DineEquity, Inc. Reports Successful Second Quarter 2014 Results

  • Second quarter 2014 adjusted EPS (Non-GAAP) of $1.16 and GAAP EPS of $1.00
  • Adjusted EPS (Non-GAAP) increased 14% compared to the second quarter of 2013
  • Generated strong free cash flow of $50.0 million in the first six months of 2014
  • Over $29 million returned to shareholders in the form of a second quarter cash dividend of $0.75 per share of common stock and share repurchases
  • Second quarter domestic system-wide same restaurant sales increased 3.2% and 0.6% at IHOP and Applebee's, respectively
  • Both IHOP and Applebee's ranked number one by Nation's Restaurant News for the seventh consecutive year in their respective categories based on last fiscal year's U.S. system-wide same-restaurant sales

GLENDALE, Calif. - (BUSINESS WIRE) - July 29, 2014 - DineEquity, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill & Bar® and IHOP® restaurants, today announced financial results for the second quarter of fiscal 2014.

"We delivered successful results for the second quarter, driven by the continued focus on our strategic objectives," said Julia A. Stewart, Chairman and Chief Executive Officer of DineEquity, Inc. Ms. Stewart added, "We are very pleased to announce that IHOP and Applebee's reported positive same-restaurant sales and outperformed their respective categories based on industry sales data. We are doing the work necessary to drive long-term success at both of our brands. In addition, we continue to generate substantial free cash flow, tightly manage our general and administrative expenses, and return significant cash to shareholders. We remain clearly focused on maximizing shareholder value and driving sustainable growth."

Second Quarter 2014 Financial Highlights

  • Adjusted net income available to common stockholders was $22.1 million, representing adjusted earnings per diluted share of $1.16 for the second quarter of 2014. This compares to $19.7 million, or adjusted earnings per diluted share of $1.02, for the second quarter of 2013. Adjusted earnings per diluted share increased by 14% compared to the second quarter of 2013. The improvement in adjusted net income was due to higher segment profit, lower general and administrative expenses, and lower cash interest expense. These items were partially offset by higher income taxes. (See "Non-GAAP Financial Measures" below.)
  • GAAP net income available to common stockholders was $18.9 million, or earnings per diluted share of $1.00, for the second quarter of 2014. This compares to $16.6 million, or earnings per diluted share of $0.87, for the second quarter of 2013. Earnings per diluted share improved by 15% compared to the second quarter of 2013. The increase in net income was primarily due to higher segment profit, lower general and administrative expenses, and a gain on the disposition of assets in the second quarter of 2014 compared to a loss in the same period of 2013. These items were partially offset by higher income tax expense and an increase in closure and impairment charges.
  • General and administrative expenses were $34.8 million for the second quarter of 2014 compared to $35.6 million for the same period of 2013.

First Six Months of 2014 Highlights

  • Adjusted net income available to common stockholders was $46.1 million in the first six months of 2014, representing adjusted earnings per diluted share of $2.43. This compares to $41.5 million, or adjusted earnings per diluted share of $2.16, for the same period in 2013. Adjusted earnings per diluted share for the first six months of 2014 rose by 13% compared to the same period in 2013. The increase was primarily due to higher segment profit, lower general and administrative expenses, and a decline in cash interest expense. These items were partially offset by higher income taxes. (See "Non-GAAP Financial Measures" below.)
  • GAAP net income available to common stockholders was $39.3 million in the first six months of 2014, or earnings per diluted share of $2.07, compared to $34.5 million, or earnings per diluted share of $1.80 for the same period in 2013. Earnings per diluted share for the first six months of 2014 improved by 15% compared to the same period in 2013. The increase was primarily due to higher segment profit, debt modification costs that occurred in the first six months of 2013 that did not recur in the first six months of 2014, and a decline in general and administrative expenses. These items were partially offset by higher income tax expense and a loss on the disposition of assets in the first six months of 2014 compared to a gain in the first six months of 2013.
  • General and administrative expenses were $69.0 million in the first six months of 2014 compared to $69.7 million for the same period of 2013.
  • EBITDA was $149.4 million for the first six months of 2014. (See "Non-GAAP Financial Measures" below.)
  • For the first six months of 2014, cash flows from operating activities were $56.0 million and free cash flow was $50.0 million. (See "Non-GAAP Financial Measures" below.)

