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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 3, 1999 Commission File No. 0-19542
AVADO BRANDS, INC.
(Exact name of registrant as specified in its charter)
Georgia 59-2778983
(State of Incorporation) (I.R.S. Employer Identification No.)
Hancock at Washington
Madison, Georgia 30650
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (706) 342-4552
Securities registered pursuant to Section 12(b) of
the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.01 per share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO_____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the definitive proxy statement incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[X]
------------------------------------------------------
As of March 30 , 1999, the aggregate market value of the common stock of
the registrant held by non-affiliates of the registrant, as determined by the
last sales price, was $134,773,000.
As of March 30, 1999, the number of shares of common stock outstanding was
29,068,586.
DOCUMENTS INCORPORATED BY REFERENCE:
(1) Annual Report to Shareholders for the fiscal year ended January 3, 1999
(Part II of Form 10-K).
(2) Definitive Proxy Statement for use in connection with the 1999 Annual
Meeting of Shareholders (Part III of Form 10-K).
PART I
Item 1. Business
General
Avado Brands, Inc. (formerly Apple South, Inc.), including its wholly owned
subsidiaries (the "Company" or "Avado Brands"), is a multi-concept restaurant
company owning and operating restaurants in 29 states plus the District of
Columbia. Since its inception in 1986, the Company has increased its
profitability and size through the efficient management of restaurant operations
and through a series of strategic restaurant openings, acquisitions and
divestitures. At January 3, 1999, the Company operated 123 Don Pablo's Mexican
Kitchen restaurants, 47 Hops Restaurant Bar & Brewery restaurants, 23 McCormick
& Schmick's seafood dinner houses, 19 Canyon Cafe restaurants as well as 44
Applebee's Neighborhood Grill & Bar restaurants which were held for sale. All
brands are owned on a proprietary basis except Applebee's, which is franchised.
For the year ended January 3, 1999, total restaurant sales were $862.7 million.
Avado Brands also owns a 20-percent equity interest in Belgo Group PLC, a
ten-unit United Kingdom restaurant company, and a 25-percent equity interest in
11 Harrigans Grill and Bar restaurants.
In November 1995, 44 Don Pablo's restaurants and 12 Harrigans restaurants
were acquired through a pooling of interests transaction with DF&R Restaurants,
Inc. During 1997, three purchase business combinations were completed which
included the acquisition of 16 McCormick & Schmick's restaurants, 21 Hops
restaurants and 13 Canyon Cafe restaurants. Also in 1997, the Company announced
its decision to sell its franchised Applebee's restaurants in order to focus on
the continued development of its higher margin, better return, greater growth
proprietary concepts. During 1998, the divestiture was substantially completed
with the sale of 233 of 279 Applebee's locations and the closing of two
additional locations. Gross proceeds from the sale transactions totaled $434.8
million including $6.8 million in notes and other amounts due. Also during 1998,
the Company divested its Harrigans restaurants, retaining a 25-percent ownership
in the ongoing business, and acquired a 20-percent interest in Belgo. In
addition, the Company and Belgo have established two, 50/50 joint ventures: one
for the initial development of one of the Company's proprietary brands in
Europe, probably McCormick & Schmick's, and the other for the development of
Belgo restaurants in the Western Hemisphere. In January of 1999, the first Belgo
restaurant in the United States was opened in New York City. In February of
1999, the Company announced the establishment of a new, 50/50 joint venture with
London-based PizzaExpress PLC for the North American development of the upscale
PizzaExpress brand. The joint venture's first U.S. restaurant opened in March of
1999 in Philadelphia under the name San Marzano.
The Company's strategy includes the acquisition, development, operation and
growth of niche-leading restaurant brands within a unique organizational
structure that rewards entrepreneurial decision-making. Each brand functions on
a decentralized basis with its own executive management, real estate
development, purchasing, recruiting, training, marketing, accounting, and
restaurant operations. This consumer-based operating philosophy allows Avado
Brands to gain competitive advantage by sharing best practices and centralizing
non-brand critical processes such as human resources, finance, treasury and
capital formation. During 1999, a total of 40 restaurants, including 20 Hops, 15
Don Pablo's, four McCormick & Schmick's and one Canyon Cafe, are expected to be
opened.
On October 13, 1998, the Company changed its corporate name from "Apple
South, Inc." to "Avado Brands, Inc." The name change was made to reflect the
evolution of the nature and character of the business, including the divestiture
of the Company's Applebee's brand, and the emphasis on a multi-brand strategy.
In connection with the corporate name change, the Company changed the Nasdaq
National Market trading symbol of its common stock from "APSO" to "AVDO."
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Avado Brands' Restaurant Concepts
Don Pablo's
The first Don Pablo's was opened in Lubbock, Texas in 1985. The restaurants
feature traditional Mexican dishes served in a distinctive, festive dining
atmosphere reminiscent of a Mexican village plaza. Each restaurant is staffed
with a highly experienced management team that is visible in the dining area and
interacts with both customers and the staff to ensure attentive customer service
and consistent food quality. Items are prepared fresh on-site using high-quality
ingredients at relatively low prices. The diverse menu, generous portions and
attractive price/value relationship appeal to a broad customer base.
Menu. The menu offers a wide variety of entrees, including enchiladas and
tacos served with various sauces and homemade salsa plus mesquite-grilled items
such as fajitas, carne asada and chicken. The menu also includes tortilla soup,
a selection of salads, Mexican-style appetizers such as quesadillas and unique
desserts. During 1998, the cost of a typical meal, including beverages, was
$8.00 to $9.50 for lunch and $9.50 to $11.50 for dinner. In addition to its
regular menu, Don Pablo's offers 15 lunch specials priced from $4.49 to $7.19
each and a lower- priced children's menu. Full bar service is also provided.
Alcoholic beverage sales accounted for approximately 19% of sales in 1998.
Restaurant Layout. Distinctive Mexican architecture and interior decor
provide a casual, fun dining atmosphere. The restaurants have an open, spacious
feel, created with the use of sky-lights and a Mexican village plaza design, and
are enhanced by an indoor fountain and the use of stucco, brick and tile, as
well as plants, signs and art work. Homemade tortillas cooked in the dining area
underscore the commitment to fresh, authentic Mexican food. Both one and
two-story building designs are utilized. The two-story design features a balcony
which provides seating for bar patrons and dining customers waiting to be
seated. The one-story design incorporates a smaller bar adjacent to the dining
area. Both designs use high ceiling architecture and have similar dining
capacities. Restaurants range in size from 6,000 square feet to 9,900 square
feet, with the average restaurant containing approximately 8,000 square feet.
The restaurants generally have dining room seating for approximately 230
customers and bar seating for approximately 70 additional customers.
Unit Economics. In 1998, the average cost of developing and opening a Don
Pablo's restaurant was approximately $1.7 million, excluding land costs and
preopening expenses. The cost of land for these restaurants ranged from
approximately $600,000 to $1,275,000; preopening expenses, which consist
primarily of wages and salaries, hourly employee recruiting, license fees,
meals, lodging and travel plus the cost of hiring and training the management
teams, averaged $185,000.
