<PAGE> 1
As filed with the Securities and Exchange Commission on June 3, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RALLY'S HAMBURGERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 62-1210077
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
600 CLEVELAND STREET, EIGHTH FLOOR
CLEARWATER, FLORIDA 34615
(813) 441-3500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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JAMES J. GILLESPIE
600 CLEVELAND STREET, EIGHTH FLOOR
CLEARWATER, FLORIDA 34615
(813) 441-3500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
JANET S. MCCLOUD, ESQ.
CHRISTENSEN, MILLER, FINK, JACOBS, GLASER, WEIL & SHAPIRO, LLP
2121 AVENUE OF THE STARS, 18TH FLOOR
LOS ANGELES, CALIFORNIA 90067
(310) 553-3000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this
Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest investment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=======================================================================================================
Proposed Proposed
Amount Maximum Maximum
Title of Each Class of to be Offering Price Aggregate Amount of
Securities to be Registered Registered Per Unit Offering Price Registration Fee
(1) (1) (2)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.10 par value 8,476,036 $ 2.125 $ 18,011,576 $ 5,313
shares (3)
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</TABLE>
(1) Estimated solely for purposes of calculating the Registration Fee.
(2) Calculated pursuant to Rule 457(c) under the Securities Act of 1933.
(3) Includes 4,566,700 shares of Common Stock issuable upon conversion of
outstanding Preferred Stock, which will become convertible upon approval by
Registrant's stockholders.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
SUBJECT TO COMPLETION, DATED JUNE 3, 1998
PROSPECTUS
8,476,036 SHARES
RALLY'S HAMBURGERS, INC.
COMMON STOCK
All of the 8,476,036 shares of common stock, $.10 par value per share
("Rally's Common Stock"), of Rally's Hamburgers, Inc., a Delaware corporation
(the "Company" or "Rally's"), to which this Prospectus relates will be offered
by certain stockholders of the Company named herein. All of such stockholders do
not necessarily intend to sell their shares of Rally's Common Stock, but they
may decide to do so in the future. See "Risk Factors-Shares Eligible for Future
Issuance and Sale; Dilution of Voting Power" and "Selling Stockholders." The
Company will not receive any proceeds from the sale of Rally's Common Stock
offered hereby. The shares of Rally's Common Stock offered by the selling
stockholders may be sold on the NASDAQ National Market (the "NMS"), at prices
then prevailing, in negotiated transactions or otherwise. With respect to
transactions on the NMS, any selling stockholder will pay the regular
commissions of brokers for effecting such sales. The last reported sale price of
Rally's Common Stock, which is traded under the symbol "RLLY," on the NMS on
June 3, 1998 was $2.0938 per share.
SEE "RISK FACTORS" COMMENCING ON PAGE 2 FOR A DISCUSSION OF CERTAIN
INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN
RALLY'S COMMON STOCK.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER,
DEALER OR AGENT. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE INFORMATION SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY OR ANY OF ITS AFFILIATES SINCE THE RESPECTIVE DATES OF THIS
PROSPECTUS.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus 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 securities laws of any State.
The date of this Prospectus is June 13, 1998
<PAGE> 3
RISK FACTORS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS OR INCORPORATES BY REFERENCE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS
AMENDED. DISCUSSIONS CONTAINING SUCH FORWARD-LOOKING STATEMENTS MAY BE FOUND IN
THE MATERIAL SET FORTH UNDER "RISK FACTORS" AS WELL AS WITHIN THE PROSPECTUS
GENERALLY, INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN. ALSO,
DOCUMENTS SUBSEQUENTLY FILED BY THE COMPANY WITH THE COMMISSION AND INCORPORATED
HEREIN BY REFERENCE MAY CONTAIN FORWARD-LOOKING STATEMENTS. THE COMPANY CAUTIONS
INVESTORS THAT ANY FORWARD-LOOKING STATEMENTS MADE BY THE COMPANY ARE NOT
GUARANTEES OF FUTURE PERFORMANCE AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS,
INCLUDING BUT NOT LIMITED TO THE FOLLOWING:
(I) THE COMPANY COMPETES WITH NUMEROUS WELL ESTABLISHED COMPETITORS WHO
HAVE SUBSTANTIALLY GREATER FINANCIAL RESOURCES AND LONGER OPERATING
HISTORIES THAN THE COMPANY. COMPETITORS HAVE INCREASINGLY OFFERED
SELECTED FOOD ITEMS AND COMBINATION MEALS, INCLUDING HAMBURGERS, AT
DISCOUNTED PRICES, AND CONTINUED DISCOUNTING BY COMPETITORS MAY
ADVERSELY AFFECT REVENUES AND PROFITABLILITY OF COMPANY RESTAURANTS.
