Checkers Drive-In Restaurants, Inc. (Nasdaq: CHKR) reported August 2 financial results for its second fiscal quarter ended June 19, 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 second quarter of fiscal 2000 include 12 weeks of activity for both Rally’s and Checkers and the 1999 financial results are Rally’s only.
Net income increased $1.2 million, or 331%, to $1.5 million, or $0.16
per diluted share for the second quarter of 2000, compared to net
income of $355,000, or $0.07 per diluted share during the second
quarter of 1999. On a combined basis, Checkers and Rally’s have not
reported net income of $1.5 million since 1993.
Total revenues increased $10.7 million to $47.1 million for the second
quarter of fiscal year compared with revenues of $36.4 million during
the second quarter of fiscal 1999. The increase in revenues is
primarily attributable to the operations of Checkers subsequent to the
merger. Same-store sales at Company-owned Checkers and Rally’s
restaurants declined by 0.2 percent and 8.1 percent, as compared to the
second quarter of 1999.
On June 15, 2000, the Company utilized cash on hand and $35.0 million
of borrowings under a new credit facility to retire the $39.5 million
balance of its 9-7/8 percent senior notes.
On June 29, 2000, the Company completed the sale of 51 Rally’s
Restaurants to a franchisee for $16.4 million. The Company has used
proceeds from this transaction to reduce its borrowings under its new
credit facility to $23.6 million.
“While I am pleased with the progress we have achieved in reducing costs and improving operations over the past two quarters, I know that we can do more,” says Daniel Dorsch, president and CEO. Since I came aboard in December 1999, the management team has been focused on increasing profits and resolving the Company’s outstanding debt issues. We are now on our way to accomplishing those goals: income is up, the debt due June 15, 2000 has been refinanced, and we have closed many of the market sale transactions that were pending.”
“With the distraction of most of the market sales and the debt refinancing behind us,” Dorsch continued, “we are now well positioned to focus on improving revenues. We have a number of programs and strategic initiatives we will be rolling out over the next several months to help us achieve our goals and overcome the many challenges that currently exist in growing sales in our segment. Our plan is to return to our roots as a premier, drive-in quick service restaurant by serving great tasting food, very fast, with a smile.”