Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 24, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-15283 | |
Entity Registrant Name | Dine Brands Global, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 95-3038279 | |
Entity Address, Address Line One | 450 North Brand Boulevard, | |
Entity Address, City or Town | Glendale, | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 91203-1903 | |
City Area Code | (818) | |
Local Phone Number | 240-6055 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | DIN | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Small Reporting Company | false | |
Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 16,419,070 | |
Entity Central Index Key | 0000049754 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 278,507 | $ 116,043 |
Receivables, net of allowance of $11,709 (2020) and $3,138 (2019) | 124,619 | 136,869 |
Restricted cash | 31,184 | 40,732 |
Prepaid gift card costs | 27,370 | 36,077 |
Prepaid income taxes | 17,880 | 13,290 |
Other current assets | 6,410 | 3,906 |
Total current assets | 485,970 | 346,917 |
Other intangible assets, net | 555,495 | 575,103 |
Operating lease right-of-use assets | 349,103 | 366,931 |
Goodwill | 251,628 | 343,862 |
Property and equipment, net | 203,540 | 216,420 |
Long-term receivables, net of allowance of $7,981 (2020) and $8,155 (2019) | 74,015 | 85,999 |
Deferred rent receivable | 65,126 | 70,308 |
Non-current restricted cash | 32,800 | 15,700 |
Other non-current assets, net | 25,590 | 28,271 |
Total assets | 2,043,267 | 2,049,511 |
Current liabilities: | ||
Current maturities of long-term debt | 9,750 | 0 |
Accounts payable | 19,181 | 40,925 |
Gift card liability | 121,994 | 159,019 |
Current maturities of operating lease obligations | 71,837 | 72,815 |
Current maturities of finance lease and financing obligations | 13,307 | 13,669 |
Accrued employee compensation and benefits | 10,568 | 23,904 |
Dividends payable | 0 | 11,702 |
Deferred franchise revenue, short-term | 8,921 | 10,086 |
Accrued advertising expenses | 21,772 | 8,760 |
Other accrued expenses | 23,376 | 17,032 |
Total current liabilities | 300,706 | 357,912 |
Long-term debt | 1,497,116 | 1,288,248 |
Operating lease obligations, less current maturities | 350,418 | 359,025 |
Finance lease obligations, less current maturities | 74,051 | 77,393 |
Financing obligations, less current maturities | 34,682 | 37,682 |
Deferred income taxes, net | 86,221 | 98,499 |
Deferred franchise revenue, long-term | 53,269 | 56,944 |
Other non-current liabilities | 15,375 | 15,582 |
Total liabilities | 2,411,838 | 2,291,285 |
Commitments and contingencies | ||
Preferred Stock, Value, Issued | 0 | 0 |
Stockholders’ deficit: | ||
Common stock, $0.01 par value; shares: 40,000,000 authorized; June 30, 2020 - 24,900,436 issued, 16,417,618 outstanding; December 31, 2019 - 24,925,447 issued, 16,521,921 outstanding | 249 | 249 |
Additional paid-in-capital | 254,429 | 246,192 |
(Accumulated deficit) retained earnings | (64,010) | 61,653 |
Accumulated other comprehensive loss | (58) | (58) |
Treasury stock, at cost; shares: June 30, 2020 - 8,482,818; December 31, 2019 - 8,403,526 | (559,181) | (549,810) |
Total stockholders’ deficit | (368,571) | (241,774) |
Total liabilities and stockholders’ deficit | $ 2,043,267 | $ 2,049,511 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Receivables, allowance for credit loss | $ 11,709 | $ 3,138 |
Long-term receivables, allowance for credit loss | $ 7,981 | $ 8,155 |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 40,000,000 | 40,000,000 |
Common stock, shares issued (in shares) | 24,900,436 | 24,925,447 |
Common stock, shares outstanding (in shares) | 16,417,618 | 16,521,921 |
Treasury stock, shares (in shares) | 8,482,818 | 8,403,526 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues: | ||||
Rental revenues | $ 23,707 | $ 29,878 | $ 52,716 | $ 60,589 |
Total revenues | 109,712 | 228,080 | 316,596 | 465,262 |
Cost of revenues: | ||||
Franchise expenses | 37,080 | 78,907 | 106,530 | 159,210 |
Company restaurant expenses | 21,139 | 31,232 | 51,471 | 62,770 |
Interest expense from finance leases | 1,137 | 1,445 | 2,347 | 2,974 |
Other rental expenses | 20,106 | 21,495 | 41,429 | 42,590 |
Rental expenses | 21,243 | 22,940 | 43,776 | 45,564 |
Financing expenses | 128 | 146 | 270 | 292 |
Total cost of revenues | 79,590 | 133,225 | 202,047 | 267,836 |
Gross profit | 30,122 | 94,855 | 114,549 | 197,426 |
General and administrative expenses | 30,870 | 39,364 | 68,478 | 82,183 |
Interest expense, net | 17,127 | 14,602 | 32,299 | 29,995 |
Impairment and closure charges | 124,365 | 289 | 124,353 | 483 |
Amortization of intangible assets | 2,755 | 2,925 | 5,581 | 5,849 |
Loss on extinguishment of debt | 0 | 8,276 | 0 | 8,276 |
Loss on disposition of assets | 1,776 | 332 | 1,543 | 441 |
(Loss) income before income tax provision | (146,771) | 29,067 | (117,705) | 70,199 |
Income tax benefit (provision) | 11,992 | (7,677) | 5,254 | (17,166) |
Net (loss) income | (134,779) | 21,390 | (112,451) | 53,033 |
Other comprehensive income net of tax: | ||||
Foreign currency translation adjustment | 0 | 2 | 0 | 1 |
Total comprehensive (loss) income | (134,779) | 21,392 | (112,451) | 53,034 |
Net (loss) income available to common stockholders: | ||||
Net (loss) income | (134,779) | 21,390 | (112,451) | 53,033 |
Less: Net loss (income) allocated to unvested participating restricted stock | 4,763 | (719) | 3,961 | (1,827) |
Net income available to common stockholders - basic | $ (130,016) | $ 20,671 | $ (108,490) | $ 51,206 |
Net (loss) income available to common stockholders per share: | ||||
Basic (USD per share) | $ (8.04) | $ 1.20 | $ (6.69) | $ 2.97 |
Diluted (USD per share) | $ (8.04) | $ 1.18 | $ (6.69) | $ 2.91 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 16,177 | 17,181 | 16,215 | 17,262 |
Diluted (in shares) | 16,177 | 17,563 | 16,215 | 17,626 |
Franchise revenues | ||||
Revenues: | ||||
Revenue from contract with customer, excluding assessed tax | $ 67,876 | $ 162,668 | $ 212,913 | $ 331,594 |
Royalties, franchise fees and other | ||||
Revenues: | ||||
Revenue from contract with customer, excluding assessed tax | 38,781 | 90,930 | 122,095 | 187,226 |
Advertising revenues | ||||
Revenues: | ||||
Revenue from contract with customer, excluding assessed tax | 29,095 | 71,738 | 90,818 | 144,368 |
Company restaurant sales | ||||
Revenues: | ||||
Revenue from contract with customer, excluding assessed tax | 16,774 | 33,751 | 48,074 | 69,486 |
Financing revenues | ||||
Revenues: | ||||
Revenue from contract with customer, excluding assessed tax | 1,355 | 1,783 | 2,893 | 3,593 |
Advertising fees | ||||
Revenues: | ||||
Revenue from contract with customer, excluding assessed tax | 29,095 | 71,738 | 90,818 | 144,368 |
Cost of revenues: | ||||
Franchise expenses | 29,095 | 71,738 | 90,818 | 144,368 |
Bad debt expense (credit) | ||||
Cost of revenues: | ||||
Franchise expenses | 5,053 | (126) | 5,571 | (593) |
