SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported):
AUGUST 20, 1997
CARROLS CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
<TABLE>
<CAPTION>
1-6553 16-0958146
<S> <C> <C>
(Commission File No.) (IRS Employer
Identification No.)
</TABLE>
968 James Street, Syracuse, New York 13203
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(315) 424-0513
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2 - ACQUISITION OR DISPOSITION OF ASSETS
As reported on Form 8-K dated August 20, 1997, filed September 4, 1997,
the Company acquired 63 Burger King restaurants for an aggregate purchase
price of approximately $52 million in cash, pursuant to a Purchase
Agreement, dated as of July 7, 1997, among the Company and Richard D.
Fors, Jr., Charles J. Mund, Charles J. Mund, Jr., Eric W. Mund, William
J. O'Donnell, John T. Sweeney, William J. Reznicek and certain other
individuals and entities signatory thereto.
This Form 8-K/A includes the interim financial statements and pro forma
financial information required by items 7(a) and 7(b) to Form 8-K.
2
<PAGE>
ITEM 7 - FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The 63 Burger King restaurants acquired by the Company were
affiliated with Resser Management Corporation, Pennyline Group,
Incorporated and Derby Management Corporation. These three
corporations were not acquired by Carrols Corporation. Combined
Financial Statements for the years ended December 31, 1996, 1995 and
1994 for the 63 Burger King Franchisees and the independent auditors
report thereon, together with the notes thereto, were previously
filed with Form 8-K on September 4, 1997.
The unaudited Interim Combined Financial Statements of the Burger
King Franchisees for the six months ended June 30, 1997 and 1996 are
located at pages 5 through 7 of this report.
(B) PRO FORMA FINANCIAL INFORMATION
The following unaudited Pro Forma Consolidated Financial Statements
are filed with this report:
PAGES
Pro Forma Consolidated Balance Sheet
at June 30, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 9-10
Pro Forma Consolidated Statement of Operations
for the six months ended
June 30, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 11
Pro Forma Consolidated Balance Sheet
at December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 12-13
Pro Forma Consolidated Statement of Operations
for the year ended
December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 14
(C) EXHIBITS
None.
3
<PAGE>
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 hereunto duly authorized.
Dated: November 3, 1997
CARROLS CORPORATION
By: ______________________________
Paul R. Flanders
Vice President - Finance
4
<PAGE>
BURGER KING FRANCHISEES AFFILIATED WITH RESSER MANAGEMENT CORP.,
PENNYLINE GROUP, INC. AND DERBY MANAGEMENT CORP.
COMBINED BALANCE SHEET
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Current Assets:
Cash $ 656,349
Inventories 374,053
Notes receivable - related party landlord 31,768
Notes receivable - management companies 15,689,291
Prepaid expenses and other current assets 627,500
Total current assets 17,378,961
Property and Equipment:
Building 352,907
Restaurant equipment 16,114,825
Leasehold improvements 6,593,802
Total property and equipment, at cost 23,061,534
Less: accumulated depreciation (17,574,574)
Net property and equipment 5,486,960
Other Assets:
Deferred charges - net 1,416,805
Note receivable - related party landlord,
net of current portion 369,945
Long-term notes receivable - management
companies 5,350,000
Security deposits 23,050
Total other assets 7,159,800
$ 30,025,721
LIABILITIES AND EQUITY:
Current liabilities:
Notes payable to-
Banks $ 641,811
Supplier 34,701
Stockholders 70,008
Accounts payable 1,035,393
Taxes withheld and payable 489,269
Accrued expenses and other current liabilities 575,731
Total current liabilities 2,846,913
Notes payable, net of current portion-
Banks 2,647,509
Supplier 153,718
Stockholders 1,283,281
Total liabilities 6,931,421
Equity:
Common stock 490,706
Additional paid-in capital 5,901,551
Retained earnings 16,593,347
Members' capital 108,696
Total equity 23,094,300
$ 30,025,721
</TABLE>
5
<PAGE>
BURGER KING FRANCHISEES AFFILIATED WITH RESSER MANAGEMENT CORP.,
PENNYLINE GROUP, INC. AND DERBY MANAGEMENT CORP.
COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
_______ SIX MONTHS
ENDED_______
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C> <C>
Sales $ 31,639,539 $ 29,710,001
Cost of goods sold
Food 7,637,222 7,107,863
Paper 894,663 880,690
Total cost of goods sold 8,531,885 7,988,553
Gross profit 23,107,654 21,721,448
Operating and administrative expenses:
Salaries and wages 5,505,458 4,856,373
Payroll taxes and other employee benefits 773,100 773,755
Accounting 272,044 261,375
Advertising 1,524,271 1,461,515
Amortization of deferred charges 65,050 65,403
Depreciation 607,800 531,284
Electric and gas 1,200,794 1,130,956
Hauling of waste 116,005 112,499
Insurance 130,411 101,564
Interest 140,919 126,424
Kitchen and dining room supplies 263,349 233,291
Promotion 943,003 876,668
Rent 2,705,825 2,534,154
Repairs and maintenance 757,277 731,782
Royalties 1,107,538 1,040,022
Taxes and licenses 499,645 478,228
Other operating expenses 335,860 310,624
Fees to affiliated companies-
Management 1,528,759 1,415,506
Administrative 2,357,894 2,139,996
Consulting 500,247 496,445
Total operating and administrative expenses 21,335,249 19,677,864
Income from operations 1,772,405 2,043,584
Interest income - affiliated companies 663,656 567,553
Net Income $ 2,436,061 $ 2,611,137
</TABLE>
6
<PAGE>
BURGER KING FRANCHISEES AFFILIATED WITH RESSER MANAGEMENT CORP.,
PENNYLINE GROUP, INC. AND DERBY MANAGEMENT CORP.
COMBINED STATEMENTS OF CASH FLOWS
(UNAUDITED)
______ SIX MONTHS
ENDED________
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 2,436,061 $ 2,611,137
Adjustments to reconcile net income to net cash flow from
operating activities:
Depreciation and amortization 672,850 596,687
Effect of changes in operating assets and liabilities (620,924) 405,967
Net cash provided by operating activities 2,487,987 3,613,791
Cash flows from investing activities:
Capital expenditures (893,685) (999,258)
Net increase in notes receivable - management companies (249,028) (1,588,971)
Net increase (decrease) in note receivable - related party 20,378 (401,927)
Other (60,863) (23,396)
Net cash used in investing activities (1,183,198) (3,013,552)
Cash flows from financing activities:
Increase in notes payable to banks and supplier 583,267 702,037
Dividends paid to stockholders (1,762,000) (1,146,667)
Other (26,802) (183,526)
Net cash used in financing activities (1,205,535) (628,156)
Net increase (decrease) in cash 99,254 (27,917)
Cash, beginning of period 557,095 676,279
Cash, end of period $ 656,349 $ 648,362
</TABLE>
7
<PAGE>
CARROLS CORPORATION
PRO FORMA CONSOLIDATED FINANCIAL DATA
(UNAUDITED)
The unaudited Pro Forma Consolidated Balance Sheets at June 30, 1997 and
December 31, 1996 reflect pro forma adjustments that were computed
assuming the acquisition had occurred on June 30, 1997 and December 31,
1996, respectively. The June 30, 1997 and December 31, 1996 unaudited
Pro Forma Consolidated Statements of Operations reflect pro forma
adjustments assuming the acquisition had occurred on January 1, 1997 and
January 1, 1996 respectively.
The unaudited pro forma consolidated financial statements have been
prepared by Registrant based upon assumptions deemed proper by it. The
unaudited pro forma consolidated financial statements presented herein
are shown for illustrative purposes only and are not necessarily
indicative of the future financial position or future results of
operations of Registrant, or of the financial position or results of
operations of Registrant that would have actually occurred had the
transaction been in effect as of the date or for the periods presented.
