<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934.
For the quarterly period ended August 15, 1994
-------------------------------
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
for the transition period from ___________________ to _____________________
Commission file number 1-13192
---------------
CKE RESTAURANTS, INC.
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 33-0602639
- ----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1200 North Harbor Boulevard, Anaheim, CA 92801
- ----------------------------------------------------------------------------
(Address of principal executive offices) (zip Code)
Registrant's telephone number, including area code (714) 774-5796
--------------------
NOT APPLICABLE
---------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ______
---
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: 18,715,821 $.01 par value common -- as of September 23, 1994
--------------------------------------------------------------
1
<PAGE> 2
CKE RESTAURANTS, INC.
INDEX
<TABLE>
<CAPTION>
Page
------
<S> <C>
Part I Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets as of August 15, 1994 and January 31, 1994 3
Consolidated Statements of Income for the twelve and twenty-eight weeks
ended August 15, 1994 and August 9, 1993 4
Consolidated Statements of Cash Flows for the twenty-eight weeks ended
August 15, 1994 and August 9, 1993 5-6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 12-13
</TABLE>
2
<PAGE> 3
CKE RESTAURANTS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
August 15, January 31,
1994 1994
---------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 9,130 $ 17,075
Marketable securities 8,989 9,064
Accounts receivable 7,568 8,956
Current portion of related party receivables 964 1,175
Inventories 6,233 7,485
Deferred tax asset, net 15,377 15,310
Other current assets 3,818 10,339
-------- --------
Total current assets 52,079 69,404
Property and equipment, net 115,986 113,212
Property under capital leases, net 32,001 33,608
Notes receivable 15,810 16,171
Related party notes receivable 851 1,976
Other assets 8,427 7,764
-------- --------
$225,154 $242,135
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 8,518 $ 13,207
Current portion of capital lease obligations 3,465 3,354
Accounts payable 12,958 13,161
Other current liabilities 33,368 36,831
-------- --------
Total current liabilities 58,309 66,553
-------- --------
Long-term debt 13,391 17,414
Capital lease obligations 44,271 45,886
Other long-term liabilities 15,863 20,206
Stockholders' equity:
Preferred stock, $.01 par value; authorized
5,000,000 shares; none issued or outstanding -- --
Common stock, $.01 par value; authorized
50,000,000 shares; issued and outstanding
18,771,321 and 18,676,587 shares 188 187
Additional paid-in capital 34,467 33,741
Retained earnings 58,665 58,148
-------- --------
93,320 92,076
-------- --------
$225,154 $242,135
======== ========
</TABLE>
3
<PAGE> 4
CKE RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except per share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Twelve Weeks Ended Twenty-eight Weeks Ended
--------------------------- ---------------------------
August 15, August 9, August 15, August 9,
1994 1993 1994 1993
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues:
Retail sales $ 87,277 $ 89,935 $198,580 $206,906
Franchised and licensed restaurants 18,031 18,975 41,734 42,859
-------- -------- -------- --------
Total revenues 105,308 108,910 240,314 249,765
-------- -------- -------- --------
Operating costs and expenses:
Retail operations:
Food and packaging 26,451 27,197 60,189 62,001
Payroll and other employee benefits 26,301 26,465 61,829 65,205
Occupancy and other operating expenses 18,941 19,961 43,748 47,666
-------- -------- -------- --------
71,693 73,623 165,766 174,872
Franchised and licensed restaurants 17,137 17,529 39,649 40,035
Advertising expenses 5,177 4,751 11,034 10,312
General and administrative expenses 8,909 8,558 18,569 18,685
-------- -------- -------- --------
Total operating costs and expenses 102,916 104,461 235,018 243,904
-------- -------- -------- --------
Operating income 2,392 4,449 5,296 5,861
Interest expense (2,307) (2,576) (4,948) (5,548)
Other income, net 1,179 966 1,910 3,959
-------- -------- -------- --------
Income before income taxes and cumulative
effect of change in accounting principle 1,264 2,839 2,258 4,272
Income tax expense 400 480 738 987
-------- -------- -------- --------
Income before cumulative effect of change
in accounting principle 864 2,359 1,520 3,285
Cumulative effect of change in accounting principle -- -- -- (768)
-------- -------- -------- --------
Net income $ 864 $ 2,359 $ 1,520 $ 2,517
======== ======== ======== ========
Net income per share:
Income before cumulative effect of
change in accounting principle $ .05 $ .13 $ .08 $ .18
Cumulative effect of change in
accounting principle .-- .-- .-- (.04)
----- ----- ----- -----
Net income $ .05 $ .13 $ .08 $ .14
===== ===== ===== =====
Weighted average shares outstanding: 18,833 18,157 18,889 18,120
====== ====== ====== ======
</TABLE>
4
<PAGE> 5
CKE RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Twenty-eight Weeks Ended
-----------------------------
August 15, August 9,
1994 1993
