Applebee's International Reports Preliminary Unaudited Fourth Quarter and Fiscal Year 2004 Results.OVERLAND PARK Overland Park, city (1990 pop. 111,790), Johnson co., NE Kans., a residential suburb of Kansas City; inc. 1960. There is printing and publishing, and the manufacture of apparel, aircraft parts, cement, prepared foods, salt, chemicals, marine accessories, and signs. , Kan Kan, river, China: see Gan. . -- Applebee's Applebee’s International, Inc. (NASDAQ: APPB) is a United States company which develops, franchises, and operates the Applebee's Neighborhood Grill and Bar restaurant chain. As of Feb. International, Inc. (Nasdaq: APPB APPB Array Processor with Pipelined Bus APPB Application Builder ) today reported preliminary unaudited net earnings of $23.6 million, or $0.29 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the fourth quarter ended December December: see month. 26, 2004. This compares to net earnings of $23.2 million, or $0.27 per diluted share, for the fourth quarter of 2003. For the fiscal year ended December 26, 2004, preliminary unaudited net earnings were a record $109.6 million, or $1.31 per diluted share. This compares to net earnings of $93.6 million, or $1.10 per diluted share, for fiscal year 2003, which included an $8.8 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ($5.6 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. or approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.06 per share) charge resulting from the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of a note receivable note receivable A debt due from borrowers and evidenced by a written promise of payment. Note receivable, an entry on the asset side of many corporate balance sheets, indicates the dollar amount of loans due to be repaid by borrowers. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the 1999 sale of the Rio See RapidIO and MP3. Bravo BRAVO Cardiology A clinical trial–Blockade of the GP IIB/IIIA Receptor to Avoid Vascular Occlusion– which evaluated lotrafiban in preventing strokes and acute MI. See GP IIB/IIIA. concept to Chevys Holdings, Inc. ("Chevys"). Like numerous companies in the restaurant industry, the company has recently reviewed its accounting treatment for leases and depreciation of related leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. . Historically, when accounting for leases with renewal options, the company has recorded rent expense on a straight-line straight-line adj. 1. Lying in a straight line. 2. Relating to a device whose linkage produces or copies motion in straight lines. 3. basis over the initial non-cancelable lease term, with the term commencing when actual rent payments began. The company depreciated Depreciated may refer to:
The company has discussed its lease accounting practices with its independent external auditors The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and its audit committee and has determined that it will correct its accounting practices in this area. The company has not yet made a final determination as to whether the corrections will be made as a cumulative adjustment in the fourth quarter of 2004 or as a restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of prior periods. Accordingly, the results included in this release are preliminary and do not reflect any adjustments for this correction CORRECTION,punishment. Chastisement by one having authority of a person who has committed some offence, for the purpose of bringing him to legal subjection. 2. It is chiefly exercised in a parental manner, by parents, or those who are placed in loco parentis. . The primary result of this correction will be to accelerate the recognition of rent expense under certain leases that include fixed-rent escalations by revising the computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. of straight-line rent expense to include certain option periods up to a maximum of 20 years, where failure to exercise such options would result in an economic penalty. The company estimates that the cumulative effect of lease accounting corrections through fiscal year 2004 would be an increase in expense of less than $9 million on a pre-tax basis ($6 million after-tax). If the company restates prior periods, the annual impact of lease-related errors on diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of would not exceed $0.01 in any year. The company anticipates that the impact of this correction may reduce diluted earnings per share by approximately $0.01 in fiscal year 2005. These estimates and our preliminary results are subject to change as the company's independent external auditors complete their audit procedures. This correction will not affect the company's previously reported or future cash flows, the timing of payments under the related leases, or compliance with any debt covenants. As previously reported, system-wide comparable sales for the fourth quarter of 2004 increased 2.3 percent, the 26th consecutive quarter of comparable sales growth. Company and franchise restaurant comparable sales increased 0.1 percent and 3.0 percent, respectively, for the quarter. System-wide comparable sales for the 2004 fiscal year increased 4.8 percent. Company and franchise restaurant comparable sales increased 3.8 percent and 5.2 percent, respectively, for the year. Lloyd L. Hill, chairman and chief executive officer, said, "Although we ended the year on a somewhat softer note, 2004 was still a terrific year on many fronts. System-wide comparable sales growth of 4.8 percent for the year substantially exceeded the casual dining industry average as measured by Knapp-Track(TM), and reflected our highest annual rate of growth since 1993. A total of 109 new restaurants were opened system-wide, the 12th consecutive year of at least 100 new restaurant openings. As a result of these strong sales and continued rapid development, we continued to expand our market share with system-wide sales growing by nearly 11 percent." Hill continued, "We continue to remain focused on improving operations throughout the system, as well as optimizing our key strategies. 