Field Management. Management is shared by 36 district and area managers who
report to two Regional Vice Presidents of Operations. The strategy is to have
each area manager responsible for a limited number of restaurants, thus
facilitating a focus on quality of operations and unit profitability. The
management staff of a typical restaurant consists of one general manager, one
kitchen manager and three assistant managers. General managers and kitchen
managers are eligible to receive bonuses equal to a percentage of their
restaurant's sales, subject to operating within budgeted costs.
Advertising and Marketing. Don Pablo's advertising and marketing strategy
combines the use of television and radio advertising in core markets with a
focus on local efforts and community involvement at all locations. In 1998,
advertising contributed to a 1% increase in annual sales for those restaurants
open for all of 1997 and 1998 as well as benefitting new restaurant openings.
Current strategies are expected to continue in 1999 with a focus on efforts,
such as Manager's Specials and other promotions, designed to increase traffic
counts and check average.
Hops Restaurant Bar & Brewery
The first Hops was opened in Clearwater, Florida in 1989. Each restaurant
offers a diverse menu of popular foods, freshly prepared in a display kitchen
with a strict commitment to quality and value. Additionally, each
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restaurant features an on-premises microbrewery. Tom Schelldorf, co-founder of
of the concept, is the current Chief Executive Officer of the brand.
Menu. The restaurants feature an American-style menu that includes top
choice steaks and prime rib, smoked baby back ribs, fresh fish, chicken and
pasta dishes, deluxe burgers and sandwiches, hand-tossed salads with homemade
dressings, appetizers, soups and desserts. The menu offers separate selections
for children. The cost of a typical meal, including beverages, ranges from $6.00
to $9.00 per person for lunch and $13.00 to $15.00 per person for dinner. Each
restaurant offers four distinctive lager-style beers and ales, plus a variety of
blends of these beers, that are brewed on-premises. An observation microbrewery
at each restaurant allows customers to view the entire brewing process. Except
for one non-alcoholic beer, the brewed beers are typically the only beers
served. Full bar service is also available at each restaurant. Alcoholic
beverages accounted for approximately 16% of sales in 1998.
Restaurant Layout. Restaurants range in size from approximately 5,000 to
7,300 square feet. The on-premise brewing equipment is an integral aspect of the
design and occupies from 450 to 750 square feet. The restaurant dining and bar
areas seat from 160 to 240 customers.
Unit Economics. The cost of developing and opening a restaurant averaged
approximately $1,525,000 in 1998, excluding land and preopening costs but
including approximately $160,000 in microbrewery equipment. Land costs ranged
from $675,000 to $1,000,000 and preopening costs averaged $170,000.
Field Management. Management is shared by seven operating partners and
three area managers who report to both the Vice President of Operations and the
Chief Executive Officer. Each operating partner is responsible for four to five
restaurants, thus facilitating a focus on quality of operations and unit
profitability. The management staff of a typical restaurant consists of one
general manager, one kitchen manager and two assistant managers. General
managers and kitchen managers are eligible to receive bonuses equal to a
percentage of their restaurant's controllable income, subject to operating above
a minimum operating margin.
Advertising and Marketing. Hops' advertising and marketing strategy has
historically focused primarily on grassroots efforts utilizing special
promotions in local markets and special event equipment designed to increase
customer awareness and name recognition. During 1998, advertising and marketing
efforts were expanded primarily through the use of radio advertising, outdoor
boards and print media in regional editions of national publications. Increased
efforts are expected to continue into 1999 with the use of television
advertising in core markets and the continued use of radio and print media as
well as grassroots efforts.
McCormick & Schmick's
McCormick & Schmick's was established in the early 1970's by co-founders
William P. McCormick and Douglas L. Schmick, current Chairman and Chief
Executive Officer, respectively. Each restaurant is designed to capture the
distinctive attributes of the local market. Varying in design from a
traditional, New England-style fish house to a more contemporary dinner house
with spectacular waterfront views, many of the restaurants are located in
historical buildings. Traditional-style bars are an integral component of each
restaurant. The same philosophy of distinctiveness and quality applies equally
to the bar operation and the dining rooms. Alcoholic beverages represented
approximately 27% of sales in 1998. Restaurants are operated under the names
McCormick & Schmick's, McCormick's Fish House, Harborside, Jake's, M&S Grill and
McCormick & Kuleto's. McCormick & Schmick's offers superior service to its
guests and is positioned in a price range at the upper end of moderate.
Menu. McCormick & Schmick's features a daily menu, offering the freshest
seafood available based on price and product availability. With 25 to 30
distinctive species and over 85 individual selections, the menu gives range in
culinary appeal as well as price selection. The cost of a typical meal,
including beverage, is approximately $10.00 to $20.00 for lunch and $25.00 to
$35.00 for dinner.
4
Restaurant Layout. Restaurants range in size from 6,000 to 14,000 square
feet with an average restaurant containing approximately 8,500 square feet. The
restaurants generally seat 200 to 300 customers in the dining room with some
locations having 40 to 60 additional patio seats available.
Unit Economics. The average cost of developing a restaurant was
approximately $2,450,000 in 1998, including leasehold improvements, fixtures and
equipment. All restaurant real estate is leased. Additionally, preopening
expenses average $300,000.
Field Management. Management is shared by seven multi-unit senior managers,
three of which have regional responsibility, and two Vice Presidents of
Operations. Staffing levels vary depending on restaurant size. A typical
restaurant has a general manager, an executive chef, a sous chef and four
assistant managers and will employ 80 to 90 full and part-time employees. The
McCormick & Schmick's operating philosophy encourages and trains the management
of individual restaurant units to be creative by promoting a large degree of
self-sufficiency.
Advertising and Marketing. Advertising and marketing efforts are focused on
a grassroots philosophy. Each region utilizes the services of a public relations
firm and makes full use of media events targeting the local market. Advertising
strategies focus on existing and local customers, but also emphasize out-of-town
travelers as a key customer component. Marketing begins in each restaurant with
daily printed menus and other local efforts. A primary focus is to expand name
and location awareness through the use of promotional discount certificates and
periodic contact with organizations in the travel/convention industry such as
hotels, travel agents and convention centers.
Canyon Cafe
Canyon Cafe restaurants operate under the names Canyon Cafe, Desert Fire
and Sam's Cafe. The first restaurant was opened in Dallas, Texas in 1989. Canyon
Cafe is dedicated to the flavor and feel of the American Southwest.
Menu. The menu offers a wide variety of unique items such as Desert Fire
Pasta, Chile Rubbed Grilled Tuna and Chipotle Chicken. A variety of more
traditional items including chicken tacos and grilled chicken salad are also
offered. During 1998, the cost of a typical meal, including beverages, was $9.00
to $14.00 for lunch and $14.00 to $20.00 for dinner. Full bar service is also
provided. Alcoholic beverages accounted for approximately 18% of sales in 1998.
