DineEquity, Inc. Reports Fourth Quarter and Fiscal 2012 Results

  • Fourth quarter 2012 adjusted EPS (non-GAAP) of $0.83
    • Fourth quarter 2012 GAAP EPS of $0.97
  • Fiscal 2012 adjusted EPS (non-GAAP) of $4.28
    • Fiscal 2012 GAAP EPS of $6.63
  • Total debt reduced by $332.6 million in fiscal 2012
  • Comprehensive G&A reduction initiative implemented
  • Successfully completed Applebee’s refranchising program and transitioned to a 99% franchised system

GLENDALE, Calif. - (BUSINESS WIRE) - Feb. 27, 2013 - DineEquity, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill & Bar and IHOP Restaurants, today announced financial results for the fourth quarter and full year of 2012.

“For DineEquity, 2012 was a year of milestones. The year was marked by accomplishing what we set out to do when we acquired Applebee’s, completing the transition to a 99% franchised restaurant system. In addition, we reduced total debt by over $1.0 billion since the acquisition in 2007,” said Julia A. Stewart, Chairman and Chief Executive Officer of DineEquity, Inc. “We remain steadfast in managing our capital structure with a long-term view to maximize shareholder value. Today’s announcement of our capital allocation strategy reflects our strong free cash flow, solid fundamentals, and less capital intensive business model.”

Fourth Quarter 2012 Financial Highlights

  • Total debt was reduced by $77.2 million in the fourth quarter of 2012 as a result of net cash proceeds and financing obligation reductions from the refranchise and sale of Applebee’s company-operated restaurants and free cash flow. The Company reduced Term Loan balances by $30.6 million and financing and capital lease obligations by $46.5 million.
  • Adjusted net income available to common stockholders was $15.5 million, representing adjusted earnings per diluted share of $0.83 for the fourth quarter of 2012. This compares to $16.4 million, or adjusted earnings per diluted share of $0.91, for the same quarter in 2011. The decrease in adjusted earnings was mainly due to, as expected, lower segment profit caused by the refranchise and sale of Applebee’s company-operated restaurants and higher income taxes. These items were partially offset by lower cash interest expense and lower general and administrative expenses. (See “Non-GAAP Financial Measures” below.)
  • GAAP net income available to common stockholders was $18.0 million, or earnings per diluted share of $0.97 for the fourth quarter of 2012, compared to $27.3 million, or earnings per diluted share of $1.51, for the same quarter in 2011. The decrease was primarily due to a lower gain on the disposition of assets, as expected, lower segment profit due to the refranchise and sale of Applebee’s company-operated restaurants and higher income taxes. These items were partially offset by lower interest expense, a decline in general and administrative expenses, and the reduced impact from debt extinguishment.
  • EBITDA was $74.0 million for the fourth quarter of 2012. (See “Non-GAAP Financial Measures” below.)
  • Consolidated general and administrative expenses were $37.6 million for the fourth quarter of 2012 compared to $40.7 million in the fourth quarter of 2011. The decrease was primarily due to the net savings in employee compensation associated with the Company’s previously announced restructuring initiative. The decline was partially offset by higher stock-based compensation due to stock appreciation and severance charges related to the workforce reduction announced in the third quarter of 2012.