Other franchise expenses | ||||
Cost of revenues: | ||||
Franchise expenses | $ 2,932 | $ 7,295 | $ 10,141 | $ 15,435 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands | Total | Revision of Prior Period, Accounting Standards Update, Adjustment | Common Stock | Additional Paid-in Capital | (Accumulated Deficit) Retained Earnings | (Accumulated Deficit) Retained EarningsRevision of Prior Period, Accounting Standards Update, Adjustment | Accumulated Other Comprehensive Loss | Treasury Stock |
Common stock, shares, outstanding, beginning (in shares) at Dec. 31, 2018 | 17,644,000 | 7,341,000 | ||||||
Stockholders' equity balance, beginning of the period at Dec. 31, 2018 | $ (202,273) | $ (5,030) | $ 250 | $ 237,726 | $ 10,414 | $ (5,030) | $ (60) | $ (450,603) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | 53,033 | 53,033 | ||||||
Other comprehensive loss | 1 | 1 | ||||||
Purchase of Company common stock (in shares) | 543,000 | (543,000) | ||||||
Purchase of Company common stock | (47,356) | $ (47,356) | ||||||
Reissuance of treasury stock (in shares) | 187,000 | (187,000) | ||||||
Reissuance of treasury stock | 6,938 | $ (1) | (1,318) | $ 8,257 | ||||
Net issuance of shares for stock plans (in shares) | (12,000) | |||||||
Repurchase of restricted shares for taxes (in shares) | (24,000) | |||||||
Repurchase of restricted shares for taxes | (2,242) | (2,242) | ||||||
Stock-based compensation | 5,894 | 5,894 | ||||||
Dividends on common stock | 24,090 | 495 | 24,585 | |||||
Common stock, shares, outstanding, ending (in shares) at Jun. 30, 2019 | 17,252,000 | 7,697,000 | ||||||
Stockholders' equity balance, ending of the period at Jun. 30, 2019 | (215,125) | $ 249 | 240,555 | 33,832 | (59) | $ (489,702) | ||
Common stock, shares, outstanding, beginning (in shares) at Dec. 31, 2018 | 17,644,000 | 7,341,000 | ||||||
Stockholders' equity balance, beginning of the period at Dec. 31, 2018 | $ (202,273) | (5,030) | $ 250 | 237,726 | 10,414 | (5,030) | (60) | $ (450,603) |
Common stock, shares, outstanding, ending (in shares) at Dec. 31, 2019 | 16,521,921 | 16,522,000 | 8,404,000 | |||||
Stockholders' equity balance, ending of the period at Dec. 31, 2019 | $ (241,774) | (497) | $ 249 | 246,192 | 61,653 | (497) | (58) | $ (549,810) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | |||||||
Common stock, shares, outstanding, beginning (in shares) at Mar. 31, 2019 | 17,651,000 | 7,324,000 | ||||||
Stockholders' equity balance, beginning of the period at Mar. 31, 2019 | $ (190,821) | $ 250 | 239,585 | 24,588 | (61) | $ (455,183) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | 21,390 | 21,390 | ||||||
Other comprehensive loss | 2 | 2 | ||||||
Purchase of Company common stock (in shares) | 392,000 | (392,000) | ||||||
Purchase of Company common stock | (35,341) | $ (35,341) | ||||||
Reissuance of treasury stock (in shares) | 19,000 | (19,000) | ||||||
Reissuance of treasury stock | 170 | $ (1) | (651) | $ 822 | ||||
Net issuance of shares for stock plans (in shares) | (21,000) | |||||||
Repurchase of restricted shares for taxes (in shares) | (5,000) | |||||||
Repurchase of restricted shares for taxes | (425) | (425) | ||||||
Stock-based compensation | 1,787 | 1,787 | ||||||
Dividends on common stock | 11,887 | 259 | 12,146 | |||||
Common stock, shares, outstanding, ending (in shares) at Jun. 30, 2019 | 17,252,000 | 7,697,000 | ||||||
Stockholders' equity balance, ending of the period at Jun. 30, 2019 | $ (215,125) | $ 249 | 240,555 | 33,832 | (59) | $ (489,702) | ||
Common stock, shares, outstanding, beginning (in shares) at Dec. 31, 2019 | 16,521,921 | 16,522,000 | 8,404,000 | |||||
Stockholders' equity balance, beginning of the period at Dec. 31, 2019 | $ (241,774) | $ (497) | $ 249 | 246,192 | 61,653 | $ (497) | (58) | $ (549,810) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | (112,451) | (112,451) | ||||||
Purchase of Company common stock (in shares) | 460,000 | (460,000) | ||||||
Purchase of Company common stock | $ (26,527) | $ (26,527) | ||||||
Reissuance of treasury stock (in shares) | (380,607) | 381,000 | (381,000) | |||||
Reissuance of treasury stock | $ 20,523 | $ 0 | 3,367 | $ 17,156 | ||||
Net issuance of shares for stock plans (in shares) | 4,000 | |||||||
Repurchase of restricted shares for taxes (in shares) | (29,000) | |||||||
Repurchase of restricted shares for taxes | (2,129) | (2,129) | ||||||
Stock-based compensation | 6,670 | 6,670 | ||||||
Dividends on common stock | 12,208 | 507 | 12,715 | |||||
Other | $ (178) | (178) | ||||||
Common stock, shares, outstanding, ending (in shares) at Jun. 30, 2020 | 16,417,618 | 16,418,000 | 8,483,000 | |||||
Stockholders' equity balance, ending of the period at Jun. 30, 2020 | $ (368,571) | $ 249 | 254,429 | (64,010) | (58) | $ (559,181) | ||
Common stock, shares, outstanding, beginning (in shares) at Mar. 31, 2020 | 16,421,000 | 8,496,000 | ||||||
Stockholders' equity balance, beginning of the period at Mar. 31, 2020 | (236,377) | $ 249 | 252,443 | 70,769 | (58) | $ (559,780) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net (loss) income | (134,779) | (134,779) | ||||||
Reissuance of treasury stock (in shares) | 14,000 | (13,000) | ||||||
Reissuance of treasury stock | (1) | $ 0 | (600) | $ 599 | ||||
Net issuance of shares for stock plans (in shares) | (14,000) | |||||||
Repurchase of restricted shares for taxes (in shares) | (3,000) | |||||||
Repurchase of restricted shares for taxes | (129) | (129) | ||||||
Stock-based compensation | 2,632 | 2,632 | ||||||
Dividends on common stock | 261 | 261 | ||||||
Other | $ (178) | (178) | ||||||
Common stock, shares, outstanding, ending (in shares) at Jun. 30, 2020 | 16,417,618 | 16,418,000 | 8,483,000 | |||||
Stockholders' equity balance, ending of the period at Jun. 30, 2020 | $ (368,571) | $ 249 | $ 254,429 | $ (64,010) | $ (58) | $ (559,181) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (112,451) | $ 53,033 |
Adjustments to reconcile net (loss) income to cash flows (used in) provided by operating activities: | ||
Depreciation and amortization | 21,345 | 20,800 |
Non-cash stock-based compensation expense | 6,670 | 5,894 |
Non-cash interest expense | 1,318 | 2,083 |
Impairment and closure charges | 124,343 | 483 |
Deferred income taxes | (10,793) | (3,186) |
Deferred revenue | (4,840) | (4,179) |
Loss on disposition of assets | 1,543 | 441 |
Other | (252) | (3,499) |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (31,039) | (1,976) |
Current income tax receivables and payables | (5,456) | 9,442 |
Gift card receivables and payables | 2,293 | (7,444) |
Other current assets | (2,503) | (3,607) |
Accounts payable | (903) | 8,995 |
Accrued employee compensation and benefits | (13,336) | (9,872) |
Other current liabilities | 13,544 | (6,355) |
Cash flows (used in) provided by operating activities | (10,517) | 69,329 |
Cash flows from investing activities: | ||
Principal receipts from notes, equipment contracts and other long-term receivables | 10,772 | 11,386 |
