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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
December 18, 1997
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)
600 Cleveland Street, Eighth Floor, Clearwater, Florida 34615
(Address of principal executive offices) (Zip Code)
(813) 441-3500
(Registrant's telephone number, including area code)
10002 Shelbyville Road, Louisville, Kentucky 40223
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 18, 1997, Rally's Hamburgers, Inc., a Delaware corporation
("Rally's"), acquired approximately 19 million shares (the "Checkers Shares") of
the common stock, $.001 par value per share (the "Checkers Common Stock"), of
Checkers Drive-In Restaurants, Inc., a Delaware corporation ("Checkers"),
pursuant to that certain Exchange Agreement, dated as of December 8, 1997 (the
"Exchange Agreement"), between Rally's, CKE Restaurants, Inc. ("CKE"), Fidelity
National Financial, Inc. ("Fidelity"), GIANT GROUP, LTD. ("GIANT") and the other
parties named in Exhibit A to the Exchange Agreement. CKE, Fidelity and GIANT
beneficially owned approximately 5,280,000 shares, 2,760,000 shares and
3,140,000 shares, respectively, of Rally's Common Stock prior to the
consummation of the Exchange Agreement, approximately 23.9%, 12.7% and 15.2% of
the then outstanding shares of Rally's Common Stock. In addition, Terry
Christensen, William Foley, II, David Gotterer, Andrew Puzder, Burt Sugarman and
C. Thomas Thompson, who are Directors of Rally's, are parties to the Exchange
Agreement. Mary Hart Sugarman, AJ Sugarman and Al Sugarman, who also
participated in the exchange, are related to Burt Sugarman. The Exchange
Agreement is being filed as Exhibit A to this Current Report on Form 8-K (the
"Form 8-K") and is incorporated herein by this reference.
In consideration of the acquisition of the Checkers Shares, Rally's
issued 3,909,336 shares of its common stock, $.10 par value per share (the
"Rally's Common Stock"), and 45,667 shares of its Series A Participating
Preferred Stock, $.10 par value per share (the "Rally's Preferred Stock"), the
terms of which are set forth in Exhibit B to the Exchange Agreement. The Rally's
Preferred Stock will be converted into 4,566,700 shares of Rally's Common Stock
upon approval of such conversion by Rally's stockholders. The exchange ratio
used to determine the number of shares of Rally's Common Stock (including the
shares to be issued upon conversion of the Rally's Preferred Stock) to be issued
pursuant to the Exchange Agreement was based upon the average closing price of
the Checkers Common Stock and the Rally's Common Stock for the five trading days
preceding the public announcement of the proposed exchange on September 22,
1997.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited financial statements of Checkers for the years ended
December 30, 1996 and unaudited financial statements for the period ended
September 8, 1997 are attached hereto as Exhibit B and incorporated herein by
this reference.
(b) Pro forma financial information required to be filed pursuant
hereto are attached hereto as Exhibit C and incorporated herein by this
reference.
(c) Exhibits.
Exhibit A -- Exchange Agreement, dated as of December 8, 1997,
between Rally's,
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CKE, Fidelity, GIANT and the other parties named in Exhibit A thereto
(incorporated by reference to Exhibit A to Rally's Statement on Schedule 13D,
dated December 18, 1997, with respect to Checkers Common Stock).
Exhibit B -- Audited financial statements of Checkers for the
years ended December 30, 1996 and unaudited financial statements of Checkers for
the period ended September 8, 1997 (incorporated by reference to pages F-1
through F-42 of Checkers Registration Statement on Form S-4 (File No. 333-3800),
as amended on November 14, 1997).
Exhibit C -- Pro forma financial information.
Exhibit D -- Consent of KPMG Peat Marwick LLP
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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.
March 2, 1998 By: /s/ James T. Holder
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(Date) James T. Holder
Vice President
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EXHIBIT C
PRO FORMA CONSOLIDATED FINANCIAL DATA
The following Pro Forma Consolidated Financial Data sets forth certain
unaudited pro forma financial information giving effect to the Exchange
Agreement. The pro forma financial information is based on, and should be read
in conjunction with, the historical consolidated financial statements of the
Company and the notes related thereto. The pro forma financial information gives
effect to the issuance of 3,909,336 shares of Rally's common stock and 45,677
shares of Rally's preferred stock in exchange for 19,100,960 shares of Checkers
common stock, based upon the per share price of the Checkers common shares at
$1.33125, assuming the exchange had occurred September 28,1997.