Fiscal 2012 Highlights

  • Total debt was reduced by $332.6 million in fiscal 2012 as a result of net cash proceeds and financing obligation reductions from the refranchise and sale of Applebee’s company-operated restaurants and free cash flow. The Company reduced Term Loan balances by $206.3 million, Senior Notes by $3.1 million, and financing and capital lease obligations by $123.2 million.
  • Adjusted net income available to common stockholders was $78.1 million for fiscal 2012, representing adjusted earnings per diluted share of $4.28. This compares to $78.2 million, or adjusted earnings per diluted share of $4.29, for fiscal 2011. The minimal decrease in adjusted earnings was primarily due to, as expected, lower segment profit primarily due to the refranchise and sale of Applebee’s company-operated restaurants and higher income taxes. These items were offset by lower cash interest expense and lower general and administrative expenses. (See “Non-GAAP Financial Measures” below.)
  • GAAP net income available to common stockholders was $122.5 million for fiscal 2012, or earnings per diluted share of $6.63, compared to $70.7 million, or earnings per diluted share of $3.89 for fiscal 2011. The increase was due to a higher gain on the refranchise and sale of Applebee’s company-operated restaurants, lower impairment and closure charges, and lower interest expense. These items were partially offset by lower segment profit due to refranchising, higher income taxes, and higher general and administrative expenses due to a non-recurring litigation settlement.
  • EBITDA was $300.3 million for fiscal 2012. (See “Non-GAAP Financial Measures” below.)
  • For fiscal 2012, cash flows from operating activities were $52.9 million, capital expenditures were $17.0 million, and free cash flow was $48.2 million. (See “Non-GAAP Financial Measures” below.) For fiscal 2011, free cash flow was $108.5 million. The decline in free cash flow in fiscal 2012 was primarily due to the increase in cash taxes paid on refranchising proceeds and, as expected, lower segment profit due to refranchising. These items were partially offset by lower cash interest paid and lower capital expenditures.
  • Applebee’s company-operated restaurant operating margin was 16.3% for fiscal 2012 compared to 14.5% for 2011. The increase of 180 basis points was primarily due to the refranchise and sale of less profitable Applebee’s company-operated restaurants. The refranchised company-operated restaurants had higher-than-average labor and occupancy costs.

Same-Restaurant Sales Performance

Fourth Quarter 2012

  • Applebee’s domestic system-wide same-restaurant sales increased 0.9% for the fourth quarter of 2012 compared to the fourth quarter of 2011. The increase in same-restaurant sales reflected a higher average guest check, partially offset by a decline in traffic compared to the same quarter a year ago.
  • IHOP’s domestic system-wide same restaurant sales decreased 2.6% for the fourth quarter of 2012 compared to the fourth quarter of 2011. The decline in same-restaurant sales reflected a decrease in traffic and a lower average guest check compared to the same period in 2011.

Fiscal 2012

  • Applebee’s domestic system-wide same-restaurant sales increased 1.2% for fiscal 2012 compared to fiscal 2011. The increase in same-restaurant sales was mainly driven by a higher average guest check, partially offset by a decline in traffic.
  • IHOP’s domestic system-wide same-restaurant sales declined 1.6% for fiscal 2012 compared to fiscal 2011. Same-restaurant sales performance reflected a decrease in traffic, partially offset by a slightly higher average guest check.

Investor Conference Call Today

The Company will host an investor conference call today (Wednesday, February 27, 2013, at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time) to discuss its fourth quarter and full year 2012 results. To participate on the call, please dial (888) 680-0879 and reference pass code 73306646. International callers, please dial (617) 213-4856 and reference pass code 73306646. Participants may also pre-register to obtain a unique pin number to join the live call without operator assistance by visiting the following Web site:

https://www.theconferencingservice.com/prereg/key.process?key=PA7HPMFPV

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. Participants should allow approximately ten minutes prior to the call's start time to visit the site and download any streaming media software needed to listen to the webcast. A telephonic replay of the call may be accessed through 11:59 p.m. Pacific Time on March 6, 2013 by dialing (888) 286-8010 and referencing pass code 23676151. International callers, please dial (617) 801-6888 and reference pass code 23676151. 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 more than 3,600 restaurants combined in 17 countries, over 400 franchisees and approximately 200,000 team members (including franchisee- and company-operated restaurant employees), DineEquity is one of the largest full-service restaurant companies in the world. For more information on DineEquity, visit the Company's Web site located at www.dineequity.com.

