UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 24, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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
- ------------------------------- ------------------------------------
(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
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes[X] No [ ]
The number of shares of the registrant's common stock outstanding as of October
25, 1995 was 30,996,276.
1
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APPLEBEE'S INTERNATIONAL, INC.
FORM 10-Q
FISCAL QUARTER ENDED SEPTEMBER 24, 1995
INDEX
<TABLE>
<CAPTION>
Page
PART I FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets as of September 24, 1995
and December 25, 1994................................................................ 3
Consolidated Statements of Earnings for the 13 Weeks and 39 Weeks
Ended September 24, 1995 and September 25, 1994...................................... 4
Consolidated Statement of Stockholders' Equity for the 39 Weeks
Ended September 24, 1995............................................................. 5
Consolidated Statements of Cash Flows for the 39 Weeks
Ended September 24, 1995 and September 25, 1994...................................... 6
Notes to Consolidated Financial Statements.............................................. 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........................................ 12
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................................................ 20
Signatures ................................................................................................. 21
Exhibit Index............................................................................................... 22
</TABLE>
2
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APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
September 24, December 25,
1995 1994
------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................................... $ 49,490 $ 9,634
Short-term investments, at market value (amortized cost of $4,900 in 1995
and $9,046 in 1994)........................................................ 5,088 8,893
Receivables (less allowance for bad debts of $923 in 1995 and $740 in 1994)... 8,553 7,396
Inventories................................................................... 9,325 5,159
Prepaid and other current assets.............................................. 5,829 2,887
------------- --------------
Total current assets....................................................... 78,285 33,969
Property and equipment, net...................................................... 143,309 114,729
Goodwill, net.................................................................... 26,481 21,113
Franchise interest and rights, net............................................... 5,949 6,401
Other assets..................................................................... 3,812 3,802
------------- --------------
$ 257,836 $ 180,014
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Demand note and current portion of notes payable and capitalized lease
obligations................................................................ $ 942 $ 3,505
Current portion of obligations under noncompetition and consulting agreement.. 220 220
Accounts payable.............................................................. 10,725 10,750
Accrued expenses and other current liabilities................................ 19,089 16,713
Accrued dividends............................................................. -- 1,269
Accrued income taxes.......................................................... 2,370 1,169
------------- --------------
Total current liabilities.................................................. 33,346 33,626
------------- --------------
Non-current liabilities:
Notes payable and capitalized lease obligations - less current portion........ 25,558 34,312
Franchise deposits............................................................ 1,300 1,355
Obligations under noncompetition and consulting agreement - less current
portion.................................................................... 440 660
Deferred income taxes......................................................... 134 715
------------- --------------
Total non-current liabilities.............................................. 27,432 37,042
------------- --------------
Total liabilities.......................................................... 60,778 70,668
Minority interest in joint venture............................................... 688 558
Commitments and contingencies (Notes 3 and 4)
Stockholders' equity:
Preferred stock - par value $0.01 per share: authorized - 1,000,000 shares;
no shares issued........................................................... -- --
Common stock - par value $0.01 per share: authorized - 125,000,000 shares;
issued - 31,253,309 shares in 1995 and 28,295,479 shares in 1994........... 312 283
Additional paid-in capital.................................................... 146,788 78,675
Retained earnings............................................................. 50,002 30,775
Unrealized gain (loss) on short-term investments, net of income taxes......... 117 (96)
------------- --------------
197,219 109,637
Treasury stock - 281,772 shares in 1995 and 1994, at cost..................... (849) (849)
------------- --------------
Total stockholders' equity................................................. 196,370 108,788
------------- --------------
$ 257,836 $ 180,014
============= ==============
See notes to consolidated financial statements.
</TABLE>
3
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APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
----------------------------------- ----------------------------------
September 24, September 25, September 24, September 25,
1995 1994 1995 1994
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Company restaurant sales....................... $ 76,965 $ 58,457 $ 216,106 $ 163,163
Franchise income............................... 11,116 8,046 31,215 22,062
---------------- --------------- ---------------- ----------------
Total operating revenues.................... 88,081 66,503 247,321 185,225
---------------- --------------- ---------------- ----------------
Cost of Company restaurant sales:
Food and beverage.............................. 21,375 16,768 61,236 47,645
Labor.......................................... 24,284 18,585 68,413 52,248
Direct and occupancy........................... 18,708 14,088 51,893 39,559
Pre-opening expense............................ 326 559 1,382 1,326
---------------- --------------- ---------------- ----------------
Total cost of Company restaurant sales...... 64,693 50,000 182,924 140,778
---------------- --------------- ---------------- ----------------
General and administrative expenses............... 9,292 6,923 27,681 20,837
Merger costs...................................... -- -- 1,770 --
Amortization of intangible assets................. 588 517 1,698 1,582
Loss on disposition of restaurants and equipment.. 60 222 166 733
---------------- --------------- ---------------- ----------------
Operating earnings................................ 13,448 8,841 33,082 21,295
---------------- --------------- ---------------- ----------------
Other income (expense):
Investment income.............................. 563 302 1,010 793
Interest expense............................... (833) (673) (2,126) (1,357)
Other income................................... 111 55 264 168
---------------- --------------- ---------------- ----------------
Total other income (expense)................ (159) (316) (852) (396)
---------------- --------------- ---------------- ----------------
Earnings before income taxes...................... 13,289 8,525 32,230 20,899
Income taxes...................................... 5,050 2,431 12,854 6,527
---------------- --------------- ---------------- ----------------
Net earnings...................................... 8,239 6,094 19,376 14,372
Pro forma provision for income taxes
of pooled companies............................ -- 678 73 1,298
---------------- --------------- ---------------- ----------------
Pro forma net earnings............................ $ 8,239 $ 5,416 $ 19,303 $ 13,074
================ =============== ================ ================
Pro forma net earnings per common share........... $ 0.28 $ 0.20 $ 0.67 $ 0.47
================ =============== ================ ================
Weighted average shares outstanding............... 29,821 27,988 28,715 27,957
See notes to consolidated financial statements.
