What was the interest expense for Checkers for the year ended December 30, 2024?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Net income | | - | | - | | 21,260 | | 21,260 | | | | Balances at December 30, 2024 | $ | - | $ | 98,449 | $ | 18,785 | $ | 117,234 | | |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Successor | Predecessor | ||||||
|---|---|---|---|---|---|---|---|
| Year Ended December 30, | 2024 | Period from June 17, 2023 through | January 1, 2024 | Period from January 3, 2023 through June 16, 2023 | |||
| Operating activities: | |||||||
| Net income (loss) | $ | 21,260 | $ | (2,570) | (91,106) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
| Depreciation and amortization | 9,312 | 4,638 | 8,552 | 892 | |||
| Amortization of deferred financing costs | 294 | 54 | |||||
| Provision for credit losses | 582 | 122 | 94 | ||||
| Deferred income tax expense (benefit) | (25,962) | 4 | (7,529) | ||||
| Noncash operating lease expense, net | 14,873 | 5,490 | 6,878 | ||||
| Right-of-use asset amortization for finance lease | 2,699 | 455 | 262 | ||||
| Change in favorable leasehold interests | 427 | 232 | 146 | ||||
| Change in unfavorable leasehold interests | 56 | (31) | 5,720 | (29) | |||
| Noncash stock based compensation | 498 | 132 | |||||
| Noncash interest on long-term debt | 5,201 | 2,534 | 13,808 | ||||
| Impairment of long-lived assets | 2,384 | 623 | 66,633 | ||||
| Net loss on disposal of fixed assets | 64 | 670 | 839 | ||||
| Changes in operating assets and liabilities: | |||||||
| Decrease (increase) in accounts receivable, net | (264) | (1,693) | 221 | ||||
| Decrease (increase) in inventory | (250) | 927 | 1,137 | (564) | |||
| Decrease (increase) in prepaid expenses | (30) | (1,618) | |||||
| Decrease (increase) in other current assets | 1,881 | (1,241) | 105 | ||||
| Decrease in other noncurrent assets | 1,150 | 231 | 602 | ||||
| (Decrease) increase in accounts payable | 582 | (16) | (247) | ||||
| (Decrease) increase in accrued liabilities, accrued wages and benefits, deferred | |||||||
| revenue, self-insurance, and long-term liabilities | (680) | (7,774) | 9,416 | ||||
| Change in operating lease liabilities | (17,434) | (8,154) | (8,250) | (584) | |||
| Other changes, net | (793) | (237) | |||||
| Net cash provided by (used in) operating activities | 15,850 | (7,222) | 6,996 | ||||
| Investing activities: | |||||||
| Capital expenditures | (10,024) | (7,269) | (5,513) | ||||
| Net cash used in investing activities | (10,024) | (7,269) | (5,513) | ||||
| Financing activities: | |||||||
| Payment for debt issuance costs | - | (500) | - | ||||
| Principal payments on long-term debt | (812) | (1,304) | (1,360) | ||||
| Principal payments on financing obligations | (73) | (47) | (400) | ||||
| Repayments on finance lease liabilities | (1,885) | (254) | (159) | ||||
| Proceeds from short-term financing | 1,464 | 1,540 | - | ||||
| Payment on short-term financing | (1,515) | - | - | ||||
| Proceeds from the issuance of long-term financing | - | 10,000 | - | ||||
| Net cash (used in) provided by financing activities | (2,821) | 9,435 | (1,919) | ||||
| NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS | 3,005 | (5,056) | (436) | ||||
| Cash, cash equivalents, and restricted cash at beginning of period | 12,557 | 17,613 | 18,049 | ||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 15,562 | $ | 12,557 | $ 17,613 | ||
| Supplemental disclosure of cash flow information: | |||||||
| Cash paid for interest | $ | 7,859 | $ | 4,619 | $ | 458 | |
| Income taxes paid, net of refunds | 558 | 18 | 43 | ||||
| Non-cash activities: | |||||||
| Non-cash right-of-use assets obtained in exchange for operating leases | $ | 664 | $ | 1,006 | $ 1,058 | ||
| Non-cash right-of-use assets obtained in exchange for finance leases | 7,48 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, noncash interest on long-term debt for the year ended December 30, 2024, was $5,201. Additionally, cash paid for interest during the same period was $7,859.
It is important to note that the FDD distinguishes between 'noncash interest' and 'cash paid for interest'. Noncash interest often relates to the amortization of debt discounts or premiums, or the accretion of interest on debt instruments where the interest is added to the principal balance rather than paid out in cash during the period. This noncash interest on long-term debt was $5,201 for the year ended December 30, 2024.
In addition to the noncash interest, Checkers also paid $7,859 in cash for interest during the year ended December 30, 2024. This represents the actual outflow of cash from the company to cover interest expenses on its debts. A prospective franchisee should consider both the cash and non-cash interest expenses when evaluating the financial health and obligations of Checkers.
Understanding the difference between cash and non-cash interest is crucial for assessing the true cost of borrowing and its impact on Checkers' cash flow. While non-cash interest affects the company's net income, cash interest directly impacts its liquidity and ability to meet its financial obligations.