Net additions to property and equipment | (7,380) | (9,175) |
Proceeds from sale of property and equipment | 456 | 400 |
Additions to long-term receivables | (1,475) | (1,555) |
Other | (276) | (186) |
Cash flows provided by investing activities | 2,097 | 870 |
Cash flows from financing activities: | ||
Proceeds from issuance of long-term debt | 0 | 1,300,000 |
Repayment of long-term debt | 0 | (1,283,750) |
Borrowing from revolving credit facility | 220,000 | 0 |
Repayment of revolving credit facility | 0 | (25,000) |
Payment of debt issuance costs | 0 | (12,189) |
Dividends paid on common stock | (23,934) | (23,346) |
Repurchase of common stock | (29,853) | (46,383) |
Principal payments on finance lease obligations | (5,993) | (6,964) |
Proceeds from stock options exercised | 20,523 | 6,938 |
Tax payments for restricted stock upon vesting | (2,129) | (2,242) |
Other | (178) | 0 |
Cash flows provided by (used in) financing activities | 178,436 | (92,936) |
Net change in cash, cash equivalents and restricted cash | 170,016 | (22,737) |
Cash, cash equivalents and restricted cash at beginning of period | 172,475 | 200,379 |
Cash, cash equivalents and restricted cash at end of period | 342,491 | 177,642 |
Supplemental disclosures: | ||
Interest paid in cash | 34,108 | 32,954 |
Income taxes paid in cash | $ 11,103 | $ 24,205 |
General
General | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General The accompanying unaudited consolidated financial statements of Dine Brands Global, Inc. (the “Company” or “Dine Brands Global”) have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The operating results for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2020. The consolidated balance sheet at December 31, 2019 has been derived from the audited consolidated financial statements at that date but does not include all of information and footnotes required by U.S. GAAP for complete financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s fiscal quarters end on the Sunday closest to the last day of each calendar quarter. For convenience, the fiscal quarters of each year are referred to as ending on March 31, June 30, September 30 and December 31. The first fiscal quarter of 2020 began on December 30, 2019 and ended on March 29, 2020; the second fiscal quarter of 2020 ended on June 28, 2020. The first fiscal quarter of 2019 began on December 31, 2018 and ended on March 31, 2019; the second fiscal quarter of 2019 ended on June 30, 2019. The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries that are consolidated in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated. The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make assumptions and estimates that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, if any, at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates are made in the calculation and assessment of the following: impairment of goodwill, other intangible assets and tangible assets; income taxes; allowance for doubtful accounts and notes receivables; lease accounting estimates; contingencies; and stock-based compensation. On an ongoing basis, the Company evaluates its estimates based on historical experience, current conditions and various other assumptions that are believed to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates. Risks and Uncertainties The Company was subject to risks and uncertainties as a result of the rapidly spreading outbreak of a novel strain of coronavirus, designated “COVID-19.” The extent of the continued impact of the COVID-19 pandemic on the Company's business is highly uncertain and difficult to predict, as measures taken in response to and the effect of the pandemic has varied and continues to vary by state and municipalities within states. Assessments of the success of measures taken and the timing of any further restrictions, or lifting of such restrictions, is rapidly evolving. The Company first began to experience impacts from COVID-19 in March 2020, as federal, state and local governments began to react to the public health crisis by encouraging “social distancing” and requiring, in varying degrees, restaurant dine-in limitations and other restrictions that largely limited the restaurants of the Company's franchisees and its company-operated restaurants to take-out and delivery sales. Many international restaurants were temporarily closed for at least a part of March as well as a result of government restrictions put in place in various countries. During the three months ended June 30, 2020, government-imposed dine-in restrictions were relaxed in many of the locations in which we operate, although dining room capacity is limited to 50% or less at most restaurants. Additionally, economies worldwide also have been negatively impacted by the COVID-19 pandemic, which possibly could cause a domestic and/or global economic recession. The Company has taken several actions to mitigate the effects of the COVID-19 pandemic on its operations and its franchisees, as follows: (i) drew down $220 million from its revolving credit facility, leaving available remaining borrowing under the facility of approximately $2 million; (ii) terminated repurchases of common stock for the foreseeable future; (iii) the Company's Board of Directors decided not to declare a dividend for the second and third quarter of 2020; (iv) voluntarily increased the interest reserve for securitized debt from the required $16.4 million (one quarter of estimated interest) to $32.8 million; (v) reduced discretionary costs, limited new hiring and reduced the use of independent contractors; (vi) temporarily furloughed certain team members across various functional groups at its restaurant support centers; (vii) deferred franchisee payment of royalty, advertising and other fees, and lease obligations for up to two months on a case-by-case basis; (viii) deferred franchisee remodel and development obligations for up to 12 months; and (ix) engaged a national real estate firm to assist franchisees and the Company with landlord discussions regarding rent abatements, deferrals and other modifications to lease agreements. The severity of the continued impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, how long the pandemic will last, whether/when recurrences of the virus may arise, what restrictions on in-restaurant dining may be enacted or re-enacted, the timing and extent of customer re-engagement with the Company's brands and, in general, what the short- and long-term impact on consumer discretionary spending the COVID-19 pandemic might have on the Company and the restaurant industry as a whole, all of which are uncertain and cannot be predicted. The Company's future results of operations and liquidity could adversely be impacted by the length of time dine-in restrictions are in place and the success of any initiatives or programs that the Company may undertake to address financial and operational challenges faced by itself and its franchisees. As such, the extent to which the COVID-19 pandemic may continue to materially impact the Company's financial condition, liquidity, or results of operations is highly uncertain. Reclassifications |
