DineEquity, Inc. Announces Second Quarter 2008 Financial Results

GLENDALE, CA--(Marketwire - July 29, 2008) - DineEquity, Inc. (NYSE: DIN), franchisor and operator of Applebee's Neighborhood Grill & Bar and IHOP restaurants, today announced financial results for the second quarter ended June 30, 2008.

For the second quarter 2008, the Company reported a net loss available to common stockholders of $23.7 million, or a net loss per diluted share available to common stockholders of $1.42. The loss was primarily due to a non-cash impairment charge of $41.1 million related to the sale-leaseback of 181 company-owned Applebee's restaurant properties, reflecting a deterioration in domestic real estate and credit markets over the past seven months. Excluding the impairment charges, the Company reported an 88.5% decrease in net income available to common stockholders to $1.6 million, or an 87.8% decrease in net income per diluted share available to common stockholders to $0.10. The decreases were primarily due to increased expenses related to the Applebee's acquisition.

The Company generated $56.8 million of cash flow from operating activities in the first six months of 2008, a 141% increase from the first six months of 2007. The Company's cash position in the first six months of 2008 was further augmented by $7.9 million from the run-off of the IHOP business' long-term notes receivable. Consolidated capital expenditures were $23.2 million in the first six months of 2008. Free cash flow for the six month period was $41.5 million. See "References to Non-GAAP Financial Measures" below.

Julia A. Stewart, DineEquity's chairman and chief executive officer, said, "We are pleased with the second quarter 2008 performance of the IHOP business, and are optimistic about the progress we continue to make on our plans to re-energize and transform the Applebee's brand and business model. IHOP's success is the result of focused execution of our core marketing, operations and development strategies, and the IHOP team continues to deliver on all fronts. This level of performance is indicative of the type of sustainable system momentum that we envision is possible at Applebee's as we apply similar strategies."

Applebee's Second Quarter 2008 Performance Detail

The following is a summary of key performance drivers of DineEquity's Applebee's business unit for the second quarter 2008:


-- During the quarter, franchisees opened 11 new Applebee's restaurants.

-- Applebee's system-wide domestic same-store sales decreased 1.7% for
the second quarter 2008, primarily due to advertised promotions that did
not perform as expected in a value-oriented competitive environment.
Applebee's will roll out value offerings beginning in August 2008 to
compete more effectively and to drive improved traffic performance.

-- On a pro forma basis, which compares second quarter 2008 results for
Applebee's franchise operations segment to the same period last year,
Applebee's franchise operations profitability grew 2.8% to $37.1 million
due to a 3.7% increase in effective units, which offset a 1.8% decrease in
domestic franchise same-store sales for the second quarter 2008.

-- On a pro forma basis, which compares second quarter 2008 results for
Applebee's company operations segment to the same period last year, sales
at Applebee's company-operated restaurants decreased 0.9% to $292.9 million
primarily due to a 1.5% decrease in same-store sales for the second quarter
2008. Operating margin improved 120 basis points to 12.7% compared to an
11.5% operating margin, excluding pre-opening expense of 0.2%, in the
second quarter last year. As a percentage of sales, food and beverage costs
and labor costs increased by 30 basis points on a consolidated basis. This
was offset by an approximate 170 basis point improvement in net
depreciation and rental expense related to extending the useful lives of
restaurant assets due to purchase price allocation. Together, these
operating margin performance factors resulted in an 11.8% increase in
segment profitability to $37.2 million in the second quarter 2008.



Stewart commented, "We continue to work through our performance improvement plan on Applebee's. During the second quarter 2008, we introduced a new advertising campaign and completed successful promotion testing aimed at driving guest traffic. We appointed Mike Archer president of Applebee's to help lead the revitalization of the business. Applebee's same-store sales performance did not meet our expectations and company operating margin improvement did not materialize. We will launch a value promotion system-wide as soon as August, and believe this will benefit our same-store sales performance as well as contribute to Applebee's company restaurant margins in line with expected sales improvements during the second half of 2008."

IHOP Second Quarter 2008 Performance Details

The following is a summary of key performance drivers of DineEquity's IHOP's business unit for the second quarter 2008:


-- During the quarter, franchisees opened 15 new IHOP restaurants.

