-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QOMRH1vxOpoMXqrZ7pEDroLAo83g6KrJqWGRKvdcEnEateDj4Yv4AiD4DUtyz2I2 G1o6sSDr2CLQb+TES800uw== 0000849101-98-000013.txt : 19980818 0000849101-98-000013.hdr.sgml : 19980818 ACCESSION NUMBER: 0000849101-98-000013 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980927 ITEM INFORMATION: FILED AS OF DATE: 19980817 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: APPLE SOUTH INC CENTRAL INDEX KEY: 0000849101 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 592778983 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-19542 FILM NUMBER: 98692744 BUSINESS ADDRESS: STREET 1: HANCOCK AT WASHINGTON CITY: MADISON STATE: GA ZIP: 30650 BUSINESS PHONE: 7063424552 MAIL ADDRESS: STREET 1: HANCOCK AT WASHINGTON CITY: MADISON STATE: GA ZIP: 30650 8-K 1 COMPLETED SALE OF 123 APPLEBEE'S RESTAURANTS 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 August 3, 1998 Date of Report (Date of earliest event reported) APPLE SOUTH, INC. (Exact name of registrant as specified in its charter) ` Georgia Commission File No. 0-19542 59-2778983 - ------------------------ ------------------------------- ------------------- (State of Incorporation) (I.R.S. Employer Identification No.) Hancock at Washington Madison, Georgia 30650 - ------------------------ ------------- (Address of Principal (Zip Code) Executive Offices) Registrant's telephone number, including area code: (706) 342-4552 ITEM 2. DISPOSITION OF ASSETS As of August 3, 1998, the Registrant had sold 123 of its 279 franchised Applebee's Neighborhood Grill & Bar ("Applebee's") restaurants through seven separate asset purchase agreements. Total consideration from the sales, based on arm's-length negotiations between the parties, was $252.9 million resulting in an estimated gain before tax effect of $98.0 million ($60.8 million gain after tax effect). At closing, the Registrant relinquished its rights to develop Applebee's restaurants in the related markets. The following table summarizes the completed sales transactions: ================ ================================== ============================ Closing Date Purchaser Restaurants ================ ================================== ============================ March 29, 1998 Applebee's International, Inc. 33 restaurants in Virginia - ---------------- ---------------------------------- ---------------------------- June 15, 1998 TSSO, Inc. 1 restaurant in Illinois - ---------------- ---------------------------------- ---------------------------- June 28, 1998 Quality Restaurant Concepts, LLC 26 restaurants in east Tennessee and Mississippi - ---------------- ---------------------------------- ---------------------------- June 28, 1998 Whit-Mart, Inc. 12 restaurants in South Carolina - ---------------- ---------------------------------- ---------------------------- August 3, 1998 Florida Apple, LLC 35 restaurants in Georgia and Florida - ---------------- ---------------------------------- ---------------------------- August 3, 1998 U.S. Restaurant Properties, Inc. 16 restaurants in Iowa and and Darrel L. Rolph (two separate northwestern Illinois agreements) - ---------------- ---------------------------------- ---------------------------- ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (b) Pro Forma Financial Statements. Basis of Presentation The accompanying pro forma consolidated statements of earnings for the year ended December 28 1997, and the six months ended June 28, 1998 present the results of Apple South, Inc. (the "Company"), excluding the operations of its sold Applebee's restaurants, as if such operations had been disposed of at the beginning of the respective periods. The pro forma consolidated balance sheet has been prepared assuming the dispositions took place as of June 28, 1998. The pro forma consolidated statements of earnings, balance sheet and notes thereto should be read in conjunction with the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 28, 1997. The pro forma information is not necessarily indicative of the consolidated results of operations or the consolidated financial position that would have resulted had the Applebee's restaurant dispositions occurred as described above, nor is it necessarily indicative of the results of operations of future periods or future consolidated financial position. Page 2 Apple South, Inc. Pro Forma Consolidated Statement of Earnings (Unaudited) (In thousands, except per share data)