(II) THE COMPANY WILL BE NEGATIVELY IMPACTED IF THE COMPANY IS UNABLE TO
SUSTAIN SAME STORE SALES INCREASES THAT WERE EXPERIENCED DURING THE
FIRST QUARTER OF 1998. SALES INCREASES WILL BE DEPENDENT, AMONG OTHER
THINGS, ON SUCCESS OF COMPANY ADVERTISING AND PROMOTION OF NEW AND
EXISTING MENU ITEMS. NO ASSURANCES CAN BE GIVEN THAT SUCH ADVERTISING
AND PROMOTIONS WILL IN FACT BE SUCCESSFUL.
THE COMPANY MAY ALSO BE NEGATIVELY IMPACTED BY OTHER FACTORS COMMON TO THE
RESTAURANT INDUSTRY SUCH AS: CHANGES IN CONSUMER TASTES AWAY FROM RED MEAT AND
FRIED FOODS; INCREASES IN THE COST OF FOOD, PAPER, LABOR, HEALTH CARE, WORKERS'
COMPENSATION OR ENERGY; AN INADEQUATE NUMBER OF HOURLY PAID EMPLOYEES; AND/OR
DECREASES IN THE AVAILABILITY OF AFFORDABLE CAPITAL RESOURCES. THE COMPANY
CAUTIONS THE READER THAT THIS LIST OF RISK FACTORS MAY NOT BE EXHAUSTIVE,
PARTICULARLY WITH RESPECT TO FUTURE FILINGS.
DECREASING RESTAURANT SALES
Comparable store sales for Company-operated restaurants open for a full
year declined each fiscal quarter from the second quarter of 1996 through the
fourth quarter of 1997. Comparable store sales were approximately $679,000 and
$633,000 per Company-operated restaurant for the 12-month periods ended March
23, 1997, and March 22, 1998, respectively. While the Company did experience an
increase of 1.6% in comparable store sales during the first quarter of 1998,
annual comparable store sales have been declining since fiscal year 1992.
Management believes the decrease in comparable restaurant sales over this time
period is primarily attributable to increased sales pressure from competitor
discounting. See "Risk Factors -- Competitive Environment."
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<PAGE> 4
HISTORY OF NET LOSSES
The Company reported net losses of $1.0 million and $1.1 million during
the first quarter of 1997 and 1998, respectively. While the Company reported
income from operations of $4.1 million and $3.3 million during 1996 and 1997,
respectively, the Company has reported losses before extraordinary items in each
of its last three fiscal years. The primary offset to the Company's income from
operations was interest expense of $8.6 million and $7.4 million in 1996 and
1997, respectively. In addition, interest expense of $1.9 million and $1.7
million was recorded during the first quarter of 1997 and 1998, respectively.
Restaurant margins before advertising expense increased in 1997 to 18.2% from
15.2% in the prior year due primarily to reduced food, paper and labor costs as
a percentage of sales. Advertising expense was 7.1% of sales in 1997 compared to
5.0% of sales in 1996. Although the Company's management has been able to
implement programs that have resulted in improved food, paper and labor costs,
the Company's debt structure and related interest expense will necessitate a
significant increase in sales to eliminate net losses in future periods.
COMPETITIVE ENVIRONMENT
The fast food restaurant industry is highly competitive and can be
significantly affected by many factors, including changes in local, regional or
national economic conditions, changes in consumer tastes, consumer concerns
about the nutritional quality of quick-service food and increases in the number
of, and particular location of, competing quick-service restaurants. Factors
such as inflation, increases in food, labor and energy costs, the availability
and cost of suitable sites, fluctuating interest and insurance rates, state and
local regulations and licensing requirements and the availability of an adequate
number of hourly-paid employees can also adversely affect the fast food
restaurant industry. In addition, major chains, which have operating concepts
similar to or competitive with the Company and which also have substantially
greater financial resources and longer operating histories than the Company,
dominate the fast food restaurant industry. The Company competes primarily on
the basis of food quality, price and speed of service. A significant change in
pricing or other marketing strategies by one or more of these competitors could
have an adverse impact on sales, earnings and growth of the Company. All of the
major fast food chains have increasingly offered selected food items and
combination meals at discounted prices. Beginning generally in the summer of
1993, the major fast food hamburger chains began to intensify their promotions
of value priced meals, many specifically targeting the $.99 price point at which
the Company sells many of its products. This increased promotional activity has
been sustained, and management believes that it has had a negative impact on the
Company's sales. While the Company cannot predict the duration of this
promotional activity or the extent to which this pricing may become more or less
competitive, such pricing could have a continued adverse effect on the Company's
sales and earnings.