---------- ---------
<S> <C> <C>
Net cash flow from operating activities:
Net income $ 1,520 $ 2,517
Adjustments to reconcile net income to net cash provided by operating activities:
Noncash franchise revenues 67 (81)
Depreciation and amortization 11,901 12,306
Noncash restructuring charges -- 533
Loss on sale of property and equipment 1,789 192
Reversal of rent subsidy reserves (2,680) --
Write-off of accounts receivable -- 267
Write-down of marketable securities -- 213
Net noncash investment income (5) (19)
Deferred income taxes -- (307)
Cumulative effect of change in accounting principle -- 768
Payment of arbitration settlement (3,000) --
Net change in marketable securities reserve -- (91)
Net change in receivables, inventories and other current assets 2,193 905
Net change in other assets (726) (293)
Net change in accounts payable and other current liabilities (107) 2,999
-------- --------
Net cash provided by operating activities 10,952 19,909
-------- --------
Cash flow from investing activities:
Construction of restaurant property to be reimbursed or sold and leased back -- (770)
Sale of or reimbursement on restaurant property to be sold and leased back -- 180
Purchases of:
Marketable securities (2,279) (8,497)
Property and equipment (13,673) (6,696)
Proceeds from sales of:
Marketable securities 8,890 26,065
Property and equipment 30 149
Collections on leases receivable 72 63
Increase in notes receivable and related party notes receivable (999) --
Collections on notes receivable and related party notes receivable 1,545 2,980
-------- --------
Net cash provided by (used in) investing activities (6,414) 13,474
-------- --------
Cash flow from financing activities:
Net change in bank overdraft (286) (2,370)
Net change in obligations secured by marketable securities -- (2,422)
Short-term borrowings 3,900 15,150
Repayments of short-term debt (3,900) (33,250)
Repayments of long-term debt (9,000) (7,822)
Repayments of capital lease obligations (1,414) (1,292)
Net change in other long-term liabilities (1,663) (1,642)
Repurchase and retirement of common stock -- (422)
Purchase of treasury stock (98) --
Exercise of stock options 727 506
Payment of dividends (749) (725)
-------- --------
Net cash used in financing activities (12,483) (34,289)
-------- --------
Net decrease in cash and cash equivalents $ (7,945) $ (906)
======== ========
</TABLE>
5
<PAGE> 6
CKE RESTAURANTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Twenty-eight Weeks Ended
----------------------------
August 15, August 9,
1994 1993
----------- ---------
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during period for:
Interest (net of amount capitalized) $4,837 $5,638
Income taxes 302 598
Noncash investing and financing activities:
Investing activities:
Transfer of marketable securities to other assets -- 6,776
Transfer of other current assets to marketable securities 6,776 --
Other investing activities:
Net change in marketable securities from noncash transactions (5) (55)
Net change in dividends receivable -- 36
Leasing activities:
Capital lessor additions -- 499
Other leasing activities:
Decrease in property under capital leases 91 --
Decrease in capital lease obligations (90) --
Reversal of certain lease subsidy reserves 2,680 --
Franchising and reorganization activities:
(Increase) decrease in property and equipment (1,289) 344
Write-off of accounts receivable -- 267
Assumption of various liabilities -- 454
(Increase) decrease in notes receivable 1,356 (481)
Sale/leaseback activities:
Transfer of restaurant property costs to property and equipment -- 6,110
</TABLE>
6
<PAGE> 7
CKE RESTAURANTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 15, 1994 AND AUGUST 9, 1993
NOTE (A) BASIS OF PRESENTATION
In June 1994, a plan of reorganization and agreement of merger were
approved by the shareholders of Carl Karcher Enterprises, Inc. ("Enterprises")
whereby Enterprises and Boston Pacific, Inc. ("Boston Pacific") became
wholly-owned subsidiaries of CKE Restaurants, Inc. ("Restaurants" and
collectively with its subsidiaries, the "Company") and the shareholders of
Enterprises became stockholders of the Company. Restaurants is a Delaware
corporation formed to provide overall strategic direction and finance, legal
and administrative support to Enterprises, operator and franchisor of
approximately 650 Carl's Jr. restaurants, and Boston Pacific, an area developer
of Boston Chicken, Inc. that will develop and operate up to 300 Boston Chicken
stores.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the requirements of Form 10-Q and, therefore, do
not include all information and footnotes which would be presented were such
consolidated financial statements prepared in accordance with generally
accepted accounting principles. These statements should be read in conjunction
with the audited financial statements presented in Enterprises' 1994 Annual
Report to Shareholders. In the opinion of management, all adjustments,
consisting of normal recurring accruals, necessary for a fair presentation of
financial position and results of operations for the interim periods presented
have been reflected herein. The results of operations for such interim periods
are not necessarily indicative of results to be expected for the full year.
