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 10, 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 definitive agreements to sell the Rio Bravo Cantina concept and four
specialty restaurants. 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 10, 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 25, 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 10, 1999
(913) 967-4035
OVERLAND PARK, KAN., February 10 -- Applebee's International, Inc. (Nasdaq:APPB)
announced today that it has entered an agreement to sell its Rio Bravo Cantina
concept to Chevys, Inc. In addition, the company has agreed to sell to another
group the four specialty restaurants that it acquired with the Rio Bravo concept
in 1995.
The Rio Bravo Cantina concept currently comprises 66 restaurants, including 40
company restaurants and 26 franchised restaurants. Under the terms of the
agreement, Chevys will become the franchisor of the Rio Bravo Cantina system and
will continue to operate the company-owned restaurants. Chevys has agreed to
provide a number of future operating alternatives for existing franchisees,
including continued operation of franchise restaurants as Rio Bravo Cantinas or,
in certain cases, conversion to Chevys Fresh Mex restaurants.
The Rio Bravo Cantina transaction is valued at $59 million, consisting of $53
million in consideration to the company ($47 million in cash at closing and a $6
million subordinated note) and a $6 million commitment of Chevys available to
partially fund the strategic alternatives offered by Chevys to the current Rio
Bravo Cantina franchisees. The transaction is expected to close late in the
first quarter of 1999, subject to customary third party approvals.
Commenting on the announcement, Lloyd Hill, chief executive officer of
Applebee's International, said, "Having completed an analysis of our overall
company strategy and Rio Bravo's future role, we determined that, while the
concept has strong positioning in its segment, it does not align with our
overall growth and return-on-investment
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objectives. We are proud of the talented and dedicated Rio Bravo team, led by
chief executive officer, Larry Folk. The combination of Rio Bravo and Chevys,
two market leaders, will provide a powerful base to lead the category. This
transaction will provide the Rio Bravo employees and franchisees with many
opportunities for future success."
Hill continued, "Our company's primary strategy will be to focus on and optimize
the core Applebee's brand. The sale of Rio Bravo supports that single-concept
focus. With nearly 1,100 Applebee's restaurants and 1998 system-wide sales of
over $2 billion, we are poised to continue to dominate our market segment. We
will direct all our resources towards achieving this goal."
Chevys, Inc., headquartered in San Francisco, CA, is a leading operator of
Mexican restaurants in the country operating restaurants under the Chevys Fresh
Mex concept. The 78 company-operated and 16 franchised Chevys restaurants are
concentrated in the western region of the United States and other markets
throughout the country. Chevys, Inc., is owned by management and J.W. Childs
Associates, LP, a private investment fund based in Boston, MA.
Scott Bergren, chief executive officer of Chevys, added, "The Rio Bravo
acquisition is a significant and important event in our company's growth and
strategic evolution, strengthening our presence in key eastern and mid-western
markets. We see great value in the strength of the Rio Bravo concept and its
people and the potential for synergistic growth with our Chevys Fresh Mex
concept. We are excited to welcome the Rio Bravo family of employees and
franchisees to Chevys."
The company has also entered into a separate definitive agreement to sell its
four specialty restaurants to Specialty Restaurant Development, LLC for $12
million in cash. The four specialty restaurants include two restaurants located
in Atlanta, GA and one each in Huntsville, AL and Nashville, TN. The owners of
the recently formed Specialty Restaurant Development, LLC are Abe Gustin, the
former chief executive officer of Applebee's International and its current
chairman of the board, and certain members of his family. In addition, the same
entity has recently become a franchisee of Applebee's International by
purchasing seven existing Applebee's restaurants located in the Orlando, FL area
from another franchisee. The sale of the specialty restaurants is expected to
close late in the first quarter of 1999, subject to normal third-party
approvals.
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The two sale transactions and related expenses are expected to result in a loss
on disposition before income taxes of approximately $8.0 million, which will be
recognized by the company in the first quarter of 1999. The divestments,
exclusive of the loss on disposition, are expected to be slightly accretive to
the company's earnings per share in 1999.
Lloyd Hill added, "We are also pleased that Abe Gustin's purchase of an
Applebee's franchise, combined with the acquisition of the specialty
restaurants, will provide yet another avenue for Abe's continued involvement
with the Applebee's organization. Abe retired as an active executive of
Applebee's International in January of this year, but will continue to serve as
the company's chairman of the board of directors, as well as a member of the
Applebee's Franchise Business Council. His counsel to the company and continued
involvement in the concept is a strength to the entire system."
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 anticipated financial impact
of the divestment of the assets of Rio Bravo International for the 1999 fiscal
year 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 10, 1999.