EXHIBIT 99.1
O'CHARLEY'S INC.
NEWS RELEASE
CONTACT: Lawrence E. Hyatt
Chief Financial Officer
(615) 782-8818
O'CHARLEY'S INC. REPORTS INITIAL IMPACT
OF HURRICANE KATRINA ON OPERATIONS
Company Updates Outlook for Third Quarter of Fiscal 2005
NASHVILLE, Tenn. (September 6, 2005) -- O'Charley's Inc. (NASDAQ/NM: CHUX), a
leading casual dining restaurant company, today made a preliminary statement on
the impact of Hurricane Katrina on its operations. In addition, the Company
updated its previously-issued earnings guidance for the third quarter of fiscal
2005.
The Company reported that 13 O'Charley's restaurants experienced
operational disruption at some point during or after Hurricane Katrina due to
storm damage. Three of those restaurants in the Gulf Coast area remain closed,
with at least two likely to remain closed for an extended period of time. The
Company confirmed that it retains flood and property insurance coverage against
certain of the physical losses, and it is currently evaluating potential
recoveries. The Company is working to re-open its closed restaurants and to
provide assistance to its employees and their families who have been impacted by
the hurricane and its aftermath. The Company is unable to fully estimate the
extent of the damage or the long term financial impact at this time.
Gregory L. Burns, chairman and chief executive officer of O'Charley's
Inc., said, "Our primary focus right now is ensuring the safety and wellbeing of
everyone in the O'Charley's family while doing all we can to assist our
communities and resume normal operations during the recovery process. We
empathize and stand with our loyal employees and customers who must rebuild
their homes and communities in the aftermath of Hurricane Katrina. In the end,
we will be part of the stronger, more vibrant Gulf Coast region that will emerge
from this disaster."
The Company also reported that prior to the hurricane and through the
first seven weeks of the third quarter, comparable restaurant sales at the
O'Charley's concept were flat, partially as a result of the continued weakness
of the Company's Midwest stores, while comparable restaurant sales at Ninety
Nine were at the lower end of the 0% to 2% range reflected in its
previously-issued guidance. This trend would have resulted in net income per
diluted share for the third quarter at or below the low end of the
previously-issued guidance range of $0.11-$0.15.
While the Company is unable to estimate the full impact of Hurricane
Katrina on its results of operations, the Company, based on the latest
information available, now expects to report net income per diluted share of
between $0.02 and $0.05 for the 12 weeks ending October 2, 2005. The Company's
revised guidance for the third quarter includes an estimate of the impact of
lost sales at the 13 O'Charley's restaurants directly impacted by Hurricane
Katrina of approximately $0.01, the impact of reduced sales and margins at the
Company's other restaurants of between $0.03 and $0.04 per diluted share, an
estimate of uninsured losses of between $0.01 and $0.02 per diluted share, and
an estimate of the cost of providing assistance to impacted
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3038 Sidco Drive - Nashville, TN 37204 - (615) 256-8500
CHUX Revises Outlook for Third Quarter of 2005
Page 2
September 6, 2005
employees of between $0.01 and $0.02 per diluted share. The Company also reduced
its estimate of third quarter pre-opening costs by $0.01 per diluted share due
to the expected timing of restaurant openings. Due to the uncertain impact of
Hurricane Katrina and its aftermath on the Company's results of operations, the
Company's previously issued guidance for the full fiscal year 2005 should no
longer be relied upon. The Company plans to issue revised guidance for the full
fiscal year when it reports its financial results for the third quarter.
Mr. Burns stated, "Prior to Hurricane Katrina, customer counts were up
at both O'Charley's and Ninety Nine, but the average check at both concepts was
below our original expectations. We believe that the continued pressure from
record gasoline prices continues to influence the buying decisions of our
customers. The lower than expected average check combined with higher labor
costs so far this quarter have resulted in lower than anticipated operating
margins. Given the much tougher operating climate that exists now compared with
only a few weeks ago, the prospect of higher gasoline prices and tight gasoline
supplies through the end of the year, and the initial assessment of the impact
of Hurricane Katrina, we believe it is prudent to revise our expectations for
the third quarter. Our guidance is subject to further revision once the full
impact of the hurricane and its aftermath are known."
ABOUT O'CHARLEY'S INC.
O'Charley's Inc. operates 228 company-owned O'Charley's restaurants in
17 states in the Southeast and Midwest, including three restaurants currently
closed due to Hurricane Katrina, and has four franchised O'Charley's restaurants
in Michigan and two joint venture O'Charley's restaurants in Louisiana. The
menu, with an emphasis on fresh preparation, features several specialty items
such as hand-cut and aged steaks, a variety of seafood and chicken, freshly
baked yeast rolls, fresh-cut salads with special-recipe salad dressings and
signature caramel pie. The Company also operates Ninety Nine Restaurant & Pub
restaurants in 107 locations throughout Connecticut, Maine, Massachusetts, New
Hampshire, New York, Rhode Island and Vermont. Ninety Nine has earned a strong
reputation for providing generous portions of high-quality food at moderate
prices in a comfortable, relaxed atmosphere. The menu features a wide selection
of appetizers, salads, sandwiches, burgers, entrees and desserts. In addition,
the Company operates six Stoney River Legendary Steaks restaurants in Georgia,
Illinois, Kentucky and Tennessee. The dinner-only steakhouse concept appeals to
both upscale casual dining and fine dining customers by offering high-quality
food and attentive customer service typical of high-end steakhouses at more
moderate prices.
FORWARD LOOKING STATEMENT
This press release and statements made by or on behalf of the Company
relating hereto may be deemed to constitute forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are subject to the
Company's inability to accurately estimate the full impact of Hurricane Katrina
and the Company's related employee assistance efforts on its results of
operations, and may be affected by certain risks and uncertainties, including,
but not limited to, the Company's ability to increase operating margins; the
effect that increases in food, labor, gasoline, interest costs and other
expenses have on our results of operations; the possible adverse effect on our
sales of decreases in consumer spending; the effect of increased competition;
the impact on our results of operations of restarting development of our
StoneyRiver concept, and the other risks described in the Company's filings with
the Securities and
CHUX Revises Outlook for Third Quarter of 2005
Page 3
September 6, 2005
Exchange Commission. In light of the significant uncertainties inherent in the
forward-looking statements included herein, you should not regard the inclusion
of such information as a representation by us that our objectives, plans and
projected results of operations will be achieved and the Company's actual
results could differ materially from such forward-looking statements. The
Company does not undertake any obligation to publicly release any revisions to
the forward-looking statements contained herein to reflect events and
circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events.
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