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 1, 1997
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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 February 1, 1997, Applebee's International, Inc. (the "Company") entered into
a definitive agreement (the "Agreement") to acquire the 11 Applebee's
restaurants in the St. Louis, Mo. market area from its franchisee, Apple
Partners Limited Partnership ("APLP"). As part of the transaction, the Company
will also acquire several restaurants under development, including two which are
expected to open in the first half of 1997. After closing, the Company will
continue the further development of the St. Louis market. Final closing is
subject to obtaining operating licenses and third party consents and is expected
to occur early in the second quarter of 1997. At closing, the principals of APLP
will enter into a non-competition agreement for a period of three years.
Under the terms of the Agreement, the Company will purchase the assets of the 11
operating restaurants for approximately $36.1 million, subject to adjustment,
and will reimburse APLP for costs incurred relating to the restaurants under
development. In addition, the Company will assume certain operating and
capitalized lease obligations relating to the acquired restaurants. Of the 11
restaurants, the land and building are leased for six properties, the land and
building are owned for three properties, and the building is owned and the land
is leased for the remaining two properties.
The purchase price will be paid in a combination of cash and $2.5 million of
promissory notes, and the transaction will be accounted for as a purchase. The
purchase price will be allocated based on an independent appraisal. The Company
preliminarily expects goodwill of approximately $25 million (which will be
amortized over 20 years) and capitalized leases of approximately $5 million to
be recorded in connection with the acquisition.
Total sales for the 11 St. Louis area Applebee's restaurants (including two
restaurants which opened in April of 1996) as reported by APLP were $27.9
million for the fiscal year ended December 29, 1996, and average annualized
restaurant sales were $2,674,000 in 1996. The St. Louis Applebee's restaurants
rank among the highest sales volumes in the Applebee's system and have
historically produced superior operating margins. Restaurant operating margins
before pre-opening expenses as reported by APLP in 1996 were in excess of 20.0%
before the 4% royalty payable to the Company.
The transaction is consistent with the Company's strategy of acquiring franchise
operations located in selected markets with high population density where market
presence has been firmly established and there remains the potential for
significant future expansion. The Company believes the current portfolio of 11
restaurants can ultimately double in number. David Head, currently Vice
President of Operations for APLP, has entered into an agreement to become a
Director of Operations for the Company upon closing, and restaurant and
multi-unit management of the St. Louis market are also anticipated to join the
Company upon the closing of the transaction.
APLP is also the Applebee's franchisee for the Portland, Oregon market and has
signed an agreement to sell its five Portland Applebee's restaurants and
restaurants under development to another existing Applebee's franchisee.
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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 10, 1997 By: /s/ George D. Shadid
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George D. Shadid
Executive Vice President and
Chief Financial Officer
