DineEquity, Inc. Announces Solid Fourth Quarter 2009 Financial
Results
Results
-- Cash flows from operating activities for fiscal 2009 were
$157.8 million compared to $110.8 million for fiscal 2008. The
increase of $47.0 million is primarily the result of improvements in
the Company's business performance, inclusive of the positive impact
of a 53rd operating week in 2009, as well as positive changes in
working capital.
-- Securitized debt was reduced by $74.3 million during the fourth quarter
and by $216.6 million during fiscal 2009 due to the use of free cash
flow for opportunistic debt retirement, normal amortization and the
sale of seven company-operated Applebee's restaurants in 2009.
-- For the fourth quarter 2009, the Company reported a net loss available
to common stockholders of $48.2 million, or $2.84 per diluted share,
compared to a net loss of $136.9 million, or $8.15 per diluted share,
in the fourth quarter 2008. For fiscal 2009, net income available to
common shareholders was $9.2 million, or $0.55 per diluted share,
compared to a net loss of $169.2 million, or $10.09 per diluted share,
for fiscal 2008. Fourth quarter and fiscal 2009 and 2008 net income
(loss) results were impacted by non-cash impairment charges primarily
related to the write down of Applebee's intangible assets. Such amounts
aggregated to $98.6 million and $170.7 million for the fourth quarters
2009 and 2008, respectively, and $105.1 million and $240.6 million for
full year 2009 and 2008, respectively.
-- Adjusted net income (loss) available to common stockholders (EPS
excluding impairment and closure charges, gain on debt repurchases,
gain/loss on disposition of assets, amortization of intangibles and
non-cash interest expense substantially related to the acquisition of
Applebee's) increased to $0.76 for the fourth quarter 2009 compared to
$0.37 for the same quarter in 2008. For fiscal 2009, adjusted EPS
increased to $4.06 compared to $2.14 for fiscal 2008. These
improvements were due primarily to higher operating margins at
company-operated Applebee's restaurants, lower interest expense as the
result of opportunistic debt retirement, disciplined General &
Administrative (G&A) expense management, and the impact of the 53rd
week in fiscal year 2009. The 53rd operating week increased pre-tax
profitability by $11 million for the fourth quarter and fiscal year
2009. These improvements were partially offset by lower same-store
sales and the sale of 110 Applebee's company-operated restaurants
since 2008. (See "Non-GAAP Financial Measures" below.)
-- Free cash flow more than doubled to $133.4 million for fiscal 2009
compared to $61.5 million in 2008. (See "Non-GAAP Financial Measures"
below.)
-- Operating margins at Applebee's company-operated restaurants improved
270 basis points to 13.4% for the fourth quarter 2009, and improved 270
basis points to 14.4% for fiscal 2009 compared to the same periods in
2008. These improvements primarily reflected better management of food
and labor costs as Applebee's continued to enhance the profit
performance of its company-operated restaurants despite challenged
same-store sales results.
-- Consolidated G&A expenses decreased 5.0% for the fourth quarter 2009
and 13.0% for fiscal 2009 compared to the same periods in 2008. These
improvements were primarily driven by lower overhead expense as a
result of the sale of 110 company-operated Applebee's restaurants since
the second quarter 2008, the integration of Applebee's and IHOP shared
services functions, other cost savings initiatives, lower stock based
compensation expense and the elimination of non-recurring transition
costs recognized in 2008.
-- For the fourth quarter 2009, IHOP's domestic system-wide same-store
sales decreased 3.1% and Applebee's domestic system-wide same-store
sales decreased 4.5% compared to the same quarter in 2008. For fiscal
2009, domestic system-wide same-store sales decreased 0.8% for IHOP and
decreased 4.5% for Applebee's compared to fiscal 2008.
-- DineEquity's predominantly franchised Applebee's and IHOP restaurant
systems generated consolidated franchise operations revenue increases
of 5.3% for the fourth quarter 2009 and 5.3% for fiscal 2009 compared
to the same periods in 2008. This was primarily due to increases in the
number of effective franchise restaurants as the result of franchising
Applebee's company-operated restaurants and IHOP new franchise
restaurant development. Consolidated franchise operations segment
profit increased 9.8% for the quarter and 5.0% for fiscal 2009,
compared to the same periods in 2008.
-- Consolidated capital expenditures were $15.4 million for fiscal 2009.
