<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] Quarterly report pursuant to section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1999
or
[ ] Transition report pursuant to section 13 or 15 (d) of the Securities
Exchange Act of 1934
Commission File Number
0-25629
CARROLS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 16-0958146
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
968 James Street
Syracuse, New York 13203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (315) 424-0513
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Common stock, par value $1.00, outstanding at August 18, 1999: 10 shares
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<PAGE>
PART 1 - FINANCIAL INFORMATION
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1999 1998
- ------ ------------ -----------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 737,000 $ 6,777,000
Trade and other receivables 204,000 1,060,000
Inventories 3,646,000 3,431,000
Prepaid real estate taxes 728,000 796,000
Prepaid expenses and other current assets 3,066,000 2,768,000
Refundable income taxes 2,664,000 4,588,000
Deferred income taxes 3,923,000 3,956,000
----------- -----------
Total current assets 14,968,000 23,376,000
Property and equipment, at cost less accumulated
depreciation and amortization of $86,166,000
and $77,451,000, respectively 105,190,000 107,669,000
Franchise rights, at cost less accumulated
amortization of $32,676,000 and $29,819,000,
respectively 103,554,000 106,041,000
Intangible assets, at cost less accumulated
amortization of $10,707,000 and $9,630,000
respectively 68,457,000 69,167,000
Other assets 10,036,000 10,367,000
Deferred income taxes 2,896,000 2,986,000
------------- -------------
$ 305,101,000 $ 319,606,000
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
<TABLE>
<CAPTION>
June 30, December 31,
LIABILITIES and STOCKHOLDER'S EQUITY 1999 1998
- ------------------------------------ ------------ -------------
(unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 14,714,000 $ 10,614,000
Accrued interest 1,747,000 2,012,000
Accrued payroll, related taxes and benefits 6,960,000 9,390,000
Other liabilities 7,490,000 9,431,000
Current portion of long-term debt 3,620,000 3,200,000
Current portion of capital lease obligations 256,000 296,000
------------ ------------
Total current liabilities 34,787,000 34,943,000
Long-term debt, net of current portion 240,853,000 256,285,000
Capital lease obligations, net of current portion 1,623,000 1,741,000
Deferred income - sale/leaseback of real estate 4,518,000 4,274,000
Accrued postretirement benefits 1,801,000 1,708,000
Other liabilities 8,175,000 6,657,000
------------ ------------
Total liabilities 291,757,000 305,608,000
Stockholder's equity:
Common stock, par value $1; authorized 1,000 shares,
issued and outstanding - 10 shares 10 10
Additional paid-in capital 24,484,990 24,484,990
Accumulated deficit (11,141,000) (10,487,000)
------------ ------------
Total stockholder's equity 13,344,000 13,998,000
------------ ------------
$305,101,000 $ 319,606,000
============ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
(13 Weeks) (14 Weeks)
(unaudited)
<S> <C> <C>
Revenues:
Restaurant sales $ 115,745,000 $ 105,807,000
Franchise fees and royalty revenues 217,000 -
------------- -------------
Total revenues 115,962,000 $ 105,807,000
Costs and expenses:
Cost of sales 35,651,000 30,234,000
Restaurant wages and related expenses 33,471,000 29,999,000
Other restaurant operating expenses 21,804,000 20,412,000
Advertising expense 5,185,000 4,866,000
General and administrative 5,322,000 4,318,000
Depreciation and amortization 5,766,000 4,757,000
------------- -------------
Total operating expenses 107,199,000 94,586,000
------------- -------------
Income from operations 8,763,000 11,221,000
Interest expense 5,578,000 4,563,000
------------- -------------
Income before income taxes 3,185,000 6,658,000
Provision for income taxes 1,780,000 2,996,000
------------- -------------
Net income $ 1,405,000 $ 3,662,000
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
(26 Weeks) (27 Weeks)
(unaudited)
<S> <C> <C>
Revenues:
Restaurant sales $ 220,408,000 $ 193,258,000
Franchise fees and royalty revenues 489,000 -
------------- -------------
Total revenues 220,897,000 193,258,000
Costs and expenses:
Cost of sales 67,020,000 55,625,000
Restaurant wages and related expenses 65,759,000 56,755,000
Other restaurant operating expenses 43,439,000 38,703,000
Advertising expense 9,635,000 8,871,000
General and administrative 11,297,000 8,067,000
Depreciation and amortization 11,538,000 8,960,000
------------- -------------
Total operating expenses 208,688,000 176,981,000
------------- -------------
Income from operations 12,209,000 16,277,000
Interest expense 11,291,000 8,897,000
------------- -------------
Income before income taxes and extraordinary loss 918,000 7,380,000
Provision for income taxes 632,000 3,323,000
------------- -------------
Income before extraordinary loss 286,000 4,057,000
Extraordinary loss on write-off of debt issue costs, net of taxes 940,000 -
------------- -------------
Net income (loss) $ (654,000) $ 4,057,000
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
(26 Weeks) (27 Weeks)
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (654,000) $ 4,057,000
Adjustments to reconcile net income (loss) to cash provided
by operating activities:
Depreciation and amortization 11,538,000 8,960,000
Deferred income taxes 123,000 77,000
Gain on sale of property and equipment - (119,000)
Extraordinary loss on write-off of debt issue costs, net of tax 940,000 -
Change in operating assets and liabilities 5,609,000 7,102,000
----------- -----------
Cash provided by operating activities 17,556,000 20,077,000
----------- -----------
Cash flows from investing activities:
Capital expenditures:
New restaurant development (4,731,000) (3,637,000)
Remodels and other capital expenditures (16,520,000) (8,167,000)
Acquisitions of restaurants (544,000) (620,000)
Proceeds from sales of property and equipment - 416,000
----------- -----------
Net cash used for investing activities (21,795,000) (12,008,000)
----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt (15,012,000) (3,934,000)
Financing costs associated with senior credit facility refinancing (878,000) -
Principal payments on capital leases (158,000) (250,000)
Proceeds from sale-leaseback transactions 14,247,000 1,702,000
Dividends paid - (3,878,000)
----------- -----------
Net cash used for financing activities (1,801,000) (6,360,000)
----------- -----------
Increase (decrease) in cash and cash equivalents (6,040,000) 1,709,000
Cash and cash equivalents, beginning of period 6,777,000 2,252,000
----------- -----------
Cash and cash equivalents, end of period $ 737,000 $ 3,961,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Statement of Management
-----------------------
The accompanying consolidated financial statements have been prepared
without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission and do not include all of the information and
the footnotes required by generally accepted accounting principles for
complete statements. In the opinion of management, all normal and
recurring adjustments necessary for a fair presentation of such
financial statements have been included.
The Company uses a 52-53 week fiscal year ending on the Sunday closest
to December 31. Fiscal 1998 contained 53 weeks and the Company has
historically included the extra week in its second fiscal quarter.
Accordingly, the three and six months results of operations and cash
flows ending June 30, 1998 include 14 weeks and 27 weeks, respectively.
The results of operations for the three and six months ended June 30,
1999 and 1998 are not necessarily indicative of the results to be
expected for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
These consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto for the
year ended December 31, 1998 contained in our 1998 Annual Report on
Form 10-K. The December 31, 1998 balance sheet data is derived from
these audited financial statements.
Certain amounts for the prior year have been reclassified to conform to
the current year presentation.
2. Income Taxes
------------
The income tax provision for the six months ended June 30, 1999 and
1998 was comprised of the following:
1999 1998
-------- -----------
Current $509,000 $ 3,248,000
Deferred 123,000 75,000
--------- -----------
$ 632,000 $ 3,323,000
========= ===========
7
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS (continued)
For 1999 and 1998 the difference between the expected tax provision
resulting from application of the federal statutory income tax rate to
pre-tax income and the reported income tax provision result principally
from state taxes and non-deductible amortization of franchise rights
and other intangibles.
3. Summarized Financial Information of Certain Subsidiaries
--------------------------------------------------------
The following table presents summarized combined financial information
for the following wholly-owned subsidiaries, whom unconditionally
guarantee the $170.0 million senior subordinated notes of the Company:
Carrols Realty Holdings, Carrols Realty I Corp., Carrols Realty II
Corp., Carrols J.G. Corp., Quanta Advertising Corp., Pollo Franchise
Inc. and Pollo Operations, Inc.
