##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    January 28, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission File Number 1-11313
  
  CKE Restaurants, Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware(State or other jurisdiction
    of
    incorporation or organization)

33-0602639(I.R.S. Employer
    Identification No.)   6307 Carpinteria Ave., Ste. A
 Carpinteria, California 93013
 (Address of principal executive
    offices)
  Registrants telephone number, including area code
 (805) 745-7500
  Securities Registered Pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $.01 par value
    4% Convertible Subordinated Notes due 2023

New York Stock Exchange
    New York Stock Exchange   Securities
    Registered Pursuant to Section 12(g) of the Act:
    None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated
    filer þ

Accelerated filer
    o

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE:




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##### 





CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  INDEX TO
    ANNUAL REPORT ON
    FORM 10-K
 For the
    Fiscal Year Ended January 28, 2008
  TABLE OF CONTENTS
  PageNo.Part IItem 1.


Business


1Item 1A.


Risk Factors


11Item 1B.


Unresolved Staff Comments


16Item 2.


Properties


16Item 3.


Legal Proceedings


17Item 4.


Submission of Matters to a Vote of Security
    Holders


17Part IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


18Item 6.


Selected Financial Data


20Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


23Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


57Item 8.


Financial Statements and Supplementary Data


57Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


57Item 9A.


Controls and Procedures


58Item 9B.


Other Information


60Part IIIItem 10.


Directors and Executive Officers of the
    Registrant


61Item 11.


Executive Compensation


61Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


61Item 13.


Certain Relationships and Related Transactions


62Item 14.


Principal Accountant Fees and Services


62Part IVItem 15.


Exhibits, Financial Statement Schedules


63EXHIBIT 12.1EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   i




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##### Table of Contents



PART I  Item 1.
    Business  Our fiscal year ends on the last Monday in January each year.
    In this Annual Report on
    Form 10-K,
    we refer to the fiscal years by reference to the calendar year
    in which they end (e.g., the fiscal year ended January 28,
    2008, is referred to as fiscal 2008, and the fiscal
    year ended January 29, 2007, is referred to as fiscal
    2007). Fiscal 2008, 2007 and 2006 each include
    52 weeks. For clarity of presentation, we generally label
    all fiscal years presented as if the fiscal year ended
    January 31. All dollar amounts, except per share amounts,
    presented in this Annual Report on
    Form 10-K
    are in thousands, unless otherwise noted.
  Company
    Overview
  ® ®
  Carls Jr.


Hardees


Other


TotalCompany-operated


406



560



1



967Franchised and licensed


735



1,366



15



2,116Total


1,141



1,926



16



3,083   Carls Jr. ®
  Hardees. 1 3 1 2 2 3 tm best-in-class tm
  Recent
    Developments
  Seventh Amended and Restated Credit Facility
    (Facility) and Amendments Thereto.
  Repurchase of Common Stock.
 1




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##### Table of Contents



Rule 10b5-1 Rule 10b5-1
  Refranchising Program. and/or
  Discontinued Operations. Accounting for
    the Impairment or Disposal of Long-Lived
  Interest Rate Swap Agreements. Accounting for Derivative Instruments and
    Hedging Activities
  Adoption of New Accounting Pronouncements.
  Use of
    Non-GAAP Financial Measures
  Form 10-K, Form 10-K.
  Contact
    Information; Obtaining Copies of this Annual Report
  www.ckr.com.
 2




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##### Table of Contents



Form 10-K, Form 10-Q Form 8-K, www.ckr.com. www.sec.gov.
  www.ckr.com (805) 745-7500.
    Competitive
    Strengths
    
    promotion of distinctive, premium-quality, great tasting
    products such as the Carls Jr. line of 100% Black Angus
    beef Six Dollar
    Burgerstm,
    Hand-Scooped Ice Cream Shakes and
    Maltstm
    and authentic breakfast burritos and Breakfast
    Burgerstm;
    as well as Hardees line of
    1/3-,
    1/2-
    and
    2/3-lb.
    100% Black Angus beef Thickburgers, Hand-Scooped Ice Cream
    Shakes and
    Maltstm,
    and Made From Scratch breakfast biscuits;
    utilization of gas-fired charbroilers in all of our Carls
    Jr. and Hardees restaurants to improve taste, operations
    and food safety; and
    ongoing programs to elevate customer service at Carls Jr.
    and Hardees to an industry-leading level.    Carls Jr. tm tm tm
  Hardees. tm ® ® tm tm tm
 3




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##### Table of Contents



Business
    Strategy
    
    increase revenues, average unit volumes and operating income at
    Carls Jr. and Hardees;
    increase development of new company-operated Carls Jr. and
    Hardees restaurants, primarily in existing core markets;
    increase development of new franchised restaurants in the
    U.S. and licensed restaurants internationally for both
    Carls Jr. and Hardees;
    refranchise strategic company-operated Hardees markets to
    support the long-term growth of the brand;
    remain focused on restaurant fundamentals  quality,
    service and cleanliness;
    capitalize on our unique brand positioning and cutting-edge
    advertising;
    offer premium products that compete on quality, innovation and
    taste;
    continue to capitalize on dual-branding opportunities available
    with Green Burrito and Red Burrito;
    control costs and improve capital structure; and
    remodel our existing store base to remain competitive.    Franchise
    Strategy
    Carls Jr.
  Hardees. and/or
 4




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##### Table of Contents



International.
    
    We evolved the system-wide mix of restaurants to one that is
    primarily franchise-operated. At the end of fiscal 2008,
    approximately 69% of Carls Jr. and Hardees
    restaurants combined were franchised.
    Our same-store sales trends for company-operated restaurants,
    for each brand by quarter were:  Carls Jr.


HardeesFiscal 2008First Quarter



%


1.8
%Second Quarter


2.0
%


2.9
%Third Quarter


0.7
%


2.7
%Fourth Quarter


1.4
%


0.4
%Fiscal 2007First Quarter


5.6
%


5.6
%Second Quarter


4.8
%


3.0
%Third Quarter


6.2
%


5.6
%Fourth Quarter


2.8
%


4.8
%   
    Quarterly operating income (loss) from continuing operations by
    segment has been:  ConsolidatedOperatingIncome fromContinuingCarls Jr.


Hardees


Other


OperationsFiscal 2008First Quarter

$
21,427


$
8,596


$
(36
)

$
29,987Second Quarter


15,060



8,271



39



23,370Third Quarter


14,570



4,599



310



19,479Fourth Quarter


15,744



(239
)


(14
)


15,491Fiscal 2007First Quarter

$
26,731


$
7,034


$
(128
)

$
33,637Second Quarter


20,973



12,848



43



33,864Third Quarter


16,513



10,219



3



26,735Fourth Quarter


16,475



100



(117
)


16,458   Financial
    Information about Operating Segments
  Form 10-K
 5




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##### Table of Contents



Investments
    in Other Restaurant Concepts
  and/or
  Restaurant
    Development
    Average per restaurant(1)(2)Carls Jr.


HardeesBuilding and leasehold improvements

$
1,118


$
1,039Equipment


325



366Total

$
1,443


$
1,405     (1)
    
    The averages above are contingent upon a number of factors
    including, but not limited to, restaurant prototype,
    geographical area and local zoning requirements.(2)
    
    The majority of these restaurants were constructed on leased
    land. One Carls Jr. restaurant and one Hardees
    restaurant were constructed on land we purchased at a cost of
    $527 and $601, respectively.    Restaurant
    Operations and Support
        in-restaurant,
   6




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##### Table of Contents



Marketing
    and Advertising
      Form 10-K.
  Purchasing
    mark-up
      Form 10-K.
 7




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Competition
    and Markets
      Trademarks
    and Service Marks
    Government
    Regulation
          Environmental
    Matters
   8




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##### Table of Contents



on-site and/or
  Seasonality
      Government
    Contracts
    Research
    and Development
    Employees
    Working
    Capital Practices
  Form 10-K
  Disclosure
    Regarding Forward-Looking Statements
  Form 10-K
 9




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##### Table of Contents



Executive
    Officers of the Registrant
    Name

Age

PositionAndrew F. Puzder


57


Chief Executive Officer and PresidentE. Michael Murphy


56


Executive Vice President, Chief Administrative Officer, General
    Counsel and SecretaryTheodore Abajian


44


Executive Vice President and Chief Financial OfficerNoah J. Griggs, Jr.


44


Executive Vice President, Training  Carls
    Jr. and HardeesBradford R. Haley


49


Executive Vice President, Marketing  Carls
    Jr. and Hardees   Andrew F. Puzder
  E. Michael Murphy
  Theodore Abajian
  Noah J. Griggs, Jr.
 10




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##### Table of Contents



Bradford R. Haley
  Item 1A.
    Risk
    Factors    Our
    success depends on our ability to compete with our
    competitors.
    We may
    be unable to recover increased operating costs through price
    increases.
  and/or
  Restrictive
    covenants in our credit facility and outstanding senior
    indebtedness could adversely affect our business.
    Our
    success depends on our ability to attract and retain key
    personnel.
   11




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##### Table of Contents



Our
    success depends on our franchisees participation in our
    strategy.
    Our
    financial results are affected by the financial results of our
    franchisees.
    Changes
    in consumer preferences and perceptions, economic, market and
    other conditions could adversely affect our operating
    results.
      We
    face commodity price and availability risks.
    We
    depend on our suppliers to deliver quality products to us
    timely.
   12




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Events
    reported in the media, such as incidents involving food-borne
    illnesses or food tampering, whether accurate or not , could
    reduce the production and supply of important food products,
    cause damage to our reputation and adversely affect our sales
    and profitability.
  e-coli,
    Our
    operations are seasonal and heavily influenced by weather
    conditions.
    Our
    business may suffer due to our inability to hire and retain
    qualified personnel and due to higher labor costs.
    Our
    business may be impacted by increased insurance and/or
    self-insurance costs.
   13




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##### Table of Contents



Our
    financial results may be impacted by our ability to select
    appropriate restaurant locations, construct new restaurants or
    complete remodels.
    We are
    subject to certain health, employment, environmental and other
    government regulations, and failure to comply with existing or
    future government regulations could expose us to litigation,
    damage to our reputation and lower profits.
         14




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##### Table of Contents



We may
    not be able to adequately protect our intellectual property,
    which could decrease the value of our brands and
    products.
    Provisions
    of our Certificate of Incorporation and Bylaws could limit the
    ability of our stockholders to effect a change in
    control.
      We
    face risks related to interest rates.
      Our
    financial results may be impacted by changes in accounting
    policies and practices.
  Accounting for Uncertainty in Income
    Taxes  an interpretation of FASB Statement
    No. 109
   15




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##### Table of Contents



Catastrophic
    events may disrupt our business.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Land and


Land Leased


Land andBuilding


and Building


BuildingOwned


Owned


Leased


TotalCarls Jr.:Company-operated


19



124



263



406Franchise-operated(1)


10



45



164



219Third party-operated/vacant(2)


5



2



11



18Subtotal


34



171



438



643Hardees:Company-operated


291



119



150



560Franchise-operated(1)


27



65



107



199Third party-operated/vacant(2)


16



15



48



79Subtotal


334



199



305



838Other:Company-operated










1



1Third party-operated/vacant(2)






2



1



3Subtotal






2



2



4Total:Company-operated


310



243



414



967Franchise-operated(1)


37



110



271



418Third party-operated/vacant(2)


21



19



60



100Total


368



372



745



1,485     (1)
    
    Franchise-operated properties are those which we own
    and lease to franchisees, or lease and sublease to franchisees.(2)
    
    Third party-operated/vacant properties are those we
    own or lease that are either leased or subleased by unaffiliated
    entities or are currently vacant.     16




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##### Table of Contents



Item 3.
    Legal
    Proceedings    Employees
    Customers
    Suppliers
    Franchising
    Intellectual
    Property
    Item 4.
    Submission
    of Matters to a Vote of Security Holders   17




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##### Table of Contents



PART II  Item 5.
    Market
    For Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    High


LowFiscal 2008First Quarter

$
21.35


$
18.25Second Quarter


23.24



15.40Third Quarter


18.41



15.19Fourth Quarter


15.43



11.31Fiscal 2007First Quarter

$
18.50


$
15.17Second Quarter


17.37



14.00Third Quarter


20.00



14.55Fourth Quarter


20.04



17.57         Shares repurchased


15,854,519Average price per share

$
16.80Total cost, including trading commissions

$
266,640Shares retired


15,845,019     Rule 10b5-1 Rule 10b5-1
 18




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##### Table of Contents



(a)


(b)


(c)