"In an environment where cautious consumer spending continues to impact same-store sales at both Applebee's and IHOP, we are pleased to have aggressively managed G&A and interest expense which resulted in adjusted earnings growth in both the fourth quarter and full year 2009," said Julia A. Stewart, DineEquity's chairman and chief executive officer. "We remain guardedly optimistic about the U.S. economy and are encouraged by improving same-store sales on a quarter over quarter basis at Applebee's. We plan to continue generating significant free cash flow and remain wholly focused on our strategic objectives of aggressively reducing securitized debt levels and differentiating the Applebee's and IHOP brands for accelerated growth when the economy recovers."
Same-Store Sales Performance
IHOP's domestic system-wide same-store sales decreased 3.1% for the fourth quarter 2009 compared to the same quarter in 2008, reflecting a lower average guest check and declines in guest traffic. For fiscal 2009, IHOP's domestic system-wide same-store sales decreased 0.8%. IHOP's marketing efforts during the quarter included IHOP's National Football League and Holiday Hotcakes limited-time offers, expanded local restaurant marketing activities around the dinner daypart, and the increased use of coupons system-wide, among other activities.
Applebee's domestic system-wide same-store sales decreased 4.5% for the fourth quarter 2009 compared to the same quarter in 2008, and decreased 4.5% for fiscal 2009 compared to fiscal 2008. Same-store sales for Applebee's domestic franchise restaurants decreased 4.6% for the quarter compared to the same quarter in 2008, and decreased 4.4% for fiscal 2009 compared to fiscal 2008. Same-store sales for Applebee's company-operated restaurants decreased 3.9% for the fourth quarter 2009 compared to the same quarter in 2008, and decreased 4.8% for fiscal 2009 compared to fiscal 2008. The performance of Applebee's company-operated restaurants for the fourth quarter 2009 reflected declines in guest traffic and a lower average guest check primarily due to unfavorable mix shift which offset a 2.2% increase in effective pricing. Applebee's marketing efforts during the quarter included Applebee's Veteran's Day event as well as its Two for $20 value offering supported by enhanced marketing activities through its sponsorship of Monday Night Football and partnership with ESPN, among other activities.
Company Operations Improvements
Applebee's company-operated restaurant operating margin improved 270 basis points to 13.4% for the quarter compared to a 10.7% operating margin in the same quarter in 2008. Applebee's improved operating margin performance for the quarter was due primarily to a reduction in hourly labor costs as a result of improved productivity, decreased food and beverage costs primarily due to vendor discounts and rebates, and a 2.2% increase in effective pricing, which was offset by an unfavorable mix shift. The 53rd operating week improved Applebee's fourth quarter 2009 margin performance by approximately 110 basis points.
Applebee's company-operated restaurant operating margin improved 270 basis points to 14.4% for fiscal 2009 compared to 11.7% for fiscal 2008. Applebee's improved operating margin performance for the year was favorably impacted by effective pricing increases of 2.7% partially offset by an unfavorable mix shift, improved labor costs primarily due to a reduction in one-time management retention costs, a reduction in hourly labor costs as a result of effective wage rate management and improved productivity, and lower group insurance costs. Decreased food and beverage costs were also a favorable margin performance factor. The 53rd operating week improved Applebee's fiscal 2009 margin performance by approximately 25 basis points.
Debt Management
Securitized debt was reduced by $74.3 million during the fourth quarter 2009 due to debt retirement in the open market and scheduled payments on the Company's subordinated notes. Securitized debt was reduced by a total of $216.6 million for fiscal 2009. The decrease was primarily due to the use of free cash flow for securitized debt retirement in the open market, after-tax proceeds related to the sale of seven company-operated Applebee's restaurants, and scheduled payments on the Company's subordinated notes.
As of the end of the fourth quarter 2009, DineEquity remained comfortably in compliance with the debt covenants set forth in the Company's securitized debt agreements. The Company's consolidated leverage ratio was 5.71x compared to a required maximum threshold of 7.0x. Debt service coverage ratios (DSCR) were 3.31x for IHOP's securitized debt on a three-month unadjusted basis and 2.60x for the Applebee's securitized debt on a three-month adjusted basis, both compared to a minimum required threshold of 1.85x. Applebee's 12-month adjusted DSCR was 3.07x, compared to a required 2.20x.
