DineEquity, Inc. Announces Strong Fourth Quarter 2010 Results
GLENDALE, CA, Mar 03, 2011 (MARKETWIRE via COMTEX) -- DineEquity, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill & Bar and IHOP Restaurants, today announced financial results for the fourth quarter and fiscal year 2010. DineEquity's financial performance for the fourth quarter and year ended December 31, 2010 included the following highlights:
-- Compared to the same periods in 2009, Applebee's domestic system-wide
same-restaurant sales increased 2.9% for the fourth quarter 2010,
representing its second consecutive quarter of positive
same-restaurant sales growth, and increased 0.3% for fiscal 2010,
representing its first year of sales growth since 2005. IHOP's
domestic system-wide same-restaurant sales increased 1.1% for the
fourth quarter 2010, representing its second consecutive quarter of
positive same-restaurant sales results, and were flat for fiscal year
2010.
-- Applebee's company-operated restaurant operating margins increased 210
basis points to 15.5% for the fourth quarter 2010, and increased 40
basis points to 14.8% for fiscal 2010 compared to the same periods in
2009. These improvements primarily reflect higher menu prices and
favorable promotional and product mix, partially offset by guest count
declines and the impact of the 53rd week in 2009.
-- Adjusted net income available to common stockholders (see "Non-GAAP
Financial Measures" below) was $10.6 million, or $0.59 per diluted
share, for the fourth quarter 2010 compared to $13.0 million, or $0.76
per diluted share, for the same quarter in 2009. This decrease was
primarily due to the $10.3 million profit before tax impact of a 53rd
operating week in 2009 and a $7.7 million charge related to the
default of an IHOP franchisee. This was partially offset by lower
preferred stock dividends, higher same-restaurant sales for both
Applebee's and IHOP and improved Applebee's restaurant operating
margins.
-- For fiscal 2010, adjusted net income available to common stockholders
was $61.7 million, or $3.50 per diluted share, compared to $69.7
million, or $4.06 per diluted share, for fiscal 2009. This decrease
was primarily due to the impact of a 53rd operating week in 2009 and a
charge related to the default of an IHOP franchisee. This was
partially offset by lower interest expense and an increase in IHOP's
effective franchise restaurants.
-- Net loss available to common stockholders in the fourth quarter 2010
was $58.1 million, or $3.33 per diluted share, and for the full year
was $30.0 million, or $1.74 per diluted share. These net losses were
primarily due to the extinguishment of debt and the redemption of
Series A perpetual preferred stock and related premiums in connection
with our successful refinancing. Partially offsetting these charges
were gains on the disposition of assets related to the sale of
company-operated Applebee's restaurants in Minnesota and parts of
Virginia.
-- General & Administrative (G&A) expenses totaled $43.1 million
for the fourth quarter 2010 and $159.6 million for the full year.
Compared to fiscal 2009, full year G&A expenses increased 0.7% for
fiscal 2010.
-- For fiscal 2010, cash flows from operating activities increased 13.6%
to $179.3 million compared to fiscal 2009, primarily due to the timing
of cash interest payments on the Company's bonds and tax benefits,
partially offset by the working capital impact of refranchising 83
restaurants in the fourth quarter 2010 and the impact of the 53rd
operating week in 2009. Consolidated capital expenditures were $18.7
million, and free cash flow (see "Non-GAAP Financial Measures" below)
was $153.9 million. From the refinancing of its debt in mid-October
2010 through the re-pricing of its bank debt on February 25, 2011, the
Company has used available free cash flow and after-tax cash proceeds
from the sale of Applebee's company-operated restaurants to reduce its
total debt by $158 million.
Julia A. Stewart, DineEquity's chairman and chief executive officer, said, "Fiscal 2010 was a successful year for DineEquity. Our performance was a reflection of the strategic work being undertaken by our management teams at Applebee's and IHOP as well as our Shared Services structure as we execute against our long-term growth plans for our brands and our business. In addition to driving positive momentum at Applebee's, we successfully refinanced our debt and sold a significant number of Applebee's company-operated restaurants despite a difficult economic period. Looking ahead, we see 2011 as a year when we will be relentlessly focused on execution as our brands move forward with an integrated marketing, menu and operations approach and an increasing number of remodeled restaurants to deliver unsurpassed guest experiences at both Applebee's and IHOP."
