-----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, A4wLwXIAbf92XkgzFQeLKYHOKkEWGF8Ckvl81wukjQwWsw0c9JEqDYXJXwVLmaV2 kVM+MgDci/oEvHzHMB2DDw== 0000892569-98-002638.txt : 19980925 0000892569-98-002638.hdr.sgml : 19980925 ACCESSION NUMBER: 0000892569-98-002638 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980810 FILED AS OF DATE: 19980924 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: 0127 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11313 FILM NUMBER: 98714028 BUSINESS ADDRESS: STREET 1: 1200 N HARBOR BLVD CITY: ANAHEIM STATE: CA ZIP: 92801 BUSINESS PHONE: 7147745796 MAIL ADDRESS: STREET 1: 1200 NORTH HARBOR BLVD 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED 08/10/1998 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 August 10, 1998 --------------- 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 (I.R.S. Employer of Incorporation or Organization) Identification No.) 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: 47,088,615 shares of Common Stock, par value $.01 per share, as of September 14, 1998 2 CKE RESTAURANTS, INC. AND SUBSIDIARIES INDEX
Page ---- Part I. Financial Information Item 1. Consolidated Financial Statements: Consolidated Balance Sheets as of August 10, 1998 and January 26, 1998.......... 2 Consolidated Statements of Income for the twelve and twenty-eight weeks ended August 10, 1998 and August 11, 1997................................... 3 Consolidated Statements of Cash Flows for the twenty-eight weeks ended August 10, 1998 and August 11, 1997......................................... 4-5 Notes to Consolidated Financial Statements...................................... 6-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................10-15 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders....................... 16 Item 6. Exhibits and Reports on Form 8-K.......................................... 16
1 3 PART 1. FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS CKE RESTAURANTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited)
August 10, January 26, 1998 1998 ---------- ---------- ASSETS Current assets: Cash and cash equivalents $ 38,050 $ 30,382 Accounts receivable 31,628 27,317 Related party receivables 1,304 1,171 Inventories 23,617 17,024 Prepaid expenses 17,349 13,045 Other current assets 810 3,217 ---------- ---------- Total current assets 112,758 92,156 Property and equipment, net 958,937 627,026 Property under capital leases, net 91,081 47,528 Long-term investments 47,627 48,089 Notes receivable 8,332 11,162 Related party receivables 7,905 7,626 Costs in excess of assets acquired, net 191,386 95,744 Other assets 38,144 28,037 ---------- ---------- $1,456,170 $ 957,368 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 48,373 $ 15,812 Current portion of capital lease obligations 8,742 5,499 Accounts payable 74,039 60,303 Deferred income taxes, net 5,675 5,675 Other current liabilities 128,259 89,195 ---------- ---------- Total current liabilities 265,088 176,484 ---------- ---------- Long-term debt 249,765 138,793 Convertible subordinated notes 197,225 -- Capital lease obligations 98,265 56,801 Other long-term liabilities 97,599 86,778 Stockholders' equity: Preferred stock, $.01 par value; authorized 5,000,000 shares; none issued or outstanding -- -- Common stock, $.01 par value; authorized 100,000,000 shares; issued and outstanding 47,085,215 and 46,523,179 shares 471 465 Additional paid-in capital 372,348 366,110 Retained earnings 175,409 131,937 ---------- ---------- Total stockholders' equity 548,228 498,512 ---------- ---------- $1,456,170 $ 957,368 ========== ==========
See Accompanying Notes to Consolidated Financial Statements. 2 4 CKE RESTAURANTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share amounts) (Unaudited)
Twelve Weeks Ended Twenty-eight Weeks Ended ----------------------------- ----------------------------- August 10, August 11, August 10, August 11, 1998 1997 1998 1997 ----------- ----------- ----------- ----------- Revenues: Company-operated restaurants: Carl's Jr $ 125,618 $ 112,953 $ 287,540 $ 257,780 Hardee's 276,546 53,898 544,473 53,898 Taco Bueno 19,196 17,690 43,775 40,078 JB's Restaurants 13,142 15,166 31,657 35,856 HomeTown Buffet -- 9,082 -- 22,252 Other 4,408 8,088 10,072 17,916 ----------- ----------- ----------- ----------- 438,910 216,877 917,517 427,780 ----------- ----------- ----------- ----------- Franchised and licensed restaurants and other: Carl's Jr 22,148 18,302 50,458 42,402 Hardee's 13,379 6,612 34,240 6,612 JB's Restaurants 404 311 837 664 ----------- ----------- ----------- ----------- 35,931 25,225 85,535 49,678 ----------- ----------- ----------- ----------- Total revenues 474,841 242,102 1,003,052 477,458 ----------- ----------- ----------- ----------- Operating costs and expenses: Restaurant operations: Food and packaging 133,548 66,671 278,398 130,061 Payroll and other employee benefits 134,090 64,133 282,793 123,739 Occupancy and other operating expenses 83,396 44,694 174,286 87,771 ----------- ----------- ----------- ----------- 351,034 175,498 735,477 341,571 Franchised and licensed restaurants and other 24,526 19,143 57,827 42,209 Advertising expenses 24,772 12,407 52,221 24,863 General and administrative expenses 25,371 16,100 62,755 31,455 ----------- ----------- ----------- ----------- Total operating costs and expenses 425,703 223,148 908,280 440,098 ----------- ----------- ----------- ----------- Operating income 49,138 18,954 94,772 37,360 Interest expense (12,605) (4,712) (21,842) (7,583) Other income, net 1,207 3,348 2,603 5,478 ----------- ----------- ----------- ----------- Income before income taxes 37,740 17,590 75,533 35,255 Income tax expense 15,136 7,045 30,197 14,124 ----------- ----------- ----------- ----------- Net income $ 22,604 $ 10,545 $ 45,336 $ 21,131 =========== =========== =========== =========== Net income per share - basic $ 0.48 $ 0.26 $ 0.97 $ 0.55 =========== =========== =========== =========== Weighted average shares outstanding - basic 46,821 40,438 46,696 38,544 =========== =========== =========== =========== Net income per share - diluted $ 0.46 $ 0.25 $ 0.93 $ 0.53 =========== =========== =========== =========== Common and common equivalent shares used in computing per share amounts - diluted 52,332 41,656 51,430 39,640 =========== =========== =========== ===========
See Accompanying Notes to Consolidated Financial Statements. 3 5 CKE RESTAURANTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
