-----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, UzrJpuB0NJxxTotioJynH+4dVId409KX/bpVyOZaHFYd6j3SWJT8sjDA2FEBBsC+ F0zYTtK87S1AEjLt4GJ6Ig== 0000892569-99-002502.txt : 19990924 0000892569-99-002502.hdr.sgml : 19990924 ACCESSION NUMBER: 0000892569-99-002502 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990809 FILED AS OF DATE: 19990923 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: 0125 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11313 FILM NUMBER: 99715413 BUSINESS ADDRESS: STREET 1: 1200 NORTH HARBOR BOULEVARD CITY: ANAHEIM STATE: CA ZIP: 92801 BUSINESS PHONE: 7147745796 MAIL ADDRESS: STREET 1: 1200 NORTH HARBOR BLVD CITY: ANAHEIM STATE: CA ZIP: 92801 10-Q 1 FORM 10-Q PERIOD END AUGUST 9, 1999 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 9, 1999 -------------------------------- 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 Incorporation or Organization) Identification No.) 401 W. Carl Karcher Way, Anaheim, CA 92801 - ------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (714) 774-5796 -------------- 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 [ ] As of September 17, 1999, 52,085,513 shares of the Registrant's Common Stock were outstanding 2 CKE RESTAURANTS, INC. AND SUBSIDIARIES INDEX
Page ---- Part I. Financial Information Item 1. Consolidated Financial Statements: Consolidated Balance Sheets as of August 9, 1999 and January 25, 1999.................. 2 Consolidated Statements of Income for the twelve and twenty-eight weeks ended August 9, 1999 and August 10, 1998........................................... 3 Consolidated Statements of Cash Flows for the twenty-eight weeks ended August 9, 1999 and August 10, 1998................................................. 4 Notes to Consolidated Financial Statements............................................. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................... 9 Item 3. Quantitative and Qualitative Disclosures about Market Risk......................... 14 Part II. Other Information Item 2. Changes in Securities and Use of Proceeds.......................................... 15 Item 4. Submission of Matters to a Vote of Security Holders............................... 15 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)
August 9, January 25, 1999 1999 ---------- ---------- ASSETS Current assets: Cash and cash equivalents $ 43,548 $ 46,297 Accounts receivable 44,550 46,820 Related party receivables 1,124 1,474 Inventories 25,951 22,507 Prepaid expenses 18,853 12,349 Other current assets 2,991 4,845 ---------- ---------- Total current assets 137,017 134,292 Property and equipment, net 1,014,445 940,178 Property under capital leases, net 84,717 81,895 Long-term investments 32,888 34,119 Notes receivable 6,868 7,898 Related party receivables 7,697 7,020 Costs in excess of assets acquired, net 251,971 252,035 Other assets 46,945 39,477 ---------- ---------- $1,582,548 $1,496,914 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 4,303 $ 4,273 Current portion of capital lease obligations 8,747 7,838 Accounts payable 86,253 88,462 Other current liabilities 98,114 101,074 ---------- ---------- Total current liabilities 197,417 201,647 ---------- ---------- Long-term debt 222,175 360,684 Senior subordinated notes 200,000 -- Convertible subordinated notes 159,225 162,225 Capital lease obligations 93,239 90,373 Deferred income taxes, net 15,029 15,029 Other long-term liabilities 78,935 80,114 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 52,075,513 and 51,850,249 shares 521 519 Additional paid-in capital 382,464 380,423 Retained earnings 233,543 205,900 ---------- ---------- Total stockholders' equity 616,528 586,842 ---------- ---------- $1,582,548 $1,496,914 ========== ==========
See Accompanying Notes to Consolidated Financial Statements. 2 4 CKE RESTAURANTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share amounts)
Twelve Weeks Ended Twenty-eight Weeks Ended --------------------------- --------------------------- August 9, August 10, August 9, August 10, 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Revenues: Company-operated restaurants $ 423,424 $ 438,910 $ 970,168 $ 917,517 Franchised and licensed restaurants and other 41,835 35,931 90,814 85,535 ----------- ----------- ----------- ----------- Total revenues 465,259 474,841 1,060,982 1,003,052 ----------- ----------- ----------- ----------- Operating costs and expenses: Restaurant operations: Food and packaging 126,498 133,548 290,230 278,398 Payroll and other employee benefits 132,295 134,090 297,874 282,793 Occupancy and other operating expenses 84,180 83,396 195,015 174,286 ----------- ----------- ----------- ----------- 342,973 351,034 783,119 735,477 Franchised and licensed restaurants and other 31,197 24,526 66,725 57,827 Advertising expenses 28,614 24,772 61,293 52,221 General and administrative expenses 31,328 25,371 71,093 62,755 ----------- ----------- ----------- ----------- Total operating costs and expenses 434,112 425,703 982,230 908,280 ----------- ----------- ----------- ----------- Operating income 31,147 49,138 78,752 94,772 Interest expense (13,492) (12,605) (29,170) (21,842) Other income (expense), net (811) 1,207 (1,077) 2,603 ----------- ----------- ----------- ----------- Income before income taxes and extraordinary item 16,844 37,740 48,505 75,533 Income tax expense 6,546 15,136 19,077 30,197 ----------- ----------- ----------- ----------- Income before extraordinary item 10,298 22,604 29,428 45,336 Extraordinary item - gain on early retirement of debt, net of applicable income taxes of $186 -- -- 290 -- ----------- ----------- ----------- ----------- Net income $ 10,298 $ 22,604 $ 29,718 $ 45,336 =========== =========== =========== =========== Basic income per share before extraordinary item $ 0.20 $ 0.44 $ 0.56 $ 0.88 Extraordinary item - gain on early retirement of debt, net of income taxes - basic -- -- .01 -- ----------- ----------- ----------- ----------- Net income per share - basic $ 0.20 $ 0.44 $ 0.57 $ 0.88 =========== =========== =========== =========== Weighted average shares outstanding - basic 52,009 51,503 51,934 51,366 =========== =========== =========== =========== Diluted income per share before extraordinary item $ 0.20 $ 0.42 $ 0.56 $ 0.84 Extraordinary item - gain on early retirement of debt, net of applicable taxes - diluted -- -- .01 -- ----------- ----------- ----------- ----------- Net income per share - diluted $ 0.20 $ 0.42 $ 0.57 $ 0.84 =========== =========== =========== =========== Weighted average shares outstanding - diluted 56,186 57,565 56,263 56,573 =========== =========== =========== ===========
