conditions set forth therein.

     On April 19, 2007, the Borrower provided written notice to the Administrative Agent of its request for Additional Term Loans in an aggregate principal amount of $50,000,000.

     The Additional Term Lender has agreed, subject to the terms and conditions set forth herein, to make Additional Term Loans to the Borrower in an aggregate amount of $50,000,000.

1

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

     Section 1. Amendments to Credit Agreement.

          (a) The Borrower and the Additional Term Lender party hereto hereby agree that:

               (i) the Commitment (the “May 2007 Commitment”) of the Additional Term Lender and the aggregate amount of the Additional Term Loans which shall be borrowed (the “May 2007 Term Loans”) pursuant to this Amendment and Section 2.23 of the Credit Agreement shall be in an aggregate principal amount of $50,000,000; and

               (ii) the May 2007 Term Loans shall be made on the first date on which the conditions set forth in Sections 2.23 and 4.2 of the Credit Agreement and Section 2 hereof have been satisfied in full (the “Additional Loan Effective Date”).

          (b) The Borrower and the Additional Term Lender hereby agree that each May 2007 Term Loan funded pursuant to this Amendment will have the same ranking and all other terms as the Term Loans, except that the May 2007 Term Loans shall accrue interest from and including the Additional Loan Effective Date, and, from and after the Additional Loan Effective Date, the Additional Term Lender will be a Lender and a Term Loan Lender for any and all purposes under the Credit Agreement.

          (c) To give effect to the May 2007 Term Loans, the parties hereto agree that:

               (i) Section 1.1 of the Credit Agreement is amended by adding the following new definitions thereto in alphabetical order:

“New Tranche Term Loans” shall have the meaning provided in Section 2.1.

“Original Term Loans” shall mean the Term Loans made on the Closing Date.

               (ii) Section 1.1 of the Credit Agreement is amended by amending and restating the definition of “Term Loan” in its entirety to read in full as follows:

“Term Loan” shall have the meaning provided in Section 2.1, provided that for all purposes of the Loan Documents other than the first four sentences of Section 2.1, “Term Loan” shall include the New Tranche Term Loans made pursuant to Section 2.1.

2

               (iii) Section 2.1 of the Credit Agreement is amended by adding the following after the fourth sentence of such section:

On May 3, 2007, Additional Term Loans in the principal amount of $50,000,000 shall be made by Lenders agreeing to do so pursuant to Section 2.23 (collectively, the “New Tranche Term Loans").

[Remainder of Page Intentionally Left Blank]

3

               (iv) The table set forth in Section 2.1 of the Credit Agreement is hereby amended and restated as follows:

	Paydown Amount		Paydown Amount
	in connection with		in connection with
Date	Original Term Loans		New Tranche Term Loans
July 1, 2007	$	300,000	$	125,000
October 1, 2007	$	300,000	$	125,000
January 1, 2008	$	300,000	$	125,000
April 1, 2008	$	300,000	$	125,000
July 1, 2008	$	300,000	$	125,000
October 1, 2008	$	300,000	$	125,000
January 1, 2009	$	300,000	$	125,000
April 1, 2009	$	300,000	$	125,000
July 1, 2009	$	300,000	$	125,000
October 1, 2009	$	300,000	$	125,000
January 1, 2010	$	300,000	$	125,000
April 1, 2010	$	300,000	$	125,000
July 1, 2010	$	300,000	$	125,000
October 1, 2010	$	300,000	$	125,000
January 1, 2011	$	300,000	$	125,000
April 1, 2011	$	300,000	$	125,000
July 1, 2011	$	300,000	$	125,000
October 1, 2011	$	300,000	$	125,000
January 1, 2012	$	300,000	$	125,000
April 1, 2012	$	28,500,000	$	11,875,000
July 1, 2012	$	28,500,000	$	11,875,000
October 1, 2012	$	28,500,000	$	11,875,000
January 1, 2013	$	28,800,000	$	12,000,000

4

     Section 2. Conditions to Effectiveness. The effectiveness of this Amendment is conditioned upon the following:

          (a) Amendment. The Administrative Agent shall have received counterparts of this Amendment that, when taken together, bear the signatures of the Borrower, the Administrative Agent, and the Additional Term Lender.

          (b) Confirmation of Guaranty and Security Interest. The Borrower and each Subsidiary of the Borrower (other than any such Subsidiary which is an Immaterial Subsidiary) shall have executed and delivered to the Administrative Agent a Confirmation of Guaranty and Security Interest.

          (c) Additional Commitment Agreement. The Administrative Agent shall have received an Additional Commitment Agreement in form and substance reasonably acceptable to it executed by each of the Additional Term Lender, the Administrative Agent and the Borrower.

