-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S0rZu1MPM4nlURTq4B4q4vL5PbCe4wvY4R3WkGtBydwkTzJuLT0jqlr3cZwGPAV9 29OrZSyD4a/6bRXZBBjZbQ== 0000892569-97-001630.txt : 19970616 0000892569-97-001630.hdr.sgml : 19970616 ACCESSION NUMBER: 0000892569-97-001630 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970519 FILED AS OF DATE: 19970613 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CKE RESTAURANTS INC CENTRAL INDEX KEY: 0000919628 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 330602639 STATE OF INCORPORATION: DE FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11313 FILM NUMBER: 97623873 BUSINESS ADDRESS: STREET 1: 1200 N HARBOR BLVD CITY: ANAHEIM STATE: CA ZIP: 92801 BUSINESS PHONE: 7147745796 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED MAY 19, 1997 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES --- EXCHANGE ACT OF 1934. For the quarterly period ended May 19, 1997 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES --- EXCHANGE ACT OF 1934. for the transition period from ___________ to ___________ Commission file number 1-13192 CKE RESTAURANTS, INC. ------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 33-0602639 - ---------------------------------- ------------------------------------ (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 1200 North Harbor Boulevard, Anaheim, CA 92801 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (714) 774-5796 NOT APPLICABLE - -------------------------------------------------------------------------------- Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report. Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 33,448,926 shares of Common Stock, par value $.01 per share as of June 9, 1997 - -------------------------------------------------------------------------------- 2 CKE RESTAURANTS, INC. INDEX
Page ---- Part I. Financial Information Item 1. Consolidated Financial Statements: Consolidated Balance Sheets as of May 19, 1997 and January 27, 1997................. 2 Consolidated Statements of Income for the sixteen weeks ended May 19, 1997 and May 20, 1996.................................................... 3 Consolidated Statements of Cash Flows for the sixteen weeks ended May 19, 1997 and May 20, 1996.................................................... 4-5 Notes to Consolidated Financial Statements.......................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................................ 7-10 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K............................................... 11-13
1 3 PART I. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS CKE RESTAURANTS, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited)
May 19, January 27, 1997 1997 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 28,201 $ 39,782 Marketable securities 573 -- Accounts receivable 6,752 7,942 Related party receivables 2,056 2,088 Inventories 9,058 9,223 Deferred income taxes, net 7,214 7,214 Other current assets and prepaid expenses 11,279 6,608 ----------- ----------- Total current assets 65,133 72,857 Property and equipment, net 211,256 205,805 Property under capital leases, net 35,951 37,115 Long-term investments 47,119 33,218 Notes receivable 6,036 6,210 Related party receivables 6,078 9,325 Other assets 38,408 36,687 ----------- ----------- $ 409,981 $ 401,217 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 758 $ 735 Current portion of capital lease obligations 4,960 4,766 Accounts payable 25,165 33,930 Other current liabilities 51,694 44,463 ----------- ----------- Total current liabilities 82,577 83,894 ----------- ----------- Long-term debt 34,055 33,770 Capital lease obligations 46,323 48,141 Other long-term liabilities 21,610 20,608 Stockholders' equity: Preferred stock, $.01 par value; authorized 5,000,000 shares; none issued or outstanding -- -- Common stock, $.01 par value; authorized 50,000,000 shares; issued and outstanding 33,444,420 and 33,218,751 shares 334 332 Additional paid-in capital 127,637 126,279 Retained earnings 97,445 88,193 ----------- ----------- Total stockholders' equity 225,416 214,804 ----------- ----------- $ 409,981 $ 401,217 =========== ===========
See Accompanying Notes to Consolidated Financial Statements 2 4 CKE RESTAURANTS, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share amounts) (Unaudited)
