What was the interest expense for Checkersrallys for the year ended December 30, 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 compensation | 498 | 132 | 5,720 | |||
| 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 | (564) | |||
| Decrease (increase) in prepaid expenses | (30) | (1,618) | 1,137 | |||
| 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) | |||
| Other changes, net | (793) | (237) | (584) | |||
| 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 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 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. These figures provide insight into the interest-related financial activities of Checkersrallys during this time.
For a prospective franchisee, understanding these interest expenses is crucial. The noncash interest, while not an immediate out-of-pocket expense, reflects accrued interest that will eventually need to be paid. The cash paid for interest represents the actual outflow of funds for servicing debt. Monitoring these figures can help franchisees assess the financial health and debt management practices of Checkersrallys.
The distinction between cash and noncash interest is important. Noncash interest often arises from accounting adjustments, such as the amortization of debt discounts or premiums. While it doesn't affect the immediate cash flow, it does impact the overall profitability and debt obligations of Checkersrallys. Franchisees should consider both figures when evaluating the financial stability of the franchise.
In the context of potential investment, these interest figures can be compared to industry benchmarks to determine if Checkersrallys's debt management is typical or if it carries a higher or lower burden than its peers. A high-interest expense might indicate higher levels of debt or less favorable financing terms, which could impact the profitability and financial flexibility of both the franchisor and its franchisees.