          (d) Opinion of Counsel. The Administrative Agent shall have received, on behalf of itself and the Lenders, a legal opinion of Stradling Yocca Carlson & Rauth, counsel for the Borrower, addressed to the Administrative Agent, the Issuing Bank and the Lenders and dated the Additional Loan Effective Date, addressing such matters as the Administrative Agent may reasonably request.

          (e) Secretary’s Certificate. The Administrative Agent shall have received a certificate of the Secretary or Assistant Secretary of the Borrower, dated as of the Additional Loan Effective Date (i) certifying as true, correct and complete as of the Additional Loan Effective Date, an attached copy of the certificate of incorporation or other similar organizational document of the Borrower as amended, restated, supplemented or otherwise modified on or prior to the Additional Loan Effective Date (certified by the Secretary of State or other comparable authority where customary in such jurisdiction as of a date not more than ten Business Days prior to the Additional Loan Effective Date) and certifying that there have been no changes to such certificate of incorporation or other similar organizational document since the date of the certification thereof by the Secretary of State or other comparable authority where customary in such jurisdiction, (ii) certifying as true, correct and complete and as in full force and effect as of the Additional Loan Effective Date, an attached copy of the by-laws or other similar organizational document of the Borrower as amended through the date of such certificate, (iii) certifying an attached copy of the resolutions of the Borrower’s Board of Directors approving and authorizing the execution, delivery and performance of this Amendment and all other documents, instruments and agreements executed and/or delivered in connection herewith or required or contemplated hereunder (the “Amendment Documents”), and (iv) certifying the names and true signatures of the incumbent officers of the Borrower authorized to sign this Amendment and the other Amendment Documents, together with a certification of the name and true signature of the Secretary or Assistant Secretary of the Borrower executing and delivering this certificate.

5

          (f) Officer’s Certificate. The Administrative Agent shall have received a certificate dated as of the Additional Loan Effective Date signed by the chief financial officer of the Borrower certifying that the conditions set forth in Sections 4.2(a), (b) and (d) of the Credit Agreement have been satisfied in full with respect to the May 2007 Term Loans.

          (g) No Default or Event of Default. After giving effect to this Amendment and the Additional Term Loans, no Default or Event of Default shall have occurred and be continuing as a result of a breach of the covenants in Section 7.1 of the Credit Agreement and the Administrative Agent shall have received a certificate of the President or Vice President of the Borrower, dated as of the Additional Loan Effective Date, certifying the foregoing.

          (h) Additional Matters. All corporate and other proceedings taken or to be taken in connection with this Amendment and all documents incidental thereto, whether or not referred to herein, shall be reasonably satisfactory in form and substance to the Administrative Agent.

     Section 3. Representations and Warranties. The Borrower hereby represents and warrants to the Administrative Agent and the Lenders, as of the date hereof, that both before and after giving effect to this Amendment:

          (a) All of the representations and warranties of the Borrower and each other Loan Party contained in the Loan Documents (other than representations and warranties which expressly speak only as of a different date) are true and correct;

          (b) No Default or Event of Default has occurred or is continuing; and

          (c) The May 2007 Term Loans will be used to prepay the Revolving Loans pursuant to Sections 2.2 and 2.11 of the Credit Agreement and for other general corporate purposes.

     Section 4. Affirmations.

          (a) The Borrower hereby (i) expressly acknowledges the terms of this Amendment, (ii) ratifies and affirms its obligations under the Loan Documents to which it is a party, and (iii) agrees such Loan Documents remain in full force and effect.

6

          (b) The Borrower and the Administrative Agent hereby acknowledge and agree that (i) the Additional Term Lender is approved and included as a “Term Loan Lender” and as a “Lender”, each as defined in and under the Credit Agreement, and (ii) the other terms, conditions, rights and remedies of the Lenders and the Term Loan Lenders otherwise extend in all respects and are identical to those applicable to the Additional Term Lender under this Amendment.

          (c) The Borrower and the Administrative Agent hereby acknowledge and agree that the May 2007 Term Loans are “Term Loans”, “Loans” and “Obligations” as defined in and under the Credit Agreement.

          (d) The Borrower and the Administrative Agent hereby acknowledge and agree that the Additional Term Lender is a Secured Party as defined in and under the Borrower Security Agreement and the Subsidiary Security Agreement.

          (e) The Borrower and the Administrative Agent hereby acknowledge and agree that the grants of security interests and pledges of the Borrower pursuant to the Security Documents secures all amounts advanced and committed under the May 2007 Term Loans and this Amendment, which amounts are and shall be secured by all of the Collateral as defined in the Credit Agreement.

          (f) The Borrower hereby reaffirms, as of the Additional Loan Effective Date, the covenants and agreements contained in each Loan Document to which it is a party, including, in each case, such covenants and agreements as in effect immediately after giving effect to this Amendment and the transactions contemplated thereby.

