UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest
event reported) March 23, 2005
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APPLEBEE'S INTERNATIONAL, INC.
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 000-17962 43-1461763
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4551 W. 107th Street, Overland Park, Kansas 66207
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(Address of principal executive offices) (Zip Code)
(913) 967-4000
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(Registrant's telephone number, including area code)
None
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act 17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 4.02. Non-Reliance on Previously Issued Financial Statements or a
Related Audit Report or Completed Interim Review.
The Company's management and its audit committee concluded on March 23,
2005 that certain of the Company's previously issued consolidated financial
statements will be restated. As a result of the restatement, the consolidated
financial statements included in the Company's Annual Report on Form 10-K
("10-K") for the fiscal years ended December 28, 2003 and December 29, 2002, and
those in the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 28, 2004, June 27, 2004 and September 26, 2004, and the preliminary
unaudited financial results included in the Company's press release issued on
February 9, 2005 should no longer be relied upon.
The Company had previously announced that, like many other companies in the
restaurant, retail and other industries, it had determined that it would correct
its accounting treatment for leases. Historically, when accounting for leases
with renewal options, the Company recorded rent expense on a straight-line basis
over the initial non-cancelable lease term, with the term commencing when actual
rent payments began. The Company depreciated leasehold improvements on those
properties over a maximum period of 20 years which, in certain cases, would have
included a portion of the renewal option periods.
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 of straight-line rent expense to include certain option
periods, where failure to exercise such options would result in an economic
penalty such that the renewal appears reasonably assured. The lease term will be
deemed to commence on the date when the Company becomes legally obligated for
the rent payments. In connection with the restatement for lease accounting
matters, the Company will also correct for other previously identified
immaterial errors in its financial statements, primarily related to vacation and
workers compensation expense. These corrections will not affect the Company's
previously reported or future cash flows, sales, the timing of payments under
the related leases, or compliance with any debt covenants.
In establishing its accounting policy for straight-line rent allocated to
the construction period included in the lease term, the Company determined such
rent should be recognized as a cost of construction of leasehold improvements
and capitalized. As a result of adopting this policy, the Company anticipates
that the impact of lease accounting matters will reduce diluted earnings per
share by less than $0.01 in fiscal year 2005.
The Company's 10-K for the fiscal year ended December 26, 2004 to be filed
with the SEC will include disclosure of the effects of the adjustments on the
financial statements of each of the periods included in the audited financial
statements for the fiscal years ended December 28, 2003 and December 29, 2002
and on the unaudited quarterly results of operations for fiscal year 2004 and
fiscal year 2003.
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The restatement adjustments will increase net earnings by approximately
$1,300,000 ($0.02 per share) and $800,000 ($0.01 per share) for the fiscal years
ended December 26, 2004 and December 28, 2003, respectively, and will decrease
net earnings by approximately $2,500,000 ($0.03 per share) for the fiscal year
ended December 29, 2002. The cumulative effect of these restatement adjustments
is a reduction to retained earnings of approximately $4,900,000 as of the
beginning of fiscal year 2002.
Although the company does not believe these errors resulted in a material
misstatement of the company's consolidated financial statements for any annual
or interim period previously reported, the effects of correcting these errors in
the fourth quarter of 2004 would have been material to that period. Management's
Report on Internal Controls over Financial Reporting to be included in the
Company's 10-K will contain an assessment by management that the Company's
internal control over financial reporting was effective as of December 26, 2004.
The Company previously announced that it had filed Form 12b-25 with the
SEC. If a completed 10-K is filed within 15 days after filing a Form 12b-25,
then the 10-K is deemed timely filed. However, because of the additional work
necessary to implement the construction period lease accounting policy, the
Company does not expect that it will be able to file its 10-K by March 28, 2005.
Therefore, notwithstanding the Form 12b-25 filing, the Company expects it will
be late filing its 10-K, but expects to be able to file its 10-K by March 31,
2005.
The Company's management and audit committee have discussed the matters
disclosed in this Form 8-K with Deloitte & Touche LLP its independent registered
public accounting firm. The Company's press release dated March 28, 2005
concerning these matters is attached as Exhibit 99.1 hereto.
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Item 9.01. Financial Statements and Exhibits
(c) Exhibits. The following exhibit is filed herewith:
99.1 Press Release dated March 28, 2005.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 28, 2005
APPLEBEE'S INTERNATIONAL, INC.
By: /s/ Steven K. Lumpkin
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Steven K. Lumpkin
Executive Vice President and
Chief Financial Officer
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Exhibit Index
Exhibit
Number Description
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99.1 Press Release dated March 28, 2005
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