FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
March 19, 2003
CHECKERS DRIVE-IN RESTAURANTS, INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-19649 58-1654960
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
4300 WEST CYPRESS STREET, SUITE 600, TAMPA FLORIDA 33607
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(813) 283-7000
Former name or former address (if changed since last report)
NOT APPLICABLE
Item 9. REGULATION FD DISCLOSURE.
On March 19, 2003, the Registrant issued a news release entitled
"Fourth Quarter and Full Year 2002 Results," and a copy is being
filed herewith as Exhibit 99.1.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHECKERS DRIVE-IN RESTAURANTS, INC.
By:_________________________________
Name: Daniel J. Dorsch
Title: President and Chief Executive Officer
Dated: March 19, 2003
EXHIBIT INDEX
Exhibit Number Description
99.1 Press Release, dated March 19, 2003
Exhibit 99.1
CHECKERS DRIVE-IN RESTAURANTS, INC.
4300 West Cypress Street, Suite 600, Tampa, Florida 33607
* (813) 283-7000 * (813) 283-7001
CONTACT: David Koehler, CFO NEWS RELEASE
813-283-7000
FOR IMMEDIATE RELEASE
TAMPA, FL - March 19, 2003 - CHECKERS DRIVE-IN RESTAURANTS, INC.
(NASDAQ: CHKR) today announced its financial results for the
fourth quarter and year ended December 30, 2002. Revenue of
$53.5 million in the fourth quarter was the highest quarterly
result since the first quarter of 2000.
Highlights for fiscal 2002 compared to fiscal 2001 were as
follows:
* Total revenues increased 10.8% to $179.0 million
* Restaurant EBITDA margins increased approximately 30%
* Fully diluted earnings per share from operations
before non-cash charges increased approximately 60%
to $0.82
* Non-cash charges of $12.6 million related to impairments
and surplus properties
* Net loss of $1.7 million or ($0.14) per diluted share
Highlights for the fourth quarter of 2002 relative to the
same quarter last year were as follows:
* Total revenues increased approximately 4.8% to
$53.5 million
* Comparable corporate store sales increased 0.54%
Fiscal 2002 results:
Total revenues including franchise royalty and fee income
increased 10.8% to $179.0 million for the year ended
December 30, 2002 as compared to the year ended
December 31, 2001. For the year, corporate owned
stores generated revenues of $164.1 million in
2002 versus $145.4 million in 2001 with year-over-
year same store sales decreasing 0.17%. Despite
the slight decrease in same store sales, revenue
growth was boosted by the reacquisition of 23
franchised stores throughout the year.
During 2002, franchise royalty revenues decreased
to $14.6 million from $15.5 million a year ago,
driven by a comparable store sales decrease of
1.8% and 50 fewer franchised locations due to
27 net closings and the reacquisition of 23 units.
Franchise fees and other income decreased to $0.4
million in fiscal 2002 as compared to fiscal 2001
primarily due to the 70 restaurant franchise
transfer fees received in fiscal 2001.
Due to non-cash charges of $12.6 million incurred
during the fiscal year, Checkers reported a $1.7
million net loss for fiscal 2002, or a $0.14 loss
per diluted share compared to net income of $4.3
million, or $0.36 per diluted share in 2001.
Excluding those charges, however, Checkers generated
net income per diluted share of $0.82 as compared
to $0.51 a year ago before non-cash charges of $1.7
million.
For the year ended December 30, 2002, restaurant
EBITDA margins, defined as Company-owned restaurant
sales less restaurant level operating expenses,
excluding restaurant depreciation and
amortization, increased approximately 30% as
compared to the year ended December 31, 2001.
Also, for the year, Checkers generated free cash
flow of approximately $14.9 million. Free cash
flow is defined as net income plus depreciation,
amortization, non-cash charges, less maintenance
capital expenditures.
Fourth quarter results:
Total revenues including franchise royalty and fee
income increased 4.8% to $53.5 million for the
fourth quarter ended December 30, 2002 compared
to the fourth quarter ended December 31, 2001.
Corporate owned restaurant sales for the quarter
increased 6.2% to $49.1 million versus $46.2
million in the fourth quarter of 2001. The results
were primarily driven by a 0.54% increase in same
store sales and the reacquisition of franchise
restaurants since the end of the fourth quarter of
fiscal 2001.
Franchise royalty revenue declined 5.0% for the
quarter to $4.3 million versus $4.5 million a year
ago. Not only were there 50 fewer franchised units
in the current quarter as compared to the prior
period, but same store sales declined by 4.3%.
Harsher than normal weather conditions in several
markets combined with a soft economy and industry
wide deep discounting adversely affected results.
Also during the quarter, Checkers incurred non-cash
charges of $10.8 million related to asset impairment
and restaurant closures. As a result, Checkers
reported a net loss of $9.7 million or $0.79 per
diluted share in the fourth quarter of 2002,
compared to net income of $2.3 million or $0.18
per diluted share in the same period of 2001.
