What was the reported value of Carls' accumulated deficit on January 31, 2022?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
rating costs and expenses | 736,564 | 740,329 | | Operating income | 95,774 | 92,204 | | Interest expense | (62,900) | (63,303) | | Other income, net | 3,751 | 4,458 | | Income before income taxes | 36,625 | 33,359 | | Income tax expense | 8,865 | 8,620 | | Net income $ | 27,760 | $ 24,739 |
CKE RESTAURANTS HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands)
| Fi | scal 2023 | Fi | scal 2022 | |
|---|---|---|---|---|
| Net income | S | 27,760 | $ | 24,739 |
| Other comprehensive loss: | ||||
| Foreign currency translation adjustments | (250) | (186) | ||
| Other comprehensive loss | (250) | (186) | ||
| Comprehensive income | S | 27,510 | $ | 24,553 |
CKE RESTAURANTS HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except shares)
| Shares | Common Stock Amount | Additional Paid-In Capital | Notes Receivable from CKE Inc. | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Equity | |||
|---|---|---|---|---|---|---|---|---|---|
| Balance as of January 31 | 100 | $ | $ 691 ,182 | $(300,366) $ (45,339) | $ | (699) $344,778 | |||
| , 2021 | |||||||||
| Share-based compensation | 855 | 855 | |||||||
| Other comprehensive income | (186) |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the accumulated deficit as of January 31, 2022, was reported as $(125,600). This figure represents the cumulative losses that Carls has incurred over its operational history up to that date. An accumulated deficit is essentially the opposite of retained earnings and indicates that the company's losses and distributions have exceeded its profits.
For a prospective franchisee, this number provides insight into the financial health and historical profitability of Carls. While a large accumulated deficit might raise concerns, it's important to consider this figure in the context of the company's overall financial statements, including its assets, liabilities, and cash flow. A franchisee should investigate the reasons behind the deficit, such as past investments, economic downturns, or strategic decisions, and understand how Carls plans to address it.
It is also important to note that the FDD includes combined consolidated financial statements for Carl's Jr. SPV Guarantor LLC and its subsidiaries, and Hardee's SPV Guarantor LLC and its subsidiaries. Therefore, the accumulated deficit reflects the combined financial performance of both entities, not just Carls alone. A potential franchisee should seek clarification from Carls on the specific factors contributing to the accumulated deficit and the strategies in place to improve future profitability.