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- -----------
<S> <C> <C>
Balance sheet:
Current assets $ 2,417,000 $ 910,000
Non-current assets 85,945,000 89,922,000
Current liabilities 4,806,000 7,401,000
Non-current liabilities 1,915,000 1,845,000
<CAPTION>
Six Months Ended June 30,
1999 1998
----------- -----------
<S> <C> <C>
Statement of Operations:
Revenues $ 42,266,000 $ 113,000
Operating expenses 35,615,000 113,000
Income from operations 6,651,000 -
Net income 2,736,000 -
</TABLE>
8
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS (continued)
4. Business Segment Information
The Company is engaged in the quick-service restaurant industry, with
two restaurant concepts: Burger King, operating as a franchisee, and
Pollo Tropical, a Company owned concept. The Company's Burger King
restaurants are all located in the United States, primarily in the
Northeast, Southeast and Midwest. Pollo Tropical is a regional quick-
service restaurant chain featuring grilled marinated chicken and
authentic "made from scratch" side dishes. Pollo Tropical's core
markets are located in south and central Florida.
Segment information as of and for the six months ended June 30, 1998 is
not presented, since the Pollo Tropical acquisition did not occur until
July 9, 1998 and previous to this, we operated our business as one
segment whose results are reflected in the June 30, 1998 Statement of
Operations. Segment information for Burger King restaurants and Pollo
Tropical for the six months ended June 30, 1999 is shown in the
following table. The "Other" column includes corporate related items
not allocated to reportable segments and for income from operations,
principally corporate depreciation and amortization. Other identifiable
assets consist primarily of franchise rights and intangible assets.
Non-operating expenses, comprised of interest expense and the
extraordinary loss, are corporate related items and therefore have not
been allocated to the reportable segments.
<TABLE>
<CAPTION>
Six Months Ended June 30, 1999
------------------------------
Burger
King Pollo
Restaurants Tropical Other Consolidated
----------- -------- -------- ------------
($ in 000's)
<S> <C> <C> <C> <C>
Revenues $ 178,965 $ 41,932 $ - $ 220,897
Cost of sales 52,543 14,477 - 67,020
Restaurant wages and related
expenses 56,315 9,444 - 65,759
Depreciation and amortization 6,394 976 4,168 11,538
Income from operations 8,812 7,565 (4,168) 12,209
Identifiable assets 192,314 20,608 92,179 305,101
Capital expenditures, excluding
acquisitions 14,752 5,919 580 21,251
</TABLE>
9
<PAGE>
CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS (continued)
5. Acquisitions
------------
On July 9, 1998, the Company consummated the purchase of the
outstanding common stock of Pollo Tropical Inc. ("Pollo Tropical") for
an approximate cash purchase price of $94.6 million and on July 20,
1998 merged Pollo Tropical into the Company. Pollo Tropical operates
and franchises quick-service restaurants featuring fresh grilled
chicken marinated in a proprietary blend of tropical fruit juices and
spices and authentic "made from scratch" side dishes. The Pollo
Tropical acquisition has been accounted for by the purchase method of
accounting. The excess purchase price over net assets acquired is
included in intangible assets and is amortized over 40 years using the
straight-line method.
The following proforma results of operations for the six months ended
June 30, 1998 assume this acquisition occurred as of the beginning of
the period:
Revenues $ 229,160,000
Income from operations $ 21,629,000
Net income $ 4,765,000
The preceding proforma financial information is not necessarily
indicative of the operating results that would have occurred had the
acquisition been consummated as of the beginning of the period, nor are
they necessarily indicative of future operating results.
6. Extraordinary Loss
------------------
On February 12, 1999, the Company entered into a new senior credit
facility with Chase Bank of Texas, National Association, as agent and
lender, and other lenders as parties thereto. In connection with this
transaction, we have recognized an extraordinary loss of $940,000, net
of $885,000 in income taxes, in the first quarter of 1999. This loss
represents the write-off of unamortized debt issue costs related to the
previous senior credit facility.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Overview
- --------
As of June 30, 1999, we operated 346 Burger King restaurants located in 13
Northeastern, Midwestern and Southeastern states and owned and operated 42 Pollo
Tropical restaurants in Florida. In addition, at June 30, 1999, we franchised 24
Pollo Tropical restaurants in the Caribbean, Central and South America and
Miami. In July 1998, the Company acquired Pollo Tropical, Inc. which owned and
operated 36 restaurants. Since June 30, 1998, the Company has built nine Burger
King restaurants, acquired two Burger King restaurants and closed five
under-performing Burger King restaurants. Comparable store sales data is for a
comparable number of weeks for each period discussed.
Results of Operations
- ---------------------
Three Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998
The following table sets forth, for the three months ended June 30, 1999 and
1998, selected operating results as a percentage of restaurant sales:
1999 1998
---- ----
Restaurant sales:
Burger King restaurants 82.4% 100.0%
Pollo Tropical 17.6 -
----- -----
100.0 100.0
Costs and expenses:
Cost of sales 30.8 28.6
Restaurant wages and related expenses 28.9 28.3
Other restaurant expenses including advertising 23.3 23.9
General and administrative 4.6 4.1
Depreciation and amortization 5.0 4.5
----- -----
Income from restaurant operations 7.4% 10.6%
===== =====
Restaurant Sales
- ----------------
Restaurant sales for the three months ended June 30, 1999, increased 9.4% to
$115.7 million from $105.8 million in the first quarter of 1998. The increase in
sales was primarily the result of the acquisition of Pollo Tropical in July
1998, whose total restaurant sales were $20.3 million in the second quarter of
1999. The second quarter of 1998 contained an additional week which had $7.3
million in restaurant sales. Sales at our comparable Burger King restaurants
(those units operating for the entirety of the compared periods) decreased 4.4%
for the second quarter of 1999 as compared to an increase of 6.4% for the second
quarter of 1998.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION (continued)
Operating Costs and Expenses
- ----------------------------
Cost of sales (food and paper costs), as a percentage of restaurant sales, were
30.8% for the second quarter of 1999 compared to 28.6% for the second quarter of
1998. The increase in the second quarter of 1999 was due to higher cost of sales
at our Pollo Tropical restaurants, relative to our Burger King restaurants.
Pollo Tropical's cost of sales were 34.8% for the second quarter of 1999
compared to 29.9% for our Burger King restaurants. This increased total cost of
sales, as a percentage of sales, by 1.1%. Higher cost of sales, as a percentage
of sales, at our Burger King restaurants was primarily due to higher discounting
of food related to increased promotional activities. In addition, the second
quarter of 1998 included a cost rebate of approximately $815,000, linked to the
adverse impact of a recall of beef in the third quarter of 1997.
Restaurant wages and related expenses increased, as a percentage of sales,
during the second quarter to 28.9% in 1999 from 28.3% in 1998. This increase was
due to the effect of lower sales volumes in the second quarter of 1999 on fixed
labor costs and a 3.7% increase in our average hourly labor rate in the second
quarter of 1999 at our Burger King restaurants. Collectively, these factors
caused as a percentage of total sales, a 1.6% increase in restaurant wages and
related expenses. This increase was substantially offset by Pollo Tropical's
lower restaurant wages, as a percentage of sales, due to Pollo Tropical's higher
average unit volumes. Pollo Tropical restaurants wages and related expenses were
22.6% of restaurant sales in the second quarter of 1999, and decreased total
restaurant wages by 1.0% compared to the second quarter of 1998.
Other restaurant operating expenses, including advertising, decreased from 23.9%
of restaurant sales in the second quarter of 1998 to 23.3% in the second quarter
of 1999, due to Pollo Tropical's other restaurant operating expenses being 17.8%
of restaurant sales in the second quarter of 1999. This caused a 1.1% decrease,
as a percentage of sales, in total other restaurant operating expenses. This
decrease was offset by the effect of lower sales volumes on fixed costs in the
second quarter of 1999 for our Burger King restaurants, particularly occupancy
costs. Other operating expenses, including advertising, increased to 24.5% of
restaurant sales for our Burger King restaurants in the second quarter of 1999.
Administrative expenses increased, as a percentage of sales, from 4.1% in the
second quarter of 1998 to 4.6% in the second quarter of 1999. This increase is
due to lower sales volumes in our Burger King restaurants in the second quarter
of 1999 and administrative functions acquired in the July 1998 acquisition of
Pollo Tropical.
Earnings before interest, taxes, depreciation and amortization and non-cash
extraordinary items ("EBITDA") was $14.5 million in the second quarter of 1999
compared to $16.0 million in the second quarter of 1998. As a percentage of
total revenues, EBITDA decreased from 15.1% in the second quarter of 1998 to
12.5% in the second quarter of 1999 as a result of the factors discussed above.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION (continued)
Depreciation and amortization increased $1.0 million in the second quarter of
1999 due to the increase in property and equipment, goodwill and purchased
intangibles from the purchase of Pollo Tropical in July 1998.
Interest expense was $5.6 million in the second quarter of 1999 compared to $4.6
million in the second quarter of 1998 and increased as a result of the higher
average debt balances from the funding of the acquisition of Pollo Tropical in
July 1998. This was offset somewhat by the favorable effect on average interest
rates due to the Company's 1998 refinancing activities.
