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RALLY'S REPORTS FOURTH QUARTER AND YEAR END RESULTS

LOUISVILLE, Ky., March 8 /PRNewswire/ -- Rally's Hamburgers, Inc. (Nasdaq: RLLY) announced a loss of $24.9 million or $1.59 per share for the fourth quarter and a loss of $46.9 million or $3.00 per share for the year of 1995. The Company recorded non-cash charges totaling $18.1 million during the fourth quarter and $31.0 million for the year. The fourth quarter non-cash charges include $13.7 million for the early adoption of Statement of Financial Accounting Standards No. 121 (SFAS 121) and $4.4 million primarily for the planned disposal of certain excess properties. Exclusive of these charges, the Company's 1995 fourth quarter loss would have been $6.7 million or $.43 per share and the loss for the year would have been $15.9 million or $1.02 per share.

The implementation of SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," has no cash impact. This new accounting requirement changes the way a company must identify and measure impairment for long-lived assets. The new standard requires companies to test at a lower level of the business for such impairment, where circumstances indicate that impairment may exist.

Total revenues increased 1% in the fourth quarter to $46.7 million from $46.1 million in the comparable period of 1994. Company-owned same store sales declined by 1% during the fourth quarter. Systemwide same store sales declined by 3% during the quarter. For the year, total revenues increased 1% to $188.9 million from $186.3 million in 1994. Company-owned same store sales declined by 4% during the year. Systemwide same store sales declined by 5% for the year. A chart outlining same store sales trends since the first quarter of 1995 has been included in this release.

Michael E. Foss, Senior Vice President and Chief Financial Officer stated, "In the third quarter earnings release we articulated the four basic steps the Company is taking to stem the losses it has been incurring and return the Company to profitability. We are making progress down this path: First, we have attacked the decline in same store sales with new marketing, promotional and advertising strategies. Our actions to date have resulted in Company-owned same store sales being up by approximately 3.5% year over year through the first two months of 1996. Rally's newest advertising campaign focusing on the taste of its products, which is targeted directly toward our core user, was introduced in most markets during the last week of February. Second, as of March 7, 1996 the Company has closed 16 under performing restaurants that had been previously targeted for closure and we have divested 15 surplus properties which have generated $2.4 million in cash that was received during the first quarter of 1996. Third, the Company has reorganized itself around 6 regional divisions. This decentralization will allow decision making in the Company much closer to the guests we serve. Fourth, we instituted significant reductions in both our field and corporate overhead structures late in the fourth quarter."

During January 1996, two significant announcements were made. First, the Company announced that its largest shareholder, GIANT GROUP, LTD. was going to initiate an exchange offer that should result in GIANT significantly increasing its percentage ownership of the Company from its current level of 48%. Additionally, the Company bought back $22 million face value of its outstanding 9 7/8% Senior Notes. These notes were purchased for a combination of $11.1 million in cash and $4.1 million in a short term note. As a result of this repurchase, $15.2 million of the Senior Notes have been classified as a current liability in the year-end balance sheet. This repurchase will save the Company approximately $2 million annually in interest expense.

The Company was pleased to note that the February 1, 1996 edition of the well known Restaurants & Institutions magazine reported a first place ranking for Rally's, in the hamburger category, in overall value, significantly beating out its three largest competitors: McDonald's, Burger King and Wendy's.

The Company ended the fourth quarter with approximately $14.4 million in cash and investments. Asset sales provided $.6 million in cash during the quarter. Total debt was approximately $91.8 million at the end of the fourth quarter, down $.3 million from the end of the third quarter. Total debt as of the end of February, 1996 was reduced to approximately $75.3 million due principally to the repurchase of the Senior Notes in January. The face value amount of the Senior Notes that remained outstanding as of the end of February was approximately $63 million.

The Company opened no units and closed 16 units during the fourth quarter. Franchise operators opened 4 units and closed 5 units during the quarter. As of March 7, 1996 there were 481 Rally's Hamburgers restaurants operating in 19 states.
 Same Store Sales - Year to Year % Change
 1995 1996
 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Jan/Feb
 Western Region -20% -20% -14% -1% 9%
 Northern Region -4% 3% 7% 1% -2%
 Eastern Region -11% -9% -5% -1% 5%
 East Central Region -1% 1% -1% -3% 6%
 Southern Region -13% -8% -10% -5% 1%
 West Central Region -4% 3% 1% 1% 4%
 Total Company Stores -8.1% -3.3% -2.5% -1.1% 3.5%
 Franchisee Stores -10.0% -5.6% -3.1% -4.5% -0.6%


Notes: 1. New advertising campaign instituted in most markets
 during the last week of February, 1996.
 2. Closed stores are removed from same store computations at
 date of closure.
 RALLY'S HAMBURGERS, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except shares and per share amounts)
 Three Months Ended Twelve Months Ended
 Dec. 31, Jan. 1, Dec. 31, Jan. 1,
 1995 1995 1995 1995


