<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended October 6, 1996
Commission file number O-18629
O'Charley's Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 62-1192475
- ------------------------------------------ -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3038 Sidco Drive, Nashville, Tennessee 37204
- -------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(615) 256-8500
----------------------------------------------------
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.
Class Outstanding as of November 18, 1996
----- -----------------------------------
Common Stock, no par value 7,845,368 shares
<PAGE> 2
O'Charley's Inc.
Form 10-Q/A
For Quarter Ended October 6, 1996
Index
Page No.
Part I - Financial Information
Item 1. Financial statements:
Balance sheets as of October 6, 1996 and
December 31, 1995 3
Statements of earnings for the twelve weeks 4
ended October 6, 1996 and October 1, 1995
Statements of earnings (loss) for the forty weeks
ended October 6, 1996 and October 1, 1995 5
Statements of cash flows for the forty weeks
ended October 6, 1996 and October 1, 1995 6
Notes to unaudited financial statements 7
Item 2. Management's discussion and analysis of
financial condition and results of operations 8 - 11
Part II - Other Information
Item 1. Legal proceedings 12
Item 6. Exhibits and reports on form 8-K 12
Signatures 13
<PAGE> 3
O'Charley's Inc.
Balance Sheets
(dollars in thousands)
<TABLE>
<CAPTION>
October 6, December 31,
1996 1995
---------- ------------
<S> <C> <C>
Assets
Current Assets:
Cash $ 330 $ 2,576
Accounts receivable 1,615 1,244
Due from related parties - 108
Inventories 5,748 3,780
Preopening costs 1,219 1,045
Deferred income taxes 839 925
Other current assets 1,682 971
-------- -------
Total current assets 11,433 10,649
Property and Equipment, net 98,947 81,512
Other Assets 957 1,276
-------- -------
$111,337 $93,437
======== =======
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 5,907 $ 4,424
Accrued payroll and related expenses 3,500 3,435
Accrued expenses 11,828 4,650
Federal, state and local taxes 486 2,606
Current portion of long-term debt and capitalized leases 2,914 2,793
-------- -------
Total current liabilities 24,635 17,908
Deferred Income Taxes 733 2,619
Long-Term Debt 28,679 11,990
Capitalized Lease Obligations 10,227 9,272
Shareholders' Equity:
Common stock - No par value;authorized, 50,000,000
shares; issued and outstanding, 7,821,938 in 1996
and 7,770,967 in 1995 29,651 29,819
Retained earnings 17,412 21,829
-------- -------
47,063 51,648
-------- -------
$111,337 $93,437
======== =======
</TABLE>
See notes to financial statements.
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<PAGE> 4
O'Charley's Inc.
Statements of Earnings
Twelve Weeks Ended October 6, 1996 and October 1, 1995
<TABLE>
<CAPTION>
1996 1995
----------------- ------------------
(in thousands, except per share data)
<S> <C> <C>
Revenues:
Restaurant sales $38,712 $31,739
Commissary sales 576 2,346
Franchise revenue 7 6
------- -------
39,295 34,091
Costs and Expenses:
Cost of restaurant sales:
Cost of food, beverage and supplies 13,986 11,728
Payroll and benefits 12,041 9,495
Restaurant operating costs 5,822 4,834
Cost of commissary sales 550 2,240
Advertising, general and administrative expenses 2,145 1,873
Depreciation and amortization 1,899 1,472
------- -------
36,443 31,642
------- -------
Income from Operations 2,852 2,449
Other(Income)Expense:
Interest expense, net 605 436
Other, net (56) (7,664)
------- -------
549 (7,228)
------- -------
Earnings Before Income Taxes 2,303 9,677
Income Tax Expense 806 3,627
------- -------
Net Earnings $ 1,497 $ 6,050
======= =======
Earnings per Common Share $ 0.18 $ 0.72
======= =======
Weighted Average Common Shares Outstanding 8,310 8,451
======= =======
</TABLE>
See notes to financial statements.
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<PAGE> 5
O'Charley's Inc.