The provision for income taxes of $1,780,000 in the second quarter of 1999 was
derived on an estimated effective income tax rate for 1999 of 58.6%. This rate
is higher than the Federal statutory tax rate due to state franchise taxes and
non-deductible amortization of franchise rights and other intangible assets.
Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998
The following table sets forth, for the six months ended June 30, 1999 and 1998,
selected operating results as a percentage of restaurant sales:
1999 1998
---- ----
Restaurant sales:
Burger King restaurants 81.2% 100.0%
Pollo Tropical 18.8 -
----- -----
100.0 100.0
Costs and expenses:
Cost of sales 30.4 28.8
Restaurant wages and related expenses 29.8 29.4
Other restaurant expenses including advertising 24.1 24.6
General and administrative 5.1 4.2
Depreciation and amortization 5.2 4.6
----- -----
Income from restaurant operations 5.4% 8.4%
===== =====
Restaurant Sales
- ----------------
Restaurant sales for the six months ended June 30, 1999, increased 14.0% to
$220.4 million from $193.3 million in the first six months of 1998. The increase
in sales was primarily the result of the acquisition of Pollo Tropical in July
1998, whose total restaurant sales were $41.4 million in the first six months of
1999. Sales at our comparable Burger King restaurants (those units operating for
the entirety of the compared periods) decreased 5.5% for the first six months of
1999 as compared to an increase of 6.8% for the first six months of 1998.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION (continued)
Operating Costs and Expenses
- ----------------------------
Cost of sales (food and paper costs), as a percentage of restaurant sales, were
30.4% for the first six months of 1999 compared to 28.8% for the first six
months of 1998. The increase in the first six months of 1999 was due to higher
cost of sales at our Pollo Tropical restaurants, relative to our Burger King
restaurants. Pollo Tropical's cost of sales were 34.9% for the first six months
of 1999 compared to 29.4% for our Burger King restaurants. This increased total
cost of sales, as a percentage of sales, by 1.2%. Higher cost of sales, as a
percentage of sales, at our Burger King restaurants was primarily due to higher
discounting of food related to increased promotional activities. In addition,
the second quarter of 1998 included a cost rebate of approximately $815,000,
linked to the adverse impact of a recall of beef in the third quarter of 1997,
as well as increases in commodity costs which were not offset by menu price
increases in the first six months of 1999.
Restaurant wages and related expenses increased, as a percentage of sales,
during the first six months to 29.8% in 1999 from 29.4% in 1998. This increase
was due to the effect of lower sales volumes in the first six months of 1999 on
fixed labor costs and a 3.6% increase in our average hourly labor rate for the
first six months of 1999 at our Burger King restaurants. Collectively, these
factors caused, as a percentage of total sales, a 1.4% increase in restaurant
wages and related expenses. This increase was substantially offset by Pollo
Tropical's lower restaurant wages, as a percentage of sales, due to Pollo
Tropical's higher average unit volumes. Pollo Tropical restaurants wages and
related expenses were 22.8% of restaurant sales in the first six months of 1999,
and decreased total restaurant wages by 1.0% compared to the first six months of
1998.
Other restaurant operating expenses, including advertising, decreased from 24.6%
of restaurant sales in the first six months of 1998 to 24.1% in the first six
months of 1999, due to Pollo Tropical's other restaurant operating expenses
being 16.9% of restaurant sales in the first six months of 1999. This caused a
1.3% decrease, as a percentage of sales, in total other restaurant operating
expenses. This decrease was offset by the effect of lower sales volumes on fixed
costs in the first six months of 1999 for our Burger King restaurants,
particularly utility and occupancy costs. Other operating expenses, including
advertising, increased to 25.7% of restaurant sales for our Burger King
restaurants in the first six months of 1999.
Administrative expenses increased, as a percentage of sales, from 4.2% in the
first six months of 1998 to 5.1% in the first six months of 1999. This increase
is due to lower sales volumes in our Burger King restaurants in the first six
months of 1999 and administrative functions acquired in the July 1998
acquisition of Pollo Tropical.
Earnings before interest, taxes, depreciation and amortization and non-cash
extraordinary items ("EBITDA") was $23.7 million in the first six months of 1999
compared to $25.2 million in the first six months of 1998. As a percentage of
total revenues, EBITDA decreased from 13.1% in the first six months of 1998 to
10.8% in the first six months of 1999 as a result of the factors discussed
above.
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION (continued)
Depreciation and amortization increased $2.6 million in the first six months of
1999 due primarily to the increase in property and equipment, goodwill and
purchased intangibles from the purchase of Pollo Tropical in July 1998.
Interest expense was $11.3 million in the first six months of 1999 compared to
$8.9 million in the first six months of 1998 and increased as a result of the
higher average debt balances from the funding of the acquisition of Pollo
Tropical in July 1998. This was offset somewhat by the favorable effect on
average interest rates due to the Company's 1998 refinancing activities.
The income tax provision of $632,000 in the first six months of 1999 is based on
an estimated effective income tax rate for 1999 of 58.6%. This rate is higher
than the Federal statutory tax rate due to state franchise taxes and
non-deductible amortization of franchise rights and other intangible assets.
Liquidity and Capital Resources
- -------------------------------
We do not have significant receivables or inventory and receive trade credit
based upon negotiated terms in purchasing food products and other supplies. We
are able to operate with a substantial working capital deficit because (i)
restaurant operations are conducted on a cash basis (ii) rapid turnover allows a
limited investment in inventories, and (iii) cash from sales is usually received
before related accounts for food, supplies and payroll become due. Our cash
requirements arise primarily from the need to finance the opening and equipping
of new restaurants, ongoing capital reinvestment in our existing restaurants,
the acquisition of existing Burger King restaurants, and for servicing our debt.
The Company's operations in the first six months generated approximately $17.6
million in cash in 1999, compared with $20.1 million in 1998.
Capital expenditures represent a major investment of cash for the Company, and
totaled, excluding acquisitions, $21.3 million in the first six months of 1999
and $11.8 million in the first six months of 1998. Capital expenditures in 1999
included $3.3 million for the purchase of the land and building for two Pollo
Tropical restaurants that were previously leased. Capital expenditures included
$0.5 million and $0.6 million for the acquisition of two Burger King restaurants
in each of the six months ended June 30, 1999 and 1998, respectively.
The sale and leaseback of eight Burger King restaurant properties and five Pollo
Tropical restaurant properties in June 1999 generated proceeds of $14.2 million
which were used to reduce outstanding debt.
Under our senior credit facility, which was amended to increase our revolving
credit facility by $5 million on May 17, 1999, Chase Bank of Texas, National
Association, as agent, along with a syndicate of six other lenders, have
provided a term loan facility of $50.0 million, of which $48.5 million is
outstanding at
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION (continued)
June 30, 1999 and a revolving credit facility under which we may borrow up to
$105.0 million, $78.5 million of which is available at June 30, 1999 after
reserving for a $1.2 million letter of credit guaranteed by the facility. At
June 30, 1999, we had total indebtedness of $246.0 million comprised of $170.0
million of unsecured 9.5% senior subordinated notes, total borrowings under our
senior credit facility of $73.8 million and other debt of $2.6 million.
In 1999, we anticipate capital expenditures of approximately $40 million,
excluding the cost of any acquisitions that we may make. These amounts include
approximately $12 million for construction of new Burger King restaurants,
including real estate; $5 million for construction of new Pollo Tropical
restaurants; and $12 million for ongoing reinvestment and remodeling of our
existing restaurants. We are also in the process of upgrading our restaurant
point-of-sale systems, our in-restaurant support systems and our corporate
information systems. We have remaining commitments at June 30, 1999 to purchase
approximately $6.6 million of restaurant point-of-sale systems.
Interest payments under our outstanding indebtedness will represent significant
liquidity requirements for us. We believe cash generated from our operations and
availability under our senior credit facility will provide sufficient cash
availability to cover our working capital needs, capital expenditures, planned
development and debt service requirements for the next 12 months.
Inflation
- ---------
The inflationary factors which have historically affected our results of
operations include increases in food and paper costs, labor and other operating
expenses. Wages paid in our restaurants are impacted by changes in the Federal
or state minimum hourly wage rates. Accordingly, changes in the Federal or
states minimum hourly wage rate directly affect our labor cost. We and the
restaurant industry typically attempt to offset the effect of inflation, at
least in part, through periodic menu price increases and various cost reduction
program. However, no assurance can be given that we will be able to offset such
inflationary cost increases in the future.
Year 2000
- ---------
We recognize the need to ensure our operations will not be adversely impacted by
Year 2000 software failures. We have addressed this risk to the availability and
integrity of financial systems and the reliability of operating systems. We have
projects underway for the installation of new point-of-sale (POS) systems in our
restaurants, although substantially all of our existing POS systems will operate
through the change to Year 2000, and for the replacement of a substantial
portion of our corporate financial and decision support systems.