The accompanying unaudited consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries. All material
intercompany profits, transactions and balances have been eliminated.
Since Boston Pacific began its start-up operations in February 1994 and
Restaurants did not commence its operations until June 1994, most of the
financial performance for the current fiscal year and all of the financial
performance for the prior fiscal year discussed and analyzed in this Form 10-Q
are comprised of the operations of Enterprises, unless otherwise indicated.
NOTE (B) NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Statement of Financial Accounting Standards No. 115
("SFAS 115"), "Accounting for Certain Investments in Debt and Equity
Securities," as of February 1, 1994, the adoption of which did not have a
material effect on the Company's consolidated financial statements. SFAS 115
requires the inclusion in income or stockholders' equity of unrealized gains
and losses resulting from the fair value accounting of investments in debt and
equity securities, except for debt securities classified as "held to maturity."
Net income for the first half of fiscal 1994 has been restated from
that previously reported to reflect a charge of $768,000, which represented the
cumulative effect related to a change in the method used to discount the
Company's workers' compensation reserve.
NOTE (C) COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company is subject to various
claims, lawsuits and other disputes with third parties incidental to its
operations. While certain of these matters involve claims for substantial
amounts, the Company intends to defend these actions vigorously and it is the
opinion of the Company's management that their ultimate resolution will not
have a material adverse affect on the Company's consolidated financial
statements.
NOTE (D) RECLASSIFICATIONS
Certain prior year amounts in the accompanying consolidated financial
statements have been reclassified to conform to the fiscal 1995 presentation.
7
<PAGE> 8
CKE RESTAURANTS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
In June 1994, a plan of reorganization and agreement of merger were
approved by the shareholders of Carl Karcher Enterprises, Inc. ("Enterprises")
whereby Enterprises and Boston Pacific, Inc. ("Boston Pacific") became
wholly-owned subsidiaries of CKE Restaurants, Inc. ("Restaurants" and
collectively with its subsidiaries, the "Company") and the shareholders of
Enterprises became stockholders of the Company. Restaurants is a Delaware
corporation formed to provide overall strategic direction and finance, legal
and administrative support to Enterprises, operator and franchisor of
approximately 650 Carl's Jr. restaurants, and Boston Pacific, an area developer
of Boston Chicken, Inc. that will develop and operate up to 300 Boston Chicken
stores.
In April 1994, as part of its new marketing strategy, Enterprises
implemented a quality/value repositioning program designed to improve
customers' price/value perceptions and increase the frequency of their visits,
which should in turn increase Carl's Jr. restaurant sales. This repositioning
program resulted in lower prices and a more streamlined menu in most Carl's Jr.
restaurants. New menu boards were installed that prominently display
photographs of a variety of products, making the menu easier to read, and
allowing for more effective promotion of "combo meal" sales. New drive-thru
timers were also installed to help the operators improve their speed of
service. A new advertising campaign was introduced and resources were devoted
to a new product development program and the ongoing consumer research
necessary to support this entire marketing strategy. Finally, to ensure that
any increases in sales and transactions resulting from this program did not
negatively affect the Company's high standards for guest service, staffing
levels were higher than usual during the introductory weeks of this campaign.
In an effort to increase further its retail sales, the Company is also
aggressively exploring and testing a variety of new ideas and opportunities for
its Carl's Jr. restaurants. One such opportunity is a test of dual concepts
which will offer branded products from other restaurant concepts (e.g. Green
Burrito(R)) in a limited number of both Company-operated and franchised
restaurants in the coming months.
The Company's first three Boston Chicken stores opened during the
second quarter of this year, all of which were formerly Carl's Jr. restaurants.
