-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DWir5DNDXy0axED4+RLbm6ZL6u5j+yY/zM56aTt4cvk29hCxxz9sPUCoOpa6yxkg FAVB7UMSn176XQByfXrjaw== 0000944209-96-000175.txt : 19960730 0000944209-96-000175.hdr.sgml : 19960730 ACCESSION NUMBER: 0000944209-96-000175 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960724 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960729 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RALLYS HAMBURGERS INC CENTRAL INDEX KEY: 0000854873 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 621210077 STATE OF INCORPORATION: DE FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17980 FILM NUMBER: 96599900 BUSINESS ADDRESS: STREET 1: 10002 SHELBYVILLE RD STE 150 CITY: LOUISVILLE STATE: KY ZIP: 40223 BUSINESS PHONE: 5022458900 MAIL ADDRESS: STREET 1: 10002 SHELBYVILLE RD STREET 2: STE 150 CITY: LOUISVILLE STATE: KY ZIP: 40223 FORMER COMPANY: FORMER CONFORMED NAME: RALLYS INC DATE OF NAME CHANGE: 19920703 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) July 24, 1996 RALLY'S HAMBURGERS, INC. ----------------------------------------------------------------- (Exact Name of Registrant as specified in Charter) Delaware 0-17980 62-1210077 - ------------------ ----------- -------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification incorporation) Number) 10002 Shelbyville Road, Suite 150, Louisville, Kentucky 40223 ----------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (502) 245-8900 ------------------------------------------------------------------ (Registrant's telephone number, including area code) ------------------------------------------------------------------ (Former name or former address, if changed since last report) Item 5. OTHER EVENTS ------------ On July 24, 1996, Rally's Hamburgers, Inc. issued a press release with respect to its operating results for the second quarter of fiscal 1996. A copy of such press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. Item 7. EXHIBITS -------- 99.1 Press Release dated July 24, 1996. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. RALLY'S HAMBURGERS, INC. July 26, 1996 By: /s/ Michael E. Foss ------------------------- Michael E. Foss Senior Vice President and Chief Financial Officer 3 EX-99.1 2 RALLY'S REPORTS PROFIT FOR SECOND QUARTER EXHIBIT 99.1 RALLY'S REPORTS PROFIT FOR SECOND QUARTER LOUISVILLE, Ky., July 24 /PRNewswire/ -- Rally's Hamburgers, Inc. (Nasdaq: RLLY) announced net income of $111,000 or $.01 per share for the second quarter ended June 30, 1996. This represents a $1.4 million improvement over the comparable quarter of the prior year in which the Company lost $1.2 million or $.08 per share. For the six months ended June 30, 1996, the Company recorded earnings of $949,000 or $.06 per share compared with a net loss of $4.8 million or $.30 per share for the prior year period. First quarter and year to date earnings were favorably impacted by an extraordinary gain, net of tax of $4.5 million or $.29 per share from the early extinguishment of debt. The Company attributes the year over year improvement in second quarter results to the impact of the prior closure and/or writedown of poor performing stores, reduced general and administrative and interest expenses, the initial impact of cost reduction strategies aimed at reducing food, paper and labor costs and lower advertising expenses. Total revenues declined by $2.5 million, to $47.4 million, in the quarter due primarily to a lower number of systemwide units in operation and to same store sales declines of 1% for Company units and 5% systemwide. Donald E. Doyle, President and Chief Executive Officer, stated, "This is our first profitable quarter, excluding extraordinary gains, since the second quarter of 1993. While the situation at Rally's is clearly challenging and much remains to be done, I am encouraged by our accomplishments to date and the outlook for the Company going forward." "We have made progress on several fronts, including the establishment of a strategic partnership with the Carl's Jr. chain in California. The first major benefit of this partnership was the implementation of a management agreement with Carl's to operate 28 Rally's Company-owned stores in California and Arizona beginning July 1st. This agreement will provide an immediate positive effect on our cash flow and allow us to concentrate our efforts in more fully developed Rally's markets." "We have taken several actions to improve same store sales growth, including the appointment of a new advertising agency. Our new ad agency, Mendelsohn - Zien, is also the agency for the Carl's Jr. chain and has developed innovative, successful advertising for Carl's that has resulted in unparalleled same store sales growth for them. I remain very optimistic about the strength of the Rally's brand and its overall customer appeal and our ability to return to positive same store sales growth." Doyle added, "We believe that sustainable improvement in operating earnings will be driven by fundamental changes in our store level economics. We initiated important changes designed to drive such improvement. Changes in our overall procurement program such as renegotiating contracts, selecting alternative vendors, and making low risk specification changes began influencing