-- IHOP's system-wide same-store sales increased 2.6% for the second
quarter 2008, which produced the business' 22nd consecutive quarter of
positive same-store sales growth and reflected positive traffic growth for
the system. IHOP's growth was supported primarily by unique limited-time
offers such as Tour de French Toast and Discover America Pancakes, as well
as promotional activities around IHOP's year-long 50th birthday
celebration.

-- IHOP's core franchising business reflected revenue growth of 5.9% to
$49.7 million compared to the same quarter last year due to a 4.2% increase
in effective units and the business' solid same-store sales results for the
second quarter 2008. IHOP's franchise operations expense increased 2.1%,
resulting in a 9.1% increase in segment profitability to $27.9 million for
the second quarter 2008.


Stewart commented, "IHOP's performance for the second quarter 2008 reflects our proven financial formula for success, which is centered on driving top line sales through new franchise restaurant openings and same-store sales growth while moderating G&A spending. This approach has allowed us to maximize the benefits of IHOP's high cash flow generating franchise business model. Recently, we appointed Des Hague president of IHOP Restaurants, and, with his leadership, we plan to build upon IHOP's success and take our growth strategies to the next level."

Progress on Applebee's Business Model Transformation

The following is a summary of the key developments of the business model transformation for Applebee's:


-- DineEquity completed the sale-leaseback of 181 company-owned
Applebee's restaurant properties during the second quarter 2008. This
transaction generated approximately $303 million in proceeds net of taxes
and closing costs. The Company also sold one additional Applebee's
restaurant property during the second quarter 2008, generating
approximately $1.7 million in after-tax cash proceeds.

-- DineEquity repaid approximately $303 million of $350 million in
consolidated short-term funded debt during the second quarter 2008.

-- Subsequent to quarter end, Applebee's generated $27 million in after-
tax cash proceeds from the sale of 26 company-operated restaurants in the
Southern California market, in line with its strategy to franchise the
majority of Applebee's company-operated restaurants. The Company completed
the sale-leaseback of Applebee's corporate office building in Lenexa,
Kansas, for approximately $39 million in after-tax cash proceeds. These
transactions enabled the Company to retire the remainder of its $350
million consolidated short-term funded debt on July 21, 2008. The Company
avoided the incurrence of make-whole payments that would have otherwise
been due on those debt obligations.

-- During the quarter, Applebee's also signed an asset purchase agreement
for the sale of three company restaurants in Delaware with an expected
closing date during the third quarter 2008. DineEquity expects to complete
the sale of its 15 company restaurants in Nevada in the fourth quarter
2008, as previously announced.

-- DineEquity is reiterating its expectation of franchising approximately
100 company-operated Applebee's restaurants in 2008. However, the majority
of restaurants expected to be sold during the remainder of the year consist
of those with profit margins below the company-operated average. As a
result, the Company expects after-tax cash proceeds from franchising
company-operated Applebee's to range between $70 and $80 million this year.


2008 Performance Guidance

The following is a summary of DineEquity expectations for key financial metrics for fiscal 2008:


-- The Company revised its consolidated cash from operations expectations
to range between $95 and $100 million for fiscal 2008. This revision
reflects increased tax obligations related to the sale-leaseback of 181
Applebee's company-owned restaurant properties, being offset in part by
higher cash earnings. On an overall cash basis, this decrease will be
offset by a reduction in restricted cash associated with the sale-leaseback
transaction. The Company's revised outlook on cash from operations compares
to its previous expectation which ranged between $105 and $110 million for
fiscal 2008.

-- The Company's cash performance is expected to be augmented by
approximately $17 million from the structural run-off of the IHOP business
unit's long-term notes receivable in fiscal 2008.

-- The Company reiterated its expectation that consolidated capital
expenditures will range between $30 and $34 million for fiscal 2008.

-- The Company's revised expectation is that consolidated free cash flow
will range between $78 and $87 million for fiscal 2008, in line with its
revised cash from operations outlook for the year.

-- The Company reiterated its expectation of producing system-wide same-
store sales growth at IHOP in the range of 2% to 4% for fiscal 2008. The
Company expects system-wide domestic same-store sales growth for Applebee's
to range between negative 1% and positive 1% for fiscal 2008.