Same-Restaurant Sales Performance

Second Quarter 2014

  • Applebee's domestic system-wide same-restaurant sales increased 0.6% for the second quarter of 2014 compared to the second quarter of 2013.
  • IHOP's domestic system-wide same restaurant sales increased 3.2% for the second quarter of 2014 compared to the same quarter of 2013.

First Six Months of 2014 Highlights

  • Applebee's domestic system-wide same-restaurant sales remained flat for the first six months of 2014 compared to the same period in 2013.
  • IHOP's domestic system-wide same restaurant sales increased 3.6% for the first six months of 2014 compared to the first six months 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, except for IHOP's domestic system-wide same restaurant sales. The Company revised IHOP's sales performance guidance to range between positive 1.0% and positive 2.5%. This reflects an increase from the previous expectations of between positive 0.5% and positive 2.0%.

Investor Conference Call Today

The Company will host a conference call to discuss its results on the same day at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time. To participate on the call, please dial (800) 708-4539 and reference pass code 37666196. International callers, please dial (847) 619-6396 and reference pass code 37666196.

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 10:30 a.m. Pacific Time on July 29, 2014 through 11:59 p.m. Pacific Time on August 5, 2014 by dialing (888) 843-7419 and referencing pass code 37666196#. International callers, please dial (630) 652-3042 and reference pass code 37666196#. 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       Six Months Ended
      June 30,       June 30,
      2014     2013       2014     2013
Segment Revenues:                                  
Franchise and restaurant revenues     $ 126,444       $ 124,153         $ 258,239       $ 252,482  
Rental revenues     30,709       30,731         61,462       61,734  
Financing revenues     3,368       3,230         8,021       7,067  
Total segment revenues     160,521       158,114         327,722       321,283  
Segment Expenses:                                  
Franchise and restaurant expenses     42,155       42,308         87,833       86,784  
Rental expenses     23,653       24,535         47,519       48,804  
Financing expenses     240       245         825       245  
Total segment expenses     66,048       67,088         136,177       135,833  
Gross segment profit     94,473       91,026         191,545       185,450  
General and administrative expenses     34,816       35,641         69,001       69,673  
Interest expense     24,942       24,956         49,911       50,251  
Amortization of intangible assets     3,070       3,069         6,141       6,140  
Closure and impairment charges     637       324         837       1,162  
Loss on extinguishment of debt     6       16         12       36  
Debt modification costs                         1,296  
(Gain) loss on disposition of assets     (130 )     64         797       (254 )
Income before income tax provision     31,132       26,956         64,846       57,146  
Income tax provision     (11,965 )     (10,019 )       (24,855 )     (21,970 )
Net income     $ 19,167       $ 16,937         $ 39,991       $ 35,176  
Net income available to common stockholders:                                  
Net income     $ 19,167       $ 16,937         $ 39,991       $ 35,176  
Less: Net income allocated to unvested participating restricted stock     (307 )     (298 )       (649 )     (627 )
Net income available to common stockholders     $ 18,860       $ 16,639         $ 39,342       $ 34,549  
Net income available to common stockholders per share:                                  
Basic     $ 1.00       $ 0.88         $ 2.09       $ 1.82  
Diluted     $ 1.00       $ 0.87         $ 2.07       $ 1.80  
Weighted average shares outstanding:                                  
Basic     18,776       18,953         18,785       18,932  
Diluted     18,955       19,222         19,003       19,207  
                                   
Dividends declared per common share     $ 0.75       $ 0.75         $ 1.50       $ 1.50  
Dividends paid per common share     $ 0.75       $ 0.75         $ 1.50       $ 1.50  
                                           

 

                 
DineEquity, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
                 
       

June 30,
2014

     