Twenty-eight Weeks Ended -------------------------- August 10, August 11, 1998 1997 --------- ---------- Net cash flow from operating activities: Net income $ 45,336 $ 21,131 Adjustments to reconcile net income to net cash provided by operating activities, excluding the effect of acquisitions and dispositions: Depreciation and amortization 39,036 20,753 Loss on sale of property and equipment and capital leases 1,015 2,126 Net noncash investment and dividend income (678) (1,899) (Gain) loss on noncurrent asset and liability transactions 462 (481) Net change in receivables, inventories and other current assets and prepaid expenses (5,739) (2,623) Net change in accounts payable and other current liabilities 33,943 (176) --------- --------- Net cash provided by operating activities 113,375 38,831 --------- --------- Cash flow from investing activities: Purchases of: Marketable securities -- (393) Property and equipment (45,210) (39,266) Long-term investments -- (14,199) Proceeds from sale of: Marketable securities and long-term investments -- 393 Property and equipment 7,165 36 Increase in notes receivable, related party receivables and leases receivable (1,700) (382) Collections on notes receivable, related party receivables and leases receivable 4,522 4,631 Net change in other assets 727 867 Acquisitions, net of cash acquired (394,651) (323,878) Dispositions, net of cash surrendered 4,328 -- --------- --------- Net cash used in investing activities (424,819) (372,191) --------- --------- Cash flow from financing activities: Net proceeds from common stock offering -- 222,141 Net change in bank overdraft (9,780) (2,671) Long-term borrowings 221,220 134,389 Convertible subordinated notes 197,225 -- Repayments of long-term debt (77,582) (20,287) Repayments of capital lease obligations (4,000) (2,407) Deferred financing costs (10,211) (4,278) Net change in other long-term liabilities (2,095) (2,541) Payment of dividends (1,895) (1,335) Exercise of stock options 6,230 1,946 --------- --------- Net cash provided by financing activities 319,112 324,957 --------- --------- Net increase (decrease) in cash and cash equivalents 7,668 (8,403) Cash and cash equivalents at beginning of period 30,382 46,330 --------- --------- Cash and cash equivalents at end of period $ 38,050 $ 37,927 ========= =========
See Accompanying Notes to Consolidated Financial Statements. 4 6 CKE RESTAURANTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
Twenty-eight Weeks Ended -------------------------- August 10, August 11, 1998 1997 ---------- ---------- Supplemental disclosures of cash flow information: Cash paid during the period for: Interest (net of amounts capitalized) $ 16,746 $ 5,135 Income taxes 20,859 4,483 Hardee's Acquisition: Tangible assets acquired at fair value $ -- $ 461,978 Cost in excess of net assets acquired -- 24,848 Liabilities assumed at fair value -- (159,826) --------- --------- Total purchase price $ -- $ 327,000 ========= ========= FEI Acquisition: Tangible assets acquired at fair value $ 444,500 $ -- Costs in excess of net assets acquired 89,917 -- Liabilities assumed at fair value (153,780) -- --------- --------- Total purchase price $ 380,637 $ -- ========= =========
See Accompanying Notes to Consolidated Financial Statements 5 7 CKE RESTAURANTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AUGUST 10, 1998 AND AUGUST 11, 1997 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 1998 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 1998 consolidated financial statements to conform to the fiscal 1999 presentation. Share and per share information has been retroactively adjusted to reflect the ten percent stock dividend paid in February 1998. NOTE (B) ACQUISITIONS - --------------------- On April 1, 1998, the Company acquired Flagstar Enterprises, Inc. ("FEI"), the largest franchisee in the Hardee's system, previously operating 557 Hardee's restaurants located primarily in the Southeastern United States. In connection with the acquisition, which was accounted for as a purchase, the Company acquired all of the issued and outstanding shares of common stock of FEI from Advantica Restaurant Group, Inc. ("Advantica") for cash consideration of $380.6 million (which includes miscellaneous expenses paid to Advantica) and the assumption of approximately $45.6 million in capital lease obligations. On March 13, 1998, the Company completed a $197.2 million private placement of convertible subordinated notes (see Note (D)), and on April 1, 1998, the Company amended its existing credit facility, incurring an additional $213.2 million in indebtedness (see Note (C)). The net proceeds from the convertible subordinated notes and borrowings under the Company's credit facility were used primarily to finance the acquisition of FEI. On July 15, 1997, the Company acquired Hardee's Food Systems, Inc. ("Hardee's"), the operator and franchisor of the Hardee's(R) quick-service hamburger restaurant concept. In connection with the acquisition, which was accounted for as a purchase, the Company acquired all of the issued and outstanding shares of Hardee's for cash consideration of $327.0 million. The purchase price remains subject to adjustment to an amount to be agreed upon by the Company and Imasco Holdings, Inc., which represents the net asset value of Hardee's as of July 15, 1997. The Company used the net proceeds from the sale of 9,171,250 shares of the Company's common stock to the public for net proceeds of $222.3 million in conjunction with borrowings of $133.9 million under the Company's credit facility to finance the acquisition. Selected unaudited pro forma combined results of operations for the 28-week periods ended August 10, 1998 and August 11, 1997, assuming the acquisitions occurred on January 28, 1997, using actual restaurant-level margins and general and administrative expenses prior to the acquisitions, are presented as follows:
Twenty-eight Weeks Ended ---------------------------------- August 10, 1998 August 11, 1997 --------------- --------------- Total revenues $1,124,249 $1,213,131 Net income $ 43,857 $ 15,648 Net income per share - basic $ 0.94 $ 0.33 Net income per share - diluted $ 0.90 $ 0.32
6 8 CKE RESTAURANTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) AUGUST 10, 1998 AND AUGUST 11, 1997 NOTE (C) LONG TERM DEBT - ----------------------- On April 1, 1998, the Company amended its existing credit facility (the "Senior Credit Facility") to increase the aggregate principal amounts of the lenders' commitments under the term loan facility (the "Term Loan Facility") to $250.0 million and under the revolving credit facility (the "Revolving Credit Facility") to $250.0 million, which includes a $65.0 million letter of credit subfacility, and to extend the final maturity date from July 2002 to April 2003. The Company incurred borrowings of $213.2 million thereunder to finance a portion of the purchase price of the FEI acquisition (see Note (B)). Principal repayments under the Term Loan Facility are due in quarterly installments, commencing in July 1998 and continuing thereafter until the final maturity of the Senior Credit Facility in April 2003, resulting in annual reductions of $20.0 million in the first year of the Term Loan Facility and annual reductions thereafter ranging from $40.0 million to $70.0 million. Additional borrowings under the Revolving Credit Facility may be used for working capital and other general corporate purposes, including permitted investments and acquisitions, and any outstanding amounts thereunder will become due in April 2003. The Company will be required to repay borrowings under the Senior Credit