</TABLE>
4
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APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Unrealized
Gain (Loss)
Additional on Total
Common Stock Paid-In Retained Short-Term Treasury Stockholders'
Shares Amount Capital Earnings Investments Stock Equity
------------- ----------- ---------- -------------- ----------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 25, 1994........ 28,295,479 $ 283 $ 78,675 $ 30,775 $ (96) $ (849) $108,788
Issuance of common stock from
public offering............. 2,415,000 24 60,435 -- -- -- 60,459
Stock options exercised:
Company..................... 542,830 5 4,258 -- -- -- 4,263
IRC......................... -- -- 1,333 -- -- -- 1,333
Income tax benefit upon exercise
of stock options............ -- -- 1,938 -- -- -- 1,938
Unrealized gain on short-term
investments, net of income
taxes....................... -- -- -- -- 213 -- 213
Pro forma provision for income
taxes of pooled company..... -- -- -- 73 -- -- 73
Reclassification of net income
of IRC partnerships......... -- -- 149 (149) -- -- --
Pro forma net earnings......... -- -- -- 19,303 -- -- 19,303
------------- ----------- ---------- -------------- ----------- ---------- -------------
Balance, September 24, 1995....... 31,253,309 $ 312 $ 146,788 $ 50,002 $ 117 $ (849) $196,370
============= =========== ========== ============== =========== ========== =============
See notes to consolidated financial statements.
</TABLE>
5
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APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
39 Weeks Ended
----------------------------------
September 24, September 25,
1995 1994
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Pro forma net earnings...................................... $ 19,303 $ 13,074
Adjustments to reconcile pro forma net earnings to net
cash provided by operating activities:
Depreciation and amortization............................ 8,443 6,157
Amortization of intangible assets........................ 1,698 1,582
Gain on sale of investments.............................. (66) (112)
Deferred income tax benefit.............................. (673) (139)
Loss on disposition of restaurants and equipment......... 166 533
Pro forma provision for income taxes of pooled companies. 73 1,298
Changes in assets and liabilities (exclusive of effects of
acquisitions):
Receivables.............................................. (1,157) 454
Inventories.............................................. (4,166) (3,710)
Prepaid and other current assets......................... (2,978) 64
Accounts payable......................................... (25) (1,993)
Accrued expenses and other current liabilities........... 2,376 3,146
Accrued income taxes..................................... 1,201 (258)
Franchise deposits....................................... (55) 48
Other.................................................... 583 (545)
---------------- ----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES................ 24,723 19,599
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments......................... -- (6,159)
Maturities and sales of short-term investments.............. 4,212 2,042
Purchases of property and equipment......................... (32,145) (31,634)
Acquisition of restaurants.................................. (9,682) (3,315)
Proceeds from sale of restaurants and equipment............. 39 1,458
---------------- ----------------
NET CASH USED BY INVESTING ACTIVITIES.................... (37,576) (37,608)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock...................... 60,459 --
Dividends paid.............................................. (1,269) (879)
Cash transactions of pooled companies prior to acquisition,
net...................................................... -- (2,393)
Issuance of common stock upon exercise of stock options..... 5,596 500
Income tax benefit upon exercise of stock options........... 1,938 200
Proceeds from issuance of notes payable..................... 8,087 26,532
Payments on notes payable................................... (22,012) (7,498)
Payments under noncompetition and consulting agreement...... (220) (244)
Minority interest in net earnings of joint venture.......... 130 61
---------------- ----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES................ 52,709 16,279
---------------- ----------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS............................................ 39,856 (1,730)
CASH AND CASH EQUIVALENTS, beginning of period................. 9,634 8,054
---------------- ----------------
CASH AND CASH EQUIVALENTS, end of period....................... $ 49,490 $ 6,324
================ ================
See notes to consolidated financial statements.
</TABLE>
6
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APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
39 Weeks Ended
-----------------------------------
September 24, September 25,
1995 1994
---------------- -----------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the 39 week period for:
Income taxes..................................................... $ 10,348 $ 7,142
================ =================
Interest............................................................ $ 2,156 $ 1,220
================ =================
</TABLE>
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Capitalized lease obligations of $2,608,000 were incurred in April 1995 when the
Company acquired the operations and assets of five franchise restaurants.
DISCLOSURE OF ACCOUNTING POLICY:
For purposes of the consolidated statements of cash flows, the Company considers
all highly liquid investments purchased with a maturity of three months or less
to be cash equivalents.
See notes to consolidated financial statements.
7
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APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The consolidated financial statements of Applebee's International, Inc. and
subsidiaries (the "Company") included in this Form 10-Q have been prepared
without audit (except that the balance sheet information as of December 25, 1994
has been derived from consolidated financial statements which were audited) in
accordance with the rules and regulations of the Securities and Exchange
Commission. Although certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, the Company believes that
the disclosures are adequate to make the information presented not misleading.
The accompanying consolidated financial statements should be read in conjunction
with the audited financial statements and notes thereto included in the
Company's Current Report on Form 8-K dated September 6, 1995.
The Company believes that all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results of the interim
periods presented have been made. The results of operations for the interim
periods presented are not necessarily indicative of the results to be expected
for the full year.
Beginning in fiscal 1995, the cost of meals provided to employees and other
complimentary meals have been classified as labor costs and direct and occupancy
costs, respectively. Previously, the retail price of such meals was reflected in
Company restaurant sales with corresponding amounts reflected as labor costs or
direct and occupancy costs. The consolidated financial statements for the 13
weeks and 39 weeks ended September 25, 1994 have been reclassified to conform to
the presentation for the 13 weeks and 39 weeks ended September 24, 1995, the
effects of which were not material.
