Applebee's International Reports Second Quarter 2006 Diluted Net Earnings Per Share of $0.27 Including Impairment Charge and Stock-Based Compensation.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 net earnings of $20.4 million, or $0.27 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 second quarter ended June June: see month. 25, 2006 as compared to $0.34 per diluted share for the second quarter of 2005. Excluding 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. and other restaurant closure costs of $3.0 million ($2.0 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. $0.03 per share) and stock-based compensation of $5.2 million ($3.5 million after-tax or approximately $0.05 per share), net earnings were $25.9 million, or $0.34 per diluted share, for the second quarter of 2006. A reconciliation of non-GAAP measurements to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). results is attached to this release. System-wide domestic comparable sales for the second quarter of 2006 decreased 1.8 percent. Company and domestic franchise restaurant comparable sales decreased 2.0 percent and 1.7 percent, respectively, for the quarter. System-wide domestic comparable sales for the year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. period through June increased 0.4 percent, with domestic franchise restaurant comparable sales up 0.7 percent and company comparable sales down 0.4 percent. The company also reported comparable sales for the June fiscal period, comprised of the five weeks ended June 25, 2006. System-wide domestic comparable sales decreased 3.0 percent for the June period. Comparable sales for domestic franchise restaurants decreased 3.2 percent, and comparable sales for company restaurants decreased 2.5 percent, reflecting a decrease in guest traffic of approximately 5.0 percent, combined with a higher average check. In addition, the company reported comparable sales for the July July: see month. fiscal period, comprised of the four weeks ended July 23, 2006. System-wide domestic comparable sales decreased 3.6 percent for the July period, while comparable sales for domestic franchise restaurants decreased 3.4 percent. Comparable sales for company restaurants decreased 4.1 percent, reflecting a decrease in guest traffic of between 5.5 and 6.0 percent, combined with a higher average check. System-wide domestic comparable sales for the year-to-date period through July have decreased 0.1 percent, with domestic franchise restaurant comparable sales up 0.1 percent and company comparable restaurant sales down 0.9 percent. Lloyd Hill, chairman and chief executive officer, said, "We are disappointed that our efforts to broaden our reach have been masked A state of being disabled or cut off. by the challenging consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. environment. As we are uncertain as to when the environment will start to improve, we are taking a more conservative view in our outlook for the remainder of the year. Despite this uncertainty, our management team is focused on putting in place the building blocks for the future success of the brand." Dave Goebel, president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , added, "These building blocks include sharpening For image sharpening, see . Sharpening is the process of creating or refining a sharp edge on a tool or implement. The term has a wide application but can be expressed as the creation of two intersecting planes which produce an edge that is sharp enough to cut through the target our focus to enhance our brand appeal. The new food that we are developing is the best we have created in our history. By the end of the year we will have introduced more than 20 new or improved menu items that are designed to appeal to both the customer that is still frequenting casual dining and the customer that is seeking value. We are also committed to sharpening our advertising to align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. with our food strategy by having a stronger, more straight-forward message to the consumer that communicates what's new at Applebee's. While our current results do not reflect the full benefit of these initiatives, I am confident our strategies are right on track." Other results for the second quarter and year-to-date periods ended June 25, 2006 included: --Net earnings for the 26-week period ended June 25, 2006 were $47.6 million, or $0.63 per diluted share. This compares to net earnings in the same period of 2005 of $59.1 million, or $0.72 per diluted share. Excluding impairment and other restaurant closure costs of $4.6 million ($3.0 million after-tax or approximately $0.04 per share) and stock-based compensation of $11.4 million ($7.5 million after-tax or approximately $0.10 per share), net earnings were $58.1 million, or $0.77 per diluted share, for the 26-week period ended June 25, 2006. --Total system-wide sales for the quarter increased by 5.7 percent over the prior year. 