The primary purpose of these projects is to improve the efficiency of our
restaurant and support operations. However, they will also provide the
additional benefit of making our systems Year 2000 compliant where necessary. We
have purchased point-of-sale hardware and software, and a suite of
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION (continued)
corporate financial software applications all of which are designed and
warranted to be Year 2000 compliant.
As of June 30, 1999, we had successfully implemented certain corporate financial
applications including general ledger, accounts payable and asset management,
salaried payroll and human resource processing and approximately one-third of
our restaurant hourly payroll and human resources processing. The remaining
corporate support systems to be implemented are the conversion of the remaining
restaurant hourly payroll and human resources processing, expected to be
completed in the fourth quarter of 1999, and completion of new sales and
inventory accounting systems. The implementation of corporate financial software
applications began in 1998 and is estimated to cost a total of $4.5 million, of
which $.6 million remains to be expended in the second half of 1999. We believe
that all of our computer systems will be Year 2000 compliant in the fourth
quarter of 1999.
In addition to our internal efforts, we are also monitoring certain initiatives
of Burger King Corporation ("BKC") as they evaluate Year 2000 readiness of food
and equipment suppliers, utility companies and other key suppliers to the Burger
King system. Although BKC has not made any representations or warranties with
respect to such activities, they are providing us the results of third party
validations of the readiness of existing equipment used in the restaurants,
summarized responses from shared vendors and domestic contingency plans. We have
also been closely monitoring the remediation progress of our major food supplier
and working closely with it to successfully interface our ordering and delivery
systems as transitions are made to Year 2000 compliant systems. At June 30,
1999, our major food supplier had completed the transition of all its
distribution systems currently utilized by the Company.
We are evaluating our implementation progress on an ongoing basis and are
currently developing a contingency plan which will address upgrading certain
existing systems, should our scheduled implementation dates be modified or if
the Burger King results warrant enhanced contingency planning. While we are
monitoring the progress of our key suppliers, we cannot be assured that their
remediation efforts will be successful, in which case we could be adversely
impacted by our ability to obtain food supplies for our restaurants. In the
event that the remediation efforts of our suppliers are not successful, we
believe that we could alternatively process orders to obtain food supplies for
our restaurants manually. Should we be unable to process orders, we believe that
the time required by our key suppliers to implement corrective actions, when
combined with our inventory levels, would not result in a material disruption to
our restaurant operations.
17
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There were no material legal proceedings commenced by or initiated
against the Company during the reported quarter or material
developments in any previously reported litigation.
Item 2. Changes in Securities
None
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8K
a. The following exhibit is filed as part of this report.
Exhibit No.
----------
10.31 Supply Agreement between AmeriServe Food Distribution, Inc.
and Carrols Corporation dated January 31, 1999.
10.32 Amendment to Loan Agreement dated as of May 17, 1999 by and
among Carrols Corporation, each of the Lenders party thereto,
Manufacturers and Traders Trust Company, as Co-Agent, Nationsbank,
N.A., as Co-Agent, Suntrust Bank, Atlanta, as Co-Agent and Chase
Bank of Texas, National Association, as Agent.
27 Financial Data Schedule
b. There were no reports on Form 8-K filed during the reported
quarter.
18
<PAGE>
SIGNATURE
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.
CARROLS CORPORATION
968 James Street
Syracuse, New York 13203
(Registrant)
Date: August 18, 1999 /s/__________________________________________________
(Signature)
Alan Vituli
Chairman and Chief Executive Officer
Date: August 18, 1999 /s/__________________________________________________
(Signature)
Paul R. Flanders
Vice President - Finance (Principal Financial Officer
and Principal Accounting Officer)
19
<PAGE>
Exhibit A
AMENDMENT TO LOAN AGREEMENT
THIS AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and entered
into as of May 17, 1999 by and among CARROLS CORPORATION, a Delaware corporation
(the "Borrower"); each of the Lenders which is or may from time to time become a
party to the Loan Agreement (as defined below) (individually, a "Lender" and,
collectively, the "Lenders"), MANUFACTURERS AND TRADERS TRUST COMPANY, as
Co-Agent, NATIONSBANK, N.A., as Co-Agent, SUNTRUST BANK, ATLANTA, as Co-Agent,
and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, a national banking association,
acting as agent for the Lenders (in such capacity, together with its successors
in such capacity, the "Agent").
RECITALS
A. The Borrower, the Lenders and the Agent executed and delivered that
certain Loan Agreement dated as of February 12, 1999. Said Loan Agreement, as
amended, supplemented and restated, is herein called the "Loan Agreement". Any
capitalized term used in this Amendment and not otherwise defined shall have the
meaning ascribed to it in the Loan Agreement.
B. The Borrower, the Lenders and the Agent desire to amend the Loan
Agreement in certain respects.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and warranties herein set forth, and further good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Lenders and the Agent do hereby agree as
follows:
SECTION 1. Amendment to Loan Agreement.
(a) The definition of "Revolving Loan Commitment" set forth in Section 1.1
of the Loan Agreement is hereby amended to read in its entirety as follows:
Revolving Loan Commitment means, as to any Lender, the obligation,
if any, of such Lender to make Revolving Loans and incur or participate in
Letter of Credit Liabilities in an aggregate principal amount at any one
time outstanding up to (but not exceeding) the amount, if any, set forth
opposite such Lender's name on the following table, or otherwise provided
for in an Assignment and Acceptance Agreement (as the same may be reduced
from time to time pursuant to Section 2.3 hereof):
Lender Revolving Commitment
------ --------------------
CHASE BANK OF TEXAS, $19,476,904.37
NATIONAL ASSOCIATION
<PAGE>
MANUFACTURERS AND TRADERS
TRUST COMPANY $19,476,904.38
NATIONSBANK, N.A. $19,476,904.38
SUNTRUST BANK, ATLANTA $19,476,904.38
THE NORTHERN TRUST COMPANY $13,546,191.25
COMERICA BANK $ 6,773,095.62
NATIONAL CITY BANK OF KENTUCKY $ 6,773,095.62
The above amounts give effect to certain Assignments and Acceptances dated May
17, 1999 executed by (i) Chase Bank of Texas, National Association,
Manufacturers and Traders Trust Company, NationsBank, N.A. and Suntrust Bank,
Atlanta in favor of National City Bank of Kentucky and (ii) Chase Bank of Texas,
National Association in favor of The Northern trust Company and Comerica Bank.
SECTION 2. Ratification. Except as expressly amended by this Amendment,
the Loan Agreement and the other Loan Documents shall remain in full force and
effect. None of the rights, title and interests existing and to exist under the
Loan Agreement are hereby released, diminished or impaired, and the Borrower
hereby reaffirms all covenants, representations and warranties in the Loan
Agreement.
SECTION 3. Expenses. The Borrower shall pay to the Agent all reasonable
fees and expenses of its respective legal counsel (pursuant to Section 11.3 of
the Loan Agreement) incurred in connection with the execution of this Amendment.
SECTION 4. Certifications. The Borrower hereby certifies that (a) no
material adverse change in the assets, liabilities, financial condition,
business or affairs of the Borrower has occurred and (b) no Default or Event of
Default has occurred and is continuing or will occur as a result of this
Amendment.
SECTION 5. Miscellaneous. This Amendment (a) shall be binding upon and
inure to the benefit of the Borrower, the Lenders and the Agent and their
respective successors, assigns, receivers and trustees; (b) may be modified or
amended only by a writing signed by the required parties; (c) shall be governed
by and construed in accordance with the laws of the State of New York and the
United States of America; (d) may be executed in several counterparts by the
parties hereto on separate counterparts, and each counterpart, when so executed
and delivered, shall constitute an original agreement, and all such separate
counterparts shall constitute but one and the same agreement and (e) together
with the other Loan Documents, embodies the entire agreement and
2
<PAGE>
understanding between the parties with respect to the subject matter hereof and
supersedes all prior agreements, consents and understandings relating to such
subject matter. The headings herein shall be accorded no significance in
interpreting this Amendment.
NOTICE PURSUANT TO TEX. BUS. & COMM. CODE ss.26.02
THE LOAN AGREEMENT, AS AMENDED BY THIS AMENDMENT, AND ALL OTHER LOAN
DOCUMENTS EXECUTED BY ANY OF THE PARTIES PRIOR HERETO OR SUBSTANTIALLY
CONCURRENTLY HEREWITH CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT BLANK INTENTIONALLY
3
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have caused
this Amendment to be signed by their respective duly authorized officers,
effective as of the date first above written.
