<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996)
For the fiscal year ended December 29, 1996
Commission file number 0-18629
O'CHARLEY'S INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 62-1192475
---------------------------- ----------------------
(State of other jurisdiction (I.R.S. Employer
of incorporation or Identification Number)
jurisdiction)
3038 Sidco Drive
Nashville, Tennessee 37204
---------------------------- ----------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (615) 256-8500
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, no
par value
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the registrant on March 14, 1997 was approximately $83,895,045. For
purposes of this calculation, shares held by non-affiliates excludes only those
shares beneficially owned by officers, directors and shareholders beneficially
owning 10% or more of the outstanding Common Stock. The market value
calculation was determined using the closing sale price of the registrant's
common stock on March 14, 1997 ($13.00) as reported on The Nasdaq Stock
Market's National Market.
Shares of common stock, no par value, outstanding on March 14, 1997,
were 7,872,146.
<PAGE> 2
O'CHARLEY'S INC.
Form 10-K/A
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Part I
Item 1: Business - Omitted
Item 2: Properties - Omitted
Item 3: Legal Proceedings - Omitted
Item 4: Submission of Matters to a Vote of Shareholders -
Omitted
Part II
Item 5: Market for the Registrant's Common Stock and Related
Stockholder Matters - Omitted
Item 6: Selected Financial Data............................................ 5
Item 7: Management's Discussion and Analysis of
Financial Conditions and Results of
Operations - Omitted
Item 8: Financial Statements and Supplementary Data........................ 7
Item 9: Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure -
Omitted
Part III
Item 10: Directors and Executive Officers of the Registrant -
Omitted
Item 11: Executive Compensation - Omitted
Item 12: Security Ownership of Certain Beneficial
Owners and Management - Omitted
Item 13: Certain Relationships and Related Transactions -
Omitted
Part IV
Item 14: Exhibits, Financial Statement Schedules and Reports
on Form 8-K................................................... 25
</TABLE>
<PAGE> 3
O'CHARLEY'S INC.
PART I
ITEM 1. BUSINESS - Omitted from this Form 10-K/A
2
<PAGE> 4
ITEM 2. PROPERTIES - Omitted from this Form 10-K/A
ITEM 3. LEGAL PROCEEDINGS - Omitted from this Form 10-K/A
3
<PAGE> 5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS - Omitted from this
Form 10-K/A
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS - Omitted from this Form 10-K/A
4
<PAGE> 6
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth the selected financial data for each of
the years in the five-year period ended December 29, 1996. Each fiscal year has
been restated to reflect the combined operations of the Company and Shoex as
their merger was accounted for as a pooling-of-interests.
<TABLE>
<CAPTION>
December 29, December 31, December 25, December 26, December 27,
(In Thousands, Except Per Share Data) 1996 1995 1994 1993 1992
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the Year Ended
RESULTS OF OPERATIONS
Revenues $164,530 $147,557 $122,697 $95,586 $82,542
Restaurant Operating Margin 29,320 25,016 19,904 14,416 12,193
Advertising, General and
Administrative Expenses 9,370 8,187 7,717 5,894 5,116
Depreciation and Amortization 8,141 6,164 4,711 3,437 3,479
Litigation 6,200 1,000 -- -- --
Income From Operations 6,838 11,138 8,051 5,582 4,067
Asset Revaluation 5,110 -- -- -- --
Earnings (Loss) Before
Income Taxes (1,944) 16,662 7,465 5,085 3,514
Income Tax Expense (Benefit) 1 (797) 6,071 2,492 1,867 1,277
Net Earnings (Loss) 1 (1,147) 10,591 4,973 3,218 2,237
------------------------------------------------------------------
PER SHARE DATA
Net Earnings (Loss) 1 $ (0.15) $1.26 $0.61 $0.42 $0.31
Weighted Average Common
Shares Outstanding 7,802 8,438 8,137 7,689 7,279
-----------------------------------------------------------------
At Year End
FINANCIAL POSITION
Cash $1,616 $2,576 $1,727 $1,180 $1,049
Working Capital (10,864) (7,344) (3,050) (3,327) (1,946)
Property and Equipment, net 103,281 81,512 64,609 50,219 37,247
Total Assets 117,159 93,351 76,082 57,971 43,831
Long-Term Debt 29,822 11,990 15,140 8,987 3,904
Capitalized Lease Obligations 11,797 9,272 5,744 4,697 3,651
Shareholders' Equity 50,926 51,787 40,804 33,204 27,897
------------------------------------------------------------------
</TABLE>
1 The income tax expense, net earnings and per share data for fiscal years
1995, 1994, 1993 and 1992 represent pro forma amounts (see Note 2 and Note 10
in Notes to Financial Statements).
See notes to financial statements.
5
<PAGE> 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Omitted from this Form 10-K/A.
6
<PAGE> 8
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS PAGE
- ----------------------------- ----
<S> <C>
Independent Auditors' Report 8
Balance Sheets of O'Charley's Inc. as of December 29, 1996
and December 31, 1995 9
Statements of Operations of O'Charley's Inc. for the years ended
December 29, 1996, December 31, 1995, and December 25, 1994 10
Statements of Shareholders' Equity of O'Charley's Inc. for the
years ended December 29, 1996, December 31, 1995,
and December 25, 1994 11
Statements of Cash Flows of O'Charley's Inc. for the years ended
December 29, 1996, December 31, 1995, and December 25, 1994 12
Notes to Financial Statements 13
</TABLE>
7
<PAGE> 9
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
O'Charley's Inc.
Nashville, Tennessee:
We have audited the balance sheets of O'Charley's Inc. as of December 29, 1996,
and December 31, 1995, and the related statements of operations, shareholders'
equity, and cash flows for each of the years in the three-year period ended
December 29, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of O'Charley's Inc. as of
December 29, 1996, and December 31, 1995, and the results of its operations and
its cash flows for each of the years in the three-year period ended December
29, 1996, in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Nashville, Tennessee
February 6, 1997
8
<PAGE> 10
BALANCE SHEETS
<TABLE>
<CAPTION>
December 29, December 31,
(Dollars in Thousands) 1996 1995
-----------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 1,616 $ 2,576
Accounts receivable, less allowance for doubtful
accounts of $58 in 1996 and $92 in 1995 1,546 1,244
Due from related parties -- 108
Inventories 4,505 3,780
Preopening costs 1,097 1,045
Deferred income taxes 2,334 839
Other current assets 1,357 971
----------------------------
Total current assets 12,455 10,563
PROPERTY AND EQUIPMENT, NET 103,281 81,512
OTHER ASSETS 1,423 1,276
$117,159 $93,351
-----------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 5,022 $ 4,423
Accrued payroll and related expenses 3,365 3,435
Accrued expenses 9,162 4,650
Federal, state and local taxes 2,461 2,606
Current portion of long-term debt and capitalized leases 3,309 2,793
----------------------------
Total current liabilities 23,319 17,907
DEFERRED INCOME TAXES 1,295 2,395
LONG-TERM DEBT 29,822 11,990
CAPITALIZED LEASE OBLIGATIONS 11,797 9,272
SHAREHOLDERS' EQUITY:
Common stock--No par value; authorized, 50,000,000
shares; issued and outstanding, 7,854,369 in 1996 and
7,770,964 in 1995 29,592 28,991
Additional paid-in capital 652 967
Retained earnings 20,682 21,829
-----------------------------
Total shareholders' equity 50,926 51,787
-----------------------------
$117,159 $93,351
-----------------------------
</TABLE>
See notes to financial statements.