Facility with the proceeds from (i) certain asset sales (unless the net proceeds of such sales are reinvested in the Company's business), (ii) the issuance of certain equity securities or (iii) the issuance of additional indebtedness. Of the various options the Company has regarding interest rates, it has selected LIBOR plus a margin, with future margin adjustments dependent on certain financial ratios from time to time. Borrowings and other obligations of the Company under the Senior Credit Facility are general unsubordinated obligations of the Company and are secured by a pledge of the capital stock of certain of the Company's present and future subsidiaries, which subsidiaries guarantee such borrowings and other obligations, and are secured by certain franchise rights, accounts receivable, contract rights, general intangibles (including trademarks) and other assets of the Company and such subsidiaries. The Senior Credit Facility contains a number of significant covenants that, among other things, (i) restrict the ability of the Company and its subsidiaries to incur additional indebtedness and incur liens on their assets, in each case subject to specified exceptions, (ii) impose specified financial tests as a precondition to the Company's and its subsidiaries' acquisition of other businesses, and (iii) limit the Company and its subsidiaries from making capital expenditures and certain restricted payments (including dividends and repurchases of stock), subject in certain circumstances to specified financial tests. In addition, the Company is required to comply with specified financial ratios and tests, including minimum EBITDA requirements, minimum interest coverage and fixed charge coverage ratios, minimum consolidated tangible net worth requirements and maximum leverage ratios. As of August 10, 1998, the Company is in compliance with all of its debt covenants. NOTE (D) CONVERTIBLE SUBORDINATED NOTES - --------------------------------------- On March 13, 1998, the Company completed a private placement of $197.2 million aggregate principal amount of convertible subordinated notes (the "Notes"), in which the Company received net proceeds of approximately $192.3 million, of which $24.1 million was used to repay indebtedness under the Term Loan Facility. The Notes, which represent unsecured general obligations of the Company subordinate in right of payment to certain other obligations, including obligations under the Senior Credit Facility, are due in 2004, are convertible into the Company's common stock at an initial conversion price of $48.204 and carry a 4.25% coupon rate. The remaining net proceeds from the Notes, together with borrowings under the Senior Credit Facility, were used to fund the acquisition of FEI on April 1, 1998 (see Note (B)). 7 9 CKE RESTAURANTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) AUGUST 10, 1998 AND AUGUST 11, 1997 NOTE (E) SUBSEQUENT EVENTS - -------------------------- On September 1, 1998, the Company completed two transactions which resulted in the disposition of the entire JB's Restaurant system and Galaxy Diner restaurants. First, the Company sold 14 company-operated JB's Restaurants and two Galaxy Diner restaurants to Timber Lodge Steakhouse, Inc. for 687,890 shares of Timber Lodge common stock, in connection with the merger of Timber Lodge and Santa Barbara Restaurant Group, Inc. ("SBRG"), formerly GB Foods Corporation. Second, the Company sold its wholly owned subsidiary, JB's Family Restaurants, Inc., which consists of the remaining 48 company-operated JB's Restaurants and the JB's franchise system together with four Galaxy Diner restaurants, to SBRG for one million shares of SBRG common stock. Together, these transactions give the Company approximately 13% ownership in SBRG. On September 11, 1998, Star Buffet, Inc. announced the repurchase from the Company of two million shares of Star Buffet common stock held by the Company for a purchase price of $5.0 million in cash and a $7.5 million, 90-day promissory note secured by treasury stock of Star Buffet. NOTE (F) NEW ACCOUNTING PRONOUNCEMENTS - -------------------------------------- In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 establishes standards for the reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. SFAS 130 requires all items that are required to be recognized under accounting standards as components of comprehensive income to be reported in a financial statement that is displayed with the same prominence as other financial statements. SFAS 130 does not require a specific format for that financial statement but requires that an enterprise display an amount representing total comprehensive income for the period covered by that financial statement. SFAS 130 requires an enterprise to (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. SFAS 130 is effective for fiscal years beginning after December 15, 1997. The Company did not have any additional items that were required to be disclosed under SFAS 130. In June 1997, the FASB issued Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("SFAS 131"). SFAS 131 establishes standards for public business enterprises to report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to stockholders. It also establishes standards for related disclosures about products and services, geographic areas and major customers. This statement supersedes FASB Statement No. 14, "Financial Reporting for Segments of a Business Enterprise," but retains the requirement to report information about major customers. It amends FASB Statement No. 94, "Consolidation of All Majority-Owned Subsidiaries," to remove the special disclosure requirements for previously unconsolidated subsidiaries. SFAS 131 requires, among other items, that a public business enterprise report a measure of segment profit or loss, certain specific revenue and expense items, and segment assets, information about the revenues derived from the enterprise's products or services, and major customers. SFAS 131 also requires that the enterprise report descriptive information about the way that the operating segments were determined and the products and services provided by the operating segments. SFAS 131 is effective for financial statements for periods beginning after December 15, 1997. In the initial year of application, comparative information for earlier years is to be restated. SFAS 131 need not be applied to interim financial statements in the initial year of its application, but comparative information for interim periods in the initial year of application is to be reported in financial statements for interim periods in the second year of application. Management has not determined whether the adoption of SFAS 131 will have a material impact on the Company's segment reporting. 