-- The Company reiterated its expectation that consolidated G&A expense
will range between $186 and $199 million in fiscal 2008.

-- The Company reiterated its expectations that franchisees and its area
licensee will open between 65 and 70 new IHOP restaurants this year, and
that franchisees will open between 50 and 65 new Applebee's restaurants in
fiscal 2008.

-- The Company reiterated its expectation to improve Applebee's company
operating margin by approximately 150 to 200 basis points for the full-year
2008. The Company now expects this improvement to result primarily from a
net depreciation and rental expense benefit due to purchase price
accounting, as well as from ongoing operational improvement initiatives.

-- The Company's revised expectation is that depreciation and
amortization will range between $105 and $115 million, in fiscal 2008 due
to further purchase price accounting adjustments primarily related to
Applebee's restaurants assets. This compares to the Company's previous
expectation which ranged between $115 and $125 million this year.

-- The Company reiterated its expectation that interest expense would be
approximately $203 million in fiscal 2008. Approximately $40 million of
this interest expense is attributable to non-cash items primarily
associated with financing related costs.

Investor Conference Call Today

DineEquity will host an investor conference call to discuss second quarter 2008 financial results today at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). To participate on the call, please dial (888) 680-0869 and reference pass code 35984516. DineEquity's is also providing supplemental information to support today's investor conference call discussion. This information is posted as supporting material to the second quarter 2008 webcast link, which may be accessed by visiting the Calls & Presentations section of DineEquity's Investor Relations website at http://investors.dineequity.com.

A telephonic replay of the call may be accessed through August 5, 2008 by dialing 888-286-8010 and referencing pass code 41685988. An online archive of the webcast also will be available on the Investor Information section of DineEquity's Web site.

About DineEquity, Inc.

Based in Glendale, California, DineEquity, Inc. franchises and operates restaurants under the Applebee's Neighborhood Grill & Bar and IHOP brands. With more than 3,300 restaurants combined, DineEquity is the largest full-service restaurant company in the world. For more information on DineEquity, visit the Company's Web site located at www.dineequity.com.

Forward-Looking Statements

There are forward-looking statements contained in this news release. They use such words as "may," "will," "expect," "believe," "plan," or other similar terminology, and include statements regarding the strategic and financial benefits of the acquisition of Applebee's International, Inc., expectations regarding integration and cost savings, and other financial guidance. These statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results to be materially different than those expressed or implied in such statements. These factors include, but are not limited to: the implementation of the Company's strategic growth plan; the availability of suitable locations and terms for the sites designated for development; the ability of franchise developers to fulfill their commitments to build new restaurants in the numbers and time frames covered by their development agreements; legislation and government regulation including the ability to obtain satisfactory regulatory approvals; risks associated with executing the Company's strategic plan for Applebee's; risks associated with the Company's incurrence of significant indebtedness to finance the acquisition of Applebee's; the failure to realize the synergies and other perceived advantages resulting from the acquisition; costs and potential litigation associated with the acquisition; the ability to retain key personnel after the acquisition; conditions beyond the Company's control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting the Company's customers or food supplies; or acts of war or terrorism; availability and cost of materials and labor; cost and availability of capital; competition; continuing acceptance of the IHOP and Applebee's brands and concepts by guests and franchisees; the Company's overall marketing, operational and financial performance; economic and political conditions; adoption of new, or changes in, accounting policies and practices; and other factors discussed from time to time in the Company's news releases, public statements and/or filings with the Securities and Exchange Commission, especially the "Risk Factors" sections of Annual and Quarterly Reports on Forms 10-K and 10-Q. Forward-looking information is provided by the Company pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of these factors. In addition, the Company disclaims any intent or obligation to update these forward-looking statements.