CARROLS CORPORATION.
a Delaware corporation
By: [ILLEGIBLE]
-------------------------------------
Name:___________________________________
Title:__________________________________
4
<PAGE>
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Agent and as a Lender
By: /s/ Michael J. Costello
-------------------------------------
Michael J. Costello, Vice President
5
<PAGE>
MANUFACTURERS AND TRADERS TRUST
COMPANY, as Co-Agent and as a Lender
By: /s/ Michele J. Martin
-------------------------------------
Name: Michele J. Martin
-----------------------------------
Title: Vice President
----------------------------------
6
<PAGE>
NATIONSBANK, NA., as Co-Agent and as a
Lender
By: /s/ William W. Tucker
-------------------------------------
Name: William W. Tucker
-----------------------------------
Title: Senior Vice President
----------------------------------
7
<PAGE>
SUNTRUST BANK, ATLANTA.
as Co-Agent and as a Lender
By: /s/ J. Scott Deviney
-------------------------------------
Name: J. Scott Deviney
-----------------------------------
Title: AVP
------------------------------------
By: /s/ Donald M. Thompson
-------------------------------------
Name: Donald M. Thompson
-----------------------------------
Title: VP
----------------------------------
8
<PAGE>
THE NORTHERN TRUST COMPANY
By: /s/ [ILLEGIBLE]
-------------------------------------
Name: [ILLEGIBLE]
-----------------------------------
Title: VP
----------------------------------
9
<PAGE>
COMERICA BANK
By: /s/ David W. Shirey
-------------------------------------
Name: David W. Shirey
-----------------------------------
Title: Assistant Vice President
----------------------------------
10
<PAGE>
NATIONAL CITY BANK OF KENTUCKY
By: /s/ Tom Gurbach
-------------------------------------
Name: Tom Gurbach
-----------------------------------
Title: Vice President
----------------------------------
11
<PAGE>
The undersigned hereby join in this Amendment to evidence their consent to
execution by Borrower of this Amendment, to confirm that each Loan Document now
or previously executed by the undersigned applies and shall continue to apply to
the Loan Agreement, as amended hereby, to acknowledge that without such consent
and confirmation. Lender would not execute this Amendment and to join in the
notice pursuant to Tex. Bus. & Comm. Code ss.26.02 set forth above.
CARROLS REALTY HOLDINGS CORP.,
a Delaware corporation
By: [ILLEGIBLE]
-------------------------------------
Name:___________________________________
Title:__________________________________
CARROLS HOLDINGS CORPORATION,
a Delaware corporation
By: [ILLEGIBLE]
-------------------------------------
Name:___________________________________
Title:__________________________________
CARROLS REALTY HOLDINGS CORP.,
a Delaware corporation
By: [ILLEGIBLE]
-------------------------------------
Name:___________________________________
Title:__________________________________
CARROLS REALTY I CORP.,
a Delaware corporation
By: [ILLEGIBLE]
-------------------------------------
Name:___________________________________
Title:__________________________________
12
<PAGE>
POLLO FRANCHISE, INC.,
a Florida corporation
By: [ILLEGIBLE]
-------------------------------------
Name:___________________________________
Title:__________________________________
POLLO OPERATIONS, INC.,
a Florida corporation
By: [ILLEGIBLE]
-------------------------------------
Name:___________________________________
Title:__________________________________
13
<PAGE>
Exhibit B
SUPPLY AGREEMENT
THIS AGREEMENT (hereinafter "Agreement"), is made the 31st day of January, 1999,
by and between AmeriServe Food Distribution, Inc., a Delaware corporation,
(hereinafter "Seller"), and Carrols Corporation ("Buyer), a Delaware corporation
with its principal place of business located at 968 James Street, Syracuse, New
York 13203 (hereinafter collectively referred to as "Buyer'). This Agreement
replaces, in its entirety, the Supply Agreement dated April 1, 1994 between
Buyer and Seller.
RECITALS
A. Buyer is the owner and operator of certain Burger King(R)
restaurants ("Restaurants") identified on Exhibit "A" attached
hereto, and has the authority to enter in this Agreement on behalf
of all individuals who are franchisees for the listed restaurants
who shall be jointly and severally bound under this agreement.
B. Seller is an approved distributor of food, paper, dairy, produce,
and other products sold or used in Burger King(R) restaurants.
C. Seller is a firm, which carries products required and desired by the
Restaurants.
D. Seller desires to perform, or on exclusive basis, the functions of
purchasing, warehousing, and distributing certain products for and
to the Restaurants.
THEREFORE, in consideration of the premises, and of the mutual agreements
contained herein, the parties hereto agree as follows:
1. SUBJECT MATTER OF AGREEMENT. Buyer hereby agrees to purchase
continuously from Seller, and Seller hereby agrees to distribute and sell
continuously to (hereinafter collectively referred to as "supply") Buyer all of
certain Burger King(R) approved food, paper, dairy, produce, premium, and other
products required by Buyer in accordance with the terms and conditions contained
herein.
2. TERM. The Term of this Agreement shall commence on April 1, 1999, and
shall continue in full force and effect for five (5) years from such date,
unless terminated earlier in accordance with the provisions hereof. Each
twelve-month period within the Term shall be referred to as a "Contract Year.
1
<PAGE>
3. LOCATIONS. Seller shall supply all of the existing Burger King
Restaurants owned by Buyer and its affiliates as well as any future Restaurant
opened by Buyer. If Buyer sells or transfers a Restaurant during the Term of
this Agreement, Buyer, if so requested by Seller, will use all reasonable
efforts to assign this Agreement to the buyer or transferee of said
Restaurant(s).
4. PRODUCTS. Seller shall supply the Restaurants and Buyer shall purchase
from Seller in the quantities constituting the total requirements of the
Restaurants for all items of approved Burger King products unless permitted to
be excluded by Seller. Products will be purchased in accordance with the Burger
King Corporation (BKC) Approved Brands and Processors List. Multiple vendors for
the same product will not be required.
If for any reason Seller's supply of any products in any Service Center
Area or in all Service Center Areas shall be insufficient to meet all of its
customer orders, Seller shall have the right, at its option and without
liability hereunder, to apportion its available supply of such products in such
Service Center Area or all Service Center Areas among any and all of its
customers in an equitable manner. In such event, Buyer shall be permitted to
purchase unavailable supplies from other sources without liability to Seller.
It is agreed that the prices listed in Exhibit B were determined and
agreed to by Buyer and Seller based on the weight, cube and pack size of the
Restaurant Products at the time of the signing of this Agreement. A change in a
Restaurant Product's weight, cube or pack size caused by a change requested by
Buyer, a change by the supplier or a change in suppliers subsequent to the
signing of this Agreement or the introduction of New Restaurant Products, may be
financially detrimental to Seller or Buyer. Therefore, if the average weight,
cube or pack size of approved Restaurant Products change after the signing of
this Agreement, then the prices shall be equitably adjusted and agreed upon by
Buyer and Seller.
Additionally, if Buyer's specifications for Restaurant Products change
which materially increase Sellers costs to provide its services under this
Agreement, Buyer will reasonably and in good faith negotiate with Seller
requested changes to the prices listed on Exhibit B. The prices to be paid by
Buyer assume that Seller will continue to receive standard vendor payment terms
and prompt pay discounts consistent with those in effect on the date of this
Agreement. In the event these terms or discounts are changed as a result of
actions taken by RSI, Buyer and Seller will attempt to obtain satisfactory
adjustment in terms or discounts through RSI or the authorized Burger King
buying agent. If such adjustments are not obtained, Buyer will reasonably and in
good faith negotiate with Seller requested changes to the prices of the affected
items listed on Exhibit B. Sellers inability to pay vendor on a timely basis
thereby resulting in a change in vendor terms will not result in any adjustment
to prices.
2
<PAGE>
5. DELIVERY FREQUENCY AND SERVICE LEVEL.
a. All orders for Products for any Restaurant shall be tendered to Seller
by 2:00 p.m., or such later time as may be established by the distribution
center, one day prior to the scheduled loading date of the vehicle servicing
such Restaurant. (Example: orders for a standard one-day route, loading Tuesday
for Wednesday delivery will be required by 2:00 p.m. on Monday.) Seller shall
initially assign to each Restaurant the day and approximately time when that
Restaurant will be required to place its order, which date and time may be
adjusted periodically. Within twelve months of the commencement of this
Agreement, Seller will provide all software and hardware (if required) to enable
all Restaurants to place orders electronically. After the twelve month
introductory period, any Restaurants not using electronic ordering will be
charged an additional $.10 per case.
b. Seller shall make deliveries to the Restaurants on a twice per week
basis or three times per week for high volume restaurants based on mutual
agreement of Buyer and Seller. Seller shall immediately notify a Restaurant if a
delivery will be delayed more than two hours from the scheduled delivery time.