See Accompanying Notes to Consolidated Financial Statements. 3 5 CKE RESTAURANTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Twenty-eight Weeks Ended ------------------------ August 9, August 10, 1999 1998 --------- --------- Net cash flow from operating activities: Net income $ 29,718 $ 45,336 Adjustments to reconcile net income to net cash provided by operating activities, excluding the effect of acquisitions and dispositions: Extraordinary gain on early retirement of debt (476) -- Depreciation and amortization 50,674 39,036 Loss on sale of property and equipment and capital leases 2,133 1,015 Noncash litigation settlement 722 -- Net noncash investment and dividend income (140) (678) Loss on noncurrent asset and liability transactions 555 462 Net change in receivables, inventories and other current assets and prepaid expenses (6,025) (5,739) Net change in accounts payable and other current liabilities (20,513) 33,943 --------- --------- Net cash provided by operating activities 56,648 113,375 --------- --------- Cash flow from investing activities: Purchases of property and equipment (126,169) (45,210) Proceeds from sale of property and equipment 9,948 7,165 Increase in notes receivable, related party receivables and leases receivable (737) (1,700) Collections on notes receivable, related party receivables and leases receivable 1,757 4,522 Net change in other assets (1,638) 727 Acquisitions, net of cash acquired (1,303) (394,651) Dispositions, net of cash surrendered -- 4,328 --------- --------- Net cash used in investing activities (118,142) (424,819) --------- --------- Cash flow from financing activities: Net change in bank overdraft 15,973 (9,780) Long-term borrowings 274,000 221,220 Issuance of convertible subordinated notes -- 197,225 Repayments of long-term debt (215,004) (77,582) Repayments of capital lease obligations (3,744) (4,000) Deferred financing costs (10,686) (10,211) Net change in other long-term liabilities (1,179) (2,095) Payment of dividends (2,074) (1,895) Exercise of stock options 1,459 6,230 --------- --------- Net cash provided by financing activities 58,745 319,112 --------- --------- Net increase (decrease) in cash and cash equivalents (2,749) 7,668 Cash and cash equivalents at beginning of period 46,297 30,382 --------- --------- Cash and cash equivalents at end of period $ 43,548 $ 38,050 ========= =========
See Accompanying Notes to Consolidated Financial Statements. 4 6 CKE RESTAURANTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Twenty-eight Weeks Ended ------------------------- August 9, August 10, 1999 1998 --------- --------- Supplemental disclosures of cash flow information: Cash paid during the period for: Interest (net of amounts capitalized) $ 22,862 $ 16,746 Income taxes 14,786 20,859 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 9, 1999 AND AUGUST 10, 1998 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 1999 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 1999 consolidated financial statements to conform to the fiscal 2000 presentation. Share and per share information has been retroactively adjusted to reflect the ten percent stock dividend paid in January 1999. 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 included miscellaneous expenses paid to Advantica) and the assumption of approximately $45.6 million in capital lease obligations. The Company used the majority of the net proceeds from the issuance of $197.2 million of convertible subordinated notes together with borrowings of $213.2 million under its senior credit facility to finance the acquisition. Selected unaudited pro forma combined results of operations for the 28-week period ended August 10, 1998, assuming the acquisition occurred on January 27, 1998, using actual restaurant-level margins and general and administrative expenses prior to the acquisition, is as follows:
Twenty-eight Weeks Ended August 10, 1998 ----------------------- Total revenues $1,124,249 Net income $ 43,857 Net income per share - basic $ 0.85 Net income per share - diluted $ 0.82
NOTE (C) LONG TERM DEBT On March 4, 1999, the Company amended its existing senior credit facility, which consisted of a $250.0 million term loan facility and a $250.0 million revolving credit facility. The senior credit facility, as amended, consists of a $500.0 million revolving credit facility and includes a $75.0 million letter of credit sub-facility. The senior credit facility will be reduced beginning in March 2001 by a minimum of $50.0 million each year, for the three subsequent years. Additional borrowings under the senior credit facility may be used for working capital or other general corporate purposes, including permitted investments and acquisitions, and any amounts outstanding thereunder will become due in February 2004. Borrowings and other obligations of the Company under the senior credit facility are general unsubordinated obligations of the Company and 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 6 8 CKE RESTAURANTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AUGUST 9, 1999 AND AUGUST 10, 1998 (Continued) obligations, and are secured by certain franchise rights, contract rights, general intangibles (including trademarks) and other assets of the Company and such subsidiaries. The Company is required to repay borrowings under the senior credit facility with the proceeds from certain asset sales (unless the net proceeds of such sales are reinvested in the Company's business), from the issuance of certain equity securities and from 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. 