2005 is off to a good start with strong January January: see month. sales, especially in the face of extremely difficult comparisons. We have essentially completed the rollout of our Carside To Go(TM) program in all company and franchise restaurants and will launch national advertising beginning on Valentine's Day Valentine's Day: see Saint Valentine's Day. Valentine's Day Lovers' holiday celebrated on February 14, the feast day of St. Valentine, one of two 3rd-century Roman martyrs of the same name. St. . We also are very pleased with the results of our strategic alliance with Weight Watchers, particularly since the start of the year as we've we've Contraction of we have. we've have supported it with national advertising. Leveraging our significant marketing muscle in 2005 is a key initiative, as we will use a more than 30 percent increase in our national advertising budget to convey convey v. to transfer title (official ownership) to real property (or an interest in real property) from one (grantor) to another (grantee) by a written deed (or an equivalent document such as a judgment of distribution which conveys real property from an estate). multiple messages to our guests, including our branded campaign events, Carside To Go(TM), our partnership with Weight Watchers, and our neighborhood branding messages." Other results for the fiscal year ended December 26, 2004 included: --Total system-wide sales for the 2004 fiscal year increased by 10.7 percent over 2003. System-wide sales are a non-GAAP financial measure that includes sales at all company and franchise Applebee's restaurants, as reported by franchisees. The company believes that system-wide sales information is useful in analyzing Applebee's market share and growth, and because franchisees pay royalties Not to be confused with Royal family. Royalties (sometimes, running royalties) are usage-based payments made by one party (the "licensee") to another (the "licensor") for ongoing use of an asset, most typically an intellectual property (IP) right. and contribute to the national advertising pool based on a percentage of their sales. --Applebee's ended the year with 1,671 restaurants system-wide (424 company and 1,247 franchise restaurants). There were 109 new Applebee's restaurants opened system-wide during fiscal year 2004, the 12th consecutive year of at least 100 new restaurant openings, including 32 company and 77 franchised restaurants. --During 2004, the company repurchased 3,993,670 shares of common stock at an average price of $24.97 for an aggregate cost of $99.7 million. As previously announced, the company's Board of Directors has authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: additional stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. of up to $150,000,000 beginning in 2005 and has approved a written plan for repurchases of common stock in the open market in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Rule 10b5-1 of the Securities Exchange Act of 1934. --As of December 26, 2004, the company had total debt outstanding of $35.7 million, with $108 million available under its revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. BUSINESS OUTLOOK The company reiterated its previously stated guidance with respect to its business outlook for fiscal year 2005. --Over 125 new restaurants are expected to open in 2005, including at least 40 company and 85 franchise restaurants. Approximately 25 company restaurants and 20 to 25 franchise restaurants are currently expected to open in the first half of the year, with the balance opening in the second half of the year. --System-wide comparable sales are expected to increase by at least 3 percent for the full year, with results expected to be lower during the first part of the year and accelerate throughout the year. --Overall restaurant margins before pre-opening expense for the full year of 2005 are expected to be similar to fiscal year 2004 results. --General and administrative expenses, as a percentage of operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. , are expected to be in the high-8 percent range. --The effective income tax rate is expected to be 34.6 percent for the year. --Excluding the cost of franchise acquisitions, capital expenditures are expected to be between $130 and $140 million in 2005. --Based on the foregoing assumptions, diluted earnings per share for fiscal year 2005 are expected to be in the range of $1.48 to $1.51, with diluted earnings per share for the first quarter expected to be slightly less than the prior year. These earnings per share estimates exclude the potential impact of any corrections to the company's lease accounting practices as discussed above, as well as the impact of expensing stock options beginning in the third quarter of 2005. A conference call to review the fourth quarter and fiscal year 2004 results and the current business outlook will be held on Thursday Thursday: see week. morning, February February: see month. 10, 2005, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). The conference call will be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and a replay will be available shortly after the call on the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the company's website (www.applebees.com). Applebee's International, Inc., headquartered in Overland Park, Kan., develops, franchises and operates restaurants under the Applebee's Neighborhood Grill Grill may refer to: In food:
Certain statements contained in this release, including fiscal year 2005 guidance as set forth in the Business Outlook section, are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. 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 ability of its franchisees to obtain financing, 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 operating costs npl → gastos mpl operacionales 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 Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed with the Securities and Exchange Commission on February 9, 2005. The company disclaims any obligation to update these forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. .
APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
PRELIMINARY(a) UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share amounts)
13 Weeks Ended 52 Weeks Ended
------------------- --------------------
December December December December
26, 28, 26, 28,
2004 2003 2004 2003
--------- --------- ----------- --------
Revenues:
Company restaurant sales...$238,296 $216,212 $976,798 $867,158
Franchise royalties and
fees...................... 29,854 27,745 121,510 109,833
Other franchise income..... 3,188 4,266 13,615 13,147
--------- --------- ---------- ---------
Total operating
revenues.............. 271,338 248,223 1,111,923 990,138
--------- --------- ---------- ---------
Cost of company restaurant
sales:
Food and beverage.......... 63,857 56,260 259,134 225,346
Labor...................... 78,760 70,559 319,104 283,745
Direct and occupancy....... 62,665 55,861 243,616 216,677
Pre-opening expense........ 976 819 2,915 1,950
--------- --------- ---------- ---------
Total cost of company
restaurant sales....... 206,258 183,499 824,769 727,718
--------- --------- ---------- ---------
Cost of other franchise
income...................... 2,908 4,187 14,401 12,697
General and administrative
expenses..................... 27,509 25,917 104,627 95,013
Amortization of intangible
assets....................... 220 86 663 364
Loss (gain) on disposition of
restaurants and equipment.... 435 (615) 1,955 699
--------- --------- ---------- ---------
Operating earnings............ 34,008 35,149 165,508 153,647
--------- --------- ---------- ---------
Other income (expense):
Investment income.......... 718 506 1,284 1,554
Interest expense........... (487) (364) (1,626) (1,733)
Impairment of Chevys note
receivable................ -- -- -- (8,803)
Other income............... 990 919 2,400 1,520
--------- --------- ---------- ---------
Total other income
(expense).............. 1,221 1,061 2,058 (7,462)
--------- --------- ---------- ---------
Earnings before income taxes.. 35,229 36,210 167,566 146,185
Income taxes.................. 11,660 13,036 57,978 52,627
--------- --------- ---------- ---------
Net earnings.................. $23,569 $23,174 $109,588 $93,558
========= ========= ========== =========
Basic net earnings per common
share (b).................... $0.29 $0.28 $1.34 $1.13
========= ========= ========== =========
Diluted net earnings per
common share (b)............. $0.29 $0.27 $1.31 $1.10
========= ========= ========== =========
Basic weighted average shares
outstanding (b).............. 80,835 82,380 81,528 82,944
========= ========= ========== =========
Diluted weighted average
shares outstanding (b)....... 82,518 85,012 83,600 85,409
========= ========= ========== =========
(a) Fiscal year 2004 financial statements have not yet been filed with
the Securities and Exchange Commission. These results do not
reflect the potential adjustments discussed in this press release
related to lease accounting.
(b) All earnings per share and weighted average share information
reflects a three-for-two stock split effective at the close of
business on June 15, 2004.
