What was the impairment of long-lived assets for Checkersrallys during the period from June 17, 2023 through January 1, 2024?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
tment | | - | | - | | 181 | | 181 | | | 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 | |||
| Amortization of deferred financing costs | 294 | 54 | 892 | |||
| 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) | (29) | |||
| Noncash stock based comp |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the impairment of long-lived assets for the period from June 17, 2023 through January 1, 2024, was $623 thousand. This figure represents a non-cash expense that Checkersrallys recognized due to a decrease in the recoverable amount of its assets, such as property, equipment, or intangible assets.
For a prospective franchisee, understanding impairment charges is crucial because it reflects the financial health and asset management practices of Checkersrallys. A high impairment charge could indicate that the company's assets are not performing as expected, potentially due to operational inefficiencies, market changes, or other factors affecting the value of the assets.
It is important to note that impairment charges are non-cash expenses, meaning they do not directly impact the company's cash flow. However, they do reduce the company's reported earnings and can affect its overall financial stability. Franchisees should consider this information when evaluating the long-term viability and potential risks associated with investing in a Checkersrallys franchise.