8 10 CKE RESTAURANTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) AUGUST 10, 1998 AND AUGUST 11, 1997 In December 1997, the American Institute of Certified Public Accountants approved for issuance the Statement of Position 98-5 ("SOP 98-5"), Reporting on the Costs of Start-Up Activities. SOP 98-5 requires that costs incurred during a start-up activity (including organization costs) be expensed as incurred. SOP 98-5 is effective for fiscal years beginning after December 15, 1998. The Company currently amortizes pre-opening costs over one year from the time they are incurred. The impact of the adoption of SOP 98-5 on the Company's consolidated financial position or results of operations will not be material. 9 11 CKE RESTAURANTS, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW - -------- Consolidated net income for the 12-week period ended August 10, 1998 increased 114.4% to $22.6 million, or $0.46 per share on a diluted basis as compared with $10.5 million, or $0.25 per share on a diluted basis for the prior year quarter. Net income for the 28-week period ended August 10, 1998, increased 114.5% to $45.3 million or $0.93 per share on a diluted basis as compared with net income of $21.1 million, or $0.53 per share on a diluted basis. These improved results were primarily due to the additional operations of Hardee's Food Systems, Inc. ("Hardee's"), which was acquired on July 15, 1997 and Flagstar Enterprises, Inc. ("FEI"), a former franchisee of Hardee's with 557 Hardee's restaurants, which was acquired from Advantica Restaurant Group, Inc. ("Advantica") on April 1, 1998. Also contributing to the increase in net income was improved operating performance of the Company's Carl's Jr. and Taco Bueno chains due to continued sales growth resulting from the Company's dual-branding and image-enhancement programs at its Carl's Jr. restaurants and increased advertising and continued improvements in operating efficiencies in its Carl's Jr. and Taco Bueno restaurants. Operating results for the 28 weeks ended August 10, 1998 include 28 weeks of operations for Hardee's and 19 weeks of operations for the Hardee's restaurants acquired from Advantica. The corresponding period of the prior fiscal year includes four weeks of operations for Hardee's and does not include the results of operations of any of the Hardee's restaurants acquired from Advantica. The Company is continuing with the conversion of certain of its existing Carl's Jr. restaurants into Carl's Jr./Green Burrito dual-brand restaurants, pursuant to an amended agreement with Santa Barbara Restaurant Group, Inc., formerly GB Foods Corporation. During the second quarter, the Company opened an additional five dual-brand Company-operated restaurants and two dual-brand franchise restaurants for a total of 125 Company-operated and 19 franchised restaurants operating as of August 10, 1998. During the first quarter of fiscal 1999, the Company made a significant step toward balancing the number of Hardee's franchise and Company-operated stores with the acquisition of FEI from Advantica for the purchase price of $380.6 million plus the assumption of $45.6 million in capital lease obligations. (See Note (B) of Notes to the Company's consolidated financial statements as of and for the period ended August 10, 1998). As of August 10, 1998, the Company operates approximately 50% of the Hardee's system. The acquisition was financed in part by $192.3 million in net proceeds the Company raised from a private placement of convertible subordinated notes, which was completed on March 13, 1998, and in part by the Company's increased credit facility. 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; changes in prevailing interest rates and the availability of financing; food, labor, and employee benefit costs; changes in, or the failure to comply with, government regulations; weather conditions; construction schedules; demands placed on management and capital resources by the substantial increase in the size of the Company resulting from the acquisition of Hardee's and FEI, changes in the Company's integration plans for Hardee's and its expansion plans; 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; and other risks detailed in the Company's filings with the Securities and Exchange Commission. RESULTS OF OPERATIONS - --------------------- Revenues from Company-operated restaurants increased $222.0 million, or 102.4%, to $438.9 million and $489.7 million, or 114.5%, to $917.5 million for the 12- and 28-week periods ended August 10, 1998, respectively. Carl's Jr., Hardee's and Taco Bueno Company-operated revenues contributed $12.7 million, 10 12 CKE RESTAURANTS, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) $222.6 million and $1.5 million, respectively, to the increase in revenues in the 12-week period and $29.8 million, $490.6 million and $3.7 million, respectively, to the increase in revenues in the 28-week period. Offsetting these increases was the decrease in revenues from the Company's HomeTown Buffet and Casa Bonita Restaurants which were sold to Star Buffet in connection with its initial public offering in September 1997. On a same-store sales basis (calculated using only restaurants that were in operations for the full periods being compared), revenues from Company-operated Carl's Jr. restaurants increased 5.1% in the 12-week period ended August 10, 1998, on top of a 4% same-store sales increase in the second quarter of fiscal 1998, marking the 13th consecutive quarter of same-store sales increases. Same-store sales for Taco Bueno increased 5.9% in the second quarter of fiscal 1999 as compared with a 5% increase in the second quarter last year, also the 13th consecutive quarter of same-store sales increases. Company-operated Hardee's same-store sales decreased 9.7% for the second quarter, a modest improvement from the 10.8% decline experienced in the first quarter of fiscal 1999. The increase in revenues for the Company's Carl's Jr. restaurants are primarily attributable to the continued focus on promoting great-tasting new and existing food products through increased advertising, the conversion of existing Carl's Jr. locations to Carl's Jr./Green Burrito dual-brand restaurants, the image enhancement of its restaurants, which was completed in December 1997 and the increase in the number of Company-operated Carl's Jr. restaurants operating in fiscal 1999 as compared with fiscal 1998. The increase in revenues for the Taco Bueno chain is due in part to a new advertising campaign, which began in the fourth quarter of fiscal 1998. Additionally, the Company has been focusing on more prime real estate than previously targeted for its new restaurants. The three Taco Bueno restaurants that have opened since October 1997 have generated average unit volumes substantially higher than the rest of the Taco Bueno system. Much of the decrease in same-store sales at Hardee's can be attributed to menu deletions made since the acquisition as well as the discontinuation of promotional discounting and monthly new product introductions. Average unit volumes at the Company's Carl's Jr. and Taco Bueno restaurants concepts continued to increase and reached $1,185,800 and $714,900 on a rolling 13-period basis, respectively, at the end of the second quarter. Average unit volumes for the Company's Hardee's restaurants