Restaurant Layout. The restaurants are based on a Santa Fe design which
reflects a strong southwestern influence through the use of heavy ponderosa pine
timbers. The walls, floors and furniture reflect surfaces and colors native to
the American Southwest. Restaurants are located in malls, in-line power centers
and as freestanding buildings. In-line and mall sites average 7,000 square feet
with some locations featuring an additional 800-1,000 square foot patio. The
freestanding buildings have 6,700 square feet with a 1,050 square foot patio.
All locations typically have a minimum of 190 interior dining seats, an average
of 26 bar seats and 45-50 patio seats.
Unit Economics. In 1998, the cost of developing and opening a restaurant
averaged $1,400,000 for in-line/mall locations and $1,600,000 for freestanding
locations, excluding land costs and preopening expenses. In 1998, one land site
was purchased at a cost of $947,000. Preopening expenses averaged $151,000.
Field Management. Management is structured with a general manager, two to
three assistant managers, an executive chef and a sous chef. Regional Directors
are responsible for quality of operations and sales and profitability of four to
five restaurants and report to a Director of Operations. All managers are
eligible to receive bonuses based on individual restaurant operating
performance.
Advertising and Marketing. Advertising and marketing strategy relies
on grassroots efforts focused on developing a strong brand identity and
strong core-customer recommendations. Advertising and marketing efforts
include local radio, media appearances, event involvement and billboards as
well as direct mail and other print media.
5
Additional local efforts, such as a system-wide "neighborhood networking"
program, are utilized to develop a direct relationship with targeted customers.
Other Restaurant Operational Functions
Quality Control. All levels of management are responsible for ensuring that
restaurants are operated in accordance with strict quality standards. Management
structure allows restaurant general managers to spend a significant portion of
their time in the dining area of the restaurant supervising staff and providing
service to customers. Compliance with quality standards is monitored by periodic
on-site visits and formal periodic inspections by multi-unit management.
Training. Each brand requires employees to participate in formal training
programs. Management training programs generally last ten to 16 weeks and
encompass three general areas, including (i) all service positions, (ii)
management accounting, personnel management, and dining room and bar operations
and (iii) kitchen management. Management positions at new restaurants are
typically staffed with personnel who have had previous experience in a
management position at another of the respective brands' restaurants. In
addition, a highly experienced opening team assists in opening each restaurant.
Prior to opening, all personnel undergo intensive training conducted by the
restaurant opening team.
Purchasing. Avado Brands strives to obtain consistent quality items at
competitive prices from reliable sources for all of its brands. The Company
continually researches and tests various products in an effort to maintain the
highest quality products and to be responsive to changing customer tastes.
Purchasing is handled by each brand, which, with the exception of McCormick &
Schmick's, uses one primary distributor for food products other than produce,
which is typically purchased locally. At McCormick & Schmick's, purchasing is
under the direction of each restaurants' executive chef in order to obtain the
freshest, highest quality seafood available with a focus on local tastes. All
food and beverage products are available on short notice from alternative
qualified suppliers. The Company has not experienced any significant delays in
receiving food and beverage inventories, restaurant supplies or equipment.
Restaurant Reporting. Financial controls are maintained through a
centralized accounting system at each brands' headquarters. A point-of-sale
reporting system is utilized in each restaurant. Restaurant management submits
to brand headquarters various daily and weekly reports of cash, deposits, sales,
labor costs, etc. Physical inventories of all food, beverage and supply items
are taken at least monthly. Operating results compared to prior periods and
budgets are closely monitored by both brand and corporate personnel.
Trademarks and Licenses
Avado Brands has registered the principal trademarks and service marks used
by its restaurant brands with the United States Patent and Trademark Office. The
Company believes that its trademarks and service marks are integral and
important factors in establishing the identity and marketing of its restaurant
brands. Although the Company is aware of certain marks used by other persons in
certain geographical areas which may be similar in certain respects to the
Company's marks, the Company believes that these other marks will not adversely
affect the Company or its business.
The restaurant concepts for the Company's joint ventures with Belgo Group
PLC and PizzaExpress PLC are licensed from these joint venturers or their
affiliates. Such licenses are essential for the operation of these joint
ventures and include the licensing of related trademarks and service marks.
Governmental Regulation
Alcoholic Beverage Regulation. Each restaurant is subject to licensing and
regulation by a number of governmental authorities, which include alcoholic
beverage control and health, safety and fire agencies in the state, county and
municipality in which the restaurant is located. Difficulties or failures in
obtaining the required licenses or approvals could delay or prevent the opening
of a new restaurant in a particular area. Alcoholic beverage control regulations
require restaurants to apply to a state authority and, in certain locations,
county or municipal authorities
6
for a license or permit to sell alcoholic beverages on the premises and to
provide service for extended hours and on Sundays. Some counties prohibit the
sale of alcoholic beverages on Sundays. Typically, licenses or permits must be
renewed annually and may be revoked or suspended for cause at any time.
Alcoholic beverage control regulations relate to numerous aspects of a
restaurant's operations, including minimum age of patrons and employees, hours
of operation, advertising, wholesale purchasing, inventory control and handling,
storage and dispensing of alcoholic beverages.
The Company may be subject in certain states to "dram-shop" statutes which
generally provide a person injured by an intoxicated patron the right to recover
damages from an establishment that wrongfully served alcoholic beverages to the
intoxicated person. The Company carries liquor liability coverage as part of its
existing comprehensive general liability insurance.
Brewpub Regulation. Hops is subject to additional regulations as a result
of the on-premises microbrewery in each restaurant. Historically, the alcoholic
beverage laws of most states prohibited the manufacture and retail sale of beer
to consumers by a single person or entity or related persons or entities. At
present, all 50 states allow for the limited manufacture and retail sale of
microbrewed beer by restaurants and bars classified as "brewpubs" under state
law. The Hops restaurants are required to comply with such state brewpub laws in
order to obtain necessary state licenses and permits. Additionally, many states
impose restrictions on the operations of brewpubs, such as a prohibition on the
bottling of beer, a prohibition on the sale of beer for consumption off of
restaurant premises, and a limitation on the volume of beer that may be brewed
at any location, as well as certain geographic limitations. In addition, certain
states limit the number of brewpubs that may be owned by any person or entity or
a related group of entities. The Company's ability to own and operate Hops
restaurants in any state is and will continue to be dependent upon its ability
to operate within the regulatory scheme of such states.
Other Regulation. The Company's restaurant operations are also subject to
Federal and state laws governing such matters as minimum wage, working
conditions, overtime and tip credits. The Company experienced a slight increase
in hourly labor costs as a result of the 1996 and 1997 increases in the federal
minimum wage rate.
Competition
The restaurant industry in the U.S. is highly competitive with respect to
price, service, location, and food type and quality, and competition is expected
to intensify. There are a few, well-established competitors with greater
financial and other resources than Avado Brands. Some of the Company's
competitors have been in existence for a substantially longer period than Avado
Brands and may be better established in the markets where the Company's
restaurants are or may be located. The restaurant business is often affected by
changes in consumer tastes, national, regional or local economic conditions,
demographic trends, traffic patterns, the availability and cost of suitable
locations, and the type, number and location of competing restaurants. The
Company also experiences competition in attracting and retaining qualified
management level operating personnel. In addition, factors such as inflation,
increased food, labor and benefits costs, and difficulty in attracting hourly
employees may adversely affect the restaurant industry in general and Avado
Brands' restaurants in particular.
