Applebee's International Reports Second Quarter Diluted Earnings Per Share of $0.34.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 $28.2 million, or $0.34 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. 27, 2004, including a previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). $2.3 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ($1.5 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. $0.02 per share) inventory 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. charge. This compares to net earnings of $20.2 million, or $0.24 per diluted share, for the second quarter of 2003, which included an $8.8 million pre-tax ($5.6 million after-tax or approximately $0.06 per share) charge resulting from fully reserving 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"). As previously reported, system-wide comparable sales for the second quarter of 2004 increased 6.3 percent, the 24th consecutive quarter of comparable sales growth. Company and franchise restaurant comparable sales increased 5.5 percent and 6.5 percent, respectively, for the quarter. System-wide 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 7.2 percent, with company and franchise restaurant comparable sales up 7.0 percent and 7.2 percent, respectively. The company also reported comparable sales for the July July: see month. fiscal period, comprised of the four weeks ended July 25, 2004. System-wide comparable sales increased 5.5 percent for the July period, and comparable sales for franchise restaurants increased 6.0 percent. Comparable sales for company restaurants increased 3.9 percent, reflecting an increase in guest traffic of approximately 3.0 percent, combined with a higher average check. The company noted that its Fresh Garden Classics promotion featuring four salads, which began on June 21, and concludes on August 15, has lower price points than either the prior year or recent promotions. System-wide comparable sales for the year-to-date period through July have increased 7.0 percent, with company and franchise restaurant comparable sales up 6.6 percent and 7.1 percent, respectively. Lloyd L. Hill, chairman and chief executive officer, said: "The first half of the year produced exceptional results. Comparable sales and traffic growth in both the first and second quarters were above our own expectations and substantially exceeded the casual dining industry average as measured by Knapp-Track(TM), despite some slowing in 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. seen in both restaurants and retail in May and June. "We continued to improve our food with the successful system-wide introduction of an updated menu in May featuring the addition of ten Weight Watchers(R) items as well as the introduction of baby back ribs to our permanent menu. Both our kitchen display system ("KDS KDS Korea Data Systems (monitor manufacturer) KDS Kristen Demokratisk Samling KDS Keyboard Display Station KDS Karate Dance Style KDS Kuwaiti Dental Society (www.kwtdent. ") and Carside To Go(TM) program are now providing guests with greater convenience in more than 1,000 restaurants throughout the system. The continued outstanding execution and optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. of these three key strategies will be our focus for the remainder of the year." Other results for the second quarter and year-to-date periods ended June 27, 2004, included: --Net earnings for the 26-week period ended June 27, 2004, were $57.7 million, or $0.68 per diluted share, including the inventory impairment charge. This compares to net earnings in the same period of 2003 of $44.8 million, or $0.53 per diluted share, including the Chevys charge. --Total system-wide sales for the quarter increased 12 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 1,612 restaurants system-wide (405 company and 1,207 franchise restaurants). During the second quarter of 2004, there were 12 new Applebee's restaurants opened system-wide, including 4 company and 8 franchised restaurants. --As previously disclosed, the company recorded a pre-tax charge of $2.3 million for the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of excess riblets A riblet is the usually boneless meat from the end of a rib, sometimes referred to as a rib tip. Riblets can be produced from beef, lamb, or veal, but the term is most often applied to pork rib