ended the quarter at $823,400. Revenues from franchised and licensed restaurants for the 12- and 28-week periods ended August 10, 1998 increased 42.4% to $35.9 million and 72.2% to $85.5 million, respectively, over the same prior year periods. These revenue increases were mainly due to royalties from the Hardee's franchise system, increased royalties from, and food purchases by, Carl's Jr. franchisees as a result of higher sales volume at Carl's Jr. franchised restaurants and the increase in the number of Carl's Jr. franchised restaurants operating in fiscal 1999 as compared with fiscal 1998. The Company's consolidated restaurant-level margins of its Company-operated restaurants increased in the 12-week period ended August 10, 1998 by 0.9% as compared with the same period of the prior year, primarily reflecting the impact of the disposition of the Company's buffet-style restaurants, which have higher operating costs, and the improvement in operating margins at the Company's Hardee's quick-service restaurants. Although Hardee's restaurant-level margins are substantially lower that the rest of the Company's quick-service hamburger concepts, the Company successfully increased these margins in the second quarter of fiscal 1999 to 18.0% of Company-operated revenues as compared to 16.3% in the first quarter of fiscal 1999 and 12.8% at fiscal 1998 year-end. The Company has accomplished this increase in Hardee's margins through many of the successful cost-saving measures it executed at its Carl's Jr. restaurants over the past several years, including the introduction of the Carl's Jr. labor matrix to improve labor usage, a focus on safety and accident prevention as a method of lowering workers' compensations costs, a reduction of food waste and theft tolerance levels, and a decrease in food and paper costs through the realization of certain purchasing synergies. Restaurant-level margins for the Company's Carl's Jr. restaurants reached 25.8% for both the 12- and 28-week periods ended August 10, 1998, an increase of 1.3% and 1.5%, respectively, over the prior year periods. The improved results in operating margins reflect the Company's continued commitment to improving the cost structure at its Carl's Jr. restaurants, principally in the areas of increased purchasing 11 13 CKE RESTAURANTS, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) savings in food and paper, improving labor productivity and decreasing worker's compensation costs. As a percentage of revenues from Carl's Jr. Company-operated restaurants, food and packaging costs have decreased 1.3% and .9% to 28.7% and 28.9%, respectively, for the 12- and 28-week periods ended August 10, 1998, as compared with the same periods a year ago despite increased pressure from commodity prices and a change in the product mix as a result of the promotion of larger, more expensive sandwiches. As a percentage of revenues from Company-operated restaurants, Carl's Jr. payroll and other employee benefits have increased 1.0% to 26.3%, and 0.3% to 26.0%, respectively, for the 12- and 28-week periods ended August 10, 1998 as compared with the comparable periods in the prior year. The recent federal and California minimum wage increases contributed to the rise in payroll and employee benefit costs. Occupancy and other operating expenses as a percentage of revenues from Carl's Jr. Company-operated restaurants have decreased 1.0% to 19.3%, and 0.9% to 19.3%, respectively, for the 12- and 28-week periods as compared with the same periods of the prior year. These costs are generally fixed in nature and, as such, decrease as a percentage of revenues from Company-operated restaurants as sales increase. Taco Bueno's restaurant-level margins for the 12- and 28-week periods ended August 10, 1998 decreased 0.8% to 25.2% and increased 1.5% to 26.3%, respectively, as compared with the prior year periods. Second quarter restaurant-level margins at the Taco Bueno chain were negatively impacted by increased commodity costs for cheese and tomatoes and increased lease expense and labor costs as a result of additional training for the new point-of-sale equipment installed in all of the Taco Bueno restaurants. The Company's hourly employees are paid rates related to the federal and state minimum wage laws. Legislation increasing the federal minimum wage in October 1996 and September 1997 has resulted in higher labor costs to the Company and its franchisees. Moreover, the California state minimum wage was increased effective March 1998 to rates above the federal minimum wage. The Company anticipates that any future increases in minimum wage levels 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 28.1% and 37.0% for the 12- and 28-week periods ended August 10, 1998 over the same periods of the prior year. The increase is primarily due to increased food and other products from the Company by Carl's Jr. franchisees, as well as the costs associated with the Hardee's franchise system. As a percentage of revenues from franchised and licensed restaurants, these costs have decreased 7.6% and 17.4%, respectively, in the 12- and 28-week periods as compared with the prior year. While Carl's Jr. earns its income from both royalties paid and food purchases by franchisees, Hardee's earns the majority of its income from royalties paid by its franchisees, who purchase food, supplies and other products from independent vendors and distributors. Accordingly, the cost structure associated with the Hardee's royalty stream of income is substantially lower than that associated with the Carl's Jr. franchise and license operations. Advertising expenses increased $12.4 million and $27.4 million, respectively, from the 12- and 28-weeks periods ended August 11, 1997, mainly due to the additional advertising support at Hardee's. Advertising has become increasingly important in the current competitive environment, and, as a result, advertising expenses have increased in terms of dollars spent in fiscal 1999 as compared with fiscal 1998, while remaining relatively consistent as a percentage of revenues from Company-operated restaurants. The Company has seen same-store sales growth in its Carl's Jr. restaurants in each quarter since the Company began its current advertising campaign in May 1995. During the fourth quarter of fiscal 1998, the creators of the successful Carl's Jr. commercials launched a new, humorous advertising campaign for Taco Bueno, which has contributed in driving the same-store sales increases in the first and second quarters of fiscal 1999. In addition, the Company also hired a new advertising firm for its Hardee's chain. New television commercials began airing in April 1998, which focus on Hardee's rich, satisfying food. 12 14 CKE RESTAURANTS, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) General and administrative expenses increased $9.3 million and $31.3 million to $25.4 million and $62.8 million for the 12- and 28-week periods ended August 10, 1998 over the same periods of the prior year. As a percentage of revenues, these expenses have