Sixteen Weeks Ended ---------------------------- May 19, May 20, 1997 1996 ----------- ----------- Revenues: Company-operated restaurants: Carl's Jr $ 144,827 $ 129,510 Taco Bueno 22,388 -- JB's Restaurants 20,690 -- HomeTown Buffet 13,170 -- Other 9,828 -- ----------- ----------- 210,903 129,510 ----------- ----------- Franchised and licensed restaurants: Carl's Jr 24,218 23,424 JB's Restaurants 349 -- ----------- ----------- 24,567 23,424 ----------- ----------- Total Revenues 235,470 152,934 ----------- ----------- Operating costs and expenses: Restaurant operations: Food and packaging 65,302 39,755 Payroll and other employee benefits 59,606 35,631 Occupancy and other operating expenses 43,178 26,539 ----------- ----------- 168,086 101,925 Franchised and licensed restaurants 22,496 22,176 Advertising expenses 10,545 7,571 General and administrative expenses 16,112 11,186 ----------- ----------- Total operating costs and expenses 217,239 142,858 ----------- ----------- Operating income 18,231 10,076 Interest expense (2,871) (2,595) Other income, net 2,305 1,274 ----------- ----------- Income before income taxes 17,665 8,755 Income tax expense 7,079 3,422 ----------- ----------- Net income $ 10,586 $ 5,333 =========== =========== Net income per common and common equivalent share $ .31 $ .19 =========== =========== Common and common equivalent shares used in computing per share amounts 34,300 28,664 =========== ===========
See Accompanying Notes to Consolidated Financial Statements 3 5 CKE RESTAURANTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Sixteen Weeks Ended ---------------------------- May 19, May 20, 1997 1996 ----------- ----------- Net cash flow from operating activities: Net income $ 10,586 $ 5,333 Adjustments to reconcile net income to net cash provided by operating activities: Noncash franchise income -- (98) Depreciation and amortization 10,247 6,440 Loss on sale of property and equipment and capital leases 87 237 Write-off of accounts and notes receivable -- 47 Loss from long-term investments 150 -- Write-down of long-lived assets -- 1,250 Net noncash investment and dividend income (1,063) (232) Deferred income taxes -- 51 Noncash increase in reserves 280 297 Net change in receivables, inventories and other current assets (3,871) (2,479) Net change in accounts payable and other current liabilities 2,722 4,953 ----------- ----------- Net cash provided by operating activities 19,138 15,799 ----------- ----------- Cash flow from investing activities: Purchases of: Marketable securities (573) (266) Property and equipment (14,363) (8,413) Long-term investments (14,268) (9,190) Proceeds from sale of: Marketable securities and long-term investments -- 388 Property and equipment 11 2,478 Collections on leases receivable 57 46 Increases in notes receivable and related party receivables (100) -- Collections on notes receivable and related party receivables 4,156 614 Net change in other assets (927) (406) ----------- ----------- Net cash used in investing activities (26,007) (14,749) ----------- ----------- Cash flow from financing activities: Net change in bank overdraft (2,998) 1,868 Short-term borrowings 2,000 600 Repayments of short-term debt (2,000) (600) Long-term borrowings 489 -- Repayments of long-term debt (179) (8,432) Repayments of capital lease obligations (1,232) (803) Deferred financing costs (553) -- Net change in other long-term liabilities (265) (366) Payment of dividends (1,334) (743) Exercise of stock options 1,360 709 ----------- ----------- Net cash used in financing activities (4,712) (7,767) ----------- ----------- Net decrease in cash and cash equivalents $ (11,581) $ (6,717) =========== ===========
See Accompanying Notes to Consolidated Financial Statements 4 6 CKE RESTAURANTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Sixteen Weeks Ended --------------------------- May 19, May 20, 1997 1996 ----------- ----------- Supplemental disclosures of cash flow information: Cash paid during period for: Interest (net of amount capitalized) $ 2,543 $ 2,499 Income taxes 1,770 128 Noncash investing and financing activities: Investing activities: Sale of property and equipment -- 2,469 Increase in long-term investments -- (2,469)
5 7 CKE RESTAURANTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MAY 19, 1997 AND MAY 20, 1996 NOTE (A) BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements include the accounts of CKE Restaurants, Inc. and its consolidated wholly-owned subsidiaries (the "Company" or "CKE") and have been prepared in accordance with generally accepted accounting principles, the instructions to Form 10-Q, and Article 10 of Regulation S-X. These statements should be read in conjunction with the audited consolidated financial statements presented in the Company's 1997 Annual Report to Stockholders. In the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of financial position and results of operations for the interim periods presented have been reflected herein. The results of operations for such interim periods are not necessarily indicative of results to be expected for the full year or for any other future periods. Certain reclassifications have been made to the fiscal 1997 consolidated financial statements to conform to the fiscal 1998 presentation. Share and per share information has been retroactively adjusted to reflect the three-for-two stock split which occurred in January 1997. NOTE (B) LONG-TERM INVESTMENT IN CHECKER'S DRIVE-IN RESTAURANTS, INC. On