DineEquity has provided supplemental information to this news release regarding its compliance with its debt covenants, which may be accessed by visiting the Calls & Presentations section of DineEquity's Investor Relations Web site at http://investors.dineequity.com and referring to supporting materials for the Company's fourth quarter 2009 webcast.
Investor Conference Call Today
The Company will host an investor conference call to discuss its fourth quarter and fiscal 2009 financial results and 2010 performance guidance today, Wednesday, March 3, 2010, at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). To participate on the call, please dial (888) 713-4214 and reference pass code 31206619. A live webcast of the call will be available on DineEquity's Web site at www.dineequity.com, and may be accessed by visiting Calls & Presentations under the site's Investor Information section. A telephonic replay of the call may be accessed through March 10, 2010 by dialing 888-286-8010 and referencing pass code 26600797. 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 3,400 restaurants combined, DineEquity is the largest full-service restaurant company in the world. For more information on DineEquity, visit the Company's Web site located at www.dineequity.com.
Forward-Looking Statements
There are forward-looking statements contained in this news release. They use such words as "may," "will," "expect," "believe," "plan," or other similar terminology. These statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results to be materially different than those expressed or implied in such statements. These factors include, but are not limited to: the implementation of DineEquity, Inc.'s (the "Company") strategic growth plan; the availability of suitable locations and terms for sites designated for development; the ability of franchise developers to fulfill their commitments to build new restaurants in the numbers and time frames covered by their development agreements; legislation and government regulation including the ability to obtain satisfactory regulatory approvals; risks associated with the Company's indebtedness; conditions beyond the Company's control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting the Company's customers or food supplies, or acts of war or terrorism; availability and cost of materials and labor; cost and availability of capital; competition; potential litigation and associated costs; continuing acceptance of the International House of Pancakes ("IHOP") and Applebee's brands and concepts by guests and franchisees; the Company's overall marketing, operational and financial performance; economic and political conditions; adoption of new, or changes in, accounting policies and practices; and other factors discussed from time to time in the Company's news releases, public statements and/or filings with the Securities and Exchange Commission, especially the "Risk Factors" sections of Annual and Quarterly Reports on Forms 10-K and 10-Q. Forward-looking information is provided by the Company pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of these factors. In addition, the Company disclaims any intent or obligation to update these forward-looking statements.
Non-GAAP Financial Measures
This news release includes references to the Company's "net income (loss) available to common stockholders, excluding impairment and closure charges, gain on extinguishment of debt, amortization of intangible assets, non-cash interest expense and (loss) gain on disposition of assets" and the non-GAAP financial measures "EBITDA" and "free cash flow." The former 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 related to debt extinguishment, any intangible asset amortization, any non-cash interest expense and any gain or loss related to the disposition of assets incurred in such period. This is presented on an aggregate basis and a per share (diluted) basis. For the latter, the Company defines "EBITDA" for a given period as income before income taxes (including gain on extinguishment of debt) less interest expense, depreciation and amortization, impairment and closure charges, stock-based compensation, gain/loss on sale of assets and non-cash amounts related to a captive insurance subsidiary. "EBITDAR" for a given period is defined as EBITDA plus annualized operating lease expense (Rent). "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. 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 notes receivable, 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. EBITDA and free cash flow 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 generally accepted accounting principles.