December 31,
2013

        (Unaudited)          
Assets                    
Current assets:                    
Cash and cash equivalents       $ 100,350         $ 106,011  
Receivables, net       91,187         144,137  
Prepaid gift cards       40,459         49,223  
Prepaid income taxes               4,708  
Deferred income taxes       28,874         23,853  
Other current assets       12,323         3,650  
Total current assets       273,193         331,582  
Long-term receivables, net       190,380         197,153  
Property and equipment, net       261,201         274,295  
Goodwill       697,470         697,470  
Other intangible assets, net       788,105         794,057  
Other assets, net       108,740         110,085  
Total assets       $ 2,319,089         $ 2,404,642  
Liabilities and Stockholders' Equity                    
Current liabilities:                    
Current maturities of long-term debt       $ 4,720         $ 4,720  
Accounts payable       41,138         40,050  
Gift card liability       108,046         171,955  
Accrued employee compensation and benefits       14,404         24,956  
Accrued interest payable       13,622         13,575  
Income taxes payable       10,812          
Current maturities of capital lease and financing obligations       12,936         12,247  
Other accrued expenses       19,098         16,770  
Total current liabilities       224,776         284,273  
Long-term debt, net (less current maturities)       1,202,995         1,203,517  
Capital lease obligations (less current maturities)       105,212         111,707  
Financing obligations (less current maturities)       46,815         48,843  
Deferred income taxes       330,525         341,578  
Other liabilities       98,173         99,545  
Total liabilities       2,008,496         2,089,463  
Commitments and contingencies                    
Stockholders' equity:                    
Common stock, $0.01 par value, shares: 40,000,000 authorized; June 30, 2014 - 25,277,373 issued, 18,967,460 outstanding; December 31, 2013 - 25,299,315 issued, 19,040,890 outstanding       253         253  
Additional paid-in-capital       276,636         274,202  
Retained earnings       348,026         336,578  
Accumulated other comprehensive loss       (56 )       (164 )
Treasury stock, at cost; shares: June 30, 2014 - 6,309,913; December 31, 2013 - 6,258,425       (314,266 )       (295,690 )
Total stockholders' equity       310,593         315,179  
Total liabilities and stockholders' equity       $ 2,319,089         $ 2,404,642  
                         

 

         
DineEquity, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
         
        Six Months Ended
        June 30,
        2014       2013
Cash flows from operating activities:                    
Net income       $ 39,991         $ 35,176  
Adjustments to reconcile net income to cash flows provided by operating activities:                    
Depreciation and amortization       17,498         17,636  
Non-cash interest expense       3,315         3,054  
Deferred income taxes       (16,047 )       (15,335 )
Non-cash stock-based compensation expense       5,508         5,842  
Tax benefit from stock-based compensation       3,578         2,943  
Excess tax benefit from share-based compensation       (4,455 )       (1,567 )
Loss (gain) on disposition of assets       797         (254 )
Debt modification costs               1,281  
Other       (867 )       1,072  
Changes in operating assets and liabilities:                    
Receivables, net       54,225         34,670  
Current income tax receivables and payables       16,004         8,716  
Prepaid expenses and other current assets       7,156         16,476  
Accounts payable       1,911         8,089  
Accrued employee compensation and benefits       (10,552 )       (7,612 )
Gift card liability       (63,911 )       (59,936 )
Other accrued expenses       1,841         5,178  
Cash flows provided by operating activities       55,992         55,429  
Cash flows from investing activities:                    
Additions to property and equipment       (4,086 )       (2,953 )
Proceeds from sale of property and equipment       681          
Principal receipts from notes, equipment contracts and other long-term receivables       6,066         7,063  
Other       75         11  
Cash flows provided by investing activities       2,736         4,121  
Cash flows from financing activities:                    
Repayment of long-term debt       (2,400 )       (2,400 )
Payment of debt modification costs               (1,281 )
Principal payments on capital lease and financing obligations       (5,570 )       (5,018 )
Repurchase of DineEquity common stock       (30,006 )       (14,504 )
Dividends paid on common stock       (28,518 )       (28,885 )
Repurchase of restricted stock       (1,944 )       (2,841 )
Proceeds from stock options exercised       6,658         3,348  
Excess tax benefit from share-based compensation       4,455         1,567  
Change in restricted cash       (7,064 )       1,564  
Cash flows used in financing activities       (64,389 )       (48,450 )
Net change in cash and cash equivalents       (5,661 )       11,100  
Cash and cash equivalents at beginning of period       106,011         64,537  
Cash and cash equivalents at end of period       $ 100,350         $ 75,637  
                         