tips. The tips are trimmed from the lower ribs when cutting a St. inventory which it determined during the second quarter no longer met the company's quality standards. --The company repurchased 814,500 shares of common stock in the second quarter at an average price of $26.01 for an aggregate cost of $21.2 million. Year-to-date, the company has repurchased 2,097,450 shares of common stock at an average price of $25.38 for an aggregate cost of $53.2 million. As of June 27, 2004, $46.5 million remains available under the company's ongoing 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 27, 2004, the company had total debt outstanding of $43.8 million, with $100 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 2004: --More than 100 new restaurants are expected to open in 2004, including at least 32 company restaurants and 70 to 80 franchise restaurants. Nine 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. --The company continues to expect system-wide comparable sales to increase by at least 5 percent for the full year, although monthly sales results may be more volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. given economic conditions, calendar shifts, prior year comparisons or unusual events. --Overall restaurant margins before pre-opening expense for the full year are expected to be similar to fiscal year 2003 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 low-9 percent range. --The effective income tax rate is currently expected to continue at 35.0 percent for the remainder of the year. --Excluding the cost of franchise acquisitions, capital expenditures are expected to be between $95 and $105 million in 2004. --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 2004 are expected to be $1.34 to $1.36, including the inventory impairment charge of approximately $0.02 per share. A conference call to review the second quarter 2004 results and the current business outlook will be held on Thursday Thursday: see week. morning, July 29, 2004, 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 2004 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 February: see month. 11, 2004. 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 27, June 29, June 27, June 29,
2004 2003 2004 2003
--------- --------- --------- ---------
Revenues:
Company restaurant sales... $247,769 $220,107 $491,329 $428,517
Franchise royalties
and fees.................. 30,779 27,331 61,551 54,494
Other franchise income..... 3,399 3,268 6,514 5,909
--------- --------- --------- ---------
Total operating
revenues.............. 281,947 250,706 559,394 488,920
--------- --------- --------- ---------
Cost of company restaurant
sales:
Food and beverage.......... 66,647 57,040 130,162 111,886
Labor...................... 81,086 71,804 160,745 140,168
Direct and occupancy....... 60,240 54,386 119,309 104,947
Pre-opening expense........ 391 334 941 555
--------- --------- --------- ---------
Total cost of company
restaurant sales...... 208,364 183,564 411,157 357,556
--------- --------- --------- ---------
Cost of other franchise
income....................... 5,035 3,173 7,972 5,673
General and administrative
expenses..................... 24,932 22,887 50,449 45,507
Amortization of intangible
assets....................... 158 92 244 191
Loss on disposition of
restaurants and equipment.... 584 731 1,079 1,198
--------- --------- --------- ---------
Operating earnings............ 42,874 40,259 88,493 78,795
--------- --------- --------- ---------
Other income (expense):
Investment income.......... 18 485 241 821
Interest expense........... (416) (518) (760) (1,039)
Impairment of Chevys note
receivable................ -- (8,803) -- (8,803)
Other income............... 951 1 842 206
--------- --------- --------- ---------
Total other income
(expense)............. 553 (8,835) 323 (8,815)
--------- --------- --------- ---------
Earnings before income
taxes........................ 43,427 31,424 88,816 69,980
Income taxes.................. 15,200 11,239 31,086 25,193
--------- --------- --------- ---------
Net earnings.................. $28,227 $20,185 $57,730 $44,787
========= ========= ========= =========
Basic net earnings per common
share(a)..................... $0.35 $0.24 $0.71 $0.54
========= ========= ========= =========
Diluted net earnings per
common share(a).............. $0.34 $0.24 $0.68 $0.53