Statements of Earnings
Forty Weeks Ended October 6, 1996 and October 1, 1995
<TABLE>
<CAPTION>
1996 1995
---------------- -----------------
(in thousands, except per share data)
<S> <C> <C>
Revenues:
Restaurant sales $123,018 $101,455
Commissary sales 1,817 8,149
Franchise revenue 24 21
-------- --------
124,859 109,625
Costs and Expenses:
Cost of restaurant sales:
Cost of food, beverage and supplies 44,228 37,405
Payroll and benefits 38,258 30,372
Restaurant operating costs 18,772 15,350
Cost of commissary sales 1,731 7,781
Advertising, general and administrative expenses 6,947 6,150
Depreciation and amortization 6,128 4,478
Asset revaluation 5,110 -
-------- --------
121,174 101,536
-------- --------
Income from Operations 3,685 8,089
Other(Income)Expense:
Interest expense, net 1,945 1,562
Litigation 8,500 1,000
Other, net 36 (8,358)
-------- --------
10,481 (5,796)
-------- --------
Earnings (Loss) Before Income Taxes (6,796) 13,885
Income Tax Expense (Benefit) (2,379) 5,100
-------- --------
Net Earnings (Loss) $ (4,417) $ 8,785
======== ========
Earnings (Loss) per Common Share $ (0.57) $ 1.04
======== ========
Weighted Average Common Shares Outstanding 7,789 8,450
======== ========
</TABLE>
See notes to financial statements.
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<PAGE> 6
O'Charley's Inc.
Statements of Cash Flows
Forty Weeks Ended October 6, 1996 and October 1, 1995
<TABLE>
<CAPTION>
1996 1995
------ ------
(in thousands)
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings (loss) $(4,417) $ 8,785
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 4,479 3,638
Amortization of preopening costs 1,649 840
Asset revaluation adjustment 5,110 -
Provision for deferred income taxes (1,800) -
Gain on the sale of assets (171) (8,656)
Changes in assets and liabilities:
Accounts receivable (263) (290)
Inventories (1,968) 41
Additions to preopening costs (1,824) (1,542)
Other current assets (711) (58)
Accounts payable 1,483 1,711
Accrued payroll and other accrued expenses 5,123 4,509
------- -------
Net cash provided by operating activities 6,690 8,978
Cash Flows from Investing Activities:
Additions to property and equipment (23,177) (18,528)
Proceeds from the sale of assets 171 13,994
Other, net (53) (65)
------- -------
Net cash used by investing activities (23,059) (4,599)
Cash Flows from Financing Activities:
Proceeds from long-term debt 17,300 6,000
Payments on long-term debt and capitalized
lease obligations (3,009) (10,278)
Distribution to Shoex, Inc. shareholders (315) (317)
Exercise of employee incentive stock options 147 445
------- -------
Net cash provided by financing activities 14,123 (4,150)
------- -------
Increase (Decrease) in Cash (2,246) 229
Cash at Beginning of the Period 2,576 1,727
------- -------
Cash at End of the Period $ 330 $ 1,956
======= =======
</TABLE>
See notes to financial statements.
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<PAGE> 7
O'Charley's Inc.
Notes To Unaudited Financial Statements
Twelve and Forty Weeks Ended October 6, 1996 and October 1, 1995
A. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
reporting and in accordance with Rule 10-01 of Regulation S-X.
In the opinion of management, the unaudited interim financial statements
contained in this report reflect all adjustments, consisting of only normal
recurring accruals which are necessary for a fair presentation of the financial
position and the results of operations for the interim periods presented. The
results of operations for any interim period are not necessarily indicative of
results for the full year.
These financial statements, footnote disclosures and other information
should be read in conjunction with the financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
B. Litigation
On February 15, 1994, a purported class action suit was filed in the
United States District Court in the Western District of Tennessee against the
Company and certain of its current and previous officers. The suit alleged
racially discriminatory job selection, termination and work environment
practices in violation of federal law. In June 1996, the U.S. District Court
Judge ruled that the pending lawsuit would proceed provisionally as a class
action. On July 22, 1996, the Company agreed to a preliminary settlement which
was approved on November 15, 1996 by the U.S. District Court. Under the
settlement, the Company will pay to members of the class and their counsel up
to $7.5 million, consisting of $6.1 million in cash and $1.4 million in
O'Charley's common stock. The Company charged to earnings the $7.5 million and
an additional $1.0 million for legal and related expenses incurred and
anticipated to be incurred in connection with the settlement. The settlement
and related reserves resulted in a second quarter charge to earnings of
approximately $5.5 million after-tax or $.71 per share.