decreased 1.3% and 0.3% in the 12- and 28-week periods of fiscal 1999 as compared with the same periods of fiscal 1998. The decrease in general and administrative expenses as a percent of total revenues reflects the economies of scale the Company is realizing by absorbing certain costs from the 557 Hardee's franchised restaurants acquired from Advantica into the Company's existing infrastructure. Interest expense for the 12- and 28-week periods ended August 10, 1998 increased $7.9 million and $14.3 million, respectively, as compared with the prior year periods, principally as a result of higher levels of borrowings outstanding and the assumption of capital leases as a result of the acquisition of Hardee's in July 1997 and the acquisition of FEI in April 1998. Other income, net, is mainly comprised of interest income, lease income, dividend income, gains and losses on sales of restaurants, income and loss on long-term investments, property management expenses and other non-recurring income and expenses. Other income, net, decreased $2.1 million and $2.9 million, respectively, for the 12- and 28-week periods ended August 10, 1998, over the comparable prior year periods. The decrease generally resulted from increased expenses from the Company's property management activities, decreases in lease and interest income and losses recorded from the Company's long-term investment in Rally's Hamburgers, Inc., offset in part by interest earned on the Company's notes receivable from franchisees. FINANCIAL CONDITION - ------------------- For the 28 weeks ended August 10, 1998, the Company generated cash flows from operating activities of $113.4 million, compared with $38.8 million for the same period of the prior year. This increase was mainly due to the added operations of the Company's Hardee's restaurants and increased revenues and improved operating margins at the Company's Carl's Jr. and Taco Bueno restaurants. Cash and cash equivalents in the current quarter increased $7.7 million as the Company generated $4.3 million (net of cash surrendered) from the sale of 12 JB's Restaurants to Star Buffet, Inc., $4.5 million from collections on notes receivable, related party receivables and leases receivable, and $6.2 million from the exercise of stock options in addition to the increase in cash flow from operations. The Company used excess cash flow from operations to fund capital additions of approximately $45.2 million, to repay capital lease obligations of $4.0 million, to repay long-term borrowings of $77.6 million, to pay $10.2 million of deferred financing costs associated with the FEI acquisition and to pay dividends to its stockholders of $1.9 million. A portion of the $197.2 million convertible subordinated notes, combined with the majority of the increase in long-term borrowings of $221.2 million, was used to purchase FEI for $380.6 million. Total cash and cash equivalents available to the Company as of August 10, 1998 was $38.1 million. On April 1, 1998, the Company amended its existing credit facility (the "Senior Credit Facility") to increase the aggregate principal amounts of the lenders' commitments under the term loan facility (the "Term Loan Facility") to $250.0 million and under the revolving credit facility (the "Revolving Credit Facility") to $250.0 million, which includes a $65.0 million letter of credit subfacility, and to extend the final maturity date from July 2002 to April 2003. The Company incurred borrowings of $213.2 million thereunder to finance a portion of the purchase price of the FEI acquisition (see Note (B) of Notes to the Company's consolidated financial statements as of and for the period ended August 10, 1998). Principal repayments under the Term Loan Facility are due in quarterly installments, commencing in June 1998 and continuing thereafter until the final maturity of the Senior Credit Facility in April 2003, resulting in annual reductions of $20.0 million in the first year of the Term Loan Facility and annual reductions thereafter ranging from $40.0 million to $70.0 million. Additional borrowings under the Revolving Credit Facility may be used for working capital and other general corporate purposes, including permitted investments and acquisitions, and any outstanding amounts thereunder will become due in April 2003. The Company will be 13 15 CKE RESTAURANTS, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) required to repay borrowings under the Senior Credit Facility with the proceeds from (i) certain asset sales (unless the net proceeds of such sales are reinvested in the Company's business), (ii) the issuance of certain equity securities or (iii) the issuance of additional indebtedness. Of the various options the Company has regarding interest rates, it has selected LIBOR plus a margin, with future margin adjustments dependent on certain financial ratios from time to time. Borrowings and other obligations of the Company under the Senior Credit Facility are general unsubordinated obligations of the Company and are secured by a pledge of the capital stock of certain of the Company's present and future subsidiaries, which subsidiaries guarantee such borrowings and other obligations, and are secured by certain franchise rights, accounts receivable, contract rights, general intangibles (including trademarks) and other assets of the Company and such subsidiaries. The Senior Credit Facility contains a number of significant covenants that, among other things, (i) restrict the ability of the Company and its subsidiaries to incur additional indebtedness and incur liens on their assets, in each case subject to specified exceptions, (ii) impose specified financial tests as a precondition to the Company's and its subsidiaries' acquisition of other businesses, and (iii) limit the Company and its subsidiaries from making capital expenditures and certain restricted payments (including dividends and repurchases of stock), subject in certain circumstances to specified financial tests. In addition, the Company is required to comply with specified financial ratios and tests, including minimum EBITDA requirements, minimum interest coverage and fixed charge coverage ratios, minimum consolidated tangible net worth requirements and maximum leverage ratios. As of August 10, 1998, the Company is in compliance with all of its debt covenants. On March 13, 1998, the Company completed a private placement of $197.2 million aggregate principal amount of convertible subordinated notes (the "Notes"), in which the Company received net proceeds of approximately $192.3 million, of which $24.1 million was used to prepay indebtedness under the Term Loan Facility. The Notes, which represent unsecured general obligations of the Company subordinate in right of payment to certain other obligations, including obligations under the Senior Credit Facility, are due in 2004, are convertible into the Company's common stock at an initial conversion price of $48.204 and carry a 4.25% coupon rate. The remaining net proceeds from the Notes, together with borrowings under the Senior Credit Facility, were used to fund the acquisition of FEI on April 1, 1998. 