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 quarter with 1,860 restaurants open system-wide (507 company and 1,353 franchise restaurants). During the second quarter of 2006, there were 35 new Applebee's restaurants opened system-wide, including 10 company and 25 franchised restaurants. --The company repurchased 469,000 shares of common stock in the second quarter at an average price of $23.38 for an aggregate cost of $11.0 million. For the 26-week period ended June 25, 2006, the company has repurchased 687,200 shares of common stock at an average price of $23.48 for an aggregate cost of $16.1 million. As of June 25, 2006, $112.8 million remains available under the company's current stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. authorization The right or permission to use a system resource; the process of granting access. See access control. . --As of June 25, 2006, the company had total debt outstanding of $201.7 million, with $37.2 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 updated its guidance with respect to its business outlook for the remainder of fiscal year 2006: --Approximately 125 new restaurants are expected to open in 2006, including approximately 35 company restaurants and at least 90 franchise restaurants. Through the second quarter, 64 new restaurants have opened system-wide, including 19 company and 45 franchised restaurants. Approximately 6 company restaurants are expected to open in the third quarter, with the balance opening in the fourth quarter of the year. Approximately 20 to 25 franchise restaurants are expected to open in the third quarter, with the remainder opening in the fourth quarter. --As a result of the current uncertainty surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the macro consumer environment and in consideration of recent results, the company now expects system-wide comparable sales for the remainder of the year to be in a range from flat to down 4.0 percent, which would result in full year system-wide comparable sales in a range from flat to down 2.0 percent. --Overall restaurant margins before pre-opening expense for the full year are expected to be less than fiscal year 2005 results and will be dependent on comparable sales performance at company restaurants. Higher energy costs, including utilities, fuel surcharges and packaging costs, are expected to continue to have a negative impact on margins, but will be partially offset by the impact of a change in accounting convention for smallwares that was implemented in the second quarter. The change in accounting convention had a $0.007 per diluted share favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact in the quarter and is expected to have a favorable impact of $0.02 for the year and $0.03 per diluted share for fiscal year 2007. --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 low-to-mid 10 percent range for the full year, including the impact of stock-based compensation. --The effective income tax rate is now expected to be between 34.5 and 35.0 percent for the remainder of the year. --Excluding the cost of franchise acquisitions, capital expenditures are expected to be between $135 and $145 million in 2006, including costs relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the construction of a new corporate headquarters that will open in the latter half of 2007. In addition, the company completed the acquisition of four franchise restaurants in the Houston Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; area in late January January: see month. for approximately $8.2 million. --The incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. impact of stock-based compensation expense resulting from the implementation of Statement of Financial Accounting Standards No. 123R, "Share-Based Payment," is estimated to be approximately $0.17 per diluted share for the year, with a slightly higher proportion recognized in the first quarter. --Based on the foregoing assumptions and the company's performance through the first half of the year, 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 for fiscal year 2006 excluding impairment charges are expected to be in the range of $1.12 to $1.22, including the impact of stock-based compensation expense. A conference call to review the second quarter 2006 results and the current business outlook will be held on Thursday Thursday: see week. morning, July 27, 2006, 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 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 2006 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 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December December: see month. 25, 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
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share amounts)
13 Weeks Ended 26 Weeks Ended
------------------- -------------------
June 25, June 26, June 25, June 26,
2006 2005 2006 2005
--------- --------- --------- ---------
Operating revenues:
Company restaurant sales... $296,128 $272,703 $604,027 $543,161
Franchise royalties and
fees...................... 34,306 32,493 70,241 65,501
Other franchise income..... 539 1,424 984 2,489
--------- --------- --------- ---------
Total operating
revenues.............. 330,973 306,620 675,252 611,151
--------- --------- --------- ---------
Cost of company restaurant
sales:
Food and beverage.......... 78,433 72,565 160,669 144,200
Labor...................... 100,296 90,115 201,327 178,839
Direct and occupancy....... 80,411 71,038 159,357 137,405
Pre-opening expense........ 1,157 1,268 1,907 2,435
--------- --------- --------- ---------
Total cost of company
restaurant sales...... 260,297 234,986 523,260 462,879
--------- --------- --------- ---------
Cost of other franchise
income....................... 281 1,229 1,047 2,048
General and administrative
expenses..................... 32,320 27,980 67,926 54,926
Amortization of intangible
assets....................... 204 226 408 454
Impairment and other
restaurant closure costs..... 3,000 -- 4,600 --
Loss on disposition of
property and equipment....... 430 564 1,007 861
--------- --------- --------- ---------
Operating earnings............ 34,441 41,635 77,004 89,983
--------- --------- --------- ---------
Other income (expense):
Investment income (loss)... (285) 449 460 408
Interest expense........... (2,985) (634) (5,539) (971)
Other income............... 101 584 237 1,019
--------- --------- --------- ---------
Total other income
(expense)............. (3,169) 399 (4,842) 456
--------- --------- --------- ---------