Non-GAAP Financial Measures

This news release includes references to the Company's "net income available to common stockholders, excluding impairment charges" and the non-GAAP financial measure "free cash flow." The former is computed for a given period by deducting from net (loss) income available to common stockholders for such period the effect of any loss related to impairment and closure charges incurred in such period. This is presented on an aggregate basis and a per share (diluted) basis. For the latter, the Company defines "free cash flow" for a given period as cash provided by operating activities, plus receipts from notes and equipment contracts receivable ("long-term notes receivable"), less capital expenditures. Management utilizes free cash flow to determine the amount of cash remaining for general corporate and strategic purposes after the receipts from long-term notes receivable, and the funding of operating activities and capital expenditures. Management believes this information is helpful to investors to determine the Company's cash available for these purposes. Free cash flow is a supplemental non-GAAP financial measure and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. The following table reconciles the Company's cash provided by operating activities to free cash flow for the Company's fiscal 2008 performance guidance:


For the Six Months
Ended Fiscal 2008
June 30, 2008 Guidance
--------------------------------
(in millions)
Cash flows from operating activities $ 57 $ 95-100
Receipts from long term notes receivable 8 17
Capital expenditures (23) (30)-(34)
------------------ -----------
Free cash flow $ 42 $ 78-87
================== ===========


DINEEQUITY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)


Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues
Franchise revenues $ 87,421 $ 46,934 $ 177,355 $ 93,984
Company restaurant sales 296,496 4,625 608,418 8,609
Rental income 32,568 33,058 65,533 66,068
Financing revenues 7,648 4,870 15,616 10,950
--------- --------- --------- ---------
Total revenues 424,133 89,487 866,922 179,611
--------- --------- --------- ---------
Costs and Expenses
Franchise expenses 22,384 21,369 45,761 42,590
Company restaurant expenses 259,723 5,371 536,269 9,985
Rental expenses 24,561 24,594 49,270 49,175
Financing expenses 2,548 57 5,887 529
General and administrative
expenses 49,230 14,103 96,804 30,224
Interest expense 51,561 3,277 102,208 5,492
Impairment and closure
charges 41,080 48 41,155 55
Amortization of intangible
assets 3,080 -- 5,979 --
Other (income) expense, net (3) 509 (1,860) 1,250
Early debt extinguishment
costs -- -- -- 2,223
--------- --------- --------- ---------
Total costs and expenses 454,164 69,328 881,473 141,523
--------- --------- --------- ---------
(Loss) income from continuing
operations before income taxes (30,031) 20,159 (14,551) 38,088
Benefit (provision) for income
taxes 10,760 (6,029) 9,222 (12,645)
--------- --------- --------- ---------
(Loss) income from continuing
operations (19,271) 14,130 (5,329) 25,443
Loss from discontinued
operations, net of tax (114) -- (202) --
--------- --------- --------- ---------
Net (loss) income $ (19,385) $ 14,130 $ (5,531) $ 25,443
========= ========= ========= =========
Net (loss) income $ (19,385) $ 14,130 $ (5,531) $ 25,443
Less: Series A preferred
stock dividends (4,750) -- (9,500) --
Less: Accretion of Series B
preferred stock (535) -- (1,056) --
Less: Unvested restricted
stock share of loss 930 -- 539 --
--------- --------- --------- ---------
Net (loss) income available to
common stockholders - basic $ (23,740) $ 14,130 $ (15,548) $ 25,443
========= ========= ========= =========
Net (loss) income available to
common stockholders per share
Basic $ (1.42) $ 0.82 $ (0.93) $ 1.45
========= ========= ========= =========
Diluted $ (1.42) $ 0.82 $ (0.93) $ 1.44
========= ========= ========= =========
Weighted average shares
outstanding
Basic 16,768 17,156 16,735 17,500
========= ========= ========= =========
Diluted 16,768 17,328 16,735 17,688
========= ========= ========= =========
Dividends declared per common
share $ 0.25 $ 0.25 $ 0.50 $ 0.50
========= ========= ========= =========
Dividends paid per common share $ 0.25 $ 0.25 $ 0.50 $ 0.50
========= ========= ========= =========




DineEquity, Inc.

IHOP BUSINESS UNIT

The following table sets forth, for the three-month and six-month periods
ended June 30 of the current year and prior year, the number of effective
restaurants in the IHOP system and information regarding the percentage
change in sales at those restaurants compared to the same periods in the
prior year. "Effective restaurants" are the number of restaurants in a
given period, adjusted to account for restaurants open for only a portion
of the period. Information is presented for all effective restaurants in
the IHOP system, which includes IHOP restaurants owned by the Company, as
well as those owned by franchisees and area licensees. Sales at
restaurants that are owned by franchisees and area licensees are not
attributable to the Company. However, we believe that presentation of this
information is useful in analyzing our revenues because franchisees and
area licensees pay us royalties and advertising fees that are generally
based on a percentage of their sales, as well as rental payments under
leases that are usually based on a percentage of their sales. Management
also uses this information to make decisions about future plans for the
development of additional restaurants as well as evaluation of current
operations. Pro forma information on Applebee's restaurant data and
restaurant development and franchising activity is presented in the
section entitled "Pro Forma Comparison of Three Months and Six Months
ended June 30, 2008 with Three Months and Six Months ended June 30,
2007 -- Applebee's" herein.


