Checkers Drive-In Restaurants, Inc
. (Nasdaq: CHKR) reported May 11 financial results for its first fiscal quarter ended March 27, 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 first quarter of fiscal 2000 include 12 weeks of activity for both Rally's and Checkers, and the 1999 financial results are Rally's only.
Results for the first quarter ended March 27, 2000 are as follows:
- Total revenues increased $22.1 million to $52.2 million for the first quarter of fiscal 2000 compared with revenues of $30.1 million during the first quarter of fiscal 1999.
- 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 0.7 percent while Checkers same-store sales increased by 1.1 percent during the first quarter.
- The net loss for the quarter was $425,000 or $.05 per share as compared to a net loss of $1.6 million or $.33 per share during the first quarter of fiscal 1999. On April 30, 2000, the Company completed the repayment of the remaining $2.0 million outstanding under the Restated Credit Agreement.
- In addition, as of May 11, 2000, the Company has reduced the balance of the 9 7/8% Senior Notes to $40.0 million. The Senior Notes mature on June 15, 2000. In connection with its previously announced debt reduction strategy, the Company is in various stages of completing five separate transactions involving the sale of 142 Company-operated restaurants to new and existing franchisees and the sale of its modular building manufacturing facility. These transactions, if completed, are expected to generate net proceeds to the Company of approximately $33.5 million. There cannot, however, be any assurance that any or all of the foregoing transactions will close prior to June 15, 2000. Accordingly, the Company is working with financial institutions to secure bridge or other financing that would enable it to meet its upcoming debt obligations.
Although the Company believes that its debt reduction and refinancing strategy will be successful, there can be no assurance that the Company will be able to satisfy the entire principal balance of the Senior Notes on their due date.
"The senior management team has been working diligently to complete the market sales and repay the Company's debt," says Daniel J. Dorsch, president and chief executive officer. "Simultaneously, we continue to examine every aspect of our business in an effort to provide better food and service to our customers while reducing operating costs through the implementation of strict control and reporting procedures. I believe we are making progress."
Dorsch continued, "We reduced operating expenses by an average of five percentage points during the second and third accounting periods of the first quarter as compared with the first period, and same store sales are improving. We are hopeful that these results are indicative of trends that will continue as we execute our operating and cost-reduction initiatives."