Forward-Looking Statements

Statements contained in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by words such as "may," "will," "should," "expect," "anticipate," "believe," "estimate," "intend," "plan" and other similar expressions. These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those expressed or implied in such statements. These factors include, but are not limited to: the effect of general economic conditions; the Company's indebtedness; risk of future impairment charges; trading volatility and the price of the Company’s common stock; the Company's results in any given period differing from guidance provided to the public; the highly competitive nature of the restaurant business; the Company's business strategy failing to achieve anticipated results; risks associated with the restaurant industry; risks associated with locations of current and future restaurants; rising costs for food commodities and utilities; shortages or interruptions in the supply or delivery of food; ineffective marketing and guest relationship initiatives and use of social media; changing health or dietary preferences; our engagement in business in foreign markets; harm to our brands' reputation; litigation; third-party claims with respect to intellectual property assets; environmental liability; liability relating to employees; failure to comply with applicable laws and regulations; failure to effectively implement restaurant development plans; our dependence upon our franchisees; concentration of Applebee's franchised restaurants in a limited number of franchisees; credit risk from IHOP franchisees operating under our previous business model; termination or non-renewal of franchise agreements; franchisees breaching their franchise agreements; insolvency proceedings involving franchisees; changes in the number and quality of franchisees; inability of franchisees to fund capital expenditures; heavy dependence on information technology; the occurrence of cyber incidents or a deficiency in our cybersecurity; failure to execute on a business continuity plan; inability to attract and retain talented employees; risks associated with retail brand initiatives; failure of our internal controls; and other factors discussed from time to time in the Company's Annual and Quarterly Reports on Forms 10-K and 10-Q and in the Company's other filings with the Securities and Exchange Commission. The forward-looking statements contained in this release are made as of the date hereof and the Company assumes no obligation to update or supplement any forward-looking statements.

Non-GAAP Financial Measures

This news release includes references to the Company's non-GAAP financial measures "adjusted net income available to common stockholders (adjusted EPS)," "EBITDA," "free cash flow," and "segment EBITDA." "Adjusted EPS" is computed for a given period by deducting from net income (loss) available to common stockholders for such period the effect of any impairment and closure charges, any gain or loss related to debt extinguishment, any intangible asset amortization, any non-cash interest expense, any debt modification costs, any one-time litigation settlement charges, any general and administrative restructuring costs, net of savings, any gain or loss related to the disposition of assets, and any state income tax impact of deferred taxes due to refranchising incurred in such period. This is presented on an aggregate basis and a per share (diluted) basis. The Company defines "EBITDA" for a given period as income before income taxes less interest expense, loss on retirement of debt, depreciation and amortization, impairment and closure charges, non-cash stock-based compensation, gain/loss on disposition of assets and other charge backs as defined by its credit agreement. "Free cash flow" for a given period is defined as cash provided by operating activities, plus receipts from notes and equipment contracts receivable ("long-term notes receivable"), less dividends paid and capital expenditures. "Segment EBITDA" for a given period is defined as gross segment profit plus depreciation and amortization as well as interest charges related to the segment. Management utilizes EBITDA for debt covenant purposes and free cash flow to determine the amount of cash remaining for general corporate and strategic purposes after the receipts from long-term receivables, and the funding of operating activities, capital expenditures and preferred dividends. Management believes this information is helpful to investors to determine the Company's adherence to debt covenants and the Company's cash available for these purposes. Adjusted EPS, EBITDA, free cash flow and segment EBITDA are supplemental non-GAAP financial measures and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with United States generally accepted accounting principles.

DineEquity, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
 
      Three Months Ended     Twelve Months Ended
      December 31,     December 31,
      2012     2011     2012     2011
Segment Revenues:                        
Franchise revenues     $ 107,917       $ 97,757       $ 421,459       $ 398,539  
Company restaurant sales     16,862       110,029       291,121       530,984  
Rental revenues     30,763       30,957       122,859       125,960  
Financing revenues     3,095       3,436       14,489       19,715  
Total segment revenues     158,637       242,179       849,928       1,075,198  
Segment Expenses:                        
Franchise expenses     28,774       26,350       109,900       105,006  
Company restaurant expenses     16,998       95,422       249,296       458,443  
Rental expenses     24,090       24,413       97,165       98,147  
Financing expenses     37       (28 )     1,623       5,973  
Total segment expenses     69,899       146,157       457,984       667,569  
Gross segment profit     88,738       96,022       391,944       407,629  
General and administrative expenses     37,607       40,670       163,215       155,822  
Interest expense     25,571       31,364       114,338       132,707  
Impairment and closure charges     2,954       2,918       4,218       29,865  
Amortization of intangible assets     3,071       3,075       12,293       12,300  
Loss on extinguishment of debt     637       3,274       5,554       11,159  
Debt modification costs           (72 )           4,031  
Gain on disposition of assets     (12,955 )     (21,966 )     (102,597 )     (43,253 )
Income before income taxes     31,853       36,759       194,923       104,998  
Income tax provision     (13,034 )     (8,139 )     (67,249 )     (29,806 )
Net income     $ 18,819       $ 28,620       $ 127,674       $ 75,192  
                         