A total of six Carl's Jr. restaurants will be converted to Boston Chicken
stores in fiscal 1995. All of these restaurants were closed during the first
half of this year. By converting these sites, the Company believes that the
development of its Boston Chicken operations has been accelerated, several
underperforming Carl's Jr. restaurants have been eliminated, and sales and
profit increases have occurred in the Carl's Jr. locations nearest these
conversion sites. A total of 17 Boston Chicken stores will open in the latter
half of this year, five of which are scheduled to open in the third quarter and
12 of which are scheduled to open in the fourth quarter.
Since Boston Pacific began its start-up operations in February 1994 and
Restaurants did not commence its operations until June 1994, most of the
financial performance for the current fiscal year and all of the financial
performance for the prior fiscal year discussed and analyzed below are
comprised of the operations of Enterprises, unless otherwise indicated.
FINANCIAL CONDITION
The quality/value repositioning program at Carl's Jr. and the start-up
of the Company's Boston Chicken operations each required the use of cash during
the 28 weeks ended August 15, 1994. Additionally, a nonrecurring $3.0 million
cash payment was made related to an arbitration settlement for which an accrual
had been recognized at the end of the prior fiscal year. Thus, cash and cash
equivalents decreased a total of $7.9 million since the end of fiscal 1994.
Total cash, cash invested in money market funds (a cash equivalent) and
short-term marketable securities, which are invested in a diversified,
highly-liquid investment portfolio containing minimal interest rate risk,
amounted to $18.1 million as of the end of the second quarter.
8
<PAGE> 9
CKE RESTAURANTS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
Other current assets decreased during the current fiscal year largely
as a result of the reclassification of $6.8 million of investment securities to
marketable securities. These funds, which had been held in trust by the State
of California in connection with the Company's self-insured workers'
compensation program, were returned to the Company in April 1994. The State
requires the Company to secure its potential workers' compensation claims each
year by providing a prescribed amount either through one or more standby
letters of credit or an equivalent amount of cash or investment securities. The
requirement for the period beginning May 1, 1994 is $12.1 million and the
Company negotiated with its bank in March 1994 to provide a single standby
letter of credit to satisfy this requirement.
In August 1994, the Company's revolving credit line with its bank was
increased to $20.0 million, of which $15.7 will be committed to two standby
letters of credit, one related to the Company's workers' compensation program
and the other related to the Company's distribution facility in Northern
California.
During the first quarter of fiscal 1995, the Company reacquired several
Carl's Jr. restaurants from a former franchisee which resulted in the reversal
of $2.7 million of lease subsidy reserves that had previously been established.
In May 1994, the Board of Directors adopted a new stock incentive plan
under which various incentives including stock or stock options may be awarded
to eligible employees and non-employee directors to purchase up to 1,750,000
shares of the Company's common stock. This plan, approved by the shareholders
at the Company's 1994 annual meeting, provides for certain automatic grants of
stock options each year to non-employee directors, priced at an amount equal to
or greater than the fair market value on the grant date. A total of 50,000
options have been granted under this new plan.
In July 1994, the Board of Directors authorized the repurchase of up to
two million shares of the Company's common stock. A total of 11,100 shares of
stock were repurchased during the quarter ended August 15, 1994. These shares
were purchased in a series of open market transactions for an aggregate
purchase price of $98,000 and are being held as treasury stock. Subsequent to
the end of the quarter, the Company purchased a total of 62,500 shares from the
Chairman Emeritus at a price of $9.13 per share. These shares are also being
held as treasury stock.
RESULTS OF OPERATIONS
Retail sales, comprised mainly of Carl's Jr. restaurant sales,
decreased 3% and 4% in the 12- and 28-week periods ended August 15, 1994 to
$87.3 million and $198.6 million, respectively, primarily due to lower per
store volumes but also because the number of restaurants operating in both
current year periods decreased slightly. On a same-store basis, these
restaurant sales, which are calculated using only restaurants open for the full
periods being compared, declined approximately 1% in the second quarter of this
year, following approximately a 4% decline in the first quarter of this year.
The 1% decline in the most recent quarter is the lowest quarterly decline
experienced by the Company during the last three years and is a marked
improvement as compared with the decline in the prior fiscal year, which
averaged approximately 9% throughout the first half of the year. The Company
believes its Carl's Jr. restaurant sales were positively affected by improving
customer price/value perceptions as a result of its repositioning program.