 

               
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 or loss on disposition of assets, all items net of taxes, and related per share data:

               
      Three Months Ended       Six Months Ended
      June 30,       June 30,
      2014     2013       2014     2013
Net income available to common stockholders, as reported     $ 18,860       $ 16,639         $ 39,342       $ 34,549  
Closure and impairment charges     637       324         837       1,162  
Loss on extinguishment of debt     6       16         12       36  
Amortization of intangible assets     3,070       3,069         6,141       6,140  
Non-cash interest expense     1,673       1,551         3,315       3,054  
Debt modification costs                         1,296  
(Gain) loss on disposition of assets     (130 )     64         797       (254 )
Income tax provision     (1,997 )     (1,909 )       (4,219 )     (4,345 )
Net income allocated to unvested participating restricted stock     (55 )     (60 )       (116 )     (137 )
Net income available to common stockholders, as adjusted     $ 22,064       $ 19,694         $ 46,109       $ 41,501  
                                   
Diluted net income available to common stockholders per share:                                  
Net income available to common stockholders, as reported     $ 1.00       $ 0.87         $ 2.07       $ 1.80  
Closure and impairment charges     0.02       0.01         0.02       0.04  
Loss on extinguishment of debt     0.00       0.00         0.00       0.00  
Amortization of intangible assets     0.10       0.10         0.20       0.20  
Noncash interest expense     0.06       0.05         0.11       0.10  
Debt modification costs                         0.04  
(Gain) loss on disposition of assets     (0.01 )     0.00         0.02       (0.01 )
Net income allocated to unvested participating restricted stock     0.00       0.00         0.00       (0.01 )
Rounding     (0.01 )     (0.01 )       0.01        
Diluted net income available to common stockholders per share, as adjusted     $ 1.16       $ 1.02         $ 2.43       $ 2.16  
                                   

Numerator for basic EPS-income available to common stockholders, as adjusted

    $ 22,064       $ 19,694         $ 46,109       $ 41,501  
Effect of unvested participating restricted stock using the two-class method     1       1         3       4  
Numerator for diluted EPS-income available to common stockholders after assumed conversions, as adjusted     $ 22,065       $ 19,695         $ 46,112       $ 41,505  
                                   
Denominator for basic EPS-weighted-average shares     18,776       18,953         18,785       18,932  
Dilutive effect of stock options     179       269         218       275  
Denominator for diluted EPS-weighted-average shares and assumed conversions     18,955       19,222         19,003       19,207  
                                   

 

                 
DineEquity, Inc. and Subsidiaries
Non-GAAP Financial Measures
(In thousands)
(Unaudited)
 

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

                 
       

Six Months
Ended

     

Twelve Months
Ended

        June 30, 2014
U.S. GAAP income before income taxes       $ 64,846         $ 118,317  
Interest charges       57,741         115,591  
Depreciation and amortization       17,498         35,217  
Non-cash stock-based compensation       5,508         9,030  
Closure and impairment charges       837         1,487  
Gain on sale of assets       797         828  
Other       2,154         3,453  
EBITDA       $ 149,381         $ 283,923  
         

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):

         
        Six Months Ended
        June 30,
        2014       2013
Cash flows provided by operating activities       $ 55,992         $ 55,429  
Principal receipts from long-term receivables       6,066         7,063  
Additions to property and equipment       (4,086 )       (2,953 )
Free cash flow before debt service       57,972         59,539  
Principal payments on capital lease and financing obligations       (5,570 )       (5,018 )
Mandatory 1% of Term Loans principal balance repayment       (2,360 )       (2,360 )
Free cash flow       50,042         52,161  
Dividends paid on common stock       (28,518 )       (28,885 )
Repurchase of DineEquity common stock       (30,006 )       (14,504 )
        $ (8,482 )       $ 8,772  
                         

 

                                     
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 June 30, 2014
     

Franchise -
Applebee's

   

Franchise -
IHOP

   

Company
Restaurants

   

Rental
Operations

   