Three Months Six Months
Ended Ended
June 30, June 30,
---------------- ----------------
2008 2007 2008 2007
------- ------- ------- -------
Restaurant Data
Effective restaurants(a)
Franchise 1,185 1,137 1,180 1,133
Company 10 13 10 12
Area license 158 159 157 159
------- ------- ------- -------
Total 1,353 1,309 1,347 1,304
======= ======= ======= =======
System-wide(b)
Sales percentage change(c) 6.3% 7.9% 7.1% 6.6%
Same-store sales percentage change(d) 2.6% 2.5% 3.2% 1.6%
Franchise(b)
Sales percentage change(c) 6.9% 8.0% 7.7% 6.6%
Same-store sales percentage change(d) 2.6% 2.6% 3.2% 1.6%
Area License(b)
Sales percentage change(c) 2.2% 4.0% 2.7% 4.5%

(a) "Effective restaurants" are the number of restaurants in a given fiscal
period adjusted to account for restaurants open for only a portion of
the period. Information is presented for all effective restaurants in
the IHOP system, which includes IHOP restaurants owned by the Company
as well as those owned by franchisees and area licensees.

(b) "System-wide sales" are retail sales at IHOP restaurants operated by
franchisees, area licensees and the Company, as reported to the
Company. Franchise restaurant sales were $543.2 million and $1,090.4
million for the second quarter and first six months ended June 30,
2008, respectively, and sales at area license restaurants were $53.9
million and $111.3 million for the second quarter and first six months
ended June 30, 2008, respectively. Franchise restaurant sales were
$508.0 million and $1,012.2 million for the second quarter and first
six months ended June 30, 2007, respectively, and sales at area
license restaurants were $52.8 million and $108.3 million for the
second quarter and first six months ended June 30, 2007, respectively.
Sales at restaurants that are owned by franchisees and area licensees
are not attributable to the Company.

(c) "Sales percentage change" reflects, for each category of restaurants,
the percentage change in sales in any given fiscal period compared to
the prior fiscal period for all restaurants in that category.

(d) "Same store sales percentage change" reflects the percentage change in
sales, in any given fiscal period compared to the prior fiscal period,
for restaurants that have been operated throughout both fiscal periods
that are being compared and have been open for at least 18 months.
Because of new unit openings and store closures, the restaurants open
throughout both fiscal periods being compared will be different from
period to period. Same store sales percentage change does not include
data on restaurants located in Florida.




DineEquity, Inc.

IHOP BUSINESS UNIT

The following table summarizes our restaurant development and franchising
activity:

Three Months Six Months
Ended June 30, Ended June 30,
----------------- -----------------
2008 2007 2008 2007
-------- -------- -------- --------

Restaurant Development Activity
Beginning of period 1,353 1,306 1,344 1,302
New openings
Company-developed -- -- -- --
Domestic franchisee-developed 13 15 24 21
International franchisee-developed 1 -- 1 2
Area license 1 -- 1 --
-------- -------- -------- --------
Total new openings 15 15 26 23
Closings
Company and domestic franchise (4) (1) (6) (5)
International franchise (1) -- (1) --
Area license (2) (1) (2) (1)
-------- -------- -------- --------
End of period 1,361 1,319 1,361 1,319
======== ======== ======== ========

Summary-end of period
Franchise 1,195 1,147 1,195 1,147
Company 10 13 10 13
Area license 156 159 156 159
-------- -------- -------- --------
Total 1,361 1,319 1,361 1,319
======== ======== ======== ========
Restaurant Franchising Activity
Company-developed -- -- -- --
Franchisee-developed 13 15 24 21
International franchisee-developed 1 -- 1 2
Rehabilitated and refranchised 5 -- 9 2
-------- -------- -------- --------
Total restaurants franchised 19 15 34 25
Reacquired by the Company (6) -- (9) (6)
Closed (4) (1) (6) (4)
-------- -------- -------- --------
Net addition 9 14 19 15
======== ======== ======== ========




DineEquity, Inc.