Employees
As of January 3, 1999, Avado Brands employed approximately 20,300 persons
in 29 states plus the District of Columbia. Of those employees, approximately
280 held management or administrative positions, 1,500 were involved in
restaurant management, and the remainder were engaged in the operation of
restaurants. Management believes that the Company's continued success will
depend to a large degree on its ability to attract and retain good management
employees. While the Company will have to continually address a level of
employee attrition normally expected in the food-service industry, Avado Brands
has taken steps to attract and keep qualified management personnel through the
implementation of a variety of employee benefit plans, including an Employee
Stock Ownership Plan, a 401(k) Plan, and an incentive stock option plan for its
key employees. None of the Company's employees is covered by a collective
bargaining agreement. The Company considers its employee relations to be good.
7
Item 2. Properties
The Company owns a renovated historic building in Madison, Georgia,
containing approximately 19,000 square feet of office space and an adjoining
building containing approximately 41,000 square feet of office space. These
office buildings have served as the Company's corporate and Applebee's
headquarters. In 1997, the Company completed construction of a new 44,100 square
foot facility in Bedford, Texas, to house the Don Pablo's headquarters. The
headquarters for McCormick & Schmick's is located in approximately 12,000 square
feet of leased space in Portland, Oregon. The headquarters for Hops is located
in approximately 15,000 square feet of leased space in Tampa, Florida and the
headquarters for Canyon Cafe is located in approximately 7,500 square feet of
leased space in Dallas, Texas. The Company believes that its corporate and brand
headquarters are sufficient for its present needs.
In selecting restaurant sites, the Company attempts to acquire prime
locations in market areas to maximize both short- and long-term revenues. Site
selection is made by each brand's development department, subject to executive
officer approval. Within the target market areas, the brands evaluate major
retail and office concentrations and major traffic arteries to determine focal
points. Site specific factors include visibility, ease of ingress and egress,
proximity to direct competition, accessibility to utilities, local zoning
regulations, laws regulating the sale of alcoholic beverages, and various other
factors.
8
As of March 1, 1999, the Company operated 248 restaurants. The Company
leases the underlying real estate on which 99 of the restaurants are located and
leases both the buildings and underlying real estate for an additional 60
restaurants. The remaining 89 restaurants and related real estate are owned by
the Company. The following table presents restaurant locations by brand:
Don McCormick Canyon
Pablo's Hops & Schmick's Cafe Sub-total Applebee's Total
- -------------------------------------------------------------------------------------------------------------------
Florida 18 27 45 45
Texas 15 5 20 20
Ohio 15 15 15
Indiana 10 10 1 11
California 7 2 9 9
North Carolina 4 5 9 9
Tennessee 5 3 1 9 9
Georgia 4 2 2 8 8
Michigan 8 8 8
Minnesota 7 1 8 8
Pennsylvania 8 8 1 9
Virginia 7 1 8 9 17
Colorado 5 1 1 7 7
Arizona 3 3 6 6
Kentucky 4 2 6 7 13
South Carolina 2 4 6 6
Washington 4 2 6 6
Maryland 4 1 5 10 15
Oregon 5 5 5
New York 4 4 4
Oklahoma 4 4 4
Washington D.C. 2 2 2
Illinois 1 1 2 2
Missouri 2 2 2
New Jersey 2 2 2
Alabama 1 1 1
Iowa 1 1 1
Nevada 1 1 1
Delaware 2 2
West Virginia 1 1
- -------------------------------------------------------------------------------------------------------------------
Totals 127 49 23 18 217 31 248
===================================================================================================================
9
Item 3. Legal Proceedings
In 1997, two lawsuits were filed by persons seeking to represent a class of
shareholders of the Company who purchased shares of the Company's common stock
between May 26, 1995 and September 24, 1996. Each plaintiff named the Company
and certain of its officers and directors as defendants. The complaints alleged
acts of fraudulent misrepresentation by the defendants which induced the
plaintiffs to purchase the Company's common stock and alleged illegal insider
trading by certain of the defendants, each of which allegedly resulted in losses
to the plaintiffs and similarly situated shareholders of the Company. The
complaints each sought damages and other relief. In 1998, one of these suits
(Artel Foam Corporation Pension Trust, et al. v. Apple South, Inc., et al.,
Civil Action No. CV-97-6189) was dismissed. Although the ultimate outcome of the
remaining lawsuit cannot be determined at this time, the Company believes that
the allegations therein are without merit and intends to vigorously defend
itself.
The Company is involved in various other claims and legal actions arising
in the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
The Company did not submit any matter to a vote of its security holders
during the fourth quarter of the fiscal year ended January 3, 1999.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Information in response to this item is incorporated by reference to page
36 of the Company's Annual Report to Shareholders for the fiscal year ended
January 3, 1999, the relevant portion of which is attached as Exhibit 13.1
hereto.
Item 6. Selected Financial Data
Information in response to this item is incorporated by reference to page
17 of the Company's Annual Report to Shareholders for the fiscal year ended
January 3, 1999, the relevant portion of which is attached as Exhibit 13.1
hereto.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
Of Operations
Information in response to this item is incorporated by reference to pages
18 through 22, inclusive, of the Company's Annual Report to Shareholders for the
fiscal year ended January 3, 1999, the relevant portion of which is attached as
Exhibit 13.1 hereto.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Information in response to this item is incorporated by reference to page
22 of the Company's Annual Report to Shareholders for the fiscal year ended
January 3, 1999, the relevant portion of which is attached as Exhibit 13.1
hereto.
10
Item 8. Financial Statements and Supplementary Data
Information in response to this item is incorporated by reference to pages
23 through 35, inclusive, of the Company's Annual Report to Shareholders for the
fiscal year ended January 3, 1999, the relevant portion of which is attached as
Exhibit 13.1 hereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable
Part III
Item 10. Directors and Executive Officers of the Registrant
Information in response to this item is incorporated by reference to the
information contained under the headings "Nominees for Director" , "Executive
Officers", and "Section 16(a) Beneficial Ownership Reporting Compliance" in the
Company's definitive Proxy Statement for use in connection with the 1999 Annual
Meeting of Shareholders, filed with the Commission on March 31, 1999.
Item 11. Executive Compensation
Information in response to this item is incorporated by reference to the
information contained under the heading "Compensation of Executive Officers" in
the Company's definitive Proxy Statement for use in connection with the 1999
Annual Meeting of Shareholders, filed with the Commission on March 31, 1999. In
no event shall the information contained in the Proxy Statement under the
heading "Comparison of Five-Year Cumulative Shareholder Return" be deemed
incorporated herein by such reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information in response to this item is incorporated by reference to the
information contained under the heading "Voting Securities and Principal Holders
Thereof" in the Company's definitive Proxy Statement for use in connection with
the 1999 Annual Meeting of Shareholders, filed with the Commission on March 31,
1999.