2. Acquisitions
IRC Merger: On March 23, 1995, a wholly-owned subsidiary of the Company merged
with and into Innovative Restaurant Concepts, Inc. ("IRC"), referred to herein
as the "IRC Merger". Immediately prior to the IRC Merger, IRC's affiliated
limited partnerships, Cobb/Gwinnett Rio, Ltd., Rio Real Estate, L.P. and CG
Restaurant Partners, Ltd., were liquidated, and contemporaneously with the IRC
Merger, the Company acquired the interests of the limited partners in the
distributed assets of these partnerships. As a result of the IRC Merger, IRC
became a wholly-owned subsidiary of the Company. A total of approximately
2,630,000 shares of the Company's newly-issued common stock was issued to the
shareholders and limited partners of IRC, including IRC shares issued in 1995
upon the exercise of IRC stock options prior to the IRC Merger. IRC employees
also exchanged pre-existing stock options for options to purchase approximately
147,000 shares of the Company's common stock. Of such shares and options, 7.5%
were placed in escrow to address potential adjustments during the escrow period
that will end December 23, 1995. In addition, the Company assumed approximately
$13,700,000 of IRC indebtedness, of which $1,270,000 was repaid at closing. At
the time of the IRC Merger, IRC operated 17 restaurants, 13 of which were Rio
Bravo Cantinas, a Mexican restaurant concept, and four were other specialty
restaurants.
8
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The IRC Merger was accounted for as a pooling of interests and accordingly, the
accompanying consolidated financial statements have been restated to include the
accounts and operations of the merged entities for all periods presented. All
share amounts have been restated to reflect the total number of shares issued in
the IRC Merger for all periods presented. Combined and separate results of the
Company and IRC during the periods preceding the IRC Merger were as follows
(amounts in thousands):
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Company IRC Adjustments Combined
----------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
13 Weeks Ended
March 26, 1995:
Net sales.......... $ 52,199 $ 13,822 $ -- $ 66,021
Net earnings....... $ 5,519 $ 577 $ (1,843) $ 4,253
13 Weeks Ended
September 25, 1994:
Net sales.......... $ 45,225 $ 13,232 $ -- $ 58,457
Net earnings....... $ 4,820 $ 631 $ (35) $ 5,416
39 Weeks Ended
September 25, 1994:
Net sales.......... $ 123,763 $ 39,400 $ -- $ 163,163
Net earnings....... $ 11,267 $ 1,974 $ (167) $ 13,074
</TABLE>
Adjustments have been made to eliminate the impact of intercompany balances and
to record provisions for pro forma income taxes for certain affiliates of IRC.
Merger costs of $1,770,000 relating to the IRC Merger were expensed in the first
quarter of 1995. Merger costs include investment banking fees, legal and
accounting fees, and other merger related expenses. The impact of these costs on
pro forma net earnings per common share was approximately $0.06 in the first
quarter of 1995.
Other restaurant acquisitions: On April 3, 1995, the Company acquired the
operations of five franchise restaurants and the related furniture and fixtures,
certain land and leasehold improvements for a total purchase price of
$9,682,000. The acquisition was accounted for as a purchase, and accordingly,
the purchase price has been allocated to the fair value of net assets acquired
and resulted in an allocation to goodwill of $6,432,000. In connection with this
acquisition, the Company also recorded capitalized lease obligations of
$2,608,000. The 1995 financial statements reflect the results of operations of
such restaurants subsequent to the date of acquisition. Results of operations of
such restaurants prior to acquisition were not material in relation to the
Company's operating results for the periods shown.
3. Commitments and Contingencies
Litigation, claims and disputes: The Company is using assets owned by a former
Texas franchisee in the operation of two restaurants under a purchase rights
agreement which required the Company to make certain payments to the
franchisee's lender. In 1991, a dispute arose between the lender and the Company
over the amount of the payments due the lender. Based upon a then current
independent appraisal, the Company offered to settle the dispute and purchase
the assets for $1,000,000 in 1991. The lender rejected the Company's offer and
claimed that the Company had guaranteed the entire $2,400,000 debt of the
franchisee. In November 1992, the lender was declared insolvent by the FDIC and
has since been liquidated. The Company has been contacted by the FDIC, and in
1993, the Company offered to settle the issue and purchase the assets at the
three restaurants then being operated for $182,000. The Company has since closed
one of the restaurants and has recently lowered its offer to $120,000 to settle
9
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the issue and purchase the assets at the two remaining restaurants. The FDIC has
declined to accept the Company's offer, indicating instead its preliminary
position that the Company should pay the entire debt of the franchisee. The
Company has decided to close one of the two remaining restaurants, and does not
currently intend to make an additional settlement offer to the FDIC. In the
event that the Company were to pay an amount determined to be in excess of the
fair market value of the assets, the Company will recognize a loss at the time
of such payment.
In addition, the Company is involved in various legal actions arising in the
normal course of business. While the resolution of any of such actions or the
matter described above may have an impact on the financial results for the
period in which it is resolved, the Company believes that the ultimate
disposition of these matters will not, in the aggregate, have a material adverse
effect upon its business or consolidated financial position.
Franchise financing: The Company entered into an agreement in 1992 with a
financing source to provide up to $75,000,000 of financing to Company
franchisees to fund development of new franchise restaurants. Up to $25,000,000
of the $75,000,000 available under the agreement could be used by franchisees
for short-term construction financing. The Company provided a limited guaranty
of loans made under the agreement. The Company's recourse obligation of the
construction financing portion of the facility is capped at $2,500,000. When the
short-term construction loans are converted to long-term loans, the Company's
maximum recourse obligation is reduced from 10% to 6.7% of the $75,000,000
facility. The Company's recourse obligations are reduced beginning in the second
year of each long-term loan and thereafter decrease ratably to zero after the
seventh year of each loan. At September 24, 1995, approximately $44,447,000 had
been funded through this financing source and various loans were in process. The
Company has not been apprised of any defaults under this agreement by
franchisees. This agreement expired on December 31, 1994 and was not renewed,
although some loan commitments as of the termination date may thereafter be
funded until December 31, 1995.