February 19, 1997, the Company purchased 6,162,299 shares of Checkers Drive-In Restaurants, Inc. ("Checkers") common stock at $1.14 per share and 61,636 shares of Checkers Series A preferred stock at $114.00 per share for an aggregate purchase price of $14.1 million in connection with a private placement of Checkers' securities to the Company and other investors, including certain related parties. Registration rights with respect to the common stock will commence one year from the date of purchase. The shares of Checkers' common stock acquired by the Company represent approximately 10% of Checkers' outstanding shares. The shares of Series A preferred stock acquired by the Company are convertible into an aggregate of 6,162,299 additional shares of common stock; provided, however, that such conversion is subject to the approval of Checkers' stockholders at its next annual meeting. If Checkers' stockholders fail to approve the common stock provisions of the Series A preferred stock, cash dividends will accrue at a rate of 14.5% six months from the date of issuance and quarterly thereafter. Assuming full exercise of the Checkers' warrants and the conversion of all of the Series A preferred stock into Checkers' common stock, the Company would beneficially own approximately 22% of Checkers' outstanding shares. NOTE (C) ACQUISITION OF HARDEE'S FOOD SYSTEMS, INC. On April 27, 1997, the Company entered into a Stock Purchase Agreement with Imasco Holdings, Inc., a Delaware corporation ("Imasco") and Hardee's Food Systems, Inc., a North Carolina corporation ("Hardee's"), pursuant to which the Company has agreed to acquire from Imasco all of the issued and outstanding shares of capital stock of Hardee's for a purchase price of $327.0 million (subject to adjustment). The Company proposes to finance the acquisition of Hardee's with a combination of new senior secured indebtedness, net proceeds from a proposed public offering of shares of the Company's Common Stock and cash on hand at the time of closing. Consummation of the transaction is subject to the satisfaction of certain conditions, including receipt of the proceeds of the proposed public stock offering. 6 8 CKE RESTAURANTS, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Consolidated net income for the 16-week period ended May 19, 1997 nearly doubled, increasing 98.5% to $10.6 million, or $0.31 per share, as compared with net income of $5.3 million, or $0.19 per share, for the comparable period in the prior year; representing the highest quarterly net income and earnings per share in the history of the Company. These positive results were primarily due to increased sales growth resulting from the Company's dual-branding and image enhancement programs in its Carl's Jr. restaurants, increased advertising and continued improvements in operating efficiencies in the Company-operated Carl's Jr. restaurants, and the additional operations of the Company's recently acquired concepts, all of which were profitable during the first quarter of fiscal 1998. The Company is continuing with the conversion of certain of its existing Carl's Jr. locations into Carl's Jr./Green Burrito dual-brand restaurants, pursuant to an agreement with GB Foods Corporation. In February 1997, the Company amended its agreement with GB Foods Corporation, operator of The Green Burrito(R), to increase the minimum number of dual-brand restaurants from 140 to 306 over the next four years. Accordingly, the Company is accelerating the original 40 restaurant conversions per year to 60 dual-brand conversions per year. As of May 19, 1997, there were 69 Company-operated and seven franchised dual-brand restaurants operating. Post-conversion revenues in the first quarter of fiscal 1998 for the 49 Company-operated Carl's Jr./Green Burrito dual-brand restaurants operating less than a year were approximately 17% higher than same-store sales in the comparable prior year period. As part of the Company's chain-wide Carl's Jr. restaurant remodeling program, over 260 remodels have been completed as of the end of the first quarter, representing over 60% of the Company-operated Carl's Jr. restaurants. The Company is continuing to experience increased sales in these remodeled restaurants. The Company expects to have substantially all Company-operated Carl's Jr. restaurants remodeled by early calendar year 1998. On April 27, 1997, the Company entered into a Stock Purchase Agreement with Imasco and Hardee's, pursuant to which the Company agreed to acquire all of the outstanding capital stock of Hardee's for a purchase price of $327.0 million, subject to certain adjustments. See Note C of Notes to Consolidated Financial Statements. The Company anticipates that a combination of new senior secured indebtedness, the net proceeds from a proposed public stock offering, and cash on hand at the time of closing will provide it with the cash necessary to complete