Net income available to common stockholders:                        
Net income     $ 18,819       $ 28,620       $ 127,674       $ 75,192  
Less: Accretion of Series B preferred stock     (464 )     (658 )     (2,498 )     (2,573 )
Less: Net income allocated to unvested participating restricted stock     (318 )     (623 )     (2,718 )     (1,886 )
Net income available to common stockholders     $ 18,037       $ 27,339       $ 122,458       $ 70,733  
Net income available to common stockholders per share:                        
Basic     $ 0.98       $ 1.55       $ 6.81       $ 3.96  
Diluted     $ 0.97       $ 1.51       $ 6.63       $ 3.89  
Weighted average shares outstanding:                        
Basic     18,391       17,646       17,992       17,846  
Diluted     18,637       18,578       18,877       18,185  
                                 
                                 
DineEquity, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
       
     

December 31,

      2012         2011
Assets     (Unaudited)
Current assets:                
Cash and cash equivalents     $ 64,537           $ 60,691  
Receivables, net     128,610           115,667  
Prepaid income taxes     16,080           13,922  
Prepaid gift cards     50,242           45,412  
Deferred income taxes     21,772           20,579  
Assets held for sale               9,363  
Other current assets     13,214           11,313  
Total current assets     294,455           276,947  
Long-term receivables     212,269           226,526  
Property and equipment, net     294,375           474,154  
Goodwill     697,470           697,470  
Other intangible assets, net     806,093           822,361  
Other assets, net     110,738           116,836  
Total assets     $ 2,415,400           $ 2,614,294  
Liabilities and Stockholders’ Equity                
Current liabilities:                
Current maturities of long-term debt     $ 7,420           $ 7,420  
Accounts payable     30,751           29,013  
Accrued employee compensation and benefits     22,435           26,191  
Gift card liability     161,689           146,955  
Accrued interest payable     13,236           12,537  
Current maturities of capital lease and financing obligations     10,878           13,480  
Other accrued expenses     21,351           22,048  
Total current liabilities     267,760           257,644  
Long-term debt, less current maturities     1,202,063           1,411,448  
Financing obligations, less current maturities     52,049           162,658  
Capital lease obligations, less current maturities     124,375           134,407  
Deferred income taxes     362,171           383,810  
Other liabilities     98,177           109,107  
Total liabilities     2,106,595           2,459,074  
Commitments and contingencies                
Stockholders’ equity:                
Convertible preferred stock, Series B, at accreted value; shares: 10,000,000 authorized; 2012 - no shares issued or outstanding; 2011 - 35,000 issued, 34,900 outstanding               44,508  
Common stock, $0.01 par value; shares: 40,000,000 authorized; 2012 - 25,362,946 issued, 19,197,899 outstanding; 2011 - 24,658,985 issued, 18,060,206 outstanding     254           247  
Additional paid-in-capital     264,342           205,663  
Retained earnings     322,045           196,869  
Accumulated other comprehensive loss     (152 )         (294 )
Treasury stock, at cost; shares: 2012 - 6,165,047; 2011 - 6,598,779     (277,684 )         (291,773 )
Total stockholders’ equity     308,805           155,220  
Total liabilities and stockholders’ equity     $ 2,415,400           $ 2,614,294  
                         
