DineEquity, Inc. Announces Fourth Quarter 2008 Financial Results

Improved Expense Control Enhances Financial Flexibility

Glendale, CA--(Marketwire) - DineEquity, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill & Bar and IHOP Restaurants, today announced financial results for the fourth quarter ended December 31, 2008.

The Company generated $110.8 million of cash flows from operating activities for fiscal 2008, a 4.2% increase compared to fiscal 2007. The Company's cash flows from operating activities for fiscal 2008 was further augmented by $15.8 million from the run-off of the IHOP business' long-term notes receivable, offset by consolidated capital expenditures of $31.8 million for fiscal 2008. Free cash flow for fiscal 2008 was $94.8 million (see "References to Non-GAAP Financial Measures" below).

For the fourth quarter 2008, the Company reported a net loss available to common stockholders of $136.9 million, or a net loss per diluted share available to common stockholders of $8.15. The loss was primarily due to non-cash, after tax impairment charges of $148.3 million related to write downs of Applebee's goodwill and intangible assets. Excluding impairment charges for the fourth quarter 2008, the Company reported net income available to common stockholders of $5.7 million, or net income per diluted share available to common stockholders of $0.34.

Julia A. Stewart, DineEquity's chairman and chief executive officer, said, "Our results for the quarter and full year 2008 reflect the significant contraction of consumer spending in the second half of the year. We continue to believe that IHOP is well positioned to extend its lead in family dining even in this challenging economy, and we are taking significant steps to reposition the Applebee's brand in order to drive future growth. Additionally, we have taken proactive steps to maximize our financial flexibility and tighten expenses as we continue to manage our business for the long-term."

IHOP Performance Highlights


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


-- IHOP's system-wide same-store sales decreased 1.0% for the fourth
quarter 2008 compared to the same quarter last year and increased 1.5% for
fiscal 2008, reflecting higher average guest check and a reduction in guest
traffic for both periods. IHOP's marketing efforts during the quarter
included unique limited-time offers such as Fruit Crepe Fever and Coffee
Cake Pancakes supported by national advertising, holiday gift card and IHOP
'n Go carry out program advertising, along with restaurant level programs
aimed at driving the dinner day part.

-- During the quarter, franchisees and its Florida area licensee opened
26 new IHOP restaurants, bringing total fiscal 2008 new franchise openings
to 71 restaurants in the U.S., Mexico and Canada.

-- IHOP's franchising business generated revenue growth of 5.6% to $51.6
million for the fourth quarter 2008 compared to the same quarter last year
primarily due to a 3.5% increase in effective units during the quarter.
IHOP's franchise operations segment profitability increased 7.0% to $27.8
million for the fourth quarter 2008 compared to the same quarter last year.
Stewart commented, "Despite a difficult consumer environment, IHOP delivered a solid performance in 2008 due to the successful brand revitalization and operational improvement strategies employed over the past several years. These strategies of energizing the brand, improving operations and maximizing development remain as relevant today as they were when initiated in 2003, and will provide the framework for the IHOP team and our franchisees to sustain system momentum."

Applebee's Performance Highlights

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


-- Applebee's system-wide domestic same-store sales decreased 4.6% for
the fourth quarter 2008 compared to the same quarter last year and
decreased 2.2% for fiscal 2008. Same-store sales for Applebee's domestic
franchise restaurants decreased 4.7% for the fourth quarter 2008 compared
to the same quarter last year and decreased 2.4% for fiscal 2008. Same-
store sales for Applebee's company-operated restaurants decreased 4.2% for
the fourth quarter 2008 compared to the same quarter last year and
decreased 1.3% for fiscal 2008. Applebee's company-operated restaurant same-
store sales results for the fourth quarter 2008 reflected traffic declines,
which offset an increased average guest check that was primarily driven by
an effective pricing increase of nearly 4.0%. Applebee's marketing efforts
during the quarter included an enhanced value offering, Two for $20,
supported by national advertising, a holiday gift card promotion and the
continuation of Applebee's "It's a Whole New Neighborhood" campaign.

-- During the quarter, franchisees opened 14 new Applebee's restaurants,
bringing the total number of new franchise openings to 48 restaurants for
fiscal 2008 throughout the U.S. and in several international locations.