Same-Restaurant Sales Performance
Applebee's domestic system-wide same-restaurant sales increased 2.9% for the fourth quarter 2010 compared to the same quarter in 2009. The improvement was primarily due to ongoing marketing and operational initiatives and menu enhancements. Domestic franchise same-restaurant sales increased 3.4% and company-operated Applebee's same-restaurant sales increased 0.3% for the fourth quarter 2010 compared to the same quarter in 2009. Fourth quarter 2010 results at Applebee's company-operated restaurants reflected a higher average guest check partially offset by a decline in guest traffic compared to the same quarter in 2009. Menu pricing at company-operated restaurants for the fourth quarter 2010 increased 2.1%.
For fiscal 2010, Applebee's domestic system-wide same-restaurant sales increased 0.3% compared to fiscal 2009. Domestic franchise same-restaurant sales increased 0.6% and company-operated Applebee's same-restaurant sales decreased 1.3% compared to fiscal 2009. The overall improvement in same-restaurant sales was primarily due to ongoing marketing, operational and menu revitalization efforts, which were further enhanced during the quarter by a refreshed Two for $20 value offering including stuffed pastas, Flavor Loaded Steaks starting at $9.99 and the second consecutive year of Applebee's Veteran's Day event.
IHOP's domestic system-wide same-restaurant sales increased 1.1% for the fourth quarter 2010 compared to the same quarter in 2009. The improvement was primarily due to the limited-time offer Festival of Flavors along with the promotion of Trick or Treat All-You-Can-Eat Pancakes. IHOP's same-restaurant sales results for the fourth quarter 2010 reflected a higher average guest check offset by a decline in guest traffic. For fiscal 2010, IHOP's domestic system-wide same-restaurant sales were flat compared to fiscal 2009.
Applebee's Restaurant Operating Margins
Applebee's company-operated restaurant operating margin improved 210 basis points to 15.5% for the fourth quarter 2010 compared to 13.4% for the same quarter in 2009. Applebee's improved operating margin performance for the quarter was due primarily to positive check growth due to menu price increases of 2.1%, favorable promotional and mix impacts, favorable timing shifts of advertising expenses, and favorable operating results including lower labor and commodity costs, partially offset by guest count declines and the impact of the 53rd operating week in 2009. The sale of 83 Applebee's company-operated restaurants improved fourth quarter 2010 margins by 20 basis points. Additionally, operating margin improvements reflected lower depreciation expense associated with the accounting treatment related to restaurants held for sale in the first quarter 2011.
Applebee's company-operated restaurant operating margin improved 40 basis points to 14.8% for fiscal 2010 compared to 14.4% for fiscal 2009. Applebee's improved restaurant operating margin performance for 2010 was favorably impacted by menu price increases of 1.7% and favorable mix shifts, decreased food and beverage cost due to lower commodity costs and labor savings driven by improvements in hourly labor productivity. These gains were partially offset by guest count declines, increases in facility expenses and gift card program costs. The 53rd operating week in 2009 and the sale of 83 company-operated restaurants decreased Applebee's fiscal 2010 operating margin by approximately 20 basis points for the year.
Sale of Applebee's Company Restaurants
In the fourth quarter 2010, DineEquity successfully completed two transactions for the sale of 83 company-operated Applebee's restaurants located in Minnesota and parts of Wisconsin and Virginia. These transactions resulted in after-tax cash proceeds of $37 million and reduced sale-leaseback related financing obligations by $63 million. Subsequent to the fourth quarter 2010, the Company successfully completed two transactions for the sale of 65 company-operated Applebee's restaurants located in St. Louis, Missouri and parts of Illinois and in Washington D.C. These transactions resulted in after-tax cash proceeds of $49 million and reduced sale-leaseback related financing obligations by $31 million. The sale of one additional restaurant in the Washington D.C. transaction is expected to be completed shortly due to additional time required to transfer the lease for this property.
The sale of company-operated Applebee's restaurants furthers DineEquity's strategic objective of transitioning Applebee's into a more highly franchised restaurant system over time. The Company believes a more heavily franchised business model requires less capital investment and reduces the volatility of the Company's cash flow performance, while also providing cash proceeds from franchising of restaurants for the retirement of debt.