CERTAIN FINANCING CONSIDERATIONS; LEVERAGE
As of March 22, 1998, the Company had outstanding approximately $ 58.3
million principal amount of its 9 7/8% Senior Notes due 2000 (the "Senior
Notes"), with a required sinking fund payment of approximately $ 1.6 million due
in 1999, which is a significant portion of the capitalization of the Company. As
such: (i) the abiltiy of the Company to obtain additional financing in the
future for working capital, capital expenditures, debt service requirements or
other purposes may be impaired; (ii) a substantial portion of the Company's cash
flow from operations will be required to service the Company's interest expense
and principal repayment obligations; and (iii) the Company's level of
indebtedness may make it more vulnerable in the event of a sustained downturn in
its business or a general economic decline. The ability of the Company to
satisfy its obligations under the Senior Notes will be dependent upon,
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<PAGE> 5
among other factors, the Company successfully increasing revenues and sustaining
operational profitability.
INVESTMENT IN CHECKERS DRIVE-IN RESTAURANTS, INC.
Pursuant to an 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
persons who may sell shares of Rally's Common Stock pursuant hereto, Rally's
acquired approximately 19.1 million shares of the common stock, $.001 par value
per share ("Checkers Common Stock"), of Checkers Drive-In Restaurants, Inc., a
Delaware corporation ("Checkers"), approximately 26.1% of the outstanding
Checkers Common Stock. Rally's is now the largest stockholder of Checkers, which
develops, produces, owns, operates and franchises approximately 483
quick-service "double drive-thru" restaurants in approximately 23 states. In
addition, Rally's has announced that it may acquire up to one million shares of
Checkers Common Stock in the open market. As a result of its acquisition of
Checkers Common Stock, Rally's recorded losses on investment in affiliate of
approximately $720,000 in fiscal 1997 and $42,000 in the first quarter of 1998.
Checkers has reported losses from operations in each of its last four fiscal
years, but reported operating income of $1.6 million and net income of $394,000
during the first quarter of 1998. Checkers' comparable sales continued to
decrease in fiscal 1997, but reported an 8.9% comparable store sales increase
during the first quarter of 1998. While Checkers, under the direction of new top
management, has implemented programs to improve food, paper and labor costs, no
assurance can be given that such programs will enable Checkers to sustain
comparable store sales increases and the return to profitability that was
experienced during the first quarter of 1998. In addition, no assurance can be
given that Rally's will not be required to record losses in the future as a
result of its investment in Checkers. See "Risk Factors-Reliance on Key
Personnel," "--Shares Eligible for Future Issuance and Sale; Dilution of Voting
Power" and "Selling Stockholders."
RELIANCE ON KEY PERSONNEL
Significant management changes have occurred since the end of the third
quarter of fiscal 1997. In November 1997, James J. Gillespie became the Chief
Executive Officer of Rally's and Checkers. In March 1998, Harvey Fattig became
Executive Vice President and Chief Operating Officer of the Company and
Checkers. In December 1997, Joseph N. Stein, Executive Vice President and Chief
Administrative Officer of Checkers, became Executive Vice President and Chief
Financial Officer of the Company. In addition, effective November 30, 1997,
Rally's and Checkers entered into a Management Services Agreement pursuant to
which Checkers has agreed to provide key services to Rally's, including:
executive management; financial planning and accounting; franchise; purchasing;
and human resources. As a result of this arrangement, the positions of
substantially all of Rally's corporate personnel were eliminated by the end of
January 1998, and Checkers' corporate personnel is providing substantially all
services necessary for the day-to-day operations of Rally's business. In
addition to Messrs. Gillespie, Fattig and Stein, James T. Holder, Senior Vice
President, General Counsel and Secretary of Checkers serves as Senior Vice
President, Assistant General Counsel and Secretary of the Company. The Company's
success will be dependent on the ability of the new senior management team of
the Company and Checkers to manage the operations of both companies. In
addition, the Company's and Checkers' ability to attract and retain experienced
successful executives to the management team will affect the Company's
performance. The loss of one or more members of senior management could
adversely affect the Company's business and development.