-- On a pro forma basis, which compares fourth quarter 2008 results for
Applebee's franchise operations segment to the same period last year,
Applebee's franchise operations segment profitability grew 0.3% to $34.5
million due to a 7.3% increase in effective units, which offset a 4.7%
decrease in domestic franchise same-store sales for the fourth quarter
2008.

-- On a pro forma basis, which compares fourth quarter 2008 results for
Applebee's company operations segment to the same period last year, sales
at Applebee's company-operated restaurants decreased 18.3% to $225.0
million primarily due to a 13.2% decrease in the number of effective units
as a result of the Company's refranchising efforts. Operating margin, which
is defined as total sales less expenses, improved 280 basis points to 10.7%
compared to a 7.9% operating margin, excluding pre-opening expense of 10
basis points, for the fourth quarter 2007. Applebee's operating margin
performance for the quarter was primarily driven by improvement in the
management of labor expense and food and beverage costs, which more than
offset higher commodity and utility costs. These factors resulted in an
11.5% increase in segment profitability to $24.0 million for the fourth
quarter 2008.

-- In line with its strategy to franchise the majority of Applebee's
company-operated restaurants, Applebee's completed the sale of 103
restaurants in Southern California, Delaware, Nevada and Texas during
fiscal 2008.
Stewart commented, "We have strong interest from prospective buyers in all of Applebee's company-operated restaurants available for sale, but recognize that closing deals is very difficult in the current environment. We continue to believe we will meet our 2009 refranchising goal of selling approximately 200 restaurants as we are working with several interested parties to overcome obstacles posed by the credit markets and weakness in the broader economy. In the meantime, we remain focused on margin improvement and profitability enhancement at Applebee's company-operated restaurants. Additionally, we are moving into the next stage of Applebee's brand revitalization process with strategic menu updates and expanded marketing efforts planned throughout the year."

Maximizing Financial Flexibility

Through a combination of refranchising and sale-leaseback proceeds, rental obligation assignments, and the use of free cash flow to retire debt, DineEquity reduced its leverage levels by approximately $500 million in fiscal 2008. Additionally, the Company has taken proactive steps to further maximize its financial flexibility, including cost reduction actions that have already resulted in approximately $20 million worth of profit enhancements over and above the approximate $35 million worth of cost savings to date made possible by the Applebee's acquisition and the sale of company-operated restaurants.

As a result, DineEquity complied with its debt covenants throughout fiscal 2008 and believes it will continue to do so in fiscal 2009. The Company's consolidated leverage ratio as of the end of the fourth quarter 2008 was 6.77x. As of the end of the fourth quarter 2008, debt service coverage ratios were 3.0x for IHOP's securitization on a three-month unadjusted basis and 2.0x for the Applebee's securitization on three-month adjusted basis.

DineEquity has provided supplemental information to this news release regarding its compliance with its debt covenants, which may be accessed by visiting the Calls & Presentations section of DineEquity's Investor Relations website at http://investors.dineequity.com and referring to supporting materials for the Company's fourth quarter 2008 webcast.

Investor Conference Call Today

The Company will host an investor conference call to discuss its fourth quarter and fiscal 2008 financial results and 2009 performance guidance today at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). To participate on the call, please dial (888) 679-8037 and reference pass code 81027656. A live webcast of the call will be available on DineEquity's Web site at www.dineequity.com, and may be accessed by visiting Calls & Presentations under the site's Investor Information section. A telephonic replay of the call may be accessed through March 4, 2009 by dialing 888-286-8010 and referencing pass code 85912763. 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., through its subsidiaries, franchises and operates restaurants under the Applebee's Neighborhood Grill & Bar and IHOP brands. With approximately 3,400 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; 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 loss 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 fiscal 2008:


For the year Ended
December 31, 2008
------------------
(in millions)
Cash flows from operating activities $ 110.8
Receipts from long term notes receivable 15.8
Capital expenditures (31.8)
------------------
Free cash flow $ 94.8
==================




