What was the carrying amount of Carls' Series 2021-1 Class A-2 Notes in 2023?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
Indenture governing the Senior Notes includes certain covenants and restrictions that may limit CKE Restaurants' ability to declare and pay dividends. No dividends were declared and paid in fiscal 2023. During fiscal 2022, we paid a cash dividend of $105,000 to CKE Inc. During fiscal 2022, CKE Inc. made a capital contribution to CKE Restaurant Holdings, Inc. of $41 ,500.
During fiscal 2023, CKE Inc. merged with CKE Restaurants which survives the merger. As a result of the merger, all assets, liabilities and debts of CKE, Inc. transferred to CKE Restaurants. The intercompany note agreements between the entities were cancelled, and the CKE Restaurants note receivable from CKE Inc. in the amount of $441 ,866 was reclassified to accumulated deficit. In addition, $316 of cash held by CKE Inc. was consolidated into CKE Restaurants.
NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents information on our financial in
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls' 2024 Franchise Disclosure Document, the carrying amount of the Series 2021-1 Class A-2 Notes in 2023 was $173,801. This figure represents the book value of these particular notes as of the end of Carls' fiscal year 2023.
Carrying amount is an important metric for prospective franchisees to understand because it reflects the outstanding debt obligations of the company. A higher carrying amount could indicate greater financial leverage, which might introduce additional risk. Conversely, a lower carrying amount may suggest a more conservative financial strategy.
It is also important to note that the FDD provides the estimated fair value of these notes, which was $146,485 in 2023. The difference between the carrying amount and the fair value can provide insights into how the market perceives the value of Carls' debt. Franchisees should consult with a financial advisor to fully understand the implications of these figures and how they might affect the stability and future prospects of the franchise system.