Seller shall establish delivery routes for maximum efficiency, which may be
adjusted to accommodate volume fluctuations. No deliveries will be made between
11:00 am. and 1:30 p.m. unless otherwise agreed by Buyer and Seller. Seller
agrees to fill emergency orders ("Special Deliveries") requested by Buyer to
provide continuity of service to the Restaurants. A delivery fee of $50.00 per
order or $.50 per mile (round trip), whichever is greater, will be added to then
invoice total for any Special Delivery at Seller's option. If Special Delivery
is due to Seller being in an out of stock situation, Special Delivery will be
made within 24 hours and at no cost to Buyer. Seller will staff its delivery
routes with double drivers, driver/helper, or single drivers at its option.
c. Buyer may elect to have "tailgate" deliveries for any or all of the
Restaurants served hereunder in a Service Center Area so long as Seller is able
to assemble a regularly scheduled route without materially impairing the overall
efficiency of Seller's routing where all restaurants on the route elect tailgate
service. If requested by Buyer, Seller agrees to use reasonable efforts to
cooperate with Buyer in establishing such a tailgate route as described in the
preceding sentence. In such event the "tailgate" deliveries shall be made in
accordance with and subject to Seller's terms, conditions and practices for
"tailgate" deliveries. "Tailgate" discount will be $.08 per full case.
d. All Products will be sold and distributed, and all services will be
rendered by Seller hereunder, in compliance with all requirements and
obligations under the BKC Distribution Agreement and BKC's then current Quality
Assurance Standards. Without limiting the foregoing, (i) all Products will be
stored, handled and transported in accordance with BKC's then-current Quality
Assurance Standards, including, without limitation, Products requiring frozen or
refrigeration storage, (ii) all drivers shall act in a professional and
courteous manner, (iii) all tractors and trailers shall be maintained in a
3
<PAGE>
clean condition, (iv) all Products shall be delivered in a manner to minimize
damage. All items shall be delivered by Seller's employees or agents to a
storage location within each Restaurant, as reasonably designated by each Buyer
and (v) deliveries will be made within time limits established based on target
driver unload rates. Average unload time for a standard, 120-case delivery on a
restaurant lot which allows tractor/trailer parking adjacent to delivery
entrance will be one hour.
The Buyer shall retain the right to make claims for short or mistaken delivery
of Restaurant Products; provided, however, that any such claim must be noted on
the delivery receipt or in the case of a key drop be made by telephone by 10:00
a.m. of the day of the delivery. If the Buyer decides to return any
nonperishable, saleable Restaurant Products ordered by the Buyer and delivered
to it within specification, not damaged, with sufficient shelf life for resale,
Seller shall charge Buyer for taking back such Restaurant Products an amount
equal to fifteen percent (15%) of the invoice price of such Restaurant Products
as a restocking fee. The parties shall work cooperatively to dispose of obsolete
inventory, requested to be stocked by the local ADI, a franchisee or
franchisees, (including promotional items and kids' meals) as promptly and
expeditiously as possible and Seller may assess a 1.5% monthly storage fee for
all such obsolete items until actual disposal.
e. In the event of any Product recall, Seller shall provide all reasonable
assistance to Buyer, the Purchasing Agent, BKC and its designees in connection
therewith.
f. Seller shall assign an account representative to Seller's activities
with Buyer. Such account representative shall maintain contact with the Buyer on
a mutually agreed upon basis to ensure that service levels and Restaurant
requirements are being met.
6. PRICE.
a. Buyer shall pay Seller for the products and services provided based
upon "Cost" plus an appropriate dollar mark-up as described in Exhibit B.
b. The Cost plus payment shall compensate Seller for the cost of goods
provided and for services rendered, which services shall include, but not be
limited to, purchasing, receiving, storing, selecting and transporting. "Cost"
as used herein shall be based on item's cost as quoted by R.S.I. or in the
absence of an R.S.I. quote, by the product's vendor. Only items, which have a
2-week usage quantity, which is less than a full truckload will be costed, based
on L.T.L. (Less-Than-Truckload) quantities. All others will be costed at full
truckload. The L.T.L. bracket will be established based on the bracket closest
to one week's annualized usage of the product.
c. The per case charges (not the percentage mark-up) on Exhibit B attached
hereto shall be subject to an annual adjustment at the beginning of each
contract year to reflect any increase or decrease in the Consumer Price Index.
(Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average, All
Items (Base Year 1982-
4
<PAGE>
84=100)). The CPI increases shall not begin until the CPI increases by more than
4% from the Agreement commencement date and then only to the extent that the
cumulative increase exceeds 4%. Any changes above the first 4% increase shall be
cumulative but shall be capped at three percent (3%) per annum.
d. In the event Seller implements pricing to other Burger King restaurants
with the same delivery and service requirements, average geographic proximity
and cost to service, for a lower net fee than that described in Exhibit B or in
7(b) below then Buyer will be offered such lower mark-up.
7. INVOICE AND PAYMENT TERMS.
a. Seller will invoice Buyer at the time of delivery to the Restaurant for
all goods and services supplied hereunder in accordance with the prices
described above.
b. Buyer shall make payment to Seller for all goods and services provided
hereunder in accordance with the terms described below.
i. Buyer shall make payment to Seller for all goods in accordance
with the following terms:
(A) Payment for all deliveries made during the current month
shall be paid by the 15th of the following month (30 day average).
(B) Prompt payment discounts may be taken as follows:
1) A discount of .425% may be taken on the invoice
amount of all invoices for deliveries made during the 1st through the 15th of
the current month and paid by the last banking day of the current month and for
deliveries made during the 16th through month-end paid by the 15th of the
following month (22.5 days average).
2) A discount of .775% may be taken on the invoice
amount of all invoices for deliveries made during the current week (Saturday
through Friday) and paid Monday of the second following week (14 days average).
3) A discount of 1.075% may be taken on the invoice
amount of all the invoices for deliveries made during the current week and paid
by Monday of the following week (7 day average).
4) A discount of 1.425% may be taken on the invoice
amount of all invoices which are paid on a cash-on-delivery (C.O.D.) basis.
5
<PAGE>
5) During the third month of the fiscal quarter for
Buyer the following cash discount may be taken so long as during the 15 days
prior to this discount period Buyer was availing itself of the 1.425% discount
for payment being made on a cash-on-delivery (C.O.D.) basis:
A discount of .775% may be taken on the invoice
amount of all invoices for deliveries made during the four week period starting
on or after the fourth Monday prior to the end of Buyers' fiscal quarter and
ending on Buyers' fiscal quarter and paid on the day following the end of
Buyers' fiscal quarter.
ii. No prompt payment discount shall be allowed on the invoice
amount of any taxes, other special promotional items (including premiums) set
forth on Exhibit "B" or products on which prices or price terms are governed or
otherwise controlled by state law.
iii. No prompt payment discount can be taken or earned at any time
when Buyer has any past -due amount balance for items sold and delivered except
those which relate to invoices which are disputed in good faith. Invoices must
be paid in full. Credits may not be taken until credit memos are received by
Buyer, which credit memos will be delivered to Buyer with the second scheduled
delivery to Buyer. Credits not received may be deducted by Buyer. A copy of
invoice with deduction marked by driver or credit slip signed by driver at
delivery must be forwarded to Seller with payment as proof of deduction.
c. All payments shall be sent to the place set forth on Seller's invoices.
An invoice shall be considered "paid" only upon receipt of a wire transfer or
check (which is not returned) at Seller's lock box or other place to which
payments are required to be made as set forth on Seller's invoices. Past due
accounts are subject to pre-pay before product loading. Past due amounts are
subject to a late charge of 1.5% per month.
d. Seller will invoice Buyer at the time of delivery to the Restaurant for
all goods and services supplied hereunder. Except for invoices disputed in good
faith, payments not received by the dates specified in b(i)(A) will be
considered past due, and subsequent deliveries to Buyer may, at Seller's
discretion, be placed on a cash on delivery ("C.Q.D.") basis; provided, however,
that if Buyer thereafter makes payment of all past due balances and establishes
a satisfactory payment record, Seller will review Buyer's account balances and
credit worthiness in a reasonable manner and may extend credit to Buyer on such
terms and conditions as Seller may reasonably determine and excepting that, if
Buyer makes payment of all past due balances within four business days of their
becoming past due, Seller shall re-establish Buyer's credit without review,
unless Buyer becomes past due twice within a 18-month period, in which case the
review and credit determination stated above shall apply; such review will not
eliminate or reduce the prompt payment discounts specified in b(i)(B). In the
event of a restriction of credit, Buyer has the right to request a credit review
every sixty days.
6
<PAGE>
e. The Cost plus provisions and discount payment terms of this Agreement
are in lieu of any and all price discount programs and policies of Seller, now
in effect or hereafter instituted.
8. MARKETING ALLOWANCE. In exchange for Buyer's agreement to this long-term
Supply Agreement, Seller will provide a Marketing Allowance of $5,000 per
restaurant owned by Buyer at the time the Supply Agreement commences or opened
by January 15, 1999. In the event Buyer has past due balances owed to Seller,
the Marketing Allowance will first be applied to such balances.