Severance agreements: The Company has severance and employment agreements with
certain officers providing for severance payments to be made in the event the
employee resigns or is terminated related to a change in control (as defined in
the agreements). If the severance payments had been due as of September 24,
1995, the Company would have been required to make payments aggregating
approximately $5,600,000. In addition, the Company has severance and employment
agreements with certain officers which contain severance provisions not related
to a change in control, and such provisions would have required aggregate
payments of approximately $3,000,000 if such officers had been terminated as of
September 24, 1995.
4. Financing
In February 1995, the Company obtained a $20,000,000 unsecured bank revolving
credit facility which expires on December 31, 1997. The revolving credit
facility bears interest at LIBOR plus 0.60% or the prime rate, at the Company's
option, and requires the Company to pay a commitment fee of 0.15% on any unused
portion of the facility. As of September 24, 1995, no amounts were outstanding
under the facility. The revolving credit facility contains various covenants and
restrictions which, among other things, require the maintenance of a stipulated
fixed charge coverage ratio and minimum consolidated net worth, as defined, and
also limit additional indebtedness in excess of specified amounts. The revolving
credit facility also restricts the amount of retained earnings available for the
payment of cash dividends. The Company is currently in compliance with such
covenants.
10
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5. Public Offering of Common Stock
On July 28, 1995, the Company completed a public offering of its common stock
consisting of 2,100,000 shares sold by the Company and 300,000 shares sold by
certain stockholders of the Company. In addition, the Company and the selling
stockholders granted the underwriters an option to purchase 315,000 and 45,000
shares, respectively, to cover over-allotments, which was exercised on August 9,
1995. Net proceeds of $60,459,000, after expenses, were received from the
offering. A portion of the net proceeds of the offering was used to retire
approximately $12,500,000 of secured debt assumed in certain recent acquisitions
and to repay the outstanding balance of the Company's revolving credit facility
of $5,000,000.
11
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
The Company's revenues are generated from two primary sources: Company
restaurant sales (food and beverage sales) and franchise income consisting of
franchise restaurant royalties (generally 4% of each franchise restaurant's
monthly gross sales) and franchise fees (which typically range from $30,000 to
$35,000 per restaurant opened). Beverage sales include sales of alcoholic
beverages, while non-alcoholic beverages are included in food sales. Certain
expenses (food and beverage, labor, direct and occupancy costs, and pre-opening
expenses) relate directly to Company restaurants, and other expenses (general
and administrative and amortization expenses) relate to both Company restaurants
and franchise operations. The Company's policy is to expense pre-opening costs
as incurred.
Beginning in fiscal 1995, the cost of meals provided to employees and other
complimentary meals have been classified as labor costs and direct and occupancy
costs, respectively. Previously, the retail price of such meals was reflected in
Company restaurant sales with corresponding amounts reflected as labor costs or
direct and occupancy costs. The consolidated financial statements for fiscal
1994 have been reclassified to conform to the presentation adopted in fiscal
1995, the effects of which were not material.
The Company operates on a 52 or 53 week fiscal year ending on the last Sunday in
December. The 1995 fiscal year will contain 53 weeks. The Company's fiscal
quarters ended September 24, 1995 and September 25, 1994 each contained 13
weeks, and are referred to hereafter as the "1995 quarter" and the "1994
quarter," respectively. The 39 week periods ended September 24, 1995 and
September 25, 1994 are referred to hereafter as the "1995 year-to-date period"
and the "1994 year-to-date period," respectively.
Recent Acquisitions
On October 24, 1994, a wholly-owned subsidiary of the Company merged with and
into Pub Ventures of New England, Inc. ("PVNE"), the Company's franchisee for
the New England area, referred to herein as the "PVNE Merger." As a result of
the PVNE Merger, PVNE became a wholly-owned subsidiary of the Company. The PVNE
Merger was accounted for as a pooling of interests and, accordingly, the
accompanying consolidated financial statements include the accounts and
operations of the merged entities for all periods presented. At the time of the
PVNE Merger, PVNE operated 14 Applebee's restaurants.
On March 23, 1995, a wholly-owned subsidiary of the Company merged with and into
Innovative Restaurant Concepts, Inc. ("IRC"), referred to herein as the "IRC
Merger." As a result of the IRC Merger, IRC became a wholly-owned subsidiary of
the Company. The IRC Merger was accounted for as a pooling of interests and,
accordingly, the accompanying consolidated financial statements include the
accounts and operations of the merged entities for all periods presented. At the
time of the IRC Merger, IRC operated 17 restaurants, including 13 Rio Bravo
Cantina restaurants, and four other specialty restaurants, comprised of Ray's on
the River, two Green Hills Grille restaurants, and the Rio Bravo Grill. During
1993, IRC acquired six Casa Gallardo restaurant sites which were subsequently
converted to Rio Bravo Cantina restaurants. The four specialty restaurants and
the Casa Gallardo restaurants prior to their conversion to Rio Bravo Cantina
restaurants are included in "specialty restaurants."
12
<PAGE>
On April 3, 1995, the Company acquired the operations and assets of five
franchise restaurants in the Philadelphia metropolitan area, referred to herein
as the "Philadelphia Acquisition." The Philadelphia Acquisition was accounted
for as a purchase and, accordingly, the results of operations of such
restaurants have been reflected in the 1995 financial statements subsequent to
the date of acquisition.
Results of Operations
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.