9
<PAGE> 11
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended
----------------------------------------------
December 29, December 31, December 25,
(In Thousands, Except Per Share Data) 1996 1995 1994
----------------------------------------------
<S> <C> <C> <C>
REVENUES:
Restaurant sales $162,235 $138,098 $112,183
Commissary sales 2,264 9,429 10,483
Franchise revenue 31 30 31
------------------------------------------
164,530 147,557 122,697
COSTS AND EXPENSES:
Cost of restaurant sales:
Cost of food, beverage and supplies 58,184 50,687 41,356
Payroll and benefits 50,227 41,511 33,641
Restaurant operating costs 24,504 20,884 17,282
Cost of commissary sales 2,156 8,986 9,939
Advertising, general and administrative expenses 9,370 8,187 7,717
Depreciation and amortization 8,141 6,164 4,711
Asset revaluation 5,110 -- --
------------------------------------------
157,692 136,419 114,646
------------------------------------------
INCOME FROM OPERATIONS 6,838 11,138 8,051
OTHER (INCOME) EXPENSE:
Interest expense, net 2,588 1,920 1,290
Litigation 6,200 1,000 --
Other, net (6) (8,444) (704)
------------------------------------------
8,782 (5,524) 586
------------------------------------------
EARNINGS (LOSS) BEFORE INCOME TAXES (1,944) 16,662 7,465
INCOME TAX EXPENSE (BENEFIT) (797) 5,785 2,236
------------------------------------------
NET EARNINGS (LOSS) $(1,147) $10,877 $5,229
------------------------------------------
PRO FORMA DATA:
Earnings before income taxes as reported $16,662 $7,465
Pro forma income tax expense 6,071 2,492
------------------------
Pro forma net earnings $10,591 $4,973
------------------------
EARNINGS (LOSS) PER COMMON SHARE 1 $(0.15) $1.26 $0.61
------------------------------------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 7,802 8,438 8,137
------------------------------------------
</TABLE>
1 Earnings per common share for 1995 and 1994 represent pro forma amounts (see
Note 2 in Notes to Financial Statements).
See notes to financial statements.
10
<PAGE> 12
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional
----------------- Paid-in Retained
(In Thousands) Shares Amount Capital Earnings Total
---------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 26, 1993, as originally reported 6,545 $25,656 $0 $7,300 $32,956
Adjustment to reflect the merger with
Shoex, Inc. on January 5, 1996 667 -- 248 -- 248
---------------------------------------------------------
Balance, December 26, 1993, as adjusted 7,212 25,656 248 7,300 33,204
1994 Net earnings -- -- 768 4,461 5,229
Cash distribution to Shoex, Inc. shareholders -- -- (440) -- (440)
Exercise of employee stock options including
tax benefits 468 2,629 -- -- 2,629
Shares issued under CHUX Ownership Plan 19 182 -- -- 182
---------------------------------------------------------
Balance, December 25, 1994 7,699 28,467 576 11,761 40,804
1995 Net earnings -- -- 809 10,068 10,877
Cash distribution to Shoex, Inc. shareholders -- -- (418) -- (418)
Exercise of employee stock options including
tax benefits 55 320 -- -- 320
Shares issued under CHUX Ownership Plan 17 204 -- -- 204
---------------------------------------------------------
Balance, December 31, 1995 7,771 28,991 967 21,829 51,787
1996 Net loss -- -- -- (1,147) (1,147)
Cash distribution to Shoex, Inc. shareholders -- -- (315) -- (315)
Exercise of employee stock options including
tax benefits 65 446 -- -- 446
Shares issued under CHUX Ownership Plan 18 155 -- -- 155
---------------------------------------------------------
Balance, December 29, 1996 7,854 $29,592 $652 $20,682 $50,926
---------------------------------------------------------
</TABLE>
See notes to financial statements.
11
<PAGE> 13
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------
December 29, December 31, December 25,
(In Thousands) 1996 1995 1994
--------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $(1,147) $10,877 $5,229
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 5,982 4,875 3,876
Amortization of preopening costs 2,159 1,289 835
Deferred income taxes (2,595) 936 (216)
Gain on sale of assets (157) (7,448) --
Asset revaluation 5,110 -- --
Changes in assets and liabilities:
Accounts receivable (302) (84) (464)
Due from related parties 108 281 (172)
Inventories (725) 699 (1,446)
Additions to preopening costs (2,211) (1,970) (794)
Other current assets (386) (120) (356)
Accounts payable 599 981 705
Accrued payroll and other accrued expenses 4,297 2,241 2,041
---------------------------------------
Net cash provided by operating activities 10,732 12,557 9,238
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (27,744) (20,439) (15,364)
Proceeds from sale of property and equipment 1,341 6,100 48
Proceeds from sale of unconsolidated partnership -- 7,894 --
Other, net (516) (85) (360)
---------------------------------------
Net cash used by investing activities (26,919) (6,530) (15,676)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 18,503 6,000 13,300
Payments on long-term debt and capitalized
lease obligations (3,563) (11,284) (8,943)
Distribution to shareholders of acquired entity (315) (418) (440)
Exercise of employee incentive stock options 602 524 2,811
---------------------------------------
Net cash provided (used) by financing activities 15,227 (5,178) 6,728
---------------------------------------
(Decrease) Increase in Cash (960) 849 290
Cash at Beginning of the Period 2,576 1,727 1,437
---------------------------------------
Cash at End of the Period $1,616 $2,576 $1,727
---------------------------------------
</TABLE>
See notes to financial statements
12
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
O'CHARLEY'S INC. (the "Company") owns, operates and franchises 70 (at December
29, 1996) full-service restaurant facilities in various cities in 10
southeastern and midwestern states under the trade name of "O'Charley's." The
financial statements include the accounts of the Company and its wholly owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated. The Company's fiscal year ends on the last Sunday in December.
While fiscal year 1995 was comprised of 53 weeks, fiscal years 1996 and 1994
were comprised of 52 weeks.
FINANCIAL STATEMENTS and these accompanying notes have been restated to reflect
the combined operations of the Company and Shoex, Inc., a merger accounted for
as a pooling-of-interests (see also Note 2).
INVENTORIES are valued at the lower of cost (first-in, first-out method) or
market and consist primarily of food, beverages and supplies.
PREOPENING COSTS represent costs incurred prior to a restaurant opening. These
costs are capitalized and amortized over a 12-month period commencing the date
the restaurant opens.
PROPERTY AND EQUIPMENT are stated at cost and depreciated on a straight-line
method over the following estimated useful lives: buildings and
improvements--30 years; furniture, fixtures and equipment--3 to 10 years.
Leasehold improvements are amortized over the lesser of the asset's estimated
useful life or the lease term. Equipment under capitalized leases is amortized
to its expected value to the Company at the end of the lease term. Property
leased to others includes land, buildings and improvements which are
depreciated over the Company's standard estimated useful lives for these
assets. Gains or losses are recognized upon the disposal of property and
equipment, and the asset and related accumulated depreciation and amortization
are removed from the accounts. Maintenance, repairs and betterments which do
not enhance the value of or increase the life of the assets are charged to
costs and expenses as incurred.