9. ELIGIBILITY OF BUYER TO PARTICIPATE IN FUTURE DISTRIBUTION SERVICES PROGRAMS
APPROVED BY BURGER KING CORPORATION
Seller understands and recognizes that Buyer [is/are] Burger King(R)
franchisee(s). Seller also acknowledges that Burger King Corporation ("BKC"),
the National Franchisee Association, Inc. ("NFA"), an association made up
exclusively of Burger King franchisees, and Restaurant Services, Inc. ("RSI"), a
purchasing cooperative having Burger King franchisees and BKC as its members
have endorsed the formation of an RSI Ad Hoc Distribution Committee (the
"Committee"). Seller also understands that the Committee was formed for the
purpose of and is empowered to study, develop and recommend the implementation
of a new and/or modified distribution service system for the Burger King System
in the United States that will result in efficiencies and related cost savings
for both Buyer and Seller and improved service levels for the Burger King System
(the "New Distribution Program"). Finally, Seller understands that if the
Committee's recommendations are approved by BKC the New Distribution Program
will be implemented on or after July 1, 1999.
In the event that BKC approves the Committee's recommendation and implementation
of the New Distribution Program commences, Seller agrees that Buyer shall have
each of the following rights beginning on the commencement of the implementation
of the New Distribution Program ("Buyer's New Program Rights"):
(a) Buyer shall have the absolute right to terminate this Agreement upon
notice to Seller at any time beginning on the commencement of the
implementation of the New Distribution Program, and Seller's sole and
exclusive remedy at law and at equity (except for outstanding accounts
payable and other items to be returned under the Agreement) for such early
termination shall be repayment by Buyer to Seller on a pro rata basis the
$5,000 marketing allowance (the "Marketing Allowance") paid by Seller to
Buyer upon the execution of this Agreement. For purposes of this paragraph
the term "pro rata" means $5,000 divided by the total number of months of
this Agreement with said sum then being multiplied by the total number of
months remaining under this Agreement prior to its termination. For
example, if the Marketing Allowance is $5,000, the term of the Agreement
is 60 months, and the Agreement is terminated with 50 months remaining,
the calculation would be as follows: $5,000 / 60 months = $83.33 and
$83.33 x 50 = $4,166.50, i.e., Buyer would have an obligation to repay
Seller $4,166.50; or
7
<PAGE>
(b) If Seller elects to participate in the New Distribution Program, Buyer
shall have the right to ratify and confirm this Agreement subject to the
inclusion in this Agreement of any and all commercial terms and conditions
of service, including, without limitation, price, that would provide
additional benefits to Buyer that are a part of the New Distribution
Program. Seller agrees that all additional benefits of the New
Distribution Program will be automatically incorporated by reference into
this Agreement and any terms of this Agreement that would conflict with
the terms of the New Distribution Program will be automatically deleted.
(c) If Seller elects not to participate in the New Distribution Program, then
Buyer shall have the rights described in (a) above (but not the rights
described in (b) above) or the right to keep the this Agreement intact
without repayment of the Marketing Allowance.
10. TITLE AND RISK OF LOSS.
a. Seller shall bear all risk of loss, damage, or destruction until title
passes to Buyer. Title to all goods shall pass upon delivery to the respective
Restaurants subject to rejection of certain items by notation on the delivery
ticket. Except in the case of night deliveries or so-called "key" deliveries,
all deliveries shall be checked in jointly by the driver of the delivery vehicle
and an authorized representative of Buyer, both of whom shall note on the
delivery ticket any shortages and damaged or rejected goods. Seller shall ensure
that all billings reflect all shortages and damaged or rejected goods noted on
the delivery ticket. Buyer shall make arrangements through Seller's order
department for any goods to be returned to Seller. Seller shall issue a receipt
to Buyer for any goods picked up for return to ensure that Buyer receives a
proper credit therefor. Seller shall issue any credits in accordance with its
Product Credit Policy, as amended by Seller from time to time. Credit memos are
due to Buyer by the second restaurant delivery following the delivery which
generated the credit.
b. Seller will acquire and maintain an inventory of new products (i.e.,
those which have no prior sales history within the Burger King System), special
promotional products (e.g., licensed premiums), and other like products. If
Seller orders such products based upon sales projections or other estimates or
commitments provided by Buyers (the franchisees or their designated
representative), then at the conclusion of the promotion or test, or upon
expiration of the product shelf life, whichever comes first, Buyer agrees to
reimburse Seller for the Cost of any unsold products that Seller had ordered or
committed for based on Buyer's estimates.
c. In the event this Agreement is canceled by Buyer, Buyers will use best
efforts to ensure the successor distributor will purchase Burger King
proprietary products at Seller's cost within 60 days of termination, provided
these products may, at the termination of Seller's service to Restaurants, be
consumed prior to the product expiration date stamped by the manufacturer on
each carton.
8
<PAGE>
11. AUDIT.
a. R.S.I. Cost Notifications, Vendor Price Notifications and freight rate
bracket schedules, will be made available to Buyer. These will be the basis for
matching against product costs established by Seller for pricing to Buyer. Buyer
must provide a list of Seller invoice dates and items to be audited.
b. Seller and Buyer agree to work together in good faith to resolve any
conflict. In the event of a conflict between Buyer's audit of Seller and
Seller's audit which cannot be resolved, if the amount involved exceeds
$10,000.00, then Buyer or Seller may give the other written notice (the "Notice
of Disputes") which shall specify in detail the nature of any disagreements so
asserted. All matters specified in any Notice of Dispute shall be submitted for
resolution by arbitration in Dallas, Texas in accordance with the rules of the
American Arbitration Association (AA) by an arbitrator mutually appointed by
Buyer and Seller. If within ten (10) days of the Notice of Dispute the parties
are unable to agree upon the selection of an arbitrator, then either party may
request the AAA to select an arbitrator who is willing to perform such
services. The arbitrator selected shall consider only the disputed items set
forth in the Notice of Dispute. The arbitrator shall act promptly to resolve all
disputed matters and its decision shall be final and binding on the parties. The
fees and expenses of the arbitrator shall be shared 50% by all Buyers alleging a
conflict and 50% by Seller. Nothing herein shall prevent or delay Seller from
seeking any available legal or equitable remedies to collect past due accounts
receivable from any Buyer, including, without limitation, the filing of a
collection lawsuit.
12. CONFIDENTIALITY. Seller and Buyer agree that all information as to quantity,
Cost, and price of goods and services shall be maintained in confidence, except
that such information may be provided by either party to its auditors,
consultants, advisors and in any manner proscribed by law and to any prospective
purchasers of all or part of their respective businesses.
13. CHANGE OF CONTROL. In the event of a change of control of Buyer a portion of
Buyer's restaurants (i.e., the sale of a majority of the capital stock of Buyer,
the sale of a substantial portion of Buyer's assets, the merger, consolidation
or recapitalization of Buyer, etc.), all amounts owing by Buyer to Seller, for
the affected restaurants, as the case may be, shall be immediately due and
payable, and Buyer shall be required to pay such amounts to Seller no later than
the closing of the transaction(s) relating to such change of control.
14. SELLER'S INDEMNITY. Seller hereby agrees to protect, indemnify, defend and
save Buyer, its affiliated companies and the officers, directors, employees,
agents and legal representatives of same, harmless from any and all claims,
demands, suits, causes of action, or actions, whether meritorious or not,
arising out of or related to the performance of Seller's duties and obligations
or failure to so perform under this
9
<PAGE>
Agreement, including but not limited to the storage and delivery of Products to
each of the Restaurants.
15. BUYER'S INDEMNITY Buyer hereby agrees to protect, indemnify, defend and save
Seller, its affiliated companies and the officers, directors, employees, agents
and legal representatives of same, harmless from any and all claims, demands,
suits, causes of action, or actions, whether meritorious or not, arising out of
or related to the performance of Buyer duties and obligations or failure to so
perform under this Agreement, or to the extent such claim, demand, suit, or
action related to the use, handling, or preparation of any Product, including
but not limited to any claimed defect or contamination of any Product, arising
after delivery thereof to Buyer, and any actual or alleged infringement of any
United States or Foreign Letters Patent, trademarks, copyrights, or other
proprietary rights relating to the Products.
16. FORCE MAJEURE. Neither party shall be liable for any delay or untimely
performance which is directly caused by non-Seller related strikes, floods,
fires, acts of God, or acts or regulations of any governmental authority which
are beyond the control of the performing party ("Force Majeure").