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
----------------------------- -----------------------------
September 24, September 25, September 24, September 25,
1995 1994 1995 1994
-------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Company restaurant sales............................ 87.4% 87.9% 87.4% 88.1%
Franchise income.................................... 12.6 12.1 12.6 11.9
-------------- -------------- ------------- ----------------
Total operating revenues......................... 100.0% 100.0% 100.0% 100.0%
============== ============== ============= ================
Cost of Company restaurant sales (as a percentage of
Company restaurant sales):
Food and beverage................................... 27.8% 28.7% 28.3% 29.2%
Labor............................................... 31.6 31.8 31.7 32.0
Direct and occupancy................................ 24.3 24.1 24.0 24.3
Pre-opening expense................................. 0.4 0.9 0.6 0.8
-------------- -------------- ------------- ----------------
Total cost of Company restaurant sales........... 84.1% 85.5% 84.6% 86.3%
============== ============== ============= ===============
General and administrative expenses.................... 10.5% 10.4% 11.2% 11.2%
Merger costs........................................... -- -- 0.7 --
Amortization of intangible assets...................... 0.7 0.8 0.7 0.9
Loss on disposition of restaurants and equipment....... 0.1 0.3 0.1 0.4
-------------- -------------- ------------- ---------------
Operating earnings..................................... 15.3 13.3 13.4 11.5
-------------- -------------- ------------- ---------------
Other income (expense):
Investment income................................... 0.6 0.4 0.4 0.4
Interest expense.................................... (0.9) (1.0) (0.9) (0.7)
Other income........................................ 0.1 0.1 0.1 0.1
-------------- -------------- ------------- ---------------
Total other income (expense)..................... (0.2) (0.5) (0.4) (0.2)
-------------- -------------- ------------- ---------------
Earnings before income taxes........................... 15.1 12.8 13.0 11.3
Income taxes (including pro forma provision
for income taxes of pooled companies)............... 5.7 4.7 5.2 4.2
-------------- -------------- ------------- ---------------
Pro forma net earnings................................. 9.4% 8.1% 7.8% 7.1%
============== ============== ============= ===============
</TABLE>
13
<PAGE>
The following table sets forth certain unaudited restaurant data relating to
Company and franchise restaurants, as reported to the Company by franchisees.
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
---------------------------- -----------------------------
September 24, September 25, September 24, September 25,
1995 1994 1995 1994
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Number of restaurant openings:
Applebee's:
Company owned or operated......................... 3 7 16 15
Franchise......................................... 33 28 91 71
Total Applebee's.................................. 36 35 107 86
Rio Bravo Cantinas................................... 1 1 3 2
Restaurants open (end of period):
Applebee's:
Company owned or operated(1)...................... 118 90 118 90
Franchise......................................... 494 356 494 356
Total Applebee's.................................. 612 446 612 446
Rio Bravo Cantinas................................... 15 11 15 11
Specialty restaurants................................ 4 4 4 4
Total................................................ 631 461 631 461
Weighted average weekly sales per restaurant:
Applebee's:
Company owned..................................... $40,895 $40,953 $40,644 $40,668
Company owned or operated(1)...................... $40,663 $40,599 $40,404 $40,122
Franchise......................................... $41,445 $41,246 $41,717 $41,274
Total Applebee's.................................. $41,292 $41,115 $41,458 $41,039
Rio Bravo Cantinas................................... $66,598 $69,949 $66,726 $72,080
Change in comparable restaurant sales(2):
Applebee's:
Company owned..................................... 0.8% 1.5% 1.3% 3.4%
Company owned or operated(1)...................... 0.9% 1.3% 1.5% 3.2%
Franchise......................................... 1.0% 1.3% 1.8% 2.8%
Total Applebee's.................................. 0.9% 1.3% 1.7% 2.9%
Rio Bravo Cantinas................................... 1.3% 6.1% 1.1% 10.7%
<FN>
- --------
(1) Company owned or operated data include two Texas restaurants operated by the
Company under a management agreement since July 1990.
(2) When computing comparable restaurant sales, restaurants open for at least 18
months are compared from period to period.
</FN>
</TABLE>
14
<PAGE>
Company Restaurant Sales. Company restaurant sales for the 1995 and 1994
quarters and the 1995 and 1994 year-to-date periods were as follows (in
thousands):
13 Weeks Ended
September 24, September 25, Increase
1995 1994 (Decrease)
------------- ------------- -------------
Applebee's........................ $ 60,810 $ 45,225 $ 15,585
Rio Bravo Cantinas................ 12,654 9,723 2,931
Specialty restaurants............. 3,501 3,509 (8)
------------- ------------- -------------
Total.......................... $ 76,965 $ 58,457 $ 18,508
============= ============= =============
39 Weeks Ended
September 24, September 25, Increase
1995 1994 (Decrease)
------------- ------------- -------------
Applebee's........................ $ 170,583 $ 123,763 $ 46,820
Rio Bravo Cantinas................ 34,964 27,823 7,141
Specialty restaurants............. 10,559 11,577 (1,018)
------------- ------------- -------------
Total.......................... $ 216,106 $ 163,163 $ 52,943
============= ============= =============
Overall Company restaurant sales increased 32% in both the 1995 quarter and the
1995 year-to-date period. Sales for Company owned Applebee's restaurants
increased 34% and 38% in the 1995 quarter and the 1995 year-to-date period,
respectively, due primarily to Company restaurant openings, sales from the five
Philadelphia restaurants acquired in April 1995, and a menu price increase
implemented in mid-July 1994. The increases in sales for the Rio Bravo Cantina
restaurants resulted primarily from Company restaurant openings and increases in
comparable restaurant sales. The decrease in sales for the specialty restaurants
in both the 1995 quarter and the 1995 year-to-date period was due to the
conversion of two Casa Gallardo restaurants to Rio Bravo Cantina restaurants
subsequent to the end of the first quarter of 1994.
