DineEquity, Inc. Reports Strong First Quarter 2014 Results

  • First quarter 2014 adjusted EPS (Non-GAAP) of $1.26 and GAAP EPS of $1.08
  • Adjusted EPS (Non-GAAP) increased 11% compared to the first quarter of 2013
  • Generated strong free cash flow of $50.3 million
  • Returned over $29 million to shareholders through share repurchases and a first quarter cash dividend of $0.75 per share of common stock, or 58% of free cash flow
  • First quarter domestic system-wide same-restaurant sales increased 3.9% at IHOP and decreased 0.5% at Applebee's
  • IHOP achieved its fourth consecutive quarter of positive same-restaurant sales

GLENDALE, Calif. - BUSINESS WIRE) - May 1, 2014 - DineEquity, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill & Bar® and IHOP® restaurants, today announced financial results for the first quarter of 2014.

“DineEquity started 2014 with a strong first quarter, building on our accomplishments from the prior year. We continue to execute on our strategy and generate strong free cash flow,” said Julia A. Stewart, Chairman and Chief Executive Officer of DineEquity, Inc.

Ms. Stewart continued, “IHOP's same-restaurant sales were positive for the fourth consecutive quarter and overwhelmingly outperformed its category, reflecting our focus on menu enhancements, innovative advertising, and higher operating standards. At Applebee's, we are conducting a comprehensive assessment of the brand, with the goal of achieving consistent and positive same-restaurant sales and traffic. We have the foundation to build momentum at both brands and maintain our commitment to create additional value for our shareholders.”

First Quarter 2014 Financial Highlights

  • Adjusted net income available to common stockholders was $24.0 million for the first quarter of 2014, or adjusted earnings per diluted share of $1.26. This compares to $21.8 million, or adjusted earnings per diluted share of $1.14, for the same period of 2013. The increase in adjusted net income was due to higher segment profit and lower cash interest expense. These items were partially offset by higher income taxes and a slight increase in general and administrative expenses. (See “Non-GAAP Financial Measures” below.)
  • GAAP net income available to common stockholders was $20.5 million for the first quarter of 2014, or earnings per diluted share of $1.08. This compares to $17.9 million, or earnings per diluted share of $0.93 for the same period of 2013. The increase in net income was primarily due to higher segment profit and debt modification costs that occurred in the first quarter of 2013 that did not recur in the first quarter of 2014. These items were partially offset by a loss on the disposition of assets in the first quarter of 2014 compared to a gain in the same period of 2013 and a modest increase in general and administrative expenses.
  • EBITDA was $77.6 million for first quarter of 2014. (See “Non-GAAP Financial Measures” below.)
  • For the first quarter of 2014, cash flows from operating activities were $52.8 million, principal receipts from long-term receivables were $3.4 million, capital expenditures were $2.0 million, principal payments on capital lease and financing obligations were $2.7 million, the mandatory 1% repayment on the Term Loan principal balance was $1.2 million, and free cash flow was $50.3 million. (See “Non-GAAP Financial Measures” below.)

Potential Refinancing of Indebtedness

The Company is actively evaluating debt refinancing options. DineEquity continually monitors, among other things, prevailing interest rates and the economic environment to determine the optimal timing of a transaction. The Company anticipates refinancing some or all of its long-term debt in 2014 if financial market and economic conditions are favorable to do so.

Same-Restaurant Sales Performance

  • Applebee's domestic system-wide same-restaurant sales decreased 0.5% for the first quarter of 2014 compared to the same quarter of 2013.
  • IHOP's domestic system-wide same restaurant sales increased 3.9% for the first quarter of 2014 compared to the same period of 2013.

Financial Performance Guidance for Fiscal 2014

DineEquity reiterates its financial performance guidance for fiscal 2014 contained in the press release issued on February 26, 2014.