Corporate Refinancing and Subsequent Re-pricing Completed
On October 20, 2010, DineEquity successfully completed a $1.8 billion refinancing through a $950 million senior secured credit facility and $825 million of senior unsecured notes. The refinancing was accretive to earnings based on a combined reduction of interest expense and non-deductible preferred dividends. The Company used proceeds from its refinancing activities, cash on hand and asset sales proceeds to fund the retirement of all of its outstanding securitized debt and redeem all of its Series A perpetual preferred stock in the fourth quarter 2010. In conjunction with this transaction, DineEquity recognized a charge of approximately $64 million in the fourth quarter of 2010 related to the write off of deferred financing costs associated with its previous securitized debt structure and Series A perpetual preferred stock. Additionally, the Company recognized a $46 million charge in the fourth quarter of 2010 related to prepayment penalties and tender premiums associated with the refinancing of its previous securitized structure. These charges were exclusive of related income tax benefits.
In the first quarter 2011, DineEquity completed a re-pricing of its senior secured term loan facility on February 25, 2011 to take advantage of lower interest rates available in the current senior secured debt market. This re-pricing transaction established a $742.0 million senior secured credit facility maturing in October 2017. The Company also increased the amount of its $50 million senior secured revolving credit facility, maturing in October 2015, to $75 million. This facility was not drawn on as of the closing date of the completed re-pricing. DineEquity's bank loans will bear interest at an annual rate equal to LIBOR plus 300 basis points, subject to a floor of 125 basis points floor on LIBOR. Today, this represents a 4.25% interest rate, or a 175 basis point reduction compared to the Company's previous interest rate. Fees and other costs to re-price its senior secured debt totaled $12.4 million.
DineEquity intends to continue to dedicate its free cash flow, along with cash proceeds generated from the future sales of Applebee's company-operated restaurants, to the retirement of its senior secured credit facility.
Investor Conference Call Today
DineEquity will host an investor conference call to discuss its 2011 financial performance guidance and fourth quarter and fiscal 2010 financial results on Thursday, March 3, 2011 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). To participate on the call, please dial (888) 679-8037 and reference pass code 88090090. A live webcast of the call will be available on DineEquity's Web site at www.dineequity.com, and may be accessed by visiting Calls & Presentations under the site's Investor Information section. Participants should allow approximately ten minutes prior to the call's start time to visit the site and download any streaming media software needed to listen to the webcast. A telephonic replay of the call may be accessed through March 10, 2011 by dialing 888-286-8010 and referencing pass code 48867470. 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 nearly 3,500 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
Statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 substantial indebtedness; risk of future impairment charges; 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; shortages or interruptions in the supply or delivery of food; changing health or dietary preferences; harm to our brands' reputation; litigation; environmental liability; liability relating to employees; failure to comply with applicable laws and regulations; failure to effectively implement restaurant development plans; 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; inability of franchisees to fund capital expenditures; and other factors discussed from time to time in the Company's Form 10-Q, Form 10-K 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)" and "free cash flow." Adjusted EPS is computed for a given period by deducting from net income (loss) available to common stockholders for such period the effect of any impairment and closure charges, any gain or loss related to debt extinguishment and Series A Preferred Stock, any intangible asset amortization, any non-cash interest expense, any gain or loss related to the disposition of assets and any premium paid on redemption of Series A Preferred Stock incurred in such period. This is presented on an aggregate basis and a per share (diluted) basis. "Free cash flow" for a given period is defined as cash provided by operating activities, plus receipts from notes, equipment contracts and other long-term receivables ("long-term notes receivable"), less dividends paid and capital expenditures. Management utilizes free cash flow to determine the amount of cash remaining for general corporate and strategic purposes after the receipts from long-term notes receivable, and the funding of operating activities, capital expenditures and preferred dividends. Management believes this information is helpful to investors to determine the Company's adherence to debt covenants and the Company's cash available for these purposes. Adjusted EPS 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.
DINEEQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
Segment Revenues:
Franchise revenues $ 96,183 $ 93,276 $ 376,745 $ 372,198
Company restaurant sales 173,356 221,871 815,572 890,020
Rental revenues 26,179 34,663 124,508 133,845
Financing revenues 4,072 5,395 16,260 17,899
---------- ---------- ---------- ----------
Total revenues 299,790 355,205 1,333,085 1,413,962
---------- ---------- ---------- ----------
Segment Expenses:
Franchise expenses 27,467 24,845 103,835 102,256
Company restaurant
expenses 147,429 193,123 699,266 766,466
Rental expenses 23,990 24,222 96,155 97,303
Financing expenses 734 10 1,968 370
---------- ---------- ---------- ----------
Total segment expenses 199,620 242,200 901,224 966,395
---------- ---------- ---------- ----------
Segment gross profit 100,170 113,005 431,861 447,567
General and administrative
expenses 43,112 41,454 159,643 158,469
Interest expense 40,062 46,862 171,496 186,473
Impairment and closure
charges 397 98,622 3,482 105,094
Amortization of intangible
assets 3,070 3,250 12,300 12,306
Loss (gain) on
extinguishment of debt
and Series A Preferred
Stock 111,643 (6,875) 107,003 (45,678)
(Gain) loss on disposition
of assets (14,496) 306 (13,573) (6,947)
Other expense, net 807 249 3,590 1,266
---------- ---------- ---------- ----------
(Loss) income before income
taxes (84,425) (70,863) (12,080) 36,584
Benefit (provision) for
income taxes 33,594 26,812 9,292 (5,175)
---------- ---------- ---------- ----------
Net (loss) income $ (50,831) $ (44,051) $ (2,788) $ 31,409
========== ========== ========== ==========
Net (loss) income $ (50,831) $ (44,051) $ (2,788) $ 31,409
Less: Series A preferred
stock dividends (8,827) (5,281) (25,927) (19,531)
Less: Accretion of Series
B preferred stock (622) (585) (2,432) (2,291)
Less: Net loss (income)
allocated to unvested
participating restricted
stock 2,176 1,760 1,173 (351)
---------- ---------- ---------- ----------
Net (loss) income available
to common stockholders $ (58,104) $ (48,157) $ (29,974) $ 9,236
========== ========== ========== ==========
Net (loss) income available
to common stockholders per
share
Basic $ (3.33) $ (2.84) $ (1.74) $ 0.55
========== ========== ========== ==========
Diluted $ (3.33) $ (2.84) $ (1.74) $ 0.55
========== ========== ========== ==========
Weighted average shares
outstanding
Basic 17,455 16,953 17,240 16,917
========== ========== ========== ==========
Diluted 17,455 16,953 17,240 16,917
========== ========== ========== ==========
DINEEQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
December 31, December 31,
2010 2009
------------ ------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 102,309 $ 82,314
Restricted cash 854 72,690
Receivables, net 98,776 104,690
Inventories 10,757 12,236
Prepaid income taxes 34,094 7,702
Prepaid gift cards 27,465 19,878
Prepaid expenses 14,602 13,425
Deferred income taxes 24,301 15,444
Assets held for sale 37,944 8,765
------------ ------------
Total current assets 351,102 337,144
------------ ------------
Non-current restricted cash 778 48,173
Restricted assets related to captive insurance
subsidiary 3,562 4,344
Long-term receivables 239,945 259,775
Property and equipment, net 612,175 771,372
Goodwill 697,470 697,470
Other intangible assets, net 835,879 849,552
Other assets, net 115,730 133,038
------------ ------------
Total assets $ 2,856,641 $ 3,100,868
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 9,000 $ 25,200
Accounts payable 32,724 31,729
Accrued employee compensation and benefits 32,846 37,397
Gift card liability 124,972 105,465
Accrued interest payable 17,482 3,627
Other accrued expenses 48,058 54,549
------------ ------------
Total current liabilities 265,082 257,967
------------ ------------
Long-term debt, less current maturities 1,631,469 1,637,198
Financing obligations, less current maturities 237,826 309,415
Capital lease obligations, less current maturities 144,016 152,758
Deferred income taxes 375,697 369,127
Other liabilities 118,972 117,449
------------ ------------
Total liabilities 2,773,062 2,843,914
Commitments and contingencies
Preferred stock, Series A -- 187,050
Total stockholders' equity 83,579 69,904
------------ ------------
Total liabilities and stockholders' equity $ 2,856,641 $ 3,100,868
============ ============
DINEEQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Year Ended December 31,
------------------------
2010 2009
----------- -----------