C. Asset Revaluation
During the second quarter of 1996, losses at certain restaurant units
prompted an evaluation of net realizable value of certain assets in accordance
with Financial Accounting Standards Board Statement No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
("FASB 121"). Accordingly, the Company recorded a $5.1 million pre-tax charge
to earnings in the second quarter of 1996 for assets impaired under FASB 121.
This amount represents the difference between fair value and net book value for
certain identifiable assets. The $5.1 charge is comprised of the following
impaired restaurant assets: $1.9 million for two units closed subsequent to
the end of the second quarter; $1.0 million for an additional three units
expected to be closed or relocated within one-year; and $2.2 million for other
assets expected to be held. The fair market value for the assets of stores
expected to remain open was primarily measured by discounting the future
expected cash flows for those units.
D. Business Acquisitions
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 was 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. The accompanying
1996 financial statements include the transactions and balances of Shoex. Each
of the previously reported financial statements have been restated to reflect
the combined results of the Company and Shoex.
-7-
<PAGE> 8
O'Charley's Inc.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Twelve and Forty Weeks Ended October 6, 1996 and October 1, 1995
Results of Operations
The following table highlights the operating results for the third quarter
and first three quarters of 1996 and 1995 as a percentage of total revenue
unless otherwise indicated. Each of the third quarters is comprised of 12
weeks. Each of the first three quarters is comprised of 40 weeks. All
comparisons included in management's discussion and analysis compares the
respective third quarter and first three quarters of 1996 to the third quarter
and first three quarters of 1995 unless otherwise indicated.
<TABLE>
<CAPTION>
Third Quarter Year To Date
--------------- ---------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues:
Restuarant sales 98.5% 93.1% 98.5% 92.6%
Commissary sales 1.5% 6.9% 1.5% 7.4%
----- ----- ----- -----
100.0% 100.0% 100.0% 100.0%
Costs and Expenses:
Cost of restaurant sales: (1)
Cost of food, beverage and supplies 36.2% 37.0% 36.0% 36.9%
Payroll and benefits 31.1% 29.9% 31.1% 29.9%
Restaurant operating costs 15.0% 15.2% 15.2% 15.1%
----- ----- ----- -----
82.3% 82.1% 82.3% 81.9%
Restaurant operating margin 17.7% 17.9% 17.7% 18.1%
Cost of commissary sales (2) 95.5% 95.5% 95.3% 95.5%
Advertising, general and
administrative expenses 5.5% 5.5% 5.6% 5.6%
Asset revaluation - - 4.1% -
Depreciation and amortization 4.8% 4.3% 4.9% 4.1%
Other(Income)Expense:
Interest expense, net 1.5% 1.3% 1.6% 1.4%
Litigation - - 6.8% 0.9%
Other, net (0.1)% (22.5)% 0.0% (7.6)%
Earnings (Loss) Before Income Taxes 5.9% 28.4% (5.4)% 12.7%
Net Earnings (Loss) 3.8% 17.7% (3.5)% 8.0%
===== ===== ===== =====
</TABLE>
- ----------------------
(1) As a percentage of restaurant sales.
(2) As a percentage of commissary sales.
-8-
<PAGE> 9
TOTAL REVENUES increased $5,204,000 or 15.3% for the third quarter of 1996
and $15,234,000 or 13.9% for the first forty weeks of 1996. Restaurant sales
increased $6,973,000 or 22.0% and $21,563,000 or 21.3% for the third quarter
and first three quarters of 1996, respectively. These increases are primarily
due to additional Company owned restaurants operated in 1996. The following
table presents the number of restaurants in operation for each of the first
three quarters in 1996 and 1995:
<TABLE>
1996 1995
---- ----
<S> <C> <C>
Company Restaurants:
Number of restaurants at beginning of year 61 50
Opened during first quarter 5 3
Opened during second quarter 3 3
Opened during third quarter 3 2
Closed during third quarter (4) -
---- ----
Number of restaurants at end of third quarter 68 58
==== ====
Franchised Restaurants 1 1
---- ----
Total Restaurants 69 59
==== ====
</TABLE>
In addition, restaurant sales for the third quarter of 1996 were
positively affected from higher average unit volumes of newly opened stores.