DINEEQUITY, INC. AND SUBSIDIARIES

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

Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Revenues
Franchise revenues $ 88,547 $ 62,991 $ 353,331 $ 205,757
Company restaurant sales 228,891 112,750 1,103,228 125,905
Rental income 32,852 33,112 131,347 132,422
Financing revenues 5,235 4,740 25,722 20,475
---------- ---------- ---------- ----------
Total revenues 355,525 213,593 1,613,628 484,559
---------- ---------- ---------- ----------
Costs and Expenses
Franchise expenses 26,227 22,986 96,243 88,054
Company restaurant
expenses 205,491 102,299 978,197 117,448
Rental expenses 24,299 24,549 98,057 98,402
Financing expenses 1,101 228 7,314 1,215
General and
administrative expenses 43,617 33,531 182,239 81,597
Interest expense 50,443 19,769 203,141 28,654
Impairment and closure
charges 170,732 4,326 240,630 4,381
Amortization of
intangible assets 3,076 1,132 12,132 1,132
(Gain) loss on
extinguishment of debt (12,808) -- (15,242) 2,223
Other (income) expense,
net 1,659 313 (926) 2,030
Loss on derivative
financial instrument -- 26,513 -- 62,131
---------- ---------- ---------- ----------
Total costs and
expenses 513,837 235,646 1,801,785 487,267
---------- ---------- ---------- ----------
Loss from continuing
operations before income
taxes (158,312) (22,053) (188,157) (2,708)
Benefit for income taxes (21,188) (7,746) (33,698) (2,228)
---------- ---------- ---------- ----------
Net loss $ (137,124) $ (14,307) $ (154,459) $ (480)
========== ========== ========== ==========
Net loss $ (137,124) $ (14,307) $ (154,459) $ (480)
Less: Series A preferred
stock dividends (4,750) (1,561) (19,000) (1,561)
Less: Accretion of Series
B preferred stock (551) (181) (2,151) (181)
Less: Net loss allocated
to unvested
participating
restricted stock 5,476 -- 6,417 --
---------- ---------- ---------- ----------
Net loss available to
common stockholders $ (136,949) $ (16,049) $ (169,193) $ (2,222)
========== ========== ========== ==========
Net loss available to
common stockholders per
share
Basic $ (8.15) $ (0.94) $ (10.09) $ (0.13)
========== ========== ========== ==========
Diluted $ (8.15) $ (0.94) $ (10.09) $ (0.13)
========== ========== ========== ==========
Weighted average shares
outstanding
Basic 16,799 16,996 16,764 17,232
========== ========== ========== ==========
Diluted 16,799 16,996 16,764 17,232
========== ========== ========== ==========
Dividends declared per
common share $ 0.25 $ 0.25 $ 1.00 $ 1.00
========== ========== ========== ==========
Dividends paid per common
share $ 0.25 $ 0.25 $ 1.00 $ 1.00
========== ========== ========== ==========




DineEquity, Inc.

IHOP BUSINESS UNIT
The following table sets forth, for the three-month and twelve-month periods ended December 31 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 Year ended December 31, 2008 with Three Months and Year ended December 31, 2007 -- Applebee's" herein.


Three Months Ended Year Ended
December 31, December 31,
------------------- --------------------
2008 2007 2008 2007
-------- --------- --------- ---------
Restaurant Data
Effective restaurants(a)
Franchise 1,206 1,162 1,189 1,144
Company 11 11 10 12
Area license 159 157 158 158
-------- --------- --------- ---------
Total 1,376 1,330 1,357 1,314
======== ========= ========= =========
System-wide(b)
Sales percentage change(c) 3.6 % 7.8% 5.5% 6.9%
Same-store sales percentage
change(d) (1.0)% 3.7% 1.5% 2.2%
Franchise(b)
Sales percentage change(c) 3.4 % 8.3% 5.9% 7.1%
Same-store sales percentage
change(d) (1.0)% 3.7% 1.5% 2.2%
Area License(b)
Sales percentage change(c) 6.2 % 3.8% 3.1% 4.2%


(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 $539.7 million and
$2.2 billion for the fourth quarter and fiscal year ended
December 31, 2008, respectively, and sales at area license restaurants
were $55.2 million and $218.4 million for the fourth quarter and fiscal
year ended December 31, 2008, respectively. Franchise restaurant sales
were $522.0 million and $2.1 billion for the fourth quarter and fiscal
year ended December 31, 2007, respectively, and sales at area license
restaurants were $51.9 million and $211.9 million for the fourth
quarter and fiscal year ended December 31, 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 Ended Year Ended
December 31, December 31,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------