APPLEBEE'S BUSINESS UNIT

Pro Forma Comparison of Three Months and Six Months ended June 30, 2008
with Three Months and Six Months ended June 30, 2007 -- Applebee's

The following is a comparison of (i) information for three months and six
months ended June 30, 2008 for our Applebee's segment and (ii) information
for the for three months and six months ended June 30, 2007 for Applebee's
International, Inc. prior to the acquisition date ("Predecessor
Applebee's").

Restaurant Data

The following table sets forth, for the three and six months ended June 30,
2008 and 2007, the number of effective restaurants in the Applebee's system
and information regarding the percentage change in sales at those
restaurants compared to the same period in the prior year.

Three Months Six Months
Ended June 30, Ended June 30,
--------------- ---------------
2007 2007
2008 (e) 2008 (e)
------ ------ ------ ------
Applebee's Restaurant Data
Effective restaurants(a)
Company 510 505 510 505
Franchise 1,480 1,427 1,474 1,419
------ ------ ------ ------
Total 1,990 1,932 1,984 1,924
====== ====== ====== ======
System-wide(b)
Applebee's domestic sales percentage
change(c) 0.3% 3.2% 1.6% 1.7%
Applebee's domestic same-store sales
percentage change(d) (1.7)% (0.9)% (0.6)% (2.5)%
Franchise(b)
Applebee's domestic sales percentage
change(c) 0.8% 3.6% 1.7% 2.1%
Applebee's domestic same-store sales
percentage change(d) (1.8)% (0.8)% (0.9)% (2.4)%
Company
Applebee's domestic sales percentage
change(c) (1.0)% 2.2% 1.1% 0.7%
Applebee's domestic same-store sales
percentage(d) (1.5)% (1.2)% 0.3% (2.8)%

(a) "Effective restaurants" are the number of restaurants in a given fiscal
period adjusted to account for restaurants open for only a portion of
the period. Information is presented for all effective restaurants in
the Applebee's system, which includes restaurants owned by Applebee's
as well as those owned by franchisees and international licensees.

(b) "System-wide sales" are sales of Applebee's restaurants operated by
franchisees and Applebee's as reported to the Company. The Company
acquired Applebee's International, Inc. on November 29, 2007. Domestic
franchise restaurant sales for Applebee's restaurants were $859.7
million and $852.8 million for the three months ended June 30, 2008 and
2007, respectively and $1,757.5 million and $1,727.7 million for the
six
months ended June 30, 2008 and 2007, respectively. Franchise restaurant
sales are sales recorded at restaurants that are owned by franchisees
and are not attributable to either the Company or Predecessor
Applebee's. Franchise restaurant sales are useful in analyzing our
franchise revenues because franchisees pay royalties and other fees
that are generally based on a percentage of their sales.

(c) "Sales percentage change" reflects, for each category of restaurants,
the percentage change in sales in any given fiscal year compared to
the prior fiscal year for all restaurants in that category. All
periods for company-owned Applebee's restaurants exclude the impact
of discontinued operations.

(d) "Same-store sales percentage change" reflects the percentage change in
sales, in any given fiscal year compared to the prior fiscal year, for
restaurants that have been operated throughout both fiscal periods
that are being compared and have been open for at least 18 months.
Because of new unit openings and store closures, the restaurants open
throughout both fiscal periods being compared will be different from
period to period.

(e) Data for Predecessor Applebee's




DineEquity, Inc.