Same store sales increased .2% in the third quarter of 1996. Same store sales
did not change for the first forty weeks of 1996. For each of the first three
quarters of 1996, same store sales were positively affected by an increase in
the overall check average due primarily to a menu price increase of 1.5% taken
in the fourth quarter of 1995. In the first three quarters of 1996, the
Company experienced declines in same store customer counts.
Commissary sales decreased in each of the first three quarters of 1996
primarily as the result of discontinuing sales to Logan's Roadhouse Restaurants
and to certain unaffiliated restaurants. Following its initial public
offering, Logan's ceased purchasing products from the Commissary in October
1995.
RESTAURANT OPERATING MARGIN, defined as restaurant sales less cost of
restaurant sales, increased $1.2 million or 20.8% in the third quarter of 1996
and $3.4 million or 18.7% in the first three quarters of 1996. As a percentage
of restaurant sales, the restaurant operating margin decreased .2% to 17.7% in
the third quarter and decreased .4% to 17.7% in the first three quarters. In
each of the first three quarters of 1996, the percentage margin decrease was
primarily due to an increase in the percentage cost of payroll and benefits
partially offset by a decrease in the percentage cost of food, beverage and
supplies.
COST OF FOOD, BEVERAGE AND SUPPLIES as a percentage of restaurant sales
decreased .8% and .9% in the third quarter and first three quarters of 1996,
respectively. The percentage cost decrease in the third quarter was primarily
due to cost reductions in produce and poultry. For the first three quarters,
the decrease in the cost of food was due primarily to a reduction in produce
cost, primarily lettuce, and to an overall reduction in red meat cost.
PAYROLL AND BENEFITS as a percentage of restaurant sales increased 1.2% in
the third quarter and first three quarters of 1996. The Company is continuing
to pay higher base salaries and hourly wage rates in order to attract and
retain management and hourly co-workers. Additionally, the Company experienced
higher bonus expense and employee benefit costs, primarily vacation pay in
1996. A decrease in workers compensation expense partially offset the above
mentioned increases. The federal minimum wage rate increased by $.50 to $4.75
per hour on October 1, 1996 and an additional increase of $.40 to $5.15 per
hour will occur on September 1, 1997. The base wage rate paid to directly
tipped employees has remained at $2.13 per hour. The Company generally pays
higher wage rates for its hourly co-workers as compared to the expected
increase in the minimum wage rate. The Company has, however, experienced a
minimal increase in labor costs as a result of the minimum wage increase. The
inflationary effects of the minimum wage increase is currently unknown and may
increase the cost of payroll and benefits in the future.
ADVERTISING, GENERAL AND ADMINISTRATIVE EXPENSES as a percentage of total
revenue did not change in the third quarter and the first three quarters of
1996. In the third quarter and first three quarters of 1996, the Company
increased its percentage cost of advertising. Additionally, the Company
incurred higher salary and related payroll cost
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<PAGE> 10
due to the hiring of additional management personnel in the areas of
information services, advertising and real estate. These increases were
partially offset by a decrease in executive officers' bonus compensation which
is based on a formula of increased profits. Certain other cost percentages
decreased as a result of spreading certain general and administrative expenses
over a greater volume of total revenue. Subsequent to the Company's new menu
introduced near the end of the third quarter of 1996, the Company began a new
radio and television advertising campaign. Management expects to increase
advertising expense as a percentage of sales during the fourth quarter of 1996.
DEPRECIATION AND AMORTIZATION EXPENSE as a percentage of total revenues
increased .5% and .8% in the third quarter and first three quarters of 1996.
Pre-opening amortization expense has increased due to the increased number of
new stores opened for less than one year. Depreciation expense as a percentage
of restaurant sales increased as the Company increased the amount of building
improvement costs due to the remodeling of certain existing restaurants.
ASSET REVALUATION represents the write down of certain assets in
accordance with FASB Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of". See footnote C
of the accompanying notes to unaudited financial statements.