Investor Conference Call 

The Company will host an investor conference call on May 1, 2014, at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time to discuss its results for the first quarter of fiscal 2014. To participate on the call, please dial (888) 713-4213 and reference pass code 84150990. International callers, please dial (617) 213-4865 and reference pass code 84150990. Participants may also pre-register to obtain a unique pin number to join the call without operator assistance by visiting the following Web site:

https://www.theconferencingservice.com/prereg/key.process?key=PFCRY8M8E

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 Investors 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 from 12:00 p.m. Pacific Time on May 1, 2014 through 11:59 p.m. Pacific Time on May 8, 2014 by dialing (888) 286-8010 and referencing pass code 31135803. International callers, please dial (617) 801-6888 and reference pass code 31135803. An online archive of the webcast will also be available on the Investors 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 19 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 press release 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 and risks associated with the timing and our ability to refinance 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; fourth-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 or loss available to common stockholders for such period the effect of any closure and impairment charges, any gain or loss related to debt extinguishment, any intangible asset amortization, any non-cash interest expense, any debt modification costs, and any gain or loss related to the disposition of assets. 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 extinguishment of debt, depreciation and amortization, closure and impairment charges, non-cash stock-based compensation, gain or 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 principal payments on capital lease and financing obligations, the mandatory 1% of Term Loan principal balance repayment, 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 and for the return of cash to stockholders pursuant to our capital allocation strategy, after the receipts from long-term receivables, and the funding of operating activities, capital expenditures and debt service. 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
          March 31,
          2014     2013
Segment Revenues:                
Franchise and restaurant revenues         $ 131,795       $ 128,329  
Rental revenues         30,753      

31,003

 
Financing revenues         4,653       3,837  
Total segment revenues         167,201       163,169  
Segment Expenses:                
Franchise and restaurant expenses         45,678       44,476  
Rental expenses         23,866       24,269  
Financing expenses         585        
Total segment expenses         70,129       68,745  
Gross segment profit         97,072       94,424  
General and administrative expenses         34,185       34,032  
Interest expense         24,969       25,295  
Amortization of intangible assets         3,071       3,071  
Closure and impairment charges         200       838  
Loss on extinguishment of debt         6       20  
Debt modification costs               1,296  
Loss (gain) on disposition of assets         927       (318 )
Income before income taxes         33,714       30,190  
Income tax provision         (12,890 )     (11,951 )
Net income         $ 20,824       $ 18,239  
Net income available to common stockholders:                
Net income         $ 20,824       $ 18,239  
Less: Net income allocated to unvested participating restricted stock         (343 )     (329 )
Net income available to common stockholders         $ 20,481       $ 17,910  
Net income available to common stockholders per share:                
Basic         $ 1.09       $ 0.95  
Diluted         $ 1.08       $ 0.93  
Weighted average shares outstanding:                
Basic         18,794       18,911  
Diluted         19,054       19,193  
                 
Dividends declared per common share         $ 0.75       $ 0.75  
Dividends paid per common share         $ 0.75       $ 0.75
DineEquity, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
                 
         

March 31,
2014

   

December 31, 2013

          (Unaudited)      
Assets                
Current assets:                
Cash and cash equivalents         $ 133,218       $ 106,011  
Receivables, net         91,493       144,137  
Prepaid income taxes               4,708  
Prepaid gift cards         39,559       49,223  
Deferred income taxes         26,501       23,853  
Other current assets         8,092       3,650  
Total current assets         298,863       331,582  
Long-term receivables         194,066       197,153  
Property and equipment, net         264,855       274,295  
Goodwill         697,470       697,470  
Other intangible assets, net         791,033       794,057  
Other assets, net         108,960       110,085  
Total assets         $ 2,355,247       $ 2,404,642  
Liabilities and Stockholders’ Equity                
Current liabilities:                
Current maturities of long-term debt         $ 4,720       $ 4,720  
Accounts payable         39,857       40,050  
Gift card liability         111,020       171,955  
Accrued employee compensation and benefits         10,099       24,956  
Accrued interest payable         31,671       13,575  
Income taxes payable         12,890        
Current maturities of capital lease and financing obligations         12,577       12,247  
Other accrued expenses         22,940       16,770  
Total current liabilities         245,774       284,273  
Long-term debt, less current maturities         1,203,247       1,203,517  
Capital lease obligations, less current maturities         108,533       111,707  
Financing obligations, less current maturities         46,848       48,843  
Deferred income taxes         334,195       341,578  
Other liabilities         98,470       99,545  
Total liabilities         2,037,067       2,089,463  
Commitments and contingencies                
Stockholders’ equity:                
Common stock, $0.01 par value, shares: 40,000,000 authorized; March 31, 2014 - 25,284,475 issued, 19,155,078 outstanding; December 31, 2013 - 25,299,315 issued, 19,040,890 outstanding         253       253  
Additional paid-in-capital         274,557       274,202  
Retained earnings         343,095       336,578  
Accumulated other comprehensive loss         (170 )     (164 )
Treasury stock, at cost; shares: March 31, 2014 - 6,129,397; December 31, 2013 - 6,258,425         (299,555 )     (295,690 )
Total stockholders’ equity         318,180       315,179  
Total liabilities and stockholders’ equity         $ 2,355,247       $ 2,404,642  
                         