[Financial Tables to Follow]
DINEEQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Revenues
Franchise revenues $ 93,276 $ 88,547 $ 372,198 $ 353,331
Company restaurant sales 221,871 228,891 890,020 1,103,228
Rental income 34,663 32,852 133,845 131,347
Financing revenues 5,395 5,235 17,899 25,722
---------- ---------- ---------- ----------
Total revenues 355,205 355,525 1,413,962 1,613,628
---------- ---------- ---------- ----------
Costs and Expenses
Franchise expenses 24,845 26,227 102,256 96,243
Company restaurant
expenses 193,123 205,491 766,466 978,197
Rental expenses 24,222 24,299 97,303 98,057
Financing expenses 10 1,101 370 7,314
General and
administrative expenses 41,454 43,617 158,469 182,239
Interest expense 46,862 50,443 186,473 203,141
Impairment and closure
charges 98,622 170,732 105,094 240,630
Amortization of
intangible assets 3,250 3,076 12,306 12,132
Gain on extinguishment
of debt (6,875) (12,808) (45,678) (15,242)
(Gain) loss on
disposition of assets 306 691 (6,947) 259
Other expense (income),
net 249 968 1,266 (1,185)
---------- ---------- ---------- ----------
Total costs and
expenses 426,068 513,837 1,377,378 1,801,785
---------- ---------- ---------- ----------
Income (loss) before income
taxes (70,863) (158,312) 36,584 (188,157)
Provision (benefit) for
income taxes (26,812) (21,188) 5,175 (33,698)
---------- ---------- ---------- ----------
Net income (loss) $ (44,051) $ (137,124) $ 31,409 $ (154,459)
========== ========== ========== ==========
Net income (loss) $ (44,051) $ (137,124) $ 31,409 $ (154,459)
Less: Series A preferred
stock dividends (5,281) (4,750) (19,531) (19,000)
Less: Accretion of
Series B preferred stock (585) (551) (2,291) (2,151)
Less: Net (income) loss
allocated to unvested
participating restricted
stock 1,760 5,476 (351) 6,417
---------- ---------- ---------- ----------
Net income (loss) available
to common stockholders $ (48,157) $ (136,949) $ 9,236 $ (169,193)
========== ========== ========== ==========
Net income (loss) available
to common stockholders per
share
Basic $ (2.84) $ (8.15) $ 0.55 $ (10.09)
========== ========== ========== ==========
Diluted $ (2.84) $ (8.15) $ 0.55 $ (10.09)
========== ========== ========== ==========
Weighted average shares
outstanding
Basic 16,953 16,799 16,917 16,764
========== ========== ========== ==========
Diluted 16,953 16,799 16,917 16,764
========== ========== ========== ==========
Dividends declared per
common share -- $ 0.25 -- $ 1.00
========== ========== ========== ==========
Dividends paid per common
share -- $ 0.25 -- $ 1.00
========== ========== ========== ==========
DINEEQUITY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2009 2008
------------ ------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 82,314 $ 114,443
Restricted cash 72,690 83,355
Receivables, net 104,690 117,930
Inventories 12,236 10,959
Prepaid income taxes 7,702 15,734
Prepaid gift cards 19,878 15,375
Prepaid expenses 13,425 1,692
Deferred income taxes 15,444 27,504
Assets held for sale 8,765 11,861
------------ ------------
Total current assets 337,144 398,853
------------ ------------
Non-current restricted cash 48,173 53,395
Restricted assets related to captive insurance
subsidiary 4,344 5,849
Long-term receivables 259,775 277,106
Property and equipment, net 771,372 824,482
Goodwill 697,470 697,470
Other intangible assets, net 849,552 956,036
Other assets, net 133,038 148,026
------------ ------------
Total assets $ 3,100,868 $ 3,361,217
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 25,200 $ 15,000
Accounts payable 31,729 48,983
Accrued employee compensation and benefits 37,397 44,299
Gift card liability 105,465 95,532
Accrued financing costs -- 20,071
Other accrued expenses 54,549 55,249
Accrued interest payable 3,627 3,580
------------ ------------
Total current liabilities 257,967 282,714
------------ ------------
Long-term debt, less current maturities 1,637,198 1,853,367
Financing obligations, less current maturities 309,415 318,651
Capital lease obligations, less current
maturities 152,758 161,310
Deferred income taxes 369,127 395,448
Other liabilities 117,449 119,910
------------ ------------
Total liabilities 2,843,914 3,131,400
Preferred stock, Series A 187,050 187,050
Total stockholders' equity 69,904 42,767
------------ ------------
Total liabilities and stockholders' equity $ 3,100,868 $ 3,361,217
============ ============
DINEEQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Year Ended December 31,