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED, which is included in
other assets, is amortized over 20 years using the straight-line method. The
Company periodically reviews the value of these assets to assess recoverability
and impairment, and impairment would be recognized in the statement of
operations if a permanent impairment was determined to have occurred.
ADVERTISING COSTS. The Company generally expenses advertising costs as incurred
except for certain creative and development production costs which are
amortized over its expected period of future benefits.
DEFERRED REVENUE, which is included in accrued expenses, includes deferred gift
certificate revenue. The Company records a deferred liability at the time
certificates are sold at an amount equal to the anticipated redemption value.
The deferred liability is reduced when gift certificates are redeemed; and
accordingly, at that time, the Company records restaurant sales.
INCOME TAXES are accounted for in accordance with the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between financial statement carrying
amounts of existing assets and liabilities and their respective tax basis.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the statement
of earnings in the period that includes the enactment date.
STOCK OPTION PLAN. Prior to January 1, 1996, the Company accounted for its
stock option plans in accordance with the provisions of Accounting Principles
Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations. As such, the compensation expense would be recorded on
the date of grant only if the current market price of the underlying stock
exceeded the exercise price. On January 1, 1996, the
13
<PAGE> 15
Company adopted Statement of Financial Accounting Standards No. 123(FAS 123),
Accounting for Stock-based Compensation, which permits entities to recognize as
expense over the vesting period the fair value of all stock-based awards on the
date of the grant. Alternatively, FAS 123 also allows entities to continue to
apply the provisions of APB Opinion No. 25 and provide pro forma net earnings
and pro forma earnings per share disclosures for employee stock option grants
made in 1995 and future years as if the fair-value-based method defined in FAS
123 had been applied. The Company has elected to continue to apply the
provisions of APB Opinion No. 25 and provide the pro forma disclosure
provisions of FAS 123.
FRANCHISE REVENUES. Initial franchise fees are recognized when all material
services have been substantially performed by the Company and the restaurant
has opened for business. Franchise royalties, which are based on a percentage
of monthly sales, are recognized as income on the accrual basis. Costs
associated with franchise operations are expensed as incurred.
PER SHARE DATA has been computed on the basis of the weighted average number of
shares outstanding, including common stock equivalents, which consist of stock
options, except for any reporting period which reflects a net loss, as the
inclusion of common stock equivalents in such a period would be anti-dilutive.
In determining the number of dilutive common stock equivalents, the Company
includes average common shares attributable to dilutive stock options using the
treasury stock method. Fully diluted earnings per share is not presented since
it approximates earnings per common share.
USE OF ESTIMATES. Management of the Company has made certain estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from these estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS. The Company has adopted Statement of
Financial Accounting Standards No. 107, Disclosures about Fair Value of
Financial Instruments (FAS 107), which requires disclosure of the fair values
of most on-and-off balance sheet financial instruments for which it is
practicable to estimate that value. The scope of FAS 107 excludes certain
financial instruments such as trade receivables and payables when the carrying
value approximates the fair value, employee benefit obligations, lease
contracts, and all nonfinancial instruments such as land, buildings, and
equipment. The fair values of the financial instruments are estimates based
upon current market conditions and quoted market prices for the same or similar
instruments as of December 29, 1996. Book value approximates fair value for
substantially all of the Company's assets and liabilities which fall under the
scope of FAS 107.
IMPAIRMENT OF LONG-LIVED ASSETS. The Company has adopted Statement of Financial
Accounting Standards No. 121 (FAS 121), Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. This statement
requires that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. All assets that
management determined to be permanently impaired have been written down to fair
value.
CERTAIN RECLASSIFICATIONS have been made to the accompanying financial
statements for the previous fiscal years to conform to the 1996 presentation.
2. BUSINESS ACQUISITION
On January 5, 1996, the shareholders of the Company approved an Agreement and
Plan of Merger, dated October 9, 1995, to merge with Shoex, Inc. (Shoex), a
franchisee of the Company which owned and operated six O'Charley's restaurants
in Alabama. The transaction is accounted for as a pooling-of-interests. The
Company exchanged 666,666 shares of Company stock valued at approximately $9.5
million. The Company assumed approximately $1.9 million in net obligations of
Shoex, Inc. (defined as long-term debt, capitalized lease obligations and
working capital deficit). As a result of the merger, O'Charley's owns the six
restaurants and the rights to develop other O'Charley's restaurants in Alabama,
Mississippi and specific locations in Florida and Georgia. All comparative
financial statements presented reflect the combined results of the Company and
Shoex for all periods presented.
14
<PAGE> 16
Revenues, net earnings and changes in shareholders' equity of the separate
companies for the periods preceding the acquisition were as follows:
<TABLE>
<CAPTION>
Changes in
Net Shareholders'
(In Thousands) Revenues Earnings Equity
------------------------------------------
<S> <C> <C> <C>
Fiscal year ended December 31, 1995:
O'Charley's, as previously reported $136,605 $10,068 --
Shoex 14,827 809 $(440)
Pro forma adjustments (3,875) (286) --
-----------------------------------------
Combined $147,557 $10,591 $(440)
-----------------------------------------
Fiscal year ended December 25, 1994
O'Charley's, as previously reported $112,128 $4,461 --
Shoex 13,986 768 $(418)
Pro forma adjustments (3,417) (256) --
-----------------------------------------
Combined $122,697 $4,973 $(418)
-----------------------------------------
</TABLE>
3. ASSET REVALUATION
Operating losses at certain restaurant units prompted an evaluation of net
realizable value of certain assets in accordance with FAS 121. Accordingly,
the Company recorded a $5,110,000 charge to earnings for assets impaired under
FAS 121. This amount represents the difference between fair value and net book
value for certain identifiable assets consisting primarily of buildings,
improvements and equipment. The fair value for these assets was determined
using several evaluation techniques including the present value of estimated
expected future cash flows, quoted market prices and prices for similar assets.
The $5,110,000 charge is comprised of the following impaired restaurant assets:
(1)Assets to be disposed of: $536,000 for two restaurant units which were
closed in the third quarter of 1996 and were later sold in 1996 and $1,967,000
for two units which were closed in the third quarter of 1996 and are expected
to be disposed of in 1997 having a carrying value on December 29, 1996 of
$1,747,000; (2)Assets to be held: $445,000 primarily for restaurant computer
equipment and $2,162,000 for five restaurant units expected to remain open or
be relocated. The 1996 results of operations for the four units closed include
revenues of $4,293,000 and costs and expenses of $4,865,000.