Earnings before income taxes.. 31,272 42,034 72,162 90,439
Income taxes.................. 10,868 14,544 24,607 31,292
--------- --------- --------- ---------
Net earnings.................. $20,404 $27,490 $47,555 $59,147
========= ========= ========= =========
Basic net earnings per common
share........................ $0.28 $0.34 $0.64 $0.74
========= ========= ========= =========
Diluted net earnings per
common share................. $0.27 $0.34 $0.63 $0.72
========= ========= ========= =========
Basic weighted average shares
outstanding.................. 74,112 79,897 74,113 80,295
========= ========= ========= =========
Diluted weighted average
shares outstanding........... 75,083 81,360 75,161 81,861
========= ========= ========= =========
APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS (Unaudited) (in thousands, except per share amounts) In addition to the results provided 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 Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP") throughout this document, the company has provided non-GAAP measurements which present operating results on a basis before impairment and other restaurant closure costs and stock-based compensation. The company adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123R, "Share-Based Payment" ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R") at the beginning of fiscal year 2006. SFAS 123R requires all stock-based compensation, including grants of employee stock options, to be recognized in the statement of earnings based on fair value. The company adopted this accounting treatment using the modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. prospective transition method; therefore results for prior periods have not been restated. Prior to the adoption of SFAS 123R, the company accounted for stock-based compensation using the intrinsic value Intrinsic Value 1. The value of a company or an asset based on an underlying perception of the value. 2. For call options, this is the difference between the underlying stock's price and the strike price. method prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). in Accounting Principles Board The Accounting Principles Board (APB) is the former authoritative body of the American Institute of Certified Public Accountants (AICPA). It was created by the American Institute of Certified Public Accountants in 1959 and issued pronouncements on accounting principles until 1973, ("APB APB See Accounting Principles Board (APB). ") Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. The company is using earnings before impairment and other restaurant closure costs and stock-based compensation as a key performance measure of results of operations for purposes of evaluating performance internally. In addition, the company's internal reporting and budgeting, as well as the calculation of its incentive compensation payments, includes the use of reported amounts excluding stock-based compensation. This non-GAAP measurement is not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the company believes that the presentation of earnings before impairment and other restaurant closure costs and stock-based compensation provides additional information to facilitate the comparison of past and present operations.
13 Weeks Ended 26 Weeks Ended
----------------- ------------------
June 25, June 26, June 25, June 26,
2006 2005 2006 2005
-------- -------- --------- --------
Impairment and other restaurant
closure costs................... $(3,000) $-- $(4,600) $--
Stock-based compensation(a)...... (5,247) (571) (11,412) (1,067)
Income taxes..................... 2,781 197 5,507 369
-------- -------- --------- --------
Impairment and other restaurant
closure costs and stock-based
compensation, net of tax....... $(5,466) $(374) $(10,505) $(698)
======== ======== ========= ========
Diluted weighted average shares
outstanding..................... 75,083 81,360 75,161 81,861
======== ======== ========= ========
Diluted earnings per share impact
of impairment and other
restaurant closure costs and
stock-based compensation........ $(0.07) -- $(0.14) $(0.01)
======== ======== ========= ========
Reconciliation of earnings before
impairment and other restaurant
closure costs and stock-based
compensation to net earnings:
Earnings before impairment and
other restaurant closure
costs and stock-based
compensation................. $25,870 $27,864 $58,060 $59,845
Impairment and other
restaurant closure costs and
stock-based compensation, net
of tax....................... (5,466) (374) (10,505) (698)
-------- -------- --------- --------
Net earnings.................. $20,404 $27,490 $47,555 $59,147
======== ======== ========= ========
Reconciliation of earnings per
share before impairment and
other restaurant closure costs
and stock-based compensation to
reported earnings per share:
Diluted earnings per share
before impairment and other
restaurant closure costs and
stock-based compensation..... $0.34 $0.34 $0.77 $0.73
Diluted earnings per share
impact of impairment and
other restaurant closure
costs and stock-based
compensation................. (0.07) -- (0.14) (0.01)
-------- -------- --------- --------
Reported diluted earnings
per share.................. $0.27 $0.34 $0.63 $0.72
======== ======== ========= ========
(a) Stock-based compensation for the second quarter of 2006 includes
$243,000 in cost of company restaurant sales and $5,004,000 in
general and administrative expenses. Stock-based compensation for
the 26 weeks ended June 25, 2006 includes $487,000 in cost of
company restaurant sales and $10,925,000 in general and
administrative expenses. Stock-based compensation for both periods
in 2005 represents restricted stock expense which was included
entirely in general and administrative expenses.