Financing
Operations

    Total
Revenue     $ 50,039     $ 60,731     $ 15,674       $ 30,709     $ 3,368     $ 160,521
Expense       1,294       25,331       15,530         23,653       240       66,048
Gross segment profit       48,745       35,400       144         7,056       3,128       94,473
Plus:                                    
Depreciation/amortization       2,615             495         3,314             6,424
Interest charges                   99         3,721             3,820
Segment EBITDA     $ 51,360     $ 35,400     $ 738       $ 14,091     $ 3,128     $ 104,717
                                     
   

 

Three months ended June 30, 2013

   

 

Franchise -
Applebee's

 

 

Franchise -
IHOP

   

Company
Restaurants

   

Rental
Operations

   

Financing
Operations

    Total
Revenue  

 

$

50,223

 

 

$

57,773

    $ 16,157      

$

30,731

    $ 3,230     $ 158,114
Expense  

 

 

1,448

 

   

24,695

      16,165        

24,535

      245       67,088
Gross segment profit  

 

 

48,775

 

   

33,078

      (8 )      

6,196

      2,985       91,026
Plus:                                    
Depreciation/amortization  

 

 

2,711

 

   

      542        

3,346

            6,599
Interest charges  

 

 

 

   

      93        

4,020

            4,113
Segment EBITDA  

 

$

51,486

 

 

$

33,078

    $ 627      

$

13,562

    $ 2,985     $ 101,738
                       

 

           
      Six months ended June 30, 2014
     

Franchise -
Applebee's

   

Franchise -
IHOP

   

Company
Restaurants

   

Rental
Operations

   

Financing
Operations

    Total
Revenue     $ 100,792     $ 125,472     $ 31,975       $ 61,462     $ 8,021     $ 327,722
Expense       2,694       53,304       31,835         47,519       825       136,177
Gross segment profit       98,098       72,168       140         13,943       7,196       191,545
Plus:                                    
Depreciation/amortization       5,236             1,019         6,658             12,913
Interest charges                   199         7,581             7,780
Segment EBITDA     $ 103,334     $ 72,168     $ 1,358       $ 28,182     $ 7,196     $ 212,238
                                     
      Six months ended June 30, 2013
     

Franchise -
Applebee's

   

Franchise -
IHOP

   

Company
Restaurants

   

Rental
Operations

   

Financing
Operations

    Total
Revenue     $ 100,956     $ 118,904     $ 32,622       $ 61,734     $ 7,067     $ 321,283
Expense       2,932       51,398       32,454         48,804       245       135,833
Gross segment profit       98,024       67,506       168         12,930       6,822       185,450
Plus:                                    
Depreciation/amortization       5,471             1,071         6,754             13,296
Interest charges                   187         8,112             8,299
Segment EBITDA     $ 103,495     $ 67,506     $ 1,426       $ 27,796     $ 6,822     $ 207,045
                                                   

Restaurant Data

The following table sets forth, for the three and six months ended June 30, 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       Six Months Ended
      June 30,       June 30,
      2014     2013       2014     2013
      (unaudited)
Applebee's Restaurant Data                                  
Effective Restaurants(a)                                  
Franchise     1,985       2,003         1,985       2,005  
Company     23       23         23       23  
Total     2,008       2,026         2,008       2,028  
                                   
System-wide(b)                                  
Sales percentage change(c)     0.6 %     0.6 %       (0.1 )%     0.7 %
Domestic same-restaurant sales percentage change(d)     0.6 %     1.3 %       0.0 %     0.0 %
                                   
Franchise(b)(e)                                  
Sales percentage change(c)     0.6 %     8.7 %       (0.1 )%     8.9 %
Domestic same-restaurant sales percentage change(d)     0.6 %     1.3 %       0.1 %     0.0 %
Average weekly domestic unit sales (in thousands)     $ 48.2       $ 47.4         $ 48.8       $ 48.3  
               
      Three Months Ended       Six Months Ended
      June 30,       June 30,
      2014     2013       2014     2013
      (unaudited)
IHOP Restaurant Data                                  
Effective Restaurants(a)                                  
Franchise     1,448       1,410         1,444       1,409  
Area license     167       167         167       167  
Company     10       12         11       12  
Total     1,625       1,589         1,622       1,588  
                                   