========= ========= ========= =========
Basic weighted average shares
outstanding(a)............... 81,781 83,153 81,883 83,031
========= ========= ========= =========
Diluted weighted average
shares outstanding(a)........ 84,098 85,548 84,371 85,303
========= ========= ========= =========
(a) 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 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 27, June 29, June 27, June 29,
2004 2003 2004 2003
---------- --------- --------- --------
Revenues:
Company restaurant sales... 87.9% 87.8% 87.8% 87.6%
Franchise royalties
and fees.................. 10.9 10.9 11.0 11.1
Other franchise income..... 1.2 1.3 1.2 1.2
---------- --------- --------- --------
Total operating
revenues............... 100.0% 100.0% 100.0% 100.0%
========== ========= ========= ========
Cost of sales (as a percentage
of company restaurant sales):
Food and beverage.......... 26.9% 25.9% 26.5% 26.1%
Labor...................... 32.7 32.6 32.7 32.7
Direct and occupancy....... 24.3 24.7 24.3 24.5
Pre-opening expense........ 0.2 0.2 0.2 0.1
---------- --------- --------- --------
Total cost of sales..... 84.1% 83.4% 83.7% 83.4%
========== ========= ========= ========
Cost of other franchise income
(as a percentage of other
franchise income).......... 148.1% 97.1% 122.4% 96.0%
General and administrative
expenses..................... 8.8 9.1 9.0 9.3
Amortization of intangible
assets....................... -- -- -- --
Loss on disposition of
restaurants and equipment.... 0.2 0.3 0.2 0.2
---------- --------- --------- --------
Operating earnings............ 15.2 16.1 15.8 16.1
---------- --------- --------- --------
Other income (expense):
Investment income.......... -- 0.2 -- 0.2
Interest expense........... (0.1) (0.2) (0.1) (0.2)
Impairment of Chevys note
receivable................ -- (3.5) -- (1.8)
Other income............... 0.3 -- 0.2 --
---------- --------- --------- --------
Total other income
(expense).............. 0.2 (3.5) 0.1 (1.8)
---------- --------- --------- --------
Earnings before income
taxes........................ 15.4 12.5 15.9 14.3
Income taxes.................. 5.4 4.5 5.6 5.2
---------- --------- --------- --------
Net earnings.................. 10.0% 8.1% 10.3% 9.2%
========== ========= ========= ========
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 26 Weeks Ended
------------------- -------------------
June 27, June 29, June 27, June 29,
2004 2003 2004 2003
--------- --------- --------- ---------
Number of restaurants:
Company:
Beginning of period.... 391 371 383 357
Restaurant openings.... 4 4 12 7
Restaurants closed..... -- (2) -- (2)
Restaurants acquired
from franchisees...... 10 -- 10 11
--------- --------- --------- ---------
End of period.......... 405 373 405 373
--------- --------- --------- ---------
Franchise:
Beginning of period.... 1,212 1,142 1,202 1,139
Restaurant openings.... 8 13 19 29
Restaurants closed..... (3) -- (4) (2)
Restaurants acquired
from franchisees...... (10) -- (10) (11)
--------- --------- --------- ---------
End of period.......... 1,207 1,155 1,207 1,155
--------- --------- --------- ---------
Total:
Beginning of period.... 1,603 1,513 1,585 1,496
Restaurant openings.... 12 17 31 36
Restaurants closed..... (3) (2) (4) (4)
--------- --------- --------- ---------
End of period.......... 1,612 1,528 1,612 1,528
========= ========= ========= =========
Weighted average weekly sales
per restaurant:
Company.................... $47,758 $45,402 $48,075 $45,041
Franchise.................. $48,759 $45,940 $48,763 $45,682
Total...................... $48,510 $45,807 $48,593 $45,526
Change in comparable
restaurant sales:(1)
Company.................... 5.5% 5.1% 7.0% 4.9%
Franchise.................. 6.5% 3.2% 7.2% 3.0%
Total...................... 6.3% 3.6% 7.2% 3.5%
Total operating revenues (in
thousands):
Company restaurant sales... $247,769 $220,107 $491,329 $428,517
Franchise royalties and
fees(2)................... 30,779 27,331 61,551 54,494
Other franchise
income(3)................. 3,399 3,268 6,514 5,909
--------- --------- --------- ---------
Total...................... $281,947 $250,706 $559,394 $488,920
========= ========= ========= =========
(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 $764,422 and $684,131 in the 2004
quarter and the 2003 quarter, respectively, and $1,528,538 and
$1,360,443 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.
APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share amounts)
June 27, December 28,
2004 2003
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents................. $14,890 $17,867
Short-term investments, at market
value.................................... 280 27
Receivables, net of allowance............. 41,166 31,950
Receivables related to captive insurance
subsidiary............................... 4,775 450
Inventories............................... 31,814 20,799
Prepaid income taxes...................... -- 5,800
Other current assets related to captive
insurance subsidiary..................... 1,706 657
Prepaid and other current assets.......... 11,448 9,072
------------ ------------
Total current assets.................. 106,079 86,622
Property and equipment, net.................. 435,647 419,802
Goodwill..................................... 116,344 105,326
Restricted assets related to captive
insurance subsidiary........................ 16,251 10,763
Other intangible assets, net................. 5,819 1,137
Other assets................................. 26,125 20,351
------------ ------------
$706,265 $644,001
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt......... $212 $192
Accounts payable.......................... 39,507 37,633
Accrued expenses and other current
liabilities.............................. 81,026 96,637
Loss reserve and unearned premiums related
to captive insurance subsidiary.......... 20,758 11,007
Accrued income taxes...................... 20,697 --
Accrued dividends......................... -- 3,863
------------ ------------
Total current liabilities............. 162,200 149,332
------------ ------------
Non-current liabilities:
Long-term debt - less current portion..... 43,584 20,670
Other non-current liabilities............. 17,656 14,267
------------ ------------
Total non-current liabilities......... 61,240 34,937
------------ ------------
Total liabilities..................... 223,440 184,269
------------ ------------
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................ 210,064 200,574
Retained earnings......................... 581,636 523,954
------------ ------------
792,785 725,613
Treasury stock - 26,631,822 shares in 2004
and 25,715,767 shares in 2003, at cost... (309,960) (265,881)
------------ ------------
Total stockholders' equity............ 482,825 459,732
------------ ------------
$706,265 $644,001
============ ============
APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
26 Weeks Ended
--------------------
June 27, June 29,
2004 2003
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings................................... $57,730 $44,787
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization.............. 22,167 19,943
Amortization of intangible assets.......... 244 191
Amortization of unearned compensation...... 695 539
Other amortization......................... 175 97
Inventory impairment....................... 2,300 --
Deferred income tax benefit................ (245) (734)
Gain on sale of investments................ -- (24)
Loss on disposition of restaurants and
equipment................................. 1,079 1,198
Impairment of Chevys note receivable....... -- 8,803
Income tax benefit from exercise of stock
options................................... 5,169 3,879
Changes in assets and liabilities (exclusive of
effects of acquisitions):
Receivables................................ (9,003) (5,377)
Receivables related to captive insurance
subsidiary................................ (4,325) (4,359)
Inventories................................ (13,103) (8,019)
Prepaid income taxes....................... 5,800 1,880
Other current assets related to captive
insurance subsidiary...................... (1,049) (2,031)
Prepaid and other current assets........... (923) 2,347
Accounts payable........................... 1,874 2,547
Accrued expenses and other current
liabilities............................... (15,927) (6,693)
Loss reserve and unearned premiums related
to captive insurance subsidiary........... 9,751 8,210
Accrued income taxes....................... 20,697 --
Other...................................... (2,667) 608
---------- ---------
NET CASH PROVIDED BY OPERATING
ACTIVITIES................................ 80,439 67,792
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............ (36,543) (28,964)
Restricted assets related to captive insurance
subsidiary.................................... (5,488) (2,512)
Acquisition of restaurants..................... (13,817) (21,557)
Lease acquisition costs........................ (4,919) --
Purchases of short-term investments............ (253) --
Proceeds from sale of restaurants and
equipment..................................... -- 35
Maturities and sales of short-term
investments................................... -- 480
Other investing activities..................... (966) --
---------- ---------
NET CASH USED BY INVESTING ACTIVITIES...... (61,986) (52,518)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock.................... (53,223) (13,282)
Dividends paid................................. (3,911) (3,323)
Issuance of common stock upon exercise of stock
options....................................... 8,789 8,318
Shares issued under employee benefit plans..... 3,981 1,418
Net long-term debt proceeds (payments)......... 22,934 (19,039)
---------- ---------
NET CASH USED BY FINANCING ACTIVITIES...... (21,430) (25,908)
---------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS......... (2,977) (10,634)
CASH AND CASH EQUIVALENTS, beginning of period.... 17,867 15,169
---------- ---------
CASH AND CASH EQUIVALENTS, end of period.......... $14,890 $4,535
========== =========
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