(d)Total Number of


Maximum DollarShares Purchased


Value of SharesTotal


Average


as Part of


that May Yet BeNumber of


Price


Publicly


Purchased UnderShares


Paid per


Announced Plans


the Plans orPeriod

Purchased


Share


or Programs


ProgramsNovember 6, 2007  December 3, 2007


410,600


$
14.92



410,600


$
19,550December 4, 2007  December 31, 2007


118,100



14.34



118,100



17,853January 1, 2008  January 28, 2008


2,126,600



11.80



2,126,600



42,747Total


2,655,300


$
12.40



2,655,300


$
42,747     COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
    Among CKE Restaurants, Inc.  CKR, QSR Peer Group
    And The S&P Small Cap 600 Index
  
  2003


2004


2005


2006


2007


2008CKE Restaurants, Inc


$
100.00



$
212.15



$
374.86



$
436.74



$
555.25



$
374.59QSR Peer Group(1)


$
100.00



$
163.99



$
202.37



$
230.08



$
267.08



$
271.72S&P Small Cap 600


$
100.00



$
152.54



$
164.83



$
201.26



$
214.43



$
195.59   *
    
    $100 invested on January 31, 2003 in stock or
    index-including reinvestment of dividends.    (1)
    
    The QSR Peer Group is comprised of the following companies: Jack
    in the Box Inc., McDonalds Corp., Wendys International,
    Inc. and Yum! Brands, Inc. 19




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K.
  Selected
    Financial and Operating Data
  Fiscal Year Ended January 31,(1)2008


2007


2006


2005


2004Consolidated Statements of Operations Data:Revenue:Company-operated restaurants

$
1,201,577


$
1,225,227


$
1,162,179


$
1,170,323


$
1,100,619Franchised and licensed restaurants and other


333,057



316,844



307,012



300,764



268,868Total revenue

$
1,534,634


$
1,542,071


$
1,469,191


$
1,471,087


$
1,369,487Operating income(2)

$
88,327


$
110,694


$
80,368


$
63,326


$
28,620Interest expense(3)


33,033



19,768



22,988



36,775



40,043Income tax expense (benefit)(4)


24,659



34,019



(122,962
)


654



3,991Income (loss) from continuing operations


35,072



54,194



182,709



22,979



(15,196
)Loss from discontinued operations(5)(6)


(3,996
)


(4,022
)


(1,570
)


(4,963
)


(38,024
)Net income (loss)


31,076



50,172



181,139



18,016



(53,220
)Income (loss) from continuing operations per share 
    basic


0.59



0.85



3.08



0.40



(0.26
)Income (loss) from continuing operations per share 
    diluted


0.57



0.77



2.54



0.39



(0.26
)Loss from discontinued operations per share  diluted


(0.07
)


(0.05
)


(0.03
)


(0.09
)


(0.66
)Net income (loss) per share  diluted

$
0.50


$
0.72


$
2.51


$
0.30


$
(0.92
)Weighted-average shares outstanding  diluted


62,559



72,377



73,250



59,583



57,536Cash dividends declared per common share

$
0.24


$
0.16


$
0.16


$



$
Ratio of earnings to fixed charges(7)


1.9
x


2.8
x


2.1
x


1.3
x


Segment Operating Data:Carls Jr.:Total revenue

$
845,634


$
830,961


$
802,761


$
792,829


$
725,055Operating income


66,801



80,692



80,047



59,826



54,634Hardees:Total revenue


685,273



706,884



661,509



673,172



642,694Operating income (loss)


21,227



30,201



11,600



3,398



(26,277
) 20




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##### Table of Contents



Fiscal Year Ended January 31,(1)2008


2007


2006


2005


2004Consolidated Balance Sheet Data:Cash and cash equivalents

$
19,993


$
18,620


$
21,279


$
18,363


$
54,291Working capital deficit


(47,510
)


(33,631
)


(27,038
)


(74,907
)


(43,820
)Total assets


791,711



796,638



795,428



669,434



730,742Total long-term debt and capital lease obligations, including
    current portion


392,036



178,055



264,662



317,048



418,176Stockholders equity


145,242



378,846



308,938



119,668



100,658     (1)
    
    Our fiscal year is 52 or 53 weeks, ending the last Monday
    in January. For clarity of presentation, we generally label all
    fiscal years presented as if the fiscal year ended
    January 31. Fiscal 2008, 2007, 2006 and 2004 include
    52 weeks. Fiscal 2005 includes 53 weeks. The results
    of operations for La Salsa have been classified as
    discontinued operations for all periods presented.(2)
    
    Fiscal 2008, 2007, 2006, 2005 and 2004, include $(577), $3,543,
    $6,481, $9,975 and $17,212, respectively, of facility action
    charges, net, which are included in operating income (loss).(3)
    
    Fiscal 2008 includes $11,380 of interest expense related to
    changes in the fair value of our interest rate swap agreements.(4)
    
    Fiscal 2006 includes a $147,988 income tax benefit related to
    the reversal of previously established valuation allowance
    against deferred income tax assets.(5)
    
    Discontinued operations contain the financial results of
    La Salsa in fiscal 2008, 2007, 2006, 2005 and 2004 and the
    financial results of Timber Lodge in fiscal 2005 and 2004.(6)
    
    Fiscal 2004 includes a $34,059 impairment charge to reduce the
    carrying value of La Salsa goodwill to $0.(7)
    
    For purposes of calculating the ratio of earnings to fixed
    charges, (a) earnings represent income (loss) before income
    taxes, discontinued operations and fixed charges, and
    (b) fixed charges consist of interest on all indebtedness,
    interest related to capital lease obligations, amortization of
    debt issuance costs and a portion of rental expense that is
    representative of the interest factor (deemed by us to be
    one-third). Earnings were sufficient to cover fixed charges for
    fiscal 2008, 2007, 2006 and 2005, and insufficient to cover
    fixed charges for fiscal 2004 by $11,205. 21




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##### Table of Contents



Selected
    Financial and Operating Data by Segment
  Fiscal Year Ended January 31,(1)2008


2007


2006


2005


2004Carls Jr. RestaurantsRestaurants open (at end of fiscal year):Company-operated


406



393



428



428



426Franchised and licensed


735



694



621



586



580Total


1,141



1,087



1,049



1,014



1,006Restaurant revenue:Company-operated restaurants

$
595,272


$
590,613


$
574,663


$
567,960


$
523,945Franchised and licensed restaurants(2)


853,391



795,520



700,590



679,734



596,318Company-operated average unit volume (trailing-13 periods)


1,493



1,440



1,341



1,301



1,187Company-operated same-store sales increase


0.9
%


4.9
%


2.2
%


7.7
%


2.9
%Restaurant operating costs as a percentage of company-operated
    restaurants revenue


78.5
%


76.3
%


76.6
%


78.9
%


79.8
%Hardees RestaurantsRestaurants open (at end of fiscal year):Company-operated


560



696



663



677



721Franchised and licensed


1,366



1,210



1,330



1,357



1,400Total


1,926



1,906



1,993



2,034



2,121Restaurant revenue:Company-operated restaurants

$
605,986


$
634,264


$
587,082


$
601,068


$
575,238Franchised and licensed restaurants(2)


1,196,505



1,156,201



1,173,442



1,203,750



1,186,490Company-operated average unit volume (trailing-13 periods)


954



916



874



862



792Company-operated same-store sales increase (decrease)


2.0
%


4.8
%


(0.2
)%


7.0
%


2.5
%Restaurant operating costs as a percentage of company-operated
    restaurants revenue


83.6
%


81.9
%


84.5
%


85.7
%


90.7
%     (1)
    
    Our fiscal year is 52 or 53 weeks, ending the last Monday
    in January. For clarity of presentation, we generally label all
    fiscal years presented as if the fiscal year ended
    January 31. Fiscal 2008, 2007, 2006 and 2004 include
    52 weeks. Fiscal 2005 includes 53 weeks.(2)
    
    Franchised and licensed restaurant operations are not included
    in our Consolidated Statements of Income; however, franchised
    and licensed restaurants revenues result in royalties and rental
    revenues, which are included in franchised and licensed
    restaurants and other revenue. 22




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-K.
  Overview
    
    Consolidated revenue decreased 0.5%, to $1,534,634 in fiscal
    2008 from $1,542,071 in fiscal 2007.
    Carls Jr. same-store sales increased for the eighth
    consecutive year in fiscal 2008, growing 0.9% at
    company-operated restaurants, following a 4.9% increase in
    fiscal 2007.
    Hardees same-store sales increased 2.0% at
    company-operated restaurants in fiscal 2008, following a 4.8%
    increase in fiscal 2007.
    Annual average unit volume increased 3.7%, to $1,493, for
    Carls Jr. company-operated restaurants and increased 4.1%,
    to $954, for Hardees company-operated restaurants.
    Carls Jr. total restaurant operating costs as a percentage
    of company-operated restaurants revenue increased 220 basis
    points to 78.5% in fiscal 2008, as compared to 76.3% in fiscal
    2007.
    Hardees total restaurant operating costs as a percentage
    of company-operated restaurants revenue increased 170 basis
    points to 83.6% in fiscal 2008, as compared to 81.9% in fiscal
    2007.
    Income before income taxes and discontinued operations decreased
    $28,482, or 32.3%, to $59,731 in fiscal 2008, as compared to
    $88,213 in fiscal 2007.
    Net income decreased to $31,076, or $0.50 per diluted share.
    This represents a decrease of $19,096 from the prior year net
    income.
    During fiscal 2008, we repurchased 15,854,519 shares of our
    common stock for $266,640 under our Stock Repurchase Plan.
    On March 27, 2007, we amended and restated our senior
    credit facility. As amended, our Facility provides for a
    $470,000 senior secured credit facility consisting of a $200,000
    revolving credit facility and a $270,000 term loan. The
    revolving credit facility matures on March 27, 2012. The
    principal amount of the term loan is scheduled to be repaid in
    quarterly installments through January 1, 2013. On
    March 7, 2008, we amended our Facility to modify one of our
    restrictive covenants for each of the quarters in fiscal 2009
    through 2012.
    During fiscal 2008, we declared cash dividends of $0.06 per
    share of our common stock each quarter for a total of $0.24 per
    share for a total of $13,873.
    During fiscal 2008, we launched a refranchising program that is
    expected to involve approximately 200 Hardees
    restaurant locations in a number of markets across the
    Midwestern and Southeastern United States. During fiscal 2008,
    we sold 136 company-operated Hardees restaurants and
    other real property with net book values totaling $46,328 to
    seven franchisees. In connection with these transactions, we
    received aggregate consideration of $53,009 and recognized net
    gains of $2,457 and initial franchise fees of $2,735.   23




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
      Critical
    Accounting Policies
      
    estimation of future cash flows used to assess the
    recoverability of long-lived assets and to establish the
    estimated liability for closed restaurants and subsidizing lease
    payments of franchisees;
    estimation, using actuarially determined methods, of our
    self-insured claim losses under our workers compensation,
    general and auto liability insurance programs;
    determination of appropriate estimated liabilities for loss
    contingencies;
    determination of appropriate assumptions to use in evaluating
    leases for capital versus operating lease treatment,
    establishing depreciable lives for leasehold improvements and
    establishing straight-line rent expense periods;
    estimation of the appropriate allowances associated with
    franchisee and licensee receivables;
    determination of the appropriate assumptions to use to estimate
    the fair value of share-based compensation; and
    estimation of our net deferred income tax asset valuation
    allowance, liabilities related to uncertain tax positions and
    effective tax rate.    Impairment
    of Property and Equipment and Other Amortizable Long-Lived
    Assets Held and Used, Held for Sale or To Be Disposed of Other
    Than By Sale
  and/or
 24




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
        Impairment
    of Goodwill
  Goodwill and Other
    Intangible Assets and/or Business Combinations
    Estimated
    Liability for Closed Restaurants
   25




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
      Estimated
    Liability for Self-Insurance
        Loss
    Contingencies
  Accounting for Contingencies
 26




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
      Accounting
    for Lease Obligations
      Franchised
    and Licensed Operations
    and/or and/or
   27




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
      Accounting for Costs
    Associated with Exit or Disposal Activities
  and/or
  Share-Based
    Compensation
  Share-Based Payment Accounting for
    Stock Issued to Employees
 28




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
  Income
    Taxes
           29




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
    Franchised
    Operations
    and/or
 30




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
  Operating
    Review
    2008


2007


2006Revenue:Company-operated restaurants


78.3
%


79.5
%


79.1
%Franchised and licensed restaurants and other


21.7



20.5



20.9Total revenue


100.0



100.0



100.0Operating costs and expenses:Restaurant operating costs(1):Food and packaging


29.7



28.8



29.4Payroll and other employee benefits


29.2



29.1



29.4Occupancy and other


22.3



21.3



21.9Total restaurant operating costs


81.1



79.2



80.6Franchised and licensed restaurants and other(2)


77.6



75.6



77.2Advertising(1)


5.9



5.8



6.0General and administrative


9.4



9.5



9.4Facility action charges, net






0.2



0.4Operating income


5.8



7.2



5.5Interest expense


(2.2
)


(1.3
)


(1.6
)Conversion inducement expense






(0.4
)


Other income, net


0.3



0.2



0.2Income before income taxes and discontinued operations


3.9



5.7



4.1Income tax expense (benefit)


1.6



2.2



(8.4
)Income from continuing operations


2.3
%


3.5
%


12.4
%     (1)
    
    As a percentage of company-operated restaurants revenue.(2)
    
    As a percentage of franchised and licensed restaurants and other
    revenue. 31




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
     Carls


Hardees


Total(1)Company-operated restaurantsOpen as of January 31, 2007


393



696



1,090New


16



7



23Closed


(3
)


(12
)


(15
)Divested






(136
)


(136
)Acquired






5



5Open as of January 31, 2008


406



560



967Franchised and licensed restaurantsOpen as of January 31, 2007


694



1,210



1,919New


53



45



98Closed


(12
)


(20
)


(32
)Divested






(5
)


(5
)Acquired






136



136Open as of January 31, 2008


735



1,366



2,116Total restaurantsOpen as of January 31, 2007


1,087



1,906



3,009New


69



52



121Closed


(15
)


(32
)


(47
)Divested






(141
)


(141
)Acquired






141



141Open as of January 31, 2008


1,141



1,926



3,083     (1)
    
    Total includes one company-operated and 15
    franchised Green Burrito restaurants that were open as of
    January 31, 2007 and 2008. 32




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
     Fiscal 2008Carls Jr.