The following table contains information derived from the company's
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 26 Weeks Ended
----------------- -----------------
June 25, June 26, June 25, June 26,
2006 2005 2006 2005
-------- -------- -------- --------
Operating revenues:
Company restaurant sales........ 89.5% 88.9% 89.5% 88.9%
Franchise royalties and fees.... 10.4 10.6 10.4 10.7
Other franchise income.......... 0.2 0.5 0.1 0.4
-------- -------- -------- --------
Total operating revenues..... 100.0% 100.0% 100.0% 100.0%
======== ======== ======== ========
Cost of sales (as a percentage of
company restaurant sales):
Food and beverage............... 26.5% 26.6% 26.6% 26.5%
Labor........................... 33.9 33.0 33.3 32.9
Direct and occupancy............ 27.2 26.0 26.4 25.3
Pre-opening expense............. 0.4 0.5 0.3 0.4
-------- -------- -------- --------
Total cost of sales.......... 87.9% 86.2% 86.6% 85.2%
======== ======== ======== ========
Cost of other franchise income (as
a percentage of other
franchise income)............... 52.1% 86.3% 106.4% 82.3%
General and administrative expenses 9.8 9.1 10.1 9.0
Amortization of intangible assets.. 0.1 0.1 0.1 0.1
Impairment and other restaurant
closure costs..................... 0.9 -- 0.7 --
Loss on disposition of property and
equipment......................... 0.1 0.2 0.1 0.1
-------- -------- -------- --------
Operating earnings................. 10.4 13.6 11.4 14.7
-------- -------- -------- --------
Other income (expense):
Investment income (loss)........ (0.1) 0.1 0.1 0.1
Interest expense................ (0.9) (0.2) (0.8) (0.2)
Other income.................... -- 0.2 -- 0.2
-------- -------- -------- --------
Total other income
(expense)................... (1.0) 0.1 (0.7) 0.1
-------- -------- -------- --------
Earnings before income taxes....... 9.4 13.7 10.7 14.8
Income taxes....................... 3.3 4.7 3.6 5.1
-------- -------- -------- --------
Net earnings....................... 6.2% 9.0% 7.0% 9.7%
======== ======== ======== ========
The following table sets forth certain financial information and other
restaurant data relating to company and franchise restaurants, as
reported to us by franchisees:
13 Weeks Ended 26 Weeks Ended
------------------- -------------------
June 25, June 26, June 25, June 26,
2006 2005 2006 2005
--------- --------- --------- ---------
Number of restaurants:
Company:
Beginning of period..... 497 437 486 424
Restaurant openings..... 10 14 19 27
Restaurant closings..... -- -- (2) --
Restaurants acquired
from franchisees....... -- 11 4 11
--------- --------- --------- ---------
End of period........... 507 462 507 462
--------- --------- --------- ---------
Franchise:
Beginning of period..... 1,332 1,257 1,318 1,247
Restaurant openings..... 25 16 45 29
Restaurant closings..... (4) (2) (6) (5)
Restaurants acquired
from franchisees....... -- (11) (4) (11)
--------- --------- --------- ---------
End of period........... 1,353 1,260 1,353 1,260
--------- --------- --------- ---------
Total:
Beginning of period..... 1,829 1,694 1,804 1,671
Restaurant openings..... 35 30 64 56
Restaurant closings..... (4) (2) (8) (5)
--------- --------- --------- ---------
End of period........... 1,860 1,722 1,860 1,722
========= ========= ========= =========
Weighted average weekly sales
per restaurant:
Company..................... $45,245 $46,800 $46,650 $47,483
Domestic franchise.......... $50,127 $51,056 $51,863 $51,547
Domestic total.............. $48,736 $49,894 $50,383 $50,452
Change in comparable restaurant
sales:(1)
Company..................... (2.0)% (1.2)% (0.4)% (0.4)%
Domestic franchise.......... (1.7)% 2.3 % 0.7 % 3.6 %
Domestic total.............. (1.8)% 1.4 % 0.4 % 2.6 %
Total operating revenues (in
thousands):
Company restaurant sales....$296,128 $272,703 $604,027 $543,161
Franchise royalties and
fees(2).................... 34,306 32,493 70,241 65,501
Other franchise income(3)... 539 1,424 984 2,489
--------- --------- --------- ---------
Total.......................$330,973 $306,620 $675,252 $611,151
========= ========= ========= =========
(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 (including international restaurants), in thousands, were
$859,557 and $820,483 in the 2006 quarter and the 2005 quarter,
respectively, and $1,764,201 and $1,653,480 in the 2006
year-to-date period and 2005 year-to-date period, respectively.
Franchise fees typically range from $30,000 to $35,000 for each
restaurant opened.
