010615 Checkers Taking Over 21 West Coast Rally'sJune 11, 2001Clearwater, FL - Checkers Drive-In Restaurants, Inc. reported that beginning July 3, 2001 it will take over operations of 18 restaurants in California and 3 restaurants in Phoenix, Arizona, from CKE Restaurants, Inc. CKE has been operating them pursuant to an agreement entered into on May 22, 1996, with Rally's Hamburgers, Inc., during Rally's financial difficulties in the mid- 1990s. Rally's Hamburgers, Inc. merged with Checkers Drive-In Restaurants, Inc. on August 9, 1999. Under the operating agreement with CKE Restaurants, Inc., the Company retained ownership of the restaurants and receives a percentage of gross revenues from CKE, which is offset by the ownership costs related to these units. These costs consist primarily of non-cash expenses of depreciation and amortization. The change in control will shift the restaurants from franchise operations to company operations, and as such, all transactions will be accounted for in the same manner. The conversion of these 21 restaurants follows Checkers' announcement last month that it is purchasing 8 franchised Checkers restaurants in the Atlanta area. Daniel Dorsch, President and Chief Executive Officer, commented, “Taking over operations and effective control of our West Coast restaurants from CKE continues along the plan to completely separate the two companies. Our people have been working with the CKE group on the transition and we are pleased with the operations. These restaurants are up 4.5% in comp sales for the first quarter of 2001.”
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