Accounting Standards Adopted an
Accounting Standards Adopted and Newly Issued Accounting Standards Not Yet Adopted | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Accounting Standards Adopted and Newly Issued Accounting Standards Not Yet Adopted | Accounting Standards Adopted and Newly Issued Accounting Standards Not Yet Adopted Accounting Standards Adopted in the Current Fiscal Year In February 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance on the measurement of current expected credit losses (“CECL”) on financial instruments. The new guidance has replaced the incurred loss methodology of recognizing credit losses on financial instruments with a methodology that estimates the expected credit loss on financial instruments and reflects the net amount expected to be collected on the financial instrument. The Company adopted this change in accounting principle as of the first day of the first fiscal quarter of 2020 using the modified retrospective method. Accordingly, financial information for periods prior to the date of initial application has not been adjusted. Upon adoption of the new CECL guidance, the Company recognized an increase to its allowance for credit losses of $0.7 million. The Company recognized an adjustment to retained earnings upon adoption of $0.5 million, net of tax of $0.2 million. Additional new accounting guidance became effective for the Company as of the beginning of fiscal 2020 that the Company reviewed and concluded was either not applicable to its operations or had no material effect on its consolidated financial statements in the current or future fiscal years. Newly Issued Accounting Standards Not Yet Adopted In December 2019, the FASB issued new guidance intended to simplify the accounting for income taxes, change the accounting for certain income tax transactions, and make other minor changes. The Company will be required to adopt the new guidance beginning with its first fiscal quarter of 2021; early adoption in any interim period after issuance of the new guidance is permitted. The Company is currently assessing the impact this guidance will have on its consolidated financial statements but does not expect this standard to have a material effect on its financial statements. The Company does not intend to adopt the standard early. The Company reviewed all other newly issued accounting pronouncements and concluded that they either are not applicable to the Company's operations or that no material effect is expected on the Company's financial statements when adoption is required in the future. |
Impairment and Closure Charges
Impairment and Closure Charges (Notes) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Impairment and Closure Charges | Impairment and Closure Charges Goodwill and Intangible Assets Most of the Company's goodwill and intangible assets arose from the November 29, 2007 acquisition of Applebee's. The Company evaluates its goodwill and the indefinite-lived Applebee's tradename for impairment annually in the fourth quarter of each year or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment. Definite-lived intangible assets and long-lived tangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable based on estimated undiscounted future cash flows. Because of the risks and uncertainties associated with the COVID-19 pandemic, during the three months ended March 31, 2020, the Company performed assessments to determine whether the impacts of COVID-19 indicated a potential impairment to our goodwill and intangible assets, as well as our tangible assets. The Company evaluated multiple scenarios modeling impacts of COVID-19 on its key performance indicators and its long-term view of future trends in sales, operating expenses, overhead expenses, depreciation, capital expenditures and changes in working capital. The Company also considered the continuing favorable benefits of the Tax Cuts and Jobs Act of 2017, Applebee's brand performance during the first quarter of 2020 through the week ended March 8, 2020, and the market value of the Company's stock, absolute and relative to the overall U.S. stock market, throughout the first quarter of 2020. The Company concluded, based on information available at that time, it was not more likely than not that the carrying value of goodwill and indefinite-lived intangible assets exceeded fair value as of March 31, 2020. In the second quarter of 2020, the Company noted that its common stock had recovered less of its early March 2020 (pre-pandemic) market value than the overall U.S. stock market had recovered. The Company also was able to assess several additional months of data as to the impact of the COVID-19 pandemic on its operations and, in turn, assess the impact that might have on the risk premium incorporated into its discount rate. Based on these developments, the Company determined that an interim quantitative test of goodwill and indefinite-lived intangible assets for impairment should be performed as of May 24, 2020. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The fair value technique used in this instance is classified as Level 3, where unobservable inputs are used when little or no market data is available. In performing the quantitative test for impairment of goodwill, the Company used the income approach method of valuation that includes the discounted cash flow method and the market approach that includes the guideline public company method to determine the fair value of goodwill and intangible assets. Significant assumptions made by management in estimating fair value under the discounted cash flow model include future trends in sales, operating expenses, overhead expenses, depreciation, capital expenditures and changes in working capital, along with an appropriate discount rate based on the Company's estimated cost of equity capital and after-tax cost of debt. Significant assumptions used to determine fair value under the guideline public company method include the selection of guideline companies and the valuation multiples applied. In performing the impairment review of the tradename, the Company used the relief of royalty method under the income approach method of valuation. Significant assumptions used to determine fair value under the relief of royalty method include future trends in sales, a royalty rate and a discount rate to be applied to the forecast revenue stream. As a result of performing the quantitative test of impairment, the Company recognized an impairment of $92.2 million to the goodwill of the Applebee's franchise unit and an impairment of $11.0 million to Applebee's tradename during the three months ended June 30, 2020. The majority of the impairment was due to an increase in the assessed risk premium incorporated into the discount rate assumption. In addition, the Company reviewed