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) October 30, 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 October 30, 2001, Applebee's International, Inc. (the "Company") issued
a press release entitled "Applebee's International Reports Third Quarter Diluted
Earnings Per Share of 44 Cents; Provides Guidance for Fiscal Year 2002." The
press release contained the following information.
FOR IMMEDIATE RELEASE
Contact: Carol DiRaimo,
Director of Investor Relations
(913) 967-4109
Applebee's International Reports Third Quarter
Diluted Earnings Per Share of 44 Cents
Provides Guidance for Fiscal Year 2002
Overland Park, Kan., October 30, 2001 -- Applebee's International, Inc.
(Nasdaq:APPB) today reported net earnings of $16.8 million, or 45 cents and 44
cents per share on a basic and diluted basis, respectively, for the third
quarter ended September 30, 2001. The reported earnings per share are consistent
with the company's earlier guidance and represent an increase of 12.5 percent
and 10 percent on a basic and diluted basis, respectively, as compared with 40
cents per share on both a basic and diluted basis for the third quarter of 2000.
As previously reported, system-wide comparable sales increased 2.7 percent for
the third quarter. Franchise and company restaurants increased 2.9 percent and
1.9 percent, respectively, for the third quarter.
The company also reported comparable sales for the October fiscal period,
comprised of the four weeks ended October 28, 2001. System-wide comparable sales
increased 1.6 percent, reflecting a 2.1 percent increase for franchise
restaurants and a 0.3 percent decrease for company restaurants. The decrease in
comparable sales for company restaurants reflects negative guest traffic of
approximately 2.0 percent, offset in part by a higher average check.
Lloyd L. Hill, chairman and chief executive officer, said, "Given the uncertain
economic and operating environment, we are pleased with our overall system-wide
sales performance in the recent months of September and October. Sales trends in
October have continued to be erratic in the aftermath of the September 11th
events, with weekend traffic remaining stronger than weekday traffic. The timing
of our October promotions resulted in no network television advertising for two
weeks of the month while we had advertising in all four weeks of last year.
While difficult to predict, we continue to expect system-wide comparable sales
for the fourth quarter to be in the range of zero to 2 percent."
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Hill concluded, "Even as our economy has slowed, development remains on track
with 74 restaurants opened year-to-date, and 2001 will mark the ninth
consecutive year that the Applebee's system has opened more than 100
restaurants. Long-term consumer-dining habits are firmly entrenched, and given
our dominant brand, franchise business model and strong price/value
relationship, we believe we are well positioned to weather a weaker
consumer-spending environment."
Other results for the third quarter and year-to-date periods ended September 30,
2001 included:
o Net earnings for the 39-week period ended September 30, 2001 were $51.4
million, or $1.39 and $1.36 per share, respectively, on a basic and diluted
basis. This compares to net earnings in the same period of 2000 of $47.2
million, or $1.19 and $1.18 per share, respectively, on a basic and diluted
basis. This represents an increase in basic and diluted earnings per share
of 17 percent and 15 percent, respectively.
o System-wide sales for the Applebee's concept were a record $745.9 million
for the third quarter, an increase of 12 percent over the prior year.
System-wide sales for the 39-week period ended September 30, 2001 reached
$2.19 billion, also up 12 percent.
o Operating revenues (comprised of company restaurant sales and franchise
income) increased 9 percent for the third quarter and 10 percent for the
year-to-date period.
o Applebee's ended the quarter with 1,358 restaurants system-wide (298
company and 1,060 franchise restaurants). During the third quarter of 2001,
there were 34 new Applebee's restaurants opened system-wide, including 9
company and 25 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
195,000 shares of common stock in the third quarter at an average price of
$27.71 for an aggregate cost of $5.4 million. As of September 30, 2001,
$20.6 million remains available under this authorization. During 2001, the
company has repurchased 1,909,000 shares at an average price of $23.56 for
an aggregate cost of $45.0 million under this and previous authorizations.
The company expects to complete the refinancing of its existing credit
facilities in early November with the establishment of a new $150 million
revolving credit facility. As a result of the refinancing, non-recurring charges
of approximately 10 cents per share are expected in the fourth quarter due to
the write-off of previously deferred financing costs and the termination of
interest rate swap agreements.