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<PAGE> 6
SHARES ELIGIBLE FOR FUTURE ISSUANCE AND SALE; DILUTION OF VOTING POWER
As of May 11, 1998, (i) 24,879,414 shares of Rally's Common Stock were
outstanding, (ii) 12,387,335 shares of Rally's Common Stock were reserved for
issuance in connection with the exercise of outstanding options and warrants,
(iii) options to purchase 798,470 shares of Rally's Common Stock were available
for grant under the Company's stock option plans, and (iv) 4,566,700 shares are
issuable upon conversion of Rally's Series A Participating Preferred Stock (the
"Series A Stock"). The Series A Stock is not currently convertible but will be
automatically converted if such conversion is approved by the Company's
stockholders at the Company's Annual Meeting of Stockholders on June 11, 1998.
The Company is obligated to register the shares of Rally's Common Stock offered
hereby pursuant to the Exchange Agreement. The holders of such shares are
entitled to sell the shares covered hereby in the open market, subject to any
limitations under federal securities laws resulting from their relationship to
the Company. There can be no assurance that any of these sales will not have an
adverse effect on the market price for Rally's Common Stock.
The Company may issue additional shares of Rally's Common Stock and
preferred stock in the future in connection with acquisitions, corporate
combinations, financing activities or employee compensation plans. Sales of
substantial amounts of Rally's Common Stock in the open market or the
availability of such shares for sale could adversely affect the market for
Rally's Common Stock.
CONTROLLING STOCKHOLDERS
As of May 11, 1998, (i) CKE beneficially owned 8,076,095 shares of
Rally's Common Stock, including 1,525,488 shares underlying options or warrants
exercisable within 60 days ("Exercisable Securities") (approximately 30.9% of
the outstanding shares) and was entitled to receive 2,861,000 additional shares
of Common Stock upon conversion of the Series A Stock; (ii) Fidelity held
3,128,461 shares of Rally's Common Stock, including 1,096,687 shares underlying
Exercisable Securities (approximately 12.2% of the outstanding shares) and was
entitled to receive 377,100 additional shares of Common Stock upon conversion of
the Series A Stock; and GIANT held 3,180,718 shares of Rally's Common Stock
(approximately 12.9% of the outstanding shares) and was entitled to receive
44,900 additional shares of Common Stock upon conversion of the Series A Stock.
GIANT has entered into an arrangement with CKE and Fidelity with respect to the
election of directors of Rally's. Therefore, CKE and Fidelity have the practical
ability to elect the Company's Board of Directors and to have a significant
influence on matters put to a vote of the Company's stockholders.
POSSIBLE VOLATILITY OF STOCK PRICE
Rally's Common Stock, which is quoted on the NMS, has experienced, and
could experience in the future, significant price and volume fluctuations which
could adversely affect its market price. In addition, the Company believes that
factors such as quarterly fluctuations in the financial results of the Company,
the overall economy and the financial markets could cause the price of Rally's
Common Stock to fluctuate substantially.
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<PAGE> 7
LITIGATION
For a description of certain litigation of which the Company is a
party, see "Item 3. Legal Proceedings" of the 1997 10-K which is incorporated
herein by reference.
GOVERNMENT REGULATION
The restaurant business is subject to extensive federal, state and
local government regulations relating to the development and operations of fast
food restaurants, including regulations relating to building, parking, ingress
and egress and zoning requirements and the preparation and sale of food and laws
that govern the Company's relationship with their respective employees, such as
minimum wage requirements, overtime and working conditions and citizenship
requirements. The failure to obtain or retain food licenses or substantial
increases in the minimum wage could adversely affect operations. The Company
does not anticipate that the increases in the minimum wage will result in
material upward pressure on the Company's prevailing wage scale. The Company is
also subject to federal regulation and ceratin state laws which regulate the
offer and sale of franchises to their respective franchisees.
THE COMPANY
Rally's is one of the largest chains of double drive-thru restaurants
in the United States. At March 22, 1998, the Rally's system included
approximately 478 restaurants in 18 states, primarily in the Midwest and the
Sunbelt, comprised of 229 Company -owned and operated restaurants and 249
franchised restaurants, including 27 Company owned restaurants in Western
markets which are operated as Rally's restaurants by CKE under an operating
agreement which began in July 1996. Two additional restaurants covered by such
agreement have been converted to Carl's Jr. format and are not included in the
above store count. The Company's restaurants offer high quality fast food served
quickly and at everyday prices generally below the regular prices of the four
largest hamburger chains. The Company serves the drive-thru and take-out
segments of the quick-service restaurant market. The Company opened its first
restaurant in January 1985 and began offering franchises in November 1986. The
Company's executive offices are located at 600 Cleveland Street, Eighth Floor,
Clearwater, Florida 34615, and its telephone number is (813) 441-3500.
