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, 1995 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 15, 1995
10 shares
PART 1 - FINANCIAL INFORMATION
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
ASSETS March 31, December 31,
1995 1994
Current assets:
Cash and cash equivalents $ 2,850,000 $ 1,710,000
Trade and other receivables 397,000 532,000
Inventories 2,102,000 2,254,000
Prepaid real estate taxes 598,000 384,000
Prepaid expenses and other current assets 437,000 459,000
_________ _________
Total current assets 6,384,000 5,339,000
Property and equipment, at cost:
Land 6,123,000 6,543,000
Buildings and improvements 13,841,000 14,260,000
Leasehold improvements 34,821,000 34,813,000
Equipment 40,743,000 40,141,000
Capital leases 15,355,000 15,558,000
Construction in progress 306,000 41,000
___________ ___________
111,189,000 111,356,000
Less accumulated depreciation
and amortization (55,445,000) (53,969,000)
___________ ___________
Net property and equipment 55,744,000 57,387,000
Franchise rights, at cost (less accumulated
amortization of $18,119,000 at March 31, 1995
and $17,548,000 at December 31, 1994). 45,454,000 46,042,000
Beneficial leases, at cost (less accumulated
amortization of $7,414,000 at March 31, 1995
and $7,433,000 at December 31, 1994). 8,217,000 8,405,000
Excess of cost over fair value of assets
acquired (less accumulated amortization of
$477,000 at March 31, 1995 and $462,000 at
December 31, 1994). 1,834,000 1,849,000
Other assets 5,623,000 5,666,000
____________ ____________
$123,256,000 $124,688,000
============ ============
FN></TABLE
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONT'D)
MARCH 31, 1995 AND DECEMBER 31, 1994
LIABILITIES AND STOCKHOLDER'S (DEFICIT)
March 31, December 31,
1995 1994
Current liabilities:
Current portion of long-term debt $ 258,000 $ 258,000
Current portion of capital lease obligations 615,000 615,000
Accounts payable 3,870,000 6,915,000
Accrued liabilities:
Payroll and employee benefits 3,023,000 3,748,000
Taxes - income and other 1,584,000 1,525,000
Other 3,018,000 3,835,000
Interest 1,802,000 4,899,000
__________ __________
Total current liabilities 14,170,000 21,795,000
Long-term debt, net of current portion 128,429,000 120,680,000
Capital lease obligations,
net of current portion 3,817,000 3,966,000
Deferred income - sale/leaseback of real estate 1,871,000 1,888,000
Accrued postretirement benefits 1,371,000 1,354,000
Other liabilities 2,030,000 2,213,000
___________ ___________
Total liabilities 151,688,000 151,896,000
Stockholder's (deficit):
Common stock, par value $1; authorized 1,000
shares, issued and outstanding - 10 shares 10 10
Additional paid-in capital 1,274,990 1,474,990
Accumulated deficit (29,707,000) (28,683,000)
__________ __________
Total stockholder's (deficit) (28,432,000) (27,208,000)
___________ ___________
$123,256,000 $124,688,000
=========== ===========
FN></TABLE
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
March 31, March 31,
1995 1994
(13 weeks) (13 weeks)
Revenues:
Sales $ 51,426,000 $ 42,717,000
Other income 35,000 46,000
___________ ___________
51,461,000 42,763,000
Costs and expenses:
Cost of sales 14,809,000 12,767,000
Restaurant wages & related expenses 15,818,000 13,553,000
Other restaurant operating expenses 10,764,000 9,512,000
Depreciation and amortization 2,750,000 2,712,000
Administrative expenses 2,528,000 1,994,000
Advertising expenses 2,175,000 1,917,000
Interest expense 3,656,000 3,522,000
___________ ___________
52,500,000 45,977,000
___________ ___________
Loss before taxes and extraordinary
item $ (1,039,000) $ (3,214,000)
Provision for state taxes (50,000)
___________ ___________
Loss before extraordinary item (1,089,000) (3,124,000)
Extraordinary item - gain on purchase of
senior notes 65,000
___________ ___________
Net loss $ (1,024,000) $ (3,214,000)
=========== ===========
<FN>
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
Increase (Decrease) in Cash and Cash Equivalents
March 31, March 31,
1995 1994
(13 weeks) (13 weeks)
Cash flows from
operating activities:
Net loss $(1,024,000) $(3,214,000)
Adjustments to reconcile net loss
to cash provided by operating
activities:
Depreciation and amortization 2,750,000 2,712,000
Non-cash extraordinary gain (65,000)
Change in assets and liabilities:
Trade and other receivables 135,000 27,000
Inventories 155,000 (5,000)
Prepaid expenses and
other current assets (192,000) 18,000
Other assets (110,000) (22,000)
Accounts payable (3,045,000) 482,000
Accrued interest (3,097,000) (3,129,000)
Accrued taxes - income and other 59,000 112,000
Accrued payroll and employee benefits (725,000) (146,000)
Other accrued liabilities (768,000) (492,000)
Other (186,000) 1,000
_________ _________
Cash used by operating activities (6,113,000) (3,656,000)
_________ _________
Cash flows from investing activities:
Capital expenditures:
Property and equipment (1,046,000) (672,000)
New restaurants (54,000) (106,000)
Acquisition of restaurants (1,516,000)
Franchise rights (40,000) (30,000)
Payments received on notes, mortgages
and capital subleases receivable 8,000 43,000
Disposal of property, equipment
and franchise rights 502,000
__________ __________
Net cash used for investing activities (1,132,000) (1,779,000)
__________ __________
<FN>
CARROLS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D)
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
Increase (Decrease) in Cash and Cash Equivalents
March 31, March 31,
1995 1994
(13 weeks) (13 weeks)
Cash flows from financing activities:
Proceeds from long-term debt $9,314,000 $8,300,000
Principal payments on long-term debt (65,000) (74,000)
Principal payments on capital leases (149,000) (145,000)
Purchase of senior notes (1,387,000)
Retirement of long-term debt (75,000)
Proceeds from sale-leaseback transactions 872,000
Dividends paid (200,000) (2,873,000)
___________ __________
Net cash provided by
financing activities 8,385,000 5,133,000
___________ __________
Increase (decrease) in cash
and cash equivalents 1,140,000 (302,000)
Cash and cash equivalents,
beginning of period 1,710,000 1,172,000
___________ __________
CASH AND CASH EQUIVALENTS,
END OF PERIOD $2,850,000 $ 870,000
=========== ==========
Supplemental disclosures:
Interest paid on debt $6,753,000 $6,651,000
Taxes paid $ 41,000 $ 64,000
<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, 1995 and December 31, 1994, the results of operations for the
three months ended March 31, 1995 and 1994 and cash flows for the three months
ended March 31, 1995 and 1994. These financial statements should be read in
conjunction with the Company's annual report on Form 10-K for the period ended
December 31, 1994.