Excluding the non-cash charges, net income would
have been $1.1 million or $0.08 per diluted share
compared to $3.9 million or $0.32 per diluted share
in the fourth quarter of 2001 before non-cash
charges of $1.7 million.
Daniel J. Dorsch, Chief Executive Officer and
President commented, "We are proud of the progress
this Company has made. Excluding non-cash charges,
our 2002 operating earnings growth was nearly 80%
over last year, which is a testament to our drive
and our people. Not only did we increase management
retention levels and quicken the speed per
transaction throughout our system, but we
strengthened our balance sheet." Mr. Dorsch
continued, "In fiscal 2003 we plan to improve on
our success and leverage our sales and operating
momentum with our most valuable asset, our people.
With the team as our foundation, Checkers will target
productivity and new unit development strategies
during the year. We will do so, however, with a
sense that the economy is somewhat weak and the
consumer is uncertain. To that end, we'll adopt a
more conservative stance on new unit growth and
focus primarily on improvement in existing corporate
and franchised stores. Ultimately, we believe that
this strategy will drive increased sales and
earnings along with shareholder value over the
long term."
Impairment charges:
Checkers incurred a non-cash impairment of assets
charge of $6.5 million during the fourth quarter
and $7.4 million for fiscal 2002.
The charge relates to 58 restaurants that did not meet
performance criteria established at the beginning
of the Company's turnaround in fiscal 2000. In
addition, five owned properties, 21 nonstandard
modular buildings and five buildings in New Orleans
targeted for replacement, were included in the
impairment charge.
As part of the Company's three to five year strategy
of reducing Company owned stores from 32% to
approximately 25%, Checkers will utilize the sale of
assets to franchisees, which have now been marked
to the current market, as a base to build additional
new stores under area development agreements.
Restaurant closure charge:
Furthermore, the Company recognized losses net of
termination gains of $4.3 million in the fourth
quarter and $5.2 million for fiscal 2002 from
restaurant closures related to the estimated
future lease costs of surplus properties.
The Company remains obligated to make ongoing
lease payments estimated to be $1.4 million in
2003 on 24 vacant sites and nine sites, which are
subleased for less than the Company's lease cost.
While management was successful in reducing its
surplus properties to 33, the loss reserve was
increased during fiscal 2002 on these remaining
sites to 100% of future lease obligations.
Management will continue its efforts to reduce
its obligations on these leases in the future.
David Koehler, Chief Financial Officer commented,
"We are very proud of our top-line growth in
2002, as well as the improvement in operating
earnings. Our cash balance and free cash flow
generation abilities are at a three-year high
and our operating improvements, including the
implementation of technology at the store level,
has further improved results. As we move into
2003, we'll maintain a conservative approach and
preserve our balance sheet strength. We'll also
continue to evaluate our Company-owned versus
franchised mix, and seek out ways to improve
performance throughout the system."
Updated 2003 guidance:
The Company also updated its business outlook
for the first quarter and full fiscal year
ended December 31, 2003. For the first quarter
ending March 31, 2003, the Company expects
earnings per fully diluted share of $0.16
to $0.18.
For the full year, Checkers expects to open
approximately 15-19 new system-wide restaurants,
down from the previous guidance of 20 to 35 new
restaurants. The 2003 estimate assumes four
Company-owned sites and 11-15 franchised locations.
Company-owned comparable same store sales are
expected to increase by 0.5% to 2.5% for 2003
although monthly sales results may be more
volatile given the soft economy and calendar
shifts. Based on the foregoing assumptions,
diluted earnings per share for fiscal year 2003
are expected to range from $0.65 to $0.75,
excluding any income tax implications.
About Checkers Drive-In Restaurants, Inc.:
As of December 30, 2002, Checkers Drive-In
Restaurants, Inc. and its franchisees own
398 Checkers( operating primarily in the
Southeastern United States and 386 Rally's(
operating primarily in the Midwestern United
States. Checkers is headquartered in Tampa,
Florida.
For more information about the Company, please
visit www.checkers.com.
To access the quarterly call at 11:00 am EST on
Thursday, March 20, 2003, dial 1-800-388-975 or
visit our web site at www.checkers.com.
Except for historical information, this announcement contains
"forward-looking" and "Safe Harbor" statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, Section
21E of the Securities Exchange Act of 1934, as amended and the
Private Securities Litigation Reform Act of 1995. These forward-looking
and Safe Harbor statements reflect management's expectations based
upon currently available information and data; however, actual results
are subject to future events and uncertainties, which could cause
actual results to materially differ from those projected in these statements.
Factors that can cause actual results to materially differ include,
but are not limited to: the uncertainties associated with litigation;
increased advertising, promotions and discounting by
competitors which may adversely affect sales; the ability
of the company and its franchisees to open
new restaurants and operate new and existing
restaurants profitability; increases in food, labor, utilities,
employee benefits and similar costs; economic and political
conditions where the company or its franchisees operate;
and new product and concept developments by food industry
competitors. Further information regarding factors that could
affect the company's financial and other results is included
in the Company's Forms 10Q and 10K, filed with
the Securities and Exchange Commission.