4. PROPERTY AND EQUIPMENT
Property and equipment at December 29, 1996, and December 31, 1995, consist of
the following:
<TABLE>
<CAPTION>
(In Thousands) 1996 1995
------------------------------
<S> <C> <C>
Land and improvements $26,500 $20,524
Buildings and improvements 36,680 26,582
Furniture, fixtures and equipment 26,365 20,195
Leasehold improvements 20,154 18,332
Equipment under capitalized leases 19,066 15,990
Property leased to others 1,032 951
------------------------------
129,797 102,574
Less accumulated depreciation and amortization (26,516) (21,062)
------------------------------
$103,281 $81,512
------------------------------
</TABLE>
15
<PAGE> 17
5. OTHER ASSETS
Other assets at December 29, 1996, and December 31, 1995, consist of the
following:
<TABLE>
<CAPTION>
(In Thousands) 1996 1995
---------------------------
<S> <C> <C>
Excess of cost over fair value of net assets acquired,
net of accumulated amortization of $83 in 1996
and $144 in 1995 $239 $490
Prepaid expenses 647 469
Trade notes receivable 537 317
---------------------------
$1,423 $1,276
---------------------------
</TABLE>
6. ACCRUED EXPENSES
Accrued expenses at December 29, 1996, and December 31, 1995, include the
following:
<TABLE>
<CAPTION>
(In Thousands) 1996 1995
---------------------------
<S> <C> <C>
Deferred revenue-gift certificates $1,151 $807
Workers' compensation expenses 1,325 1,363
Accrued litigation 4,627 605
Other accrued expenses 2,059 1,875
---------------------------
$9,162 $4,650
---------------------------
</TABLE>
7. LONG-TERM DEBT
Long-term debt at December 29, 1996, and December 31, 1995, consists of the
following:
<TABLE>
<CAPTION>
(In Thousands) 1996 1995
----------------------------
<S> <C> <C>
$70 million revolving line of credit $29,000 $10,500
Secured mortgage notes payable 251 845
Installment notes payable 722 972
----------------------------
29,973 12,317
Less current maturities (151) (327)
----------------------------
$29,822 $11,990
----------------------------
</TABLE>
On November 22, 1996, the Company entered into an amended and restated
revolving credit agreement (the "Credit Agreement") which increased its
unsecured line of credit facility to $70 million from $30 million. The Credit
Agreement requires monthly interest payments at a floating rate based on the
bank's prime rate plus or minus a certain percentage spread or the LIBOR rate
plus a certain percentage spread. The interest rate spread on the restructured
facility is based on certain financial ratios achieved by the Company and is
recomputed quarterly. At December 29, 1996, the $29,000,000 outstanding balance
carried interest rates from 6.84% (LIBOR rate plus 1.25%) to 7.75% (prime minus
.5%). The new credit facility includes a provision to extend its November 30,
1999, maturity annually by one year beginning on the first anniversary of the
facility. The Credit Agreement also requires the Company to meet certain
financial and other covenants. During fiscal 1996, the Company was in
compliance with all covenants.
16
<PAGE> 18
The secured mortgage note payable at December 29, 1996, bears interest at 10.6%
and is payable in monthly installments, including interest, through June 2010.
This debt is collateralized by land and buildings having a depreciated cost of
approximately $979,000 at December 29, 1996.
The installment notes payable at December 29, 1996, bear interest at 9.1% and
are payable in monthly installments, including interest, through October 2002.
Debt of $624,000 is secured by an airplane with a depreciated cost of
approximately $605,000 at December 29, 1996. The remaining debt of $98,000,
issued in connection with the 1993 merger of Burbet Foods, Inc. is unsecured.
The annual maturities of long-term debt as of December 29, 1996, are:
$151,000-1997; $143,000-1998; $29,113,000-1999; $124,000-2000; $135,000-2001;
and $307,000 thereafter.
8. LEASE COMMITMENTS
The Company has various leases for certain restaurant land and buildings under
operating lease agreements. Under these leases, the Company pays taxes,
insurance and maintenance costs in addition to the lease payments. Certain
leases also provide for additional contingent rentals based on a percentage of
sales in excess of a minimum rent. The Company leases certain equipment and
fixtures under capital lease agreements having lease terms from five to seven
years. The Company expects to exercise its options under these agreements to
purchase the equipment in accordance with the provisions of the lease
agreements.
As of December 29, 1996, approximately $19,066,000 cost less $4,014,000
accumulated amortization of the Company's property and equipment is under
capitalized lease obligations. Interest rates on capitalized lease obligations
range from 6.6% to 10.5%. Future minimum lease payments at December 29, 1996,
are as follows:
<TABLE>
<CAPTION>
Capitalized
Equipment Operating
(In Thousands) Leases Leases
-------------------------------
<S> <C> <C>
1997 $ 4,188 $ 3,746
1998 4,203 3,749
1999 3,523 3,714
2000 3,508 3,523
2001 2,049 3,474
Thereafter 300 31,267
----------------------------
Total minimum rentals 17,771 $49,473
-------
Less amount representing interest (2,816)
-------
Net minimum lease payments 14,955
Less current maturities (3,158)
-------
Capitalized lease obligations $11,797
-------
</TABLE>
Rent expense for the fiscal years ending in December for operating leases is as
follows:
<TABLE>
<CAPTION>
(In Thousands) 1996 1995 1994
----------------------------------------
<S> <C> <C> <C>
Minimum rentals $3,100 $3,525 $3,105
Contingent rentals 417 428 314
----------------------------------------
$3,517 $3,953 $3,419
----------------------------------------
</TABLE>
17
<PAGE> 19
9. COMMITMENTS AND CONTINGENCIES
On February 15, 1994, a class action suit was filed in the United States
Federal District Court against the Company and certain of the Company's
executive officers and directors. The suit alleged racially discriminatory
practices by the defendant parties in violation of federal law. During the
fourth quarter of 1996, the Court approved a consent decree which approved a
definitive settlement agreement. The settlement agreement provided for a
settlement pool of $4.8 million for the benefit of present and past
African-American employees of O'Charley's (the "Class") whose claims arose on
or after March 31, 1992, reserved $700,000 for claims administration and fees,
and included $2.0 million for the attorneys representing the Class. Based on
the relatively low number of class members electing to participate in the
settlement, the original $7.5 million total settlement amount has been reduced
to approximately $5.2 million. As of December 29, 1996, the Company has paid
approximately $1.4 million towards the total settlement. Estimated amounts to
be paid in 1997 include approximately $3.1 million in cash and approximately
$750,000 in Company stock. The Company believes there are adequate reserves
recorded for the anticipated future payments of the lawsuit settlement.
The Company is involved in other legal actions incidental to its business. In
the opinion of management, the ultimate disposition of these matters will not
have a material adverse effect on the Company's operating results or financial
position.
10. INCOME TAXES
The total income tax expense (benefit) for the fiscal years ending in December
is allocated as follows:
<TABLE>
<CAPTION>
(In Thousands) 1996 1995 1994
--------------------------------------------
<S> <C> <C> <C>
Earnings $ (797) $5,785 $2,236
Shareholders' equity, tax benefit derived from
non-statutory stock options exercised (200) (77) (1,100)
--------------------------------------------
$ (997) $5,708 $1,136
--------------------------------------------
</TABLE>
Effective January 5, 1996, the Company merged with Shoex, Inc. which is
accounted for as a pooling-of-interests. Shoex, Inc. was an S Corporation
whereby its income was taxable at the shareholder level. Had Shoex been subject
to income taxes, additional income tax expense of $286,000 and $256,000 in 1995
and 1994, respectively, would have been recorded. The pro forma data presented
on the face of the statements of operations reflect these amounts.