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<PAGE> 8
SELLING STOCKHOLDERS
All of the shares of Rally's Common Stock being offered hereby were
purchased in a private placement pursuant to the Exchange Agreement or were
issued upon conversion of the Series A Stock. Pursuant to the Exchange
Agreement, the Company is required to register the offer and sale of all shares
of Rally's Common Stock acquired pursuant to the Exchange Agreement, including
shares received upon conversion of the Series A Stock. See "Risk
Factors-Investment in Checkers Drive-In Restaurants, Inc."
The following table sets forth: (i) the names of the persons who
acquired shares of Rally's Common Stock pursuant to the Exchange Agreement; (ii)
the number of shares of Rally's Common Stock beneficially owned by each such
person as of May 11, 1998; (iii) the number of shares of Rally's Common Stock to
be received upon conversion of the Series A Stock; (iv) the number of shares of
Rally's Common Stock which may be sold by each such person pursuant hereto; and
(v) the number of shares of Rally's Common Stock to be owned, and the
corresponding percentage of the total number of shares of Rally's Common Stock
to be outstanding, assuming the sale of all of the shares of Rally's Common
Stock offered pursuant hereto.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP AFTER SALE
-------------------------------
SHARES SHARES TO BE
ISSUABLE OWNED
UPON ASSUMING PERCENTAGE OF
SHARES CONVERSION SHARES WHICH ALL OFFERED OUTSTANDING
BENEFICIALLY OF SERIES MAY BE SHARES ARE COMMON
SELLING STOCKHOLDER OWNED(1) A STOCK OFFERED(3) SOLD STOCK(4)
- ------------------- -------- ------- ---------- ---- ---------
(2)
<S> <C> <C> <C> <C> <C>
CKE Restaurants, Inc. 8,076,095(5) 2,861,900 5,659,980 5,278,015(5) 17.2%
Fidelity National Financial, 3,128,461(6) 377,100 745,773 2,759,788(6) 9.1%
Inc.
GIANT GROUP, LTD. 3,180,718 44,900 88,769 3,136,849 10.7%
David Gotterer (7) 518,068(8) 25,500 50,338 493,230(8) 1.7%
Burt Sugarman (9) 5,671(10) 25,500 50,338 850,833(10) 2.8%
Mary Hart Sugarman 266,686(11) 61,100 120,802 206,984(11) *
A J Sugarman 8,570 6,100 12,055 2,615 *
David Malcolm(12) 59,702 61,000 120,802 0 *
Terry Christensen (9) 395,392(13) 12,400 24,562 383,230(13) 1.3%
Al Sugarman 9,925 10,200 20,125 0 *
The Travelers Indemnity 2,432,974(14) 563,900 563,900 2,432,974(14) 8.1%
Group
William P. Foley II (15) 544,553(16) 101,800 201,353 445,000(16) 1.5%
Frank Willey(17) 49,776 50,900 100,676 0 *
</TABLE>
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<PAGE> 9
<TABLE>
<S> <C> <C> <C> <C> <C>
Carl Strunk(17) 14,156 14,400 28,556 0 *
Andrew Puzder (18) 229,725(19) 10,200 20,125 219,000(19) *
Patrick Stone(20) 9,925 10,200 20,125 0 *
William Imparato(17) 49,776 50,900 100,676 0 *
Daniel D. Lane(21) 39,850 40,700 80,550 0 *
Danny Lane 9,925 10,200 20,125 0 *
Cary H. Thompson(17) 9,925 10,200 20,125 0 *
Stephen C. Mahood(17) 19,851 20,400 40,251 0 *
Carl L. Karcher(21) 49,776 50,900 100,676 0 *
Carl N. Karcher 19,851 20,400 40,251 0 *
C. Howard Lester(21) 59,702 61,100 120,802 0 *
C. Thomas Thompson (22) 454,925(23) 10,200 20,125 445,000(23) 1.5%
Byron Allumbaugh(21) 19,851 20,400 40,251 0 *
Ernie Smith 9,925 10,200 20,125 0 *
Ron Maudsley 9,925 10,200 20,125 0 *
Paul DeFalco 9,975 13,700 23,675 0 *
19,693,654 4,566,600 8,476,036 16,653,518
</TABLE>
- ------------------------
* Represents less than 1% of class.
