SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the three months ended Commission File Number
March 31, 1994 1-6553
CARROLS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 16-0958146
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
968 James Street
Syracuse, New York 13203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (315) 424-0513
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Common stock, par value $1.00, outstanding at May 13, 1994
10 shares
PART 1 - FINANCIAL INFORMATION
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1994 AND DECEMBER 31, 1993
ASSETS March 31, December 31,
1994 1993
Current assets:
Cash and cash equivalents $ 870,000 $ 1,172,000
Trade and other receivables 605,000 632,000
Inventories 2,056,000 2,051,000
Prepaid expenses and other current assets 733,000 760,000
_________ _________
Total current assets 4,264,000 4,615,000
Property and equipment, at cost:
Land 6,206,000 6,431,000
Buildings and improvements 13,918,000 14,341,000
Leasehold improvements 34,062,000 34,025,000
Equipment 35,665,000 35,012,000
Capital leases 15,689,000 15,689,000
Construction in progress 378,000 100,000
___________ ___________
105,918,000 105,598,000
Less accumulated depreciation
and amortization (48,845,000) (47,254,000)
___________ ___________
Net property and equipment 57,073,000 58,344,000
Franchise rights, at cost (less accumulated
amortization of $22,837,000 at March 31, 1994
and $22,067,000 at December 31, 1993). 49,280,000 48,799,000
Excess of cost over fair value of assets
acquired (less accumulated amortization of
$419,000 at March 31, 1994 and $404,000 at
December 31, 1993). 1,892,000 1,907,000
Other assets 5,969,000 6,070,000
____________ ____________
$118,478,000 $119,735,000
============ ============
FN></TABLE
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONT'D)
MARCH 31, 1994 AND DECEMBER 31, 1993
LIABILITIES AND STOCKHOLDER'S (DEFICIT)
March 31, December 31,
1994 1993
Current liabilities:
Current portion of long-term debt $ 258,000 $ 283,000
Current portion of capital lease obligations 583,000 584,000
Accounts payable 6,327,000 5,845,000
Accrued liabilities:
Payroll and employee benefits 2,194,000 2,340,000
Taxes - income and other 1,185,000 1,073,000
Other 2,440,000 3,432,000
Interest 1,735,000 4,864,000
__________ __________
Total current liabilities 14,722,000 18,421,000
Long-term debt, net of current portion 122,374,000 114,197,000
Capital lease obligations,
net of current portion 4,459,000 4,603,000
Deferred income - sale/leaseback of real estate 1,967,000 1,998,000
Accrued postretirement benefits 1,326,000 1,288,000
Deposits and other noncurrent liabilities 1,621,000 1,632,000
___________ ___________
Total liabilities 146,469,000 142,139,000
Stockholder's (deficit):
Common stock, par value $1; authorized 1,000
shares, issued and outstanding - 10 shares 10 10
Additional paid-in capital 2,074,990 4,447,990
Accumulated deficit (30,066,000) (26,852,000)
__________ __________
Total stockholder's (deficit) (27,991,000) (22,404,000)
___________ ___________
$118,478,000 $119,735,000
=========== ===========
FN></TABLE
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1994 AND 1993
March 31, March 31,
1994 1993
(13 weeks) (13 weeks)
Revenues:
Sales $ 42,717,000 $ 36,370,000
Other income 46,000 50,000
___________ ___________
42,763,000 36,420,000
Costs and expenses:
Cost of sales 12,767,000 10,085,000
Restaurant wages & related expenses 13,553,000 11,979,000
Other restaurant operating expenses 9,512,000 7,857,000
Depreciation and amortization 2,712,000 2,858,000
Administrative and advertising expenses 3,911,000 3,709,000
Interest expense 3,522,000 2,870,000
___________ ___________
45,977,000 39,358,000
___________ ___________
Net loss $ (3,214,000) $ (2,938,000)
=========== ===========
<FN>
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1994 AND 1993
Increase (Decrease) in Cash and Cash Equivalents
March 31, March 31,
1994 1993
(13 weeks) (13 weeks)
Cash flows from
operating activities:
Net loss $(3,214,000) $(2,938,000)
Adjustments to reconcile net loss
to cash provided by operating
activities:
Depreciation and amortization 2,712,000 2,858,000
Change in assets and liabilities:
Trade and other receivables 27,000 (137,000)
Inventories (5,000) 96,000
Prepaid expenses and
other current assets 18,000 233,000
Other assets (22,000) 416,000
Accounts payable 482,000 (572,000)
Accrued interest (3,129,000) 1,441,000
Deposits and other reserves (11,000) 587,000
Other accrued liabilities (492,000) (773,000)
Other (22,000) 3,000
_________ _________
Cash provided by (used for) operating
activities (3,656,000) 1,214,000
_________ _________
Cash flows from investing activities:
Capital expenditures:
Property and equipment (672,000) (290,000)
New restaurants (106,000) (13,000)
Acquisition of restaurants (1,516,000)
Franchise rights (30,000)
Payments received on notes, mortgages
and capital subleases receivable 43,000 19,000
Disposal of property, equipment
and franchise rights 502,000 10,000
__________ __________
Net cash used for investing activities (1,779,000) (274,000)
__________ __________
<FN>
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D)
THREE MONTHS ENDED MARCH 31, 1994 AND 1993
Increase (Decrease) in Cash and Cash Equivalents
March 31, March 31,
1994 1993
(13 weeks) (13 weeks)
Cash flows from financing activities:
Proceeds from long-term debt $8,300,000 $1,450,000
Principal payments on long-term debt (74,000) (2,024,000)
Principal payments on capital leases (145,000) (141,000)
Retirement of long-term debt (75,000)
Dividends paid (2,873,000) (200,000)
___________ __________
Net cash provided by (used for)
financing activities 5,133,000 (915,000)
___________ __________
Increase (decrease) in cash
and cash equivalents (302,000) 25,000
Cash and cash equivalents,
beginning of period 1,172,000 1,189,000
___________ __________
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 870,000 $1,214,000
=========== ==========
Supplemental disclosures:
Interest paid on debt $6,651,000 $1,429,000
<FN>
CARROLS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of normal and
recurring accruals) necessary to present fairly the Company's financial
position as of March 31, 1994 and December 31, 1993, the results of operations
for the three months ended March 31, 1994 and 1993 and cash flows for the three
months ended March 31, 1994 and 1993. These financial statements should be read
in conjunction with the Company's annual report on Form 10-K for the period
ended December 31, 1993.