Income tax expense (benefit) related to earnings for the fiscal years ending in
December consists of:
<TABLE>
<CAPTION>
(In Thousands) 1996 1995 1994
----------------------------------------
<S> <C> <C> <C>
Current $1,798 $4,849 $2,452
Deferred (2,595) 936 (216)
----------------------------------------
$ (797) $5,785 $2,236
----------------------------------------
</TABLE>
18
<PAGE> 20
Income tax expense (benefit) attributable to earnings differs from the amounts
computed by applying the applicable U.S. federal income tax rate to pretax
earnings from operations as a result of the following:
<TABLE>
<CAPTION>
1996 1995 1994
---------------------------------------
<S> <C> <C> <C>
Federal statutory rate (34.0%) 35.0% 34.0%
Increase (decrease) in taxes due to:
State income taxes, net of federal tax benefit (1.8) 3.9 3.9
Utilization of tax credits (21.3) (2.8) (5.1)
Adjustment to deferred tax assets and liabilities for
change in tax status of Shoex 12.1 -- --
Earnings attributable to S Corporation -- (1.7) (3.4)
Other (primarily goodwill amortization) 4.0 .3 .6
----------------------------------------
(41.0%) 34.7% 30.0%
----------------------------------------
</TABLE>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at each of the
respective fiscal year ends are as follows:
<TABLE>
<CAPTION>
(In Thousands) 1996 1995
-----------------------
<S> <C> <C>
Deferred tax assets:
Accrued expenses, principally due to accruals for workers'
compensation, employee health and retirement benefits $1,161 $833
Accrued litigation 1,827 182
Other 27 141
-----------------------
Total gross deferred tax assets 3,015 1,156
Deferred tax liabilities:
Property and equipment, principally due to differences in
depreciation and capitalized lease amortization 1,468 2,203
Preopening cost, due to cost in excess of amortization 428 403
Other 80 106
------------------------
Total gross deferred tax liabilities 1,976 2,712
------------------------
Net deferred tax liability (asset) $(1,039) $1,556
------------------------
</TABLE>
The net deferred tax liability (asset) at December 29, 1996, and December 31,
1995, are recorded as follows:
<TABLE>
<CAPTION>
(In Thousands) 1996 1995
------------------------
<S> <C> <C>
Deferred income taxes, long-term liability $1,295 $2,395
Deferred income taxes, current asset (2,334) (839)
------------------------
$(1,039) $1,556
------------------------
</TABLE>
Statement 109 requires an evaluation of the deferred tax asset components and
recognition of a valuation allowance if it is determined that more likely than
not all or some portion of the deferred asset will not be realized. Based on
the Company's history of annual increases in taxable income and management's
projections of future taxable income, the Company estimates, it is more likely
than not all of the deferred assets will be realized; thus, no valuation
allowance is recorded.
19
<PAGE> 21
11. SHAREHOLDERS' EQUITY
The Company's charter authorizes 100,000 shares of preferred stock of which the
Board of Directors may, without shareholder approval, issue with voting or
conversion rights upon the occurrence of certain events. At December 29, 1996,
no preferred shares had been issued.
12. STOCK OPTION AND PURCHASE PLANS
The Company has four incentive stock option plans: the 1985 Stock Option Plan,
the 1989 Consultant Stock Program, the 1990 Employee Stock Plan and the 1991
Stock Option Plan for Outside Directors. Options under these plans include
both statutory and nonstatutory stock options and are issued to officers, key
employees, nonemployee directors and consultants of the Company. The Company
has reserved 3,737,500 shares of common stock for these plans under which the
options are granted at 100% of the fair market value of common stock on the
date of the grant, expire 10 years from the date of the grant and are
exercisable at various times as previously determined by the Board of
Directors. The Company accounts for these plans under the direction of APB
Opinion No. 25, and accordingly, no compensation cost has been recognized.
If compensation cost for these plans had been determined consistent with FAS
Statement No. 123, the Company's net earnings and earnings per share would have
been reduced to the following pro forma amounts:
<TABLE>
<CAPTION>
1996 1995
-----------------------------
<S> <C> <C> <C>
Net Earnings (Loss): As reported (pro forma in 1995) $(1,147,000) $10,590,000
Pro forma, as adjusted under FAS 123 (1,493,000) 10,303,000
Earnings (Loss) per
Common Share: As reported (pro forma in 1995) $(0.15) $1.26
Pro forma, as adjusted under FAS 123 (0.19) 1.22
</TABLE>
Because the Statement 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years.
A summary of stock option activity during the periods indicated is as follows:
<TABLE>
<CAPTION>
Number of Weighted-Average
Shares Exercise Price
------------------------------------
<S> <C> <C>
Balance at December 25, 1994 1,618,225 $7.16
Granted 457,475 11.75
Exercised (69,741) 4.91
Forfeited (54,790) 8.97
-------------------------------
Balance at December 31, 1995 1,951,169 8.22
Granted 195,250 12.36
Exercised (65,670) 3.91
Forfeited (241,140) 10.15
-------------------------------
Balance at December 29, 1996 1,839,609 $8.53
-------------------------------
</TABLE>
20
<PAGE> 22
The following table summarizes information about stock options outstanding at
December 29, 1996:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------------------------------------------------
Number Weighted-Avg. Number
Outstanding Remaining Weighted-Avg. Exercisable Weighted-Avg.
Exercise Price at 12/29/96 Contractual Life Exercise Price at 12/29/96 Exercise Price
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$2.00 to 03.50 188,851 3.3 years $2.81 165,301 $2.85
$4.17 to 06.83 221,900 5.4 5.19 167,825 5.09
$8.41 to 11.67 1,180,703 7.2 9.25 453,767 8.89
$12.00 to 14.37 248,155 8.9 12.49 40,587 12.71
- ----------------------------------------------------------------------------------------------------------
$2.00 to 14.37 1,839,609 6.8 $8.53 827,480 $7.10
- ----------------------------------------------------------------------------------------------------------
</TABLE>
At December 29, 1996, and December 31, 1995, the number of options exercisable
was 827,480 and 781,000, respectively, and the weighted-average exercise price
of those options was $7.10 and $6.37, respectively.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1996 and 1995: risk-free interest rate of 6.7%;
expected life of 7.4 years; expected volatility of 41.6%.
The Company has established the CHUX Ownership Plan for the purpose of
providing an opportunity for eligible employees of the Company to become
shareholders in O'Charley's. The Company has reserved 450,000 common shares
for this plan. The CHUX Ownership Plan is intended to be an employee stock
purchase plan which qualifies for favorable federal income tax treatment under
Section 423 of the Internal Revenue Code. The Plan allows participants to
purchase common stock at 85% of fair market value, which is issued at the end
of each Plan year. Contributions of up to 15% of base salary are made by each
participant through payroll deductions. The Plan year begins October 1. As of
December 29, 1996, 54,000 shares have been issued under this Plan.
13. EMPLOYEE BENEFIT PLAN
The Company has a 401(k) salary reduction and profit-sharing plan called the
CHUX Savings Plan. Under the Plan, employees, including Shoex employees, can
make contributions up to 15% of their annual compensation. The Company
contributes annually to the Plan an amount equal to 40% of employee
contributions, subject to certain limitations. Additional contributions are
made at the discretion of the Board of Directors. Company contributions vest at
the rate of 20% each year beginning after the employee's initial year of
employment. Company contributions were approximately $84,000 in 1996, $77,000
in 1995 and $65,000 in 1994.
14. RELATED-PARTY TRANSACTIONS
As discussed in the Business Acquisition footnote, the Company merged with
Shoex, Inc. on January 5, 1996. An officer and a director of the Company each
had an interest in Shoex and, accordingly, received their respective pro rata
share of the Company's Common Stock which was issued to the shareholders of
Shoex. Previous to the merger, the Company's commissary sold food products and
supplies to Shoex, and the Company also received a fee for providing accounting
and administrative services. The merger with Shoex is accounted for as a
pooling-of-interests; therefore, all related-party transactions previously
reported have been eliminated through the restatement of the financial
statements.