                         
DineEquity, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
       
      Twelve Months Ended
      December 31,
      2012         2011
Cash flows from operating activities:     (Unaudited)
Net income     $ 127,674           $ 75,192  
Adjustments to reconcile net income to cash flows provided by operating activities:                
Depreciation and amortization     39,538           50,220  
Non-cash interest expense     5,985           6,160  
Loss on extinguishment of debt     5,554           11,159  
Impairment and closure charges     3,931           8,448  
Deferred income taxes     (22,832 )         11,835  
Non-cash stock-based compensation expense     11,442           9,492  
Tax benefit from stock-based compensation     6,814           6,494  
Excess tax benefit from stock options exercised     (5,669 )         (5,443 )
Gain on disposition of assets     (102,597 )         (43,253 )
Other     (8,991 )         (1,765 )
Changes in operating assets and liabilities:                
Receivables     (11,629 )         (16,722 )
Current income tax receivables and payables     1,272           20,479  
Other current assets     (9,119 )         (5,354 )
Accounts payable     1,778           (3,533 )
Accrued employee compensation and benefits     (3,756 )         (6,656 )
Gift card liability     14,735           21,983  
Other accrued expenses     (1,251 )         (17,050 )
Cash flows provided by operating activities     52,879           121,686  
Cash flows from investing activities:                
Additions to property and equipment     (16,952 )         (26,332 )
Proceeds from sale of property and equipment and assets held for sale     168,881           115,642  
Principal receipts from notes, equipment contracts and other long-term receivables     12,250           13,122  
Other     1,238           (753 )
Cash flows provided by investing activities     165,417           101,679  
Cash flows from financing activities:                
Borrowings under revolving credit facilities     50,000           40,000  
Repayments under revolving credit facilities     (50,000 )         (40,000 )
Repayment of long-term debt (including premiums)     (216,037 )         (225,681 )
Payment of debt issuance costs               (12,295 )
Purchase of DineEquity common stock               (21,170 )
Principal payments on capital lease and financing obligations     (10,849 )         (13,391 )
Repurchase of restricted stock     (1,740 )         (5,080 )
Proceeds from stock options exercised     9,254           6,725  
Excess tax benefit from share-based compensation     5,669           5,443  
Change in restricted cash     (747 )         466  
Cash flows used in financing activities     (214,450 )         (264,983 )
Net change in cash and cash equivalents     3,846           (41,618 )
Cash and cash equivalents at beginning of year     60,691           102,309  
Cash and cash equivalents at end of year     $ 64,537           $ 60,691  
                         
                         

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

Reconciliation of (i) net income available to common stockholders to (ii) net income available to common stockholders excluding impairment and closure charges, loss on extinguishment of debt, amortization of intangible assets, non-cash interest expense, debt modification costs, a one-time litigation settlement, general and administrative ("G&A") restructuring costs, net of savings, gain on disposition of assets, all items net of taxes, and the income tax impact of refranchising and restructuring, and related per share data:

 

    Three Months Ended     Twelve Months Ended
      December 31,     December 31,
      2012     2011     2012     2011
Net income available to common stockholders, as reported     $ 18,037       $ 27,339       $ 122,459       $ 70,733  
Impairment and closure charges     2,954       2,871       4,218       29,600  
Loss on extinguishment of debt     637       3,274       5,554       11,159  
Amortization of intangible assets     3,071       3,075       12,293       12,300  
Non-cash interest expense     1,438       1,578       5,985       6,160  
Debt modification costs           (72 )           4,031  
Litigation settlement     77             9,124        
G&A restructuring costs, net of savings     495             1,764        
Gain on disposition of assets     (12,955 )     (21,966 )     (102,597 )     (43,253 )
Income tax benefit     1,655       4,474       24,598       (7,959 )
Income tax impact of refranchising and restructuring           (4,422 )     (6,258 )     (4,422 )
Net income allocated to unvested participating restricted stock     45       248       984       (197 )
Net income available to common stockholders, as adjusted     $ 15,454       $ 16,399       $ 78,124       $ 78,152  
                         
