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EXHIBIT 99.3
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
The following Unaudited Pro Forma Combined Condensed Financial Statements
are based upon the consolidated financial statements of the Company and are
adjusted to give effect to the acquisitions of Casa Bonita Incorporated and
subsidiaries ("Casa Bonita") and Summit Family Restaurants Inc. and
subsidiaries ("Summit") by the Company (the "Acquisitions").
The Company acquired an 80.0% equity interest in Casa Bonita on October 1,
1996. Casa Bonita currently operates 108 Taco Bueno restaurants located in Texas
and Oklahoma. The acquisition was effected by CBI Restaurants, Inc. ("CBI"), a
newly-formed corporation in which the Company holds an 80.0% equity interest.
CBI paid $42.0 million in cash, which was financed by short-term loans of $9.0
million from the Company, $8.0 million from Fidelity National Financial, Inc.
("Fidelity"), and $5.0 million from Giant Group, Ltd. The balance of the
purchase price, $20.0 million, was financed through the Company's investment of
$16.0 million in cash for an 80.0% interest in CBI, and Fidelity's investment of
$4.0 million in cash for the remaining 20.0% interest in CBI. The Company's
investments in CBI were funded out of borrowings in the principal amount of
$25.0 million under the Company's credit facility.
On July 15, 1996, the Company acquired Summit for a total purchase price of
$29.1 million, of which $17.7 million was paid in cash and the balance was paid
by the issuance of 501,388 shares of the Company's Common Stock.
The Unaudited Pro Forma Combined Condensed Balance Sheet as of August 12,
1996 gives effect to the Casa Bonita acquisition as if it had occurred on such
date and was prepared based upon the consolidated balance sheets of the Company
(including Summit) as of August 12, 1996 and of Casa Bonita as of June 24, 1996.
The Unaudited Pro Forma Combined Condensed Statements of Operations for the
fiscal year ended January 31, 1996 and for the 28 weeks ended August 12, 1996
give effect to the Acquisitions as if they had occurred at the beginning of each
period presented. The Unaudited Pro Forma Combined Condensed Statement of
Operations for the fiscal year ended January 31, 1996 was prepared based upon
the consolidated statements of operations of the Company for the fiscal year
ended January 31, 1996, of Summit for the 52 weeks ended March 11, 1996 and of
Casa Bonita for the fiscal year ended April 1, 1996. The Unaudited Pro Forma
Combined Condensed Statement of Operations for the 28 weeks ended August 12,
1996 was prepared based upon the consolidated statements of operations of the
Company for the 28 weeks ended August 12, 1996, of Summit for the 26 weeks ended
July 15, 1996 and of Casa Bonita for the 28 weeks ended June 24, 1996. The
Company's fiscal year is the 52- or 53-week period ending on the last Monday of
January in each year. For clarity of presentation, the fiscal year of the
Company presented herein is as if the fiscal year ended on January 31.
The Unaudited Pro Forma Combined Condensed Financial Statements are
provided for comparative purposes only and are not necessarily indicative of the
results of operations or financial position of the combined companies that would
have occurred had the Acquisitions occurred at the beginning of the periods
presented or on the date indicated, nor are they necessarily indicative of
future operating results or financial position. The unaudited pro forma
adjustments are based upon currently available information and upon certain
assumptions that management of the Company believes are reasonable under the
circumstances.
The Acquisitions were or will be accounted for using the purchase method of
accounting. Accordingly, the Company's cost to acquire Summit and Casa Bonita
were or will be allocated to the assets acquired and liabilities assumed
according to their respective fair values. The allocation is dependent upon
certain valuations and other studies that have not progressed to a stage where
there is sufficient information to make a definitive allocation. Accordingly,
the purchase allocation adjustments made in connection with the preparation of
the Unaudited Pro Forma Combined Condensed Financial Statements are preliminary,
and have been made solely for the purpose of preparing such Unaudited Pro Forma
Combined Condensed Financial Statements.
The Unaudited Pro Forma Combined Condensed Financial Statements do not
reflect certain cost savings that the Company expects to be realized primarily
through elimination of certain duplicative administrative costs. No assurances
can be made as to the amount of cost savings, if any, that actually will be
realized.
