What primarily constituted the goodwill balance for Carls as of January 31, 2024?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
ccounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
Nashville, Tennessee April 10, 2024
CKE RESTAURANTS HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(In thousands, except shares and par values)
| ASSETS Current assets: $ 130,566 $ 107,853 Cash and cash equivalents 15,942 16,053 Cash and cash equivalents - restricted 38,438 37,541 Accounts receivable, net 3,029 2,999 Inventories 13,562 6,183 Prepaid expenses 80 83 Other current assets 201,617 170,712 Total current assets 377,436 371,572 Property and equipment, net 424,719 448,064 Operating lease assets 539,421 540,083 Goodwill 777,538 793,030 Intangible assets, net 40,485 29,806 Other assets, net $ 2,361,216 $ 2,353,267 Total assets LIABILITIES AND EQUITY Current liabilities: $ 11,800 $ 13,700 Current portion of long-term debt 1,515 1,268 Current portion of finance leases 79,623 85,529 Current portion of operating leases 23,855 28,159 Accounts payable 71,641 66,753 Other current liabilities 188,434 195,409 Total current liabilities 1,108,022 1,116,405 Long-term debt, less current portion 23,370 14,428 Finance leases, less current portion 366,233 381,495 Operating leases, less current portion 171,393 175,131 Deferred income tax liabilities, net 263,631 277,497 Other long-term liabilities 2,121,083 2,160,365 Total liabilities Commitments and contingencies (Notes 8, 9, 10 and 14) Equity: Common stock, $0.01 par value; 100 shares authorized, issued and outstanding as of January 31, 2024 and 2023 — — 736,438 734,314 Additional paid-in capital (495,148) (540,277) Accumulated deficit (1,157) (1,135) Accumulated other comprehensive loss 240,133 192,902 Total equity $ 2,361,216 $ 2,353,267 Total liabilities and equity | January 31, 2024 | | January 31, 2023 | | | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the goodwill balance as of January 31, 2024, was $539,421,000. Goodwill represents the excess of the purchase price in an acquisition over the fair value of the net identifiable assets acquired. It is an intangible asset that is not amortized but is tested for impairment at least annually.
For a prospective Carls franchisee, this goodwill figure is significant because it reflects the value Carls has established beyond its tangible assets. A high goodwill balance suggests that Carls has a strong brand reputation, customer loyalty, and other intangible assets that contribute to its overall value. This can translate to a more stable and potentially profitable business for franchisees.
However, it's important to note that goodwill is subject to impairment. If the fair value of Carls's reporting units declines below their carrying amount, an impairment charge may be recognized, which could negatively impact Carls's financial performance. While this doesn't directly affect the franchisee's day-to-day operations, it's an indicator of the overall financial health and stability of the Carls organization.