Cash flows from operating activities
Net (loss) income $ (2,788) $ 31,409
Adjustments to reconcile net income to cash
flows provided by operating activities:
Depreciation and amortization 61,427 65,379
Non-cash interest expense 34,379 39,422
Loss (gain) on extinguishment of debt and
Series A Preferred Stock 107,003 (45,678)
Impairment and closure charges 3,482 105,094
Deferred income taxes (15,484) (19,875)
Non-cash stock-based compensation expense 13,085 10,710
Tax benefit from stock-based compensation 2,692 531
Excess tax benefit from stock options
exercised (4,775) (48)
Gain on disposition of assets (13,573) (6,947)
Other 5,430 (5,816)
Changes in operating assets and liabilities
Receivables 3,736 11,607
Inventories (263) (1,474)
Prepaid expenses (9,148) (15,947)
Current income tax receivables and payables (27,703) 5,001
Accounts payable 27 (14,867)
Accrued employee compensation and benefits (5,000) (8,119)
Gift card liability 19,507 7,180
Other accrued expenses 7,248 286
----------- -----------
Cash flows provided by operating
activities 179,282 157,848
----------- -----------
Cash flows from investing activities
Additions to property and equipment (18,677) (15,372)
Proceeds from sale of property and equipment
and assets held for sale 51,642 15,777
Principal receipts from notes, equipment
contracts and other long-term receivables 19,452 17,553
Other 1,087 877
----------- -----------
Cash flows provided by investing
activities 53,504 18,835
----------- -----------
Cash flows from financing activities
Proceeds from issuance of long-term debt 1,725,000 10,000
Restricted cash related to securitization debt 119,133 15,878
Repayment of long-term debt (including tender
premiums) (1,777,946) (173,777)
Payment of debt issuance costs (57,602) (20,300)
Redemption of Series A Preferred Stock (190,000) --
Dividends paid (26,117) (24,091)
Principal payments on capital lease and
financing obligations (16,118) (16,160)
Repurchase of restricted stock (1,884) (605)
Proceeds from stock options exercised 7,968 324
Excess tax benefit from stock options
exercised 4,775 48
Other -- (129)
----------- -----------
Cash flows used in financing activities (212,791) (208,812)
----------- -----------
Net change in cash and cash equivalents 19,995 (32,129)
Cash and cash equivalents at beginning of year 82,314 114,443
----------- -----------
Cash and cash equivalents at end of year $ 102,309 $ 82,314
=========== ===========
NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
(Unaudited)
Reconciliation of (i) net (loss) income available to common stockholders to (ii) net income available to common stockholders excluding impairment and closure charges, loss (gain) on extinguishment of debt and Series A Preferred Stock, amortization of intangible assets, non-cash interest expense, (gain) loss on disposition of assets and premium paid on redemption of Series A Preferred Stock, and related per share data:
Three Months Ended Year Ended
December 31, December 31,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Net (loss) income available to
common stockholders, as
reported $ (58,104) $ (48,157) $ (29,974) $ 9,236
Impairment and closure charges 397 98,622 3,482 105,094
Loss (gain) on extinguishment of
debt and Series A Preferred
Stock 111,643 (6,875) 107,003 (45,678)
Amortization of intangible
assets 3,070 3,250 12,300 12,306
Non-cash interest expense 3,176 10,084 34,379 39,422
(Gain) loss on disposition of
assets (14,496) 306 (13,573) (6,947)
Series A redemption premium 7,600 -- 7,600 --
Income tax provision (40,094) (41,944) (55,919) (41,470)
Net income allocated to unvested
participating restricted stock (2,574) (2,237) (3,589) (2,294)
--------- --------- --------- ---------
Net income available to common
stockholders, as adjusted $ 10,618 $ 13,049 $ 61,709 $ 69,669
========= ========= ========= =========
Diluted net income available to
common stockholders per share:
Net (loss) income available to
common stockholders per share,
as reported $ (3.33) $ (2.84) $ (1.74) $ 0.55
Impairment and closure charges
per share 0.01 3.33 0.12 3.57
Loss (gain) on extinguishment of
debt and Series A Preferred
Stock per share 3.81 (0.23) 3.72 (1.55)
Amortization of intangible
assets per share 0.10 0.11 0.42 0.42
Non-cash interest expense per
share 0.11 0.34 1.17 1.34
Series A redemption premium per
share 0.42 -- 0.43 --
(Gain) loss on disposition of
assets per share (0.49) 0.01 (0.46) (0.23)
Net income allocated to unvested