(1) For purposes of this table, a person or a group of persons is
deemed to have "beneficial ownership" as of a given date of any shares which
such person has the right to acquire within 60 days after such date. For
purposes of computing the percentage of outstanding shares held by each person
or group of persons named above on a given date, any shares which such person or
persons has the right to acquire within 60 days after such date are deemed to be
outstanding, but are not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person.
(2) The persons named above collectively hold an aggregate of 45,667
shares of the Company's Series A Stock issued pursuant to the Exchange
Agreement. The Series A Stock provides that it will be converted into Rally's
Common Stock (at a ratio of 1/100, subject to adjustment), if and only if such
conversion is approved by the Company's stockholders. It is anticipated that the
conversion of the Series A Stock will be presented to the Company's stockholders
for their consideration at the Annual Meeting of Stockholders scheduled for June
11, 1998.
(3) The column representing the "Shares Which May Be Offered" equals
the sum of the shares of Rally's Common Stock (i) acquired in December 1997
pursuant to the Exchange Agreement and (ii) which may be acquired upon
conversion of the Series A Stock.
(4) Based on 24,879,414 shares of Rally's Common Stock outstanding as
of May 11, 1998 plus 4,566,700 shares issuable upon conversion of the Series A
Stock. Shares of Rally's Common Stock subject to options or warrants exercisable
within 60 days ("Exercisable Securities") are deemed
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<PAGE> 10
outstanding for purposes of computing the percentage of class of the person or
entity holding such options
or warrants but are not deemed outstanding for computing the percentage of class
for any other person or entity.
(5) Includes 6,550,607 shares of Rally's Common Stock held directly
and 1,525,488 shares of Rally's Common Stock underlying Exercisable Securities.
(6) Includes 2,031,774 shares of Rally's Common Stock held directly
and 1,096,687 shares of Rally's Common Stock underlying Exercisable Securities.
(7) Director of Rally's and GIANT.
(8) Includes 486,615 shares of Rally's Common Stock underlying
Exercisable Securities, but excludes 22,500 shares underlying options held by
Mr. Gotterer, as to which shares he disclaims beneficial ownership since a
business partner is entitled to the beneficial ownership of such shares upon any
exercise of such options.
(9) Director of Rally's, GIANT and Checkers.
(10) Includes 850,833 shares of Rally's Common Stock underlying
Exercisable Securities. Excludes 3,180,718 shares owned by GIANT of which Mr.
Sugarman may be deemed to be a controlling person. Mr. Sugarman disclaims
beneficial ownership of the shares owned by GIANT. Also excludes shares of
Rally's Common Stock beneficially owned by AJ Sugarman and Mary Hart Sugarman,
Mr. Sugarman's minor child and spouse, respectively, as to which Mr. Sugarman
disclaims beneficial ownership. Mr. Sugarman is the Chairman of the Board,
President and Chief Executive Officer of GIANT and beneficially owns
approximately 55.2% of the outstanding common stock of GIANT.
(11) Includes 104,692 shares of Rally's Common Stock underlying
Exercisable Securities.
(12) Director of GIANT.
(13) Includes 380,615 shares of Rally's Common Stock underlying
Exercisable Securities.
(14) Includes 1,016,787 shares of Rally's Common Stock underlying
Exercisable Securities.
(15) Chairman of the Board of Rally's, Checkers, CKE and Fidelity;
Chief Executive Officer of CKE and Fidelity.
(16) Includes 445,000 shares of Rally's Common Stock underlying
Exercisable Securities.
(17) Executive Officer of Fidelity.
(18) Director of Rally's; Executive Officer of Fidelity.
(19) Includes 219,000 shares of Rally's Common Stock underlying
Exercisable Securities.
(20) Executive Officer of Fidelity.
(21) Director of CKE.
-9-
<PAGE> 11
(22) Director of Rally's and Checkers; Executive Officer of CKE.
(23) Includes 445,000 shares of Rally's Common Stock underlying
Exercisable Securities.
CERTAIN LEGAL MATTERS
Certain legal matters in connection with the validity of the shares of
Common Stock to which this Prospectus relates will be passed upon for the
Company by Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP, Los
Angeles, California. Terry N. Christensen, a director of the Company, is a
partner of Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP. See
"Selling Stockholders" for information with respect to Rally's Common Stock
beneficially owned by Mr. Christensen.