17. DEFAULT. Each party upon material breach of this Agreement by the other
party, which is not cured within the period specified below, shall be entitled
to (a) terminate this Agreement and (b) with respect to all breaches (material
or otherwise) recover its damages according to law. In addition to the other
provisions of this agreement, a breach hereunder shall exist if any of the
following events shall occur and be continuing: (i) if a proceeding is
instituted by or against either party under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law to be adjudicated a
bankrupt or insolvent provided that the parties have 60 days to have an
involuntary petition in bankruptcy dismissed; (ii) the appointment of or taking
possession by a custodian, receiver, liquidation, assignee, trustee or similar
official of all or a substantial part of the assets of either party; (iii) the
assignment of all or substantially all of the assets of either party for the
benefit of creditors of either party; or (iv) if either party shall admit in
writing its inability to pay its debts as they become due. It is further
understood that Seller's failure to deliver any shipment of products hereunder,
or Seller's delivery of any shipment of non-conforming products, shall be
deemed, subject to the terms and conditions hereof, to be a breach with respect
to such shipment only and that such default does not substantially impair the
value of this Agreement to Buyer as a whole, nor shall it be deemed to
constitute a breach of this Agreement as a whole. Without limiting the
foregoing, in the event Seller fails to make deliveries to one or more
Restaurants, fails to make deliveries in accordance with this Agreement within a
given Service Center Area, or fails to make deliveries to all of the Restaurants
in accordance with this Agreement, then Buyer shall give Seller written notice
of such failure, specifying in reasonable detail the alleged failure to perform,
and providing Seller with the opportunity to cure such alleged failure to
perform within 30 days from receipt of such notice or within 3 days if failure
is related to product which is non-conforming or rejected or to un-delivered
10
<PAGE>
product. No default by Seller shall be deemed to have occurred unless Seller has
failed to cure such alleged default within such 30-day period or 3 day period.
In the event of a pattern of repeated material failures by Seller to perform,
Buyer may terminate this Agreement; however, if such patterns are related to a
specific Service Center, Buyer may elect to terminate the Agreement with respect
to only that Center.
18. CONSTRUCTION. This Agreement shall be construed and enforced in accordance
with the laws of the State of Texas except to the extent that these laws are
governed by the federal laws of the United States, including, but not limited
to, all matters of construction, validity and performance.
19. ARBITRATION.
a. Except as otherwise provided herein, any controversy or claim arising
out of or relating to this Agreement or the breach hereof shall be settled by
arbitration in accordance with such rules as may be agreed upon by Seller and
Buyer, or, failing agreement, in accordance with the Commercial Arbitration
Rules of the American Arbitration Association (the "AA") as such rules may be
modified herein.
b. An award rendered in connection with arbitration pursuant to this
Section shall be final and binding, and judgement upon such an award may be
entered and enforced in any court of competent jurisdiction.
c. The forum for arbitration under this Section shall be Dallas, Texas and
the governing law for such arbitration shall be the law of the State of Texas.
d. Arbitration under this Section shall be conducted by a single
arbitrator selected jointly by Seller and Buyer. If within thirty (30) days
after a demand for arbitration is made, Seller and Buyer are unable to agree on
a single arbitrator, three arbitrators shall be appointed. Seller and Buyer
shall each select one arbitrator and those two arbitrators shall then select
within thirty (30) days a third neutral arbitrator. In connection with the
selection of a single arbitrator or the third arbitrator, consideration shall be
given to familiarity with distribution of food and related products and
experience in dispute resolution between parties, as a judge or otherwise. If
the arbitrators selected by Seller and Buyer cannot agree on a third arbitrator,
they shall discuss the qualifications of such third arbitrator with the AA prior
to selection of such arbitrator, which selection shall be in accordance with the
Commercial Arbitration Rules of AAA.
e. If an arbitrator cannot continue to serve, a successor to an arbitrator
selected by Seller and Buyer shall be also selected by the same party, and a
successor to a neutral arbitrator shall be selected as specified in subsection
(d) of this Section. A full rehearing will be held only if the neutral
arbitrator is unable to continue to serve or if the remaining arbitrators
unanimously agree that such a rehearing is appropriate.
11
<PAGE>
f. the arbitrator or arbitrators shall be guided, but not bound, by the
Federal Rules of Evidence and by the procedural rules, including discovery
provisions, of the Federal Rules of Civil Procedure. Any discovery shall be
limited to information directly relevant to the controversy or claim in
arbitration.
g. The parties shall each be responsible for their own costs and expenses,
except for the fees and expenses of the arbitrators, which shall be shared
equally by Seller and Buyer.
20. NOTICES. All notices, requests, demand and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been properly given if mailed first class, postage prepaid,
certified mail, return receipt requested, or by express mail, or other express
courier service, as follows:
IF TO SELLER: AMERISERVE
1500 San Remo Ave., 3 Floor
Coral Gables, FL 33146
Attention: Senior Vice President -- Burger King
Account
WITH A COPY TO: AMERISERVE
14841 Dallas Parkway
Dallas, TX 75240-2100
Attention: Senior Vice President and General Counsel
IF TO BUYER:
21. ASSIGNMENT. Neither Buyer nor Seller may assign its rights and obligations
under this Agreement to any third party without the consent of the other party,
which consent shall not be unreasonably withheld; except that Seller may assign
its rights and obligations under this Agreement without Buyer's consent to any
party controlled by, or under common control with Seller, or to any purchaser of
all or a substantial part of its business or assets.
22. INSURANCE Seller agrees to maintain comprehensive commercial general
liability coverage with an insurer during this Agreement with coverage,
including product liability, of $25 million. Seller will provide proof of
insurance upon request.
12
<PAGE>
23. OTHER GENERAL PROVISIONS.
a. The headings in this Agreement are used only as a matter of convenience
and for reference and shall not define, limit or describe the scope of this
Agreement or the intent of any provision.
b. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute a
single document.
c. Any provisions of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extend
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. If any court or panel of arbitrators determines that any
covenant is invalid or unenforceable, all other covenant shall not thereby be
affected and shall be given full effect, without regard to the invalid portions.
d. The provisions of this Agreement shall be interpreted in accordance
with the laws of the State of Texas.
e. No party shall be responsible for delays or defaults under this
Agreement if such delay or default is occasioned by war, strikes, fire, an act
of God or other causes beyond such party's control.
f. Notwithstanding any provision or reference in this Agreement to the
contrary, in no event shall Buyer or Seller be liable to the other for any
consequential, special, exemplary, incidental or punitive damages, including
lost profits or business opportunities.
g. This Agreement, including the Schedules hereto, sets forth the entire
agreement and understanding of the parties in respect of the transactions
contemplated by them and supersedes any and all bid requirements, proposals,
drafts, prior agreements and understanding relating to the subject matter of
this Agreement. All the terms and conditions of this Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by Buyer and Seller
and their respective heirs, successors and assigns. This agreement shall not be
amended except in writing signed by all parties hereto. No provision,
requirement, or breach of this Agreement may be waived by any party except in
writing. If any party fails to enforce any right to remedy available under this
Agreement, that failure shall not be construed as a waiver of any right or
remedy with respect to any other breach or failure by the other parties.
13
<PAGE>
h. Annexed as Exhibit" C" is Carrols' Policy on Sexual Harassment, which
Seller acknowledges and agrees that it will advise all of its employees of.
Seller will indemnify and hold Buyer harmless for all claims arising out of the
failure of Seller's employees or agents to comply with said policy; such
indemnification shall include attorney's fees and costs.
"SELLER": AmeriServe Food
Distribution, Inc.
BY: /s/ Robert H. Winstead
-------------------------------------
SVP Burger King Account
"BUYER" CARROLS CORPORATION
BY: /s/ Joseph Zirkman
-------------------------------------
Joseph Zirkman, V. President
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains Summary Financial Information extracted from the
Quarterly Report for the 6 months ended June 30, 1999 of Carrols Corporation and
is qualified in its entirety by reference to such financial statement.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 737,000
<SECURITIES> 0
<RECEIVABLES> 204,000
<ALLOWANCES> 53,000
<INVENTORY> 3,646,000
<CURRENT-ASSETS> 14,968,000
<PP&E> 191,356,000
<DEPRECIATION> (86,166,000)
<TOTAL-ASSETS> 305,101,000
<CURRENT-LIABILITIES> 34,787,000
<BONDS> 242,476,000
0
0
<COMMON> 10
<OTHER-SE> 13,344,000
<TOTAL-LIABILITY-AND-EQUITY> 305,101,000
<SALES> 115,745,000
<TOTAL-REVENUES> 115,962,000
<CGS> 35,651,000
<TOTAL-COSTS> 187,756,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,291,000
<INCOME-PRETAX> 918,000
<INCOME-TAX> 632,000
<INCOME-CONTINUING> 286,000
<DISCONTINUED> 0
<EXTRAORDINARY> 940,000
<CHANGES> 0
<NET-INCOME> (654,000)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