- ------------------------------------------------------------------------------------------------------------------------------------ Historical Pro Forma Year Ended Year Ended December 28, Pro Forma December 28, 1997 Adjustments 1997 - ------------------------------------------------------------------------------------------------------------------------------------ Restaurant sales: Applebee's $ 454,127 (210,178)(B) 243,949 Don Pablo's 196,457 - 196,457 Hops 49,511 - 49,511 McCormick & Schmick's 67,373 - 67,373 Canyon Cafes 18,577 - 18,577 Harrigans 19,560 - 19,560 Other 2,715 - 2,715 - ------------------------------------------------------------------------------------------------------------------------------------ Total restaurant sales 808,320 (210,178) 598,142 - ------------------------------------------------------------------------------------------------------------------------------------ Restaurant operating expenses: Food and beverage 225,302 (57,655)(B) 167,647 Payroll and benefits 249,356 (63,262)(B) 186,094 Depreciation and amortization 31,441 (8,472)(B) 22,969 Other operating expenses 187,781 (48,237)(B) 139,544 - ------------------------------------------------------------------------------------------------------------------------------------ Total restaurant operating expenses 693,880 (177,626) 516,254 - ------------------------------------------------------------------------------------------------------------------------------------ General and administrative expenses 39,617 (5,674)(B) 33,943 - ------------------------------------------------------------------------------------------------------------------------------------ Operating income 74,823 (26,878) 47,945 - ------------------------------------------------------------------------------------------------------------------------------------ Other income (expense): Interest expense (20,575) 17,471 (C) (3,104) Distributions on preferred securities (6,412) - (6,412) Interest income 71 - 71 Other, primarily goodwill amortization (5,834) 10 (B) (5,824) - ------------------------------------------------------------------------------------------------------------------------------------ Total other income (expense) (32,750) 17,481 (15,269) - ------------------------------------------------------------------------------------------------------------------------------------ Earnings before income taxes 42,073 (9,397) 32,676 Income taxes 13,625 (3,050)(D) 10,575 - ------------------------------------------------------------------------------------------------------------------------------------ Net earnings $ 28,448 (6,347) 22,101 ==================================================================================================================================== Basic earnings per common share $ 0.74 0.57 ============================================================================================= =========== Diluted earnings per common share $ 0.73 0.57 ============================================================================================= =========== Average number of common shares used in basic calculation 38,620 38,620 ============================================================================================= =========== Average number of common shares used in diluted calculation 44,927 44,927 ============================================================================================= ===========
See accompanying notes to pro forma consolidated financial statements. Page 3 Apple South, Inc. Pro Forma Consolidated Statement of Earnings (Unaudited) (In thousands, except per share data)
- ------------------------------------------------------------------------------------------------------------------------------------ Historical Pro Forma Six Months Six Months Ended Ended June 28, Pro Forma June 28, 1998 Adjustments 1998 - ------------------------------------------------------------------------------------------------------------------------------------ Restaurant sales: Applebee's $ 236,387 (99,433)(B) 136,954 Don Pablo's 125,679 - 125,679 Hops 48,887 - 48,887 McCormick & Schmick's 46,703 - 46,703 Canyon Cafes 23,863 - 23,863 - ------------------------------------------------------------------------------------------------------------------------------------ Total restaurant sales 481,519 (99,433) 382,086 - ------------------------------------------------------------------------------------------------------------------------------------ Restaurant operating expenses: Food and beverage 134,697 (27,562)(B) 107,135 Payroll and benefits 155,975 (33,413)(B) 122,562 Depreciation and amortization 8,388 - 8,388 Other operating expenses 112,357 (23,399)(B) 88,958 - ------------------------------------------------------------------------------------------------------------------------------------ Total restaurant operating expenses 411,417 (84,374) 327,043 - ------------------------------------------------------------------------------------------------------------------------------------ General and administrative expenses 25,196 (3,331)(B) 21,865 - ------------------------------------------------------------------------------------------------------------------------------------ Operating income 44,906 (11,728) 33,178 - ------------------------------------------------------------------------------------------------------------------------------------ Other income (expense): Interest expense (14,353) 7,017 (C) (7,336) Distributions on preferred securities (4,025) - (4,025) Gain on disposal of assets held for sale 46,697 - 46,697 Income from investments carried at equity 787 - 787 Other, primarily goodwill amortization (3,223) 16 (B) (3,207) - ------------------------------------------------------------------------------------------------------------------------------------ Total