APPLEBEE'S BUSINESS UNIT

The following table summarizes Applebee's restaurant development and
franchising activity:

Three Months Six Months
Ended June 30, Ended June 30,
----------------- -----------------
2008 2007(a) 2008 2007(a)
-------- -------- -------- --------

Applebee's Restaurant Development
Activity
Beginning of period 1,986 1,930 1,976 1,930
New openings
Company-developed -- 3 1 10
Franchisee-developed 11 15 27 28
-------- -------- -------- --------
Total new openings 11 18 28 38
Closings
Company (2) (4) (3) (23)
Franchise (2) (1) (8) (2)
-------- -------- -------- --------
End of period 1,993 1,943 1,993 1,943
======== ======== ======== ========
Summary-end of period
Company 509 508 509 508
Franchise 1,484 1,435 1,484 1,435
-------- -------- -------- --------
Total 1,993 1,943 1,993 1,943
======== ======== ======== ========
Applebee's Restaurant Franchising
Activity
Domestic franchisee-developed 6 9 17 21
International
franchisee-developed 5 6 10 7
-------- -------- -------- --------
Total restaurants franchised 11 15 27 28
Closings
Domestic franchisee (2) (1) (7) (2)
International franchisee -- -- (1) --
-------- -------- -------- --------
Net addition 9 14 19 26
======== ======== ======== ========

(a) Data for Predecessor Applebee's


The following table summarizes Applebee's segment profit:

Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2008 2007 (a) 2008 2007 (a)
--------- --------- --------- ---------
Franchise revenues $ 37,713 $ 36,506 $ 75,650 $ 74,027
Franchise expenses 566 370 996 743
--------- --------- --------- ---------
Franchise segment profit $ 37,147 $ 36,136 $ 74,654 $ 73,284
========= ========= ========= =========

Company restaurant revenues $ 292,866 $ 295,650 $ 600,893 $ 594,267
Company restaurant expenses 255,618 262,328 527,733 522,733
--------- --------- --------- ---------
Company restaurant segment profit $ 37,248 $ 33,322 $ 73,160 $ 71,534
========= ========= ========= =========

(a) Data for Predecessor Applebee's




DINEEQUITY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)


June 30, December 31,
2008 2007
----------- -----------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 38,033 $ 26,838
Restricted cash 142,003 128,138
Short-term investments, at market value 278 300
Receivables, net 87,260 115,335
Inventories 13,323 13,280
Prepaid income taxes -- 30,695
Prepaid expenses 12,288 30,831
Deferred income taxes 40,649 21,862
Assets held for sale 40,168 60,347
Current assets related to discontinued
operations 5,775 6,052
----------- -----------
Total current assets 379,777 433,678
----------- -----------
Non-current restricted cash 57,763 57,962
Restricted assets related to captive insurance
subsidiary 6,401 10,518
Long-term receivables 281,886 288,452
Property and equipment, net 933,371 1,139,616
Goodwill 820,686 730,728
Other intangible assets, net 1,008,423 1,011,457
Other assets, net 155,272 156,193
Non-current assets related to discontinued
operations 2,558 2,558
----------- -----------
Total assets $ 3,646,137 $ 3,831,162
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 44,960 $ 99,019
Accrued employee compensation and benefits 46,209 56,795
Deferred revenue 43,170 76,802
Accrued financing costs 41,361 63,045
Other accrued expenses 73,414 49,203
Deferred compensation 71 21,236
Accrued interest payable 5,502 15,240
----------- -----------
Total current liabilities 254,687 381,340
----------- -----------
Long-term debt 1,955,238 2,263,887
Financing obligation 332,031 --
Capital lease obligations, less current
maturities 165,331 168,242
Deferred income taxes 426,207 504,865
Other liabilities 124,406 113,103
Non-current liabilities related to discontinued
operations 2,594 3,302
Commitments and contingencies
Preferred stock, Series A, $1 par value, 220,000
shares authorized; 190,000 shares issued and
outstanding as of June 30, 2008 and December 31,
2007 187,050 187,050
Stockholders' equity
Convertible Preferred stock, Series B, at
accreted value, 10,000,000 shares authorized;
35,000 shares issued and outstanding at June
30, 2008 and December 31, 2007 36,237 35,181
Common stock, $.01 par value, 40,000,000 shares
authorized; June 30, 2008: 23,695,962 shares
issued and 17,465,367 shares outstanding;
December 31, 2007: 23,359,664 shares issued
and 17,105,469 shares outstanding 230 230
Additional paid-in-capital 157,918 149,564
Retained earnings 314,080 338,790
Accumulated other comprehensive loss (33,353) (36,738)
Treasury stock, at cost (6,230,595 shares and
6,254,195 shares at June 30, 2008 and December
31, 2007, respectively) (276,519) (277,654)
----------- -----------
Total stockholders' equity 198,593 209,373
----------- -----------
Total liabilities and stockholders' equity $ 3,646,137 $ 3,831,162
=========== ===========




DINEEQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)


Six Months Ended
June 30,
------------------
2008 2007
-------- --------
Cash flows from operating activities
Net (loss) income $ (5,531) $ 25,443
Adjustments to reconcile net income to cash flows
provided by operating activities
Depreciation and amortization 55,369 10,830
Impairment and closure charges 41,155 55
Debt extinguishment and other costs -- 2,223
Deferred income taxes (38,420) (2,753)
Stock-based compensation expense 7,057 2,245
Tax benefit from stock-based compensation 945 2,343
Excess tax benefit from stock options exercised (315) (2,343)
Gain on disposition of assets (166) (98)
Changes in operating assets and liabilities
Receivables 28,336 2,595
Inventories (43) 94
Prepaid expenses 26,090 (2,603)
Accounts payable (27,007) (6,986)
Accrued employee compensation and benefits (10,586) (3,915)
Deferred revenues (33,632) --
Other accrued expenses 12,439 (2,243)
Other 1,125 (1,308)
-------- --------
Cash flows provided by operating activities 56,816 23,579
-------- --------
Cash flows from investing activities
Additions to property and equipment (23,216) (1,449)
Additions to long-term receivables (1,573) (893)
Payment of accrued acquisition costs (10,063) --
Collateral released by captive insurance subsidiary 3,823 --
Proceeds from sale of property and equipment -- 795
Principal receipts from notes and equipment
contracts receivable 7,871 8,283
Reductions (additions) to assets held for sale 11,930 (429)
Property insurance proceeds 478 (173)
-------- --------
Cash flows (used in) provided by investing
activities (10,750) 6,134
-------- --------
Cash flows from financing activities
Proceeds from issuance of long-term debt -- 208,000
Proceeds from financing obligations 333,617 --
Repayment of long-term debt (312,800) (129,206)
Principal payments on capital lease and financing
obligations (3,167) (2,809)
Dividends paid (15,115) (8,820)
Payment of preferred stock issuance costs (1,500) --
Purchase of treasury stock, net -- (77,020)
Reissuance of treasury stock 755 --
Proceeds from stock options exercised 989 6,370
Excess tax benefit from stock options exercised 315 2,343
Payment of debt issuance costs (24,299) (14,307)
Prepayment penalties on early debt extinguishment -- (1,219)
Restricted cash related to securitization (13,666) --
-------- --------
Cash flows used in financing activities (34,871) (16,668)
-------- --------
Net change in cash and cash equivalents 11,195 13,045
Cash and cash equivalents at beginning of year 26,838 19,516
-------- --------
Cash and cash equivalents at end of year $ 38,033 $ 32,561
======== ========
Supplemental disclosures
Interest paid $ 90,487 $ 15,694
Income taxes paid $ 12,514 $ 17,513




DINEEQUITY, INC. AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
(Unaudited)


Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Net (loss) income available to
common stockholders, as
reported $ (23,740) $ 14,130 $ (15,548) $ 25,443
Impairment and closure charges
Early debt extinguishment
costs 41,080 48 41,155 55
Income tax benefit Early debt
extinguishment costs (14,719) (14) (26,083) (18)
Net income allocated to
unvested participating
restricted stock (994) -- (504) --
--------- --------- --------- ---------
Net income (loss) available to
common stockholders, as
adjusted $ 1,627 $ 14,164 $ (980) $ 25,480
========= ========= ========= =========


Diluted net income available
to common stockholders per
share:
Net (loss) income available to
common stockholders per share,
as reported $ (1.42) $ 0.82 $ (0.93) $ 1.44
Impairment and closure charges
per share Early debt
extinguishment costs 2.45 -- 2.46 --
Income tax benefit per share
Early debt extinguishment
costs (0.87) -- (1.56) --
Net income allocated to
unvested participating
restricted stock per share (0.06) -- (0.03) --
--------- --------- --------- ---------
Diluted net income (loss)
available to common
stockholders per share, as
adjusted $ 0.10 $ 0.82 $ (0.06) $ 1.44
========= ========= ========= =========

###

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