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 23, 1999
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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
Applebee's International, Inc. (the "Company") issued a press
release announcing its new strategic business plans, the development potential
of the Applebee's concept and new executive appointments. The press release is
attached as Exhibit A hereto and incorporated herein by reference.
Item 7. Exhibits
(c) Exhibits
Exhibit Description
A Press release of the Company dated
February 23, 1999
2
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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 23, 1999 By: /s/ George D. Shadid
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George D. Shadid
Executive Vice President and
Chief Financial Officer
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Contact: George D. Shadid FOR IMMEDIATE RELEASE
Chief Financial Officer February 23, 1999
(913) 967-4035
OVERLAND PARK, KAN., February 23 - At a company-sponsored investor conference
held in New York City today, Applebee's International, Inc. (Nasdaq: APPB)
outlined its strategic business plans.
"Over the last six months we have sharpened our strategic direction and all
aspects of our strategy are focused on increasing shareholder value," commented
Lloyd L. Hill, chief executive officer. "Our goal is to deliver 15% annual
earnings per share growth over the next five years. We are targeting to increase
our return on shareholder equity, which is already one of the highest in the
industry, to the 20% range over the next two to three years. As a commitment to
increasing shareholder value, we announced today an additional $100 million
stock buyback program to repurchase shares of the company's stock over the next
two years."
"We have recently added several new executives in critical areas of our
business. Our management team is now complete and ready to lead Applebee's to
new record levels of performance. With our recently announced divestiture of Rio
Bravo Cantina, we are poised to focus singularly on the Applebee's concept. We
are committed to optimizing the sales and returns of our existing restaurants by
intensifying our food, menu and brand enhancement strategies. Historically, a
large part of our earnings growth resulted from rapid unit expansion of the
Applebee's system. While we will continue to expand the concept, our earnings
per share growth will now come from a combination of new unit growth, same store
sales increases and shareholder value strategies including stock repurchases.
Hill concluded, "With nearly 1,100 restaurants and over $2.0 billion in annual
system sales, Applebee's Neighborhood Grill and Bar is the largest casual dining
concept in America, both in terms of number of restaurants and market share."
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Applebee's International, Inc.
Press Release - February 23, 1999
Page 2
Highlights of the conference presentations included:
o The company announced the addition of two new key executives. John Koch has
now joined the company as senior vice president of research and
development. In addition, Karen Eadon has accepted the position of senior
vice president of marketing.
Mr. Koch was previously the top R&D executive with The Olive Garden and has
over 20 years of restaurant experience, including product development,
operations and training. Ms. Eadon comes to the company from the top
marketing spot with ARCO AM/PM, a leading operator of convenience stores,
and was previously with Taco Bell for eight years. Ms. Eadon is a seasoned
executive with over 20 years of marketing, advertising and brand
development in the restaurant, retail and consumer products sectors.
o As a result of the company's intensified focus on food and menu strategies
as well as an increase in network television advertising, same store sales
are expected to increase 1 to 1.5% in 1999 and at least 2 to 3% beginning
in the year 2000.
o The company announced the introduction of new Applebee's "small-town"
prototype designs developed for communities of less than 25,000 population.
Seven test units of the new small-town designs were opened in 1998, two by
the company and five by a franchisee, and additional units are in the
development pipeline for both the company and selected franchisees. The
company expects the long-term potential development of the small-town
prototype to be at least 150 restaurants. Based on continued successful
market penetration of the Applebee's concept as well as the new potential
for small-towns, the company now expects the ultimate domestic potential of
the Applebee's system to be at least 1,800 restaurants.
o The company expects the number of Applebee's restaurants to increase at an
annual expansion rate of about 10-11% over the next few years, a more
moderate pace of unit growth from recent years. The company expects to open
28 new restaurants in 1999 and 25-30 company restaurants per year over the
next five years. Franchisees are expected to open 75-90 restaurants in 1999
and approximately 100 restaurants a year for the next few years. Capital
expenditures of between $60 and $65 million are planned in 1999, a decrease
from $78 million in 1998. This decrease is primarily due to the divestiture
of the Rio Bravo Cantina concept and the resulting elimination of the
company's new unit development for that concept.
o Beginning in 1999, the company will begin to generate significant free cash
flow from operations. Combining this cash flow with its strong balance
sheet will allow the company to implement a new $100 million stock buyback
program over the next two years.
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Applebee's International, Inc.
Press Release - February 23, 1999
Page 3
o The divestiture of the 274 Applebee's restaurants previously operated by
Apple South, Inc. (now Avado Brands, Inc.) is nearing completion with the
remaining 31 restaurants expected to be sold within the next 90 days. The
large Apple South territories have been redistributed among 14 franchise
groups, 11 of which are new highly-motivated, well-financed groups.
Historically, Apple South's unit volumes were approximately $300,000 below
the average of the other restaurants in the Applebee's system. The company
believes that the new franchisees of these units will be able to recapture
a significant portion of this difference over time.
o The company expects earnings per share for 1999 to be in the range of $1.85
to $1.90 and earnings per share for the first quarter of 1999 to be in the
range of $0.42 to $0.43, consistent with the range of analyst expectations.
The operations of Rio Bravo Cantina have continued to adversely impact
sales and margins, and the severe weather in January had a negative impact
on sales at both the Applebee's and Rio Bravo concepts.
Applebee's International, Inc., headquartered in Overland Park, Kan., currently
develops franchises and operates casual dining restaurants in 48 states and six
international countries, under the Applebee's Neighborhood Grill and Bar and Rio
Bravo Cantina brands.
The statements contained in this release regarding restaurant development
potential, capital expenditures, sales growth, earnings per share, returns on
shareholder equity, and share repurchases 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. For a 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 23, 1999.