Diluted net income available to common stockholders per share:                        
Net income available to common stockholders, as reported     $ 0.97       $ 1.51       $ 6.63       $ 3.89  
Impairment and closure charges     0.10       0.10       0.13       0.95  
Loss on extinguishment of debt     0.02       0.11       0.18       0.36  
Amortization of intangible assets     0.10       0.10       0.40       0.39  
Non-cash interest expense     0.05       0.05       0.20       0.20  
Debt modification costs           0.00             0.13  
Litigation settlement                 0.30        
G&A restructuring costs, net of savings     0.02             0.06        
Gain on disposition of assets     (0.43 )     (0.73 )     (3.33 )     (1.38 )
Income tax impact of refranchising and restructuring           (0.25 )     (0.33 )     (0.23 )
Net income allocated to unvested participating restricted stock     0.00       0.01       0.05       (0.01 )
Change due to increase in net income           0.01       (0.01 )     (0.01 )
Diluted net income available to common stockholders per share, as adjusted     $ 0.83       $ 0.91       $ 4.28       $ 4.29  
                         
Numerator for basic EPS-income available to common stockholders, as adjusted     $ 15,454       $ 16,399       $ 78,124       $ 78,152  
Effect of unvested participating restricted stock using the two-class method     4       6       81       105  
Effect of dilutive securities:                        
Convertible Series B preferred stock                 2,497       2,573  
Numerator for diluted EPS-income available to common stockholders after assumed conversions, as adjusted     $ 15,458       $ 16,405       $ 80,702       $ 80,830  
                         
Denominator for basic EPS-weighted-average shares     18,391       17,646       17,992       17,846  
Effect of dilutive securities:                        
Stock options     246       289       264       339  
Convertible Series B preferred stock                 621       643  
Denominator for diluted EPS-weighted-average shares and assumed conversions     18,637       17,935       18,877       18,828  
                                 
                                 
DineEquity, Inc. and Subsidiaries
Non-GAAP Financial Measures
(In thousands)
(Unaudited)
           

Reconciliation of U.S. GAAP income before income taxes to EBITDA:

           
          Twelve Months Ended
          December 31,
          2012     2011
U.S. GAAP income before income taxes         $ 194,923       $ 104,998  
Interest charges         131,869       151,332  
Loss on extinguishment of debt         5,554       11,159  
Depreciation and amortization         39,538       50,220  
Non-cash stock-based compensation         11,442       9,492  
Impairment and closure charges         4,218       29,643  
Other         15,304       6,830  
Gain on sale of assets         (102,597 )     (43,253 )
EBITDA         $ 300,251       $ 320,421  
           
           

Reconciliation of the Company's cash provided by operating activities to free cash flow:

           
          Twelve Months Ended
          December 31,
          2012     2011
Cash flows provided by operating activities         $ 52,879       $ 121,686  
Principal receipts from notes, equipment contracts and other long-term receivables         12,250       13,122  
Additions to property and equipment         (16,952 )     (26,332 )
Free cash flow         $ 48,177       $ 108,476  
                         
                         
DineEquity, Inc. and Subsidiaries
Non-GAAP Financial Measures
(In thousands)
(Unaudited)
       

Reconciliation of U.S. GAAP gross segment profit to segment EBITDA:

       
      Three months ended December 31, 2012
     

Franchise -
Applebee's

   

Franchise -
IHOP

   

Company
Restaurants

   

Rental
Operations

   

Financing
Operations

    Total
Revenue     $ 48,364       $ 59,553       $ 16,862       $ 30,763       $ 3,095       $ 158,637
Expense     2,389       26,385       16,998       24,090       37       69,899
Gross segment profit     45,975       33,168       (136 )     6,673       3,058       88,738
Plus:                                    
Depreciation/amortization     2,351             599       3,383             6,333
Interest charges                 92       4,161             4,253
Segment EBITDA     $ 48,326       $ 33,168       $ 555       $ 14,217       $ 3,058       $ 99,324
                                                           
      Three months ended December 31, 2011
     

Franchise -
Applebee's

   

Franchise -
IHOP

   

Company
Restaurants

   

Rental
Operations

   