An officer of the Company, a principal shareholder, and certain directors own a
certain percentage of partnerships which have lease agreements with the Company
for eight of its restaurant facilities. The leases expire at various times
through 2012, with options to renew for a term of 10 years. The lease
agreements grant the Company an option to purchase the properties at fair
market value at any time during the term of the lease.
21
<PAGE> 23
On July 26, 1995, the Company sold substantially all of its interest in Logan's
Partnership (Logan's) upon Logan's initial public offering. An officer and a
director of the Company, at that time, had an ownership interest in Logan's.
The Company received $7.9 million net proceeds from the sale of its Logan's
shares. In addition, Logan's Partnership purchased all five of the Logan's
restaurant properties owned by the Company at their appraised fair market value
of approximately $6.1 million. As a result of the transactions, the Company
reported a one-time gain (included in other income, net) of approximately $7.4
million in 1995 or $0.55 per share. During the time of the Company's ownership
in Logan's, the Company owned certain land, building and improvements and
leased certain property which was leased or subleased to Logan's Partnership.
Each of the leases was treated as an operating lease and provided for
additional contingent rentals based on a percentage of sales in excess of
minimum rent. Additionally, the Company guaranteed a line of credit and
equipment leases on behalf of Logan's Partnership, sold products from the
Company's commissary and provided accounting and administrative services to the
Partnership for a fee. Previously, the Company's commissary sold products to
other restaurant entities controlled by a director of the Company and certain
of its officers.
In the opinion of management and the Company's Board of Directors, all
related-party transactions, including terms and amounts, are comparable to
those which could be obtained from unaffiliated third parties.
The aforementioned related-party transactions are reflected in the financial
statements as follows:
<TABLE>
<CAPTION>
(In Thousands) 1996 1995 1994
------------------------------------
<S> <C> <C> <C>
BALANCE SHEETS
Current Assets:
Due from related parties -- $108 $388
Property and equipment, net (property leased to others) -- -- 4,630
Other Assets:
Investment in unconsolidated partnership -- -- 283
STATEMENTS OF EARNINGS
Revenues:
Commissary sales -- 6,463 4,075
Costs and Expenses:
Restaurant operating costs:
Rent expense 843 843 859
Contingent rentals 293 256 219
Depreciation and amortization (property leased to others) -- 69 57
Other (Income) Expense:
Interest income (guarantee fee) -- (54) (15)
Other, net:
Accounting and administrative fees -- (56) (68)
Net rental income -- (534) (396)
Equity earnings in Partnership -- (273) (328)
Gain on sale of assets -- (7,448) --
STATEMENTS OF CASH FLOWS
Cash Flows From Investing Activities:
Additions to property and equipment -- -- (3,285)
Proceeds from sale of property and equipment -- 6,100 --
Proceeds from sale of unconsolidated partnership -- 7,894 --
</TABLE>
22
<PAGE> 24
15. STATEMENTS OF CASH FLOWS
Supplemental disclosure of cash flow information is as follows:
<TABLE>
<CAPTION>
(In Thousands) 1996 1995 1994
--------------------------------------
<S> <C> <C> <C>
Cash paid for interest $3,074 $2,158 $1,300
Additions to capitalized lease obligations 5,922 6,242 2,938
Income taxes paid 1,979 4,508 1,404
</TABLE>
16. SELECTED QUARTERLY DATA (UNAUDITED)
Summarized quarterly financial data for 1996 and 1995 is shown below:
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
(In Thousands, Except Per Share Data) (16 weeks) (12 weeks) (12 weeks) (12 weeks)
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended December 29, 1996
Net revenues $47,079 $38,485 $39,295 $39,671
Income (loss) from operations 3,258 (2,425) 2,852 3,153
Net earnings (loss) 1,569 (7,483) 1,497 3,270
Earnings (loss) per common share .19 (.96) .18 .39
</TABLE>
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
(In Thousands, Except Per Share Data) (16 weeks) (12 weeks) (12 weeks) (13 weeks)
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended December 31, 1995 1
Net revenues $41,858 $33,676 $34,091 $37,932
Income from operations 3,120 2,520 2,449 3,049
Net earnings 1,242 1,493 6,050 1,805
Earnings per common share .15 .18 .72 .21
</TABLE>
1 The income tax expense and net earnings for 1995 represent pro forma amounts
(see Notes 2 and 10).
23
<PAGE> 25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE - Omitted from this Form 10-K/A
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - Omitted from this
Form 10-K/A
ITEM 11. EXECUTIVE COMPENSATION - Omitted from this Form 10-K/A
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT - Omitted from this Form 10-K/A
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - Omitted from this
Form 10-K/A.
24
<PAGE> 26
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements: See Item 8.
2. Financial Statement Schedules
Not Applicable
3. Management Contracts and Compensatory Plans and Arrangements
- O'Charley's Inc. 1985 Stock Option Plan (included as
Exhibit 10.11)
- O'Charley's Inc. 1990 Employee Stock Plan (included
as Exhibit 10.12)
- First Amendment to O'Charley's Inc. 1990 Employee
Stock Plan (included as Exhibit 10.13)
- Second Amendment to O'Charley's Inc. 1990 Employee
Stock Plan (included as Exhibit 10.14)
- O'Charley's 1991 Stock Option Plan for Outside
Directors, as amended (included as Exhibit 10.15)
- CHUX Ownership Plan (included as Exhibit 10.16)
- Severance Agreement and General Release, dated
September 9, 1996, by and between O'Charley's Inc.
and Charles F. McWhorter (included as Exhibit 10.20)
- Severance Compensation Agreement, dated September 16,
1996, by and between O'Charley's Inc. and Gregory L.
Burns (included as Exhibit 10.21)
4. Exhibits:
Exhibit
Number Description
- ------- -----------
2 ---- Amended and Restated Agreement and Plan of Merger
dated as of November 16, 1995 by and between
O'Charley's Inc. and Shoex, Inc. (incorporated by
reference to Exhibit 2 of the Company's Current
Report on Form 8-K dated January 5, 1996)
3.1 ---- Restated Charter of the Company (incorporated by
reference to Exhibit 3.1 of the Company's
Registration Statement on Form S-1, Registration No.
33-35170)
3.2 ---- Amended and Restated Bylaws of the Company
(incorporated by reference to Exhibit 3.2 of the
Company's Annual Report on Form 10-K for the year
ended December 30, 1990)
4.1 ---- See Exhibits 3.1 and 3.2 for provisions of the
Restated Charter and the Amended and Restated Bylaws
defining the rights of holders of the Common Stock
of the Company.
4.2 ---- Form of Stock Certificate for the Common Stock of the
Company (incorporated by reference to Exhibit 4.1
of the Company's Registration Statement on Form S-1,
Registration No. 33-35170).
10.1 ---- Lease dated May 1, 1987 between CWF Associates and
CWF Corporation and all amendments thereto for 2895
Richmond Road, Lexington, KY 40509 (incorporated by
25
<PAGE> 27
reference to Exhibit 10.1 of the Company's
Registration Statement on Form S-1, Registration No.
