Checkers Drive-In Restaurants, Inc. (Nasdaq: CHK) reported on Arpril 3, 2000 financial results for its fourth quarter and fiscal year ended January 3, 2000. As the merger with Rally’s Hamburgers, Inc. on August 9, 1999 was accounted for as a reverse acquisition, Rally’s was deemed the acquiring company for accounting purposes. Accordingly, the historical financial results for the combined entity prior to August 9, 1999 are those of Rally’s. The results reported for the fourth quarter of fiscal 1999 include 17 weeks of activity for both Rally’s and Checkers and the year-to-date results include 53 weeks of activity for Rally’s and 21 weeks for Checkers. These 1999 results are compared to the 1998 financial results of Rally’s only.
Results for the 17-week period ended January 3, 2000 are as follows: Total revenues increased $46.2 million to $89.7 million for the fourth quarter of fiscal 1999 compared with revenues of $43.5 million during the fourth quarter of fiscal 1998. The increase in revenues is primarily attributable to the operations of Checkers subsequent to the merger. Same- store sales at the Company’s Rally’s restaurants declined by 2.3 percent while Checkers same store sales increased by 4.8 percent during the fourth quarter.
The net loss for the quarter of $23.3 million included a $21.9 million charge taken primarily to reduce the carrying value of certain Company- operated restaurants which the Company intends to sell to franchisees during fiscal 2000, partially offset by a $2.6 million gain on the sale of restaurants to franchisees in the fourth quarter of 1999. Excluding these items, the net loss for the quarter was $4.0 million or $0.43 per share as compared to a net loss of $3.8 million or $0.79 per share during the fourth quarter of 1998. The prior year results include loss provisions of $1.7 million related to the closure of certain Rally’s restaurants.
As stated in previous news releases, the Company is aggressively pursuing a debt reduction strategy that involves the sale of certain Company- operated market areas to franchisees. Through March 30, 2000, the Company has completed the sale of 135 Company-operated restaurants to franchisees and a sale-leaseback transaction, which have generated net proceeds to the Company of approximately $30 million. The Company expects to complete additional transactions during fiscal 2000 and will use the resulting proceeds to further reduce debt.
Year-to-date results for the 53-week period ended January 3, 2000 are as follows:
Total revenues increased $56.8 million to $201.8 million for fiscal 1999 compared with revenues of $145.0 million during fiscal 1998. The increase in revenues is mostly attributable to the operations of Checkers restaurants for the 21 weeks subsequent to the merger. Same-store sales at the Company’s Rally’s restaurants increased by 0.2 percent, while Checkers same-store sales decreased 2.6 percent during fiscal 1999 as compared to fiscal 1998.
The net loss of $25.9 million also includes the aforementioned $21.9 million charge and $2.6 million gain recorded in the fourth quarter of 1999. Excluding these items, the net loss was $6.6 million or $0.99 per share compared with a net loss of $7.5 million or $1.67 per share during 1998. The prior year results include loss provisions of $1.7 million related to the closure of certain Rally’s restaurants.
Daniel J. Dorsch, president and chief executive officer, commented, “The merger of Checkers and Rally’s has given us new efficiencies in purchasing, people and franchisees that we intend to capitalize upon early in 2000. With the planned sale of approximately half of our Company-owned restaurants to existing and new franchisees underway, we are positioning to take this Company to the next level operationally and financially. Funds from the restaurant sales will be used to pay down existing debt, while our new franchisees will bring passion to the management of these locations, leading to increased growth.”