The following table sets forth, for the periods indicated,
information derived from the Company's preliminary unaudited
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 52 Weeks Ended
----------------- -----------------
December December December December
26, 28, 26, 28,
2004 2003 2004 2003
-------- -------- -------- --------
Revenues:
Company restaurant sales........ 87.8% 87.1% 87.8% 87.6%
Franchise royalties and fees.... 11.0 11.2 10.9 11.1
Other franchise income.......... 1.2 1.7 1.2 1.3
-------- -------- -------- --------
Total operating revenues..... 100.0% 100.0% 100.0% 100.0%
======== ======== ======== ========
Cost of sales (as a percentage of
company restaurant sales):
Food and beverage............... 26.8% 26.0% 26.5% 26.0%
Labor........................... 33.1 32.6 32.7 32.7
Direct and occupancy............ 26.3 25.8 24.9 25.0
Pre-opening expense............. 0.4 0.4 0.3 0.2
-------- -------- -------- --------
Total cost of sales.......... 86.6% 84.9% 84.4% 83.9%
======== ======== ======== ========
Cost of other franchise income (as
a percentage of other franchise
income)........................... 91.2% 98.1% 105.8% 96.6%
General and administrative
expenses......................... 10.1 10.4 9.4 9.6
Amortization of intangible assets.. 0.1 -- 0.1 --
Loss (gain) on disposition of
restaurants and equipment......... 0.2 (0.2) 0.2 0.1
-------- -------- -------- --------
Operating earnings................. 12.5 14.2 14.9 15.5
-------- -------- -------- --------
Other income (expense):
Investment income............... 0.3 0.2 0.1 0.2
Interest expense................ (0.2) (0.1) (0.1) (0.2)
Impairment of Chevys note
receivable..................... -- -- -- (0.9)
Other income.................... 0.4 0.4 0.2 0.2
-------- -------- -------- --------
Total other income
(expense).................. 0.4 0.4 0.2 (0.8)
-------- -------- -------- --------
Earnings before income taxes....... 13.0 14.6 15.1 14.8
Income taxes....................... 4.3 5.3 5.2 5.3
-------- -------- -------- --------
Net earnings....................... 8.7% 9.3% 9.9% 9.4%
======== ======== ======== ========
The following table sets forth certain unaudited financial
information and other restaurant data relating to company and
franchise restaurants, as reported to us by franchisees:
13 Weeks Ended 52 Weeks Ended
------------------- ---------------------
December December December December
26, 28, 26, 28,
2004 2003 2004 2003
--------- --------- ----------- ---------
Number of restaurants:
Company:
Beginning of period... 413 372 383 357
Restaurant openings... 11 11 32 26
Restaurants closed.... -- -- (1) (2)
Restaurants acquired
from franchisees..... -- -- 10 11
Restaurants acquired
by franchisees....... -- -- -- (9)
--------- --------- ----------- ---------
End of period......... 424 383 424 383
--------- --------- ----------- ---------
Franchise:
Beginning of period... 1,224 1,171 1,202 1,139
Restaurant openings... 37 33 77 74
Restaurants closed.... (14) (2) (22) (9)
Restaurants acquired
from franchisees..... -- -- (10) (11)
Restaurants acquired
by franchisees....... -- -- -- 9
--------- --------- ----------- ---------
End of period......... 1,247 1,202 1,247 1,202
--------- --------- ----------- ---------
Total:
Beginning of period... 1,637 1,543 1,585 1,496
Restaurant openings... 48 44 109 100
Restaurants closed.... (14) (2) (23) (11)
--------- --------- ----------- ---------
End of period......... 1,671 1,585 1,671 1,585
========= ========= =========== =========
Weighted average weekly sales
per restaurant:
Company................... $43,812 $43,963 $46,536 $45,000
Franchise................. $45,695 $44,116 $47,613 $45,271
Total..................... $45,215 $44,079 $47,345 $45,205
Change in comparable
restaurant sales:(1)
Company................... 0.1% 5.2% 3.8% 5.2%
Franchise................. 3.0% 4.4% 5.2% 3.7%
Total..................... 2.3% 4.6% 4.8% 4.1%
Total operating revenues (in
thousands):
Company restaurant sales..$238,296 $216,212 $976,798 $867,158
Franchise royalties and
fees(2).................. 29,854 27,745 121,510 109,833
Other franchise income(3). 3,188 4,266 13,615 13,147
--------- --------- ----------- ---------
Total.....................$271,338 $248,223 $1,111,923 $990,138
========= ========= =========== =========
(1) When computing comparable restaurant sales, restaurants open for
at least 18 months are compared from period to period.
(2) Franchise royalties are generally 4% of each franchise
restaurant's reported monthly gross sales. Reported franchise
sales, in thousands, were $726,510 and $677,444 in the 2004
quarter and the 2003 quarter, respectively, and $3,001,287 and
$2,725,179 in the 2004 year-to-date and 2003 year-to-date period,
respectively. Franchise fees typically range from $30,000 to
$35,000 for each restaurant opened.
(3) Other franchise income includes insurance premiums from franchisee
participation in our captive insurance company and revenue from
information technology products and services provided to certain
franchisees.
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