its reacquired franchising rights and determined that the carrying amount exceeded the estimated fair value by $3.3 million and has recorded an impairment to that intangible asset. Changes in the carrying amount of goodwill for the six months ended June 30, 2020 are as follows: Applebee's Franchise Unit Applebee's Company Unit IHOP Franchise Unit Total (In millions) Balance at December 31, 2019: $ 328.4 $ 4.6 $ 10.8 $ 343.9 Impairment loss (92.2) — — (92.2) Balance at June 30, 2020: $ 236.2 $ 4.6 $ 10.8 $ 251.6 Changes in the carrying amount of intangible assets for the six months ended June 30, 2020 are as follows: Not Subject to Amortization Subject to Amortization Tradename Other Franchising Rights Reacquired Franchising Rights Leaseholds Total (In millions) Balance at December 31, 2019: $ 479.0 $ 3.2 $ 79.0 $ 9.8 $ 4.1 $ 575.1 Impairment loss (11.0) — — (3.3) — (14.3) Amortization expense — — (5.0) (0.5) 0.0 — (5.5) Additions — 0.2 — — — 0.2 Balance at June 30, 2020: $ 468.0 $ 3.4 $ 74.0 $ 6.0 $ 4.1 $ 555.5 The Company's goodwill and intangible assets are at risk of additional impairment in the future in the event of sustained downward movement in the Company's stock price, downward revisions of long-term performance assumptions or increases in the assumed long-term discount rate. Long-lived Assets Impairment and Closure Charges Long-lived tangible asset impairment and closure charges for the three and six months ended June 30, 2020 were as follows: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 (In millions) Long-lived tangible asset impairment $ 17.2 $ — $ 17.2 $ — Closure charges 0.7 0.3 0.7 0.5 Total long-lived asset impairment and closure charges $ 17.9 $ 0.3 $ 17.9 $ 0.5 The long-lived asset impairment related to 46 Applebee's company-operated restaurants and 33 IHOP franchisee-operated restaurants for which the carrying amount exceeded the undiscounted cash flows The impairment recorded represented the difference between the carrying value and the estimated fair value. Approximately $9.4 million of the total impairment related to operating lease right-of-use assets that had been recorded in 2019 upon adoption of new lease accounting guidance codified in Accounting Standards Topic 842 |
Revenue Disclosures
Revenue Disclosures | 3 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Disclosures | Revenue Disclosures Franchise revenue (which comprises most of the Company's revenues) and revenue from company-operated restaurants are recognized in accordance with current guidance for revenue recognition as codified in Accounting Standards Topic 606 (“ASC 606”). Under ASC 606, revenue is recognized upon transfer of control of promised services or goods to customers in an amount that reflects the consideration the Company expects to receive for those services or goods. Franchising Activities The Company owns, franchises and operates the Applebee's Neighborhood Grill & Bar ® (“Applebee's”) concept in the casual dining category of the restaurant industry and the Company owns and franchises the International House of Pancakes ® (“IHOP”) concept in the family dining category of the restaurant industry. The franchise arrangement for both brands is documented in the form of a franchise agreement and, in most cases, a development agreement. The franchise arrangement between the Company as the franchisor and the franchisee as the customer requires the Company to perform various activities to support the brands that do not directly transfer goods and services to the franchisee, but instead represent a single performance obligation, which is the transfer of the franchise license. The intellectual property subject to the franchise license is symbolic intellectual property as it does not have significant standalone functionality, and substantially all the utility is derived from its association with the Company’s past or ongoing activities. The nature of the Company’s promise in granting the franchise license is to provide the franchisee with access to the respective brand’s symbolic intellectual property over the term of the license. The services provided by the Company are highly interrelated with the franchise license and as such are considered to represent a single performance obligation. The transaction price in a standard franchise arrangement for both brands primarily consists of (a) initial franchise/development fees; (b) continuing franchise fees (royalties); and (c) advertising fees. Since the Company considers the licensing of the franchising right to be a single performance obligation, no allocation of the transaction price is required. All domestic IHOP franchise agreements require franchisees to purchase proprietary pancake and waffle dry mix from the Company. The Company recognizes the primary components of the transaction price as follows: • Franchise and development fees are recognized as revenue ratably on a straight-line basis over the term of the franchise agreement commencing with the restaurant opening date. As these fees are typically received in cash at or near the beginning of the franchise term, the cash received is initially recorded as a contract liability until recognized as revenue over time; • The Company is entitled to royalties and advertising fees based on a percentage of the franchisee's gross sales as defined in the franchise agreement. Royalty and advertising revenue are recognized when the franchisee's reported sales occur. Depending on timing within a fiscal period, the recognition of revenue results in either what is considered a contract asset (unbilled receivable) or, once billed, accounts receivable, and are included in “receivables, net” in the Consolidated Balance Sheets. • Revenue from the sale of proprietary pancake and waffle dry mix is recognized in the period in which distributors ship the franchisee's order; recognition of revenue results in an accounts receivable included in “receivables, net” in the Consolidated Balance Sheets. In determining the amount and timing of revenue from contracts with customers, the Company exercises significant judgment with respect to collectibility of the amount; however, the timing of recognition does not require significant judgments as it is based on either the term of the franchise agreement, the month of reported sales by the franchisee or the date of product shipment, none of which require estimation. The Company does not incur a significant amount of contract acquisition costs in conducting franchising activities. The Company's franchising arrangements do not contain a significant financing component. Company Restaurant Revenue Sales by company-operated restaurants are recognized when food and beverage items are sold. Company restaurant sales are reported net of sales taxes collected from guests that are remitted to the appropriate taxing authorities. The following table disaggregates franchise revenue by major type for the three and six months ended June 30, 2020 and 2019: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 