(3) Other franchise income includes revenue from information
technology products and services provided to certain franchisees.
In addition, the 2005 period includes insurance premiums from
franchisee participation in our captive insurance program.
APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share amounts)
June 25, December 25,
2006 2005
----------- ------------
ASSETS
Current assets:
Cash and cash equivalents.................. $6,896 $13,040
Short-term investments, at market value.... 289 286
Receivables, net of allowance.............. 37,706 37,857
Receivables related to captive insurance
subsidiary................................ 503 1,712
Inventories................................ 12,525 20,373
Prepaid income taxes....................... 55 3,488
Prepaid and other current assets........... 18,339 13,518
----------- ------------
Total current assets.................... 76,313 90,274
Property and equipment, net................... 619,638 590,593
Goodwill...................................... 139,111 138,443
Restricted assets related to captive insurance
subsidiary................................... 17,267 19,329
Other intangible assets, net.................. 6,713 8,050
Other assets, net............................. 33,712 31,899
----------- ------------
$892,754 $878,588
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.......... $283 $259
Notes payable.............................. 4,400 7,900
Accounts payable........................... 41,773 63,445
Accrued expenses and other current
liabilities............................... 83,661 100,995
Loss reserve related to captive insurance
subsidiary................................ 7,103 10,235
Accrued dividends.......................... -- 14,840
Accrued income taxes....................... 275 --
----------- ------------
Total current liabilities............... 137,495 197,674
----------- ------------
Non-current liabilities:
Long-term debt, less current portion....... 197,066 180,208
Deferred income taxes...................... 34,235 37,722
Other non-current liabilities.............. 55,784 50,374
----------- ------------
Total non-current liabilities........... 287,085 268,304
----------- ------------
Total liabilities....................... 424,580 465,978
----------- ------------
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 - 108,503,243 shares............. 1,085 1,085
Additional paid-in capital................. 248,656 234,988
Unearned compensation...................... -- (2,614)
Retained earnings.......................... 757,832 710,277
----------- ------------
1,007,573 943,736
Treasury stock - 34,133,112 shares in 2006
and 34,304,693 shares in 2005, at cost.... (539,399) (531,126)
----------- ------------
Total stockholders' equity.............. 468,174 412,610
----------- ------------
$892,754 $878,588
=========== ============
APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
26 Weeks Ended
------------------
June 25, June 26,
2006 2005
-------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings.................................... $47,555 $59,147
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization................ 31,577 25,676
Amortization of intangible assets............ 408 454
Stock-based compensation..................... 11,412 1,067
Other amortization........................... 156 63
Deferred income tax benefit.................. (1,046) (2,294)
Impairment and other restaurant closure costs 4,600 --
Loss on disposition of property and equipment 1,007 861
Income tax benefit from stock-based
compensation................................ 1,403 3,794
Changes in assets and liabilities, exclusive of
effect of acquisitions:
Receivables.................................. 148 834
Receivables related to captive insurance
subsidiary.................................. 1,209 (1,342)
Inventories.................................. 7,906 9,014
Income taxes................................. 3,708 10,552
Prepaid and other current assets............. (7,262) (217)
Accounts payable............................. (18,985) 4,626
Accrued expenses and other current
liabilities................................. (17,509) (6,902)
Loss reserve and unearned premiums related to
captive insurance subsidiary................ (3,132) 1,875
Other non-current liabilities................ 4,138 1,759
Other........................................ (1,461) (1,177)
-------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES.... 65,832 107,790
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............. (59,976) (59,922)
Change in restricted assets related to captive
insurance subsidiary........................... 2,062 (1,417)
Acquisition of restaurants...................... (8,040) (46,777)
Proceeds from sale of property and equipment.... 242 --
-------- ---------
NET CASH USED BY INVESTING ACTIVITIES........ (65,712) (108,116)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock..................... (16,134) (68,238)
Dividends paid.................................. (14,840) (4,867)
Issuance of common stock upon exercise of stock
options........................................ 7,856 9,929
Shares issued under employee benefit plans...... 2,318 2,323
Excess tax benefits from stock-based
compensation................................... 1,154 --
Net debt proceeds............................... 13,382 51,198
-------- ---------
NET CASH USED BY FINANCING ACTIVITIES........ (6,264) (9,655)
-------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS.......... (6,144) (9,981)
CASH AND CASH EQUIVALENTS, beginning of period..... 13,040 10,642
-------- ---------
CASH AND CASH EQUIVALENTS, end of period........... $6,896 $661
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