UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 1, 2001
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Commission File Number: 000-17962
Applebee's International, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 43-1461763
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4551 W. 107th Street, Suite 100, Overland Park, Kansas 66207
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(Address of principal executive offices and zip code)
(913) 967-4000
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(Registrant's telephone number, including area code)
None
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(Former name or former address, if changed since last report)
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Item 5. Other Events
On August 1, 2001, Applebee's International, Inc. (the "Company") issued a
press release entitled "Applebee's International Reports 15 Percent Increase in
Second Quarter Diluted Earnings Per Share of 47 Cents. Second Quarter Comparable
Sales Increase 3.1 Percent." The press release contained the following
information.
FOR IMMEDIATE RELEASE
Contact: Carol DiRaimo,
Director of Investor Relations
(913) 967-4109
Applebee's International Reports 15 Percent Increase
in Second Quarter Diluted Earnings Per Share of 47 Cents
Second Quarter Comparable Sales Increase 3.1 Percent
Overland Park, Kan., August 1, 2001 -- Applebee's International, Inc.
(Nasdaq:APPB) today reported net earnings of $17.8 million, or 48 cents and 47
cents per share on a basic and diluted basis, respectively, for the second
quarter ended July 1, 2001. This represents an increase in earnings per share of
14 percent and 15 percent on a basic and diluted basis, respectively, as
compared with 42 cents and 41 cents per share on a basic and diluted basis for
the second quarter of 2000.
Comparable sales for company restaurants increased 3.1 percent for the second
quarter, reflecting an increase in guest traffic of approximately 1.0 percent
combined with a higher average check (resulting from a price increase taken in
the first quarter and menu mix shifts). System-wide and franchise restaurant
comparable sales both increased 3.1 percent for the second quarter.
Lloyd L. Hill, chairman and chief executive officer, said, "We are enthusiastic
about our same-store sales and traffic growth in the second quarter, especially
considering the more challenging economic and operating environment. We did not
experience a decline in guest check in the second quarter and the price increase
we took earlier this year has not met with customer resistance.
Hill continued, "The first phase of our new core menu was successfully
introduced in over 1,000 franchise restaurants during the second quarter. In
addition, we have recently added a number of new or enhanced menu items in
company restaurants as part of our continual evolution of the core menu. We
believe our food and menu initiatives, marketing strategies and strong value
proposition combined with demographic and lifestyle trends position us well for
the long-term."
- more -
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Other results for the second quarter and year-to-date periods ended July 1, 2001
included:
o Net earnings for the 26-week period ended July 1, 2001 were $34.6
million, or 93 cents and 92 cents per share, respectively, on a basic
and diluted basis. This compares to net earnings in the same period of
2000 of $31.4 million, or 78 cents per share on both a basic and
diluted basis. This represents an increase in basic and diluted
earnings per share of 19 percent and 18 percent, respectively.
o Comparable sales for the June fiscal period, comprised of the five
weeks ended July 1, 2001, increased 3.6 percent for company
restaurants, reflecting an increase in guest traffic of approximately
1.0 percent, and a higher average check. System-wide and franchise
restaurant comparable sales increased 3.8 percent and 3.9 percent,
respectively, for the June period.
o System-wide sales for the Applebee's concept were a record $732.5
million for the second quarter, an increase of 12 percent over the
prior year. System-wide sales for the 26-week period ended July 1,
2001 reached $1.45 billion, also up 12 percent.
o Operating revenues (comprised of company restaurant sales and
franchise income) increased 10 percent for the second quarter and
year-to-date period.
o Applebee's ended the quarter with 1,324 restaurants system-wide (289
company and 1,035 franchise restaurants). During the second quarter of
2001, there were 26 new Applebee's restaurants opened system-wide,
including 2 company and 24 franchised restaurants.
o In February 2001, the company's board of directors authorized an
additional program to repurchase up to $55 million of the company's
common stock through 2001, subject to market conditions and pursuant
to applicable restrictions under the company's debt agreements. The
company repurchased 379,000 shares of common stock in the second
quarter at an average price of $26.54 for an aggregate cost of $10.1
million. During 2001, the company has repurchased 1,714,000 shares at
an average price of $23.09 for an aggregate cost of $39.6 million,
including $29.0 million under this authorization and $10.6 million
under previous authorizations.