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 9, 1999, the Company was in compliance with all of its covenants related to its senior credit facility. NOTE (D) SENIOR SUBORDINATED NOTES On March 4, 1999, the Company completed a private placement of $200.0 million aggregate principal amount of senior subordinated notes, in which the Company received net proceeds of approximately $194.8 million, of which $190.0 million was used to repay indebtedness under the senior credit facility. The senior subordinated notes are due in May 2009, carry a 9.125% coupon rate and are redeemable by the Company beginning on May 1, 2004. The indenture relating to the senior subordinated notes imposes restrictions on the Company's ability (and the ability of its subsidiaries) to incur additional indebtedness, pay dividends on, redeem or repurchase its capital stock, make investments, incur liens on its assets, sell assets other than in the ordinary course of business, and enter into certain transactions with its affiliates. The senior subordinated notes represent unsecured general obligations subordinate in right of payment to the Company's senior indebtedness, including its senior credit facility. The Company's senior credit facility is guaranteed on a secured basis by the Company's direct and indirect subsidiaries (the "Subsidiary Guarantors"), other than non-guarantor subsidiaries which conduct no material operations, have no significant assets on a consolidated basis and account for only an insignificant share of the Company's consolidated revenues. Each of the Subsidiary Guarantors also fully and unconditionally guarantee the Company's 9.125% senior subordinated notes due 2009 on a joint and several basis. Separate financial statements and other disclosures concerning the Subsidiary Guarantors are not presented because management has determined that such information is not material to investors. NOTE (E) CONVERTIBLE SUBORDINATED NOTES During the first quarter of fiscal 2000, the Company repurchased an additional $3.0 million aggregate principal amount of convertible subordinated notes for $2.5 million in cash, including accrued interest thereon. The Company recognized an extraordinary gain on the early retirement of debt of $0.3 million, net of applicable income taxes of $0.2 million. To date, the Company has repurchased a total of $38.0 million aggregate principal amount of convertible subordinated notes. 7 9 CKE RESTAURANTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AUGUST 9, 1999 AND AUGUST 10, 1998 (Continued) NOTE (F) SEGMENT INFORMATION The Company adopted Statement of Financial Accounting Standards No. 131, "Disclosure about Segments of an Enterprise and Related Information" ("SFAS 131") in its fiscal year ending January 25, 1999. The Company is engaged principally in developing, operating and franchising its Carl's Jr., Hardee's and Taco Bueno quick-service restaurants, each of which are considered strategic businesses that are managed and evaluated separately. As such, the Company considers its Carl's Jr., Hardee's and Taco Bueno chains to each be a reportable segment. Management evaluates the performance of its segments and allocates resources to them based on several factors, of which the primary financial measure is segment profit before taxes. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1 of Notes to Consolidated Financial Statements for the fiscal year ending January 25, 1999. Summarized financial information concerning the Company's reportable segments is shown in the following table. The "other" column includes corporate related items, results of insignificant operations and, as it relates to segment profit or loss, income and expense not allocated to reportable segments. The amounts reported for Hardee's reflect only the periods subsequent to the acquisition date of April 1, 1998 for FEI.
TWENTY-EIGHT WEEKS ENDED CARL'S JR. HARDEE'S TACO BUENO OTHER TOTAL ---------- ---------- ---------- ------- ---------- AUGUST 9, 1999: Revenues $370,591 $ 634,437 $48,861 $ 7,093 $1,060,982 Segment profit (loss) 37,244 15,775 4,725 (9,239) 48,505 Total assets 339,248 1,095,943 73,220 74,137 1,582,548 Capital expenditures 22,975 83,135 10,354 9,705 126,169 Depreciation and amortization 13,355 31,247 1,946 4,126 50,674 AUGUST 10, 1998: Revenues $337,998 $ 578,713 $43,780 $42,561 $1,003,052 Segment profit (loss) 40,169 36,359 4,306 (5,301) 75,533 Total assets (as of January 25, 1999) 280,201 1,072,594 62,539 81,580 1,496,914 Capital expenditures 18,424 17,803 2,455 6,528 45,210 Depreciation and amortization 12,158 20,655 1,468 4,755 39,036
8 10 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 9, 1999 decreased 54.4% to $10.3 million, or $0.20 per share on a diluted basis, as compared with net income of $22.6 million, or $0.42 per share on a diluted basis, for the prior year quarter. Net income for the 28-week period ended August 9, 1999 decreased 34.4% to $29.7 million, or $0.57 per share on a diluted basis, as compared with net income of $45.3 million, or $0.84 per share on a diluted basis for the comparable period of the prior year. Net income, excluding the $0.3 million extraordinary gain on the early retirement of debt, decreased 35.1% for the 28-week period ended August 9, 1999 to $29.4 million, or $0.56 per share on a diluted basis. The decrease in net income in the second quarter was primarily due to declining sales levels at our Carl's Jr. and Hardee's restaurants, combined with the fixed nature of certain of our operating costs. On a year to date basis, increased interest expense in connection with our recent financings also contributed to the decrease in net income. Operating results for the prior-year 28 weeks ended August 10, 1998 include 19 weeks of operations for the 557 Hardee's restaurants acquired with our acquisition of Flagstar Enterprises, Inc. ("FEI") from Advantica Restaurant Group, Inc. ("Advantica") on April 1, 1998. Operating results for Carl's Jr. for the 12- and 28-week periods ended August 9, 1999 include the results of 63 Hardee's-to-Carl's Jr. conversions in Oklahoma, Texas and Kansas. These restaurants were included in Hardee's results for the corresponding prior year periods. During the second quarter of fiscal 2000, we opened ten new Carl's Jr. restaurants and closed one restaurant. Our franchisees opened four new restaurants and closed one restaurant. As of August 9, 1999, our Carl's Jr. system included 556 company-operated restaurants, 310 franchised restaurants and 24 international restaurants, for a system total of 890 Carl's Jr. restaurants. We also opened two new Taco Bueno