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APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share amounts)
13 Weeks Ended 39 Weeks Ended
----------------------------------- ------------------------------------
September 30, September 24, September 30, September 24,
2001 2000 2001 2000
---------------- --------------- ---------------- ----------------
Revenues:
Company restaurant sales................... $ 164,238 $ 151,038 $ 486,416 $ 444,398
Franchise income........................... 23,787 21,252 69,906 61,787
---------------- --------------- ---------------- ----------------
Total operating revenues................ 188,025 172,290 556,322 506,185
---------------- --------------- ---------------- ----------------
Cost of company restaurant sales:
Food and beverage.......................... 44,489 41,408 131,427 120,789
Labor...................................... 52,864 47,703 155,297 140,825
Direct and occupancy....................... 41,459 38,005 123,322 109,760
Pre-opening expense........................ 632 322 899 831
---------------- --------------- ---------------- ----------------
Total cost of company restaurant sales.. 139,444 127,438 410,945 372,205
---------------- --------------- ---------------- ----------------
General and administrative expenses............. 19,197 16,224 54,448 48,569
Amortization of intangible assets............... 1,463 1,460 4,388 4,366
Loss on disposition of restaurants and equipment 330 231 1,088 906
---------------- --------------- ---------------- ----------------
Operating earnings.............................. 27,591 26,937 85,453 80,139
---------------- --------------- ---------------- ----------------
Other income (expense):
Investment income.......................... 479 389 1,251 1,105
Interest expense........................... (1,831) (2,225) (6,231) (6,856)
Other income............................... 322 (79) 797 342
---------------- --------------- ---------------- ----------------
Total other expense..................... (1,030) (1,915) (4,183) (5,409)
---------------- --------------- ---------------- ----------------
Earnings before income taxes.................... 26,561 25,022 81,270 74,730
Income taxes.................................... 9,775 9,208 29,907 27,501
---------------- --------------- ---------------- ----------------
Net earnings.................................... $ 16,786 $ 15,814 $ 51,363 $ 47,229
================ =============== ================ ================
Basic net earnings per common share (a)......... $ 0.45 $ 0.40 $ 1.39 $ 1.19
================ =============== ================ ================
Diluted net earnings per common share (a)....... $ 0.44 $ 0.40 $ 1.36 $ 1.18
================ =============== ================ ================
Basic weighted average shares outstanding (a)... 36,911 39,147 36,980 39,729
================ =============== ================ ================
Diluted weighted average shares outstanding (a). 37,880 39,280 37,824 39,940
================ =============== ================ ================
(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 39 Weeks Ended
----------------------------------- ------------------------------------
September 30, September 24, September 30, September 24,
2001 2000 2001 2000
---------------- --------------- ---------------- ----------------
Revenues:
Company restaurant sales................ 87.3% 87.7% 87.4% 87.8%
Franchise income........................ 12.7 12.3 12.6 12.2
---------------- --------------- ---------------- ----------------
Total operating revenues............. 100.0% 100.0% 100.0% 100.0%
================ =============== ================ ================
Cost of sales (as a percentage of
company restaurant sales):
Food and beverage....................... 27.1% 27.4% 27.0% 27.2%
Labor................................... 32.2 31.6 31.9 31.7
Direct and occupancy.................... 25.2 25.2 25.4 24.7
Pre-opening expense..................... 0.4 0.2 0.2 0.2
---------------- --------------- ---------------- ----------------
Total cost of sales.................. 84.9% 84.4% 84.5% 83.8%
================ =============== ================ ================
General and administrative expenses.......... 10.2% 9.4% 9.8% 9.6%
Amortization of intangible assets............ 0.8 0.8 0.8 0.9
Loss on disposition of restaurants and
equipment.................................. 0.2 0.1 0.2 0.2
---------------- --------------- ---------------- ----------------
Operating earnings........................... 14.7 15.6 15.4 15.8
---------------- --------------- ---------------- ----------------
Other income (expense):
Investment income....................... 0.3 0.2 0.2 0.2
Interest expense........................ (1.0) (1.3) (1.1) (1.4)
Other income............................ 0.2 -- 0.1 0.1
---------------- --------------- ---------------- ----------------
Total other expense.................. (0.5) (1.1) (0.8) (1.1)
---------------- --------------- ---------------- ----------------
Earnings before income taxes................. 14.1 14.5 14.6 14.8
Income taxes................................. 5.2 5.3 5.4 5.4
---------------- --------------- ---------------- ----------------
Net earnings................................. 8.9% 9.2% 9.2% 9.3%
================ =============== ================ ================
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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
Consistent with the company's previous guidance, fourth quarter diluted earnings
per share are expected to be in the range of 42 to 45 cents, excluding the
impact of non-recurring refinancing costs. Accordingly, fiscal year 2001 diluted
earnings per share are expected to be in the range of $1.78 to $1.81 (exclusive
of the refinancing costs), an increase of 11 to 13 percent over 2000 (fiscal
year 2001 is a 52-week fiscal year as compared to 53 weeks in 2000).
The company also provided guidance as to its business outlook for fiscal year
2002.
o Over 100 new restaurants are expected to open again in 2002, including
approximately 25 company restaurants and 80 to 90 franchise restaurants.
o Based on the current economic outlook and operating environment,
system-wide comparable sales are expected to increase in the range of zero
to 2 percent.
o As a result of the refinancing of the company's existing credit facilities,
interest expense for 2002 is expected to be in the range of $4.0 million to
$4.5 million, assuming no significant change in interest rates.
o The company will adopt Statement of Financial Accounting Standards No. 142
at the beginning of 2002 resulting in the reduction of goodwill
amortization and an increase in diluted earnings per share of approximately
9 cents.
o The uncertain economic environment lends a high degree of unpredictability
in forecasting sales and earnings. Based on the foregoing assumptions,
diluted earnings per share for 2002 are expected to be in the range of
$2.05 to $2.13.
A conference call to review the third quarter 2001 results and the current
business outlook will be held on Wednesday morning, October 31, 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. As of
October 28, 2001, there were 1,368 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: October 30, 2001 By: /s/ George D. Shadid
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George D. Shadid
Executive Vice President and
Chief Financial Officer
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