                         
DineEquity, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
          Three Months Ended
          March 31,
          2014     2013
Cash flows from operating activities:                
Net income         $ 20,824       $ 18,239  
Adjustments to reconcile net income to cash flows provided by operating activities:                
Depreciation and amortization         8,783       8,836  
Non-cash interest expense         1,642       1,503  
Deferred income taxes         (10,031 )     (8,253 )
Non-cash stock-based compensation expense         3,143       3,189  
Tax benefit from stock-based compensation         3,524       2,228  
Excess tax benefit from share-based compensation         (4,455 )     (966 )
Loss (gain) on disposition of assets         927       (318 )
Debt modification costs               1,282  
Other         (196 )     1,806  
Changes in operating assets and liabilities:                
Receivables         52,887       47,216  
Current income tax receivables and payables         18,020       16,528  
Other current assets         8,913       16,678  
Accounts payable         775       1,659  
Accrued employee compensation and benefits         (14,857 )     (11,482 )
Gift card liability         (60,936 )     (54,332 )
Other accrued expenses         23,877       27,413  
Cash flows provided by operating activities         52,840       71,226  
Cash flows from investing activities:                
Additions to property and equipment         (2,039 )     (1,495 )
Proceeds from sale of property and equipment         681        
Principal receipts from notes, equipment contracts and other long-term receivables         3,415       3,810  
Other         (55 )     68  
Cash flows provided by investing activities         2,002       2,383  
Cash flows from financing activities:                
Repayment of long-term debt         (1,200 )     (1,200 )
Payment of debt modification costs               (1,282 )
Principal payments on capital lease and financing obligations         (2,695 )     (2,483 )
Repurchase of DineEquity common stock         (15,002 )      
Dividends paid on common stock         (14,293 )     (14,512 )
Repurchase of restricted stock         (1,831 )     (2,590 )
Proceeds from stock options exercised         6,623       3,018  
Excess tax benefit from share-based compensation         4,455       966  
Change in restricted cash         (3,692 )     (2,681 )
Cash flows used in financing activities         (27,635 )     (20,764 )
Net change in cash and cash equivalents         27,207       52,845  
Cash and cash equivalents at beginning of period         106,011       64,537  
Cash and cash equivalents at end of period         $ 133,218       $ 117,382  
                         
                         

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 closure and impairment charges; loss on extinguishment of debt; amortization of intangible assets; non-cash interest expense; debt modification costs; and gain/loss on disposition of assets, all items net of taxes (as appropriate), and related per share data:

          Three Months Ended
          March 31,
          2014     2013
Net income available to common stockholders, as reported         $ 20,481       $ 17,910  
Closure and impairment charges         200       838  
Loss on extinguishment of debt         6       20  
Amortization of intangible assets         3,071       3,071  
Non-cash interest expense         1,642       1,503  
Debt modification costs               1,296  
Loss (gain) on disposition of assets         927       (318 )
Income tax provision         (2,221 )     (2,436 )
Net income allocated to unvested participating restricted stock         (61 )     (77 )
Net income available to common stockholders, as adjusted         $ 24,045       $ 21,807  
                 
Diluted net income available to common stockholders per share:                
Net income available to common stockholders, as reported         $ 1.08       $ 0.93  
Closure and impairment charges         0.01       0.02  
Loss on extinguishment of debt         0.00       0.00  
Amortization of intangible assets         0.10       0.10  
Noncash interest expense         0.06       0.05  
Debt modification costs               0.04  
Loss (gain) on disposition of assets         0.03       (0.01 )
Net income allocated to unvested participating restricted stock         (0.00 )     (0.00 )
Rounding         (0.02 )     0.01  
Diluted net income available to common stockholders per share, as adjusted         $ 1.26       $ 1.14  
                 
