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) April 24, 2002
--------------------------------
Commission File Number: 000-17962
Applebee's International, Inc.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-1461763
---------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4551 W. 107th Street, Suite 100, Overland Park, Kansas 66207
-------------------------------------------------------------------------------
(Address of principal executive offices and zip code)
(913) 967-4000
----------------------------------------------------
(Registrant's telephone number, including area code)
None
-------------------------------------------------------------
(Former name or former address, if changed since last report)
1
Item 5. Other Events
On April 24, 2002, Applebee's International, Inc. (the "Company") issued a
press release entitled "Applebee's International Reports 18 Percent Increase in
First Quarter Diluted Earnings Per Share of 53 Cents." The press release
contained the following information.
FOR IMMEDIATE RELEASE
Contact: Carol DiRaimo,
Director of Investor Relations
(913) 967-4109
Applebee's International Reports 18 Percent Increase
in First Quarter Diluted Earnings Per Share of 53 Cents
Overland Park, Kan., April 24, 2002 -- Applebee's International, Inc.
(Nasdaq:APPB) today reported net earnings of $20.3 million, or 54 cents and 53
cents per share on a basic and diluted basis, respectively, for the first
quarter ended March 31, 2002. This represents an increase in earnings per share
of 20 percent and 18 percent on a basic and diluted basis, respectively, as
compared with 45 cents per share on both a basic and diluted basis for the first
quarter of 2001.
System-wide comparable sales exceeded the company's expectation of zero to 2
percent, increasing 3.5 percent for the first quarter. Comparable sales
increased 4.1 percent for franchise restaurants and 1.5 percent for company
restaurants.
The company also reported comparable sales for the March fiscal period,
comprised of the five weeks ended March 31, 2002. System-wide comparable sales
increased 1.5 percent, reflecting a 2.2 percent increase for franchise
restaurants and a 0.7 percent decrease for company restaurants. The decrease in
comparable sales for company restaurants reflects a decline in guest traffic of
2.5 to 3.0 percent, offset in part by a higher average check. March comparable
sales were negatively impacted by the shift of the Easter holiday and
unfavorable weather in several company markets.
Lloyd L. Hill, chairman and chief executive officer, said, "Despite the
continued uncertainty in the economy, we were pleased that system-wide
comparable sales for the quarter exceeded our expectations. While March sales
were lower than recent trends due to the timing of Easter, we expect system-wide
comparable sales for the April fiscal period to be in excess of 3.0 percent,
including the positive impact of the holiday shift."
- more -
2
"During the quarter, we continued to devote additional resources to our people
strategies through increased management staffing levels, incentive compensation
and retention programs. While having a near-term impact on our restaurant
margins, these investments are designed to improve execution, resulting in
higher guest satisfaction, and are critical to building sales and traffic over
the long-term. As a result of our sales performance so far this year, combined
with our strong value proposition and the investments we have made in our people
strategies, we now expect system-wide comparable sales for the remainder of the
year to increase by at least 2 percent."
Hill concluded, "We ended the quarter with over 1,400 restaurants operating
system-wide, more than our next two competitors combined. We believe that this
dominant market position, along with demographic and lifestyle trends, our food
and menu initiatives, marketing strategies and franchise business model will
continue to provide a solid foundation for future growth."
Other results for the first quarter ended March 31, 2002 included:
o System-wide sales for the Applebee's concept were a record $795.1 million
for the first quarter ended March 31, 2002, an increase of nearly 12
percent over the prior year.
o Operating revenues (comprised of company restaurant sales and franchise
income) reached $199.8 million for the first quarter, an increase of nearly
10 percent over the prior year.
o Applebee's ended the quarter with 1,404 restaurants system-wide (314
company and 1,090 franchise restaurants). During the first quarter of 2002,
there were 13 new Applebee's restaurants opened system-wide, including 4
company and 9 franchised restaurants.
o The company repurchased 250,000 shares of common stock in the first quarter
at an average price of $33.30 for an aggregate cost of $8.3 million. The
company's 2001 stock repurchase authorization has been extended for fiscal
year 2002, of which $12.3 million currently remains available.
