What was the carrying amount of the Series 2020-1 Class A-2 Notes for Carls in 2023?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
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NOTE 12 - MEMBERS' DEFICIT
During fiscal 2023 and 2022, the CKE Securitization Entities received capital contributions of $45,394 and $23,793, respectively, consisting principally of property and equipment and assets associated with the CKE Restaurants Acquisitions (see Note 5). During fiscal 2023 and 2022, the CKE Securitization Entities paid total cash distributions of $139,428 and $323,594, respectively, to members.
During fiscal 2022, we made a distribution to members of $176,304 from the net proceeds received in connection with the Series 2021-1 Class A-2 Notes.
NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents information on our financial instruments as of January 31 , 2023 and 2022:
| 2023 | 2022 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| C |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the carrying amount for the Series 2020-1 Class A-2 Notes in 2023 was $385,688. This figure represents the book value of these particular notes on Carls's balance sheet at the end of the 2023 fiscal year. The carrying amount is an accounting measure that reflects the original value of an asset (in this case, notes) adjusted for amortization, depreciation, or impairment.
For a prospective Carls franchisee, understanding the carrying amount of these notes provides insight into the company's debt structure and financial obligations. These notes are part of Carls's overall financing strategy, and the carrying amount indicates the outstanding liability related to this specific series of notes. It is important to note that the estimated fair value of these notes was $346,802 in 2023, which is different from the carrying amount. The fair value represents the estimated market value of the notes, which can fluctuate based on market conditions and investor sentiment.
The Series 2020-1 Class A-2 Notes were issued on December 21, 2020, to pay down the Series 2018-1 Class A-2-I Notes. The notes have an anticipated repayment date of December 2027 and a legal final maturity date of December 2050. The notes require quarterly principal payments of $1,000 beginning March 22, 2021, with interest payments due quarterly in arrears on the 20th day of March, June, September, and December. The notes are secured by substantially all assets of the CKE Securitization Entities but are not guaranteed by or secured with the assets of CKE or its other subsidiaries, including CKE Restaurants.
Prospective franchisees should consider the implications of Carls's debt obligations, as they can affect the company's financial flexibility and ability to invest in the franchise system. While the carrying amount provides a snapshot of the liability, it's essential to review the overall financial health of Carls and understand how these notes fit into the broader financial picture. Reviewing the complete financial statements and consulting with a financial advisor can provide a more comprehensive understanding of the company's financial position.