other income (expense) 25,883 7,033 32,916 - ------------------------------------------------------------------------------------------------------------------------------------ Earnings before income taxes 70,789 (4,695) 66,094 Income taxes 25,925 (1,600)(D) 24,325 - ------------------------------------------------------------------------------------------------------------------------------------ Earnings before income taxes and cumulative effect of change in accounting principle 44,864 (3,095) 41,769 - ------------------------------------------------------------------------------------------------------------------------------------ Cumulative effect of change in accounting principle, net of tax benefit 1,461 - 1,461 ==================================================================================================================================== Net earnings $ 43,403 (3,095) 40,308 ==================================================================================================================================== Basic earnings per common share: Basic earnings before cumulative effect of change in accounting principle $ 1.18 1.09 Cumulative effect of change in accounting principle (0.04) (0.04) - --------------------------------------------------------------------------------------------- ----------- Basic earnings per common share $ 1.14 1.05 ============================================================================================= =========== Diluted earnings per common share: Diluted earnings before cumulative effect of change in accounting principle $ 1.03 0.97 Cumulative effect of change in accounting principle (0.03) (0.03) - --------------------------------------------------------------------------------------------- ----------- Diluted earnings per common share $ 1.00 0.93 ============================================================================================= =========== Average number of common shares used in basic calculation 38,167 38,167 ============================================================================================= =========== Average number of common shares used in diluted calculation 45,975 45,975 ============================================================================================= ===========
See accompanying notes to pro forma consolidated financial statements. Page 4 Apple South, Inc Pro Forma Consolidated Balance Sheet (Unaudited) (In thousands, except share data)
- ------------------------------------------------------------------------------------------------------------------------------------ Historical Pro Forma June 28, Pro Forma June 28, 1998 Adjustments 1998 - ------------------------------------------------------------------------------------------------------------------------------------ Assets Current assets: Cash and cash equivalents $ 3,706 22,281 (A) (75)(A) 25,912 Proceeds due from sale of assets 69,748 (69,748)(A) - Short-term investments 27 - 27 Accounts receivable 14,684 - 14,684 Inventories 10,116 (737)(A) 9,379 Prepaid expenses and other 8,224 (72)(A) 8,152 Assets held for sale 252,020 (59,485)(A) 192,535 - ------------------------------------------------------------------------------------------------------------------------------------ Total current assets 358,525 (107,836) 250,689 Premises and equipment, net 314,033 - 314,033 Goodwill, net 139,069 - 139,069 Other assets 41,271 - 41,271 - ------------------------------------------------------------------------------------------------------------------------------------ $ 852,898 (107,836) 745,062 ==================================================================================================================================== Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 30,343 - 30,343 Accrued liabilities 49,180 - 49,180 Current installments of long-term debt 19 - 19 Income taxes 16,043 7,600 (A) 23,643 - ------------------------------------------------------------------------------------------------------------------------------------ Total current liabilities 95,585 7,600 103,185 Long-term debt 385,450 (127,836)(A) 257,614 Deferred income taxes 16,700 - 16,700 Other long-term liabilities 6,782 - 6,782 - ------------------------------------------------------------------------------------------------------------------------------------ Total liabilities 504,517 (120,236) 384,281 - ------------------------------------------------------------------------------------------------------------------------------------ Company-obligated mandatorily redeemable preferred securities of Apple South Financing I, a subsidiary holding solely Apple South, Inc. 7% convertible subordinated debentures due March 1, 2027 115,000 - 115,000 Equity forward contract pending settlement 3,400 - 3,400 Shareholders' equity: Preferred stock, $0.01 par value. Authorized 10,000,000 shares; none issued - - - Common stock, $0.01 par value. Authorized 75,000,000 shares; 40,478,760 issued in 1997 405 - 405 Additional paid-in capital 141,842 - 141,842 Retained earnings 140,462 12,400 (A) 152,862 Treasury stock at cost; 3,636,535 shares in 1998 (52,728) - (52,728) - ------------------------------------------------------------------------------------------------------------------------------------ Total shareholders' equity 229,981 12,400 242,381 - ------------------------------------------------------------------------------------------------------------------------------------ $ 852,898 (107,836) 745,062 ====================================================================================================================================