Hardees


Other(A)


Eliminations(B)


TotalCompany-operated restaurants revenue

$
595,272


$
605,986


$
319


$



$
1,201,577Restaurant operating costs:Food and packaging


172,990



183,228



114







356,332Payroll and other employee benefits


159,828



190,567



131







350,526Occupancy and other


134,685



132,577



110







267,372Total restaurant operating costs


467,503



506,372



355







974,230Franchised and licensed restaurants and other revenue:Royalties


31,851



43,375



524



(60
)


75,690Distribution centers


195,144



24,307







(10
)


219,441Rent


21,751



7,908











29,659Retail sales of variable interest entity










2,954







2,954Franchise fees


1,616



3,697











5,313Total franchised and licensed restaurants and other revenue


250,362



79,287



3,478



(70
)


333,057Franchised and licensed restaurants and other expenses:Administrative expense (including provision for bad debts)


5,845



6,106











11,951Distribution centers


194,929



24,421











219,350Rent and other occupancy


18,601



5,494











24,095Operating costs of variable interest entity










2,969



(70
)


2,899Total franchised and licensed restaurants and other expenses


219,375



36,021



2,969



(70
)


258,295Advertising


34,424



35,897



3







70,324General and administrative


56,501



87,363



171







144,035Facility action charges, net


1,030



(1,607
)










(577
)Operating income

$
66,801


$
21,227


$
299


$



$
88,327Company-operated average unit volume (trailing-13 periods)

$
1,493


$
954Franchise-operated average unit volume (trailing-13 periods)

$
1,197


$
964Company-operated same-store sales increase


0.9
%


2.0
%Franchise-operated same-store sales (decrease) increase


(0.6
)%


0.4
%Company-operated same-store transaction (decrease) increase


(2.9
)%


0.8
%Average check (actual $)

$
6.80


$
4.97Restaurant operating costs as a percentage of company-operated
    restaurants revenue:Food and packaging


29.1
%


30.2
%Payroll and employee benefits


26.8
%


31.4
%Occupancy and other


22.6
%


21.9
%Total restaurant operating costs


78.5
%


83.6
%Advertising as a percentage of company-operated restaurants
    revenue


5.8
%


5.9
%   33




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
  Fiscal 2007Carls Jr.


Hardees


Other(A)


Eliminations(B)


TotalCompany-operated restaurants revenue

$
590,613


$
634,264


$
350


$



$
1,225,227Restaurant operating costs:Food and packaging


170,142



182,695



115







352,952Payroll and other employee benefits


154,791



201,008



134







355,933Occupancy and other


125,750



135,716



110







261,576Total restaurant operating costs


450,683



519,419



359







970,461Franchised and licensed restaurants and other revenue:Royalties


29,692



47,546



487



(70
)


77,655Distribution centers


187,533



16,995







(8
)


204,520Rent


21,211



7,426











28,637Retail sales of variable interest entity










3,467







3,467Franchise fees


1,912



653











2,565Total franchised and licensed restaurants and other revenue


240,348



72,620



3,954



(78
)


316,844Franchised and licensed restaurants and other expenses:Administrative expense (including provision for bad debts)


5,283



4,339











9,622Distribution centers


185,271



17,840











203,111Rent and other occupancy


18,280



5,117











23,397Operating costs of variable interest entity










3,437



(47
)


3,390Total franchised and licensed restaurants and other expenses


208,834



27,296



3,437



(47
)


239,520Advertising


33,318



37,589



7







70,914General and administrative


56,770



89,885



284







146,939Facility action charges, net


664



2,494



385







3,543Operating income (loss)

$
80,692


$
30,201


$
(168
)

$
(31
)

$
110,694Company-operated average unit volume (trailing-13 periods)

$
1,440


$
916Franchise-operated average unit volume (trailing-13 periods)

$
1,205


$
949Company-operated same-store sales increase


4.9
%


4.8
%Franchise-operated same-store sales increase


5.4
%


4.3
%Company-operated same-store transaction increase


0.7
%


1.4
%Average check (actual $)

$
6.49


$
4.89Restaurant operating costs as a percentage of company-operated
    restaurants revenue:Food and packaging


28.8
%


28.8
%Payroll and employee benefits


26.2
%


31.7
%Occupancy and other


21.3
%


21.4
%Total restaurant operating costs


76.3
%


81.9
%Advertising as a percentage of company-operated restaurants
    revenue


5.6
%


5.9
%   34




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
  Fiscal 2006Carls Jr.


Hardees


Other(A)


Eliminations(B)


TotalCompany-operated restaurants revenue

$
574,663


$
587,082


$
434


$



$
1,162,179Restaurant operating costs:Food and packaging


166,863



174,611



148







341,622Payroll and other employee benefits


150,559



190,486



193







341,238Occupancy and other


123,031



131,149



149







254,329Total restaurant operating costs


440,453



496,246



490







937,189Franchised and licensed restaurants and other revenue:Royalties


26,224



42,050



433



(86
)


68,621Distribution centers


179,222



24,458







(139
)


203,541Rent


20,968



7,121











28,089Retail sales of variable interest entity










4,279







4,279Franchise fees


1,684



798











2,482Total franchised and licensed restaurants and other revenue


228,098



74,427



4,712



(225
)


307,012Franchised and licensed restaurants and other expenses:Administrative expense (including provision for bad debts)


4,610



5,171











9,781Distribution centers


174,149



24,930











199,079Rent and other occupancy


18,213



5,959











24,172Operating costs of variable interest entity










4,299



(256
)


4,043Total franchised and licensed restaurants and other expenses


196,972



36,060



4,299



(256
)


237,075Advertising


34,660



35,282



8







69,950General and administrative


48,837



77,668



11,623







138,128Facility action charges, net


1,792



4,653



36







6,481Operating income (loss)

$
80,047


$
11,600


$
(11,310
)

$
31


$
80,368Company-operated average unit volume (trailing-13 periods)

$
1,341


$
874Franchise-operated average unit volume (trailing-13 periods)

$
1,160


$
897Company-operated same-store sales increase (decrease)


2.2
%


(0.2
)%Franchise-operated same-store sales increase (decrease)


0.7
%


(2.2
)%Company-operated same-store transaction decrease


(3.0
)%


(2.7
)%Average check (actual $)

$
6.22


$
4.76Restaurant operating costs as a percentage of company-operated
    restaurants revenue:Food and packaging


29.0
%


29.7
%Payroll and employee benefits


26.2
%


32.4
%Occupancy and other


21.4
%


22.3
%Total restaurant operating costs


76.6
%


84.5
%Advertising as a percentage of company-operated restaurants
    revenue


6.0
%


6.0
%   35




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
  Fourth Quarter Fiscal 2008Carls Jr.


Hardees


Other(A)


Eliminations(B)


TotalCompany-operated restaurants revenue

$
139,301


$
120,567


$
70


$



$
259,938Restaurant operating costs:Food and packaging


40,170



36,362



39







76,571Payroll and other employee benefits


36,948



39,648



29







76,625Occupancy and other


32,366



27,278



22







59,666Total restaurant operating costs


109,484



103,288



90







212,862Franchised and licensed restaurants and other revenue:Royalties


7,438



10,233



130



(69
)


17,732Distribution centers


45,814



6,094







(2
)


51,906Rent


4,677



2,014











6,691Retail sales of variable interest entity










361







361Franchise fees


421



1,070











1,491Total franchised and licensed restaurants and other revenue


58,350



19,411



491



(71
)


78,181Franchised and licensed restaurants and other expenses:Administrative expense (including provision for bad debts)


1,323



1,442











2,765Distribution centers


45,781



6,064











51,845Rent and other occupancy


4,132



1,472











5,604Operating costs of variable interest entity










407



(11
)


396Total franchised and licensed restaurants and other expenses


51,236



8,978



407



(11
)


60,610Advertising


7,474



6,988



1







14,463General and administrative


13,633



20,107



17







33,757Facility action charges, net


80



856











936Operating income (loss)

$
15,744


$
(239
)

$
46


$
(60
)

$
15,491Company-operated same-store sales increase


1.4
%


0.4
%Franchise-operated same-store sales (decrease) increase


(2.2
)%


0.3
%Company-operated same-store transaction decrease


(2.2
)%


(3.2
)%Average check (actual $)

$
7.05


$
5.11Restaurant operating costs as a percentage of company-operated
    restaurants revenue:Food and packaging


28.8
%


30.2
%Payroll and employee benefits


26.5
%


32.9
%Occupancy and other


23.2
%


22.6
%Total restaurant operating costs


78.6
%


85.7
%Advertising as a percentage of company-operated restaurants
    revenue


5.4
%


5.8
%   36




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
  Fourth Quarter Fiscal 2007Carls Jr.


Hardees


Other(A)


Eliminations(B)


TotalCompany-operated restaurants revenue

$
133,041


$
145,030


$
77


$



$
278,148Restaurant operating costs:Food and packaging


38,805



41,508



25







80,338Payroll and other employee benefits


34,800



46,747



30







81,577Occupancy and other


29,302



32,010



24







61,336Total restaurant operating costs


102,907



120,265



79







223,251Franchised and licensed restaurants and other revenue:Royalties


7,214



9,476



105



(37
)


16,758Distribution centers


43,332



3,464







(2
)


46,794Rent


5,151



1,326











6,477Retail sales of variable interest entity










723







723Franchise fees


234



98











332Total franchised and licensed restaurants and other revenue


55,931



14,364



828



(39
)


71,084Franchised and licensed restaurants and other expenses:Administrative expense (including provision for bad debts)


1,282



1,237











2,519Distribution centers


43,245



3,618











46,863Rent and other occupancy


4,332



944











5,276Operating costs of variable interest entity










742



(16
)


726Total franchised and licensed restaurants and other expenses


48,859



5,799



742



(16
)


55,384Advertising


7,065



8,817



2







15,884General and administrative


13,524



22,032



65







35,621Facility action charges, net


142



2,381



111







2,634Operating income (loss)

$
16,475


$
100


$
(94
)

$
(23
)

$
16,458Company-operated same-store sales increase


2.8
%


4.8
%Franchise-operated same-store sales increase


2.6
%


4.1
%Company-operated same-store transaction (decrease) increase


(2.1
)%


1.9
%Average check (actual $)

$
6.77


$
4.94Restaurant operating costs as a percentage of company-operated
    restaurants revenue:Food and packaging


29.2
%


28.6
%Payroll and employee benefits


26.2
%


32.2
%Occupancy and other


22.0
%


22.1
%Total restaurant operating costs


77.3
%


82.9
%Advertising as a percentage of company-operated restaurants
    revenue


5.3
%


6.1
%     (A)
    
    Other consists of Green Burrito and amounts that we
    do not believe would be proper to allocate to the operating
    segments.(B)
    
    Eliminations consists of the elimination of royalty
    revenues and expenses generated between Hardees and a
    variable interest entity franchisee included in our Consolidated
    Financial Statements. 37




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
   Presentation
    of Non-GAAP Measures
  Adjusted
    EBITDA
        Fiscal 2008DiscontinuedCarls Jr.