9
<PAGE> 10
CKE RESTAURANTS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
Revenues from franchised restaurants, including sales of food service
products by the Company's distribution centers, rental income, royalties and
initial franchise fees accounted for nearly 95% of total revenues from
franchised and licensed restaurants for all periods presented. Despite an
approximate 4% increase in the weighted-average number of franchised
restaurants operating in both current year periods, sales of food service
products by the Company decreased slightly as compared with the comparable year
ago periods because of declines in the franchisees' retail sales. Also
contributing to the decrease in food service sales was a reduction in prices
charged by the Company as a result of lower commodity costs and successful
contract renegotiations with certain of its vendors. Royalties rose in
connection with scheduled increases in royalty rates, particularly in the
current 28-week period, and an increase in the franchised restaurant base.
These increases were more than offset in both current year periods by the
decrease in other fees related to the sales of and repairs and maintenance on
certain franchise equipment. These sales and services were discontinued near
the end of the second quarter of fiscal 1994.
The Company has continued to focus on improving the cost structure of
its Carl's Jr. restaurants during fiscal 1995. For the 28 weeks ended August
15, 1994, Company-operated restaurant margins improved to 16.4% from 15.5% a
year ago despite slight declines in the Company-operated restaurant base and a
3% decline in same-store sales during the current year. For the 12-week
quarter, these margins were 17.9% as compared with 18.1% in the second quarter
of last year. During the first quarter of this year (a 16-week period), these
margins were 15.5% as compared with 13.4% a year ago. During the most recent
quarter, margins were affected by higher staffing levels resulting from the
introduction of the Company's repositioning program.
Nearly 80% of all operating costs associated with franchised and
licensed restaurants in both current year periods were related to the sales of
food service products to franchisees. Gross margins for franchised and licensed
restaurants decreased slightly due to the Company s decision to share decreases
in commodity costs and other savings with its franchisees.
Advertising expenses increased nearly 9% and 7% during the 12- and
28-week periods ended August 15, 1994, respectively. Although sales by
Company-operated restaurants decreased in both current year periods,
advertising expenses increased, particularly in the second quarter of this
year, in connection with the Company's repositioning program.
General and administrative expenses were 4% higher in the 12-week
quarter as compared with the comparable prior year period due largely to
expenses related to the start-up of the Company's Boston Chicken operations and
costs associated with enhancing several key areas of the Company, including
marketing, strategic planning and information systems. General and
administrative expenses for the 28-week period were similarly affected by these
costs as well as the write-off of the former menu boards, which totaled
$957,000. These costs were offset by a reversal of certain previously
established lease subsidy reserves totaling $2.7 million in connection with the
reacquisition of several Carl's Jr. franchised restaurants during the first
quarter of this year.
The Company's total debt continued to steadily decline in fiscal 1995
and as such, interest expense decreased approximately 10% in both current year
periods.
Other income, net, in both fiscal 1995 and fiscal 1994 was comprised of
investment income, gains or losses on sales of restaurants, interest on notes
and leases receivable and other miscellaneous interest income. Investment
income for the 12-week quarter compares favorably to the prior year 12-week
quarter largely due to the adoption of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." As a result of adopting this new standard, the net unrealized loss
on the Company's marketable securities portfolio for the current quarter was
included in stockholders' equity while such losses a year ago
10
<PAGE> 11
CKE RESTAURANTS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
were included in other income, net. For the 28-week period, total investment
income was $1.1 million lower than last year due to the liquidation of
the investment portfolio initiated in the prior year. Fewer sales in the
current year as compared with the first two quarters of fiscal 1994 and a first
quarter loss of $450,000 related to the termination of a restaurant lease in
the current year resulted in decreased gains on sales of restaurants,
particularly in the 28-week period. Interest income from notes and leases
receivable decreased in both current year periods due to lower average
franchisee balances outstanding.
The fiscal 1995 effective tax rate was comparable to the effective rate
applied in the same period a year ago. Lower income before income taxes in the
first half of fiscal 1995 resulted in lower tax expense as compared with the
same fiscal 1994 period.
Net income for the first half of fiscal 1994 has been restated from
that previously reported to reflect a charge of $768,000, which represented the
cumulative effect related to a change in the method used to discount the
Company's workers' compensation reserve.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS: None
ITEM 2. CHANGES IN SECURITIES: None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES: None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
The Annual Meeting of Shareholders of Carl Karcher Enterprises, Inc.
was held on June 20, 1994, for the purpose of electing a board of directors, to
consider and approve the Company's 1994 Stock Incentive Plan and to consider
and approve a Plan of Reorganization and Agreement of Merger.