INTEREST EXPENSE increased as a result of increased borrowings associated
primarily with the Company's expansion of new restaurants.
LITIGATION represents the proposed settlement of a purported class action
lawsuit alleging racial discrimination. These costs include anticipated
payments to the defendants, legal costs and other payments expected in
accordance with the proposed settlement. See footnote B of the accompanying
notes to unaudited financial statements and liquidity and capital resources.
OTHER (INCOME) EXPENSE, NET was a net income of $56,000 in the third
quarter of 1996 compared with a net income of $7.7 million in the same period
of 1995. On a year to date basis, other, net decreased $8.3 million in 1996.
During the first three quarters of 1995, the Company recorded its equity
earnings of Logan's Roadhouse Restaurants and net rental income and guarantee
fees related to its ownership of the five Logan's restaurant sites in other
income, net. In July 1995, Logan's completed an initial public offering and
the Company sold substantially all of its interest in Logan's and recorded a
gain of approximately $7.4 million. Consequently, the Company no longer
receives any income from Logan's except that in the first quarter of 1996, the
Company sold its remaining 7,000 shares of Logan's common stock. On January 5,
1996, the shareholders of the Company approved an Agreement and Plan of Merger
to merge with Shoex, Inc., a franchisee of the Company which owned and operated
six O'Charley's restaurants in Alabama. During the first quarter of 1996, the
Company expensed approximately $290,000 in acquisition cost associated with
this merger.
INCOME TAX EXPENSE for fiscal year 1995 was 36.5% of pre-tax income and
the expected rate for 1996 is approximately 35.0%. Due to the litigation
expense, the Company's federal income tax bracket in 1996 is expected to
decrease by 1.0%
Liquidity and Capital Resources
During the first forty weeks of 1996, the Company expended approximately
$26,652,000 in capital expenditures for new stores and improvements to existing
facilities. Additionally, the Company incurred approximately $1.8 million in
pre-opening costs and made $3.0 million in principal reductions in its
capitalized lease obligations and long-term debt. These cash outlays were
funded primarily by borrowings of $17.3 million on the Company's line of credit
facility, borrowings under capitalized lease obligations of $3.5 million and
$6.7 million cash provided by operating activities.
On April 21, 1994, the Company entered into a $30 million revolving line
of credit agreement with four banks (bank group) for a three-year term. At
October 6, 1996, $27.8 million was outstanding under this facility compared
with $10.5 million at December 31, 1995. The credit facility requires
quarterly interest payments at the lower of the bank's prime rate or the LIBOR
rate plus 1.5%. The credit facility contains certain financial and other
covenants, including restrictions on the sale of certain assets and additional
long-term debt facilities. The facility has a term expiring in July 1997, but
includes an option to extend the maturity for an additional two years upon
conversion of the facility to a term loan with principal payments
-10-
<PAGE> 11
required quarterly based on a seven-year amortization. At July 14, 1996, the
Company had available $2.2 million under this credit facility.
The Company has received a commitment (the "Commitment") from its bank
group to restructure its existing line of credit facility to increase the
amount available under its line of credit to $70 million, and to extend the
maturity to November 1999. The anticipated agreement will require 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 amount of the interest rate spread on the restructured facility
may vary and will be dependent on certain financial ratios achieved by the
Company. The anticipated new facility will contain provisions to extend its
term by an additional one year at the end of each anniversary period.
The Company opened 11 restaurants in the first three quarters of 1996. As
of October 6, 1996, the Company had five additional restaurants under
construction, one of which is expected to open in the fourth quarter of 1996.
For fiscal 1996, the Company expects to open 12 new Company-owned restaurants.
Management estimates that the Company will spend approximately $5.5 million in
capital expenditures for the remainder of 1996 and approximately $34 million in
1997. Actual capital expenditures may vary based on a number of factors,
including the timing of additional purchases of future restaurant sites. The
Company intends to continue to finance the furniture, fixtures and equipment
for its new stores with capitalized lease obligations.