Hardees


Other


Operations


TotalNet income (loss)

$
39,698


$
8,286


$
(12,912
)

$
(3,996
)

$
31,076Interest expense


2,764



8,921



21,348



22



33,055Income tax expense (benefit)


26,283



5,552



(7,176
)


1,953



26,612Depreciation and amortization


31,579



31,023



159



1,341



64,102Facility action charges, net


1,030



(1,607
)






(705
)


(1,282
)Share-based compensation expense


4,358



7,020











11,378Adjusted EBITDA

$
105,712


$
59,195


$
1,419


$
(1,385
)

$
164,941   Fiscal 2007DiscontinuedCarls Jr.


Hardees


Other


Operations


TotalNet income (loss)

$
48,359


$
6,499


$
(664
)

$
(4,022
)

$
50,172Interest expense


3,991



15,491



286



(17
)


19,751Income tax expense (benefit)


30,342



4,077



(400
)


(2,120
)


31,899Depreciation and amortization


26,328



32,821



219



3,050



62,418Facility action charges, net


664



2,494



385



5,003



8,546Share-based compensation expense


3,205



5,163











8,368Adjusted EBITDA

$
112,889


$
66,545


$
(174
)

$
1,894


$
181,154  38




---



##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
  Fiscal 2006DiscontinuedCarls Jr.


Hardees


Other


Operations


TotalNet income (loss)

$
74,406


$
(5,575
)

$
113,878


$
(1,570
)

$
181,139Interest expense


4,255



18,641



92



28



23,016Income tax expense (benefit)


1,888







(124,850
)


(926
)


(123,888
)Depreciation and amortization


24,958



35,473



166



3,558



64,155Facility action charges, net


1,792



4,653



36



1,544



8,025Share-based compensation expense


26



162











188Adjusted EBITDA

$
107,325


$
53,354


$
(10,678
)

$
2,634


$
152,635     2008


2007


2006Net cash provided by operating activities

$
121,365


$
163,145


$
116,173Interest expense


33,055



19,751



23,016Income tax expense


26,612



31,899



(123,888
)Amortization of deferred loan fees


(930
)


(3,097
)


(3,312
)Change in fair value of interest rate swap agreements


(11,380
)






Recovery of (provision for) losses on accounts and notes
    receivable


1,070



192



(176
)Loss on sales of property and equipment, capital leases and
    extinguishment of debt


(4,429
)


(3,449
)


(3,180
)Deferred income taxes


(14,979
)


(25,961
)


125,478Other non-cash charges


(48
)


(77
)


(88
)Net change in receivables, inventories, prepaid expenses and
    other current and non-current assets


8,431



9,095



4,390Change in estimated liability for closed restaurants and
    estimated liability for self-insurance


5,028



5,181



13,701Net change in accounts payable and other current and long-term
    liabilities


1,123



(15,585
)


521Dividends on unvested restricted stock awards


23



60



Adjusted EBITDA

$
164,941


$
181,154


$
152,635  39




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
  Fiscal
    2008 Compared with Fiscal 2007 and Fiscal 2007 Compared with
    Fiscal 2006
  Carls
    Jr.
    Restaurant Portfolio


Fiscal Year Revenue2008-2007


2007-2006











2008-2007


2007-20062008


2007


2006


Change


Change


2008


2007


2006


Change


ChangeCompany-operated


406



393



428



13



(35
)

$
595,272


$
590,613


$
574,663


$
4,659


$
15,950Franchised and licensed


735



694



621



41



73



250,362



240,348



228,098



10,014



12,250Total


1,141



1,087



1,049



54



38


$
845,634


$
830,961


$
802,761


$
14,673


$
28,200   Company-Operated
    Restaurants
  tm tm tm
  tm tm
 40




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
    2008


2007Restaurant operating costs as a percentage of company-operated
    restaurants revenue for the prior year


76.3
%


76.6
%Increase in depreciation and amortization expense


0.7



0.1Increase in workers compensation expense


0.4



0.6Increase (decrease) in rent expense and property taxes


0.4



(0.1
)Increase (decrease) in labor costs, excluding workers
    compensation


0.3



(0.5
)Increase (decrease) in food and packaging costs


0.3



(0.2
)Increase in repairs and maintenance expense


0.3



Other, net


(0.2
)


(0.2
)Restaurant operating costs as a percentage of company-operated
    restaurants revenue for the current year


78.5
%


76.3
%            41




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
    Franchised
    and Licensed Restaurants
            Hardees
    Restaurant Portfolio


Fiscal Year Revenue2008-2007


2007-2006











2008-2007


2007-20062008


2007


2006


Change


Change


2008


2007


2006


Change


ChangeCompany-operated


560



696



663



(136
)


33


$
605,986


$
634,264


$
587,082


$
(28,278
)

$
47,182Franchised and licensed


1,366



1,210



1,330



156



(120
)


79,287



72,620



74,427



6,667



(1,807
)Total


1,926



1,906



1,993



20



(87
)

$
685,273


$
706,884


$
661,509


$
(21,611
)

$
45,375   Company-Operated
    Restaurants
   42




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
  tm tm tm
  tm
    2008


2007Restaurant operating costs as a percentage of company-operated
    restaurants revenue for the prior year


81.9
%


84.5
%Increase (decrease) in food and packaging costs


1.4



(0.9
)(Decrease) increase in workers compensation expense


(0.3
)


0.3Increase in other occupancy costs


0.2



(0.2
)Increase in general liability expense


0.1



0.3Decrease in labor costs, excluding workers compensation






(1.0
)Decrease in depreciation and amortization expense


(0.1
)


(0.7
)Decrease in rent, property tax and license expense






(0.3
)Increase in repairs and maintenance expense


0.1



0.1Other, net


0.3



(0.2
)Restaurant operating costs as a percentage of company-operated
    restaurants revenue for the current year


83.6
%


81.9
%      43




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
            Franchised
    and Licensed Restaurants
       44




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
    Consolidated
    Expenses
  Advertising
    Expense
    General
    and Administrative Expenses
      Facility
    Action Charges
       45




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
      Interest
    Expense
    2008


2007


2006Facility

$
14,093


$
6,089


$
6,896Change in fair value of interest rate swap agreements


11,380







Capital lease obligations


5,074



5,665



6,2572023 Convertible Notes


608



2,553



4,200Amortization of deferred loan fees


918



3,096



3,312Letter of credit fees and other


960



2,365



2,323Total interest expense

$
33,033


$
19,768


$
22,988       Conversion
    Inducement Expense
    Other
    Income, Net
    2008


2007


2006Rental income from properties leased to third parties, net

$
1,911


$
1,802


$
1,352Interest income on notes receivable from franchisees,
    disposition properties and capital leases


1,145



1,028



1,116Other, net


1,381



863



(101
)Total other income, net

$
4,437


$
3,693


$
2,367  46




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
  Income
    Taxes
    2008


2007


2006Federal income taxes

$
20,183


$
28,081


$
(108,446
)State income taxes


3,312



4,814



(15,421
)Foreign income taxes


1,164



1,124



905Income tax expense (benefit)

$
24,659


$
34,019


$
(122,962
)Effective income tax rate


41.3
%


38.6
%


(205.8
)%         Fiscal
    Fourth Quarter 2008 Compared with Fiscal Fourth Quarter
    2007
  Carls
    Jr.
  Company-Operated
    Restaurants
   47




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
    Restaurant operating costs as a percentage of company-operated
    restaurants revenue for the prior year fourth quarter


77.3
%Increase in depreciation and amortization expense


0.6Increase in labor costs, excluding workers compensation


0.4Increase in repairs and maintenance expense


0.3Decrease in food and packaging costs


(0.3
)Increase in rent and property taxes


0.2Increase in banking expenses


0.2Decrease in asset retirement expense


(0.2
)Other, net


0.1Restaurant operating costs as a percentage of company-operated
    restaurants revenue for the current year fourth quarter


78.6
%           Franchised
    and Licensed Restaurants
     48




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
  Hardees
  Company-Operated
    Restaurants
      Restaurant operating costs as a percentage of company-operated
    restaurants revenue for the prior year fourth quarter


82.9
%Increase in food and packaging costs


1.5Increase in labor costs, excluding workers compensation


0.4Decrease in general liability insurance expense


(0.4
)Increase in workers compensation expense


0.3Increase in depreciation and amortization expense


0.2Increase in repair and maintenance expense


0.2Increase in other occupancy costs


0.2Increase in utilities


0.1Increase in uniforms and supplies


0.1Other, net


0.2Restaurant operating costs as a percentage of company-operated
    restaurants revenue for the current year fourth quarter


85.7
%          49




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
  Franchised
    and Licensed Restaurants
      Discontinued
    Operations
            Accounting
    Pronouncements Not Yet Adopted
  Fair Value
    Measurements
 50




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
    The Fair
    Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115 Accounting for Certain Investment in Debt and Equity
    Securities
  Business Combinations Noncontrolling Interests in Consolidated
    Financial Statements  an amendment of ARB
    No. 51
  Disclosures
    about Derivative Instruments and Hedging Activities
  Impact of
    Inflation
    Seasonality
   51




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
  Competition
  Form 10-K,
  Liquidity
    and Capital Resources
    and/or
      and/or and/or and/or
   52




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
             53




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
    Common shares repurchased


15,854,519Average price per share

$
16.80Total cost, including trading commissions

$
266,640Common shares retired


15,845,019     Rule 10b5-1 Rule 10b5-1
     54




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
    2008


2007Non-discretionary:RemodelsCarls Jr.

$
24,451


$
3,744Hardees


14,719



726Capital maintenanceCarls Jr.


16,355



12,288Hardees


17,894



14,948Corporate/other


7,844



24,346Total non-discretionary


81,263



56,052Discretionary:New restaurantsCarls Jr.


21,063



14,877Hardees


9,469



3,499Dual-brandingCarls Jr.


1,151



2,181Hardees


3,049



3,414Real estate/franchise acquisitions


12,033



32,213Corporate/other


2,243



Capital expenditures  discontinued operations


3,545



5,032Total discretionary


52,553



61,216Total

$
133,816


$
117,268      55




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  Managements Discussion and
    Analysis  (Continued)
 (Dollars in thousands)
  Long-Term
    Obligations
  Contractual
    Cash Obligations
    Payments Due by PeriodsLess Than








AfterTotal


One Year


1-3 Years


3-5 Years


5 YearsLong-term debt

$
351,106


$
18,024


$
5,452


$
326,686


$
944Capital lease obligations(1)(2)


61,367



10,216



18,728



14,832



17,591Operating leases(1)


605,323



84,329



144,135



105,796



271,063Unconditional purchase obligations(3)


56,096



53,683



2,413







Other commitments(4)


2,919



1,604



1,315







Total contractual cash obligations

$
1,076,811


$
167,856


$
172,043


$
447,314


$
289,598     (1)
    
    The amounts reported above as operating leases and capital lease
    obligations include leases contained in the estimated liability
    for closed restaurants and leases for which we sublease to
    franchisees. Additional information regarding operating leases
    and capital lease obligations can be found in Note 7 of
    Notes to Consolidated Financial Statements.(2)
    
    Represents the undiscounted value of capital lease payments.(3)
    
    Unconditional purchase obligations include contracts for goods
    and services, primarily related to system restaurant operations
    and contractual commitments for marketing and sponsorship
    arrangements.(4)
    
    Other commitments shown in the table above are comprised of
    FIN 48 obligations which represent uncertain tax positions.
    The years for which the uncertain tax positions will reverse
    have been estimated in scheduling the obligations within the
    table. In addition to the FIN 48 obligations in the table
    above, approximately $4,754 of unrecognized tax benefits have
    been recorded as liabilities in accordance with FIN 48, of
    which $970 is anticipated to reverse within one year and the
    remainder of which we are uncertain as to if or when such
    amounts may be settled. Additionally, there is $11,705 of
    unrecognized tax positions which are fully offset by a valuation
    allowance of which we are uncertain as to if or when such
    amounts may be settled.  Other
    Commercial Commitments
    Amount of Commitment Expirations Per PeriodTotalAmounts


Less Than


1-3


3-5Committed


One Year


Years


YearsStandby letters of credit under our Facility

$
38,247


$
10,601


$
27,646


$
Other


165



38



127



Total other commercial commitments

$
38,412


$
10,639


$
27,773


$
  56




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##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    Rate Risk
          Commodity
    Price Risk
    Item 8.
    Financial
    Statements and Supplementary Data    Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   57




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##### Table of Contents



Item 9A.
    Controls
    and Procedures  (a)
    Evaluation
    of Disclosure Controls and Procedures    Form 10-K, Rule 13a-15(e) Form 10-K
  (b)
    Managements
    Report on Internal Control over Financial
    Reporting  Rule 13a-15(f)
  Internal
    Control  Integrated Framework
    Form 10-K,
  (c)
    Changes
    in Internal Control over Financial Reporting   58




