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) February 13, 2002
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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)
1
Item 5. Other Events
On February 13, 2002, Applebee's International, Inc. (the "Company") issued
a press release entitled "Applebee's International Reports Fourth Quarter
Earnings Per Share of 45 Cents Excluding Refinancing Costs; Full Year EPS
Increases 13 Percent to $1.81." The press release contained the following
information.
FOR IMMEDIATE RELEASE
Contact: Carol DiRaimo,
Director of Investor Relations
(913) 967-4109
Applebee's International Reports Fourth Quarter
Earnings Per Share of 45 Cents Excluding Refinancing Costs;
Full Year EPS Increases 13 Percent to $1.81
Overland Park, Kan., Feb. 13, 2002 -- Applebee's International, Inc.
(Nasdaq:APPB) today reported net earnings of $17.1 million, or 46 cents and 45
cents per share on a basic and diluted basis, respectively, for the fourth
quarter ended December 30, 2001 (excluding a $4.1 million or 11 cent per share
after-tax charge relating to refinancing costs), as compared to 42 cents per
share on both a basic and diluted basis for the fourth quarter of 2000. Fourth
quarter 2001 results include 13 weeks as compared to 14 weeks in the 2000
quarter. Including refinancing costs, net earnings were $13.0 million, or 35
cents and 34 cents per share on a basic and diluted basis, respectively, for the
fourth quarter of 2001.
For the fiscal year ended December 30, 2001, net earnings were a record $68.5
million, or $1.85 and $1.81 per share on a basic and diluted basis, respectively
(excluding a $4.1 million or 11 cent per share after-tax charge relating to
refinancing costs). This represents a 15 percent and 13 percent increase in
basic and diluted earnings per share, respectively, as compared to fiscal year
2000 earnings of $1.61 and $1.60 per share on a basic and diluted basis,
respectively. Fiscal year 2001 results include 52 weeks as compared to 53 weeks
in fiscal year 2000. Including refinancing costs, net earnings were $64.4
million, or $1.74 and $1.70 per share on a basic and diluted basis,
respectively, for fiscal year 2001.
The company completed 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 $4.1 million or 11
cents per share on an after-tax basis were incurred in the fourth quarter due to
the termination of interest rate swap agreements and the write-off of previously
deferred financing costs. The costs relating to the termination of interest rate
swap agreements of $4.5 million, before income taxes, are reflected in other
expense ($2.9 million on an after-tax basis), and the write-off of deferred
financing costs is reflected as an extraordinary loss of $1.2 million, net of
income taxes, in the accompanying consolidated statements of earnings.
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Lloyd L. Hill, chairman and chief executive officer, said, "We continued to
exceed our financial targets in 2001. Earnings per share growth on a comparable
52-week basis surpassed our 2001 EPS growth target of at least 15 percent. Our
return on equity was over 22 percent for the year, well above our 20 percent
target, and one of the highest levels in the industry.
"While 2001 was a difficult year for our country and our economy, the strength
of Applebee's positioning and the casual dining segment was reinforced. Sales
trends appear to have rebounded in recent months from the lower levels
experienced in September and October, reaffirming our belief that
consumer-dining habits are firmly entrenched. We continued to build market share
with system-wide sales reaching nearly $3 billion in 2001.
"We will continue to leverage our system size by utilizing network television
advertising as a key strategy in building brand awareness. In addition to our
existing advertising campaign, we introduced a new brand image spot last week
during the Olympics that emphasizes our unique neighborhood positioning."
Hill concluded, "Our position as the world's largest casual dining concept grew
with 1,392 restaurants open at year-end, as the system opened 109 new
restaurants, an unprecedented ninth consecutive year of over 100 new restaurant
openings. This dominant market position, combined with our network advertising
presence, strong price/value relationship, and franchise business model provide
us with a solid foundation for continued growth."
Other results for the fourth quarter and fiscal year ended December 30, 2001
included:
o As previously reported, comparable sales for company restaurants increased
1.6 percent for the fourth quarter and 2.5 percent for the 52 weeks ended
December 30, 2001. System-wide comparable sales increased 2.7 percent for
the fourth quarter and 2.9 percent for the year-to-date period, while
comparable sales for franchise restaurants increased 3.0 percent for both
the quarter and year-to-date periods.