restaurants in the second quarter, bringing the total of company-operated restaurants to 113, with one licensed restaurant, for a system total of 114. We also grew our Hardee's system by an additional seven restaurants. At the end of the quarter, our Hardee's system consisted of 1,414 company-operated restaurants, 1,266 franchised restaurants and 106 international restaurants, for a system total of 2,786 Hardee's restaurants. We have remodeled approximately 106 company-operated Hardee's restaurants to the Star Hardee's format during the second quarter and our franchisees have remodeled approximately 22 restaurants, with approximately 435 Hardee's restaurants remodeled to the Star Hardee's format as of August 9, 1999, representing approximately 16% of the Hardee's system. In addition to menu enhancements, a Star Hardee's remodel involves installing charbroilers in the kitchens, remodeling the interior and exterior of the restaurant, introducing Carl's Jr.-style limited table service, adding "all-you-can-drink" beverage bars, installing new signage and adding updated computerized point of sale systems. We are currently remodeling 10 to 12 company-operated restaurants per week and our franchisees are remodeling 2 to 3 franchised restaurants per week. On average, the restaurants that have already been converted are seeing initial sales improvements of approximately 8% above pre-conversion levels. 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 our actual results, performance, or achievements 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 our size resulting from the acquisitions of Hardee's and FEI; changes in our integration plans for Hardee's and our expansion plans; risks that sales growth resulting from our 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 our filings with the Securities and Exchange Commission. 9 11 CKE RESTAURANTS, INC. AND SUBSIDIARIES (Continued) RESULTS OF OPERATIONS Revenues from company-operated restaurants decreased $15.5 million, or 3.5%, to $423.4 million for the 12-week period ended August 9, 1999 while increasing $52.7 million, or 5.7%, to $970.2 million for 28-week period ended August 9, 1999 over the same prior year periods. Carl's Jr. and Taco Bueno company-operated revenues increased by $14.4 million and $2.0 million, respectively, while Hardee's revenues from company-operated restaurants decreased by $17.4 million in the 12-week period ended August 9, 1999. For the 28-week period ended August 9, 1999, Carl's Jr., Hardee's and Taco Bueno contributed $30.9 million, $51.3 million and $5.1 million, respectively, to the increase in revenues. Offsetting these increases was the decrease in revenues from our JB's Restaurants and Galaxy Diner restaurants which were sold to Santa Barbara Restaurant Group, Inc. ("SBRG") in September 1998. On a same-store sales basis, our Carl's Jr. sales decreased 4.3% in the 12-week period ended August 9, 1999, which reflects strong comparisons in the second quarter of the last two fiscal years. Same-store sales for our company-operated Hardee's restaurants were down 4.9% for the second quarter. Same-store sales for our company-operated Taco Bueno restaurants increased 7.2%, marking the 17th consecutive quarter of same-store sales increases for the chain. The increase in company-operated revenue from our Carl's Jr. restaurants was primarily attributable to an increase in the number of restaurants open and operating in the second quarter of fiscal 2000 as compared with the second quarter of the prior year and the inclusion of $9.2 million and $21.2 million of revenue from the 63 Hardee's-to-Carl's Jr. converted restaurants for the 12- and 28-week periods ended August 9, 1999, respectively. The increase in Hardee's company-operated revenues for the 28-week period ended August 9, 1999 was primarily due to including in the current year a full 28 weeks of operations of the 557 Hardee's restaurants acquired from Advantica in April 1998, as compared with 19 weeks of operations for those restaurants included in the prior year period. Taco Bueno's increase in revenues is due mainly to our advertising campaign, which focuses on great-tasting food products, the image enhancement program for our Taco Bueno restaurants, which was begun in fiscal 1999, and the increase in the number of restaurants open and operating. Average unit volumes for the trailing 52-week period ending August 9, 1999 for our company-operated Carl's Jr. and Hardee's restaurants were $1,095,000 and $788,000, respectively, while Taco Bueno's average unit volumes continued to rise and increased to $783,000. Our revenues from franchised and licensed restaurants for the 12- and 28-week periods ended August 9, 1999 increased $5.9 million, or 16.4%, to $41.8 million and $5.3 million, or 6.2%, to $90.8 million, respectively, over the same prior year periods. These revenue increases were mainly due to increased royalties from, and food purchases by, Carl's Jr. franchisees and licensees as a result of an increase in the number of Carl's Jr. franchised restaurants operating in fiscal 2000 as compared with fiscal 1999 and an increase in equipment sales to Hardee's franchisees in connection with the remodeling of Hardee's restaurants to the Star Hardee's format. Partially offsetting these increases were the decrease in revenues due to the acquisition of previously franchised Hardee's restaurants during fiscal 1999, including the 557 formerly franchised Hardee's restaurants we acquired in April 1998 and the loss of franchised revenues from our JB's restaurants, which were sold to SBRG in September 1998. Restaurant-level margins for our company-operated Carl's Jr. restaurants decreased 1.0% to 24.8% and 1.6% to 24.2%, respectively, for the 12- and 28-week periods ended August 9, 1999, from the comparable periods of fiscal 1999, mainly due to increases in occupancy and other operating expenses. As a percentage of revenues from Carl's Jr. restaurants, food and packaging costs remained relatively consistent during the second quarter of fiscal 2000 at 28.7%, while reflecting a decrease for the 28-week period ended August 9, 1999 of 0.4% to 28.5% of revenues from company-operated Carl's 10 12 CKE RESTAURANTS, INC. AND SUBSIDIARIES (Continued) Jr. restaurants. This decrease was primarily