Comparable restaurant sales at Company owned Applebee's restaurants increased by
0.8% and 1.3% in the 1995 quarter and the 1995 year-to-date period,
respectively. The Company does not expect significant comparable restaurant
sales increases and may experience comparable restaurant sales decreases for the
remainder of the 1995 fiscal year for Company owned Applebee's restaurants, as
many of its restaurants are operating near sales capacity and are experiencing
increased competition in certain markets.
Comparable restaurant sales for the Rio Bravo Cantina restaurants increased by
1.3% and 1.1% in the 1995 quarter and the 1995 year-to-date period,
respectively, although weighted average weekly sales declined from $69,949 in
the 1994 quarter to $66,598 in the 1995 quarter and from $72,080 in the 1994
year-to-date period to $66,726 in the 1995 year-to-date period. The decrease in
weighted average weekly sales in both periods was due primarily to the lower
than average sales volumes of three of the new restaurants opened subsequent to
the end of the first quarter of 1994. Two of the restaurants were opened in a
market where there was already an existing Rio Bravo Cantina restaurant and one
of the other new restaurants is open only for dinner.
Weighted average weekly sales at Company owned Applebee's restaurants continue
to be adversely affected by the southern California and Texas territories where
the weighted average weekly sales of Company owned Applebee's restaurants were
approximately $27,000 and $33,000, respectively, in both the 1995 quarter and
the 1995 year-to-date period. When entering highly competitive new markets, or
15
<PAGE>
territories where the Company has not yet established a market presence, early
sales levels and profit margins are expected to be lower than in markets where
the Company has a concentration of restaurants or has established customer
awareness. Weighted average weekly sales in the Texas market have been improving
steadily throughout 1995 and operating margins have improved accordingly;
however, the California market has not yet shown substantial improvements in
either weighted average weekly sales or operating margins. The Company believes
that the opening of additional restaurants in these territories will result in
increased market penetration, advertising effectiveness and customer awareness,
thereby ultimately increasing restaurant sales levels and related margins.
Franchise Income. Franchise income increased $3,070,000 (38%) from $8,046,000 in
the 1994 quarter to $11,116,000 in the 1995 quarter. Franchise income increased
$9,153,000 (41%) from $22,062,000 in the 1994 year-to-date period to $31,215,000
in the 1995 year-to-date period. Such increases were due primarily to the
increased number of franchise restaurants operating during the 1995 quarter and
the 1995 year-to-date period as compared to the 1994 quarter and the 1994
year-to-date period. Franchise restaurant weighted average weekly sales
increased 0.5% and 1.1% in the 1995 quarter and the 1995 year-to-date period,
respectively, and comparable franchise restaurant sales increased 1.0% and 1.8%
in the 1995 quarter and the 1995 year-to-date period, respectively. The
remaining increases in franchise income were due to increases in franchise fees
of $145,000 in the 1995 quarter and $592,000 in the 1995 year-to-date period
resulting from increases in the number of franchise restaurant openings from 28
in the 1994 quarter to 33 in the 1995 quarter and from 71 in the 1994
year-to-date period to 91 in the 1995 year-to-date period.
Cost of Company Restaurant Sales. Food and beverage costs decreased from 28.7%
and 29.2% in the 1994 quarter and the 1994 year-to-date period, respectively, to
27.8% and 28.3% in the 1995 quarter and the 1995 year-to-date period,
respectively. These decreases resulted primarily from increased operational
efficiencies. In addition, the decrease in the 1995 year-to-date period was due,
in part, to the menu price increase implemented in mid-July 1994 at Applebee's
restaurants. Such decrease was partially offset by an increase in food costs in
the second quarter of 1995 as a result of the winter flooding in California
which caused shortages of certain produce items and a significant increase in
related costs. The Company did not increase its menu prices to offset the
effects of such increased costs. In addition, food and beverage costs were
negatively impacted by the effect of the continued decline in beverage sales, as
a percentage of overall Company restaurant sales, from 20.6% and 21.0% in the
1994 quarter and the 1994 year-to-date period, respectively, to 18.1% and 19.0%
in the 1995 quarter and the 1995 year-to-date period, respectively, as margins
on alcoholic beverage sales are higher than those for food sales. Management
believes that the reduction in beverage sales is due in part to the continuation
of the overall trend toward increased awareness of responsible alcohol
consumption.
Labor costs decreased from 31.8% and 32.0% in the 1994 quarter and the 1994
year-to-date period, respectively, to 31.6% and 31.7% in the 1995 quarter and
the 1995 year-to-date period, respectively. Labor costs, as a percentage of
sales, in both the 1995 quarter and the 1995 year-to-date period were positively
impacted by an overall reduction in workers' compensation insurance costs due to
favorable historical claims experience, and improved hourly labor efficiency,
but were adversely affected by the lower sales volumes in the southern
California and Texas markets.
Direct and occupancy costs increased from 24.1% in the 1994 quarter to 24.3% in
the 1995 quarter, but decreased from 24.3% in the 1994 year-to-date period to
24.0% in the 1995 year-to-date period. The increase in the 1995 quarter was due
primarily to higher utility costs. The decrease in the 1995 year-to-date period
was due primarily to a decrease in rent expense resulting from an increase in
16
<PAGE>
the proportion of owned versus leased properties and lower levels of advertising
expenditures. The southern California and Texas markets continue to have a
negative impact on overall direct and occupancy costs due to the absorption of
such expenses, which are primarily fixed in nature, over a lower sales base in
those markets.
General and Administrative Expenses. General and administrative expenses
increased slightly from 10.4% in the 1994 quarter to 10.5% in the 1995 quarter
and were 11.2% in both the 1994 year-to-date period and the 1995 year-to-date
period. General and administrative expenses increased by $2,369,000 and
$6,844,000 during the 1995 quarter and the 1995 year-to-date period,
respectively, compared to the 1994 quarter and the 1994 year-to-date period,
respectively. These increases resulted from the costs of additional personnel
associated with the Company's development efforts and system-wide expansion,
higher incentive compensation expense, and related fringe benefit costs. A
portion of the increase was due to an increase in the Company's training costs
relating to new Company and franchise restaurant openings and the training of
restaurant managers.