The company also reported comparable sales for the July fiscal period, comprised
of the four weeks ended July 29, 2001. System-wide comparable sales increased
2.1 percent, including a 2.3 percent increase for franchise restaurants and a
1.2 percent increase for company restaurants. The increase in comparable sales
for company restaurants reflects flat guest traffic and a higher average check,
although the guest check average was impacted during the July period as a result
of the lower price points of the current "Summer Salads" promotion.
- more -
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APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share amounts)
13 Weeks Ended 26 Weeks Ended
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July 1, June 25, July 1, June 25,
2001 2000 2001 2000
----------- ----------- ------------ -----------
Revenues:
Company restaurant sales.................... $162,035 $147,909 $322,178 $293,360
Franchise income............................ 23,885 20,736 46,119 40,535
----------- ----------- ------------ -----------
Total operating revenues................. 185,920 168,645 368,297 333,895
----------- ----------- ------------ -----------
Cost of company restaurant sales:
Food and beverage........................... 43,633 39,323 86,938 79,381
Labor....................................... 51,533 46,954 102,433 93,122
Direct and occupancy........................ 41,104 36,095 81,863 71,755
Pre-opening expense......................... 132 213 267 509
----------- ----------- ------------ -----------
Total cost of company restaurant sales... 136,402 122,585 271,501 244,767
----------- ----------- ------------ -----------
General and administrative expenses.............. 18,085 16,338 35,251 32,345
Amortization of intangible assets................ 1,462 1,455 2,925 2,906
Loss on disposition of restaurants and equipment. 571 322 758 675
----------- ----------- ------------ -----------
Operating earnings............................... 29,400 27,945 57,862 53,202
----------- ----------- ------------ -----------
Other income (expense):
Investment income........................... 415 367 772 716
Interest expense............................ (2,043) (2,267) (4,400) (4,631)
Other income................................ 385 303 475 421
----------- ----------- ------------ -----------
Total other expense...................... (1,243) (1,597) (3,153) (3,494)
----------- ----------- ------------ -----------
Earnings before income taxes..................... 28,157 26,348 54,709 49,708
Income taxes..................................... 10,361 9,696 20,132 18,293
----------- ----------- ------------ -----------
Net earnings..................................... $ 17,796 $ 16,652 $ 34,577 $ 31,415
=========== =========== ============ ===========
Basic net earnings per common share (a).......... $ 0.48 $ 0.42 $ 0.93 $ 0.78
=========== =========== ============ ===========
Diluted net earnings per common share (a)........ $ 0.47 $ 0.41 $ 0.92 $ 0.78
=========== =========== ============ ===========
Basic weighted average shares outstanding (a).... 36,914 40,035 37,015 40,020
=========== =========== ============ ===========
Diluted weighted average shares outstanding (a).. 37,872 40,550 37,774 40,341
=========== =========== ============ ===========
(a) All earnings per share and weighted average share information reflects
a three-for-two stock split effective at the close of business on June 12,
2001.
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The following table sets forth, for the periods indicated, information derived
from the Company's consolidated statements of earnings expressed as a percentage
of total operating revenues, except where otherwise noted. Percentages may not
add due to rounding.