System-wide(b)                                  
Sales percentage change(c)     6.0 %     4.3 %       6.2 %     3.3 %
Domestic same-restaurant sales percentage change(d)     3.2 %     1.9 %       3.6 %     0.7 %
                                   
Franchise(b)                                  
Sales percentage change(c)     6.1 %     4.3 %       6.3 %     3.3 %
Domestic same-restaurant sales percentage change(d)     3.2 %     1.9 %       3.6 %     0.7 %
Average weekly domestic unit sales (in thousands)     $ 35.6       $ 34.4         $ 36.4       $ 34.7  
                                   
Area License (b)                                  
Sales percentage change(c)     5.8 %     4.8 %       6.9 %     4.5 %
                                   

 

(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 six months ended June 30, 2014 and 2013 were as follows:

 

               
      Three Months Ended       Six Months Ended
      June 30,       June 30,
      2014     2013       2014     2013
      (In millions)

Reported sales (unaudited)

                               
Applebee's franchise restaurant sales     $ 1,150.7       $ 1,144.2         $ 2,333.8       $ 2,335.7
IHOP franchise restaurant sales     $ 669.5       $ 630.9         $ 1,349.8       $ 1,270.2
IHOP area license restaurant sales     $ 64.8       $ 61.3         $ 134.9       $ 126.2
                                         

 

(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.

 

               
DineEquity, Inc. and Subsidiaries
Restaurant Data
 

The following table summarizes our restaurant development activity:

               
      Three Months Ended       Six Months Ended
      June 30,       June 30,
      2014       2013         2014       2013  
      (Unaudited)

Applebee's Restaurant Development Activity

                       
Summary - beginning of period:                                  
Franchise     1,988       2,008         1,988       2,011  
Company restaurants     23       23         23       23  
Total Applebee's restaurants, beginning of period     2,011       2,031         2,011       2,034  
Franchise restaurants opened:                                  
Domestic     5       3         13       5  
International     1       1         1       1  
Total franchise restaurants opened     6       4         14       6  
Franchise restaurants closed:                                  
Domestic     (5 )     (22 )       (10 )     (25 )
International     (3 )     (1 )       (6 )     (3 )
Total franchise restaurants closed     (8 )     (23 )       (16 )     (28 )
Net franchise restaurant (reduction) development     (2 )     (19 )       (2 )     (22 )
Summary - end of period:                                  
Franchise     1,986       1,989         1,986       1,989  
Company restaurants     23       23         23       23  
Total Applebee's restaurants, end of period     2,009       2,012         2,009       2,012  
                                   

IHOP Restaurant Development Activity

                                 
Summary - beginning of period:                                  
Franchise     1,449       1,410         1,439       1,404  
Area license     168       167         168       165  
Company     10       12         13       12  
Total IHOP restaurants, beginning of period     1,627       1,589         1,620       1,581  
Franchise/area license restaurants opened:                        
Domestic franchise     7       7         16       15  
Domestic area license     1       1         2       3  
International franchise     5       1         9       3  
International area license           1               1  
Total franchise/area license restaurants opened     13       10         27       22  
Franchise/area license restaurants closed:                                  
Domestic franchise     (6 )     (5 )       (11 )     (9 )
Domestic area license     (2 )             (2 )      
International franchise                   (1 )      
International area license           (1 )       (1 )     (1 )
Total franchise/area license restaurants closed     (8 )     (6 )       (15 )     (10 )
Net franchise/area license restaurant development     5       4         12       12  
Refranchised from Company restaurants     1       1         4       1  
Franchise restaurants reacquired by the Company     (1 )             (1 )      
Net franchise/area license restaurant additions     5       5         15       13  
Summary - end of period                                  
Franchise     1,455       1,414         1,455       1,414  
Area license     167       168         167       168  
Company     10       11         10       11  
Total IHOP restaurants, end of period     1,632       1,593         1,632       1,593  
                                   

SOURCE DineEquity, Inc.

Contacts:

Ken Diptee
Investor Relations
DineEquity, Inc.
Executive Director, Investor Relations
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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