          (g) The Borrower hereby acknowledges and agrees that the acceptance by the Administrative Agent of this document shall not be construed in any manner to establish any course of dealing on the Administrative Agent’s or any Lender’s part, including the providing of any notice or the requesting of any acknowledgment not otherwise expressly provided for in any Loan Document with respect to any future amendment, waiver, supplement or other modification to any Loan Document or any arrangement contemplated by any Loan Document.

          (h) The Borrower hereby represents and warrants that, immediately after giving effect to this Amendment, each Loan Document, in each case as modified by this Amendment (where applicable), to which it is a party continues to be a legal, valid and binding obligation of the undersigned, enforceable against such party in accordance with its terms (except, in any case, as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and by principles of equity).

7

     Section 5. Reference to and Effect on the Credit Agreement and other Loan Documents. The amendments set forth herein are effective solely for the purposes set forth herein and shall be limited precisely as written, and shall not be deemed to (i) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document or of any other instrument or agreement referred to therein, except as set forth herein, or (ii) prejudice any right or remedy that the Administrative Agent or any Lender may now have or may have in the future under or in connection with the Credit Agreement, as amended hereby, or any other instrument or agreement referred to therein. Each reference in the Credit Agreement to “this Agreement,” “herein,” “hereof” and words of like import and each reference in the other Loan Documents to the “Credit Agreement” shall mean the Credit Agreement as amended hereby. This Amendment shall be construed in connection with and as part of the Credit Agreement and all terms, conditions, representations, warranties, covenants and agreements set forth in the Credit Agreement and each other instrument or agreement referred to therein, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

     Section 6. Further Assurances. The Borrower shall and shall cause each other Loan Party, upon the reasonable request of the Administrative Agent and at the Borrower’s sole cost and expense, to execute, deliver, acknowledge or obtain, or to cause to be executed, delivered, registered, filed or recorded any document or instrument supplemental or confirmatory to the implementation of the May 2007 Term Loan, all as deemed necessary, reasonable or prudent by the Administrative Agent to create, better perfect, protect or implement the security interests of the Administrative Agent for the benefit of itself and the benefit of the Secured Parties

     Section 7. Expenses and Fees. Notwithstanding anything contained in the Credit Agreement, as amended hereby, or any other Loan Document and in addition to any fees and expenses required to be paid by the Borrower thereunder, the Borrower agrees to pay all reasonable out-of-pocket costs, fees and expenses incurred by the Administrative Agent in connection with the preparation, execution and delivery of this Amendment (including the reasonable fees and expenses of counsel to the Administrative Agent).

     Section 8. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

     Section 9. Severability. In case any provision in or obligation under this Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

8

     Section 10. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW TO THE EXTENT SUCH PRINCIPLES WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF ILLINOIS).

     Section 11. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT AND THE ADDITIONAL LENDER HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AMENDMENT, THE CREDIT AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.

[Signature Pages Follow]

9

     IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first above written.

CKE RESTAURANTS, INC.
By:	/s/ Theodore Abajian
	Name:	Theodore Abajian
	Title:	Executive Vice President and Chief Financial Officer

Additional Loan and First Amendment

BNP PARIBAS, as Administrative Agent
By:	/s/ Clark C. King
	Name:	Clark C. King III
	Title:	Managing Director
By:	/s/ Michael C. Colias
	Name:	Michael C. Colias
	Title:	Director

BNP PARIBAS, as Additional Term Lender
By:	/s/ Clark C. King
	Name:	Clark C. King III
	Title:	Managing Director
By:	/s/ Michael C. Colias
	Name:	Michael C. Colias
	Title:	Director

Additional Loan and First Amendment

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew F. Puzder, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended May 21, 2007, of CKE Restaurants, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 27, 2007

/s/ Andrew F. Puzder

Andrew F. Puzder

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Theodore Abajian, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended May 21, 2007, of CKE Restaurants, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 27, 2007

/s/ Theodore Abajian

Theodore Abajian

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification by the Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q for the period ended May 21, 2007, of CKE Restaurants, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew F. Puzder, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78m(a) or Section 78o(d)); and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

     In witness whereof, the undersigned has executed and delivered this certificate as of the date set forth opposite his signature below.

Date: June 27, 2007	/s/ Andrew F. Puzder
	Andrew F. Puzder
	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification by the Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q for the period ended May 21, 2007, of CKE Restaurants, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Theodore Abajian, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Section 78m(a) or Section 78o(d)); and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

     In witness whereof, the undersigned has executed and delivered this certificate as of the date set forth opposite his signature below.

Date: June 27, 2007	/s/ Theodore Abajian
	Theodore Abajian
	Executive Vice President and Chief Financial Officer