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CKE RESTAURANTS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF AUGUST 12, 1996
(IN THOUSANDS)
HISTORICAL
------------------------------------- PRO FORMA
CKE AT CASA BONITA ACQUISITION
8/12/96 AT 6/24/96 COMBINED ADJUSTMENTS PRO FORMA
------- ----------- -------- ----------- ---------
ASSETS
Cash and cash equivalents..... $ 18,333 $ 993 $ 19,326 $ -- $ 19,326
Accounts receivable........... 7,025 76 7,101 -- 7,101
Related party notes receivable 1,360 16,981 18,341 (16,981)(d) 1,360
Inventories................... 7,973 707 8,680 -- 8,680
Deferred income taxes, net.... 15,088 1,328 16,416 -- 16,416
Other current assets and
prepaid expenses........... 7,193 114 7,307 -- 7,307
--------- -------- --------- -------- ---------
Total current assets.... 56,972 20,199 77,171 (16,981) 60,190
Property and equipment, net... 169,077 34,409 203,486 8,750(g) 212,236
Property under capital
leases, net................ 34,257 715 34,972 -- 34,972
Long-term investments......... 26,041 -- 26,041 -- 26,041
Notes receivable.............. 7,713 -- 7,713 -- 7,713
Related party notes receivable 715 -- 715 -- 715
Other assets.................. 11,682 783 12,465 5,647(h) 18,112
--------- -------- --------- -------- ---------
Total assets............ $ 306,457 $ 56,106 $ 362,563 $ (2,584) $ 359,979
========= ======== ========= ======== =========
LIABILITIES
Current portion of long-term
debt.................... $ 3,486 $ -- $ 3,486 $ 13,000(f) $ 16,486
Current portion of capital
lease obligations....... 4,666 135 4,801 -- 4,801
Accounts payable.............. 22,611 1,613 24,224 -- 24,224
Other current liabilities..... 48,488 7,020 55,508 1,100(h) 56,608
--------- -------- --------- -------- ---------
Total current liabilities 79,251 8,768 88,019 14,100 102,119
Long-term debt................ 30,230 -- 30,230 25,000(e) 55,230
Capital lease obligations..... 48,171 1,233 49,404 -- 49,404
Related party notes payable... -- 31,588 31,588 (31,588)(d) --
Other long-term liabilities... 25,279 421 25,700 -- 25,700
--------- -------- --------- -------- ---------
Total liabilities....... 182,931 42,010 224,941 7,512 232,453
Minority interest............. -- -- -- 4,000(j) 4,000
STOCKHOLDERS' EQUITY.......... 123,526 14,096 137,622 (14,096)(c) 123,526
--------- -------- --------- -------- ---------
Total liabilities and
stockholders' equity.... $ 306,457 $ 56,106 $ 362,563 $ (2,584) $ 359,979
========= ======== ========= ======== =========
See accompanying notes to unaudited pro forma combined condensed financial
statements.
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CKE RESTAURANTS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED JANUARY 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL
---------------------------------------
CKE SUMMIT CASA BONITA
FISCAL YEAR 52 WEEKS FISCAL YEAR PRO FORMA
ENDED ENDED ENDED ACQUISITION
1/31/96 3/11/96 4/1/96 COMBINED ADJUSTMENTS PRO FORMA
----------- ------- ----------- -------- ----------- ---------
TOTAL REVENUES.......................... $ 465,437 $ 120,897 $ 80,381 $ 666,715 $ -- $ 666,715
OPERATING COSTS AND EXPENSES:
Company-operated restaurants:
Food and packaging................. 121,029 39,563 22,392 182,984 -- 182,984
Payroll and other employee
benefits......................... 109,942 41,977 23,457 175,376 (1,600)(a) 173,776
Occupancy and other operating
expenses........................ 82,095 32,208 20,711 135,014 103 (g) 135,117
Franchised and licensed
restaurants........................ 68,839 194 -- 69,033 -- 69,033
Advertising expenses................. 19,940 3,316 5,033 28,289 -- 28,289
General and administrative expenses.. 37,857 9,845 4,409 52,111 265(b)(h) 52,376
---------- --------- ----------- ----------- ----------- ---------
Total operating costs and
expenses..................... 439,702 127,103 76,002 642,807 (1,232) 641,575
---------- --------- ----------- ----------- ----------- ---------
Operating income (loss)................. 25,735 (6,206) 4,379 23,908 1,232 25,140
Interest expense........................ (10,004) (1,375) (3,180) (14,559) (55)(d)(e)(f) (14,614)
Gain on sale of long-term investment.... -- 3,959 -- 3,959 -- 3,959
Other income, net....................... 2,222 400 409 3,031 (151)(d) 2,880
---------- --------- ----------- ----------- ----------- ---------
Income (loss) before income taxes....... 17,953 (3,222) 1,608 16,339 1,026 17,365
Income tax expense (benefit)............ 7,001 900 509 8,410 (1,464)(i) 6,946
---------- --------- ----------- ----------- ----------- ---------
Net income (loss) before
minority interest.................... 10,952 (4,122) 1,099 7,929 2,490 10,419
Minority interest....................... -- -- -- -- (370)(j)(k) (370)
---------- --------- ----------- ----------- ----------- ---------
Net income (loss)....................... $ 10,952 $ (4,122) $ 1,099 $ 7,929 $ 2,120 $ 10,049
========== ========= =========== =========== =========== =========
Net income per share.................... $ 0.59 $ 0.52
========== =========
Common and common equivalent shares used
in computing per share amounts....... 18,679 19,181
========== =========
See accompanying notes to unaudited pro forma combined condensed financial
statements.