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##### Table of Contents



(d)
    Report
    of Independent Registered Public Accounting Firm     Internal Control 
    Integrated Framework Managements
    Report on Internal Control over Financial Reporting
        Internal Control  Integrated
    Framework
    KPMG
    LLP
    59




---



##### Table of Contents



(e)
    Certifications  Form 10-K.
  Item 9B.
    Other
    Information   60




---



##### Table of Contents



PART III  Item 10.
    Directors
    and Executive Officers of the Registrant  Form 10-K.
  Code of
    Ethics and Corporate Governance Information
  www.ckr.com. Form 8-K, Regulation S-K)
  www.ckr.com
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Equity
    Compensation Plan Information
    Number of SecuritiesRemaining Availablefor Future IssuanceNumber of Securities


Weighted-Average


Under Equityto be Issued Upon


Exercise Price of


Compensation PlansExercise of


Outstanding


(ExcludingOutstanding Options,


Options, Warrants


Securities ReflectedPlan Category

Warrants and Rights


and Rights


in Column (a))(a)


(b)


(c)Equity compensation plans approved by security holders


4,542,406


$
12.88



3,517,455Equity compensation plans not approved by security holders(1)


326,901



8.65



54,022Total


4,869,307


$
12.60



3,571,477     (1)
    
    Represents options that are part of a broad-based
    plan as then defined by the New York Stock Exchange. See
    Note 22 of Notes to Consolidated Financial Statements. 61




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##### Table of Contents



Item 13.
    Certain
    Relationships and Related Transactions    Item 14.
    Principal
    Accountant Fees and Services   62




---



##### Table of Contents



PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules  Page(a)(1)

Index to Consolidated Financial Statements:Report of Independent Registered Public
    Accounting Firm


65Consolidated Balance Sheets  as of
    January 31, 2008 and 2007


66Consolidated Statements of Income  for
    the fiscal years ended January 31, 2008, 2007 and 2006


67Consolidated Statements of Stockholders
    Equity  for the fiscal years ended January 31,
    2008, 2007 and 2006


68Consolidated Statements of Cash Flows 
    for the fiscal years ended January 31, 2008, 2007 and
    2006


69Notes to Consolidated Financial Statements


70All schedules are omitted since the required information is not
    present in amounts sufficient to require submission of the
    schedule, or because the information required is included in the
    Consolidated Financial Statements or the notes thereto.(a)(2)

Exhibits:  An Exhibit Index
    has been filed as a part of this Annual Report on
    Form 10-K
    beginning on page 106 hereof and is incorporated herein by
    reference  63




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##### Table of Contents



SIGNATURES
    CKE Restaurants, Inc.
  By:
    /s/  Andrew
    F. Puzder         Signature

Title

Date/s/  Byron
    AllumbaughByron
    Allumbaugh

Chairman of the Board

March 26, 2008/s/  Andrew
    F. PuzderAndrew
    F. Puzder

President and Chief Executive Officer (Principal Executive
    Officer)

March 26, 2008/s/  Theodore
    AbajianTheodore
    Abajian

Executive Vice President, Chief Financial Officer (Principal
    Financial Officer)

March 26, 2008/s/  Peter
    ChurmPeter
    Churm

Director

March 26, 2008/s/  Matthew
    GoldfarbMatthew
    Goldfarb

Director

March 26, 2008/s/  Carl
    L. KarcherCarl
    L. Karcher

Director

March 26, 2008/s/  Janet
    E. KerrJanet
    E. Kerr

Director

March 26, 2008/s/  Daniel
    D. LaneDaniel
    D. Lane

Director

March 26, 2008/s/  Daniel
    E. Ponder, Jr.Daniel
    E. Ponder, Jr.

Director

March 26, 2008/s/  Jerold
    H. RubinsteinJerold
    H. Rubinstein

Director

March 26, 2008/s/  Frank
    P. WilleyFrank
    P. Willey

Director

March 26, 2008  64




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM             Internal Control  Integrated Framework
  KPMG
    LLP
    65




---



##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
 CONSOLIDATED
    BALANCE SHEETS  January 31,


January 31,2008


2007(In thousands, exceptpar values)ASSETSCurrent assets:Cash and cash equivalents

$
19,993


$
18,620Accounts receivable, net


51,394



42,485Related party trade receivables


5,179



4,644Inventories, net


26,030



21,708Prepaid expenses


12,509



12,778Assets held for sale


1,038



3,949Advertising fund assets, restricted


18,207



17,896Deferred income tax assets, net


23,768



25,450Current assets of discontinued operations






2,007Other current assets


2,887



1,971Total current assets


161,005



151,508Notes receivable, net


298



775Property and equipment, net


503,774



482,388Property under capital leases, net


21,104



25,153Deferred income tax assets, net


72,878



85,997Goodwill


22,649



22,649Long-term assets of discontinued operations






18,859Other assets, net


10,003



9,309Total assets

$
791,711


$
796,638LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of bank indebtedness and other long-term debt

$
18,024


$
1,500Current portion of capital lease obligations


5,774



5,323Accounts payable


80,697



63,994Advertising fund liabilities


18,207



17,896Current liabilities of discontinued operations






1,749Other current liabilities


85,813



94,677Total current liabilities


208,515



185,139Bank indebtedness and other long-term debt, less current portion


333,082



130,109Capital lease obligations, less current portion


35,156



41,123Long-term liabilities of discontinued operations






5,746Other long-term liabilities


69,716



55,675Total liabilities


646,469



417,792Commitments and contingencies (Notes 7, 9, 10, 11 and
    26)Subsequent events (Notes 10 and 20)Stockholders equity:Preferred stock, $.01 par value; authorized
    5,000 shares; none issued or outstanding






Series A Junior Participating Preferred stock,
    $.01 par value; 1,500 shares authorized; none issued
    or outstanding






Common stock, $.01 par value; authorized
    100,000 shares; 52,504 shares issued and
    52,476 shares outstanding as of January 31, 2008 and
    67,247 shares issued and 67,229 shares outstanding as
    of January 31, 2007


525



672Common stock held in treasury, at cost; 28 shares as of
    January 31, 2008 and 18 shares as of January 31,
    2007


(359
)


(360
)Additional paid-in capital


251,524



501,437Accumulated deficit


(106,448
)


(122,903
)Total stockholders equity


145,242



378,846Total liabilities and stockholders equity

$
791,711


$
796,638    66




---



##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF INCOME  Fiscal Years Ended January 31,2008


2007


2006(In thousands, except per share amounts)Revenue:Company-operated restaurants

$
1,201,577


$
1,225,227


$
1,162,179Franchised and licensed restaurants and other


333,057



316,844



307,012Total revenue


1,534,634



1,542,071



1,469,191Operating costs and expenses:Restaurant operating costs:Food and packaging


356,332



352,952



341,622Payroll and other employee benefits


350,526



355,933



341,238Occupancy and other


267,372



261,576



254,329Total restaurant operating costs


974,230



970,461



937,189Franchised and licensed restaurants and other


258,295



239,520



237,075Advertising


70,324



70,914



69,950General and administrative


144,035



146,939



138,128Facility action charges, net


(577
)


3,543



6,481Total operating costs and expenses


1,446,307



1,431,377



1,388,823Operating income


88,327



110,694



80,368Interest expense


(33,033
)


(19,768
)


(22,988
)Conversion inducement expense






(6,406
)


Other income, net


4,437



3,693



2,367Income before income taxes and discontinued operations


59,731



88,213



59,747Income tax expense (benefit)


24,659



34,019



(122,962
)Income from continuing operations


35,072



54,194



182,709Discontinued operations:Loss from discontinued operations (net of income tax expense
    (benefit) of $1,953 for 2008, $(2,120) for 2007 and $(926) for
    2006)


(3,996
)


(4,022
)


(1,570
)Net income

$
31,076


$
50,172


$
181,139Basic income per common share:Continuing operations

$
0.59


$
0.85


$
3.08Discontinued operations


(0.07
)


(0.06
)


(0.02
)Net income

$
0.52


$
0.79


$
3.06Diluted income per common share:Continuing operations

$
0.57


$
0.77


$
2.54Discontinued operations


(0.07
)


(0.05
)


(0.03
)Net income

$
0.50


$
0.72


$
2.51Dividends per common share

$
0.24


$
0.16


$
0.16Weighted-average common shares outstanding:Basic


59,410



63,562



59,226Dilutive effect of stock options, warrants, convertible notes
    and restricted stock


3,149



8,815



14,024Diluted


62,559



72,377



73,250    67




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
    (In thousands)  UnearnedCommon Stock


Additional


Compensation





TotalCommon Stock


Held in Treasury


Paid-In


On Restricted


Accumulated


StockholdersShares


Amount


Shares


Amount


Capital


Stock


Deficit


EquityBalance as of January 31, 2005


58,082


$
581






$



$
453,391


$



$
(334,304
)

$
119,668Cash dividends declared


























(9,513
)


(9,513
)Issuance of restricted stock awards, net of forfeitures


150



1











2,003



(2,004
)






Amortization of unearned compensation






















188







188Exercise of stock options and warrants


1,868



19











9,464











9,483Tax benefit from exercise of stock options


















11,971











11,971Repurchase and retirement of common stock


(297
)


(3
)










(3,995
)










(3,998
)Net income


























181,139



181,139Balance as of January 31, 2006


59,803



598











472,834



(1,816
)


(162,678
)


308,938Cash dividends declared


























(10,397
)


(10,397
)Issuance of restricted stock awards, net of forfeitures


634



6











(6
)










Reclassification of unearned compensation pursuant to
    SFAS 123R adoption


















(1,816
)


1,816







Exercise of stock options


1,175



12











10,315











10,327Conversion of 2023 Convertible Notes into common stock


10,224



102











88,375











88,477Tax benefit from exercise of stock options


















4,078











4,078Share-based compensation expense


















8,308











8,308Repurchase and retirement of common stock


(4,589
)


(46
)


(18
)


(360
)


(80,651
)










(81,057
)Net income


























50,172



50,172Balance as of January 31, 2007


67,247



672



(18
)


(360
)


501,437







(122,903
)


378,846Cash dividends declared


























(13,850
)


(13,850
)Issuance of restricted stock awards, net of forfeitures


643



6











(6
)










Exercise of stock options


459



5











3,317











3,322Tax benefit from exercise of stock options


















1,904











1,904Share-based compensation expense


















11,355











11,355Repurchase and retirement of common stock


(15,845
)


(158
)


(10
)


1



(266,483
)










(266,640
)Net income


























31,076



31,076FIN 48 transition amount


























(771
)


(771
)Balance as of January 31, 2008


52,504


$
525



(28
)

$
(359
)

$
251,524


$



$
(106,448
)

$
145,242    68




---



##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS
    (In thousands)  Fiscal Years Ended January 31,2008


2007


2006Cash flows from operating activities:Net income

$
31,076


$
50,172


$
181,139Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


64,102



62,418



64,155Amortization of deferred loan fees


930



3,097



3,312Share-based compensation expense


11,355



8,308



188Change in fair value of interest rate swap agreements


11,380







(Recovery of) provision for losses on accounts and notes
    receivable


(1,070
)


(192
)


176Loss on sale of property and equipment, capital leases and
    extinguishment of debt


4,429



3,449



3,180Facility action charges, net


(1,282
)


8,546



8,025Deferred income taxes


14,979



25,961



(125,478
)Other non-cash charges


48



77



88Net changes in operating assets and liabilities:Receivables, inventories, prepaid expenses and other current and
    non-current assets


(8,431
)


(9,095
)


(4,390
)Estimated liability for closed restaurants and estimated
    liability for self-insurance


(5,028
)


(5,181
)


(13,701
)Accounts payable and other current and long-term liabilities


(1,123
)


15,585



(521
)Net cash provided by operating activities


121,365



163,145



116,173Cash flows from investing activities:Purchases of property and equipment


(133,816
)


(117,268
)


(68,476
)Proceeds from sale of property and equipment


56,419



21,929



7,993Collections of non-trade notes receivable


5,406



3,749



898Decrease in cash upon deconsolidation of variable interest entity


(49
)






Disposition of La Salsa, net of cash surrendered


5,720







Other investing activities


70



62



(454
)Net cash used in investing activities


(66,250
)


(91,528
)


(60,039
)Cash flows from financing activities:Net change in bank overdraft


8,791



2,620



108Borrowings under revolving credit facility


372,500



127,000



136,500Repayments of borrowings under revolving credit facility


(351,500
)


(89,500
)


(143,000
)Borrowings under credit facility term loan


200,179







Repayments of credit facility term loan


(1,775
)


(28,928
)


(39,902
)Repayments of other long-term debt


(160
)


(145
)


(179
)Borrowing by consolidated variable interest entity






38



75Repayments of capital lease obligations


(5,340
)


(4,937
)


(5,089
)Payment of deferred loan fees


(1,279
)


(2,733
)


(102
)Repurchase of common stock


(266,732
)


(80,697
)


(3,998
)Exercise of stock options and warrants


3,322



10,327



9,483Tax benefit from exercise of stock options


1,611



2,801



Dividends paid on common stock


(13,419
)


(10,126
)


(7,119
)Net cash used in financing activities


(53,802
)


(74,280
)


(53,223
)Net increase (decrease) in cash and cash equivalents


1,313



(2,663
)


2,911Cash and cash equivalents at beginning of year


18,680



21,343



18,432Cash and cash equivalents at end of year

$
19,993


$
18,680


$
21,343    69




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFiscal Years Ended January 31, 2008, 2007 and 2006
    (Dollars in thousands, except per share amounts) Note 1 
    Significant
    Accounting Policies    Description
    of Business
  ® ® ® ® tm
    Carls Jr.