33-35170)
10.2 ---- Lease Agreement and Option to Purchase dated May 1,
1987 between CWF Associates and O'Charley's Inc. for
equipment located at 2895 Richmond Road, Lexington,
KY (incorporated by reference to Exhibit 10.2 of the
Company's Registration Statement on Form S-1,
Registration No. 33-35170)
10.3 ---- Lease dated August 15, 1987 between CWF Associates
and O'Charley's Inc. and all amendments thereto for
improvements located at 17 White Bridge Road,
Nashville, TN (incorporated by reference to Exhibit
10.3 of the Company's Registration Statement on Form
S-1, Registration No. 33-35170)
10.4 ---- Lease Agreement and Option to Purchase dated August
15, 1987 between CWF Associates and O'Charley's Inc.
for equipment located at 17 White Bridge Road,
Nashville, TN (incorporated by reference to Exhibit
10.4 of the Company's Registration Statement on Form
S-1, Registration No. 33-35170)
10.5 ---- Lease dated October 25, 1985 between Two Mile
Partners and CWF Corporation and all amendments
thereto for 912 Two Mile Parkway, Goodlettsville, TN
(incorporated by reference to Exhibit 10.5 of the
Company's Registration Statement on Form S-1,
Registration No. 33-35170)
10.6 ---- Lease dated December 30, 1985 between Two Mile
Partners and CWF Corporation for 644 N. Riverside
Dr., Clarksville, TN (incorporated by reference to
Exhibit 10.6 of the Company's Registration Statement
on Form S-1, Registration No. 33-35170)
10.7 ---- Lease dated September 9, 1985 between Two Mile
Partners and CWF Corporation for 1720 U.S. 31-W
Bypass Building, Bowling Green, KY (incorporated by
reference to Exhibit 10.7 of the Company's
Registration Statement on Form S-1, Registration No.
33-35170)
10.8 ---- Lease dated December 26, 1986 between Two Mile
Partners and CWF Corporation for 1006 Memorial Blvd.,
Murfreesboro, TN (incorporated by reference to
Exhibit 10.8 of the Company's Registration Statement
on Form S-1, Registration No. 33-35170)
10.9 ---- Area Development Agreement dated July 9, 1987,
between O'Charley's Inc. and O'Charley's of the
Carolinas, Inc. (incorporated by reference to Exhibit
10.18 of the Company's Registration Statement on Form
S-1, Registration No. 33-35170)
10.10 ---- License Agreement dated July 9, 1987, between
O'Charley's Inc. and O'Charley's of the Carolinas,
Inc. (incorporated by reference to Exhibit 10.19 of
the Company's Registration Statement on Form S-1,
Registration No. 33-35170)
10.11 ---- O'Charley's Inc. 1985 Stock Option Plan (incorporated
by reference to Exhibit 10.27 of the Company's
Registration Statement on Form S-1, Registration No.
33-35170)
26
<PAGE> 28
10.12 ---- O'Charley's Inc. 1990 Employee Stock Plan
(incorporated by reference to Exhibit 10.26 of the
Company's Registration Statement on Form S-1,
Registration No. 33-35170)
10.13 ---- First Amendment to O'Charley's Inc. 1990 Employee
Stock Plan (incorporated by reference to Exhibit
10.24 of the Company's Annual Report on Form 10-K for
the year ended December 29, 1991)
10.14 ---- Second Amendment to O'Charley's Inc. 1990 Employee
Stock Plan (incorporated by reference to Exhibit
10.23 of the Company's Annual Report on Form 10-K for
the year ended December 26, 1993)
10.15 ---- O'Charley's Inc. 1991 Stock Option Plan for Outside
Directors, As Amended (incorporated by reference to
Exhibit 10.25 of the Company's Annual Report on Form
10-K for the year ended December 27, 1992)
10.16 ---- CHUX Ownership Plan (incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the
quarter ended October 3, 1993)
10.17 ---- Lease Agreement dated as of December 30, 1990 between
Two Mile Partners, II and O'Charley's Inc.
(incorporated by reference to Exhibit 10.26 of the
Company's Annual Report on Form 10-K for the year
ended December 30, 1990)
10.18 ---- Amended and Restated Revolving Credit Agreement,
dated as of November 22, 1996, among O'Charley's Inc.
and Mercantile Bank of St. Louis National
Association, Bank One, Dayton, N.A., NationsBank of
Tennessee, N.A., as Co-Agent, and First American
National Bank, as Agent*
10.19 ---- Registration Rights Agreement dated as of January 5,
1996 by and among O'Charley's Inc., R. Wayne
Browning, Gregory L. Burns, Mike Martin and David K.
Wachtel, Jr. (incorporated by reference to Exhibit
10.36 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1995)
10.20 ---- Severance Agreement and General Release, dated
September 9, 1996, by and between O'Charley's Inc.
and Charles F. McWhorter*
10.21 ---- Severance Compensation Agreement, dated September 16,
1996, by and between O'Charley's Inc. and Gregory L.
Burns*
11 ---- Statement re computation of earnings per common share
23.1 ---- Consent of KPMG Peat Marwick, LLP
27 ---- Financial Data Schedule (for SEC use only)
(b) During the quarter ended December 29, 1996, the Company filed no reports on
Form 8-K.
- -------------
* Previously filed as an Exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended October 29, 1996.
27
<PAGE> 29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
O'CHARLEY'S INC.
Date: August 13, 1997 By: /s/ Gregory L. Burns
--------------------------
Gregory L. Burns
President, Chief Executive
Officer, and Chairman of
the Board
28
<PAGE> 30
Index to Exhibits
Exhibit
Number Description
- ------- -----------
2 ---- Amended and Restated Agreement and Plan of Merger
dated as of November 16, 1995 by and between
O'Charley's Inc. and Shoex, Inc. (incorporated by
reference to Exhibit 2 of the Company's Current
Report on Form 8-K dated January 5, 1996)
3.1 ---- Restated Charter of the Company (incorporated by
reference to Exhibit 3.1 of the Company's
Registration Statement on Form S-1, Registration No.
33-35170)
3.2 ---- Amended and Restated Bylaws of the Company
(incorporated by reference to Exhibit 3.2 of the
Company's Annual Report on Form 10-K for the year
ended December 30, 1990)
4.1 ---- See Exhibits 3.1 and 3.2 for provisions of the
Restated Charter and the Amended and Restated Bylaws
defining the rights of holders of the Common Stock
of the Company.
4.2 ---- Form of Stock Certificate for the Common Stock of the
Company (incorporated by reference to Exhibit 4.1
of the Company's Registration Statement on Form S-1,
Registration No. 33-35170).
10.1 ---- Lease dated May 1, 1987 between CWF Associates and
CWF Corporation and all amendments thereto for 2895
Richmond Road, Lexington, KY 40509 (incorporated by
<PAGE> 31
reference to Exhibit 10.1 of the Company's
Registration Statement on Form S-1, Registration No.