The Company continues to realize operating losses or nominal income for the
Texas restaurants it operates under an agreement with a former franchisee.
Income of $24,000 and $92,000 was realized during the 1995 quarter and the 1995
year-to-date period, respectively, while losses of $26,000 and $271,000 were
realized during the 1994 quarter and the 1994 year-to-date period, respectively.
Such amounts are included in general and administrative expenses in the
accompanying consolidated statements of operations. The increase in
profitability in both the 1995 quarter and the 1995 year-to-date period resulted
primarily from the closing of one of the three Texas restaurants during the
second quarter of 1994. In October 1995, the Company decided that it will close
one more of these restaurants in the first quarter of 1996 and is continuing to
evaluate its future strategy for the one restaurant that will remain open. The
estimated loss on disposition of this restaurant of approximately $275,000 will
be recognized in the fourth quarter of 1995.
The Company is using assets owned by a former Texas franchisee in the operation
of these restaurants under a purchase rights agreement which required the
Company to make certain payments to the franchisee's lender. In 1991, a dispute
arose between the lender and the Company over the amount of the payments due the
lender. Based upon a then current independent appraisal, the Company offered to
settle the dispute and purchase the assets for $1,000,000 in 1991. The lender
rejected the Company's offer and claimed that the Company had guaranteed the
entire $2,400,000 debt of the franchisee. In November 1992, the lender was
declared insolvent by the FDIC and has since been liquidated. The Company has
been contacted by the FDIC, and in 1993, the Company offered to settle the issue
and purchase the assets at the three restaurants then being operated for
$182,000. The Company has since closed one of the restaurants and has recently
lowered its offer to $120,000 to settle the issue and purchase the assets at the
two remaining restaurants. The FDIC has declined to accept the Company's offer,
indicating instead its preliminary position that the Company should pay the
entire debt of the franchisee. The Company has decided to close one of the two
remaining restaurants, and does not currently intend to make an additional
settlement offer to the FDIC. In the event that the Company were to pay an
amount determined to be in excess of the fair market value of the assets, the
Company will recognize a loss at the time of such payment. While the resolution
of this matter may have an impact on the financial results for the period in
which it is resolved, the Company believes that the ultimate disposition of this
matter will not have a material adverse effect upon its business or consolidated
financial position.
In January 1991, the Company's franchisee in Houston, Texas declared bankruptcy
and as a result, the management of the five franchise restaurants then operated
was transferred to a prospective franchisee who subsequently closed two
restaurants. In August 1992, the prospective franchisee was granted a
17
<PAGE>
development agreement for the Houston territory and franchise agreements for
such restaurants, and in October 1993, the Company provided certain financial
assistance to this franchisee in the form of a loan and a renegotiated royalty
payment obligation. The Company also subsequently provided a guarantee for an
equipment lease. The new franchisee filed for bankruptcy protection in April
1995. The Company has been monitoring the franchisee's performance and
evaluating the Company's options relating to the future operational alternatives
for this territory. The Company has established reserves which it believes are
adequate relating to any receivables from this franchisee and does not
anticipate that the franchisee's financial difficulties will have a material
adverse effect upon its business or consolidated financial position.
Merger Costs. The Company incurred merger costs of $1,770,000 in the first
quarter of 1995 relating to the IRC Merger. The impact of these costs on pro
forma net earnings per common share was approximately $0.06 in the first quarter
of 1995 and the 1995 year-to-date period.
Loss on Disposition of Restaurants and Equipment. During the second quarter of
1994, the Company recognized a loss of $223,000 resulting from the closure and
termination of the lease agreement of one restaurant. This loss was partially
offset by a gain of $54,000 resulting from the sale of one restaurant to a new
franchisee. In addition, during 1994, the Company began replacing restaurant
point-of-sale systems with upgraded systems technology which resulted in a
write-off of approximately $200,000 and $550,000 of costs of the existing
equipment in the 1994 quarter and the 1994 year-to-date period, respectively.
Interest Expense. Interest expense increased in the 1995 quarter and the 1995
year-to-date period compared to the 1994 quarter and the 1994 year-to-date
period primarily as a result of interest related to the $20,000,000 of senior
unsecured notes issued in the second quarter of 1994 and borrowings under the
revolving credit facility during the 1995 quarter.
Income Taxes. The effective income tax rate, as a percentage of earnings before
income taxes, was 38.0% and 40.1% in the 1995 quarter and the 1995 year-to-date
period, respectively, compared to 36.5% and 37.4% in the 1994 quarter and the
1994 year-to-date period, respectively. Prior to September 7, 1994, PVNE was
classified as an S Corporation and accordingly, stockholders were responsible
for paying their proportionate share of federal and certain state income taxes.
In addition, the combined earnings of IRC prior to the IRC Merger included
earnings of limited partnerships which were not taxable entities for federal and
state income tax purposes. The accompanying consolidated statements of earnings
reflect provisions for income taxes on a pro forma basis as if the Company were
liable for federal and state income taxes on PVNE's earnings prior to September
7, 1994 and the earnings of IRC's limited partnerships prior to the IRC Merger
at statutory rates. The increase in the Company's overall effective tax rate in
the 1995 year-to-date period was due to the non-deductibility of the merger
costs incurred in the first quarter of 1995 relating to the IRC Merger.
Excluding such merger costs, the effective income tax rate would have been 38.0%
in the 1995 year-to-date period.