All of management's nominees for directors were elected by the
following vote:
<TABLE>
<CAPTION>
Shares Voted Authority To Vote
"FOR" "WITHHELD"
------------ -----------------
<S> <C> <C>
William P. Foley II 17,179,451 373,067
Donald E. Doyle 15,952,996 1,599,522
Carl N. Karcher 17,129,013 423,505
Peter Churm 15,167,482 2,385,036
Carl L. Karcher 17,136,745 415,773
Daniel D. (Ron) Lane 17,176,786 375,732
Elizabeth A. Sanders 15,086,478 2,466,040
Frank P. Willey 17,166,468 386,050
</TABLE>
The proposal to approve the Company's 1994 Stock Incentive Plan was
approved by the following vote:
<TABLE>
<CAPTION>
Shares Voted Shares Voted Shares Voted Broker
"FOR" "AGAINST" "ABSTAINING" "NON-VOTES"
- ------------ ------------ ------------ -----------
<S> <C> <C> <C>
11,673,664 3,026,902 60,620 2,791,332
</TABLE>
The proposal to approve the Company's Plan of Reorganization and
Agreement of Merger was approved by the following vote:
<TABLE>
<CAPTION>
Shares Voted Shares Voted Shares Voted Broker
"FOR" "AGAINST" "ABSTAINING" "NON-VOTES"
- ------------ ------------ ------------ -----------
<S> <C> <C> <C>
10,394,088 4,306,796 60,302 2,791,332
</TABLE>
ITEM 5. OTHER INFORMATION None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11 Calculation of Earnings per Share
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has fully caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
CKE RESTAURANTS, INC.
--------------------------------
(Registrant)
September 28, 1994 /s/ Loren C. Pannier
- ------------------------- --------------------------------
Date Senior Vice President,
Chief Financial Officer and
Duly Authorized Officer
12
<PAGE> 1
EXHIBIT 11
CKE RESTAURANTS, INC.
CALCULATION OF EARNINGS PER SHARE
(In Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Twelve Weeks Ended Twenty-eight Weeks Ended
--------------------------- ----------------------------
August 15, August 9, August 15, August 9,
1994 1993 1994 1993
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
- --------------------------
Net income $ 864 $ 2,359 $ 1,520 $ 2,517
======= ======= ======= =======
Weighted average shares outstanding:
Common stock outstanding from
beginning of period 18,759 18,023 18,677 17,920
Pro-Rata Shares:
Exercise of stock options 20 -- 79 29
Repurchase and retirement of shares (2) (1) (1) --
Dilutive effect of outstanding
stock options 56 133 134 171
------- ------- ------- -------
18,833 18,155 18,889 18,120
======= ======= ======= =======
Primary earnings per share $ .05 $ .13 $ .08 $ .14
======= ======= ======= =======
FULLY DILUTED EARNINGS PER SHARE
- --------------------------------
Net income $ 864 $ 2,359 $ 1,520 $ 2,517
======= ======= ======= =======
Weighted average shares outstanding:
Common stock outstanding from
beginning of period 18,759 18,023 18,677 17,920
Pro-Rata Shares:
Exercise of stock options 20 -- 79 29
Repurchase and retirement of shares (2) (1) (1) --
Dilutive effect of outstanding
stock options 56 135 134 171
------- ------- ------- -------
18,833 18,157 18,889 18,120
======= ======= ======= =======
Fully diluted earnings per share $ .05 $ .13 $ .08 $ .14
======= ======= ======= =======
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CKE
RESTAURANTS, INC. CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF
INCOME AS OF AND FOR THE TWENTY-EIGHT WEEKS ENDED AUGUST 15, 1994, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTERLY
PERIOD ENDED AUGUST 15, 1994.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-2
<FISCAL-YEAR-END> JAN-30-1995
<PERIOD-START> FEB-01-1994
<PERIOD-END> AUG-15-1994
<CASH> 9,130
<SECURITIES> 8,989
<RECEIVABLES> 25,193
<ALLOWANCES> 0
<INVENTORY> 6,233
<CURRENT-ASSETS> 52,079
<PP&E> 253,632
<DEPRECIATION> 137,646
<TOTAL-ASSETS> 225,154
<CURRENT-LIABILITIES> 58,309
<BONDS> 0
<COMMON> 188
0
0
<OTHER-SE> 93,132
<TOTAL-LIABILITY-AND-EQUITY> 225,154
<SALES> 198,580
<TOTAL-REVENUES> 240,314
<CGS> 165,766
<TOTAL-COSTS> 235,018
<OTHER-EXPENSES> (1,910)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,948
<INCOME-PRETAX> 2,258
<INCOME-TAX> 738
<INCOME-CONTINUING> 1,520
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,520
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