3
o System-wide sales for the Applebee's concept were a record $2.93 billion
for the fiscal year ended December 30, 2001, an increase of 10 percent over
2000 system sales of $2.67 billion. Fourth quarter 2001 system sales for
the Applebee's concept were a record $735.0 million. Fourth quarter and
fiscal year 2000 sales include one extra week as compared to the fourth
quarter and fiscal year 2001. After adjusting for the extra week, system
sales would have increased by 12 percent for both the year and the quarter.
o Operating revenues (comprised of company restaurant sales and franchise
income) reached $744 million for the fiscal year, an increase of 8 percent
over 2000 operating revenues of $690 million. Fourth quarter and fiscal
year 2000 operating revenues include one extra week as compared to the
fourth quarter and fiscal year 2001. After adjusting for the extra week,
operating revenues would have increased 10 percent for both the year and
the quarter.
o Applebee's ended the year with 1,392 restaurants system-wide (310 company
and 1,082 franchise restaurants). During the fourth quarter of 2001, there
were 35 new Applebee's restaurants opened system-wide, including 12 company
and 23 franchised restaurants. There were 109 new Applebee's restaurants
opened system-wide during fiscal year 2001, including 25 company and 84
franchised restaurants.
o During 2001, the company repurchased 1,909,000 shares of common stock at an
average price of $23.56 for an aggregate cost of $45.0 million. The
company's 2001 stock repurchase authorization has been extended for fiscal
year 2002, of which $20.6 million remains available.
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APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share amounts)
13 Weeks 14 Weeks 52 Weeks 53 Weeks
Ended Ended Ended Ended
December 30, December 31, December 30, December 31,
2001 2000 2001 2000
--------------- ---------------- ---------------- ----------------
Revenues:
Company restaurant sales....................... $ 164,703 $ 161,016 $ 651,119 $ 605,414
Franchise income............................... 23,319 22,951 93,225 84,738
--------------- ---------------- ---------------- ----------------
Total operating revenues.................... 188,022 183,967 744,344 690,152
--------------- ---------------- ---------------- ----------------
Cost of company restaurant sales:
Food and beverage.............................. 44,550 45,225 175,977 166,014
Labor.......................................... 53,699 50,577 208,996 191,402
Direct and occupancy........................... 41,643 41,851 164,965 151,611
Pre-opening expense............................ 802 828 1,701 1,659
--------------- ---------------- ---------------- ----------------
Total cost of company restaurant sales...... 140,694 138,481 551,639 510,686
--------------- ---------------- ---------------- ----------------
General and administrative expenses................ 18,487 16,491 72,935 65,060
Amortization of intangible assets.................. 1,463 1,568 5,851 5,934
Loss on disposition of restaurants and equipment... 405 359 1,492 1,265
--------------- ---------------- ---------------- ----------------
Operating earnings................................. 26,973 27,068 112,427 107,207
--------------- ---------------- ---------------- ----------------
Other income (expense):
Investment income.............................. 399 379 1,650 1,484
Interest expense............................... (1,225) (2,448) (7,456) (9,304)
Other income (expense)......................... (3,541) 209 (2,744) 551
--------------- ---------------- ---------------- ----------------
Total other expense......................... (4,367) (1,860) (8,550) (7,269)
--------------- ---------------- ---------------- ----------------
Earnings before income taxes and extraordinary item 22,606 25,208 103,877 99,938
Income taxes....................................... 8,319 9,276 38,227 36,777
--------------- ---------------- ---------------- ----------------
Earnings before extraordinary item................. 14,287 15,932 65,650 63,161
Extraordinary loss from early extinguishment
of debt, net of income taxes................... (1,249) -- (1,249) --
--------------- ---------------- ---------------- ----------------
Net earnings....................................... $ 13,038 $ 15,932 $ 64,401 $ 63,161
=============== ================ ================ ================
Basic earnings per common share (a):
Basic earnings before extraordinary item....... $ 0.38 $ 0.42 $ 1.77 $ 1.61
Extraordinary item............................. (0.03) -- (0.03) --
--------------- ---------------- ---------------- ----------------
Basic net earnings per common share................ $ 0.35 $ 0.42 $ 1.74 $ 1.61
=============== ================ ================ ================
Diluted earnings per common share (a):
Diluted earnings before extraordinary item..... $ 0.37 $ 0.42 $ 1.73 $ 1.60
Extraordinary item............................. (0.03) -- (0.03) --
--------------- ---------------- ---------------- ----------------
Diluted net earnings per common share.............. $ 0.34 $ 0.42 $ 1.70 $ 1.60
=============== ================ ================ ================
Basic weighted average shares outstanding (a)...... 37,091 37,832 37,008 39,228
=============== ================ ================ ================
Diluted weighted average shares outstanding (a).... 38,109 38,077 37,918 39,447
=============== ================ ================ ================
(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.
