17927--3/23/2007--CARROLS

related topics

{debt, indebtedness, cash}

{acquisition, growth, future}

{stock, price, operating}

{condition, economic, financial}

{financial, litigation, operation}

{control, financial, internal}

{product, market, service}

{operation, natural, condition}

{investment, property, distribution}

{cost, regulation, environmental}

{regulation, change, law}

{competitive, industry, competition}

{operation, international, foreign}

{provision, law, control}

{stock, price, share}

{system, service, information}

{property, intellectual, protect}

{personnel, key, retain}

{cost, operation, labor}

Intense competition in the restaurant industry could make it more difficult to expand our business and could also have a negative impact on our operating results if customers favor our competitors or we are forced to change our pricing and other marketing strategies. Factors specific to the quick-casual and quick-service restaurant segments may adversely affect our results of operations, which may cause a decrease in earnings and revenues. Our continued growth depends on our ability to open and operate new restaurants profitably, which in turn depends on our continued access to capital, and newly acquired or developed restaurants may not perform as we expect and we cannot assure you that our growth and development plans will be achieved. Our expansion into new markets may present increased risks due to our unfamiliarity with the area. We could be adversely affected by additional instances of mad cow disease, avian flu or other food-borne illness, as well as widespread negative publicity regarding food quality, illness, injury or other health concerns. Our substantial indebtedness could adversely affect our financial condition and our ability to operate our business. Despite our substantial indebtedness, we may still incur significantly more debt, which could further exacerbate the risks described above. We may not be able to generate sufficient cash flows to meet our debt service obligations. Restrictive covenants in the new senior credit facility and the Indenture governing the Notes may restrict our ability to operate our business and to pursue our business strategies; and defaults under our debt instruments may allow the lenders to declare borrowings due and payable. We are highly dependent on the Burger King system and our ability to renew our franchise agreements with Burger King Corporation. The failure to renew our franchise agreements or Burger King s failure to compete effectively could materially adversely affect our results of operations. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results. There can be no assurance that we will not have to restate our financial statements in the future. We may incur significant liability or reputational harm if claims are brought against us or against our franchisees. Our franchisees could take actions that harm our reputation and reduce our franchise revenues. If the sale/leaseback market requires significantly higher yields, we may not enter into sale/leaseback transactions and as a result would not receive the related net proceeds. Changes in consumer taste could negatively impact our business. If a significant disruption in service or supply by any of our suppliers or distributors were to occur, it could create disruptions in the operations of our restaurants, which could have a material adverse effect on our business. If labor costs increase, we may not be able to make a corresponding increase in our prices and our operating results may be adversely affected. The efficiency and quality of our competitors advertising and promotional programs and the extent and cost of our advertising could have a material adverse effect on our results of operations and financial condition. Newly acquired or developed restaurants may reduce sales at our neighboring restaurants. Our business is regional and we therefore face risks related to reliance on certain markets. We cannot assure you that the current locations of our existing restaurants will continue to be economically viable or that additional locations will be acquired at reasonable costs. The loss of the services of our senior executives could have a material adverse effect on our business, financial condition or results of operations. Government regulation could adversely affect our financial condition and results of operations. If one of our employees sells alcoholic beverages to an intoxicated or minor patron, we may be liable to third parties for the acts of the patron. Federal, state and local environmental regulations relating to the use, storage, discharge, emission and disposal of hazardous materials could expose us to liabilities, which could adversely affect our results of operations. We are subject to all of the risks associated with leasing space subject to long-term non-cancelable leases. We may, in the future, seek to pursue acquisitions and we may not find restaurant companies that are suitable acquisition candidates or successfully operate or integrate any restaurant companies we may acquire. Our failure or inability to enforce our trademarks or other proprietary rights could adversely affect our competitive position or the value of our brand. The market price of our common stock may be highly volatile or may decline regardless of our operating performance. The concentrated ownership of our capital stock by insiders will likely limit your ability to influence corporate matters. A substantial number of shares of our common stock will be eligible for sale in the near future, which could cause our common stock price to decline significantly. We do not expect to pay any cash dividends for the foreseeable future, and the Indenture governing the Notes and the new senior credit facility limit Carrols ability to pay dividends to us and consequently our ability to pay dividends to our stockholders. If securities analysts do not publish research or reports about our business or if they downgrade our stock, the price of our stock could decline. Provisions in our restated certificate of incorporation and amended and restated bylaws or Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock. We will incur increased costs as a result of being a public company.

Full 10-K form ▸

17927--3/23/2007--CARROLS_CORP