Item 13. Certain Relationships and Related Transactions
In March 1995, the Company entered into a Split Dollar Insurance Agreement
(the "Agreement") with The DuPree Insurance Trust (the "Trust") whereby the
Company agreed to make premium payments on certain life insurance policies of
which the Trust is the owner and beneficiary. These policies provide a total of
$50 million in death proceeds payable upon death of the survivor of Tom E.
DuPree, Jr., and his wife. The devisees under the wills of Mr. DuPree and his
wife are the beneficiaries of the Trust.
The Trust has agreed to reimburse the Company on an annual basis for that
portion of the premiums which equals the current value of the economic benefit,
as defined by the Internal Revenue Service, attributable to the life insurance
protection provided. The premiums due under the policies total $850,000 per
year. Reimbursements for the current value of the economic benefit attributable
to the life insurance provided in fiscal 1998 totaled $2,308. There were no
reimbursements due to the Company from the Trust at January 3, 1999.
The Company or the Trust can cancel the Agreement at any time. Upon
cancellation, the Trust is obligated to repay the Company an amount equal to the
lesser of either the cash surrender value of the policies or the total amount of
unreimbursed premiums paid by the Company. Upon receipt of the death proceeds
under the policies, the Trust
11
is required to repay the Company for all unreimbursed premium payments. The
policies have been assigned to the Company to secure the repayment obligations
of the Trust.
In 1998, the Board of Directors approved loans to certain executive
officers of the Company. At January 3, 1999, the Company held three notes
receivable from Tom E. DuPree, Jr., the Chairman of the Board and Chief
Executive Officer of the Company, totaling $7,851,500. The notes are due in
November and December of 2000 or earlier upon demand of the Company and bear
interest at 7.0% with interest payment due at maturity. The Company also holds
notes receivable from Erich J. Booth, Chief Financial Officer and Treasurer,
totaling $107,000 and from Margaret E. Waldrep, Chief Administrative Officer,
totaling $41,500. The notes are due in October and November of 1999 and bear
interest at 5.06% with interest payment due at maturity.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this Report:
1. Financial Statements
The following financial statement items are set forth in pages 23 through
35 of the Company's Annual Report to Shareholders for the fiscal year ended
January 3, 1999, the relevant portion of which is attached as Exhibit 13.1
hereto:
Consolidated Statements of Earnings for the years ended January 3, 1999,
December 28, 1997 and December 29, 1996
Consolidated Balance Sheets as ofJanuary 3, 1999 and December 28, 1997
Consolidated Statements of Shareholders' Equity and Comprehensive Income
for the years ended January 3, 1999, December 28, 1997 and December 29,
1996
Consolidated Statements of Cash Flows for the years ended January 3, 1999,
December 28, 1997 and December 29, 1996
Notes to Consolidated Financial Statements
Report of Management Independent
Auditors' Report
2. Financial Statement Schedules
None
3. Exhibits
2.1 Agreement and Plan of Merger, dated August 15, 1995, by and among the
Company, SALSA Acquisition Corp., and DF&R Restaurants, Inc. (4)
2.2 Agreement and Plan of Merger among Apple South, Inc., M&S Acquisition
of Delaware Inc., and McCormick & Schmick Holding Corp., et. al., dated February
6, 1997. (7)
2.3 Agreements and Plan of Merger among Apple South, Inc., HG Acquisition
Corp., and Mason and Schelldorf Leasing Company, Hops Restaurants, Inc., et.
al., dated February 6, 1997. (7)
2.4 Agreement and Plan of Merger among Apple South, Inc., Coyote
Acquisition Corp., and Canyon Cafes, Inc., et. al., dated June 19, 1997. (8)
12
2.5 Asset Purchase Agreement dated December 23, 1997 by and among
Applebee's International, Inc. and Apple South, Inc. (9)
2.6 Asset Purchase Agreement dated March 16, 1998 by and among Quality
Restaurant Concepts, L.L.C., and Apple South, Inc. (11)
2.7 Asset purchase agreement dated April 23, 1998, by an among Apple South,
Inc. and Whit-Mart, Inc. (13)
2.8 Asset purchase agreement dated May 1, 1998, by and among Apple South,
Inc. and T.S.S.O., Inc., and Lois Sedowicz. (13)
2.9 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. (13)
2.10 Asset purchase agreement dated June 19, 1998, by and among Apple
South, Inc. and U.S. Restaurant Properties Operating LP. (13)
2.11 Asset purchase agreement dated June 19, 1998, by and among Apple
South, Inc. and Darrel L. Rolph. (13)
2.12 Asset purchase agreement dated July 31, 1998, by and among Apple
South, Inc. Delta Bluff , LLC. (14)
2.13 Asset purchase agreement dated August 20, 1998, by and among Apple
South, Inc. and WHG Real Estate South, LLC. and Wisconsin Hospitality Group,
LLC. (15)
2.14 Asset purchase agreement dated August 20, 1998, by and among Apple
South, Inc. and WHG Real Estate East, LLC. and Wisconsin Hospitality Group, LLC.
(15)
2.15 Asset purchase agreement dated April 6, 1998, by and among Apple
South, Inc. and Woodland Group, Inc. (15)
2.16 Asset purchase agreement dated May 15, 1998, by and among Apple South,
Inc. and Bloomin' Apple, LLC. (15)
2.17 Asset purchase agreement dated June 26, 1998, by and among Apple
South, Inc. and Apple J, L.P. (15)
2.18 Asset purchase agreement dated September 15, 1998, by and among Apple
South, Inc., and WHG Real Estate North, LLC and Wisconsin Hospitality Group,
LLC.
3.1 Amended and Restated Articles of Incorporation of the Company, as
amended October 13, 1998. (3)
3.2 By-laws of the Company. (1)
4.1 See Exhibits 3.1 and 3.2 for provisions in the Company's Amended and
Restated Articles of Incorporation and by-laws defining the rights of holders of
the Company's Common Stock. (1) (3)
4.2 Indenture dated May 1, 1996, between the Company and SunTrust Bank,
Atlanta, as Trustee. (5)
4.3 Trust Agreement of Apple South Financing I, dated as of February 18,
1997, among Apple South, Inc., First Union National Bank of Georgia, First Union
Bank of Delaware and Lansing S. Patterson.(10)
4.4 Amended and Restated Declaration of Trust of Apple South Financing I,
dated as of March 11, 1997, among Apple South, Inc., as Sponsor, First Union
National Bank of Georgia, as Institutional Trustee, First Union Bank of
Delaware, as Delaware Trustee, and the Regular Trustees named therein. (10)
13
4.5 Indenture for the 7% Convertible Subordinated Debentures, dated as of
March 6, 1997, between Apple South, Inc. and First Union National Bank of
Georgia, as Trustee. (10)
4.6 Form of $3.50 Term Convertible Security, Series A (included in Exhibit
4.4).
4.7 Form of 7% Convertible Subordinated Debenture (included in Exhibit
4.5).