Hardees


Other


TotalCompany-operated


406



560



1



967Franchised and licensed


735



1,366



15



2,116Total


1,141



1,926



16



3,083   Basis
    of Presentation and Fiscal Year
      Variable
    Interest Entities
  Consolidation of
    Variable Interest Entities  an interpretation of ARB
    No. 51 Accounting for
    Franchise Fee Revenue
 70




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Cash
    and Cash Equivalents
    Inventories
  first-in,
  Deferred
    Loan Fees
  98-14, Debtors Accounting for Changes in Line of Credit or
    Revolving-Debt Arrangements 96-19, Debtors Accounting for a Modification or Exchange of
    Debt Instruments
  Assets
    Held for Sale
  Accounting
    for the Impairment or Disposal of Long-Lived Assets
   71




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Property
    and Equipment
  Accounting for
    Leases
  Capitalized
    Costs
  Accounting for Costs and Initial
    Rental Operations of Real Estate Projects
  Goodwill
  Goodwill and Other
    Intangible Assets Business Combinations
    Facility
    Action Charges
         72




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (i)
    Impairment
    of Long-Lived Assets      (ii)
    Store
    Closure Costs      (iii)
    Gain
    (Loss) on the Sale of Restaurants    (iv)
    Amortization
    of Discount Related to Estimated Liability for Closed
    Restaurants   73




---



##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Loss
    Contingencies
  Accounting for Contingencies
  Self-Insurance
        Leases
    and Leasehold Improvements
      Franchised
    and Licensed Operations
   74




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       and/or and/or
  Revenue
    Recognition
    How Taxes
    Collected from Customers and Remitted to Governmental
    Authorities Should Be Presented in the Income Statement (That
    Is, Gross versus Net Presentation),
  Advertising
     75




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Income
    Taxes
    Accounting for
    Uncertainty in Income Taxes  an interpretation of
    FASB Statement No. 109,
      Estimations
      
    estimation of future cash flows used to assess the
    recoverability of long-lived assets, including goodwill, and to
    establish the estimated liability for closed restaurants and
    subsidizing lease payments of franchisees;
    estimation, using actuarially determined methods, of our
    self-insured claim losses under our workers compensation,
    general and auto liability insurance programs; 76




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    determination of appropriate estimated liabilities for loss
    contingencies;
    determination of appropriate assumptions to use in evaluating
    leases for capital versus operating lease treatment,
    establishing depreciable lives for leasehold improvements and
    establishing straight-line rent expense periods;
    estimation of the appropriate allowances associated with
    franchisee and licensee receivables;
    determination of the appropriate assumptions to use to estimate
    the fair value of share-based compensation; and
    estimation of our net deferred income tax asset valuation
    allowance, liabilities related to uncertain tax positions and
    effective tax rate.  Income
    Per Share
     77




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007


2006(In thousands, except per share amounts)Numerator:Income from continuing operations

$
35,072


$
54,194


$
182,709Loss from discontinued operations


(3,996
)


(4,022
)


(1,570
)Net income for computation of basic income per share

$
31,076


$
50,172


$
181,139Adjustment for interest and amortization costs for 2023
    Convertible Notes, net of related tax effect

$
444


$
1,880


$
3,070Income from continuing operations for computation of diluted
    income per share

$
35,516


$
56,074


$
185,779Net income for computation of diluted income per share

$
31,520


$
52,052


$
184,209Denominator:Weighted-average shares for computation of basic income per share


59,410



63,562



59,226Dilutive effect of stock options and restricted stock awards


1,397



1,509



2,181Dilutive effect of 2023 Convertible Notes


1,752



7,306



11,843Weighted-average shares for computation of diluted income per
    share


62,559



72,377



73,250Basic income per share:Basic income per share from continuing operations

$
0.59


$
0.85


$
3.08Basic loss per share from discontinued operations


(0.07
)


(0.06
)


(0.02
)Basic net income per share

$
0.52


$
0.79


$
3.06Diluted income per share:Diluted income per share from continuing operations

$
0.57


$
0.77


$
2.54Diluted loss per share from discontinued operations


(0.07
)


(0.05
)


(0.03
)Diluted net income per share

$
0.50


$
0.72


$
2.51     2008


2007


2006Stock options and restricted stock


1,332



1,897



2,175   Share-Based
    Compensation
  Accounting for Stock Issued to Employees Share-Based Payment
 78




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Derivative
    Financial Instruments
    Accounting for Derivative
    Instruments and Hedging Activities
  Credit
    Risks
      Comprehensive
    Income
  Reporting
    Comprehensive Income
  Segment
    Information
    Financial
    Statement Misstatement Evaluation
  Considering the Effects of Prior Year
    Misstatements when Quantifying Misstatements in Current Year
    Financial Statements.
  Note 2 
    Accounting
    Pronouncements Not Yet Adopted  Fair Value
    Measurements
 79




---



##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  The Fair
    Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115 Accounting for Certain Investment in Debt and Equity
    Securities available-for-sale
  Business Combinations Noncontrolling Interests in Consolidated
    Financial Statements  an amendment of ARB
    No. 51
  Disclosures about Derivative Instruments and Hedging
    Activities,
  Note 3 
    Adoption
    of New Accounting Pronouncements  Accounting
    for Certain Hybrid Financial Instruments  an
    amendment of FASB Statements No. 133 and 140. Accounting for Transfers and Servicing of Financial Assets
    and Extinguishments of Liabilities  a replacement of
    FASB Statement 125.
  Accounting for
    Servicing of Financial Assets  an amendment of FASB
    Statement No. 140.
   80




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 4 
    Facility
    Action Charges, Net    2008


2007


2006Carls Jr.Estimated liability for new restaurant closures

$



$
74


$
Adjustments to estimated liability for closed restaurants


770



629



846Impairment of assets to be held and used


120



364



1,431Gain on sales of restaurants and surplus properties, net


(12
)


(651
)


(732
)Amortization of discount related to estimated liability for
    closed restaurants


152



248



2471,030



664



1,792HardeesEstimated liability for new restaurant closures


221



3,038



957Adjustments to estimated liability for closed restaurants


(344
)


4



(29
)Impairment of assets to be disposed of


485



2,148



23Impairment of assets to be held and used


566



680



2,521(Gain) loss on sales of restaurants and surplus properties, net


(2,952
)


(3,859
)


504Amortization of discount related to estimated liability for
    closed restaurants


417



483



677(1,607
)


2,494



4,653OtherEstimated liability for new restaurant closures










22Adjustments to estimated liability for closed restaurants










(1
)Loss on sales of restaurants and surplus property, net






385



15



385



36TotalEstimated liability for new restaurant closures


221



3,112



979Adjustments to estimated liability for closed restaurants


426



633



816Impairment of assets to be disposed of


485



2,148



23Impairment of assets to be held and used


686



1,044



3,952Gain on sales of restaurants and surplus properties, net


(2,964
)


(4,125
)


(213
)Amortization of discount related to estimated liability for
    closed restaurants


569



731



924$
(577
)

$
3,543


$
6,481  81




---



##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007


2006Property and equipmentCarls Jr.

$
120


$
332


$
980Hardees


1,034



2,779



2,3821,154



3,111



3,362Property under capital leasesCarls Jr.










451Hardees


17



49



16217



49



613Favorable lease rightsCarls Jr.






32







32



TotalCarls Jr.


120



364



1,431Hardees


1,051



2,828



2,544$
1,171


$
3,192


$
3,975     Carls Jr.


Hardees


Other


TotalBalance as of January 31, 2005

$
4,214


$
13,075


$



$
17,289Estimated liability for new restaurant closures






957



22



979Usage


(1,692
)


(4,815
)


(21
)


(6,528
)Adjustments to estimated liability for closed restaurants


846



(29
)


(1
)


816Amortization of discount


247



677







924Balance as of January 31, 2006


3,615



9,865







13,480Estimated liability for new restaurant closures


74



3,038







3,112Usage


(1,380
)


(4,217
)






(5,597
)Adjustments to estimated liability for closed restaurants


629



4







633Amortization of discount


248



483







731Balance as of January 31, 2007


3,186



9,173







12,359Estimated liability for new restaurant closures






221







221Estimated liability for refranchising transactions






1,430







1,430Usage


(1,332
)


(3,263
)






(4,595
)Adjustments to estimated liability for closed restaurants


770



(344
)






426Amortization of discount


152



417







569Balance as of January 31, 2008


2,776



7,634







10,410Less current portion, included in other current liabilities


804



2,460







3,264Long-term portion, included in other long-term liabilities

$
1,972


$
5,174


$



$
7,146  82




---



##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 5 
    Accounts
    Receivable, Net and Notes Receivable, Net    2008


2007Trade receivables

$
37,277


$
34,294Refundable income taxes


7,497



8,265Notes receivable, current portion


7,199



684Other


176



63Allowance for doubtful accounts


(755
)


(821
)$
51,394


$
42,485     2008


2007Franchisees

$
906


$
1,243Other






2,318Allowance for doubtful accounts


(608
)


(2,786
)$
298


$
775     Accounts


NotesReceivable


Receivable


TotalBalance as of January 31, 2005

$
2,504


$
6,838


$
9,342Provision (recovery of provision)


674



(501
)


173Charge-offs


(431
)


(80
)


(511
)Recoveries


69







69Balance as of January 31, 2006


2,816



6,257



9,073(Recovery of provision) provision


(1,501
)


1,244



(257
)Charge-offs


(494
)


(4,715
)


(5,209
)Balance as of January 31, 2007


821



2,786



3,607Recovery of provision


(24
)


(1,170
)


(1,194
)Charge-offs


(42
)


(1,008
)


(1,050
)Balance as of January 31, 2008

$
755


$
608


$
1,363  83




---



##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 6 
    Property
    and Equipment, Net    EstimatedUseful Life


2008


2007Land





$
125,963


$
137,561Leasehold improvements


3-25 years



195,417



202,749Buildings and improvements


7-40 years



312,303



281,574Equipment, furniture and fixtures


3-10 years



292,283



301,951925,966



923,835Less accumulated depreciation and amortization






(422,192
)


(441,447
)$
503,774


$
482,388     Note 7 
    Leases      2008


2007Buildings

$
67,182


$
69,726Equipment


312



31267,494



70,038Less accumulated amortization


(46,390
)


(44,885
)$
21,104


$
25,153  84




---



##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Capital


OperatingFiscal:2009

$
10,216


$
84,3292010


9,736



77,6522011


8,992



66,4832012


8,048



56,9522013


6,784



48,844Thereafter


17,591



271,063Total minimum lease payments


61,367


$
605,323Less amount representing interest


(20,437
)Present value of minimum lease payments (interest rates
    primarily ranging from 8% to 14%)


40,930Less current portion


(5,774
)Capital lease obligations, excluding current portion

$
35,156       2008


2007Net minimum lease payments receivable

$
875


$
1,017Less unearned income


(265
)


(345
)Net investment

$
610


$
672     2008


2007Land

$
9,581


$
15,461Leasehold improvements


4,934



5,349Buildings and improvements


12,910



17,198Equipment, furniture and fixtures


779



1,44628,204



39,454Less accumulated depreciation and amortization


(11,994
)


(13,404
)$
16,210


$
26,050  85




---



##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Capital


OperatingLeases or


Leases orSubleases


SubleasesFiscal:2009

$
142


$
29,9322010


142



26,3942011


142



22,6452012


142



17,6342013


142



13,776Thereafter


165



51,816Total future minimum rentals

$
875


$
162,197       2008


2007


2006Minimum rentals

$
88,405


$
84,833


$
84,011Contingent rentals


3,924



4,205



4,974Gross rent expense


92,329



89,038



88,985Less sublease rentals


(32,418
)


(31,236
)