On February 15, 1994, a purported class action suit was filed in the
United States District Court in the Western District of Tennessee against the
Company and certain of its current and previous officers. The suit alleged
racially discriminatory job selection, termination and work environment
practices in violation of federal law. The lawsuit was originally set for
trial in April 1995, however, on March 17, 1995 the Court continued the trial
until such time as the Court was able to resolve the motions pending before it,
including those relating to whether the litigation would proceed as a class
action. Anticipating an April trial, in the first quarter of 1995, the Company
reserved a total of $1.0 million for legal and other expenses expected to be
incurred in defending this litigation. In June 1996, the U.S. District Court
Judge ruled that the pending lawsuit would proceed provisionally as a class
action. Due to the significant distraction this lawsuit has had on management
and the uncertainty it has caused in the market place, the Company, on July 22,
1996, agreed to a preliminary settlement which was approved on November 15,
1996 by the U.S. District Court. Under the settlement, the Company will pay up
to $7.5 million to the members of the class and their counsel, consisting of
$6.1 million in cash and $1.4 million in O'Charley's common stock. The Company
charged to earnings in the second quarter the $7.5 million and an additional
$1.0 million reserve for legal and related expenses incurred and anticipated to
be incurred in connection with the settlement. The settlement and related
reserves resulted in a second quarter charge to earnings of approximately $5.5
million after-tax or $.71 per share. The Company anticipates having to borrow
funds from its revolving credit facility to pay for this settlement. The
Company has received the consent of its bank group for the proposed settlement
amount.
-11-
<PAGE> 12
Part II - Other Information
Item 1. Legal Proceedings
On February 15, 1994, a purported class action suit was filed in the
United States District Court in the Western District of Tennessee against the
Company and certain of its current and previous officers. The suit alleged
racially discriminatory job selection, termination and work environment
practices in violation of federal law. The lawsuit was originally set for
trial in April 1995, however, on March 17, 1995 the Court continued the trial
until such time as the Court was able to resolve the motions pending before it,
including those relating to whether the litigation would proceed as a class
action. Anticipating an April trial, in the first quarter of 1995, the Company
reserved a total of $1.0 million for legal and other expenses expected to be
incurred in defending this litigation. In June 1996, the U.S. District Court
Judge ruled that the pending lawsuit would proceed provisionally as a class
action. Due to the significant distraction this lawsuit has had on management
and the uncertainty it has caused in the market place, the Company, on July 22,
1996, agreed to a preliminary settlement which was approved on November 15,
1996 by the U.S. District Court. Under the settlement, the Company will pay up
to $7.5 million to the members of the class and their counsel, consisting of
$6.1 million in cash and $1.4 million in O'Charley's common stock. The Company
charged to earnings in the second quarter the $7.5 million and an additional
$1.0 million reserve for legal and related expenses incurred and anticipated
to be incurred in connection with the settlement. The settlement and related
reserves resulted in a second quarter charge to earnings of approximately
$5.5 million after-tax or $.71 per share. The Company anticipates having to
borrow funds from its revolving credit facility to pay for this settlement.
The Company has received the consent of its bank group for the proposed
settlement amount.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule (for SEC use only)
(a) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the twelve
weeks ended October 6, 1996
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<PAGE> 13
Signatures
Pursuant to the requirements 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.
(Registrant)
Date: August 13, 1997 By: /s/ Gregory L. Burns
----------------------- --------------------------
Gregory L. Burns
President and
Chief Executive Officer
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF O'CHARLEY'S, INC. FOR THE 12 WEEKS ENDED OCTOBER
6, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JUL-15-1996
<PERIOD-END> OCT-06-1996
<CASH> 330
<SECURITIES> 0
<RECEIVABLES> 1,615
<ALLOWANCES> 0
<INVENTORY> 5,748
<CURRENT-ASSETS> 11,433
<PP&E> 98,947
<DEPRECIATION> 0
<TOTAL-ASSETS> 111,337
<CURRENT-LIABILITIES> 24,635
<BONDS> 0
0
0
<COMMON> 29,651
<OTHER-SE> 17,412
<TOTAL-LIABILITY-AND-EQUITY> 111,337
<SALES> 123,018
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<INCOME-PRETAX> (6,796)
<INCOME-TAX> (2,379)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,417)
<EPS-PRIMARY> (.57)
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</TABLE>