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 Taco Bueno and Hardee's restaurants, the repurchase of certain Hardee's restaurants from franchisees, the conversion of certain restaurants to the Carl's Jr./Green Burrito dual-brand concepts and capital expenditures to be incurred in connection with the Company's integration of Hardee's and FEI. The Company opened 12 Company-operated Carl's Jr. restaurants in the first half of fiscal 1999 and plans to open up to 40 new Company-operated Carl's Jr. restaurants and up to seven new Taco Bueno restaurants in fiscal 1999. In addition, the Company and Imasco Holdings continue to discuss certain post-closing purchase price adjustments arising from the Hardee's acquisition. The Company believes that any payments required or to be received as a result of such purchase price adjustments would not materially affect the Company's financial condition. In light of the success of the Carl's Jr. and Taco Bueno chains and the turnaround in progress at Hardee's, the Company has established new goals with respect to future development. Plans are to open 75-100 Company-operated Carl's Jr. restaurants in fiscal 2000, 125-150 in fiscal 2001 and 200 restaurants in fiscal 2002. At Taco Bueno, we anticipate opening up to 15, 25 and 35 new Company-operated restaurants in fiscal 2000, 2001 and 2002, respectively. In addition, we have slated to open 25, 50 and 100 new Company-operated Hardee's restaurants over the next three fiscal years. The quick-service restaurant business generally receives simultaneous payment for sales. The Company presently reinvests the majority of the cash received in long-term assets, primarily for the remodeling and construction of restaurants, while normal operating expenses for inventories and current liabilities normally carry longer payment terms (usually 15 to 30 days). As such, the Company typically maintains current liabilities in excess of current assets. 14 16 CKE RESTAURANTS, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The Company believes that cash generated from its various restaurant concept operations, along with cash and cash equivalents on hand as of August 10, 1998 and amounts available under the Senior Credit Facility, will provide the Company with the funds necessary to meet all of its capital spending and working capital requirements for the foreseeable future. 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. In addition, substantially all of the real properties owned by the Company and used for its restaurant operations are unencumbered and could be used by the Company as collateral for additional debt financing or could be sold and subsequently leased back to the Company; however, there can be no assurance that real estate financing or other financing could be obtained on terms acceptable to the Company. Sales, if any, of additional equity or debt securities could result in additional dilution to the Company's stockholders. YEAR 2000 - --------- The Company is currently working to resolve the potential impact of the Year 2000 on the processing of data-sensitive information by the Company's computerized information systems. The Year 2000 problem is the result of computer programs being written using two digits (rather than four) to define the applicable year. Any of the Company's programs that have time-sensitive software may recognize a date using "00" as the 1900 rather than the year 2000, which could result in miscalculations or system failures. The Company has investigated the impact of the Year 2000 problem on its business, including the Company's operational, information and financial systems. Based on this investigation, the Company does not expect the Year 2000 problem, including the cost of making the Company's computerized information systems Year 2000 compliant, to have a material adverse impact on the Company's financial position or results of operations in future periods. However, the inability of the Company to resolve all potential Year 2000 problems in a timely manner could have a material adverse impact on the Company. The Company has also initiated communications with significant suppliers and vendors on which the Company relies in an effort to determine the extent to which the Company's business is vulnerable to the failure by these third parties' to remediate their Year 2000 problems. While the Company has not been informed of any material risks associated with the Year 2000 problem on these entities, there can be no assurance that the computerized information systems of these third parties will be Year 2000 compliant on a timely basis. The inability of these third parties to remediate their Year 2000 problems could have a material adverse impact on the Company. The Company has completed a review of its information systems and is involved in a comprehensive program to upgrade computer systems and applications in connection with its effort to fully integrate its recent restaurant acquisitions. In conjunction with this computer upgrade process, the Company believes it will have addressed any potential Year 2000 issues. Total expenditures related to the upgrade of the information systems are expected to range from $18.0 million to $20.0 million. As of August 10, 1998, the Company has incurred approximately $11.0 million of expenditures consisting of internal staff costs as well as outside consulting and other expenditures related to this upgrade process. These costs are being funded through operating cash flows. To the extent possible, the Company will be developing and executing contingency plans designed to allow continued operation in the event of failure of the Company's or third parties' computer information systems. 15 17 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS The Annual Meeting of Stockholders of CKE Restaurants, Inc. was held on June 16, 1998, for the purpose of electing certain members of the board of directors. The Company's board of directors is divided into three classes. Each class serves for a period of three years, with the terms of office of the respective classes expiring in successive years. Management's nominees for directors, whose term expired as of the date of the Annual Meeting, were elected by the following vote:
Shares Voted Authority to Vote "For" "Withheld" ------------ ----------------- Carl L. Karcher 42,605,328 132,621 Frank P. Willey 42,614,570 123,379 Byron Allumbaugh 42,608,326 129,623
The following individuals continue to serve on the board of directors: William P. Foley; Carl N. Karcher; W. Howard Lester; Peter Churm and Daniel D. Lane. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 11 Calculation of Earnings Per Share. 27-1 Financial Data Schedule (included only with electronic filing). 27-2 Financial Data Schedule restated for the quarterly period ending August 11, 1997 (included only with electronic filing). 27-3 Financial Data Schedule restated for the quarterly period ending August 12, 1996 (included only with electronic filing).