4.8 Preferred Securities Guarantee Agreement, dated as of March 11, 1997,
between Apple South, Inc., as Guarantor, and First Union National Bank of
Georgia, as Preferred Guarantee Trustee. (10)
4.9 Registration Rights Agreement, dated as of March 11, 1997 among Apple
South, Inc., Apple South Financing I, J.P. Morgan Securities, Inc., and Smith
Barney, Inc. (10)
4.10 Solicitation of Consents to Proposed Amendments to 9.75% Senior Notes
due 2006 of Apple South, Inc. (13)
10.1 Apple South, Inc. 1988 Stock Option Plan. (1)
10.2 Form of Stock Option Agreement under the Apple South, Inc. 1988 Stock
Option Plan. (1) (6)
10.3 Form of Apple South, Inc. Director's Indemnification Agreement
executed by and between the Company and each member of its Board of Directors.
(1)
10.4 Form of Apple South, Inc. Officer's Indemnification Agreement executed
between the Company and each of its executive officers. (1)
10.5 Apple South, Inc. Employee Stock Ownership Plan and Trust. (1) (6)
10.6 Apple South, Inc. Profit Sharing Plan and Trust. (1) (6)
10.7 Amendment No. 2 to the Apple South, Inc. Employee Stock Ownership Plan
and Trust, dated November 22, 1993. (2)
10.8 Apple South, Inc. [Restated] Profit Sharing Plan and Trust dated
October 26, 1993. (2)
10.9 Amended form of Stock Option Agreement under the Apple South, Inc.
1988 Stock Option Plan. (2)
10.10 Apple South, Inc. 1993 Stock Incentive Plan. (2)
10.11 Form of Stock Option Agreement under the Apple South, Inc. 1993 Stock
Incentive Plan. (2)
10.12 Second Amended and Restated Credit Agreement, dated March 1, 1998,
among Apple South, Inc. Wachovia Bank, National Association, as agent for the
lenders, and the Banks listed as parties thereto. (11)
10.13 Participation Agreement (Apple South Trust No. 97-1), dated September
24, 1997, among Apple South, Inc., as lessee, First Security Bank, National
Association, as lessor, SunTrust Bank, Atlanta, as administrative agent, and the
holders and lenders signatory thereto. (11)
10.14 First amendment, dated as of March 27, 1998, to Participation
Agreement (Apple South Trust No 97-1), dated September 24, 1997, among Apple
South, Inc., as lessee, First Security Bank, National Association, as lessor,
SunTrust Bank, Atlanta, as administrative agent, and the holders and lenders
signatory thereto. (12)
14
10.15 Second amendment, dated as of August 14, 1998, to Participation
Agreement (Apple South Trust No 97-1), dated September 24, 1997, among Apple
South, Inc., as lessee, First Security Bank, National Association, as lessor,
SunTrust Bank, Atlanta, as administrative agent, and the holders and lenders
signatory thereto.
10.16 Third amendment, dated as of November 13, 1998, to Participation
Agreement (Apple South Trust No 97-1), dated September 24, 1997, among Apple
South, Inc., as lessee, First Security Bank, National Association, as lessor,
SunTrust Bank, Atlanta, as administrative agent, and the holders and lenders
signatory thereto.
10.17 Fourth amendment, dated as of February 22, 1999, to Participation
Agreement (Apple South Trust No 97-1), dated September 24, 1997, among Apple
South, Inc., as lessee, First Security Bank, National Association, as lessor,
SunTrust Bank, Atlanta, as administrative agent, and the holders and lenders
signatory thereto.
10.18 $70 million Credit Agreement, dated December 10, 1997, among Apple
South, Inc., Wachovia Bank, National Association, as agent for the lenders, and
the Banks listed as parties thereto. (11)
10.19 $100 million Credit Agreement, dated April 1, 1998, among Apple
South, Inc., Wachovia Bank, National Association, as agent for the banks, and
the banks listed as parties thereto. (12)
10.20 First amendment, dated as of June 1, 1998, to $100 million Credit
Agreement, dated April 1, 1998, among Apple South, Inc., Wachovia Bank, National
Association, as agent for the banks, and the banks listed as parties thereto.
10.21 Second amendment, dated as of October 15, 1998, to $100 million
Credit Agreement, dated April 1, 1998, among Apple South, Inc., Wachovia Bank,
National Association, as agent for the banks, and the banks listed as parties
thereto.
10.22 Third amendment, dated as of January 22, 1999, to $100 million Credit
Agreement, dated April 1, 1998, among Apple South, Inc., Wachovia Bank, National
Association, as agent for the banks, and the banks listed as parties thereto.
10.23 $30 million Credit Agreement, dated May 8, 1998, among Apple South,
Inc. as borrower and First Union National Bank as lender.
10.24 First amendment, dated as of June 28, 1998, to $30 million Credit
Agreement, dated May 8, 1998, among Apple South, Inc. as borrower and First
Union National Bank as lender.
10.25 Second amendment, dated as of November 17, 1998, to $30 million
Credit Agreement, dated May 8, 1998, among Apple South, Inc. as borrower and
First Union National Bank as lender.
10.26 Third amendment, dated as of February 26, 1999, to $30 million Credit
Agreement, dated May 8, 1998, among Apple South, Inc. as borrower and First
Union National Bank as lender.
10.27 $30 million Supplemental Credit Facility Agreement, dated December
24, 1998, among Avado Brands, Inc. and Wachovia Capital Investments, Inc.
10.28 Addendum 1, dated as of February 26, 1999, to $30 million
Supplemental Credit Facility Agreement, dated December 24, 1998, among Avado
Brands, Inc. and Wachovia Capital Investments, Inc.
10.29 Addendum 2, dated as of March 8, 1999, to $30 million Supplemental
Credit Facility Agreement, dated December 24, 1998, among Avado Brands, Inc. and
Wachovia Capital Investments, Inc.
15
13.1 Excerpts from Annual Report to Shareholders for the fiscal year ended
January 3, 1999.
22.1 Subsidiaries of the Registrant.
23.1 Consent of KPMG LLP.
27.1 Financial Data Schedule (EDGAR version only).
99.1 Safe harbor under the Private Securities Litigation Reform Act of
1995. (8)
---------------------------------------------------------------------------
(1) Incorporated by reference to the corresponding exhibit number filed
with the registrant's Registration Statement on Form S-1, File No. 33-42662.
(2) Incorporated by reference to the registrant's Annual Report on Form
10-K for its fiscal year ended December 31, 1993.
(3) Incorporated by reference to the registrant's Current Report on Form
8-K dated October 13, 1998.
(4) Incorporated by reference to the registrant's Quarterly Report on Form
10-Q for its fiscal quarter ended October 1, 1995.
(5) Incorporated by reference to the registrant's registration statement on
Form S-3, File No. 333-02958.
(6) Incorporated by reference to the registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1995.
(7) Incorporated by reference to the registrant's Quarterly Report on Form
10-Q for its fiscal quarter ended March 30, 1997.
(8) Incorporated by reference to the registrant's Quarterly Report on Form
10-Q for its fiscal quarter ended June 29, 1997.
(9) Incorporated by reference to the registrant's Report on Form 8-K dated
January 15, 1998.
(10) Incorporated by reference to the registrants's registration statement
on Form S-3, File No. 333-25205.