3
APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share amounts)
13 Weeks Ended
-------------------------------
March 31, April 1,
2002 2001
------------- -------------
Revenues:
Company restaurant sales................................ $ 174,973 $ 160,143
Franchise income........................................ 24,840 22,234
------------- -------------
Total operating revenues............................. 199,813 182,377
------------- -------------
Cost of Company restaurant sales:
Food and beverage....................................... 47,407 43,305
Labor................................................... 57,457 50,900
Direct and occupancy.................................... 42,872 40,759
Pre-opening expense..................................... 335 135
------------- -------------
Total cost of Company restaurant sales............... 148,071 135,099
------------- -------------
General and administrative expenses.......................... 19,246 17,166
Amortization of intangible assets............................ 138 1,463
Loss on disposition of restaurants and equipment............. 294 187
------------- -------------
Operating earnings........................................... 32,064 28,462
------------- -------------
Other income (expense):
Investment income....................................... 397 357
Interest expense........................................ (633) (2,357)
Other income............................................ 101 90
------------- -------------
Total other expense.................................. (135) (1,910)
------------- -------------
Earnings before income taxes................................. 31,929 26,552
Income taxes................................................. 11,654 9,771
------------- -------------
Net earnings................................................. $ 20,275 $ 16,781
============= =============
Basic net earnings per common share (a)...................... $ 0.54 $ 0.45
============= =============
Diluted net earnings per common share (a).................... $ 0.53 $ 0.45
============= =============
Basic weighted average shares outstanding (a)................ 37,252 37,116
============= =============
Diluted weighted average shares outstanding (a).............. 38,218 37,628
============= =============
(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.
4
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
---------------------------------
March 31, April 1,
2002 2001
--------------- ---------------
Revenues:
Company restaurant sales.................................... 87.6% 87.8%
Franchise income............................................ 12.4 12.2
--------------- ---------------
Total operating revenues................................. 100.0% 100.0%
=============== ===============
Cost of sales (as a percentage of Company restaurant sales):
Food and beverage........................................... 27.1% 27.0%
Labor....................................................... 32.8 31.8
Direct and occupancy........................................ 24.5 25.5
Pre-opening expense......................................... 0.2 0.1
--------------- ---------------
Total cost of sales...................................... 84.6% 84.4%
=============== ===============
General and administrative expenses.............................. 9.6% 9.4%
Amortization of intangible assets................................ 0.1 0.8
Loss on disposition of restaurants and equipment................. 0.1 0.1
--------------- ---------------
Operating earnings............................................... 16.0 15.6
--------------- ---------------
Other income (expense):
Investment income........................................... 0.2 0.2
Interest expense............................................ (0.3) (1.3)
Other income................................................ 0.1 --
--------------- ---------------
Total other expense...................................... (0.1) (1.0)
--------------- ---------------
Earnings before income taxes..................................... 16.0 14.6
Income taxes..................................................... 5.8 5.4
--------------- ---------------
Net earnings..................................................... 10.1% 9.2%
=============== ===============
5
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 guidance as to its business outlook for fiscal year
2002.
o System-wide comparable sales are now expected to increase by at least 2
percent for the remainder of 2002.
o As of March 31, 2002, the company had total long-term debt outstanding of
$55 million, reflecting payments of $20 million during the quarter. Based
on current interest rates and debt levels, interest expense for 2002 is now
expected to be approximately $2.5 million for the year.
o Consistent with current consensus analyst estimates, diluted earnings per
share for fiscal year 2002 are now expected to be in the range of $2.11 to
$2.15, excluding any impact of additional stock repurchases.
A conference call to review the first quarter 2002 results and the current
business outlook will be held on Thursday morning, April 25, 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 1,407 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.
# # #
6
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: April 24, 2002 By: /s/ Steven K. Lumpkin
--------------------- ------------------------
Steven K. Lumpkin
Executive Vice President and
Chief Financial Officer
7