RALLY'S HAMBURGERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
HISTORICAL AT PRO FORMA PRO FORMA
SEPT. 28, 1997 ADJUSTMENTS RESULTS
-------------------------------------------------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,180 $ (280) A) $ 2,900
-------------------------------------------------
Restricted cash 1,413 1,413
Investments 1,732 1,732
Accounts and notes receivable - net 1,862 1,862
Inventory 848 848
Property and equipment held for sale 244 244
Prepaid expenses and other current assets 1,096 1,096
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Total current assets 10,375 (280) 10,095
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Property and equipment, at cost, net of
accumulated depreciation and amortization 68,861 68,861
Property and equipment held for sale 1,076 1,076
Notes receivable 1,018 1,018
Intangibles, net of accumulated amortization 27,499 27,499
Investment in affiliate -- 25,708 A) 25,708
Deposits and other noncurrent assets 2,688 2,688
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$ 111,517 $ 25,428 $ 136,945
=================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current installments of long-term debt 1,202 1,202
Accounts payable 5,842 5,842
Accrued liabilities 14,839 14,839
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Total current liabilities 21,883 21,883
Senior notes - net 57,977 57,977
Long-term debt, less current maturities 4,201 4,201
Obligations under capital leases, less current ma 5,336 5,336
Other noncurrent liabilities 3,941 3,941
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Total liabilities 93,338 0 93,338
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STOCKHOLDERS' EQUITY:
Preferred stock -- 5 B) 5
Common stock 2,085 391 B) 2,476
Additional paid-in capital 71,839 25,032 B) 96,871
Retained (deficit) earnings (53,637) (53,637)
Treasury stock, at cost,273,000 shares (2,108) (2,108)
-------------------------------------------------
Net stockholders' equity 18,179 25,428 43,607
-------------------------------------------------
$ 111,517 $ 25,428 $ 136,945
=================================================
</TABLE>
A) Pro forma adjustment to record the purchase of 19,100,960 shares of
Checkers common stock at $1.33125 and the payment of $280,000 in
transaction costs.
B) Pro forma adjustment to record the issuance of 3,909,336 shares of
Rally's common stock, valued at $2.99965 per share and 45,677 shares of
Rally's preferred stock, valued at $299.965 per share.
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PRO FORMA CONSOLIDATED FINANCIAL DATA
The following Pro Forma Consolidated Financial Data sets forth certain
unaudited pro forma financial information giving effect to the Exchange
Agreement. The pro forma financial information is based on, and should be read
in conjunction with, the historical consolidated financial statements of the
Company and the notes related thereto. The pro forma financial information gives
effect to the issuance of 3,909,336 shares of Rally's common stock and 45,677
shares of Rally's preferred stock in exchange for 19,100,960 shares of Checkers
common stock, based upon the per share price of the Checkers common shares at
$1.33125, assuming the exchange had occurred December 30, 1996.
RALLY'S HAMBURGERS, INC. AND SUBSIDIARIES
UNAUDITED PROFORMA CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 28, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL
NINE MONTHS
ENDED PRO FORMA PRO FORMA
SEPT. 28, 1997 ADJUSTMENTS RESULTS
-------------------------------------------------
<S> <C> <C> <C>
TOTAL REVENUES $ 109,207 $ 109,207
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COSTS AND EXPENSES:
Restaurant cost of sales 34,334 34,334
Restaurant operating expenses 44,688 44,688
General and administrative expenses 11,306 11,306
Advertising and promotion expenses 7,197 7,197
Depreciation and amortization 6,881 6,881
Other expenses 1,437 1,437
Loss on investment in affiliate -- 2,857 C) 2,857
-------------------------------------------------
Total costs and expenses 105,843 2,857 108,700
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Operating (loss) income 3,364 (2,857) 507
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Other income (expense):
Interest expense (5,578) (5,578)
Interest income 619 619
Other 2 2
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Loss before minority interest, income tax
expense (benefit) and extraordinary items (1,593) (2,857) (4,450)
Minority interests in (losses) earnings -- --
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Loss before income tax expense (benefit)
and extraordinary items (1,593) (2,857) (4,450)
Income tax expense (benefit) 415 415
-------------------------------------------------
Loss before extraordinary items (2,008) (2,857) (4,865)
Extraordinary items -- --
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Net (loss) earnings $ (2,008) $ (2,857) $ (4,865)
=================================================
Earnings (loss) per common share:
Before extraordinary item $ (0.10) $ (0.57) $ (0.19)
Extraordinary item $ (0.00 $ (0.00 $ (0.00
-------------------------------------------------
Net loss per common share $ (0.10) $ (0.57) $ (0.19)
=================================================
Weighted average number of common shares
outstanding 20,552 5,051 D) 25,603
=================================================
</TABLE>
C) Pro forma adjustment to record Rally's 26.3% share of Checkers year to
date net losses of $9.084 million as of September 29, 1997 and amortize
$468,000 of investment goodwill associated with the exchange, assuming
the exchange had occurred on December 30, 1996.