participating restricted stock
per share (0.14) (0.13) (0.20) (0.13)
Per share effect of dilutive
calculation adjustments 0.10 0.17 0.04 0.09
--------- --------- --------- ---------
Diluted net income available to
common stockholders per share,
as adjusted $ 0.59 $ 0.76 $ 3.50 $ 4.06
========= ========= ========= =========
Numerator for basic EPS-income
available to common
stockholders, as adjusted $ 10,618 $ 13,049 $ 61,709 $ 69,669
Effect of unvested participating
restricted stock using the two-
class method 10 24 50 123
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 $ 10,628 $ 13,658 $ 61,759 $ 72,083
========= ========= ========= =========
Denominator for basic EPS-
weighted-average shares 17,455 16,953 17,240 16,917
Effect of dilutive securities:
Stock options 486 354 385 275
Convertible Series B preferred
stock -- 573 -- 573
--------- --------- --------- ---------
Denominator for diluted EPS-
weighted-average shares and
assumed conversions 17,941 17,880 17,625 17,765
========= ========= ========= =========
NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
Reconciliation of U.S. GAAP loss before income taxes to EBITDA:
Trailing Twelve Months Ended December 31, 2010
U.S. GAAP loss before income taxes $ (12,080)
Interest charges 190,739
Loss on retirement of debt and Series A Preferred Stock 107,003
Depreciation and amortization 61,427
Non-cash stock-based compensation 13,085
Impairment and closure charges 3,482
Other 1,930
Gain on sale of assets (13,573)
-----------
EBITDA $ 352,013
===========
Reconciliation of the Company's cash provided by operating activities to free cash flow:
Year Ended December 31,
------------------------
2010 2009
----------- -----------
Cash flows from operating activities $ 179,282 $ 157,848
Principal receipts from notes, equipment contracts
and other long-term receivables 19,452 17,553
Dividends paid (26,117) (24,091)
Capital expenditures (18,677) (15,372)
----------- -----------
Free cash flow $ 153,940 $ 135,938
=========== ===========
Restaurant Data
The following table sets forth, for the three-month and twelve-month periods ended December 31, 2010 and 2009, the number of effective restaurants in the Applebee's and IHOP systems and information regarding the percentage change in sales at those restaurants compared to the same periods in the prior year. "Effective restaurants" are the number of restaurants in a given period, adjusted to account for restaurants open for only a portion of the period. Information is presented for all effective restaurants in the Applebee's and IHOP systems, which includes restaurants operated by the Company, as well as those operated by franchisees and area licensees. Sales at restaurants that are operated 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 Year Ended
Ended December 31, December 31,
------------------ -----------------
2010 2009 2010 2009
-------- ------- ------- -------
Applebee's Restaurant Data (unaudited)
Effective restaurants(a)
Franchise 1,667 1,605 1,621 1,595
Company 338 399 380 401
-------- ------- ------- -------
Total 2,005 2,004 2,001 1,996
======== ======= ======= =======
System-wide(b)
Sales percentage change(c) (4.2)% 5.2% (1.8)% (2.1)%
Domestic same-restaurant sales
percentage change(d) 2.9% (4.5)% 0.3% (4.5)%
Franchise(e)
Sales percentage change(c)(g) 0.2% 7.5% (0.1)% 3.6%
Same-restaurant sales percentage
change(d) 3.4% (4.6)% 0.6% (4.4)%
Average weekly domestic unit
sales (in thousands) $ 44.5 $ 42.7 $ 45.8 $ 45.3
Company
Sales percentage change(c)(g) (22.0)% (3.2)% (8.4)% (19.7)%
Same-restaurant sales percentage
change(d) 0.3% (3.9)% (1.3)% (4.8)%
Average weekly domestic unit
sales (in thousands) $ 38.6 $ 39.0 $ 40.4 $ 41.1
Three Months Ended Year Ended
December 31, December 31,
------------------ -----------------
2010 2009 2010 2009
-------- ------- ------- --------
IHOP Restaurant Data (unaudited)
Effective restaurants(a)
Franchise 1,315 1,266 1,296 1,245
Company 10 12 11 11
Area license 164 163 164 161
-------- ------- ------- -------
Total 1,489 1,441 1,471 1,417
======== ======= ======= =======
System-wide(b)
Sales percentage change(c) (1.5)% 9.4% 2.2% 5.6%
Domestic same-restaurant sales
percentage change(d) 1.1% (3.1)% (0.0)% (0.8)%
Franchise(e)
Sales percentage change(c) (1.8)% 10.9% 2.1% 6.3%
Same-restaurant sales
percentage change(d) 1.1% (3.2)% (0.1)% (0.8)%
Average weekly unit sales (in
thousands) $ 34.4 $ 33.9 $ 35.1 $ 35.1
Company(f) n.m. n.m. n.m. n.m.