Numerator for basic EPS-income available to common stockholders, as adjusted         $ 24,045       $ 21,807  
Effect of unvested participating restricted stock using the two-class method         3       3  
Numerator for diluted EPS-income available to common stockholders after assumed conversions, as adjusted         $ 24,048       $ 21,810  
                 
Denominator for basic EPS-weighted-average shares         18,794       18,911  
Dilutive effect of stock options         260       282  
Denominator for diluted EPS-weighted-average shares and assumed conversions         19,054       19,193  
                     
                     
DineEquity, Inc. and Subsidiaries
Non-GAAP Financial Measures
(In thousands)
(Unaudited)
 

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

                 
         

Three Months
Ended

   

Twelve Months
Ended

          March 31, 2014
U.S. GAAP income before income taxes         $ 33,714       $ 114,141
Interest charges         28,952       115,888
Depreciation and amortization         8,784       35,302
Non-cash stock-based compensation         3,143       9,318
Closure and impairment charges         200       974
Gain on sale of assets         927       1,022
Other         1,858       4,301
EBITDA         $ 77,578       $ 280,946
                       
                       

Reconciliation of the Company's cash provided by operating activities to "free cash flow" (cash from operations, plus receipts from notes, equipment contracts and other long-term receivables, less consolidated capital expenditures, principal payments on capital leases and financing obligations and the mandatory annual repayment of 1% of our Term Loan principal balance):

          Three Months Ended
          March 31,
          2014        2013
Cash flows provided by operating activities         $ 52,840       $ 71,226  
Principal receipts from long-term receivables         3,415       3,810  
Additions to property and equipment         (2,039 )     (1,495 )
Free cash flow before debt service         54,216       73,541  
Principal payments on capital lease and financing obligations         (2,695 )     (2,483 )
Mandatory 1% of Term Loans principal balance repayment         (1,180 )     (1,180 )
Free cash flow         50,341       69,878  
Dividends paid on common stock         (14,293 )     (14,512 )
Repurchase of DineEquity common stock         (15,002 )      
          $ 21,046       $ 55,366  
                         
                         
DineEquity, Inc. and Subsidiaries
Non-GAAP Financial Measures
(In millions)
(Unaudited)
 

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

 

Three months ended March 31, 2014

                                     
     

Franchise -
Applebee's

   

Franchise -
IHOP

   

Company
Restaurants

   

Rental
Operations

   

Financing
Operations

    Total
Revenue     $ 50,753       $ 64,741       $ 16,301       $ 30,753       $ 4,653       $ 167,201
Expense     1,400       27,973       16,305       23,866       585       70,129
Gross segment profit     49,353       36,768       (4 )     6,887       4,068       97,072
Plus:                                    
Depreciation/amortization     2,621             524       3,344             6,489
Interest charges                 100       3,860             3,960
Segment EBITDA     $ 51,974       $ 36,768       $ 620       $ 14,091       $ 4,068       $ 107,521
                                     
                                     

Three months ended March 31, 2013

                                     
     

Franchise -
Applebee's

   

Franchise -
IHOP

   

Company
Restaurants

   

Rental
Operations

   

Financing
Operations

    Total
Revenue     $ 50,733       $ 61,131       $ 16,465       $ 31,003       $ 3,837       $ 163,169
Expense     1,484       26,703       16,289       24,269             68,745
Gross segment profit     49,249       34,428       176       6,734       3,837       94,424
Plus:                                    
Depreciation/amortization     2,760             529       3,408             6,697
Interest charges                 94       4,092             4,186
Segment EBITDA     $ 52,009       $ 34,428       $ 799       $ 14,234       $ 3,837       $ 105,307
                                                           
                                                           

Restaurant Data

The following table sets forth, for the three and three months ended March 31, 2014 and 2013, 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. 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, and, where applicable, rental payments under leases that may be partially 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
          March 31,
          2014     2013
       

 

(unaudited)

Applebee's Restaurant Data                
Effective Restaurants(a)                
Franchise           1,985         2,006  
Company           23         23  
Total           2,008         2,029  
                 