2. The results of operations for the three months ended March 31, 1994
and 1993, are not necessarily indicative of the results to be expected for the
full year.
3. Inventories at March 31, 1994 and December 31, 1993, consisted of:
March 31, December 31,
1994 1993
Raw materials (food and
paper products) $1,215,000 $1,205,000
Supplies and promotional
materials 841,000 846,000
_________ _________
$2,056,000 $2,051,000
========= =========
<FN>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
________________________
Results of Operations
Sales for the three months ended March 31, 1994 increased $6.3 million, or
17.5%, as compared to the three months ended March 31, 1993. The Company
operated an average of 195.2 Burger King restaurants for the first quarter of
1994 as compared to an average of 177 for the first quarter of 1993. Average
restaurant unit sales increased 6.9% in the first quarter of 1994 as compared
to 1993. Sales at comparable restaurants, the 172 restaurants operating for the
entirety of the compared periods, increased $1.2 million, or 3.4%. Net
restaurant selling prices decreased approximately 8.0% resulting from a 10.6%
reduction in menu prices offset by a 2.6% increase from fewer discount
promotions in 1994.
Cost of sales (food and paper costs) for the three months ended March 31,
1994 increased in dollars due to higher sales. Cost of sales as a percentage
of sales increased 2.2% from 1993 to 1994 as a result of the effect of lower net
restaurant selling prices, partially offset by decreases in various commodity
costs, including beef.
Restaurant wages and related expenses decreased from 32.9% of sales to
31.7% of sales when comparing the three months ended March 31, 1993 to 1994.
Productive labor efficiencies and the fixed element of restaurant wages more
than offset the effects of lower restaurant selling prices and increased wage
rates.
Other restaurant operating expenses increased by $1.7 million and by 0.7%
as a percentage of sales for 1994 compared to 1993. The increase was caused
primarily by expenses associated with the operation of the additional
restaurants during the most recent three months when compared to the prior year
three months.
Increased depreciation and amortization due to the additional restaurants
in operation during the first quarter of 1994 was more than offset by the
reduction in depreciation and amortization caused by assets becoming fully
depreciated.
An increase in advertising payments to Burger King Corporation of $0.3
million (based on sales levels) was partially offset by decreases in other forms
of promotional activities ($0.1 million) when comparing the three months ended
March 31, 1994 to the three months ended March 31, 1993. Administrative
expenses remained constant for the two periods.
An increase in average interest rates and an increase in average loan
balances outstanding caused interest expense to increase $0.7 million for the
three months ended March 31, 1994 compared to 1993.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(continued)
Liquidity and Capital Resources
The operating activities of the Company used $3.7 million of cash for the
three months ended March 31, 1994 which included a payment of $6.3 million for
the semi-annual payment of accrued interest on the Company's 11-1/2% Senior
Notes. Capital spending for property, equipment and franchise rights was $2.3
million which included the acquisition in March 1994 of three restaurants in
North Carolina. Dividends of $2.9 million were paid to Holdings for the payment
by Holdings of $.2 million of regular quarterly preferred stock dividends and
$2.7 million to complete the redemption and retirement of common stock and
warrants that were tendered under an offer made in October 1993 by Holdings to
purchase a limited amount of its common stock and common stock equivalents.
At March 31, 1994, the Company had $11.7 million available under its Senior
Secured Credit Facility, after reserving $2.5 million for a letter of credit
guaranteed by the Senior Secured Credit Facility. The Company believes that
future cash flow from operations together with funds available under the Senior
Secured Credit Facility will be sufficient to meet all interest and principal
payments under its indebtedness, fund the maintenance of property and equipment,
fund restaurant remodeling required under the Company's franchise agreements,
and meet required payments in respect of Preferred Stock (subject to the terms
of the Senior Note Indenture and the Senior Secured Credit Facility) with the
balance, to the extent available, used to provide funds for future acquisitions.
Inflation
While inflation can have a significant impact on food, paper, labor and
other operating costs, the Company has historically been able to minimize the
effect of inflation through periodic price increases, and believes it will be
able to offset future inflation with price increases, if necessary.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There were no material legal proceedings commenced by or initiated against
the Company during the reported quarter, or material developments in any
previously reported litigation.
Item 2. Changes in Securities
None
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8K
(a) None
(b) There were no reports on Form 8K filed during the reported quarter
SIGNATURE
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 thereunto duly authorized.
CARROLS CORPORATION
968 James Street
Syracuse, New York 13203
(Registrant)
May 13, 1994 (Alan Vituli)
Date (Signature)
Alan Vituli
Chairman and Chief Executive
Officer
May 13, 1994 (Richard V. Cross)
Date (Signature)
Richard V. Cross
Executive Vice President -
Finance and Treasurer