June 30, 2020 June 30, 2019 (In thousands) Franchise Revenue: Royalties $ 31,011 $ 75,747 $ 98,611 $ 154,382 Advertising fees 29,095 71,738 90,818 144,368 Pancake and waffle dry mix sales and other 4,037 12,526 16,885 26,957 Franchise and development fees 3,733 2,657 6,599 5,887 Total franchise revenue $ 67,876 $ 162,668 $ 212,913 $ 331,594 Accounts receivable from franchisees as of June 30, 2020 and December 31, 2019 were $97.3 million (net of allowance of $7.1 million) and $63.5 million (net of allowance of $0.7 million), respectively, and were included in receivables, net in the Consolidated Balance Sheets. Changes in the Company's contract liability for deferred franchise and development fees during the six months ended June 30, 2020 are as follows: Deferred Franchise Revenue (short- and long-term) (In thousands) Balance at December 31, 2019 $ 67,030 Recognized as revenue during the six months ended June 30, 2020 (6,473) Fees deferred during the six months ended June 30, 2020 1,633 Balance at June 30, 2020 $ 62,190 The balance of deferred revenue as of June 30, 2020 is expected to be recognized as follows: (In thousands) Remainder of 2020 $ 4,022 2021 8,775 2022 7,221 2023 6,695 2024 6,070 Thereafter 29,407 Total $ 62,190 |
Current Expected Credit Losses
Current Expected Credit Losses | 6 Months Ended |
Jun. 30, 2020 | |
Credit Loss [Abstract] | |
Current Expected Credit Losses | Current Expected Credit Losses Prior to the adoption of CECL, the Company recorded incurred loss reserves against receivable balances based on current and historical information, with delinquency status being the primary indicator of a deterioration in credit quality. The recently adopted CECL reserve methodology requires companies to measure expected credit losses on financial instruments based on the total estimated amount to be collected over the lifetime of the instrument. Under the CECL model, reserves may be established against financial asset balances even if the risk of loss is remote or has not yet manifested itself. Upon adoption of the CECL methodology, the Company developed its estimated loss reserves in the following manner. The Company continued to record specific reserves against account balances of franchisees deemed “at-risk” when a potential loss is likely or imminent as a result of prolonged payment delinquency (greater than 90 days past due) and where notable credit deterioration has become evident. For financial assets that are not currently deemed “at-risk,” an allowance is recorded based on expected loss rates derived pursuant to the following CECL methodology that assesses four components - historical losses, current conditions, reasonable and supportable forecasts, and a reversion to history, if applicable. Historical Losses Historical loss rates over a five-year span were calculated for financial assets with common risk characteristics. The Company determined historical loss rate data for each franchise brand concept was more relevant than a single blended rate. Historical losses were determined based on the average charge off method. Historical loss rates are further adjusted by factors related to current conditions and forecasts of future economic conditions. Current Conditions The Company identified three metrics that it believes provide the most relevant reflection of the current risks inherent in the Company’s franchisee-based restaurant business, as follows: (1) delinquency status, (2) system-wide same-restaurant sales, and (3) four-wall EBITDA profitability. The current conditions adjustment factor was increased to account for the impact of the COVID-19 pandemic. Reasonable and Supportable Forecasts The third component in the CECL methodology involves consideration of macroeconomic conditions that can impact the estimate of expected credit losses in the future. The Company has not developed an internal methodology in this regard; rather, the Company utilizes existing, publicly accessible sources of economic data, primarily forecasts of overall unemployment rate as well as consumer spending based on the personal consumption expenditure (PCE) index. Reversion to History The Company has determined that reversion to history was not required since the remaining average lives of the Company’s financial assets are not exceedingly lengthy. The Company considers its portfolio segments to be the following: Accounts Receivable (Franchise-Related) Most of the Company’s short-term receivables due from franchisees are derived from royalty, advertising and other franchise-related fees. Notes Receivable Notes receivable balances primarily relate to the conversion of certain Applebee's franchisee accounts receivable to notes receivable, cash loans to franchisees for working capital purposes, a note receivable in connection with the sale of IHOP company restaurants in June 2017, and IHOP franchise fee and other notes. The notes are typically collateralized by the franchise. Due to the riskier nature of Applebee's notes that were converted from previously delinquent franchisee accounts receivable balances, a significant portion of these notes have specific reserves recorded against them amounting to $11.8 million as of June 30, 2020. Direct Financing Leases Receivable Direct financing lease receivables relate to IHOP franchise development activity prior to 2003 when IHOP typically leased or purchased the restaurant site, built and equipped the restaurant, then franchised the restaurant to a franchisee. IHOP provided the financing for leasing or subleasing the site. Direct financing leases at June 30, 2020, comprised 102 leases with a weighted average remaining life of 3.6 years, and relate to locations that IHOP is leasing from third parties and subleasing to franchisees. Equipment Leases Receivable Equipment leases receivable also relate to IHOP franchise development activity prior to 2003. Equipment lease contracts are collateralized by the equipment in the restaurant. The estimated fair value of the equipment collateralizing these lease contracts are not deemed to be significant given the very seasoned and mature nature of this portfolio. The weighted average remaining life of the Company’s equipment leases is 5.9 years as of June 20, 2020. Distributor Receivables Receivables due from distributors are related to the sale of IHOP’s proprietary pancake and waffle dry mix to franchisees through the Company’s network of suppliers and distributors. Gift Card Receivables Gift card receivables consist primarily of amounts due from third-party vendors. Receivables related to gift card sales are subject to seasonality and usually peak around year end as a result of the December holiday season. June 30, 2020 December 31, 2019 (In millions) Accounts receivable $ 103.7 $ 60.8 Gift card receivables 5.8 46.7 Notes receivable 29.2 28.9 Financing receivables: Equipment leases receivable 50.0 56.3 Direct financing leases receivable 26.3 34.0 Franchise fee notes receivable 0.1 0.1 