---------------------------
2009 2008
------------ ------------
Cash flows from operating activities
Net income (loss) $ 31,409 $ (154,459)
Adjustments to reconcile net income (loss)
to cash flows provided by operating
activities
Depreciation and amortization 65,379 72,934
Non-cash interest expense 39,422 39,083
Gain on extinguishment of debt (45,678) (15,242)
Impairment and closure charges 105,094 240,630
Deferred income taxes (19,875) (65,226)
Stock-based compensation expense 10,710 12,089
Tax benefit from stock-based compensation 531 1,864
Excess tax benefit from stock options
exercised (48) (315)
Gain on disposition of assets (6,947) 259
Other (5,816) 1,172
Changes in operating assets and
liabilities
Receivables 11,607 (2,441)
Inventories (1,474) 182
Prepaid expenses (25,273) (146)
Accounts payable (14,867) (23,749)
Accrued employee compensation and
benefits (8,119) (11,609)
Gift card liability 7,180 18,480
Other accrued expenses 14,613 (2,667)
------------ ------------
Cash flows provided by operating
activities 157,848 110,839
------------ ------------
Cash flows from investing activities
Additions to property and equipment (15,372) (31,765)
(Additions) reductions to long-term
receivables 2,528 (4,743)
Payment of accrued acquisition costs -- (10,261)
Collateral released by captive insurance
subsidiary 1,549 4,559
Proceeds from sale of property and
equipment and assets held for sale 15,777 61,137
Principal receipts from notes and
equipment contracts receivable 15,025 15,797
Other (672) 471
------------ ------------
Cash flows provided by investing
activities 18,835 35,195
------------ ------------
Cash flows from financing activities
Proceeds from issuance of long-term debt 10,000 35,000
Proceeds from financing obligations -- 370,502
Repayment of long-term debt (173,777) (421,325)
Principal payments on capital lease and
financing obligations (16,160) (9,854)
Dividends paid (24,091) (33,362)
Proceeds from stock options exercised 324 989
Excess tax benefit from stock options
exercised 48 315
Payment of accrued debt issuance costs (20,300) (48,902)
Restricted cash related to securitization 15,878 49,216
Other (734) (1,008)
------------ ------------
Cash flows used in financing
activities (208,812) (58,429)
------------ ------------
Net change in cash and cash equivalents (32,129) 87,605
Cash and cash equivalents at beginning
of year 114,443 26,838
------------ ------------
Cash and cash equivalents at end of year $ 82,314 $ 114,443
============ ============
DINEEQUITY, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
(Unaudited)
Reconciliation of (i) net income (loss) available to common stockholders to
(ii) net income (loss) available to common stockholders excluding
impairment and closure charges, gain on extinguishment of debt,
amortization of intangible assets, non-cash interest expense and loss
(gain) on disposition of assets, and related per share data:
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Net (loss) income available
to common stockholders,
as reported $ (48,157) $ (136,949) $ 9,236 $ (169,193)
Impairment and closure
charges 98,622 170,732 105,094 240,630
Gain on extinguishment of
debt (6,875) (12,808) (45,678) (15,242)
Amortization of intangible
assets 3,250 3,076 12,306 12,132
Non-cash interest expense 10,084 10,136 39,422 39,083
Loss (gain) on disposition
of assets 306 691 (6,947) 259
Income tax (provision)
benefit (41,944) (22,862) (41,470) (64,036)
Net income allocated to
unvested participating
restricted stock (2,237) (5,728) (2,294) (7,773)
---------- ---------- ---------- ----------
Net income available to
common stockholders, as
adjusted $ 13,049 $ 6,288 $ 69,669 $ 35,860
========== ========== ========== ==========
Diluted net income available
to common stockholders per
share:
Net (loss) income available
to common stockholders per
share, as reported $ (2.84) $ (8.15) $ 0.55 $ (10.09)
Impairment and closure
charges per share 5.52 10.16 5.92 14.35
Gain on extinguishment of
debt per share (0.38) (0.76) (2.57) (0.91)
Amortization of intangible
assets per share 0.18 0.18 0.69 0.72
Non-cash interest expense
per share 0.56 0.60 2.22 2.33
Loss (gain) on disposition
of assets per share 0.02 0.04 (0.39) 0.02
Income tax (provision)
benefit per share (2.35) (1.36) (2.33) (3.82)
Net income allocated to
unvested participating
restricted stock per share (0.13) (0.34) (0.13) (0.46)
Per share effect of
dilutive calculation