33-35170)
10.2 ---- Lease Agreement and Option to Purchase dated May 1,
1987 between CWF Associates and O'Charley's Inc. for
equipment located at 2895 Richmond Road, Lexington,
KY (incorporated by reference to Exhibit 10.2 of the
Company's Registration Statement on Form S-1,
Registration No. 33-35170)
10.3 ---- Lease dated August 15, 1987 between CWF Associates
and O'Charley's Inc. and all amendments thereto for
improvements located at 17 White Bridge Road,
Nashville, TN (incorporated by reference to Exhibit
10.3 of the Company's Registration Statement on Form
S-1, Registration No. 33-35170)
10.4 ---- Lease Agreement and Option to Purchase dated August
15, 1987 between CWF Associates and O'Charley's Inc.
for equipment located at 17 White Bridge Road,
Nashville, TN (incorporated by reference to Exhibit
10.4 of the Company's Registration Statement on Form
S-1, Registration No. 33-35170)
10.5 ---- Lease dated October 25, 1985 between Two Mile
Partners and CWF Corporation and all amendments
thereto for 912 Two Mile Parkway, Goodlettsville, TN
(incorporated by reference to Exhibit 10.5 of the
Company's Registration Statement on Form S-1,
Registration No. 33-35170)
10.6 ---- Lease dated December 30, 1985 between Two Mile
Partners and CWF Corporation for 644 N. Riverside
Dr., Clarksville, TN (incorporated by reference to
Exhibit 10.6 of the Company's Registration Statement
on Form S-1, Registration No. 33-35170)
10.7 ---- Lease dated September 9, 1985 between Two Mile
Partners and CWF Corporation for 1720 U.S. 31-W
Bypass Building, Bowling Green, KY (incorporated by
reference to Exhibit 10.7 of the Company's
Registration Statement on Form S-1, Registration No.
33-35170)
10.8 ---- Lease dated December 26, 1986 between Two Mile
Partners and CWF Corporation for 1006 Memorial Blvd.,
Murfreesboro, TN (incorporated by reference to
Exhibit 10.8 of the Company's Registration Statement
on Form S-1, Registration No. 33-35170)
10.9 ---- Area Development Agreement dated July 9, 1987,
between O'Charley's Inc. and O'Charley's of the
Carolinas, Inc. (incorporated by reference to Exhibit
10.18 of the Company's Registration Statement on Form
S-1, Registration No. 33-35170)
10.10 ---- License Agreement dated July 9, 1987, between
O'Charley's Inc. and O'Charley's of the Carolinas,
Inc. (incorporated by reference to Exhibit 10.19 of
the Company's Registration Statement on Form S-1,
Registration No. 33-35170)
10.11 ---- O'Charley's Inc. 1985 Stock Option Plan (incorporated
by reference to Exhibit 10.27 of the Company's
Registration Statement on Form S-1, Registration No.
33-35170)
<PAGE> 32
10.12 ---- O'Charley's Inc. 1990 Employee Stock Plan
(incorporated by reference to Exhibit 10.26 of the
Company's Registration Statement on Form S-1,
Registration No. 33-35170)
10.13 ---- First Amendment to O'Charley's Inc. 1990 Employee
Stock Plan (incorporated by reference to Exhibit
10.24 of the Company's Annual Report on Form 10-K for
the year ended December 29, 1991)
10.14 ---- Second Amendment to O'Charley's Inc. 1990 Employee
Stock Plan (incorporated by reference to Exhibit
10.23 of the Company's Annual Report on Form 10-K for
the year ended December 26, 1993)
10.15 ---- O'Charley's Inc. 1991 Stock Option Plan for Outside
Directors, As Amended (incorporated by reference to
Exhibit 10.25 of the Company's Annual Report on Form
10-K for the year ended December 27, 1992)
10.16 ---- CHUX Ownership Plan (incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the
quarter ended October 3, 1993)
10.17 ---- Lease Agreement dated as of December 30, 1990 between
Two Mile Partners, II and O'Charley's Inc.
(incorporated by reference to Exhibit 10.26 of the
Company's Annual Report on Form 10-K for the year
ended December 30, 1990)
10.18 ---- Amended and Restated Revolving Credit Agreement,
dated as of November 22, 1996, among O'Charley's Inc.
and Mercantile Bank of St. Louis National
Association, Bank One, Dayton, N.A., NationsBank of
Tennessee, N.A., as Co-Agent, and First American
National Bank, as Agent*
10.19 ---- Registration Rights Agreement dated as of January 5,
1996 by and among O'Charley's Inc., R. Wayne
Browning, Gregory L. Burns, Mike Martin and David K.
Wachtel, Jr. (incorporated by reference to Exhibit
10.36 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1995)
10.20 ---- Severance Agreement and General Release, dated
September 9, 1996, by and between O'Charley's Inc.
and Charles F. McWhorter*
10.21 ---- Severance Compensation Agreement, dated September 16,
1996, by and between O'Charley's Inc. and Gregory L.
Burns*
11 ---- Statement re computation of earnings per common share
23.1 ---- Consent of KPMG Peat Marwick, LLP
27 ---- Financial Data Schedule (for SEC use only)
- -------------------
* Previously filed as an Exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 29, 1996.
<PAGE> 1
O'CHARLEY'S INC.
EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
(in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------------
December 29, December 31, December 25,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net earnings (loss) as reported (1,147) 10,877 5,229
Adjustments:
Pro forma income tax expense(1) -- (286) (256)
------------ ------------ ------------
Net earnings (pro forma for 1995 and 1994) (1,147) 10,591 4,973
============ ============ ============
Weighted average shares outstanding $ 7,802 8,438 8,137
============ ============ ============
Earnings per common share (pro forma for 1995 and 1994) $ (0.15) $ 1.26 $ 0.61
============ ============ ============
</TABLE>
(1) Pro forma income tax adjustment to reflect additional income tax expense
had Shoex, Inc. been subject to income taxes.
<PAGE> 1
EXHIBIT 23.1
ACCOUNTANTS' CONSENT
The Board of Directors
O'Charley's Inc.:
We consent to incorporation by reference in the registration statements (No.
33-69934, No. 33-39869, No. 33-39872, No. 33-51258, No. 33-51316, and No.
33-51338 on Form S-8) of O'Charley's Inc. of our report dated February 6, 1997,
relating to the balance sheets of O'Charley's Inc. as of December 29, 1996 and
December 31, 1995, and the related statements of operations, shareholders'
equity, and cash flows for each of the years in the three-year period ended
December 29, 1996, which report appears in the December 29, 1996 annual report
on Form 10-K/A No. 1 dated August 13, 1997 of O'Charley's Inc.
KPMG PEAT MARWICK LLP
Nashville, Tennessee
August 13, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF O'CHARLEY'S INC. FOR THE YEAR ENDED DECEMBER 29, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN O'CHARLEY'S INC'S ANNUAL REPORT ON FORM 10-K.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-29-1996
<CASH> 1,616
<SECURITIES> 0
<RECEIVABLES> 1,604
<ALLOWANCES> 58
<INVENTORY> 4,505
<CURRENT-ASSETS> 12,455
<PP&E> 129,797
<DEPRECIATION> 26,516
<TOTAL-ASSETS> 117,159
<CURRENT-LIABILITIES> 23,319
<BONDS> 44,928
0
0
<COMMON> 29,592
<OTHER-SE> 21,334
<TOTAL-LIABILITY-AND-EQUITY> 117,159
<SALES> 164,499
<TOTAL-REVENUES> 164,530
<CGS> 135,071
<TOTAL-COSTS> 135,071
<OTHER-EXPENSES> 13,251
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,588
<INCOME-PRETAX> (1,944)
<INCOME-TAX> (797)
<INCOME-CONTINUING> (1,147)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,147)
<EPS-PRIMARY> (0.15)
<EPS-DILUTED> (0.15)
</TABLE>