attributable to continued purchasing economies achieved as a result of the consolidated buying power directly realized from our addition of the Hardee's restaurants. Payroll and other employee benefits for our Carl's Jr. restaurant chain, as a percentage of revenues from company-operated Carl's Jr. restaurants, increased 0.3% to 26.6% and 0.5% to 26.5%, respectively, for the 12- and 28-week periods ended August 9, 1999, as compared with the comparable periods in the prior year. The increase in the number of our Carl's Jr./Green Burrito dual-brand restaurants contributed to the rise in payroll and employee benefit costs for the 28-week period ended August 9, 1999 due to the more labor intensive nature of the Green Burrito system. Carl's Jr. occupancy and other operating expenses, as a percentage of revenues from company-operated Carl's Jr. restaurants, increased 0.6% to 19.9% and 1.5% to 20.8%, respectively, for the 12- and 28-week periods as compared with the same periods of the prior year, primarily due to the fixed nature of these costs, combined with a decrease in the same-store revenue base as well as increased repair and maintenance costs and increased rent expense as a result of scheduled increases in long-term lease contracts. Hardee's restaurant-level margins for the 12- and 28-week periods ended August 9, 1999 decreased 2.5% to 15.5% and 1.0% to 16.2%, respectively. Hardee's food and packaging costs continued to decrease during the 12- and 28-week periods ended August 9, 1999, down 0.7% to 30.6% and down 0.4% to 30.8% of revenues from company-operated restaurants, respectively. This decrease was mainly due to a reduction in food waste and theft tolerance levels and continued purchasing economies achieved as a result of our increased consolidated buying power, partially offset by special promotional discounts. Payroll and other employee benefits, as a percentage of revenues from company-operated Hardee's restaurants, increased 1.7% to 33.7% in the 12-week period ended August 9, 1999 from the same prior year period, while remaining consistent at 32.9% as a percentage of company-operated revenues for the 28-week period ended August 9, 1999 as compared with the equivalent period of fiscal 1999. This increase in labor in the current 12-week period is a result of the initial increased labor required to implement the Star Hardee's conversions and the operational changes required in the converted restaurants. As a percentage of revenues from Hardee's company-operated restaurants, occupancy and other operating expenses increased 1.5% to 20.2% for the 12-week period and 1.4% to 20.1% for the 28-week period ended August 9, 1999 over the comparable prior year periods. The increase in occupancy and other operating expenses is due to the fixed nature of the costs combined with a decrease in the same-store revenue base, as well as increased depreciation costs in connection with the remodeling program of the Hardee's restaurants to the Star Hardee's format. Taco Bueno's restaurant-level operating margins decreased 0.3% to 25.0% and 0.1% to 26.2% for the 12 and 28 weeks ended August 9, 1999. While overall Taco Bueno restaurant-level margins reflected a modest decrease, food and packaging costs as a percentage of sales increased by 0.3% and 0.6% to 28.4% and 28.3%, respectively, and payroll and other employee benefit costs increased 1.2% to 32.2% and 0.5% to 31.2%, respectively, as a percentage of sales for the 12- and 28- week periods ended August 9, 1999. These increases were offset by a decrease in occupancy and other operating expenses of 1.2% and 1.0% to 14.4% and 14.3%, respectively, as a percentage of sales for the 12- and 28-week periods ended August 9, 1999 over the similar prior year periods. The increases in food and packaging costs were mainly attributable to higher commodity costs and a change in packaging materials used, while the increase in payroll and other employee benefit costs was primarily due to an increase in workers compensation costs as a result of a reevaluation of our historical workers compensation experience rating. The offsetting decrease in occupancy and other expenses was a result of the fixed nature of these costs combined with the increase in revenues. Franchised and licensed restaurant and other costs increased 27.2% to $31.2 million and 15.4% to $66.7 million for the 12 and 28 weeks ended August 9, 1999, respectively, over the prior year. These increases are primarily due to increased food and other products purchased from us by Carl's Jr. franchisees and licensees and increased equipment purchases from us by Hardee's franchisees and licensees. While royalties from Hardee's franchised and licensed restaurants decreased during the fiscal 2000 periods from the appropriate prior year periods, revenues from equipment sales to Hardee's franchised and licensed restaurants increased. The cost structure associated with equipment sales is much higher than that associated with the royalty stream of income. As a result, franchised and licensed restaurant and other costs increased 6.3% and 5.9% as a percentage of revenue from franchised and licensed restaurants for the second quarter of fiscal 2000 and the 28 weeks ended August 9, 1999, respectively, over the comparable prior year periods. Advertising expenses increased $3.8 million and $9.1 million, respectively, from the 12- and 28-week periods ended August 10, 1998, mainly due to increased advertising support for Hardee's. Advertising has become increasingly important in the current competitive environment and, as a result, advertising expenses have increased in terms of both dollars spent in the current fiscal year as compared with the prior fiscal year and as a percentage of company-operated revenues. General and administrative expenses increased $6.0 million, or 1.4% of total revenues, and $8.3 million, or 0.4% of total revenues, to $31.3 million and $71.1 million, respectively, for the 12- and 28-week 11 13 CKE RESTAURANTS, INC. AND SUBSIDIARIES (Continued) periods ended August 9, 1999 over the same periods of the prior year. This increase in general and administrative expenses reflects the planned addition of regional general and administrative expenses in the FEI markets that did not exist in the prior year, including