(32,653
)$
59,911


$
57,802


$
56,332     Note 8 
    Other
    Assets, Net    2008


2007Intangible assets (see below)

$
2,677


$
2,922Deferred loan fees


4,032



3,697Net investment in lease receivables, less current portion


540



610Other


2,754



2,080$
10,003


$
9,309    86




---



##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted-


January 31, 2008


January 31, 2007Average


Gross





Net


Gross





NetLife


Carrying


Accumulated


Carrying


Carrying


Accumulated


CarryingIntangible Asset

(Years)


Amount


Amortization


Amount


Amount


Amortization


AmountTrademarks


20


$
3,166


$
(935
)

$
2,231


$
3,166


$
(776
)

$
2,390Favorable lease agreements


22



1,085



(639
)


446



1,491



(959
)


532$
4,251


$
(1,574
)

$
2,677


$
4,657


$
(1,735
)

$
2,922     Note 9 
    Other
    Current Liabilities    2008


2007Salaries, wages and other benefits

$
29,682


$
39,400Estimated liability for self-insurance, current portion


9,984



10,938State sales taxes


5,769



6,747Accrued property taxes


4,553



4,903Accrued utilities


3,505



4,041Estimated liability for closed restaurants, current portion


3,264



3,865Interest rate swaps, current portion


2,012



Accrued interest


1,284



856Estimated liability for litigation


173



630Other accrued liabilities


25,587



23,297$
85,813


$
94,677   Note 10 
    Long-Term
    Debt and Bank Indebtedness    2008


2007Borrowings under revolving portion of our Facility

$
66,500


$
45,500Term loan under our Facility


268,225



69,821Convertible subordinated notes due 2023, interest at 4%


15,167



15,167Other long-term debt


1,214



1,121351,106



131,609Less current portion


(18,024
)


(1,500
)$
333,082


$
130,109   sub-facility.
 87




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            and/or and/or and/or
     88




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              Fiscal:2009

$
18,0242010


2,7252011


2,7272012


2,7292013


323,957Thereafter


944$
351,106  89




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 11 
    Other
    Long-Term Liabilities    2008


2007Estimated liability for self-insurance

$
27,042


$
26,199Estimated liability for deferred rent


11,655



10,013Interest rate swaps


9,368



Estimated liability for closed restaurants


7,146



8,494Other


14,505



10,969$
69,716


$
55,675     Note 12 
    Stockholders
    Equity      Shares repurchased


15,854,519Average price per share

$
16.80Total cost, including trading commissions

$
266,640Shares retired


15,845,019     Rule 10b5-1 Rule 10b5-1
    Note 13 
    Purchase
    and Cancellation of Stock Options   90




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 14 
    Fair
    Value of Financial Instruments    2008


2007Carrying


Estimated


Carrying


EstimatedAmount


Fair Value


Amount


Fair ValueFinancial assets:Cash and cash equivalents

$
19,993


$
19,993


$
18,620


$
18,620Notes receivable, net of allowance for doubtful accounts


7,132



6,979



934



770Interest rate swaps


11,380



11,380







Financial liabilities Long-term debt and bank indebtedness, including current portion


351,106



360,762



131,609



150,519     Note 15 
    Related
    Party Transactions         91




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 16 
    Franchised
    and Licensed Operations        2008


2007


2006Royalties

$
75,690


$
77,655


$
68,621Distribution center  food


195,144



187,533



179,222Distribution center  equipment


24,297



16,987



24,319Rent


29,659



28,637



28,089Franchise fees and other


8,267



6,032



6,761$
333,057


$
316,844


$
307,012     2008


2007


2006Distribution center  food

$
194,929


$
185,271


$
174,149Distribution center  equipment


24,421



17,840



24,930Rent and other occupancy


24,095



23,397



24,172Other operating expenses


14,850



13,012



13,824$
258,295


$
239,520


$
237,075   Note 17 
    Interest
    Expense    2008


2007


2006Facility

$
14,093


$
6,089


$
6,896Change in fair value of interest rate swap agreements


11,380







Capital lease obligations


5,074



5,665



6,2572023 Convertible Notes


608



2,553



4,200Amortization of deferred loan fees


918



3,096



3,312Letter of credit fees and other


960



2,365



2,323Total interest expense

$
33,033


$
19,768


$
22,988  92




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 18 
    Other
    Income, Net    2008


2007


2006Rental revenue from properties leased to third parties, net

$
1,911


$
1,802


$
1,352Interest income on notes receivable from franchisees,
    disposition properties and capital leases


1,145



1,028



1,116Other, net


1,381



863



(101
)Total other income, net

$
4,437


$
3,693


$
2,367   Note 19 
    Income
    Taxes    2008


2007


2006Current:Federal

$
6,361


$
4,323


$
1,560State


1,676



431



122Foreign


1,164



1,124



9059,201



5,878



2,587Noncurrent


503Deferred:Federal


13,319



23,758



(110,006
)State


1,636



4,383



(15,543
)14,955



28,141



(125,549
)Total

$
24,659


$
34,019


$
(122,962
)     2008


2007


2006Income tax expense at statutory rate

$
20,907


$
30,875


$
20,912State income taxes, net of federal income tax benefit


2,153



3,129



(10,024
)Decrease in valuation allowance, federal






(4,842
)


(136,264
)Nondeductible compensation


1,416



2,390



1,793Other, net


183



2,467



621$
24,659


$
34,019


$
(122,962
)  93




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007Estimated liability for closed restaurants

$
4,572


$
5,486Net operating loss carryforwards


17,888



30,100Basis difference in fixed assets


8,729



12,210Goodwill and other intangible assets


34,419



42,792Reserves and allowances


25,146



26,934Capital leases


12,720



12,726Federal and state tax credits


12,806



20,199Other


8,471



5,444124,751



155,891Valuation allowance


(28,105
)


(44,444
)Net deferred tax asset

$
96,646


$
111,447          94




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              Unrecognized tax benefits, beginning of year

$
15,913Gross increases related to tax positions taken in prior years


363Gross increases related to tax positions taken in the current
    year


3,102Unrecognized tax benefits, end of year

$
19,378        95




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 20 
    Discontinued
    Operations         96




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Cash and cash equivalents

$
60Accounts receivable, net


319Inventories, net


257Prepaid expenses


626Deferred income tax assets, net


548Other current assets


197Current assets of discontinued operations

$
2,007Property and equipment, net

$
6,202Other assets, net


12,657Long-term assets of discontinued operations

$
18,859Accounts payable

$
293Other current liabilities


1,456Current liabilities of discontinued operations

$
1,749Deferred income tax liabilities, net

$
2,216Other long-term liabilities


3,530Long-term liabilities of discontinued operations

$
5,746     2008


2007


2006Revenue

$
20,907


$
46,339


$
49,156Operating loss


(724
)


(6,202
)


(2,488
)Interest (expense) income


(22
)


17



(28
)Other income, net


92



43



20Income tax benefit


173



2,120



926(481
)


(4,022
)


(1,570
)Loss on disposal of La Salsa


(1,389
)






Income tax expense related to disposal of La Salsa


(2,126
)






Net loss on disposal of La Salsa


(3,515
)






Loss from discontinued operations

$
(3,996
)

$
(4,022
)

$
(1,570
)     Note 21 
    Segment
    Information   97




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Carls Jr.


Hardees


Other


Total2008Revenue

$
845,634


$
685,273


$
3,727


$
1,534,634Segment operating income


66,801



21,227



299



88,327Interest expense


2,764



8,921



21,348



33,033Total assets


262,968



336,745



191,998



791,711Capital expenditures(1)


81,298



48,966



1



130,265Goodwill


22,649











22,649Depreciation and amortization(1)


31,579



31,023



159



62,761Income tax expense (benefit)


26,283



5,552



(7,176
)


24,6592007Revenue

$
830,961


$
706,884


$
4,226


$
1,542,071Segment operating income (loss)


80,692



30,201



(199
)


110,694Interest expense


3,991



15,491



286



19,768Total assets(1)


212,480



369,954



193,338



775,772Capital expenditures(1)


61,280



53,406



18



114,704Goodwill


22,649











22,649Depreciation and amortization(1)


26,328



32,821



219



59,368Income tax expense (benefit)


30,342



4,077



(400
)


34,0192006Revenue

$
802,761


$
661,509


$
4,921


$
1,469,191Segment operating income (loss)


80,047



11,600



(11,279
)


80,368Interest expense


4,255



18,641



92



22,988Total assets(1)


195,729



359,342



215,148



770,219Capital expenditures(1)


28,754



38,601



211



67,566Goodwill


22,649











22,649Depreciation and amortization(1)


24,958



35,473



166



60,597Income tax expense (benefit)


1,888







(124,850
)


(122,962
)     (1)
    
    The difference between the total and the amount reported in our
    accompanying consolidated financial statements relates to our
    discontinued operations.  Note 22 
    Share-Based
    Compensation  Accounting for Stock-Based Compensation
 98




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Accounting for Income Taxes
  Statement of Cash
    Flows
    2008


2007Share-based compensation expense related to performance-vested
    restricted stock awards

$
4,231


$
2,296All other share-based compensation expense


7,147



6,072Total share-based compensation expense

$
11,378


$
8,368Associated tax benefits

$
2,338


$
2,068    99




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Net income, as reported

$
181,139Add  Share-based compensation expense included in
    reported net income, net of related tax effects


116Deduct  Total share-based compensation expense
    determined under fair value based method, net of related tax
    effects


(2,933
)Net income, pro forma

$
178,322Net income per common share:Basic  as reported

$
3.06Basic  pro forma


3.01Diluted  as reported


2.51Diluted  pro forma


2.47   Employee
    Stock Purchase Plan
      Stock
    Incentive Plans
   100




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                2008


2007


2006Annual dividend yield


1.32
%


1.09
%


1.13
%Expected volatility


47.95
%


48.66
%


63.62
%Risk-free interest rate (matched to the expected term of the
    outstanding option)


3.33
%


4.76
%


4.39
%Expected life (years)


6.00



5.97



5.29Weighted-average fair value of each option granted

$
5.01


$
8.95


$
7.14  101




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock
    options outstanding:
  Weighted-Average


AggregateWeighted-Average


Remaining


IntrinsicShares


Exercise Price


Contractual Life


ValueOutstanding as of January 31, 2007


5,374,306


$
13.36



5.38Granted


553,750



11.94Exercised


(459,813
)


7.14Forfeited


(96,015
)


14.51Expired


(502,921
)


23.96Outstanding as of January 31, 2008


4,869,307


$
12.60



5.44


$
12,350Exercisable as of January 31, 2008


3,689,324


$
12.05



4.31


$
11,516Expected to vest as of January 31, 2008


1,071,167


$
14.32



8.93


$
741     2008


2007


2006Total intrinsic value of stock options exercised

$
5,717


$
11,147


$
19,525     Restricted stock awards:
  Weighted-AverageGrant DateShares


Fair ValueRestricted stock awards as of January 31, 2007


616,012


$
17.36Granted


642,156



16.12Awards vested


(402,984
)


16.84Forfeited


(566
)


19.00Restricted stock awards as of January 31, 2008


854,618



16.67     2008


2007


2006Total fair value of awards vested

$
6,787


$
644


$
    102




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 23 
    Employee
    Benefit and Retirement Plans  Savings
    and Profit Sharing Plan
    Deferred
    Compensation Plan
     103




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 24 
    Supplemental
    Cash Flow Information    2008


2007


2006Cash paid for:Interest, net of amounts capitalized

$
22,294


$
17,687


$
19,777Income taxes, net of refunds received


6,703



5,324



1,362Non-cash investing and financing activities:Gain recognized on sale and leaseback transactions


339



368



361Dividends declared, not paid


3,148



2,694



2,394Capital lease obligations incurred to acquire assets






302



344     Note 25 
    Selected
    Quarterly Financial Data (Unaudited)    Quarter1st


2nd


3rd


4thFiscal 2008Total revenue

$
481,802


$
363,091


$
351,622


$
338,119Operating income


29,987



23,370



19,479



15,491Net income


15,351



9,425



6,202



98Basic income per common share


0.24



0.15



0.11



Diluted income per common share


0.23



0.15



0.11



Fiscal 2007Total revenue

$
474,048


$
364,404


$
354,387


$
349,232Operating income


33,637



33,864



26,735



16,458Net income


16,168



14,216



9,457



10,331Basic income per common share


0.27



0.24



0.14



0.15Diluted income per common share


0.23



0.20



0.14



0.15     Fourth
    Quarter Adjustment
   104




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##### Table of Contents



CKE
    RESTAURANTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 26 
    Commitments
    and Contingent Liabilities        March 2008