adjustments 0.18 -- 0.10 --
---------- ---------- ---------- ----------
Diluted net income available
to common stockholders per
share, as adjusted $ 0.76 $ 0.37 $ 4.06 $ 2.14
========== ========== ========== ==========
Numerator for basic
EPS-income available to
common stockholders, as
adjusted $ 13,049 $ 6,288 $ 69,669 $ 35,860
Effect of unvested
participating restricted
stock using the two-class
method 24 -- 123 --
Effect of dilutive
securities:
Stock options -- -- -- --
Convertible Series B
preferred stock 585 -- 2,291 --
---------- ---------- ---------- ----------
Numerator for diluted
EPS-income available to
common stockholders after
assumed conversions, as
adjusted $ 13,658 $ 6,288 $ 72,083 $ 35,860
========== ========== ========== ==========
Denominator for basic
EPS-weighted-average
shares 16,953 16,799 16,917 16,764
Effect of dilutive
securities:
Stock options 354 -- 275 --
Convertible Series B
preferred stock 573 -- 573 --
---------- ---------- ---------- ----------
Denominator for diluted
EPS-weighted-average
shares and assumed
conversions 17,880 16,799 17,765 16,764
========== ========== ========== ==========
DINEEQUITY, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
Reconciliation of (i) income before income taxes to (ii) EBITDA and to
(ii) EBITDAR:
Trailing Twelve Months Ended December 31, 2009
Income before income taxes (including gain
on extinguishment of debt) $ 36,584
Interest expense 207,297
Depreciation and amortization 65,378
Impairment and closure charges 105,094
Stock-based compensation 10,710
Gain on sale of assets (7,087)
Non-cash amounts related to captive
insurance subsidiary 261
----------
EBITDA 418,237
Annualized operating lease expense 98,433
----------
EBITDAR $ 516,670
==========
Reconciliation of the Company's cash provided by operating activities to
free cash flow:
Year Ended December 31,
-----------------------
2009 2008
---------- ----------
Cash flows from operating activities $ 157,848 $ 110,839
Receipts from long-term notes receivable 15,025 15,797
Dividends paid (24,091) (33,362)
Capital expenditures (15,372) (31,765)
---------- ----------
Free cash flow $ 133,410 $ 61,509
========== ==========
DINEEQUITY, INC. AND SUBSIDIARIES
RESTAURANT DATA
The following table sets forth, for the three-month and twelve-month
periods ended December 31 of the current year and prior year, information
regarding the percentage change in sales at effective restaurants in the
IHOP and Applebee's systems compared to the same periods in the prior year.
"Effective restaurants" are the number of restaurants in a given period,
adjusted to account for restaurants open for only a portion of the period.
Information is presented for all effective restaurants in the IHOP and
Applebee's system, 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 Year Ended
December 31, December 31,
-------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
Applebee's Restaurant Data (unaudited)
Effective restaurants(a)
Franchise 1,605 1,555 1,595 1,504
Company 399 442 401 486
-------- -------- -------- --------
Total 2,004 1,997 1,996 1,990
======== ======== ======== ========
System-wide(b)
Domestic sales percentage
change(c) 5.2% (3.4)% (2.1)% (0.4)%
Domestic same-store sales
percentage change(d) (4.5)% (4.6)% (4.5)% (2.2)%
Franchise(b)(e)
Domestic sales percentage
change(c)(g) 7.5% 1.7% 3.6% 1.6%
Domestic same-store sales
percentage change(d) (4.6)% (4.7)% (4.4)% (2.4)%
Domestic average weekly
unit sales (in thousands) $ 42.7 $ 43.9 $ 45.3 $ 47.2
Company
Domestic sales percentage
change(c)(g) (3.2)% (18.3)% (19.7)% (6.1)%
Domestic same-store sales
percentage change(d) (3.9)% (4.2)% (4.8)% (1.3)%
Domestic average weekly
unit sales (in thousands) $ 39.0 $ 39.2 $ 41.1 $ 43.1
Three Months Ended Year Ended
December 31, December 31,
-------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
IHOP Restaurant Data (unaudited)
Effective restaurants(a)
Franchise 1,266 1,206 1,245 1,189
Company 12 11 11 10
Area license 163 159 161 158
-------- -------- -------- --------
Total 1,441 1,376 1,417 1,357
======== ======== ======== ========
System-wide(b)
Sales percentage change(c) 9.4% 3.6% 5.6% 5.5%
Domestic same-store sales
percentage change(d) (3.1)% (1.0)% (0.8)% 1.5%
Franchise(b)(e)
Sales percentage change(c) 10.9% 3.4% 6.3% 5.9%
Same-store sales percentage
change(d) (3.2)% (1.0)% (0.8)% 1.5%
Average weekly unit sales
(in thousands) $ 33.9 $ 34.4 $ 35.1 $ 35.2
Company(f) n.m. n.m. n.m. n.m.