additional quality assurance and regional human resources support; higher training expenses for the accelerated Star Hardee's remodel rollout; and an increase in information technology costs associated with the implementation of PeopleSoft and Year 2000 compliance. Lower revenue levels combined with the planned increase in general and administrative costs resulted in higher general and administrative expenses as a percentage of total revenues. Interest expense for the 12- and 28-week periods ended August 9, 1999 increased $0.9 million and $7.3 million, respectively, as compared with the prior year periods due to higher levels of borrowings outstanding under our senior credit facility and the issuance of convertible subordinated notes in March 1998 and senior subordinated notes in March 1999. Other income (expense), net, mainly consists 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 (expense), net, decreased $2.0 million and $3.7 million, respectively, for the 12- and 28-week periods ended August 9, 1999 over the corresponding prior year periods. The decrease was due in large part to a reduction in interest income as a result of our reduced note receivable from Checkers Drive-In Restaurants, Inc., reduced notes receivable from our franchisees, reduced interest income on cash and cash equivalents and recognition of income in the prior year from our investment in Star Buffet, Inc., which was subsequently sold in October 1998. Additionally, during the 12-week period ended August 9, 1999, we issued 54,501 shares of our common stock in connection with the release of certain claims asserted against us relating to the operations of Boston West, LLC as a result of which we recognized an expense of $0.7 million. During the third quarter of fiscal 1999, our Board of Directors approved the buyback of up to $50.0 million aggregate principal amount of convertible subordinated notes. In the first quarter of fiscal 2000, we repurchased $3.0 million of convertible subordinated notes for $2.5 million in cash, including accrued interest thereon. In connection with this repurchase, we recognized an extraordinary gain on the early retirement of debt of $0.3 million, net of applicable taxes of $0.2 million, in the 28-week period ended August 9, 1999. FINANCIAL CONDITION Cash and cash equivalents decreased $2.7 million to $43.5 million in the 28-week period ended August 9, 1999. Investing activities absorbed $118.1 million of our cash to fund capital additions of $126.2 million. Partially generating some of the funds necessary for our investing activities were $9.9 million from the sale of property and equipment to our franchisees and $1.8 million from collections on and sale of notes receivable, related party receivables and leases receivable. Financing activities provided us with $58.7 million in cash, primarily from the net proceeds of the issuance of our senior subordinated notes and additional borrowings under our senior credit facility. Cash flows from operating and financing activities were mainly used to repay existing indebtedness of $215.0 million, to fund the remodeling of our Hardee's restaurants to the new Star Hardee's format and to convert certain Carl's Jr. restaurants to the Carl's Jr./Green Burrito dual-brand concepts, to pay $10.7 million of deferred financing costs associated with our issuance of the senior subordinated notes, to repay $3.7 million in capital lease obligations and to pay dividends of $2.1 million. On March 4, 1999, we completed a private placement of $200.0 million aggregate principal amount of 9.125% senior subordinated notes due 2009. We received net proceeds of $194.8 million, of which $190.0 million was used to repay outstanding term loan balances under our senior credit facility. The indenture relating to the senior subordinated notes imposes certain restrictions on our ability (and the ability of our subsidiaries) to incur indebtedness, pay dividends on, redeem or repurchase our capital stock, make investments, incur liens on our assets, sell assets other than in the ordinary course of business, or enter into certain transactions with our affiliates. The senior subordinated notes represent unsecured general obligations subordinate in right of payment to our senior indebtedness, including our senior credit facility. 12 14 CKE RESTAURANTS, INC. AND SUBSIDIARIES (Continued) In connection with our private placement of senior subordinated notes, we also amended and restated our senior credit facility to increase the lenders' commitments under our revolving credit facility to $500.0 million from $250.0 million. Commitments under the amended senior credit facility will be reduced, beginning in March 2001, by a minimum of $50.0 million each year. We also increased our letter of credit sub-facility to $75.0 million from $65.0 million, and changed the maturity date of the senior credit facility to February 2004. The term loan component of the senior credit facility was eliminated as a result of these transactions. Additional borrowings under the senior credit facility may be used for working capital and other general corporate purposes, including permitted investments and acquisitions. We will be required to repay borrowings under the senior credit facility with the proceeds from (1) certain asset sales (unless the net proceeds of such sales are reinvested in our business), (2) the issuance of certain equity securities and (3) the issuance of additional indebtedness. Of the various options we have regarding interest rates, we have selected LIBOR plus a margin, with future margin adjustments dependent on certain financial ratios from time to time. Our senior credit facility contains the following significant covenants: o restrictions on our ability to incur additional indebtedness and incur liens on our assets, subject to specified exceptions; o requirements that we satisfy specified financial tests as a precondition to our acquisition of other businesses; and o limitations on making capital expenditures and certain restricted payments (including dividends and repurchases of stock) subject in certain circumstances to specified financial tests. In addition, we are required to comply with minimum EBITDA requirements, minimum interest coverage and fixed charge coverage ratios, minimum