this acquisition. This Quarterly Report on Form 10-Q contains forward looking statements, which are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions; the impact of competitive products and pricing; success of operating initiatives; advertising and promotional efforts; adverse publicity; changes in business strategy or development plans; quality of management; availability terms and deployment of capital; the results of financing efforts; food, labor, and employee benefit costs; changes in, or the failure to comply with, government regulations; weather conditions; construction schedules; and risks that sales growth resulting from the Company's current and future remodeling and dual-branding of restaurants and other operating strategies can be sustained at the current levels experienced. RESULTS OF OPERATIONS Revenues from Company-operated restaurants, comprised mainly of sales from Carl's Jr. restaurants, increased $81.4 million or 62.8% for the 16-week period ended May 19, 1997 to $210.9 million. Carl's Jr. revenues for the 16-week period ended May 19, 1997 accounted for sales increases of $15.3 million. Also contributing to the increase were the restaurant concepts which were added in fiscal 1997, including $35.6 million and $26.0 million from Summit and Casa Bonita, respectively, and $4.5 million from Rally's. On a same-store sales basis (calculated using 7 9 CKE RESTAURANTS, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) only restaurants in operation for the full periods being compared), revenues from Company-operated Carl's Jr. restaurants increased 6.1% in the 16-week period ended May 19, 1997 as compared with 12.7% in the first quarter of fiscal 1997. Per store averages in Company-operated Carl's Jr. restaurants continue to increase and reached $1,132,000 on a 13-period rolling basis. The increase in revenues from Company-operated Carl's Jr. restaurants is primarily the result of the continued momentum in the Company's various sales enhancement programs which include the image enhancement of its restaurants through a chain-wide remodeling program, the continuation of its conversion of existing Carl's Jr. locations into Carl's Jr./Green Burrito dual-brand restaurants and the continued focus on promoting great tasting new and existing food products through increased innovative advertising. Higher average sales and transaction counts per restaurant and an increase in the number of Company-operated restaurants operating in fiscal 1998 as compared with the prior year also contributed to the increase in revenues from Company-operated Carl's Jr. restaurants. Revenues from franchised and licensed restaurants for the 16-week period ended May 19, 1997 increased 4.9% to $24.6 million over the same prior year period. This increase is largely due to increased royalties from, and food purchases by, franchisees as a result of higher sales volume at franchised Carl's Jr. restaurants, partially offset by a decrease in the number of franchised and licensed Carl's Jr. restaurants operating as compared with the prior year. Restaurant-level margins of the Company's consolidated restaurant operations decreased in the 16-week period ended May 19, 1997 by 1.0% as compared with the prior year period, primarily reflecting the impact of higher operating costs at Summit's family-style restaurant concepts which were acquired in the second quarter of fiscal 1997. The family-style segment of the restaurant industry typically has lower margins than the quick-service segment of the industry, mainly due to increased labor and food costs. While the Company's consolidated restaurant-level margins decreased in the first quarter of fiscal 1998, restaurant-level margins for the Company's Carl's Jr. restaurants chain continued to increase, reaching 23.0% for the 16-week period ended May 19, 1997. These improved results in the Company's Carl's Jr. restaurant-level operating margins reflect the Company's continued commitment to improve the cost structure of its Carl's Jr. restaurants, particularly in the areas of improving labor productivity and reducing workers' compensation costs. As a percentage of revenues from Company-operated Carl's Jr. restaurants, payroll and other employee benefits have decreased 1.5% to 26.0% for the 16-week period ended May 19, 1997 as compared with the same period a year ago, despite the October 1, 1996 increase in the federal minimum wage and the additional March 1997 increase in California state minimum wage level. Occupancy and other operating expenses as a percentage of revenues from Company-operated restaurants have decreased 0.3% to 20.2% from the same period in the first quarter of the prior year mainly due to the adoption of Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," in the prior year which resulted in a non-recurring charge of $1.3 million. Food and packaging costs have increased marginally as a percentage of