Area License(h)
Sales percentage change(c) (5.1)% 6.2% (1.6)% 3.1%
(a) "Effective restaurants" are the number of restaurants in a given fiscal
period adjusted to account for restaurants open for only a portion of
the period. Information is presented for all effective restaurants in
the IHOP system, which includes restaurants owned by the Company as
well as those owned by franchisees and area licensees.
(b) "System-wide sales" are retail sales of Applebee's and IHOP restaurants
operated by franchisees and IHOP restaurants operated by 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.
(c) "Sales percentage change" reflects, for each category of restaurants,
the percentage change in sales in any given fiscal year compared to the
prior fiscal year for all restaurants in that category. The fourth
quarter and fiscal year ended December 31, 2009 contained 14 and 53
weeks, respectively, while the fourth quarter and fiscal year ended
December 31, 2008 contained 13 and 52 weeks, respectively.
(d) "Same-store sales percentage change" reflects the percentage change in
sales, in any given fiscal year compared to the prior fiscal year, for
restaurants that have been operated throughout both fiscal periods that
are being compared and have been open for at least 18 months. Because
of new unit openings and store closures, the restaurants open
throughout both fiscal periods being compared will be different from
period to period. Same-store sales percentage change does not include
data on IHOP restaurants located in Florida.
(e) IHOP franchise restaurant sales were $598.7 million and $2.3 billion
for the fourth quarter and fiscal year ended December 31, 2009,
respectively. IHOP franchise restaurant sales were $539.7 million and
$2.2 billion for the fourth quarter and fiscal year ended December 31,
2008, respectively. Applebee's domestic franchise restaurant sales were
$878.1 million and $3.5 billion for the fourth quarter and fiscal year
ended December 31, 2009, respectively. Applebee's domestic franchise
restaurant sales were $817.1 million and $3.4 billion for the fourth
quarter and fiscal year ended December 31, 2008, respectively.
(f) Sales percentage change and same-store sales percentage change for IHOP
company-operated restaurants are not meaningful due to the relatively
small number and test-market nature of the restaurants, along with the
periodic inclusion of restaurants reacquired from franchisees that are
temporarily operated by the Company.
(g) The sales percentage change for Applebee's franchise and
company-operated restaurants is impacted by the franchising of 103
company-operated restaurants during 2008 and seven company-operated
restaurants in 2009.
(h) IHOP area license restaurants are located in Florida and Georgia in the
U.S. and in British Columbia, Canada. Sales at IHOP area license
restaurants were $52.3 million and $214.9 million for the fourth
quarter and fiscal year ended December 31, 2009, respectively. Sales at
IHOP area license restaurants were $55.2 million and $218.4 million for
the fourth quarter and fiscal year ended December 31, 2008,
respectively.
DINEEQUITY, INC. AND SUBSIDIARIES
RESTAURANT DATA
The following table summarizes our restaurant development activity:
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
(unaudited)
Applebee's Restaurant
Development Activity
Beginning of period 2,002 1,997 2,004 1,976
New openings
Company-developed -- -- -- 1
Franchisee-developed 10 14 33 48
---------- ---------- ---------- ----------
Total new openings 10 14 33 49
Closings
Company -- -- -- (3)
Franchise (4) (7) (29) (18)
---------- ---------- ---------- ----------
End of period 2,008 2,004 2,008 2,004
========== ========== ========== ==========
Summary-end of period
Franchise 1,609 1,598 1,609 1,598
Company 399 406 399 406
---------- ---------- ---------- ----------
Total 2,008 2,004 2,008 2,004
========== ========== ========== ==========
IHOP Restaurant Development
Activity
Beginning of period 1,433 1,375 1,396 1,344
New openings
Company-developed 1 1 1 1
Franchisee-developed 26 22 69 65
Area license 2 3 6 5
---------- ---------- ---------- ----------
Total new openings 29 26 76 71
Closings
Company -- -- -- (1)
Franchise (6) (5) (14) (16)
Area license -- -- (2) (2)
---------- ---------- ---------- ----------
End of period 1,456 1,396 1,456 1,396
========== ========== ========== ==========
Summary-end of period
Franchise 1,279 1,225 1,279 1,225
Company 13 11 13 11
Area license 164 160 164 160
---------- ---------- ---------- ----------
Total 1,456 1,396 1,456 1,396
========== ========== ========== ==========
SOURCE: DineEquity, Inc.