EXPERTS
The financial statements and schedule incorporated by reference in this
Prospectus and elsewhere in this Registration Statement, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
periodic reports, proxy statements and other information may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at its Chicago Regional
Office at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and at
its New York Regional Office at 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such materials can be obtained upon written request from
the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. The
Commission also maintains a site on the World Wide Web at http://www.sec.gov
that contains reports, proxy statements and other information regarding
registrants that file electronically with the Commission. The Company's Common
Stock is quoted on the NMS, and reports, proxy statements and other information
concerning the Company may be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
This Prospectus constitutes part of a Registration Statement on Form
S-3 (including all amendments and exhibits, the "Registration Statement") filed
by the Company with the Commission under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus does not contain all of the information
set forth in the Registration Statement, certain items of which are contained in
schedules and exhibits to the Registration Statement as permitted by the rules
and regulations of the Commission. Reference is hereby made to the Registration
Statement and the exhibits thereto for further information with respect to the
Company. Any statements contained herein concerning the provisions of any
contract, agreement or other document are not necessarily complete, and in each
instance, reference is made to the copy of such contract, agreement or other
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission. For further information, reference is made to the
Registration Statement, including exhibits and schedules thereto. The
Registration Statement can be inspected and copied at the Public
-10-
<PAGE> 12
Reference Room of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated herein and specifically made a part hereof by this
reference: (i) the Company's Annual Report on Form 10-K for the fiscal year
ended December 28, 1997, as amended (the "1997 10-K"); (ii) the Company's
Quarterly Report on Form 10-Q for the period ended March 22, 1998; (iii) the
Company's Proxy Statement dated May 15, 1998; and (iv) the description of
Rally's Common Stock which is contained in the Company's Registration Statement
on Form 8-A dated September 19, 1989. In addition, all documents filed by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering made hereby shall be deemed to be incorporated by reference into this
Prospectus and to be part hereof from the respective dates of filing of such
documents with the Commission. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. The Company will provide without charge
to each person to whom this Prospectus is delivered, upon written or oral
request, a copy of any or all of the documents that are incorporated herein by
reference, other than exhibits to such documents not specifically incorporated
by reference therein. Such requests should be addressed to the Company's
principal office: Rally's Hamburgers, Inc., 600 Cleveland Street, Eighth Floor,
Clearwater, Florida 34615, Attention: James T. Holder, Esq., telephone (813)
441-3500.
-11-
<PAGE> 13
8,476,036 SHARES
COMMON STOCK
TABLE OF CONTENTS
Page
Risk Factors............................ 2
The Company............................. 6
Selling Stockholders.................... 7 RALLY'S
Certain Legal Matters................... 8 HAMBURGERS, INC.
Experts................................. 8
Available Information................... 8
Documents Incorporated By Reference..... 9
PROSPECTUS
JUNE 13, 1998
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is a statement of estimated fees and expenses payable
or reimbursable by the Registrant in connection with the offer and sale of the
Common Stock, subject to future contingencies.
<TABLE>
<S> <C>
SEC registration fee ........................................ $ 5,313
Legal fees .................................................. 25,000
Accountants' fees ........................................... 1,000
Blue sky fees ............................................... 5,000
Miscellaneous ............................................... 15,000
----------
TOTAL $ 51,313
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") provides
that a Delaware corporation may indemnify any person against expenses,
judgments, fines and amounts paid in settlements actually and reasonably
incurred by any such person in connection with a threatened, pending or
completed action, suit or proceeding in which he is involved by reason of the
fact that he is or was a director, officer, employee or agent of such
corporation, provided that (i) he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and (ii) with respect to any criminal action or proceeding, he had
no reasonable cause to believe his conduct was unlawful. If the action or suit
is by or in the name of the corporation, the corporation may indemnify any such
person against expenses actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification may be made in
respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the corporation, unless and only to the extent that the Delaware Court
of Chancery or the court in which the action or suit is brought determines upon
application that, despite the adjudication of liability but in light of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expense as the court deems proper.
Section 51 of the Company's Bylaws provides for indemnification of
persons to the extent permitted by the DGCL.
