How does Hardees account for reductions to the operating lease asset and changes in the lease liability in the Consolidated Statements of Cash Flows?

According to Hardees's 2025 Franchise Disclosure Document, the company addresses reductions to the operating lease asset and changes in the lease liability within its Combined Consolidated Statement of Cash Flows. Hardees includes these adjustments as part of the changes in operating lease assets and liabilities, presented on a net basis.

This accounting treatment means that when Hardees experiences a decrease in the value of its operating lease assets or a change in its lease liabilities, these amounts are not reported separately as individual line items. Instead, they are combined and presented as a single net amount within the broader category of changes in operating lease assets and liabilities. This approach simplifies the presentation of cash flow information related to leasing activities.

For a prospective Hardees franchisee, understanding this accounting practice is important for interpreting the company's financial statements. When reviewing the Consolidated Statement of Cash Flows, franchisees should be aware that the line item for changes in operating lease assets and liabilities represents the net effect of multiple underlying transactions. This includes both increases and decreases in lease-related assets and liabilities. A franchisee may want to request additional details from Hardees regarding specific lease transactions to gain a more comprehensive understanding of the company's leasing activities and their impact on cash flows.