Other 3.2 7.3 218.3 234.2 Less: allowance for doubtful accounts and notes receivable (19.7) (11.3) 198.6 222.9 Less: current portion (124.6) (136.9) Long-term receivables $ 74.0 $ 86.0 Changes in the allowance for credit losses during the six months ended June 30, 2020 were as follows: Accounts Receivable Notes receivable, short-term Notes receivable, long-term Lease Receivables Equipment Notes Other (1) Total (In thousands) Balance, December 31, 2019 $ 0.7 $ 2.4 $ 8.2 $ — $ — $ — $ 11.3 Increase due to CECL adoption 0.3 0.0 0.1 0.1 0.1 0.1 0.7 Bad debt expense for the six months ended June 30, 2020 3.9 2.0 (0.7) 0.1 0.1 0.2 5.6 Advertising provision adjustment 2.1 (0.2) — — — — 1.9 Write-offs 0.1 0.1 — — — — 0.2 Recoveries — — — 0.0 — — 0.0 Balance, June 30, 2020 $ 7.1 $ 4.3 $ 7.6 $ 0.2 $ 0.2 $ 0.3 $ 19.7 (1) Primarily distributor receivables, gift card receivables and credit card receivables The Company's primary credit quality indicator for all portfolio segments is delinquency. The delinquency status of receivables (other than accounts receivable, gift card receivables and distributor receivables) at June 30, 2020 was as follows: Notes receivable, short-term Notes receivable, long-term Lease Receivables Equipment Notes Other (1) Total (In millions) Current $ 4.1 $ 19.5 $ 10.3 $ 19.6 $ 1.2 $ 54.7 30-59 days 0.3 1.2 5.5 10.6 — 17.6 60-89 days 0.4 1.9 9.4 17.2 — 28.9 90-119 days 0.1 0.6 1.1 2.2 — 4.0 120+ days 1.2 — — 0.4 — 1.6 Total $ 6.1 $ 23.2 $ 26.3 $ 50.0 $ 1.2 $ 106.8 (1) Primarily c redit card receivables The year of origination of the Company's financing receivables is as follows: Notes receivable, short and long-term Lease Receivables Equipment Notes Total (In millions) 2020 $ 1.7 $ — $ — $ 1.7 2019 7.9 0.9 — 8.8 2018 13.1 — — 13.1 2017 6.4 — — 6.4 2016 — 1.3 — 1.3 Prior 0.2 24.1 50.0 74.3 Total $ 29.3 $ 26.3 $ 50.0 $ 105.6 |
Lease Disclosures
Lease Disclosures | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Lease Disclosures | Lease Disclosures The Company engages in leasing activity as both a lessee and a lessor. The majority of the Company's lease portfolio originated when the Company was actively involved in the development and financing of IHOP restaurants prior to the franchising of the restaurant to the franchisee. This activity included the Company's purchase or leasing of the site on which the restaurant was located and subsequently leasing/subleasing the site to the franchisee. With a few exceptions, the Company ended this practice in 2003 and the Company's current lease activity is predominantly comprised of renewals of existing lease arrangements and exercises of options on existing lease arrangements. The Company currently leases from third parties the real property on which approximately 600 IHOP franchisee-operated restaurants and one Applebee's franchisee-operated restaurant are located; the Company (as lessor) subleases the property to the franchisees that operate those restaurants. The Company also leases property it owns to the franchisees that operate approximately 60 IHOP restaurants and one Applebee's restaurant. The Company leases from third parties the real property on which 69 Applebee's company-operated restaurants are located. The Company also leases office space for its principal corporate office in Glendale, California and restaurant support centers in Kansas City, Missouri and Raleigh, North Carolina. The Company does not have a significant amount of non-real estate leases. The Company's existing leases/subleases related to IHOP restaurants generally provided for an initial term of 20 to 25 years, with most having one or more five five The individual lease agreements do not provide information to determine the implicit interest rate in the agreements. The Company made significant judgments in determining the incremental borrowing rates that were used in calculating operating lease liabilities as of the adoption date. Due to the large number of leases, the Company applied a portfolio approach by grouping the leases based on the original lease term. The Company estimated the interest rate for each grouping primarily by reference to (i) yield rates on debt issuances by companies of a similar credit rating as the Company; (ii) U.S. Treasury rates as of the adoption date; and (iii) adjustments for differences in years to maturity. The Company's lease cost for the three and six months ended June 30, 2020 and 2019 was as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Finance lease cost: Amortization of right-of-use assets $ 1.3 $ 1.3 $ 2.5 $ 2.6 Interest on lease liabilities 1.6 2.0 3.4 4.1 Operating lease cost 26.6 26.8 53.1 53.2 Variable lease cost (0.1) 0.6 0.3 1.3 Short-term lease cost 0.0 0.0 0.0 0.0 Sublease income (21.5) (27.3) (48.1) (55.4) Lease cost $ 7.9 $ 3.4 $ 11.2 $ 5.8 Future minimum lease payments under noncancelable leases as lessee as of June 30, 2020 were as follows: Finance Operating (In millions) 2020 (remaining six months) $ 10.5 $ 52.3 2021 16.6 85.4 2022 14.9 77.9 2023 11.8 64.9 2024 9.6 59.6 Thereafter 58.2 184.7 Total minimum lease payments 121.6 524.8 Less: interest/imputed interest (35.0) (102.6) Total obligations 86.6 422.2 Less: current portion (12.5) (71.8) Long-term lease obligations $ 74.1 $ 350.4 The weighted average remaining lease term as of June 30, 2020 was 8.9 years for finance leases and 7.5 years for operating leases. The weighted average discount rate as of June 30, 2020 was 10.3% for finance leases and 5.7% for operating leases. During the three and six months ended June 30, 2020 and 2019, the Company made the following cash payments for leases: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Principal payments on finance lease obligations $ 3.0 $ 3.5 $ 6.0 $ 7.0 Interest payments on finance lease obligations $ 1.6 $ 2.0 $ 3.4 $ 4.1 Payments on operating leases $ 23.0 $ 22.8 $ 46.5 $ 45.8 Variable lease payments $ 0.2 $ 0.6 $ 0.5 $ 1.5 The Company's income from operating leases for the three and six months ended June 30, 2020 and 2019 was as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Minimum lease payments $ 22.5 $ 25.4 $ 47.9 $ 51.1 Variable lease income 0.4 2.8 2.8 6.0 Total operating lease income $ 22.9 $ 28.2 $ 50.7 $ 57.1 Minimum payments to be received as lessor under noncancelable operating leases as of June 30, 2020 were as follows: (In millions) 2020 (remaining six months) $ 53.0 2021 99.4 2022 96.7 2023 93.0 2024 85.3 Thereafter 217.6 Total minimum rents receivable $ 645.0 The Company's income from direct financing leases for the three and six months ended June 30, 2020 and 2019 was as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Interest income $ 0.8 $ 1.3 $ 1.8 $ 2.7 Variable lease income 0.0 0.3 0.2 0.7 Total operating lease income $ 0.8 $ 1.6 $ 2.0 $ 3.4 Minimum payments to be received as lessor under noncancelable direct financing leases as of June 30, 2020 were as follows: (In millions) 2020 (remaining six months) $ 6.4 2021 10.5 2022 7.6 2023 3.5 2024 1.3 Thereafter 2.5 Total minimum rents receivable 31.8 Less: unearned income (5.5) Total net investment in direct financing leases 26.3 Less: current portion (9.3) Long-term investment in direct financing leases $ 17.0 |