5
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 14 Weeks 52 Weeks 53 Weeks
Ended Ended Ended Ended
December 30, December 31, December 30, December 31,
2001 2000 2001 2000
--------------- --------------- -------------- ---------------
Revenues:
Company restaurant sales..................... 87.6% 87.5% 87.5% 87.7%
Franchise income............................. 12.4 12.5 12.5 12.3
--------------- --------------- -------------- ---------------
Total operating revenues.................. 100.0% 100.0% 100.0% 100.0%
=============== =============== ============== ===============
Cost of sales (as a percentage of company
restaurant sales):
Food and beverage............................ 27.0% 28.1% 27.0% 27.4%
Labor........................................ 32.6 31.4 32.1 31.6
Direct and occupancy......................... 25.3 26.0 25.3 25.0
Pre-opening expense.......................... 0.5 0.5 0.3 0.3
--------------- --------------- -------------- ---------------
Total cost of sales....................... 85.4% 86.0% 84.7% 84.4%
=============== =============== ============== ===============
General and administrative expenses............... 9.8% 9.0% 9.8% 9.4%
Amortization of intangible assets................. 0.8 0.9 0.8 0.9
Loss on disposition of restaurants and equipment.. 0.2 0.2 0.2 0.2
--------------- --------------- -------------- ---------------
Operating earnings................................ 14.3 14.7 15.1 15.5
--------------- --------------- -------------- ---------------
Other income (expense):
Investment income............................ 0.2 0.2 0.2 0.2
Interest expense............................. (0.7) (1.3) (1.0) (1.3)
Other income (expense)....................... (1.9) 0.1 (0.4) 0.1
--------------- --------------- -------------- ---------------
Total other expense....................... (2.3) (1.0) (1.1) (1.1)
--------------- --------------- -------------- ---------------
Earnings before income taxes and extraordinary item 12.0 13.7 14.0 14.5
Income taxes...................................... 4.4 5.0 5.1 5.3
--------------- --------------- -------------- ---------------
Earnings before extraordinary item................ 7.6 8.7 8.8 9.2
Extraordinary loss from early extinguishment
of debt, net of income taxes................. (0.7) -- (0.2) --
--------------- --------------- -------------- ---------------
Net earnings...................................... 6.9% 8.7% 8.7% 9.2%
=============== =============== ============== ===============
Fiscal year 2001 financial statements have not yet been filed with the
Securities and Exchange Commission.
6
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 updated 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.
Seven company restaurants are currently expected to open in the first half
of the year, with the balance opening in the last half of the year.
Approximately 25 to 30 franchise restaurants are expected to open in the
first half of the year, with the remainder opening in the last half of the
year. Capital expenditures are expected to be between $60 and $65 million
in 2002.
o Based on the uncertainty surrounding the economic outlook, system-wide
comparable sales are expected to increase in the range of zero to 2
percent.
o Overall restaurant margins before pre-opening expense for the full year of
2002 are currently expected to be similar to fiscal year 2001 results,
depending upon sales.
o General and administrative expenses, as a percentage of operating revenues,
are expected to be in the mid-9 percent range in 2002.
o Based on current interest rates and debt levels, interest expense for 2002
is expected to be in the range of $3.5 million to $4.0 million.
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 effective income tax rate is expected to decline to 36.5 percent in
2002 from 36.8 percent in 2001.
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, excluding the impact of stock repurchase programs.
7
A conference call to review the fourth quarter and fiscal year 2001 results and
the current business outlook will be held on Thursday morning, February 14,
2002, 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 1,394 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).
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, 2002. 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: February 13, 2002 By: /s/ George D. Shadid
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George D. Shadid
Executive Vice President and
Chief Financial Officer
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