Restaurant Development Activity
Beginning of period 1,375 1,328 1,344 1,302
New openings
Company-developed 1 -- 1 --
Domestic franchisee-developed 21 22 62 57
International
franchisee-developed 1 -- 3 2
Area license 3 1 5 1
--------- --------- --------- ---------
Total new openings 26 23 71 60
Closings
Company and domestic
franchise (5) (7) (16) (14)
International franchise -- -- (1) --
Area license -- -- (2) (4)
--------- --------- --------- ---------
End of period 1,396 1,344 1,396 1,344
========= ========= ========= =========

Summary-end of period
Franchise 1,225 1,176 1,225 1,176
Company 11 11 11 11
Area license 160 157 160 157
--------- --------- --------- ---------
Total 1,396 1,344 1,396 1,344
========= ========= ========= =========

Restaurant Franchising Activity
Company-developed -- -- -- --
Franchisee-developed 21 22 62 57
International
franchisee-developed 1 -- 3 2
Rehabilitated and refranchised 3 -- 13 4
--------- --------- --------- ---------
Total restaurants franchised 25 22 78 63
Reacquired by the Company -- (1) (13) (7)
Closed (5) (6) (16) (12)
--------- --------- --------- ---------
Net addition 20 15 49 44
========= ========= ========= =========



DineEquity, Inc.

APPLEBEE'S BUSINESS UNIT
Pro Forma Comparison of Three Months and Year ended December 31, 2008 with Three Months and Year ended December 31, 2007 -- Applebee's

The following section illustrates certain financial results of Applebee's on a stand-alone basis comparing 2008 as consolidated into DineEquity with 2007 information comprised of the 11-month data from Applebee's prior to the acquisition date of November 29, 2007 and the one-month data of Applebee's subsequent to the acquisition date ("Pro Forma 2007").

Restaurant Data

The following table sets forth, for the three months and years ended December 31, 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 Ended Year Ended
December 31, December 31,
------------------- -------------------
Pro Pro
Forma Forma
2008 2007 2008 2007
-------- -------- -------- --------
Applebee's Restaurant Data
Effective restaurants(a)
Franchise 1,555 1,449 1,504 1,429
Company 442 509 486 513
-------- -------- -------- --------
Total 1,997 1,958 1,990 1,942
======== ======== ======== ========

System-wide(b)
Applebee's domestic sales
percentage change(c)(e) (3.4)% (7.0)% (0.4)% (0.2)%
Applebee's domestic
same-store sales percentage
change(d)(e) (4.6)% (2.9)% (2.2)% (2.1)%
Franchise(b)
Applebee's domestic sales
percentage change(c)(e) 1.7% (6.7)% 1.6% 0.1%
Applebee's domestic
same-store sales percentage
change(d)(e) (4.7)% (2.9)% (2.4)% (2.0)%
Company
Applebee's domestic sales
percentage change(c)(e) (18.3)% (7.7)% (6.1)% (0.9)%
Applebee's domestic
same-store sales
percentage(d)(e) (4.2)% (2.8)% (1.3)% (2.2)%



(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
$817.1 million and $803.3 million for the three months ended
December 31, 2008 and 2007, respectively, and $3.4 billion and
$3.3 billion for the fiscal year ended December 31, 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) These amounts represent changes for Applebee's restaurants for the full
fiscal year. We acquired Applebee's on November 29, 2007. The change
in Applebee's store sales and same-store sales was (5.1)% and (4.5)%,
respectively, for the five-week period in 2007 subsequent to the
acquisition date. The change in domestic franchise restaurant store
sales and same-store sales, as reported to the Company, was (2.4)%
and (5.0)%, respectively, for the five-week period in 2007
subsequent to the acquisition date. The change in domestic system
store sales was (3.1)% and (4.8)%, respectively, for the five-week
period in 2007 subsequent to the acquisition date.



DineEquity, Inc.