$
50April 2008


50July 2008


9,207November 2008


741December 2008


553February 2009


12,816March 2009


14,830$
38,247          105




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##### Table of Contents



EXHIBIT INDEX
  Exhibits

Description3
.1

Certificate of Incorporation of the Company, incorporated herein
    by reference to Exhibit 3.1 to the Companys Form S-4
    Registration Statement Number 33-52523.3
.2

Certificate of Amendment of Certificate of Incorporation, as
    filed with the Delaware Secretary of State on December 9, 1997,
    filed as Exhibit 3.2 to the Companys Annual Report on Form
    10-K for the fiscal year ended January 26, 1998, and is hereby
    incorporated by reference.3
.3

Bylaws of the Company, incorporated herein by reference to
    Exhibit 3.2 to the Companys Form S-4 Registration
    Statement Number 33-52523.3
.4

Certificate of Amendment of Bylaws, incorporated herein by
    reference to Exhibit 3.4 to the Companys Annual Report on
    Form 10-K for the fiscal year ended January 26, 2004.3
.5

Certificate of Amendment of Bylaws, incorporated herein by
    reference to Exhibit 3.5 to the Companys Current Report on
    Form 8-K filed December 13, 2006.3
.6

Certificate of Amendment of Bylaws, incorporated herein by
    reference to Exhibit 3.6 to the Companys Current Report on
    Form 8-K filed December 10, 2007.4
.6

Indenture, dated as of September 29, 2003, by and between the
    Company and J.P. Morgan Trust Company, National
    Association, as Trustee, filed as Exhibit 4.6 to the
    Companys Quarterly Report on Form 10-Q for the quarter
    ended November 3, 2003, and is hereby incorporated by reference.4
.7

Form of Notes (included in Exhibit 4.6).4
.8

Registration Rights Agreement, dated as of September 29, 2003,
    by and among the Company and Citigroup Global Markets, Inc., for
    itself and the other initial purchasers, filed as Exhibit 4.8 to
    the Companys Quarterly Report on Form 10-Q for the quarter
    ended November 3, 2003, and is hereby incorporated by reference.10
.1

Carl Karcher Enterprises, Inc. Profit Sharing Plan, as amended,
    filed as Exhibit 10.21 to the Companys Form S-1
    Registration Statement Number 2-73695, and is hereby
    incorporated by reference.(1)10
.4

CKE Restaurants, Inc. 1994 Stock Incentive Plan, as amended,
    incorporated herein by reference to Exhibit 4.1 to the
    Companys Form S-8 Registration Statement Number
    333-12399.(1)10
.5

CKE Restaurants, Inc. 1999 Stock Incentive Plan, incorporated
    herein by reference to Exhibit 4.1 to the Companys Form
    S-8 Registration Statement Number 333-83601.(1)10
.15

Employment Agreement dated as of April 9, 1999, by and between
    the Company and John J. Dunion, filed as Exhibit 10.7 to the
    Companys Quarterly Report on Form 10-Q for the quarterly
    period ended May 17, 1999, and is hereby incorporated by
    reference.(1)10
.48

CKE Restaurants, Inc. 2001 Stock Incentive Plan, Incorporated
    herein by reference to Exhibit 4.1 to the Companys Form
    S-8 Registration Statement Number 333-76884.(1)10
.53

Employment Agreement, effective as of January 27, 2004, by and
    between the Company and Theodore Abajian, incorporated herein by
    reference to the like-numbered exhibit to the Companys
    Annual Report on Form 10-K for the fiscal year ended January 26,
    2004.(1)10
.55

Employment Agreement, effective as of April 4, 2004, by and
    between the Company and Andrew F. Puzder, incorporated herein by
    reference to the like-numbered exhibit to the Companys
    Annual Report on Form 10-K for the fiscal year ended January 26,
    2004.(1)10
.56

Employment Agreement, effective as of January 27, 2004, by and
    between the Company and E. Michael Murphy, incorporated herein
    by reference to the like-numbered exhibit to the Companys
    Annual Report on Form 10-K for the fiscal year ended January 26,
    2004.(1)10
.57

Employment Agreement, effective as of January 27, 2004, by and
    between the Company and Brad R. Haley, incorporated herein by
    reference to the like-numbered exhibit to the Companys
    Quarterly Report on Form 10-Q for the quarter ended May 17,
    2004.(1)10
.60

Amendment to Employment Agreement between the Company and Andrew
    F. Puzder, effective as of February 1, 2005, incorporated herein
    by reference to Exhibit 10.60 to the Companys Annual
    Report on Form 10-K for the fiscal year ended January 31,
    2005.(1)10
.63

CKE Restaurants, Inc. 1994 Employee Stock Purchase Plan, as
    amended, incorporated herein by reference to Annex B of the
    Companys Definitive Proxy Statement on Schedule 14A filed
    May 20, 2005.(1) 106




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##### Table of Contents



Exhibits

Description10
.64

Form of Stock Option Agreement under the 2005 Omnibus Incentive
    Compensation Plan, incorporated herein by reference to Exhibit
    10.2 to the Companys Current Report on Form 8-K filed June
    30, 2005.(1)10
.65

Form of Restricted Stock Award Agreement under the 2005 Omnibus
    Incentive Compensation Plan, incorporated herein by reference to
    Exhibit 10.3 to the Companys Current Report on Form 8-K
    filed June 30, 2005.(1)10
.66

Form of Stock Appreciation Rights Award Agreement under the 2005
    Omnibus Incentive Compensation Plan, incorporated herein by
    reference to Exhibit 10.4 to the Companys Current Report
    on Form 8-K filed June 30, 2005.(1)10
.67

Form of Restricted Stock Unit Award Agreement under the 2005
    Omnibus Incentive Compensation Plan, incorporated herein by
    reference to Exhibit 10.5 to the Companys Current Report
    on Form 8-K filed June 30, 2005.(1)10
.68

Form of Stock Award Agreement under the 2005 Omnibus Incentive
    Compensation Plan, incorporated herein by reference to Exhibit
    10.6 to the Companys Current Report on Form 8-K filed June
    30, 2005.(1)10
.69

CKE Restaurants, Inc. Deferred Compensation Plan, incorporated
    herein by reference to Exhibit 10.7 to the Companys
    Current Report on Form 8-K filed June 30, 2005.(1)10
.70

Stock Option Purchase Agreement, dated as of July 19, 2005, by
    and between the Company and William P. Foley, II,
    incorporated herein by reference to Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    filed July 19, 2005.10
.71

Amendment No. 2 to Employment Agreement between the Company and
    Andrew F. Puzder, effective as of December 6, 2005, incorporated
    herein by reference to Exhibit 10.71 to the Companys
    Annual Report on Form 10-K for the fiscal year ended January 30,
    2006.(1)10
.72

Amendment No. 1 to Employment Agreement between the Company and
    E. Michael Murphy, effective as of December 6, 2005,
    incorporated herein by reference to Exhibit 10.72 to the
    Companys Annual Report on Form 10-K for the fiscal year
    ended January 30, 2006.(1)10
.73

Amendment No. 1 to Employment Agreement between the Company and
    Theodore Abajian, effective as of December 6, 2005, incorporated
    herein by reference to Exhibit 10.73 to the Companys
    Annual Report on Form 10-K for the fiscal year ended January 30,
    2006.(1)10
.74

Amendment No. 1 to Employment Agreement between the Company and
    Brad R. Haley, effective as of December 6, 2005, incorporated
    herein by reference to Exhibit 10.74 to the Companys
    Annual Report on Form 10-K for the fiscal year ended January 30,
    2006.(1)10
.75

Amendment No. 3 to Employment Agreement between the Company and
    Andrew F. Puzder, effective as of October 12, 2006, incorporated
    herein by reference to Exhibit 10.1 to the Companys
    Current Report on Form 8-K filed October 17, 2006.(1)10
.76

Amendment No. 2 to Employment Agreement between the Company and
    E. Michael Murphy, effective as of October 12, 2006,
    incorporated herein by reference to Exhibit 10.2 to the
    Companys Current Report on Form 8-K filed October 17,
    2006.(1)10
.77

Amendment No. 2 to Employment Agreement between the Company and
    Theodore Abajian, effective as of October 12, 2006, incorporated
    herein by reference to Exhibit 10.3 to the Companys
    Current Report on Form 8-K filed October 17, 2006.(1)10
.79

Seventh Amended and Restated Credit Agreement, dated as of March
    27, 2007, by and among the Company, the Lenders party thereto,
    and BNP Paribas, a bank organized under the laws of France
    acting through its Chicago Branch, as Administrative Agent, and
    Citigroup Global Markets, Inc. and Bank of America, N.A., as
    Co-Syndication Agents.10
.80

Amendment No. 2 to Employment Agreement between the Company and
    Brad R. Haley, effective as of March 20, 2007.(1)10
.81

Stock Purchase Agreement, effective as of April 3, 2007, by and
    between the Company and Pirate Capital, LLC, a Delaware limited
    liability company, on behalf of Jolly Roger Activist Portfolio
    LTD, Jolly Roger Fund LP and Jolly Roger Offshore Fund LTD,
    incorporated by reference to Exhibit 10.1 to the Companys
    Current Report on Form 8-K filed April 5, 2007. 107




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##### Table of Contents



Exhibits

Description10
.82

Employment Agreement, effective January 2004, by and between
    Hardees Food Systems, Inc. and Noah J. Griggs,
    incorporated by reference to Exhibit 10.1 to the Companys
    Quarterly Report on Form 10-Q for the quarter ended May 21,
    2007.(1)10
.83

Amendment No. 1 to Employment Agreement between the Company and
    Noah J. Griggs, effective as of December 6, 2005, incorporated
    by reference to Exhibit 10.2 to the Companys Quarterly
    Report on
    Form 10-Q
    for the quarter ended May 21, 2007.(1)10
.84

Amendment No. 2 to Employment Agreement between the Company and
    Noah J. Griggs, effective as of March 20, 2007, incorporated by
    reference to Exhibit 10.3 to the Companys Quarterly Report
    on Form 10-Q for the quarter ended May 21, 2007.(1)10
.85

Amendment No. 3 to Employment Agreement between the Company and
    Noah J. Griggs, effective as of June 11, 2007, incorporated by
    reference to Exhibit 10.4 to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarter ended May 21, 2007.(1)10
.86

Additional Loan and First Amendment to Seventh Amended and
    Restated Credit Agreement, dated as of May 3, 2007, by and among
    the Company, the Lenders party thereto, and BNP Paribas, a bank
    organized under the laws of France acting through its Chicago
    branch, as Administrative Agent, incorporated by reference to
    Exhibit 10.5 to the Companys Quarterly Report on Form 10-Q
    for the quarter ended May 21, 2007.10
.87

CKE Restaurants, Inc. 2005 Omnibus Incentive Compensation Plan,
    as amended, incorporated by reference to Exhibit 10.1 to the
    Companys Current Report on Form 8-K filed June 15, 2007.(1)10
.88

Additional Loan and Second Amendment to Seventh Amended and
    Restated Credit Agreement, dated as of August 27, 2007, by and
    among the Company, the Lenders party thereto, and BNP Paribas, a
    bank organized under the laws of France acting through its
    Chicago branch, as Administrative Agent, incorporated by
    reference to Exhibit 10.1 to the Companys Current Report
    on Form 8-K filed August 29, 2007.10
.89

Third Amendment to Seventh Amended and Restated Credit
    Agreement, dated as of March 7, 2008, by and among the Company,
    BNP Paribas, a bank organized under the laws of France acting
    through its Chicago branch, as Administrative Agent, and the
    subsidiaries of the Company, incorporated by reference to
    Exhibit 10.1 to the Companys Current Report on Form 8-K
    filed March 13, 2008.11
.1

Computation of Per Share Earnings, included in Note 1 of Notes
    to Consolidated Financial Statements.12
.1

Computation of Ratios.14
.1

CKE Restaurants, Inc. Code of Ethics for CEO and Senior
    Financial Officers, as approved by the Companys Board of
    Directors on March 3, 2004, incorporated herein by reference to
    the like-numbered exhibit to the Companys Annual Report on
    Form 10-K for the fiscal year ended January 26, 2004.21
.1

Subsidiaries of Company.23
.1

Consent of Independent Registered Public Accounting Firm.31
.1

Certification of Chief Executive Officer pursuant to Rule 13a-
    14(a)/15d-14(a), as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.31
.2

Certification of Chief Financial Officer pursuant to Rule 13a-
    14(a)/15d-14(a), as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.32
.1

Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.32
.2

Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.     *
    
    Schedules or exhibits omitted. The Company shall furnish
    supplementally to the Securities and Exchange Commission a copy
    of any omitted schedule or exhibit upon request.(1)
    
    A management contract or compensatory plan or arrangement
    required to be filed as an exhibit to this report pursuant to
    Item 15(c) of Form 10-K. 108