Company-operated revenues due to increased pressure from commodity prices and a change in the product mix as a result of the promotion of larger, more expensive sandwiches. Many of the Company's employees are paid hourly rates related to the federal and state minimum wage laws. Legislation increasing the federal minimum wage as of October 1, 1996 has resulted in higher labor costs to the Company and its franchisees. An additional increase in the federal minimum wage will become effective in September 1997. Moreover, as a result of recent legislation in California, the California state minimum wage was increased effective March 1997. The Company anticipates that increases in the minimum wage may be offset through pricing and other cost control efforts; however, there can be no assurance that the Company or its franchisees will be able to pass such additional costs on to customers in whole or in part. Franchised and licensed restaurant costs have increased 1.4% for the 16-week period ended May 19, 1997 over the same period of the prior year. The increase is primarily due to increased food purchases by Carl's Jr. franchisees, partially offset by a decrease in the number of franchised and licensed Carl's Jr. restaurants in operation in the first quarter of fiscal 1998 as compared with the same prior year quarter. 8 10 CKE RESTAURANTS, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Advertising expenses increased $3.0 million for the 16-week period ended May 19, 1997 over the same prior year period. Advertising expenses have become increasingly important in the current competitive environment and, as a result, have increased in terms of dollars spent in the first quarter of fiscal 1998 as compared with the first quarter of the prior year while remaining relatively consistent as a percentage of Company-operated revenues. The Company has seen positive same-store sales growth in each subsequent quarter since the Company began its innovative advertising campaign in May 1995. General and administrative expenses increased $4.9 million to $16.1 million for the 16-week period ended May 19, 1997 over the comparable prior year period. However, as a percentage of total revenues, these expenses decreased 0.5% as compared with the same prior year period, reflecting the economies of scale the Company is realizing by absorbing certain costs from acquired businesses into the Company's existing infrastructure. The increase in general and administrative expenses in the 16-week period ended May 19, 1997 is primarily the result of recording incentive compensation accruals for regional restaurant management and selected corporate employees as a result of improved restaurant operating performance, in addition to increased amortization expense and various corporate legal expenses. Interest expense for the 16-week period ended May 19, 1997 increased 10.6% or $0.3 million to $2.9 million as compared with the prior year period, primarily as a result of higher levels of debt outstanding during the first quarter of fiscal 1998 as compared with the first quarter of fiscal 1997. Other income, net, is primarily comprised of investment income, interest on notes and leases receivable, gains and losses on sales of restaurants, income and loss on long-term investments, and other non-recurring income. Other income, net, increased $1.0 million from the 16-week period ended May 20, 1996, primarily resulting from interest income earned on the Company's note receivable from Checkers and amortization of the related discount in addition to dividend income recorded from the Company's long-term investment in Boston West, L.L.C. FINANCIAL CONDITION For the 16-week period ended May 19, 1997, the Company generated cash flows from operating activities of $19.1 million, compared with $15.8 million for the same period of the prior year. This increase was primarily due to increased sales levels and increased operating margins in the Company's Carl's Jr. restaurants. Cash and cash equivalents in the current period decreased $11.6 million from January 27, 1997, as the Company used cash flows from operations to fund capital additions of approximately $14.4 million, to fund the Company's long-term investment in Checkers, to reduce the Company's capital lease obligations by $1.2 million, to pay dividends to its stockholders of approximately $1.3 million, and to reduce the Company's bank overdraft by $3.0 million. The decrease in cash and cash equivalents was partially offset by cash generated from collections on notes receivable and related party receivables of approximately $4.2 million and the exercise of stock options which generated approximately $1.4 million. Total cash and cash equivalents available to the Company as of May 19, 1997 was $28.8 million, which included $0.6 million invested in marketable securities. The Company's existing credit facility (the "Current Credit Facility") consists of (i) a revolving credit facility for working capital and other general corporate purposes, under the terms of which the Company may borrow from time to time up to $30.0 million (including a letter of credit subfacility of up to $20.0 million), and (ii) a revolving credit facility for the purposes of financing investments in and acquisitions of other companies, under the terms of which the Company may borrow from time to time up to $25.0 million. As of May 19, 1997, no borrowings remained outstanding under the Current Credit Facility, and the Company was in compliance with all financial covenants contained therein. The Current Credit Facility will be replaced by a proposed new credit facility prior to or concurrently with the closing of the Company's proposed acquisition of Hardee's. 9 11 CKE RESTAURANTS, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The Company's primary source of liquidity is its revenues from Company-operated restaurants, which are generated in cash. Future capital needs will arise primarily for the construction of new restaurants, the remodeling of existing restaurants, the conversion of certain restaurants to the Carl's Jr./Green Burrito dual-brand concept and capital expenditures expected to be incurred in connection with the Company's integration of Hardee's. The Company plans to open up to 30 new Carl's Jr. restaurants in fiscal 1998 and is evaluating opening additional Taco Bueno restaurants in its existing markets in fiscal 1998. During fiscal 1998, the Company also expects to continue with its schedule to remodel the remaining Company-operated Carl's Jr. restaurants, and to convert up to 60 Carl's Jr. locations into Carl's Jr./Green Burrito dual-brand restaurants. The Company believes that cash generated from its various restaurants concept operations, along with cash and cash equivalents and marketable securities on hand as of May 19, 1997 and amounts to be available under the Company's proposed new credit facility, will provide the Company with the funds necessary to meet all of its capital spending and working capital requirements for at least the next 12 months. If those sources of capital are insufficient to satisfy the Company's capital spending and working capital requirements, or if the Company determines to make any significant acquisitions of, or investments in, other businesses, the Company may be required to sell additional equity or debt securities or obtain additional credit facilities. The sales, if any, of additional equity or debt securities could result in additional dilution to the Company's stockholders. 10 12 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 11 Calculation of Earnings Per Share. 27 Financial Data Schedule (included in electronic filing only). (b) Current Reports on Form 8-K: A Current Report on Form 8-K dated April 27, 1997 was filed during the first quarter of the fiscal year to report matters relating to the Company's proposed acquisition of Hardee's Food Systems, Inc. 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) June 13, 1997 /s/ Carl A. Strunk - ---------------------- ------------------------------------- Date Executive Vice President, Chief Financial Officer 11 13 EXHIBIT INDEX
Exhibit# Description -------- ----------- 11 Calculation of Earnings Per Share. 27 Financial Data Schedule (included in electronic filing only).
12 EX-11 2 CALCULATION OF EARNINGS PER SHARE 1 EXHIBIT 11 CKE RESTAURANTS, INC. CALCULATION OF EARNINGS PER SHARE (In thousands except per share amounts)
Sixteen Weeks Ended --------------------------- May 19, May 20, 1997 1996 ----------- ----------- PRIMARY EARNINGS PER SHARE Net income $ 10,586 $ 5,333 =========== =========== Weighted average number of common shares outstanding during the period 33,317 27,857 Incremental common shares attributable to exercise of outstanding options 886 566 ----------- ----------- Total shares 34,203 28,423 =========== =========== Primary earnings per share $ .31 $ .19 =========== =========== FULLY DILUTED EARNINGS PER SHARE Net income $ 10,586 $ 5,333 =========== =========== Weighted average number of common shares outstanding during the period 33,317 27,857 Incremental common shares attributable to exercise of outstanding options 983 807 ----------- ----------- Total shares 34,300 28,664 =========== =========== Fully diluted earnings per share $ .31 $ .19 =========== ===========
13 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CKE RESTAURANTS, INC. CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF INCOME AS OF AND FOR THE SIXTEEN WEEKS ENDED MAY 19, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MAY 19, 1997. 1,000 3-MOS JAN-26-1998 JAN-28-1997 MAY-19-1997 28,201 573 20,922 0 9,058 65,133 457,666 246,410 409,981 82,577 0 0 0 334 225,082 409,981 210,903 235,470 168,086 217,239 (2,305) 0 2,871 17,665 7,079 10,586 0 0 0 10,586 .31 .31
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