APPLEBEE'S BUSINESS UNIT

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

Three Months Ended Year Ended
December 31, December 31,
-------------------- --------------------
2008 2007 (a) 2008 2007 (a)
--------- --------- --------- ---------

Applebee's Restaurant
Development Activity
Beginning of period 1,997 1,953 1,976 1,930
New openings
Company-developed -- 2 1 14
Franchisee-developed 14 24 48 66
--------- --------- --------- ---------
Total new openings 14 26 49 80
Closings
Company -- (1) (3) (24)
Franchise (7) (2) (18) (10)
--------- --------- --------- ---------
End of period 2,004 1,976 2,004 1,976
========= ========= ========= =========
Summary-end of period
Company 406 511 406 511
Franchise 1,598 1,465 1,598 1,465
--------- --------- --------- ---------
Total 2,004 1,976 2,004 1,976
========= ========= ========= =========
Applebee's Restaurant
Franchising Activity
Domestic franchisee-developed 5 14 28 44
International
franchisee-developed 9 10 20 22
Refranchised 74 -- 103 --
--------- --------- --------- ---------
Total restaurants franchised 88 24 151 66
Closings
Domestic franchisee (6) (2) (15) (10)
International franchisee (1) -- (3) --
--------- --------- --------- ---------
Net addition 81 22 133 56
========= ========= ========= =========
(a) Pro Forma


The following table summarizes Applebee's segment profit:

Three Months Ended Year Ended
December 31, December 31,
----------------------- -----------------------
2008 2007 (a) 2008 2007 (a)
----------- ----------- ----------- -----------
Franchise revenues $ 36,991 $ 34,837 $ 148,391 $ 143,697
Franchise expenses 2,481 427 4,122 1,528
----------- ----------- ----------- -----------
Franchise segment profit $ 34,510 $ 34,410 $ 144,269 $ 142,169
=========== =========== =========== ===========

Company restaurant revenues $ 225,043 $ 275,409 $ 1,088,101 $ 1,158,537
Company restaurant expenses 201,024 253,873 961,019 1,039,126
----------- ----------- ----------- -----------
Company restaurant segment
profit $ 24,019 $ 21,536 $ 127,082 $ 119,411
=========== =========== =========== ===========
(a) Pro Forma



DINEEQUITY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

December 31, December 31,
2008 2007
------------- -------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 114,443 $ 26,838
Restricted cash 83,355 128,138
Short-term investments, at market value 276 300
Receivables, net 117,930 115,335
Inventories 10,959 13,280
Prepaid income taxes 15,734 31,020
Prepaid expenses 17,067 30,831
Deferred income taxes 27,504 21,862
Assets held for sale 11,861 66,074
------------- -------------
Total current assets 399,129 433,678
------------- -------------
Non-current restricted cash 53,395 57,962
Restricted assets related to captive
insurance subsidiary 5,573 10,518
Long-term receivables 277,106 288,452
Property and equipment, net 824,482 1,139,616
Goodwill 697,470 730,728
Other intangible assets, net 956,036 1,011,457
Other assets, net 148,026 158,751
------------- -------------
Total assets $ 3,361,217 $ 3,831,162
============= =============
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt $ 15,000 $ --
Accounts payable 48,983 99,019
Accrued employee compensation and benefits 44,299 56,795
Deferred revenue 95,532 76,802
Accrued financing costs 20,071 63,045
Other accrued expenses 55,249 49,203
Deferred compensation -- 21,236
Accrued interest payable 3,580 15,240
------------- -------------
Total current liabilities 282,714 381,340
------------- -------------
Long-term debt 1,853,367 2,263,887
Financing obligations, less current
maturities 318,651 --
Capital lease obligations, less current
maturities 161,310 168,242
Deferred income taxes 395,448 504,865
Other liabilities 119,910 116,405
Commitments and contingencies
Preferred stock, Series A, $1 par value,
220,000 shares authorized; 190,000 shares
issued and outstanding as of December 31,
2008 and 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 December 31, 2008 and 2007 37,332 35,181
Common stock, $.01 par value, 40,000,000
shares authorized; December 31, 2008:
23,696,950 shares issued and 17,466,355
shares outstanding; December 31, 2007:
23,359,664 shares issued and 17,105,469
shares outstanding 237 230
Additional paid-in-capital 165,315 149,564
Retained earnings 145,810 338,790
Accumulated other comprehensive loss (29,408) (36,738)
Treasury stock, at cost (6,230,595 shares and
6,254,195 shares at December 31, 2008 and
2007, respectively) (276,519) (277,654)
------------- -------------
Total stockholders' equity 42,767 209,373
------------- -------------
Total liabilities and stockholders'
equity $ 3,361,217 $ 3,831,162
============= =============



DINEEQUITY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended December 31,
----------------------
2008 2007
---------- ----------