consolidated tangible net worth requirements and maximum leverage ratios. As of August 9, 1999, we were in compliance with all of our debt covenants. Our primary source of liquidity is our 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 our Hardee's restaurants to the Star Hardee's format, the remodeling of existing Taco Bueno restaurants, the conversion of restaurants to the Carl's Jr./Green Burrito dual-brand concepts and capital expenditures to be incurred in connection with our integration of Hardee's. In addition, we recently announced plans to sell to existing or new franchisees at least 350 company-operated Hardee's and Carl's Jr. units over the next 12 months. The sale of these restaurants will help us raise capital to use in our Star Hardee's remodel program and to help build new Carl's Jr. and Taco Bueno restaurants. The quick-service restaurant business generally receives simultaneous cash payment for sales. We presently reinvest the majority of the net cash flow from operations in long-term assets, primarily for the remodeling and construction of restaurants. Normal operating expenses for inventories and current liabilities generally carry longer payment terms (usually 15 to 30 days). As a result, we typically maintain current liabilities in excess of current assets. We believe that cash generated from our various restaurant concept operations, along with cash and cash equivalents on hand as of August 9, 1999 and amounts available under our senior credit facility, will provide the funds necessary to meet all of our capital spending and working capital requirements for the foreseeable future. As of August 9, 1999 we had $235.0 million of borrowings available to us under our senior credit facility. If those sources of capital, together with net proceeds from sales of restaurants, are insufficient to satisfy our capital spending and working capital requirements, or if we determine to make any significant acquisitions of or investments in other businesses, we may be required to sell additional equity or debt securities or obtain additional credit facilities. Any sales of additional equity or debt securities could result in additional dilution to our stockholders. In addition, substantially all of the real properties we own and use for our restaurant operations are unencumbered and could be used by us as collateral for additional debt financing or could be sold and subsequently leased back to us. 13 15 CKE RESTAURANTS, INC. AND SUBSIDIARIES (Continued) YEAR 2000 We are currently working to resolve the potential impact of the Year 2000 ("Y2K") on the processing of data-sensitive information by our computerized information systems. Y2K problems are the result of computer programs being written using two-digits (rather than four) to define the applicable year. Any of our programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000, which could result in miscalculations or system failures. We have investigated the impact of a Y2K problem on our business, including our operational, information and financial systems. Based on this investigation, we do not expect a Y2K problem, including the cost of making our computerized information systems Y2K compliant, to have a material adverse impact on our financial position or results of operations in future periods. However, our inability to resolve all potential Y2K problems in a timely manner could have a material adverse impact on us. We have also initiated communications with significant suppliers and vendors on whom we rely in an effort to determine the extent to which our business is vulnerable to the failure by these third parties to remediate their Y2K problems. While we have not been informed of any material risks associated with a Y2K problem for these entities, we cannot assure you that the computerized information systems of these third parties will be Y2K compliant on a timely basis. The inability of these third parties to remediate their Y2K problems could have a material adverse impact on us. We have completed a review of our information systems and are involved in a comprehensive program to upgrade computer systems and applications in connection with our effort to fully integrate our recent restaurant acquisitions. In conjunction with this computer upgrade process, we believe we will have addressed any potential Y2K issues. Total expenditures related to the upgrade of the information systems are expected to range from $25.0 million to $30.0 million and will be capitalized or expensed in accordance with generally accepted accounting principles. Through August 9, 1999, we have incurred approximately $20.5 million of expenditures consisting of hardware and software purchases, internal staff costs and outside consulting and other expenditures related to this upgrade process. These costs are being funded through operating cash flows. We have developed or are in the process of developing contingency plans to handle our most reasonably likely worst case Y2K scenarios, which we have not yet identified fully. We intend to complete our determination of worst case scenarios after we have received and analyzed responses to substantially all of the inquiries we have made of third-parties. Following this analysis, which we expect to have completed by November 1999, we intend to develop a timetable for completing our contingency plans. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Our principal exposure to financial market risks is the impact that interest rate changes could have on our $500.0 million senior credit facility, of which $211.0 million remained outstanding as of August 9, 1999. Borrowings under our senior credit facility bear interest at the prime rate or at LIBOR plus an applicable margin based on certain financial ratios (averaging 6.5% in fiscal 2000). A hypothetical increase of 100 basis points in short-term interest rates would result in a reduction of approximately $2.1 million in annual pre-tax earnings. The estimated reduction is based upon the outstanding balance of our senior credit facility, and assumes no change in the volume, index or composition of debt at August 9, 1999. Substantially all of our business is transacted in U.S. dollars. Accordingly, foreign exchange rate fluctuations have never had a significant impact on us and are not expected to in the foreseeable future. 