Results for CKE's first quarter of fiscal 2002, the last fiscal quarter (fourth quarter fiscal 2001) and the first quarter of the prior fiscal year are summarized below. Pro-forma amounts are shown after applicable income taxes as if the Company (1) had not recorded a loss from the repositioning activities and (2) was able to record a deferred tax asset in fiscal year 2002 as it had been able to in the first quarter of the prior fiscal year.
"Our Carl's Jr. restaurants continued to perform well in the first quarter of fiscal 2002,'' said chief executive officer Andrew F. Puzder. "We believe that Carl's Jr.'s continued success, along with a reduction in the same-store sales declines at our Hardee's restaurants, is indicative that we are turning the corner. Not only is our loss on a pro-forma basis, as shown in the summary, substantially down from last quarter, our results, exclusive of the operating results of the stores we have sold or closed or which we will close, show pretax income of $4.5 million for this quarter versus a loss of $6.5 million a year ago. See Table 2 below.
"The table on page one of this release also reflects a substantial improvement in the pro-forma results this quarter versus the last quarter's pro-forma results. That improvement is due to several things, one of which being that the seasonality of our business results in higher sales in the first quarter of the year versus the fourth quarter of the year. That improvement was enhanced by the first quarter consisting of sixteen weeks versus twelve weeks last quarter. Lastly, operating and interest expenses were down as we control our costs and reduce our debt level.
"Hardee's same-store sales were down 4.2% in the current quarter versus a decline of 10.9% during the fourth quarter of last year. We continue our operations improvement program at Hardee's emphasizing quality, service and cleanliness, and are encouraged by the results we have seen to date. Mystery shopper scores continue to run at all-time highs.
"During the quarter, we completed sales of stores to existing franchisees as well as the sale of several surplus properties that enabled us to reduce our indebtedness under our credit facility to $120 million as of the end of the quarter. With the close of the Taco Bueno sale earlier this month, we have been able to reduce further the outstanding balance on our credit facility to approximately $46 million today.
"During the quarter, we continued to assess restaurants for likelihood of potential future profitability. We closed 84 Hardee's and 20 Carl's Jr. restaurants during the first quarter of fiscal 2002. As we close restaurants, we reduce our general and administrative expenses to a level commensurate with an increased level of franchised restaurants, including a reduction in headcount as well as other costs. We will complete an assessment of our stores during the second quarter. We expect that review to identify more stores for closure and, accordingly, expect to record a loss for the second quarter. We do not expect to incur significant store closure expense after the second quarter.
"We knew fiscal 2002 would be a repositioning year and that has proven to be true by the first quarter results,'' Puzder said. "However, we are intent on completing our repositioning activities this year and returning to profitability.''