The unaudited pro forma consolidated financial statements should be read
in conjunction with the Registrant's (i) historical financial statements
and related notes and (ii) Management's Discussion and Analysis of
Financial Condition and Results of Operations.
8
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Carrols Pro Forma Pro Forma
AS REPORTED ADJUSTMENTS TOTAL
ASSETS:
Current assets:
Cash and cash equivalents $ 3,320,000 $ 3,320,000
Trade and other receivables, net 382,000 382,000
Inventories 2,391,000 $ 380,000 (a) 2,771,000
Prepaid real estate taxes 565,000 565,000
Deferred income taxes 3,264,000 3,264,000
Prepaid expenses and other current assets 1,066,000 _________ 1,066,000
Total current assets 10,988,000 380,000 11,368,000
Property & equipment, at cost:
Land 9,513,000 655,000 (a) 10,168,000
Buildings and improvements 16,533,000 1,122,000 (a) 17,655,000
Leasehold improvements 39,329,000 39,329,000
Equipment 51,888,000 8,457,000 (a) 60,345,000
Capital leases 14,548,000 14,548,000
Construction in progress 1,760,000 _________ 1,760,000
133,571,000 10,234,000 143,805,000
Less: accumulated depreciation and amortization (67,190,000) _________ (67,190,000)
Net property & equipment 66,381,000 10,234,000 76,615,000
Franchise rights, net 65,944,000 41,677,000 (a) 107,621,000
Beneficial leases, net 6,486,000 6,486,000
Excess cost over fair value of assets acquired, net 1,704,000 1,704,000
Deferred income taxes 7,422,000 7,422,000
Other assets 8,071,000 (161,000) (a) 7,910,000
$166,996,000 $ 52,130,000 $219,126,000
</TABLE>
9
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Carrols Pro Forma Pro Forma
AS REPORTED ADJUSTMENTS TOTAL
LIABILITIES AND STOCKHOLDER'S EQUITY:
Current liabilities:
Current portion of long-term debt $ 580,000 $ 580,000
Current portion of capital lease obligations 491,000 491,000
Accounts payable 5,897,000 5,897,000
Accrued liabilities:
Payroll and employee benefits 3,467,000 3,467,000
Taxes - income and other 1,674,000 1,674,000
Interest 4,743,000 4,743,000
Other 3,522,000 $ 230,000 (a) 3,752,000
Total current liabilities 20,374,000 230,000 20,604,000
Long-term debt, net of current portion 120,635,000 51,900,000 (a) 172,535,000
Capital lease obligations, net of current portion 2,281,000 2,281,000
Deferred income - sale/leaseback of real estate 2,094,000 2,094,000
Accrued postretirement benefits 1,557,000 1,557,000
Other liabilities 2,397,000 _________ 2,397,000
Total liabilities 149,338,000 52,130,000 201,468,000
Stockholder's equity:
Common stock 10 10
Additional paid-in capital 30,547,990 30,547,990
Accumulated deficit (12,890,000) _________ (12,890,000)
Total stockholder's equity 17,658,000 _________ 17,658,000
$166,996,000 $ 52,130,000 $219,126,000
</TABLE>
(a) To reflect the assets and liabilities acquired related to the purchase of
sixty-three restaurants on August 20, 1997 financed with approximately
$51.9 million of long-term debt.