Liquidity and Capital Resources
The Company's need for capital resources historically has resulted from and for
the foreseeable future is expected to relate primarily to the construction and
acquisition of restaurants. Such capital has been provided by public stock
offerings, debt financing, and ongoing Company operations, including cash
generated from Company and franchise operations, credit from trade suppliers,
real estate lease financing, and landlord contributions to leasehold
improvements. The Company has also used its common stock as consideration in the
acquisition of restaurants. In addition, the Company assumed debt or issued new
debt in connection with the PVNE and IRC Mergers.
18
<PAGE>
Capital expenditures were $48,734,000 in 1994 (which includes the acquisition of
two franchise restaurants) and $41,827,000 in the 1995 year-to-date period
(which includes $9,682,000 related to the Philadelphia Acquisition). The Company
currently expects to open at least 27 Applebee's restaurants and four Rio Bravo
Cantina restaurants in 1995 and approximately 30 Applebee's restaurants and five
Rio Bravo Cantina restaurants in 1996. The Company presently anticipates capital
expenditures, including the Philadelphia Acquisition, of approximately
$60,000,000 in 1995 and between $60,000,000 and $65,000,000 in 1996 primarily
for the development of new restaurants, refurbishments of and capital
replacements for existing restaurants, and enhancements to information systems
for the Company's restaurants and corporate office. The amount of actual capital
expenditures will be dependent upon the proportion of leased versus owned
properties, among other things. In addition, if the Company opens more
restaurants than it currently anticipates or acquires additional restaurants,
its capital requirements will increase accordingly.
In June 1994, the Company completed a $20,000,000 senior unsecured private debt
placement with institutional lenders unaffiliated with the Company. In addition,
in February 1995, the Company obtained additional long-term debt financing in
the form of a $20,000,000 unsecured bank revolving credit facility which expires
on December 31, 1997. The debt agreements contain various covenants and
restrictions which, among other things, require the maintenance of a stipulated
fixed charge coverage ratio and minimum consolidated net worth, as defined, and
also limit additional indebtedness in excess of specified amounts. The debt
agreements also restrict the amount of retained earnings available for the
payment of cash dividends. At September 24, 1995, $30,294,000 of retained
earnings was available for the payment of cash dividends. The Company has been
and is currently in compliance with the covenants of all of its debt agreements.
On July 28, 1995, the Company completed a public offering of its common stock
consisting of 2,100,000 shares sold by the Company and 300,000 shares sold by
certain stockholders of the Company. In addition, the Company and the selling
stockholders granted the underwriters an option to purchase 315,000 and 45,000
shares, respectively, to cover over-allotments, which was exercised on August 9,
1995. Net proceeds of $60,459,000, after expenses, were received from the
offering. A portion of the net proceeds of the offering were used to retire
approximately $12,500,000 of debt assumed in connection with the PVNE and IRC
Mergers, and to repay the outstanding balance of the Company's revolving credit
facility of $5,000,000.
The Company believes that the proceeds from this offering, liquid assets, and
cash generated from operations, combined with borrowings available under the
$20,000,000 revolving credit facility, will provide sufficient funds for its
capital requirements for the foreseeable future. As of September 24, 1995, the
Company held liquid assets totaling $54,578,000, consisting of cash and cash
equivalents ($49,490,000) and short-term investments ($5,088,000), and no
amounts were outstanding under the revolving credit facility.
Inflation
Substantial increases in costs and expenses, particularly food, supplies, labor
and operating expenses could have a significant impact on the Company's
operating results to the extent that such increases cannot be passed along to
customers. The Company does not believe that inflation has materially affected
its operating results during the past three years.
19
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The Exhibits listed on the accompanying Exhibit Index are
filed as part of this report.
(b) The Company filed a report on Form 8-K on September 6, 1995
which included consolidated financial statements for the
fiscal years ended December 25, 1994, December 26, 1993 and
December 27, 1992 as restated for the merger with Innovative
Restaurant Concepts, Inc.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 27, 1995 By: /s/ Abe J. Gustin, Jr.
------------------------- --------------------------
Abe J. Gustin, Jr.
Chairman and Chief Executive Officer
Date: October 27, 1995 By: /s/ George D. Shadid
------------------------- ------------------------
George D. Shadid
Executive Vice President and
Chief Financial Officer
(principal financial officer)
Date: October 27, 1995 By: /s/ David R. Smith
------------------------- ----------------------
David R. Smith
Vice President and Controller
(principal accounting officer)
21
<PAGE>
APPLEBEE'S INTERNATIONAL, INC.
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------------- ------------------------------------------------------------------
27 Financial Data Schedule.
22
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 24, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-25-1994
<PERIOD-START> DEC-26-1994 DEC-27-1993
<PERIOD-END> SEP-24-1995 SEP-25-1994
<CASH> 49,490 6,324
<SECURITIES> 5,088 14,996
<RECEIVABLES> 9,476 6,377
<ALLOWANCES> 923 536
<INVENTORY> 9,325 5,990
<CURRENT-ASSETS> 78,285 34,916
<PP&E> 178,190 128,783
<DEPRECIATION> 34,881 25,220
<TOTAL-ASSETS> 257,836 170,410
<CURRENT-LIABILITIES> 33,346 26,157
<BONDS> 25,558 35,979
<COMMON> 312 283
0 0
0 0
<OTHER-SE> 196,058 105,198
<TOTAL-LIABILITY-AND-EQUITY> 257,836 170,410
<SALES> 216,106 163,163
<TOTAL-REVENUES> 247,321 185,225
<CGS> 182,924 140,778
<TOTAL-COSTS> 210,422 161,401
<OTHER-EXPENSES> 3,634 2,315
<LOSS-PROVISION> 183 214
<INTEREST-EXPENSE> 2,126 1,357
<INCOME-PRETAX> 32,230 20,899
<INCOME-TAX> 12,927 7,825
<INCOME-CONTINUING> 19,303 13,074
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 19,303 13,074
<EPS-PRIMARY> .67 .47
<EPS-DILUTED> .67 .47
</TABLE>