2. The results of operations for the three months ended March 31, 1995
and 1994, are not necessarily indicative of the results to be expected for the
full year.
3. Inventories at March 31, 1995 and December 31, 1994, consisted of:
March 31, December 31,
1995 1994
Raw materials (food and
paper products) $1,196,000 $1,415,000
Supplies 906,000 839,000
_________ _________
$2,102,000 $2,254,000
========= =========
<FN>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
________________________
Results of Operations
Sales for the three months ended March 31, 1995 increased $8.7 million, or
20.4%, as compared to the three months ended March 31, 1994. The Company
operated an average of 217 Burger King restaurants for the first quarter of 1995
as compared to an average of 195 for the first quarter of 1994. Average
restaurant unit sales increased 8.3% in the first quarter of 1995 as compared
to 1994. Sales at comparable restaurants, the 191 restaurants operating for the
entirety of the compared periods, increased $2.9 million, or 6.9%. Net
restaurant selling prices increased approximately 4.8% resulting from a 2.6%
increase in menu prices and 2.2% from fewer discount promotions in 1995.
Cost of sales (food and paper costs) for the three months ended March 31,
1995 increased in dollars due to higher sales. Cost of sales as a percentage
of sales decreased from 29.9% in 1994 to 28.8% in 1995 as a result of the effect
of higher net restaurant selling prices and decreases in certain commodity
costs.
Restaurant wages and related expenses decreased from 31.7% of sales to
30.8% of sales when comparing the three months ended March 31, 1994 to 1995.
Productive labor efficiencies and the fixed element of restaurant labor along
with the effects of higher restaurant selling prices more than offset the
effects of increased wage rates and the effects of increased restaurant
incentive pay.
Of the $1.3 million increase in other restaurant operating expenses,
approximately $1.0 million was associated with the operation of additional
restaurants during the most recent three months when compared to the prior year
three months. Other restaurant operating expenses decreased from 22.3% of sales
to 20.9% of sales when comparing 1994 to 1995. The fixed element of certain
expenses and the milder winter weather effect on utilities and snowplowing were
the primary causes of the decrease in other restaurant operating expenses as a
percentage of sales.
Increased depreciation and amortization due to the additional restaurants
in operation during the first quarter of 1995 was offset by the reduction in
depreciation and amortization caused by assets becoming fully depreciated.
Administrative expenses increased $0.5 million when comparing the three
months ended March 31, 1995 to 1994. The supervision of additional restaurants
and costs expended to prepare for future expansion, including development under
the new franchise restaurant concepts, were the primary cause of this increase.
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, 1995 to the three months ended March 31, 1994.
An increase in average loan balances outstanding caused interest expense
to increase $0.1 million for the three months ended March 31, 1995 compared to
1994.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(continued)
Liquidity and Capital Resources
The operating activities of the Company used $6.1 million of cash for the
three months ended March 31, 1995 which included $6.3 million for the semi-
annual payment of accrued interest on the Company's 11-1/2% Senior Notes and
using $3.3 million to take advantage of favorable payment terms from the
Company's major supplier. Capital spending for property, equipment and
franchise rights was $1.1 million which was primarily for restaurant maintenance
and remodeling. Dividends of $0.2 million were paid to Holdings for the payment
by Holdings of regular quarterly preferred stock dividends. $1.4 million was
used to purchase $1.5 million face value of the Company's senior notes. The
sale and lease/back of one restaurant property provided $0.9 million and a net
$9.3 million was borrowed during the quarter under the Senior Secured Credit
Facility.
At March 31, 1995, the Company had $9.8 million available under its Senior
Secured Credit Facility, after reserving $1.6 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 15, 1995 (Alan Vituli)
Date (Signature)
Alan Vituli
Chairman and Chief Executive
Officer
May 15, 1995 (Richard V. Cross)
Date (Signature)
Richard V. Cross
Executive Vice President -
Finance and Treasurer