This summary is based on the third quarter fiscal 2008 earnings call conducted by CKE Restaurants, Inc. (CKR: chart) on December 13, 2007.

Management:

President, Chief Executive Officer & Director: Andrew F. Puzder
Chief Financial Officer & Executive Vice President: Theodore Abajian
Vice President Investor Relations: John Beisler
Executive Vice President Supply Chain Management: John J. Dunion

Key Investors Issues

- EPS were 11 cents per share compared to 14 cents per share last year.
- Net income dropped to $6.2 million from $9.5 million in the prior-year quarter.
- Revenue fell 1% to $351.6 million from $354.4 million in the third quarter last year.

Third Quarter Highlights

Consolidated revenue was $351.6 million, a $2.8 million, or 0.8% decrease from the prior year quarter.

The decrease in revenue reflects the impact of refranchising efforts, partially offset by same store sales growth and new unit development.

Operating income was $19.5 million, a $7.3 million decline from the prior year quarter operating income of $26.7 million.

The year-over-year decline in operating income is primarily attributable to a 110 basis point or $2.9 million increase in food and packaging costs and a 110 basis point, or $2.9 million increase in occupancy and other restaurant operating costs.

G&A costs, which include an $841,000 increase in share based compensation expense, declined by $1.9 million, or 40 basis points as a percent of total revenue as compared to the prior year quarter.

G&A cost excluding share base compensation expense were down $2.7 million. Facility action charges were $.3 million as compared to a credit of $1.4 million in the prior year quarter. The prior year results included gains on the sale of surplus properties that did not recur in the current year quarter.

Interest expense was $7.7 million, an increase of $3.9 million as compared to the prior year quarter.

The increase versus the prior year quarter is due to a combination of higher overall debt balances resulting from share repurchase activity and a $1.8 million non cash charge incurred during the third quarter to adjust the carrying value of interest rate swap agreements.

The company entered into interest rate swap agreement which effectively fixed the interest rate on $200 million of term loan debt at 6.22%. These agreements expire in March of 2012. Subsequent to entering into these agreements, both current interest rates and expected future interest rates declined.

As of the end of the third quarter the company was required to record a $1.8 million charge to account for this decline and interest rate. Since the charge, the company recorded as the effect of resetting interest rate to the current market rate, the company would expect to begin recording interest expense at the then current market rate from that point forward. However, future declines in interest rate yield curves would require to record additional charges.

Income from continuing operations was $7.5 million, or 13 cents per share and include the aforementioned adjustment to interest expense which equates to approximately 2 cents per share.

Carl’s Jr. same store sales increased 0.7% rolling over a 6.2% increase in the prior year quarter.

Restaurant operating cost increased from 130 basis points to 78.8% of company operated restaurants revenue. The increase in restaurant operating cost was driven by a 140 basis point increase in occupancy and other expense over the prior year quarter due primarily to an 80 basis point increase in depreciation expense arising from increased remodel activity and the roll out of new point of sale software and related hardware. Both food and packaging costs and labor and employee benefits were relatively flat versus the prior year quarter. Higher direct labor expense related to minimum wage increases at the federal and state levels were offset by a reduction in restaurant level manager bonus expense and a 40 basis point decrease in workers’ compensation expense from favorable adjustments to workers’ compensation claim reserves.

Hardee’s same store sales at company operated Hardee’s restaurants increased by 2.7% rolling over a 5.6% increase in the prior year quarter.