(11) Incorporated by reference to the registrant's Annual Report on form
10-K for the fiscal year ended December 28, 1997.
(12) Incorporated by reference to the registrant's Quarterly Report on Form
10-Q for its fiscal quarter ended March 29, 1998.
(13) Incorporated by reference to the registrant's Quarterly Report on Form
10-Q for its fiscal quarter ended June 28, 1998.
(14) Incorporated by reference to the registrant's Quarterly Report on Form
10-Q for its fiscal quarter ended September 27, 1998.
(15) Incorporated by reference to the registrant's Report on Form 8-K dated
September 14, 1998.
(b) Reports on Form 8-K
Form 8-K dated October 13, 1998, reporting the Company's name change.
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
AVADO BRANDS, INC.
By: /s/ Tom E. DuPree, Jr.
---------------------------
Tom E. DuPree, Jr.
Chief Executive Officer and
Chairman of the Board
March 16, 1999
Atlanta, Georgia
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Tom E. DuPree, Jr. Chairman of the Board of March 16, 1999
- ------------------------ Directors and Chief Executive
Tom E. DuPree, Jr. Officer (principal executive officer)
/s/ Erich J. Booth Director and Chief Financial March 16, 1999
- ------------------------ Officer (principal financial officer)
Erich J. Booth
/s/ John G. McLeod, Jr. Senior Vice President - Human March 16, 1999
- ------------------------ Resources, and Secretary
John G. McLeod, Jr.
/s/ Margaret E. Waldrep Chief Administrative Officer March 16, 1999
- ------------------------
Margaret E. Waldrep
/s/ Louis J. Profumo Chief Accounting Officer March 16, 1999
- ------------------------ (principal accounting officer)
Louis J. Profumo
/s/ Thomas R. Williams Director March 16, 1999
- ------------------------
Thomas R. Williams
/s/ James W. Rowe Director March 16, 1999
- ------------------------
James W. Rowe
/s/ Dr. Ruth G. Shaw Director March 16, 1999
- ------------------------
Dr. Ruth G. Shaw
/s/ John L. Moorhead Director March 16, 1999
- ------------------------
John L. Moorhead
17
Exhibit Index
Exhibit Number
2.1 Agreement and Plan of Merger, dated August 15, 1995, by and among the
Company, SALSA Acquisition Corp., and DF&R Restaurants, Inc. (4)
2.2 Agreement and Plan of Merger among Apple South, Inc., M&S Acquisition
of Delaware Inc., and McCormick & Schmick Holding Corp., et. al., dated February
6, 1997. (7)
2.3 Agreements and Plan of Merger among Apple South, Inc., HG Acquisition
Corp., and Mason and Schelldorf Leasing Company, Hops Restaurants, Inc., et.
al., dated February 6, 1997. (7)
2.4 Agreement and Plan of Merger among Apple South, Inc., Coyote
Acquisition Corp., and Canyon Cafes, Inc., et. al., dated June 19, 1997. (8)
2.5 Asset Purchase Agreement dated December 23, 1997 by and among
Applebee's International, Inc. and Apple South, Inc. (9)
2.6 Asset Purchase Agreement dated March 16, 1998 by and among Quality
Restaurant Concepts, L.L.C., and Apple South, Inc. (11)
2.7 Asset purchase agreement dated April 23, 1998, by an among Apple South,
Inc. and Whit-Mart, Inc. (13)
2.8 Asset purchase agreement dated May 1, 1998, by and among Apple South,
Inc. and T.S.S.O., Inc., and Lois Sedowicz. (13)
2.9 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. (13)
2.10 Asset purchase agreement dated June 19, 1998, by and among Apple
South, Inc. and U.S. Restaurant Properties Operating LP. (13)
2.11 Asset purchase agreement dated June 19, 1998, by and among Apple
South, Inc. and Darrel L. Rolph. (13)
2.12 Asset purchase agreement dated July 31, 1998, by and among Apple
South, Inc. Delta Bluff , LLC. (14)
2.13 Asset purchase agreement dated August 20, 1998, by and among Apple
South, Inc. and WHG Real Estate South, LLC. and Wisconsin Hospitality Group,
LLC. (15)
2.14 Asset purchase agreement dated August 20, 1998, by and among Apple
South, Inc. and WHG Real Estate East, LLC. and Wisconsin Hospitality Group, LLC.
(15)
2.15 Asset purchase agreement dated April 6, 1998, by and among Apple
South, Inc. and Woodland Group, Inc. (15)
2.16 Asset purchase agreement dated May 15, 1998, by and among Apple South,
Inc. and Bloomin' Apple, LLC. (15)
2.17 Asset purchase agreement dated June 26, 1998, by and among Apple
South, Inc. and Apple J, L.P. (15)
2.18 Asset purchase agreement dated September 15, 1998, by and among Apple
South, Inc., and WHG Real Estate North, LLC and Wisconsin Hospitality Group,
LLC.
3.1 Amended and Restated Articles of Incorporation of the Company, as
amended October 13, 1998. (3)
18
3.2 By-laws of the Company. (1)
4.1 See Exhibits 3.1 and 3.2 for provisions in the Company's Amended and
Restated Articles of Incorporation and by-laws defining the rights of holders of
the Company's Common Stock. (1) (3)
4.2 Indenture dated May 1, 1996, between the Company and SunTrust Bank,
Atlanta, as Trustee. (5)
4.3 Trust Agreement of Apple South Financing I, dated as of February 18,
1997, among Apple South, Inc., First Union National Bank of Georgia, First Union
Bank of Delaware and Lansing S. Patterson.(10)
4.4 Amended and Restated Declaration of Trust of Apple South Financing I,
dated as of March 11, 1997, among Apple South, Inc., as Sponsor, First Union
National Bank of Georgia, as Institutional Trustee, First Union Bank of
Delaware, as Delaware Trustee, and the Regular Trustees named therein. (10)
4.5 Indenture for the 7% Convertible Subordinated Debentures, dated as of
March 6, 1997, between Apple South, Inc. and First Union National Bank of
Georgia, as Trustee. (10)
4.6 Form of $3.50 Term Convertible Security, Series A (included in Exhibit
4.4).
4.7 Form of 7% Convertible Subordinated Debenture (included in Exhibit
4.5).
4.8 Preferred Securities Guarantee Agreement, dated as of March 11, 1997,
between Apple South, Inc., as Guarantor, and First Union National Bank of
Georgia, as Preferred Guarantee Trustee. (10)
4.9 Registration Rights Agreement, dated as of March 11, 1997 among Apple
South, Inc., Apple South Financing I, J.P. Morgan Securities, Inc., and Smith
Barney, Inc. (10)
4.10 Solicitation of Consents to Proposed Amendments to 9.75% Senior Notes
due 2006 of Apple South, Inc. (13)
10.1 Apple South, Inc. 1988 Stock Option Plan. (1)
10.2 Form of Stock Option Agreement under the Apple South, Inc. 1988 Stock
Option Plan. (1) (6)
10.3 Form of Apple South, Inc. Director's Indemnification Agreement
executed by and between the Company and each member of its Board of Directors.