Financing
Operations

    Total
Revenue     $ 40,941       $ 56,816       $ 110,029       $ 30,957       $ 3,436       $ 242,179
Expense     602       25,748       95,422       24,413       (28 )     146,157
Gross segment profit     40,339       31,068       14,607       6,544       3,464       96,022
Plus:                                    
Depreciation/amortization     2,484             3,113       3,482             9,079
Interest charges                 116       4,374             4,490
Segment EBITDA     $ 42,823       $ 31,068       $ 17,836       $ 14,400       $ 3,464       $ 109,591
                                                           
      Twelve months ended December 31, 2012
     

Franchise -
Applebee's

   

Franchise -
IHOP

   

Company
Restaurants

   

Rental
Operations

   

Financing
Operations

    Total
Revenue     $ 185,904       $ 235,555       $ 291,121       $ 122,859       $ 14,489       $ 849,928
Expense     5,464       104,436       249,296       97,165       1,623       457,984
Gross segment profit     180,440       131,119       41,825       25,694       12,866       391,944
Plus:                                    
Depreciation/amortization     9,762             6,953       13,654             30,369
Interest charges                 377       16,996             17,373
Segment EBITDA     $ 190,202       $ 131,119       $ 49,155       $ 56,344       $ 12,866       $ 439,686
                                                           
      Twelve months ended December 31, 2011
     

Franchise -
Applebee's

   

Franchise -
IHOP

   

Company
Restaurants

   

Rental
Operations

   

Financing
Operations

    Total
Revenue     $ 169,231       $ 229,308       $ 530,984       $ 125,960       $ 19,715       $ 1,075,198
Expense     2,801       102,205       458,443       98,147       5,973       667,569
Gross segment profit     166,430       127,103       72,541       27,813       13,742       407,629
Plus:                                    
Depreciation/amortization     9,885             16,584       14,029             40,498
Interest charges                 511       17,972             18,483
Segment EBITDA     $ 176,315       $ 127,103       $ 89,636       $ 59,814       $ 13,742       $ 466,610
                                                           
                                                           

Restaurant Data

The following table sets forth, for the three and twelve months ended December 31, 2012 and 2011, the number of effective restaurants in the Applebee’s and IHOP systems 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 Applebee’s and IHOP systems, which includes 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.

      Three Months Ended     Twelve Months Ended
      December 31,     December 31,
      2012     2011     2012     2011
Applebee's Restaurant Data     (unaudited)
Effective restaurants(a)                        
Franchise     1,992       1,808       1,894       1,770  
Company     26       203       123       240  
Total     2,018       2,011       2,017       2,010  
System-wide(b)                        
Sales percentage change(c)     1.5 %     1.5 %     1.7 %     2.6 %
Domestic same-restaurant sales percentage change(d)     0.9 %     1.0 %     1.2 %     2.0 %
Franchise(b)(f)                        
Sales percentage change(c)     11.5 %     9.0 %     8.1 %     11.3 %
Domestic same-restaurant sales percentage change(d)     0.9 %     0.8 %     1.3 %     2.0 %
Average weekly domestic unit sales (in thousands)     $ 44.5       $ 44.3       $ 46.6       $ 46.4  
Company (f)                        
Sales percentage change(c)     (89.3 )%     (37.9 )%     (47.4 )%     (35.7 )%
Same-restaurant sales percentage change(d)     (3.3 )%     3.4 %     0.6 %     1.8 %
Average weekly domestic unit sales (in thousands)     $ 33.2       $ 39.8       $ 42.0       $ 41.0  
                                         
      Three Months Ended     Twelve Months Ended
      December 31,     December 31,
      2012     2011     2012     2011
      (unaudited)
IHOP Restaurant Data                        
Effective restaurants(a)                        
Franchise     1,390       1,357       1,379       1,343  
Area license     165       164       165       163  
Company     16       14       15       11  
Total     1,571       1,535       1,559       1,517  
System-wide(b)                        
Sales percentage change(c)     0.6 %     2.4 %     1.6 %     1.9 %
Domestic same-restaurant sales percentage change(d)     (2.6 )%     (1.0 )%     (1.6 )%     (2.0 )%
Franchise(b)                        
Sales percentage change(c)     0.5 %     2 %     1.3 %     1.7 %
Domestic same-restaurant sales percentage change(d)     (2.6 )%     (1 )%     (1.6 )%     (2.0 )%
Average weekly domestic unit sales (in thousands)     $ 33.3       $ 34.0       $ 34.0       $ 34.4  
                         

Company(e)

    n/m     n/m     n/m     n/m
                         
Area License(b)                        
Sales percentage change(c)     0.2 %     4.3 %     2.7 %     2.9 %
                                 
(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 and IHOP systems, which includes restaurants owned by the Company as well as those owned by franchisees and area licensees.
     