In accordance with Section 102(b)(7) of the DGCL, the Company's
Certificate of Incorporation, as amended, limits the personal liability of its
directors for violations of their fiduciary duty. The Certificate of
Incorporation eliminates each director's liability to the Registrant or its
stockholders for monetary damages except (i) for any breach of the director's
duty of loyalty to the Registrant or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under the section of the Delaware law providing for
liability of directors for unlawful payment of dividends or unlawful stock
purchases or redemptions, or (iv) for any transaction from which a director
derived an improper personal benefit. The effect of this provision is to
eliminate the personal liability of directors for monetary damages for actions
involving a breach of their fiduciary duty of care, including any such actions
involving gross negligence. This provision will not, however, limit in any way
the liability of directors for violations of the Federal securities laws.
II-1
<PAGE> 15
Rally's carries Directors' and Officers' liability insurance, with
coverage of $ 40 million, which is maintained in effect on a yearly basis,
expiring on April 1, 1999.
The above discussion of the Company's Certificate of Incorporation
and Bylaws and Sections 102(b)(7) and 145 of the DGCL is not intended to be
exhaustive and is qualified in its entirety by such Certificate of
Incorporation, Bylaws and statues.
ITEM 16. EXHIBITS
(a) The following is a list of exhibits filed herewith as a part of
this Registration Statement:
<TABLE>
<CAPTION>
Exhibit Number Description of Document
-------------- -----------------------
<S> <C>
* 5 Opinion of Christensen, Miller, Fink, Jacobs, Glaser, Weil &
Shapiro, LLP
23.1 Consent of Arthur Andersen LLP
*23.2 Consent of Christensen, Miller, Fink, Jacobs, Glaser, Weil &
Shapiro, LLP (see Exhibit 5)
24 Power of Attorney (see page II-4)
</TABLE>
------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section 10(a)
(3) of the Securities Act of 1933, as amended (the "Act");
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not
exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the
Securities and Exchange Commission (the "Commission")
pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement.
II-2
<PAGE> 16
provided, however, that the undertakings set forth in paragraphs (a)(1)(i) and
(a)(1)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the Registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered hereby which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes, that, for purposes
of determining any liability under the Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(h) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Clearwater, State of Florida, on the 22d day of May,
1998.
RALLY'S HAMBURGERS, INC.
By:/s/ JAMES J. GILLESPIE
-------------------------------------
James J. Gillespie
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of Rally's Hamburgers,
Inc. do hereby constitute and appoint James J. Gillespie, Joseph N. Stein and
James T. Holder or any of them, our true and lawful attorneys and agents, to do
any and all acts and things in our name and behalf in our capacities as
directors and officers and to execute any and all instruments for us and in our
names in the capacities indicated below, which said attorneys and agents, or
either of them, may deem necessary or advisable to enable said corporation to
comply with the Securities Act of 1933, as amended, and any rules, regulations,
and requirements of the Securities and Exchange Commission, in connection with
this Registration Statement, including specifically, but without limitation,
power and authority to sign for us or any of us in our names and in the
capacities indicated below, any and all amendments (including post-effective
amendments) to this Registration Statement, or any related registration
statement that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, as amended; and we do hereby ratify and confirm all that
the said attorneys and agents, or either of them, shall do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/JAMES J. GILLESPIE President, Chief Executive Officer
- --------------------- and Director May 22, 1998
James J. Gillespie (Principal Executive Officer)
Senior Vice President, Chief
/s/JOSEPH N. STEIN Administrative Officer and Chief May 22, 1998
- --------------------- Financial Officer
Joseph N. Stein (Principal Financial Officer)
</TABLE>
II-4
<PAGE> 18
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/WILLIAM P. FOLEY, II Director May 22, 1998
- -----------------------
William P. Foley, II
/s/TERRY N. CHRISTENSEN Director May 22, 1998
- -----------------------
Terry N. Christensen
/s/WILLIE D. DAVIS Director May 22, 1998
- -----------------------
Willie D. Davis
- ------------------------ Director , 1998
David Gotterer
/s/RONALD B. MAGGARD Director May 22, 1998
- ------------------------
Ronald B. Maggard
/s/ANDREW PUZDER Director May 22, 1998
- ------------------------
Andrew Puzder
/s/BURT SUGARMAN Director May 22, 1998
- ------------------------
Burt Sugarman
/s/C. THOMAS THOMPSON Director May 22, 1998
- -------------------------
C. Thomas Thompson
</TABLE>
II-5
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
February 27, 1998 included in Rally's Hamburgers, Inc.'s Form 10-K for the year
ended December 28, 1997 and to all references to our Firm included in or made a
part of this registration statement.
Arthur Andersen LLP
Louisville, KY
June 3, 1998