Cash flows from operating activities
Net loss $ (154,459) $ (480)
Adjustments to reconcile net loss to cash flows
provided by operating activities
Depreciation and amortization 112,017 31,829
Loss on derivative financial instrument -- 62,131
Impairment and closure charges 240,630 4,381
(Gain) loss on extinguishment of debt (15,242) 2,223
Deferred income taxes (65,226) (31,324)
Stock-based compensation expense 12,089 6,958
Tax benefit from stock-based compensation 1,864 3,476
Excess tax benefit from stock options
exercised (315) (2,693)
Loss (gain) on disposition of assets 259 (98)
Changes in operating assets and liabilities
Receivables (2,441) (22,479)
Inventories 182 512
Prepaid expenses (146) (17,147)
Accounts payable (23,749) 37,266
Accrued employee compensation and benefits (11,609) (21,868)
Deferred revenues 18,480 43,685
Other accrued expenses (2,152) 13,553
Other 657 (3,602)
---------- ----------
Cash flows provided by operating
activities 110,839 106,323
---------- ----------
Cash flows from investing activities
Additions to property and equipment (31,765) (11,871)
(Additions) reductions to long-term
receivables (4,743) 1,538
Acquisition of business, net of cash
acquired (10,261) (1,943,567)
Collateral released by captive insurance
subsidiary 4,559 345
Proceeds from sale of property and equipment 61,137 870
Principal receipts from notes and equipment
contracts receivable 15,797 16,617
Additions to assets held for sale 476 (688)
Other (5) (636)
---------- ----------
Cash flows provided by investing
activities 35,195 (1,937,392)
---------- ----------
Cash flows from financing activities
Proceeds from issuance of long-term debt 35,000 2,296,216
Proceeds from financing obligations 370,502 --
Repayment of long-term debt (421,325) (268,199)
Principal payments on capital lease and
financing obligations (9,854) (5,364)
Dividends paid (33,362) (17,293)
Payment of preferred stock issuance costs (1,500) 222,800
Reissuance (purchase) of treasury stock, net 1,135 (76,050)
Repurchase of restricted stock (540) --
Proceeds from stock options exercised 989 8,928
Excess tax benefit from stock options
exercised 315 2,693
Payment of accrued debt issuance costs (48,902) (138,021)
Payment of early debt extinguishment costs (103) (1,219)
Restricted cash related to securitization 49,216 (186,100)
---------- ----------
Cash flows used in financing activities (58,429) 1,838,391
---------- ----------
Net change in cash and cash equivalents 87,605 7,322
Cash and cash equivalents at beginning of year 26,838 19,516
---------- ----------
Cash and cash equivalents at end of year $ 114,443 $ 26,838
========== ==========
Supplemental disclosures
Interest paid $ 194,763 $ 31,331
Income taxes paid $ 40,931 $ 25,712




DINEEQUITY, INC. AND SUBSIDIARIES

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

Reconciliation of (i) net loss available to common stockholders to
(ii) net loss available to common stockholders excluding impairment
and closure charges and loss on derivative financial instrument,
and related per share data:
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Net loss available to
common stockholders, as
reported $ (136,949) $ (16,049) $ (169,193) $ (2,222)
Impairment and closure
charges 170,732 4,326 240,630 4,381
Loss on derivative
financial instrument -- 26,513 -- 62,131
Income tax benefit (22,433) (12,073) (49,833) (26,037)
Net income allocated to
unvested participating
restricted stock (5,700) -- (6,968) --
---------- ---------- ---------- ----------
Net (loss) income
available to common
stockholders, as
adjusted $ 5,650 $ 2,717 $ 14,636 $ 38,253
========== ========== ========== ==========

Diluted net income
available to common
stockholders per share:
Net loss available to
common stockholders per
share, as reported $ (8.15) $ (0.94) $ (10.09) $ (0.13)
Dilutive effect per share -- -- 0.02 --
Impairment and closure
charges per share 10.16 0.25 14.32 0.25
Loss on derivative
financial instrument per
share -- 1.56 -- 3.61
Income tax benefit per
share (1.34) (0.71) (2.97) (1.51)
Net income allocated to
unvested participating
restricted stock per share (0.33) -- (0.41) --
---------- ---------- ---------- ----------
Diluted net (loss) income
available to common
stockholders per share, as
adjusted $ 0.34 $ 0.16 $ 0.87 $ 2.22
========== ========== ========== ==========

###

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