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CKE RESTAURANTS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE 28 WEEKS ENDED AUGUST 12, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL
------------------------------------
CKE SUMMIT CASA BONITA
28 WEEKS 26 WEEKS 28 WEEKS PRO FORMA
ENDED ENDED ENDED ACQUISITION
8/12/96 7/15/96 6/24/96 COMBINED ADJUSTMENTS PRO FORMA
-------- --------- -------- -------- ------------ ---------
TOTAL REVENUES........................ $ 281,057 $ 68,732 $ 43,806 $393,595 $ -- $ 393,595
OPERATING COSTS AND EXPENSES:
Company-operated restaurants:
Food and packaging............... 73,967 22,150 12,366 108,483 -- 108,483
Payroll and other employee
benefits...................... 65,012 23,662 13,081 101,755 (1,600)(a) 100,155
Occupancy and other operating
expenses...................... 48,736 18,981 10,704 78,421 56 (g) 78,477
Franchised and licensed
restaurants...................... 39,155 130 -- 39,285 -- 39,285
Advertising expenses............... 13,470 389 2,855 16,714 -- 16,714
General and administrative expenses 20,549 6,060 2,214 28,823 142 (b)(h) 28,965
---------- --------- --------- -------- ----------- ---------
Total operating costs and
expenses................... 260,889 71,372 41,220 373,481 (1,402) 372,079
Operating income (loss)............... 20,168 (2,640) 2,586 20,114 1,402 21,516
Interest expense...................... (4,744) (711) (1,649) (7,104) (88)(d)(e)(f) (7,192)
Other income, net..................... 1,850 242 93 2,185 (107)(d) 2,078
---------- --------- --------- -------- ----------- ---------
Income (loss) before income taxes..... 17,274 (3,109) 1,030 15,195 1,207 16,402
Income tax expense (benefit).......... 6,749 (200) 430 6,979 (418)(i) 6,561
---------- --------- --------- -------- ----------- ---------
Net income (loss) before
minority interest.................. 10,525 (2,909) 600 8,216 1,625 9,841
Minority interest..................... -- -- -- -- (191)(j)(k) (191)
---------- --------- --------- -------- ----------- ---------
Net income (loss)..................... $ 10,525 $ (2,909) $ 600 $ 8,216 $ 1,434 $ 9,650
========== ========= ========= ======== =========== =========
Net income per share.................. $ 0.55 $ 0.49
========== =========
Common and common equivalent
shares used in computing per
share amounts...................... 19,220 19,638
========== =========
See accompanying notes to unaudited pro forma combined condensed financial
statements.
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NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL DATA
(IN THOUSANDS)
Summit Pro Forma Acquisition Adjustments
(a) To exclude $1,600 of change of control and severance costs for
employees of Summit who have been terminated and which are included in
Summit's results of operations for the 52 weeks ended March 11, 1996
and the 26 weeks ended July 15, 1996, respectively, as a
non-recurring charge.
(b) To record the impact to goodwill amortization expense of $77 and $41
for the fiscal year ended January 31, 1996 and the 28 weeks ended
August 12, 1996, respectively, for the recording of $2,300 of excess of
consideration paid over fair value of net assets acquired (included in
the August 12, 1996 Unaudited Pro Forma Combined Condensed Balance
Sheet) amortized over thirty years.
Casa Bonita Pro Forma Acquisition Adjustments
(c) The Unaudited Pro Forma Combined Condensed Balance Sheet has been
adjusted to eliminate the stockholder's equity of Casa Bonita.
(d) To eliminate the related party note receivable of $16,981 and notes
payable of $31,588 cancelled prior to the acquisition as well as to
exclude the related interest income of $151 and $107 and the related
interest expense of $2,995 and $1,554 for the fiscal year ended January
31, 1996 and the 28 weeks ended August 12, 1996, respectively.
(e) To record long-term borrowings by the Company of $25,000 which
bear interest at 7.0% per annum and to record interest expense of
$1,750 and $942 for the fiscal year ended January 31, 1996 and the 28
weeks ended August 12, 1996, respectively.
(f) To record short-term borrowings by CBI of $13,000 which bear interest
at 10.0% per annum and to record interest expense of $1,300 and $700
for the fiscal year ended January 31, 1996 and the 28 weeks ended
August 12, 1996, respectively.
(g) To increase land by $5,688 and buildings by $3,062 to their respective
estimated fair values, and to record the impact to depreciation expense
of $103 and $56 for the fiscal year ended January 31, 1996 and the 28
weeks ended August 12, 1996, respectively, for the estimated increase
in the building value depreciated over thirty years.
(h) To record $5,647 for the excess of consideration paid over the fair
value of net assets acquired and reserve $1,100 for estimated store
closure reserves ($800) and relocation costs ($300), and to record the
goodwill amortization of $188 and $101 for the fiscal year ended
January 31, 1996 and the 28 weeks ended August 12, 1996, respectively,
amortized over thirty years.
(i) To record the income tax effects of the pro forma adjustments and
consolidation of the entities so as to affect a pro forma tax rate of
40.0%.
(j) To record the 20.0% minority interest investment in Casa Bonita
($4,000) and the minority interest in Casa Bonita's historical net
income ($220 and $120 for the fiscal year ended January 31, 1996 and
the 28 weeks ended August 12, 1996, respectively).
(k) To record the 20.0% minority interest for adjustments (d), (f), (g) and
(h) above, tax effected at 40.0%.
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