(b)   “System-wide” sales are retail sales at Applebee’s restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated restaurants. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. Applebee's domestic franchise restaurant sales, IHOP franchise restaurant sales and IHOP area license restaurant sales for the three and twelve months ended December 31, 2012 and 2011 were as follows:
     
      Three Months Ended     Twelve Months Ended
      December 31,     December 31,
      2012     2011     2012     2011
      (In millions)

Reported sales (unaudited)

                       
Applebee's franchise restaurant sales     $ 1,069.5       $ 959.2       $ 4,234.9       $ 3,916.4
IHOP franchise restaurant sales     $ 602.6       $ 599.8       $ 2,437.2       $ 2,405.3
IHOP area license restaurant sales     $ 56.6       $ 56.5       $ 234.7       $ 228.6
                                       
(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)   “Domestic same-restaurant sales percentage change” reflects the percentage change in sales, in any given fiscal period, compared to the same weeks in the prior 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 restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period. Same-restaurant sales percentage change does not include data on IHOP restaurants located in Florida.
     
(e)   Sales percentage changes and domestic same-restaurant sales percentage change for IHOP company-operated restaurants are not meaningful (“n/m”) because there are few such restaurants, consisting of a relatively small number of restaurants in a single test market, along with a variable, small number of restaurants that are reacquired from franchisees from time-to-time and temporarily operated by the Company.
     
(f)   The sales percentage change for the three and twelve months ended December 31, 2012 and 2011 for Applebee’s franchise and company-operated restaurants was impacted by the refranchising of 154 company-operated restaurants in 2012 and 132 company-operated restaurants during 2011.
     
DineEquity, Inc. and Subsidiaries
Restaurant Data
 

The following table summarizes our restaurant development activity:

 
      Three Months Ended     Twelve Months Ended
      December 31,     December 31,
      2012     2011     2012     2011
      (unaudited)
Applebee’s Restaurant Development Activity                        
Beginning of period     2,016       2,010       2,019       2,010  
New openings:                        
Franchise     20       12       34       24  
Total new openings     20       12       34       24  
Closings:                        
Franchise     (2 )     (3 )     (19 )     (15 )
Total closings     (2 )     (3 )     (19 )     (15 )
End of period     2,034       2,019       2,034       2,019  
Summary - end of period:                        
Franchise     2,011       1,842       2,011       1,842  
Company     23       177       23       177  
Total     2,034       2,019       2,034       2,019  
 
 
      Three Months Ended     Twelve Months Ended
      December 31,     December 31,
      2012     2011     2012     2011
      (unaudited)
IHOP Restaurant Development Activity                        
Beginning of period     1,565       1,532       1,550       1,504  
New openings:                        
Franchise     20       16       47       52  
Area license           3       1       6  
Total new openings     20       19       48       58  
Closings:                        
Company     (1 )           (1 )      
Franchise     (3 )     (1 )     (14 )     (8 )
Area license                 (2 )     (4 )
Total closings     (4 )     (1 )     (17 )     (12 )
End of period     1,581       1,550       1,581       1,550  
Summary-end of period:                        
Franchise     1,404       1,369       1,404       1,369  
Area license     165       166       165       166  
Company     12       15       12       15  
Total     1,581       1,550       1,581       1,550

 

SOURCE DineEquity, Inc.

Investor Contact:

DineEquity, Inc.
Ken Diptee
Executive Director, Investor Relations
818-637-3632

Media Contact:

Sard Verbinnen & Co.
Lucy Neugart | Samantha Verdile
415-618-8750 | 212-687-8080

###

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