System-wide(b)                
Sales percentage change(c)           (0.7 )%       (0.4 )%
Domestic same-restaurant sales percentage change(d)           (0.5 )%       (1.3 )%
                 
Franchise(b)(e)                
Sales percentage change(c)           (0.7 )%       7.2 %
Domestic same-restaurant sales percentage change(d)           (0.5 )%       (1.2 )%
Average weekly domestic unit sales (in thousands)         $ 49.5       $ 49.3  
 
          Three Months Ended
          March 31,
          2014     2013
     

 

 

(unaudited)

IHOP Restaurant Data                
Effective Restaurants(a)                
Franchise           1,439         1,408  
Area license           169         167  
Company           11         12  
Total           1,619         1,587  
                 
System-wide(b)                
Sales percentage change(c)           6.5 %       2.4 %
Domestic same-restaurant sales percentage change(d)           3.9 %       (0.5 )%
                 
Franchise(b)                
Sales percentage change(c)           6.4 %       2.3 %
Domestic same-restaurant sales percentage change(d)           3.9 %       (0.5 )%
Average weekly domestic unit sales (in thousands)         $ 36.4       $ 34.9  
                 
Area License (b)                
Sales percentage change(c)           8.0 %       4.1 %
 
 
(a)   "Effective Restaurants" are the weighted average number of restaurants open 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. Unaudited reported sales for Applebee's domestic franchise restaurants, IHOP franchise restaurants and IHOP area license restaurants for the three and three months ended March 31, 2014 and 2013 were as follows:
              Three Months Ended
              March 31,
              2014     2013
           

 

(In millions)

   

Reported sales (unaudited)

               
    Applebee's franchise restaurant sales         $ 1,183.1       $ 1,191.5
    IHOP franchise restaurant sales         $ 680.3       $ 639.3
    IHOP area license restaurant sales         $ 70.1       $ 64.9
                           
(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 domestic 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 domestic 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 area license restaurants located in Florida.
     
(e)   The sales percentage change for the three months ended March 31, 2013 for Applebee’s franchise restaurants was impacted by the refranchising of 154 company-operated restaurants during 2012.
     
     
DineEquity, Inc. and Subsidiaries
Restaurant Data
 

The following table summarizes our restaurant development activity:

 

 

        Three Months Ended
          March 31,
          2014     2013
       

 

(Unaudited)

Applebee's Restaurant Development Activity

               
Summary - beginning of period:                
Franchise         1,988       2,011  
Company restaurants         23       23  
Total Applebee's restaurants, beginning of period         2,011       2,034  
Franchise restaurants opened:                
Domestic         8       2  
International                
Total franchise restaurants opened         8       2  
Franchise restaurants closed:                
Domestic         (5 )     (3 )
International         (3 )     (2 )
Total franchise restaurants closed         (8 )     (5 )
Net franchise restaurant additions (reductions)               (3 )
Summary - end of period:                
Franchise         1,988       2,008  
Company restaurants         23       23  
Total Applebee's restaurants, end of period         2,011       2,031  
                 

IHOP Restaurant Development Activity

               
Summary - beginning of period:                
Franchise         1,439       1,404  
Area license         168       165  
Company         13       12  
Total IHOP restaurants, beginning of period         1,620       1,581  
Franchise/area license restaurants opened:                
Domestic franchise         9       8  
Domestic area license         1       2  
International franchise         4       2  
International area license                
Refranchised         3        
Total franchise/area license restaurants opened         17       12  
Franchise/area license restaurants closed:                
Domestic franchise         (5 )     (4 )
Domestic area license                
International franchise         (1 )      
International area license         (1 )      
Total franchise/area license restaurants closed         (7 )     (4 )
Franchise restaurants reacquired by the Company                
Net franchise/area license restaurant additions         10       8  
Summary - end of period                
Franchise         1,449       1,410  
Area license         168       167  
Company         10       12  
Total IHOP restaurants, end of period         1,627       1,589  

SOURCE DineEquity, Inc.

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

Stacy Roughan
Media Relations
Sard Verbinnen & Co.
310-201-2040

Samantha Verdile
Media Relations
Sard Verbinnen & Co.
212-687-8080

###

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