(b) Current Reports on Form 8-K: A Current Report on Form 8-K dated April 1, 1998 (as amended) was filed during the second quarter of the fiscal year to report matters relating to the Company's acquisition of Flagstar Enterprises, 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) September 22, 1998 /s/ Carl A. Strunk - ------------------ ---------------------------------- Date Executive Vice President, Chief Financial Officer 16 18 EXHIBIT INDEX
Exhibit # Description --------- ----------- 11 Calculation of Earnings Per Share. 27-1 Financial Data Schedule (included only with electronic filing). 27-2 Financial Data Schedule restated for the quarterly period ending August 11, 1997 (included only with electronic filing). 27-3 Financial Data Schedule restated for the quarterly period ending August 12, 1996 (included only with electronic filing).
17 EX-11 2 CALCULATION OF EARNINGS PER SHARE 1 EXHIBIT 11 CKE RESTAURANTS, INC. AND SUBSIDIARIES CALCULATION OF EARNINGS PER SHARE (In thousands except per share amounts)
Twelve Weeks Ended Twenty-eight Weeks Ended ----------------------- ------------------------ August 10, August 11, August 10, August 11, 1998 1997 1998 1997 ---------- ---------- ---------- ---------- BASIC EARNINGS PER SHARE - ------------------------ Net income $22,604 $10,545 $45,336 $21,131 ======= ======= ======= ======= Weighted average number of common shares outstanding during the period 46,821 40,438 46,696 38,544 ======= ======= ======= ======= Basic earnings per share $ 0.48 $ 0.26 $ 0.97 $ 0.55 ======= ======= ======= ======= DILUTED EARNINGS PER SHARE - -------------------------- Net income $22,604 $10,545 $45,336 $21,131 Interest expense and amortization of debt issuance costs, net of income tax effect applicable to convertible subordinated notes 1,301 -- 2,317 -- ------- ------- ------- ------- Diluted earnings $23,905 $10,545 $47,653 $21,131 ======= ======= ======= ======= Weighted average number of common shares outstanding during the period 46,821 40,438 46,696 38,544 Incremental common shares attributable to: Exercise of outstanding options 1,420 1,218 1,483 1,096 Issuance of convertible subordinated notes 4,091 -- 3,251 -- ------- ------- ------- ------- Total shares 52,332 41,656 51,430 39,640 ======= ======= ======= ======= Diluted earnings per share $ 0.46 $ 0.25 $ 0.93 $ 0.53 ======= ======= ======= =======
18 EX-27.1 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 twelve weeks ended August 10, 1998, and is qualified in its entirety by reference to such Form 10-Q for the quarterly period ended August 10, 1996. 1,000 6-MOS JAN-25-1999 JAN-27-1998 AUG-10-1998 38,050 0 32,932 0 23,617 112,758 1,434,250 475,313 1,456,170 265,088 0 0 0 471 548,228 1,456,170 438,910 474,841 351,034 425,703 (1,207) 0 12,605 37,740 15,136 22,604 0 0 0 22,604 .48 .46
EX-27.2 4 FINANCIAL DATA SCHEDULE RESTATED FOR 08/11/1997
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 twelve weeks ended August 11, 1997, as restated and is qualified in its entirety by reference to such Form 10-Q for the quarterly period ended August 11, 1997. 1,000 6-MOS JAN-26-1998 JAN-28-1997 AUG-11-1997 37,927 196 44,158 0 17,670 97,564 896,065 249,575 919,043 176,323 0 0 0 419 458,268 919,043 216,877 242,102 175,498 223,148 (3,348) 0 4,712 17,590 7,045 10,545 0 0 0 10,545 .26 .25
EX-27.3 5 FINANCIAL DATA SCHEDULE RESTATED FOR 08/12/1996
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 twelve weeks ended August 12, 1996, as restated and is qualified in its entirety by reference to such Form 10-Q for the quarterly period ended August 12, 1996. 1,000 6-MOS JAN-27-1997 JAN-30-1996 AUG-12-1996 13,906 4,427 16,813 0 7,973 56,972 367,919 198,842 306,457 79,251 0 0 0 198 123,328 306,457 110,364 127,925 84,875 117,785 (528) 0 2,149 8,519 3,327 5,192 0 0 0 5,192 .17 .16
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