D) Additional weighted average number of common shares assumes a June 28,
1997 conversion of the 45,677 shares of preferred stock to common
stock.
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PRO FORMA CONSOLIDATED FINANCIAL DATA
The following Pro Forma Consolidated Financial Data sets forth certain
unaudited pro forma financial information giving effect to the Exchange
Agreement. The pro forma financial information is based on, and should be read
in conjunction with, the historical consolidated financial statements of the
Company and the notes related thereto. The pro forma financial information gives
effect to the issuance of 3,909,336 shares of Rally's common stock and 45,677
shares of Rally's preferred stock in exchange for 19,100,960 shares of Checkers
common stock, based upon the per share price of the Checkers common shares at
$1.33125, assuming the exchange had occurred January 1, 1996.
RALLY'S HAMBURGERS, INC. AND SUBSIDIARIES
UNAUDITED PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 29, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL
YEAR ENDED PRO FORMA PRO FORMA
DEC. 29, 1996 ADJUSTMENTS RESULTS
-------------------------------------------------
<S> <C> <C> <C>
TOTAL REVENUES $ 162,752 $ 162,752
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COSTS AND EXPENSES:
Restaurant cost of sales 53,712 53,712
Restaurant operating expenses 71,155 71,155
General and administrative expenses 15,426 15,426
Advertising and promotion expenses 7,767 7,767
Depreciation and amortization 9,838 9,838
Other expenses 764 764
Loss on investment in affiliate -- 12,830 E) 12,830
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Total costs and expenses 158,662 12,830 171,492
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Operating (loss) income 4,090 (12,830) (8,740)
-------------------------------------------------
Other income (expense):
Interest expense (8,622) (8,622)
Interest income 614 614
Other (49) (49)
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Loss before minority interest, income tax
expense (benefit) and extraordinary items (3,967) (12,830) (16,797)
Minority interests in (losses) earnings -- --
-------------------------------------------------
Loss before income tax expense (benefit)
and extraordinary items (3,967) (12,830) (16,797)
Income tax expense (benefit) (675) (675)
-------------------------------------------------
Loss before extraordinary items (3,292) (12,830) (16,122)
Extraordinary items 5,280 5,280
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Net (loss) earnings $ 1,988 $(12,830) $ (10,842)
=================================================
Earnings (loss) per common share:
Before extraordinary item $ (0.19) $ (2.07) $ (0.69)
Extraordinary item $ 0.31 $ 0.00 $ 0.23
-------------------------------------------------
Net loss per common share $ 0.12 $ (2.07) $ (0.47)
=================================================
Weighted average number of common shares
outstanding 17,007 6,193 F) 23,200
=================================================
</TABLE>
E) Pro forma adjustment to record Rally's 26.3% share of Checkers 1996 net
losses of $46.409 million and amortize $624,000 of investment goodwill
associated with the exchange, assuming the exchange had occurred on January
1, 1996.
F) Additional weighted average number of common shares assumes a June 30, 1996
conversion of the 45,677 shares of preferred stock to common stock.
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EXHIBIT D
ACCOUNTANTS' CONSENT
The Board of Directors
Checkers Drive-In Restaurants, Inc.:
We consent to incorporation by reference in the current report on Form 8-K/A of
Rally's Hamburgers, Inc. of our report dated March 3, 1997, with respect to the
consolidated balance sheets of Checkers Drive-In Restaurants, Inc. and
subsidiaries as of December 30, 1996 and January 1, 1996, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three-year period ended December 30, 1996, which
report appears in the registration statement on Form S-4 (No. 333-3800) as
amended, of Checkers Drive-In Restaurants, Inc.
/s/ KPMG PEAT MARWICK LLP
Tampa, Florida
March 3, 1998