13 Weeks Ended 26 Weeks Ended
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July 1, June 25, July 1, June 25,
2001 2000 2001 2000
------------ ------------ ------------- ------------
Revenues:
Company restaurant sales................................ 87.2% 87.7% 87.5% 87.9%
Franchise income........................................ 12.8 12.3 12.5 12.1
------------ ------------ ------------- ------------
Total operating revenues............................. 100.0% 100.0% 100.0% 100.0%
============ ============ ============= ============
Cost of sales (as a percentage of company restaurant sales):
Food and beverage....................................... 26.9% 26.6% 27.0% 27.1%
Labor................................................... 31.8 31.7 31.8 31.7
Direct and occupancy.................................... 25.4 24.4 25.4 24.5
Pre-opening expense..................................... 0.1 0.1 0.1 0.2
------------ ------------ ------------- ------------
Total cost of sales.................................. 84.2% 82.9% 84.3% 83.4%
============ ============ ============= ============
General and administrative expenses.......................... 9.7% 9.7% 9.6% 9.7%
Amortization of intangible assets............................ 0.8 0.9 0.8 0.9
Loss on disposition of restaurants and equipment............. 0.3 0.2 0.2 0.2
------------ ------------ ------------- ------------
Operating earnings........................................... 15.8 16.6 15.7 15.9
------------ ------------ ------------- ------------
Other income (expense):
Investment income....................................... 0.2 0.2 0.2 0.2
Interest expense........................................ (1.1) (1.3) (1.2) (1.4)
Other income............................................ 0.2 0.2 0.1 0.1
------------ ------------ ------------- ------------
Total other expense.................................. (0.7) (0.9) (0.9) (1.0)
------------ ------------ ------------- ------------
Earnings before income taxes................................. 15.1 15.6 14.9 14.9
Income taxes................................................. 5.6 5.7 5.5 5.5
------------ ------------ ------------- ------------
Net earnings................................................. 9.6% 9.9% 9.4% 9.4%
============ ============ ============= ============
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Item 9. Regulation FD Disclosure
Applebee's International, Inc. (the "Company") also included guidance
regarding its business outlook in the press release. These comments are included
below.
BUSINESS OUTLOOK
The company also provided guidance as to its business outlook for the remainder
of 2001.
o Consistent with the company's previous guidance, diluted earnings per
share for fiscal year 2001 (a 52-week fiscal year as compared to 53
weeks in 2000) are expected to be in the range of $1.83 to $1.85, an
increase of 14 to 16 percent over the prior year.
o Comparable sales for both company and franchise restaurants are
expected to increase by at least 2 to 3 percent for the remainder of
2001.
o Overall restaurant margins before pre-opening expense for both the
third and fourth quarter are expected to be in the low-16 percent
range.
o General and administrative expenses are expected to be in the high-9
percent range, as a percentage of operating revenues, for the
remainder of the year.
A conference call to review the second quarter 2001 results will be held on
Thursday morning, August 2, 2001, at 10:00 a.m. Central Time (11:00 a.m. Eastern
Time). The conference call will be broadcast live over the Internet and a replay
will be available shortly after the call on the Investor Relations section of
the company's website (www.applebees.com).
Applebee's International, Inc., headquartered in Overland Park, Kan., currently
develops, franchises and operates restaurants under the Applebee's Neighborhood
Grill and Bar brand, the largest casual dining concept in the world. There are
currently 1,338 Applebee's restaurants operating system-wide in 49 states and
eight international countries. Additional information on Applebee's
International can be found at the company's website (www.applebees.com).
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The statements contained in the Business Outlook section of this release are
forward looking and based on current expectations. There are several risks and
uncertainties that could cause actual results to differ materially from those
described, including but not limited to the ability of the company and its
franchisees to open and operate additional restaurants profitably, the continued
growth of its franchisees and its ability to attract and retain qualified
franchisees, the impact of intense competition in the casual dining segment of
the restaurant industry and its ability to control restaurant operating costs
which are impacted by market changes, minimum wage and other employment laws,
food costs and inflation. For additional discussion of the principal factors
that could cause actual results to be materially different, the reader is
referred to the company's current report on Form 8-K filed with the Securities
and Exchange Commission on February 13, 2001. The company disclaims any
obligation to update these forward-looking statements.
# # #
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
APPLEBEE'S INTERNATIONAL, INC.
(Registrant)
Date: August 1, 2001 By: /s/ George D. Shadid
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George D. Shadid
Executive Vice President and
Chief Financial Officer
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