our results by the end of the second quarter. We have identified and implemented specific changes in staffing levels and labor deployment in the stores which are yielding significant savings in management and crew labor. These cost reduction actions, which began late in the second quarter, should favorably influence ongoing cost performance. The recently announced rights offering, which we expect to complete by late August, is an important additional step which will allow us to modestly accelerate new store development as well as fund other important initiatives." The Company ended its second quarter with cash and cash equivalent balances of approximately $2.7 million essentially flat with the prior quarter after outlays in the quarter of more than $5 million related to principal and interest payments on the Company's debt. The Company expects to begin its previously announced shareholder rights offering within the next week and, while no assurances can be given as to whether the offering will be fully subscribed, is optimistic regarding the potential of the offering to improve its overall liquidity. If fully subscribed, the offering will generate gross proceeds of over $10 million and an additional $10 million in new capital if the related common stock warrants are eventually exercised over their four year life. As of July 23, 1996, the system opened 14 restaurants during the year, of which 3 were Company-owned and 11 were franchised. The Company closed 3 units and franchise operators closed 10 units during the year. As of July 23, 1996, there were 482 Rally's Hamburgers restaurants operating in 19 states. A registration statement relating to the securities to be offered and sold in the rights offering has been filed with the Securities and Exchange Commission but has not yet become effective. The securities to be offered and sold in the rights offering may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer solicitation or sale would be unlawful prior to registration or qualification under the laws of any such State. Statements in this release which are not historical facts are "forward looking" statements and "Safe Harbor" Statements under the Private Securities Litigation Reform Act of 1995 that involve risks and/or uncertainties, including but not limited to the impact of continued discounting by the Company's substantial competitors, success of the Company's advertising and promotion programs, consumer acceptance of the Company's products, increases in operating costs, availability of adequate numbers of hourly paid employees, decreases in the availability of affordable capital resources and other risks documented in the Company's Securities and Exchange Commission filings. RALLY'S HAMBURGERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (A) (in thousands, except shares and per share amounts)
Three Months Ended Six Months Ended June 30, July 2, June 30, July 2, 1996 1995 1996 1995 REVENUES Restaurant sales $45,771 $47,861 $86,279 $88,595 Franchise revenues and fees 1,586 1,982 2,990 3,718 Total revenues 47,357 49,843 89,269 92,313 COSTS AND EXPENSES Restaurant costs of sales 16,064 16,127 30,865 30,081 Restaurant operating expenses exclusive of depreciation and amortization and other operating expenses shown separately below 20,260 20,901 40,389 39,631 General & administrative expenses 3,917 4,466 8,000 9,012 Advertising and promotion expenses 2,067 3,571 4,915 6,373 Depreciation and amortization 2,614 3,573 5,302 7,004 Other charges 22 -- 754 -- Total costs and expenses 44,944 48,638 90,225 92,101 Income (loss) from operations 2,413 1,205 (956) 212 OTHER INCOME (EXPENSE) Interest expense (2,146) (2,684) (4,459) (5,275) Interest income 34 199 379 293 Other (4) 96 (33) 137 Total other (2,116) (2,389) (4,113) (4,845) Net income (loss) before tax and extraordinary items 297 (1,184) (5,069) (4,633) PROVISION (BENEFIT) FOR INCOME TAXES 186 60 (1,496) 120 Net income (loss) before extraordinary items 111 (1,244) (3,573) (4,753) EXTRAORDINARY ITEMS (net of tax of $1,817) -- -- 4,522 --
NET INCOME (LOSS) $ 111 $(1,244) $ 949 $(4,753) Income (loss) per common share: Income (loss) before extraordinary item $ 0.01 $ (0.08) $ (0.23) $ (0.30) Extraordinary item -- -- 0.29 -- Net income (loss) $ 0.01 $ (0.08) $ 0.06 $ (0.30) Weighted average shares outstanding 15,934 15,589 15,802 15,600
(A) Unaudited, subject to year-end review. RALLY'S HAMBURGERS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS AS OF JUNE 30, 1996 AND DECEMBER 31, 1995 (in thousands)
June 30, December 31, 1996 (A) 1995 ASSETS Current assets $ 7,656 $ 22,182 Assets held for sale - long term 2,445 3,517 Property and equipment, net 73,354 78,683 Notes receivable, less current portion 393 676 Intangibles and other assets 31,079 32,334 Total assets $114,927 $137,392 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities $ 27,036 $ 42,276 Long-term debt 67,623 74,783 Obligations under capital leases, less current potion 5,603 5,631 Other liabilities 7,016 8,030 Total liabilities 107,278 130,720 Shareholders' equity 7,649 6,672 Total liabilities and shareholders' equity $114,927 $137,392
(A) Unaudited, subject to year-end review. - -0- 7/24/96 /CONTACT: Donald E. Doyle, 502-245-8900/ -----END PRIVACY-ENHANCED MESSAGE-----