14 16 CKE RESTAURANTS, INC. AND SUBSIDIARIES (Continued) 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. 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 commodity cost increases which are significant and appear to be long-term in nature by adjusting our menu pricing or changing our product delivery strategy. However, increases in commodity prices could result in lower restaurant-level operating margins for our restaurant concepts. PART II. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS (c) During the second quarter of fiscal 2000, the Company issued 54,501 shares of common stock in connection with the release of certain claims asserted against the Company relating to the operations of Boston West, LLC. The shares of common stock were issued pursuant to Section 4 (2) of the Securities Act of 1933 as a transaction by an issuer not involving any public offering. The Company believes that all of the purchasers were familiar with and had access to information concerning the operations and financial condition of the Company and had the required investment intent. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS The Annual Meeting of Stockholders of CKE Restaurants, Inc. was held on June 15, 1999, for the purpose of electing certain members of the board of directors and to approve the CKE Restaurants, Inc. 1999 Stock Incentive Plan and ratification of Stock Option Grants. 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" ------------ ------------------ Daniel D. Lane 44,699,689 399,858 Peter Churm 44,691,226 348,321
The following individuals continue to serve on the board of directors: Byron Allumbaugh, William P. Foley, Carl L. Karcher, Carl N. Karcher, W. Howard Lester and Frank P. Willey. The proposal to approve the CKE Restaurants, Inc. 1999 Stock Incentive Plan and ratification of Stock Option Grants received the following votes:
Votes Percentage ---------- ---------- Shares Voted "For" 21,889,935 57.16% Shares Voted "Against" 16,247,485 42.43% Shares Voted "Abstain" 156,669 .41%
15 17 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 11 Calculation of Earnings Per Share. 12-1 Computation of Ratios 27-1 Financial Data Schedule (included only with electronic filing). (b) Current Reports on Form 8-K: None. 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, 1999 /s/ Carl A. Strunk ------------------ --------------------------- Date Executive Vice President, Chief Financial Officer 16 18 EXHIBIT INDEX
Exhibit # Description --------- ----------- 11 Calculation of Earnings Per Share. 12-1 Computation of Ratios 27-1 Financial Data Schedule (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 9, August 10, August 9, August 10, 1999 1998 1999 1998 ------- -------- ------- -------- BASIC EARNINGS PER SHARE Income before extraordinary item $10,298 $22,604 $29,428 $45,336 Extraordinary item - gain on early retirement of debt, net of applicable income taxes of $186 -- -- 290 -- ------- ------- ------- ------- Net income $10,298 $22,604 $29,718 $45,336 ======= ======= ======= ======= Weighted average number of common shares outstanding during the period 52,009 51,503 51,934 51,366 ======= ======= ======= ======= Basic earnings per share before extraordinary item $ 0.20 $ 0.44 $ 0.56 $ 0.88 Extraordinary item - gain on early retirement of debt, net of applicable income taxes - basic -- -- .01 -- ------- ------- ------- ------- Basic net income per share $ 0.20 $ 0.44 $ 0.57 $ 0.88 ======= ======= ======= ======= DILUTED EARNINGS PER SHARE Income before extraordinary item $10,298 $22,604 $29,428 $45,336 Interest expense and amortization of debt issuance costs, net of income tax effect applicable to convertible subordinated notes 1,049 1,301 2,464 2,317 ------- ------- ------- ------- Diluted income before extraordinary item $11,347 $23,905 $31,892 $47,653 Extraordinary item - gain on early retirement of debt, net of applicable income taxes of $186 -- -- 290 -- ------- ------- ------- ------- Diluted net income $11,347 $23,905 $32,182 $47,653 ======= ======= ======= ======= Weighted average number of common shares outstanding during the period 52,009 51,503 51,934 51,366 Incremental common shares attributable to: Exercise of outstanding options 544 1,562 691 1,631 Issuance of convertible subordinated notes 3,633 4,500 3,638 3,576 ------- ------- ------- ------- Total shares 56,186 57,565 56,263 56,573 ======= ======= ======= ======= Diluted net income per share before extraordinary item $ 0.20 $ 0.42 $ 0.56 $ 0.84 Extraordinary item - gain on early retirement of debt, net of applicable income taxes - diluted -- -- .01 -- ------- ------- ------- ------- Diluted earnings per share $ 0.20 $ 0.42 $ 0.57 $ 0.84 ======= ======= ======= =======
EX-12.1 3 COMPUTATION OF RATIOS 1 EXHIBIT 12-1 CKE RESTAURANTS, INC. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollars in thousands)
Twenty-eight Weeks Ended ----------------------------- August 9, August 10, 1999 1998 ---------- ---------- Earnings before fixed charges: Income before income taxes and extraordinary item.................................... $ 29,428 $ 45,336 Fixed charges................................................ 45,211 36,593 ---------- ---------- $ 74,639 $ 81,929 ========== ========== Fixed charges: Interest expense......................................... $ 29,170 $ 21,842 Interest component of rent expense (1)................... 16,041 14,751 ---------- ---------- $ 45,211 $ 36,593 ========== ========== Ratio of earnings to fixed charges........................... 1.7x 2.2x ========== ==========
- ----------- (1) Calculated as one-third of total rent expense EX-27.1 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) CKE RESTAURANTS, INC. CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF INCOME AS OF AND FOR THE 28-WEEKS ENDED AUGUST 9, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-Q FOR THE QUARTERLY PERIOD ENDED AUGUST 9, 1999. 1,000 6-MOS JAN-31-2000 JAN-26-1999 AUG-09-1999 43,548 0 60,239 0 25,951 137,017 1,308,360 293,915 1,582,548 197,417 0 521 0 0 616,007 1,582,548 970,168 1,060,982 783,119 982,230 1,077 0 29,170 48,505 19,707 29,428 0 290 0 29,718 .57 .57
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