10
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
63 Burger King
<S> <C> <C> <C> <C>
Carrols Franchisees Pro Forma Pro Forma
AS REPORTED HISTORICAL ADJUSTMENTS TOTAL
Revenues:
Sales $ 130,542,000 $ 31,640,000 $ 162,182,000
Other income 145,000 _________ ________ 145,000
130,687,000 31,640,000 162,327,000
Costs and expenses:
Cost of sales 37,302,000 8,532,000 45,834,000
Restaurant wages & related expenses 40,605,000 6,279,000 $ 2,759,000 (e) 49,643,000
Other restaurant operating expenses 26,716,000 7,117,000 33,833,000
Depreciation and amortization 6,836,000 673,000 480,000 (c) 7,989,000
Administrative expenses 5,800,000 4,659,000 (4,029,000) (d) 6,430,000
Advertising expenses 5,791,000 2,467,000 8,258,000
__________ __________ _________ ___________
Total operating expenses 123,050,000 29,727,000 (790,000) 151,987,000
Operating income 7,637,000 1,913,000 790,000 10,340,000
Interest:
Income - affiliates (664,000) 664,000 (b)
Expense 7,081,000 141,000 1,964,000 (b) 9,186,000
7,081,000 (523,000) 2,628,000 9,186,000
Income before taxes 556,000 2,436,000 (1,838,000) 1,154,000
Provision for taxes 372,000 _________ 239,000 (f) 611,000
NET INCOME $ 184,000 $ 2,436,000 $ (2,077,000) $ 543,000
</TABLE>
(b) To remove acquired Company's interest income/expense and reflect
Carrols' estimated interest expense on the purchase price of the
acquisition. Carrols' six month June 1997 average debt interest rate of
8.1% was used.
(c) To remove acquired Company's depreciation and amortization and reflect
Carrols' estimated depreciation and amortization expense for acquired
equipment, franchise fees and lease acquisition costs.
(d) To remove acquired Company's accounting charges, administrative cost
charges, consulting fees and management fees charged to the restaurants
that would not be incurred by Carrols.
(e) To reflect costs that would be incurred directly by the restaurant
entities in operating the restaurants as stand-alone Burger King
restaurants but were instead incurred by affiliated companies,
specifically Resser Management Corp., Pennyline Group, Inc. and Derby
Management Corp which were not acquired by Carrols. These costs include
costs of insurance, salary and benefits of restaurant managers and costs
relating to recruiting and training restaurant employees.
(f) To reflect tax expense as if the acquired Company was taxed as a C
corporation at a 40% effective tax rate.
11
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Carrols Pro Forma Pro Forma
<S> <C> <C> <C>
AS REPORTED ADJUSTMENTS TOTAL
ASSETS:
Current assets:
Cash and cash equivalents $ 1,314,000 $ 1,314,000
Trade and other receivables, net 793,000 793,000
Inventories 2,163,000 $ 380,000 (a) 2,543,000
Prepaid real estate taxes 725,000 725,000
Deferred income taxes 3,264,000 3,264,000
Prepaid expenses and other current assets 932,000 ________ 932,000
Total current assets 9,191,000 380,000 9,571,000
Property & equipment, at cost:
Land 9,066,000 655,000 (a) 9,721,000
Buildings and improvements 16,175,000 1,122,000 (a) 17,297,000
Leasehold improvements 38,816,000 38,816,000
Equipment 46,834,000 8,457,000 (a) 55,291,000
Capital leases 14,548,000 _________ 14,548,000
125,439,000 10,234,000 135,673,000
Less: accumulated depreciation and amortization (63,356,000) _________ (63,356,000)
Net property & equipment 62,083,000 10,234,000 72,317,000
Franchise rights, net 46,203,000 41,677,000 (a) 87,880,000
Beneficial leases, net 6,907,000 6,907,000
Excess cost over fair value of assets acquired, net 1,733,000 1,733,000
Deferred income taxes 6,637,000 6,637,000
Other assets 5,834,000 29,000 (a) 5,863,000
$138,588,000 $ 52,320,000 $190,908,000
</TABLE>
12
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Carrols Pro Forma Pro Forma
<S> <C> <C> <C>
AS REPORTED ADJUSTMENTS TOTAL