See accompanying notes to pro forma consolidated financial statements. Page 5 Apple South, Inc. Notes to Pro Forma Consolidated Financial Statements Note A Pursuant to seven separate Asset Purchase Agreements (the "Agreements"),the Company has sold 123 of its 279 franchised Applebee's Neighborhood Grill & Bar restaurants as of August 3, 1998. Total consideration from the sales was $252.9 million resulting in an estimated gain before tax effect of $98.0 million ($60.8 million gain after tax effect). Four of the Agreements were closed prior to June 28, 1998 and were thus reflected in the Company's consolidated balance sheet for the period ending June 28, 1998. As such, the pro forma adjustments in the accompanying pro forma consolidated balance sheet reflect the pro forma effects of the remaining three agreements which were closed subsequent to June 28, 1998. Total consideration from these three transactions was $86.7 million resulting in an estimated gain before tax effect of $20.0 million ($12.4 million gain after tax effect). The pro forma adjustment to long-term debt reflects the assumption that net sales proceeds of $72.8 million from the transactions closed subsequent to June 28, 1998 would have been used to reduce revolving credit agreements, with the remaining proceeds maintained as cash and cash equivalents to pay deal costs and taxes. An additional pro forma adjustment was made to reflect the assumption that a portion of the proceeds due from sale of assets of $69.7 million (received from transactions closed prior to June 28, 1998 and reflected in the "Historical June 28, 1998" balance sheet) would also have been used to reduce long-term debt. After selling expenses and income taxes, the assumed debt reduction was $55.0 million, with the remaining proceeds maintained as cash and cash equivalents. The pro forma adjustment to income tax liability reflects the tax liability relating to the gain on sale using a 38.0% effective rate. The remaining pro forma adjustments to cash and cash equivalents, inventories, prepaid expenses and other, and assets held for sale reflect the sale of certain assets and assumption of certain liabilities related to the three transactions closed subsequent to June 28, 1998. Note B The pro forma adjustments to revenues and operating expenses eliminate the activity of the 123 sold Applebee's restaurants including revenues and expenses related to restaurants opened during the period (such openings would not have occurred had the transactions actually been completed at the beginning of the periods presented). Note C The pro forma adjustment to interest expense reflects the decrease resulting from the assumed use of sales proceeds to reduce long-term debt related to revolving credit agreements and the outstanding obligation under the 1996 Senior note offering by $200.6 million. Note D The pro forma adjustment to income taxes reflects the income tax effects of the above adjustments assuming a 32.4% and 34.0% effective rate for 1997 and 1998, respectively. Page 6 (c) Exhibits. 2.1 Asset purchase agreement dated April 23, 1998, by and among Apple South, Inc. and Whit-Mart, Inc.* 2.2 Asset purchase agreement dated May 1, 1998, by and among Apple South, Inc. and T.S.S.O., Inc., and Lois Sedowicz.* 2.3 Asset purchase agreement dated May 4, 1998, by and among Apple South, Inc. and Florida Apple North, LLC., Florida Apple South, LLC., Florida Apple West, LLC, and Wigel Partnership.* 2.4 Asset purchase agreement dated June 19, 1998, by and among Apple South, Inc. and U.S. Restaurant Properties Operating LP.* 2.5 Asset purchase agreement dated June 19, 1998, by and among Apple South, Inc. and Darrel L. Rolph.* 2.6 Asset purchase agreement dated December 23, 1997 by and among Apple South, Inc. and Applebee's International, Inc.** 2.7 Asset purchase agreement dated March 16, 1998 by and among Apple South, Inc. and Quality Restaurant Concepts, LLC.*** *Incorporated by reference to the corresponding exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 28, 1998. **Incorporated by reference to Exhibit 2.1 to the Registrant's 8-K filed on January 15, 1998. ***Incorporated by reference to Exhibit 2.9 to the registrants 10-K for the year ended December 28, 1997. Page 7 SIGNATURE 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 hereunto duly authorized. APPLE SOUTH, INC. (Registrant) Date: August 17, 1998 By: /s/ Erich J. Booth --------------------------- Erich J. Booth Chief Financial Officer and Treasurer /s/ Philip L. Ammons --------------------------- Philip L. Ammons Chief Accounting Officer Page 8 -----END PRIVACY-ENHANCED MESSAGE-----