Area License(e)
Sales percentage change(c) 2.9% (5.1)% 3.3% (1.6)%
(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 and Applebee's 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 IHOP and Applebee's 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 operated by franchisees and area licensees are not attributable to the Company.
(c) "Sales percentage change" reflects, for each category of restaurants, the percentage change in sales in any given fiscal period compared to the prior fiscal period for all restaurants in that category.
(d) "Same-restaurant sales percentage change" reflects the percentage change in sales, in any given fiscal period compared to the same weeks in the prior year, for restaurants that have been operated throughout both fiscal periods that are being compared and have been open for at least 18 months. Because of new unit openings and restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period. Same-restaurant sales percentage change does not include data on IHOP restaurants located in Florida.
(e)
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
Reported sales (unaudited) 2010 2009 2010 2009
--------- --------- --------- ---------
Applebee's domestic franchise
restaurant sales $ 879.6 $ 878.1 $ 3,519.4 $ 3,523.1
IHOP franchise restaurant sales $ 587.8 $ 598.7 $ 2,364.7 $ 2,315.9
IHOP area license restaurant sales $ 54.2 $ 52.3 $ 222.0 $ 214.9
(f) Sales percentage change and same-restaurant sales percentage change for IHOP company-operated restaurants are not meaningful ("n.m.") 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 the three and twelve months ended December 31, 2010 and 2009 for Applebee's franchise and company-operated restaurants was impacted by the franchising of 83 company-operated restaurants during 2010, seven company-operated restaurants in 2009 and 103 company-operated restaurants in 2008.
DINEEQUITY, INC. AND SUBSIDIARIES
RESTAURANT DATA
The following table summarizes our restaurant development activity:
Three Months Ended Year Ended
December 31, December 31,
------------------ ------------------
2010 2009 2010 2009
-------- -------- -------- --------
(unaudited)
Applebee's Restaurant Development
Activity
Total restaurants, beginning of
period 1,999 2,002 2,008 2,004
New openings
Company-developed -- -- -- --
Franchise-developed 16 10 27 33
-------- -------- -------- --------
Total new openings 16 10 27 33
Closings
Company -- -- (7) --
Franchise (5) (4) (18) (29)
-------- -------- -------- --------
Total closings (5) (4) (25) (29)
-------- -------- -------- --------
Total restaurants, end of period 2,010 2,008 2,010 2,008
======== ======== ======== ========
Summary-end of period
Franchise 1,701 1,609 1,701 1,609
Company 309 399 309 399
-------- -------- -------- --------
Total 2,010 2,008 2,010 2,008
======== ======== ======== ========
Three Months Ended Year Ended
December 31, December 31,
------------------ ------------------
2010 2009 2010 2009
-------- -------- -------- --------
(unaudited)
IHOP Restaurant Development Activity
Total restaurants, beginning of
period 1,483 1,433 1,456 1,396
New openings
Company-developed -- 1 -- 1
Franchise-developed 25 26 60 69
Area license 1 2 4 6
-------- -------- -------- --------
Total new openings 26 29 64 76
Closings
Company -- -- (2) --
Franchise (4) (6) (10) (14)
Area license (1) -- (4) (2)
-------- -------- -------- --------
Total new closings (5) (6) (16) (16)
-------- -------- -------- --------
Total restaurants, end of period 1,504 1,456 1,504 1,456
======== ======== ======== ========
Summary-end of period
Franchise 1,329 1,279 1,329 1,279
Company 11 13 11 13
Area license 164 164 164 164
-------- -------- -------- --------
Total 1,504 1,456 1,504 1,456
======== ======== ======== ========
SOURCE: DineEquity, Inc.