LIABILITIES AND STOCKHOLDER'S DEFICIT:
Current liabilities:
Current portion of long-term debt $ 8,000 $ 8,000
Current portion of capital lease
obligations 574,000 574,000
Accounts payable 9,319,000 9,319,000
Accrued liabilities:
Payroll and employee benefits 3,837,000 3,837,000
Taxes 2,334,000 2,334,000
Interest 4,741,000 4,741,000
Other 3,382,000 $ 420,000 (a) 3,802,000
Total current liabilities 24,195,000 420,000 24,615,000
Long-term debt, net of current portion 118,180,000 51,900,000 (a) 170,080,000
Capital lease obligations, net of current portion 2,503,000 2,503,000
Deferred income - sale/leaseback of real estate 2,154,000 2,154,000
Accrued postretirement benefits 1,522,000 1,522,000
Other liabilities 1,696,000 __________ 1,696,000
Total liabilities 150,250,000 52,320,000 202,570,000
Stockholder's deficit:
Common stock 10 10
Additional paid-in capital 1,411,990 1,411,990
Accumulated deficit (10,574,000) (10,574,000)
Less: Note receivable - redemption of
warrants (2,500,000) __________ (2,500,000)
Total stockholder's deficit (11,662,000) __________ (11,662,000)
$ 138,588,000 $ 52,320,000 $ 190,908,000
</TABLE>
(a) To reflect the assets and liabilities acquired related to the purchase of
sixty-three restaurants on August 20, 1997 financed with approximately
$51.9 million of long-term debt.
13
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
63 Burger King
<S> <C> <C> <C> <C>
Carrols Franchisees Pro Forma Pro Forma
AS REPORTED HISTORICAL ADJUSTMENTS TOTAL
Revenues:
Sales $ 240,809,000 $ 62,444,000 $ 303,253,000
Other income 316,000 _________ __________ 316,000
241,125,000 62,444,000 303,569,000
Costs and expenses:
Cost of sales 68,031,000 16,984,000 85,015,000
Restaurant wages & related expenses 70,894,000 11,822,000 $ 5,444,000 (e) 88,160,000
Other restaurant operating expenses 48,683,000 13,753,000 62,436,000
Depreciation and amortization 11,015,000 1,186,000 1,120,000 (c) 13,321,000
Administrative expenses 10,703,000 9,000,000 (7,740,000) (d) 11,963,000
Advertising expenses 10,798,000 4,678,000 15,476,000
Costs associated with change
in control 509,000 ___________ _________ 509,000
Total operating expenses 220,633,000 57,423,000 (1,176,000) 276,880,000
Operating income 20,492,000 5,021,000 1,176,000 26,689,000
Interest:
Income - affiliates (1,241,000) 1,241,000 (b)
Expense 14,209,000 286,000 3,931,000 (b) 18,426,000
14,209,000 (955,000) 5,172,000 18,426,000
Income before taxes 6,283,000 5,976,000 (3,996,000) 8,263,000
Provision for taxes 3,100,000 _________ 792,000 (f) 3,892,000
NET INCOME $ 3,183,000 $ 5,976,000 $( 4,788,000) $ 4,371,000
</TABLE>
(b) To remove acquired Company's interest income/expense and reflect
Carrols' estimated interest expense on the purchase price of the
acquisition. Carrols' annual 1996 average debt interest rate of 8.1%
was used.
(c) To remove acquired Company's depreciation and amortization and reflect
Carrols' estimated depreciation and amortization expense for acquired
equipment, franchise fees and lease acquisition costs.
(d) To remove acquired Company's accounting charges, administrative cost
charges, consulting fees and management fees charged to the restaurants
that would not be incurred by Carrols.
(e) To reflect costs that would be incurred directly by the restaurant
entities in operating the restaurants as stand-alone Burger King
restaurants but were instead incurred by affiliated companies,
specifically Resser Management Corp., Pennyline Group, Inc. and Derby
Management Corp which were not acquired by Carrols. These costs
include costs of insurance, salary and benefits of restaurant managers
and costs relating to recruiting and training restaurant employees.
(f) To reflect tax expense as if the acquired Company was taxed as a C
corporation at a 40% effective tax rate.
14