(1)
10.4 Form of Apple South, Inc. Officer's Indemnification Agreement executed
between the Company and each of its executive officers. (1)
10.5 Apple South, Inc. Employee Stock Ownership Plan and Trust. (1) (6)
10.6 Apple South, Inc. Profit Sharing Plan and Trust. (1) (6)
10.7 Amendment No. 2 to the Apple South, Inc. Employee Stock Ownership Plan
and Trust, dated November 22, 1993. (2)
10.8 Apple South, Inc. [Restated] Profit Sharing Plan and Trust dated
October 26, 1993. (2)
10.9 Amended form of Stock Option Agreement under the Apple South, Inc.
1988 Stock Option Plan. (2)
10.10 Apple South, Inc. 1993 Stock Incentive Plan. (2)
19
10.11 Form of Stock Option Agreement under the Apple South, Inc. 1993 Stock
Incentive Plan. (2)
10.12 Second Amended and Restated Credit Agreement, dated March 1, 1998,
among Apple South, Inc. Wachovia Bank, National Association, as agent for the
lenders, and the Banks listed as parties thereto. (11)
10.13 Participation Agreement (Apple South Trust No. 97-1), dated September
24, 1997, among Apple South, Inc., as lessee, First Security Bank, National
Association, as lessor, SunTrust Bank, Atlanta, as administrative agent, and the
holders and lenders signatory thereto. (11)
10.14 First amendment, dated as of March 27, 1998, to Participation
Agreement (Apple South Trust No 97-1), dated September 24, 1997, among Apple
South, Inc., as lessee, First Security Bank, National Association, as lessor,
SunTrust Bank, Atlanta, as administrative agent, and the holders and lenders
signatory thereto. (12)
10.15 Second amendment, dated as of August 14, 1998, to Participation
Agreement (Apple South Trust No 97-1), dated September 24, 1997, among Apple
South, Inc., as lessee, First Security Bank, National Association, as lessor,
SunTrust Bank, Atlanta, as administrative agent, and the holders and lenders
signatory thereto.
10.16 Third amendment, dated as of November 13, 1998, to Participation
Agreement (Apple South Trust No 97-1), dated September 24, 1997, among Apple
South, Inc., as lessee, First Security Bank, National Association, as lessor,
SunTrust Bank, Atlanta, as administrative agent, and the holders and lenders
signatory thereto.
10.17 Fourth amendment, dated as of February 22, 1999, to Participation
Agreement (Apple South Trust No 97-1), dated September 24, 1997, among Apple
South, Inc., as lessee, First Security Bank, National Association, as lessor,
SunTrust Bank, Atlanta, as administrative agent, and the holders and lenders
signatory thereto.
10.18 $70 million Credit Agreement, dated December 10, 1997, among Apple
South, Inc., Wachovia Bank, National Association, as agent for the lenders, and
the Banks listed as parties thereto. (11)
10.19 $100 million Credit Agreement, dated April 1, 1998, among Apple
South, Inc., Wachovia Bank, National Association, as agent for the banks, and
the banks listed as parties thereto. (12)
10.20 First amendment, dated as of June 1, 1998, to $100 million Credit
Agreement, dated April 1, 1998, among Apple South, Inc., Wachovia Bank, National
Association, as agent for the banks, and the banks listed as parties thereto.
10.21 Second amendment, dated as of October 15, 1998, to $100 million
Credit Agreement, dated April 1, 1998, among Apple South, Inc., Wachovia Bank,
National Association, as agent for the banks, and the banks listed as parties
thereto.
10.22 Third amendment, dated as of January 22, 1999, to $100 million Credit
Agreement, dated April 1, 1998, among Apple South, Inc., Wachovia Bank, National
Association, as agent for the banks, and the banks listed as parties thereto.
10.23 $30 million Credit Agreement, dated May 8, 1998, among Apple South,
Inc. as borrower and First Union National Bank as lender.
10.24 First amendment, dated as of June 28, 1998, to $30 million Credit
Agreement, dated May 8, 1998, among Apple South, Inc. as borrower and First
Union National Bank as lender.
10.25 Second amendment, dated as of November 17, 1998, to $30 million
Credit Agreement, dated May 8, 1998, among Apple South, Inc. as borrower and
First Union National Bank as lender.
20
10.26 Third amendment, dated as of February 26, 1999, to $30 million Credit
Agreement, dated May 8, 1998, among Apple South, Inc. as borrower and First
Union National Bank as lender.
10.27 $30 million Supplemental Credit Facility Agreement, dated December
24, 1998, among Avado Brands, Inc. and Wachovia Capital Investments, Inc.
10.28 Addendum 1, dated as of February 26, 1999, to $30 million
Supplemental Credit Facility Agreement, dated December 24, 1998, among Avado
Brands, Inc. and Wachovia Capital Investments, Inc.
10.29 Addendum 2, dated as of March 8, 1999, to $30 million Supplemental
Credit Facility Agreement, dated December 24, 1998, among Avado Brands, Inc. and
Wachovia Capital Investments, Inc.
13.1 Excerpts from Annual Report to Shareholders for the fiscal year ended
January 3, 1999.
22.1 Subsidiaries of the Registrant.
23.1 Consent of KPMG LLP.
27.1 Financial Data Schedule (EDGAR version only).
99.1 Safe harbor under the Private Securities Litigation Reform Act of
1995. (8)
---------------------------------------------------------------------------
(1) Incorporated by reference to the corresponding exhibit number filed
with the registrant's Registration Statement on Form S-1, File No. 33-42662.
(2) Incorporated by reference to the registrant's Annual Report on Form
10-K for its fiscal year ended December 31, 1993.
(3) Incorporated by reference to the registrant's Current Report on Form
8-K dated October 13, 1998.
(4) Incorporated by reference to the registrant's Quarterly Report on Form
10-Q for its fiscal quarter ended October 1, 1995.
(5) Incorporated by reference to the registrant's registration statement on
Form S-3, File No. 333-02958.
(6) Incorporated by reference to the registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1995.
(7) Incorporated by reference to the registrant's Quarterly Report on Form
10-Q for its fiscal quarter ended March 30, 1997.
(8) Incorporated by reference to the registrant's Quarterly Report on Form
10-Q for its fiscal quarter ended June 29, 1997.
(9) Incorporated by reference to the registrant's Report on Form 8-K dated
January 15, 1998.
(10) Incorporated by reference to the registrants's registration statement
on Form S-3, File No. 333-25205.
(11) Incorporated by reference to the registrant's Annual Report on form
10-K for the fiscal year ended December 28, 1997.
(12) Incorporated by reference to the registrant's Quarterly Report on Form
10-Q for its fiscal quarter ended March 29, 1998.
(13) Incorporated by reference to the registrant's Quarterly Report on Form
10-Q for its fiscal quarter ended June 28, 1998.
(14) Incorporated by reference to the registrant's Quarterly Report on Form
10-Q for its fiscal quarter ended September 27, 1998.
(15) Incorporated by reference to the registrant's Report on Form 8-K dated
September 14, 1998.
21