REVENUES
 Restaurant sales 45,267 44,242 181,778 178,476
 Royalty fees 1,438 1,743 6,855 7,294
 Franchise fees (30) 90 106 328
 Area development fees 20 15 120 220
 Total revenues 46,695 46,090 188,859 186,318


COSTS AND EXPENSES

Restaurant costs
 of sales 17,196 15,430 64,813 62,518


Restaurant operating expenses

exclusive of depreciation

and amortization and other

operating expenses shown
 separately below 21,929 19,232 83,671 77,292


General & Administrative
 expenses 5,106 4,726 19,606 18,848


Advertising and promotion
 expenses 3,529 2,817 13,188 10,898


Depreciation and
 amortization 2,708 3,420 13,006 14,139


Provision for restructuring

program, other restaurant

closures, and
 other charges 18,106 11,384 31,045 17,259


Total costs
 and expenses 68,574 57,009 225,329 200,954
 Loss from operations (21,879) (10,919) (36,470) (14,636)


OTHER INCOME (EXPENSE)
 Interest expense (2,654) (2,395) (10,682) (9,742)
 Interest income 57 130 538 477
 Other 46 (403) 234 (354)
 Total other (2,551) (2,668) (9,910) (9,619)


Loss before
 income taxes (24,430) (13,587) (46,380) (24,255)


PROVISION (BENEFIT) FOR
 INCOME TAXES 420 (1,602) 539 (4,982)
 Net loss (24,850) (11,985) (46,919) (19,273)


Loss per common and
 common equivalent share (1.59) (0.79) (3.00) (1.42)


Weighted average
 shares outstanding 15,649 15,095 15,620 13,564
 ASSETS December 31, January 1,
 1995 1995


Current assets:
 Cash and cash equivalents $9,494 $2,707
 Investments 4,933 4,085


Royalties receivable, including

$227 and $483 from related parties

at January 1, 1995 and December 31,

1995, respectively, net of a reserve

for doubtful accounts of $402 and

$922 at January 1, 1995 and December 31,
 1995, respectively 818 1,016


Accounts and other receivables, net

of a reserve for doubtful accounts

of $176 and $453 at January 1, 1995
 and December 31, 1995, respectively 2,131 3,893
 Inventory, at lower of cost or market 1,056 943


Current portion of notes receivable,

including $108 and $10 from related

parties at January 1, 1995 and

December 31, 1995, respectively,

net of a reserve for doubtful accounts
 of $109 at December 31, 1995 113 250


Prepaid expenses and other current
 assets 1,131 1,382
 Assets held for sale 2,506 ---
 Total current assets 22,182 14,276
 Assets held for sale 3,517 10,930


Net property and equipment, at
 historical cost 78,683 113,009


Notes receivable, less current

portion, including $197 and $165

from related parties at January 1,

1995 and December 31, 1995,

respectively, net of a reserve for

doubtful accounts of $433 at
 December 31, 1995 676 441


Intangible and other assets, less

accumulated amortization of $4,743

and $6,888 at January 1, 1995 and
 December 31, 1995, respectively 32,334 30,760
 Total assets $137,392 $169,416


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Accounts payable $8,773 $8,263
 Accrued liabilities 15,959 10,319


Current maturities of long-term debt
 and obligations under capital leases 17,544 2,494
 Total current liabilities 42,276 21,076


Senior notes, net of discount of

$897 and $768 at January 1, 1995
 and December 31, 1995, respectively 69,034 84,103
 Long-term debt, less current maturities 5,749 2,105


Obligations under capital leases,
 less current maturities 5,631 5,439
 Other liabilities 8,030 3,206
 Total liabilities 130,720 115,929


Shareholders' equity:

Common stock, $.10 par value,

50,000,000 shares authorized,

15,837,000 and 15,927,000 shares

issued at January 1, 1995 and
 December 31, 1995, respectively 1,593 1,584
 Additional paid-in capital 60,804 60,610


Less: Treasury shares,

239,000 and 273,000 shares

at January 1, 1995 and
 December 31, 1995, respectively (2,108) (2,009)
 Retained deficit (53,617) (6,698)
 Total shareholders' equity 6,672 53,487


Total liabilities
 and shareholders' equity $137,392 $169,416
 -0- 3/8/96


/CONTACT: Michael E. Foss, Senior Vice President and Chief Financial Officer of Rally's Hamburgers, 502-254-8916/

(RLLY)

CO: Rally's Hamburgers Inc. ST: Kentucky IN: RST SU: ERN

SK-DM -- LAF018 -- 1671 03/08/96 15:09 EST
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