Lease Disclosures | Lease Disclosures The Company engages in leasing activity as both a lessee and a lessor. The majority of the Company's lease portfolio originated when the Company was actively involved in the development and financing of IHOP restaurants prior to the franchising of the restaurant to the franchisee. This activity included the Company's purchase or leasing of the site on which the restaurant was located and subsequently leasing/subleasing the site to the franchisee. With a few exceptions, the Company ended this practice in 2003 and the Company's current lease activity is predominantly comprised of renewals of existing lease arrangements and exercises of options on existing lease arrangements. The Company currently leases from third parties the real property on which approximately 600 IHOP franchisee-operated restaurants and one Applebee's franchisee-operated restaurant are located; the Company (as lessor) subleases the property to the franchisees that operate those restaurants. The Company also leases property it owns to the franchisees that operate approximately 60 IHOP restaurants and one Applebee's restaurant. The Company leases from third parties the real property on which 69 Applebee's company-operated restaurants are located. The Company also leases office space for its principal corporate office in Glendale, California and restaurant support centers in Kansas City, Missouri and Raleigh, North Carolina. The Company does not have a significant amount of non-real estate leases. The Company's existing leases/subleases related to IHOP restaurants generally provided for an initial term of 20 to 25 years, with most having one or more five five The individual lease agreements do not provide information to determine the implicit interest rate in the agreements. The Company made significant judgments in determining the incremental borrowing rates that were used in calculating operating lease liabilities as of the adoption date. Due to the large number of leases, the Company applied a portfolio approach by grouping the leases based on the original lease term. The Company estimated the interest rate for each grouping primarily by reference to (i) yield rates on debt issuances by companies of a similar credit rating as the Company; (ii) U.S. Treasury rates as of the adoption date; and (iii) adjustments for differences in years to maturity. The Company's lease cost for the three and six months ended June 30, 2020 and 2019 was as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Finance lease cost: Amortization of right-of-use assets $ 1.3 $ 1.3 $ 2.5 $ 2.6 Interest on lease liabilities 1.6 2.0 3.4 4.1 Operating lease cost 26.6 26.8 53.1 53.2 Variable lease cost (0.1) 0.6 0.3 1.3 Short-term lease cost 0.0 0.0 0.0 0.0 Sublease income (21.5) (27.3) (48.1) (55.4) Lease cost $ 7.9 $ 3.4 $ 11.2 $ 5.8 Future minimum lease payments under noncancelable leases as lessee as of June 30, 2020 were as follows: Finance Operating (In millions) 2020 (remaining six months) $ 10.5 $ 52.3 2021 16.6 85.4 2022 14.9 77.9 2023 11.8 64.9 2024 9.6 59.6 Thereafter 58.2 184.7 Total minimum lease payments 121.6 524.8 Less: interest/imputed interest (35.0) (102.6) Total obligations 86.6 422.2 Less: current portion (12.5) (71.8) Long-term lease obligations $ 74.1 $ 350.4 The weighted average remaining lease term as of June 30, 2020 was 8.9 years for finance leases and 7.5 years for operating leases. The weighted average discount rate as of June 30, 2020 was 10.3% for finance leases and 5.7% for operating leases. During the three and six months ended June 30, 2020 and 2019, the Company made the following cash payments for leases: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Principal payments on finance lease obligations $ 3.0 $ 3.5 $ 6.0 $ 7.0 Interest payments on finance lease obligations $ 1.6 $ 2.0 $ 3.4 $ 4.1 Payments on operating leases $ 23.0 $ 22.8 $ 46.5 $ 45.8 Variable lease payments $ 0.2 $ 0.6 $ 0.5 $ 1.5 The Company's income from operating leases for the three and six months ended June 30, 2020 and 2019 was as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Minimum lease payments $ 22.5 $ 25.4 $ 47.9 $ 51.1 Variable lease income 0.4 2.8 2.8 6.0 Total operating lease income $ 22.9 $ 28.2 $ 50.7 $ 57.1 Minimum payments to be received as lessor under noncancelable operating leases as of June 30, 2020 were as follows: (In millions) 2020 (remaining six months) $ 53.0 2021 99.4 2022 96.7 2023 93.0 2024 85.3 Thereafter 217.6 Total minimum rents receivable $ 645.0 The Company's income from direct financing leases for the three and six months ended June 30, 2020 and 2019 was as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Interest income $ 0.8 $ 1.3 $ 1.8 $ 2.7 Variable lease income 0.0 0.3 0.2 0.7 Total operating lease income $ 0.8 $ 1.6 $ 2.0 $ 3.4 Minimum payments to be received as lessor under noncancelable direct financing leases as of June 30, 2020 were as follows: (In millions) 2020 (remaining six months) $ 6.4 2021 10.5 2022 7.6 2023 3.5 2024 1.3 Thereafter 2.5 Total minimum rents receivable 31.8 Less: unearned income (5.5) Total net investment in direct financing leases 26.3 Less: current portion (9.3) Long-term investment in direct financing leases $ 17.0 |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt At June 30, 2020 and December 31, 2019, long-term debt consisted of the following: June 30, 2020 December 31, 2019 (In millions) Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I $ 700.0 $ 700.0 Series 2019-1 4.723% Fixed Rate Senior Secured Notes, Class A-2-II 600.0 600.0 Series 2019-1 Variable Funding Senior Notes Class A-1, variable interest rate of 3.18% at June 30, 2020 220.0 — Debt issuance costs (13.1) (11.8) Long-term debt, net of debt issuance costs 1,506.9 1,288.2 Current portion of long-term debt (9.8) — Long-term debt $ 1,497.1 $ 1,288.2 On June 5, 2019, Applebee’s Funding LLC and IHOP Funding LLC (the “Co-Issuers”), each a special purpose, wholly-owned indirect subsidiary of the Company, issued two tranches of fixed rate senior secured notes, the Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I (“Class A-2-I Notes”) in an initial aggregate principal amount of $700 million and the Series 2019-1 4.723% Fixed Rate Senior Secured Notes, Class A-2-II (“Class A-2-II Notes”) in an initial aggregate principal amount of $600 million (the “Class A-2-II Notes” and, together with the Class A-2-I Notes, the “2019 Class A-2 Notes”). The 2019 Class A-2 Notes were issued pursuant to an offering exempt from registration under the Securities Act of 1933, as amended. The Co-Issuers also replaced their existing revolving financing facility, the 2018-1 Variable Funding Senior Notes, Class A-1 (“2018-1 Class A-1 Notes”), with a new revolving financing facility, the 2019-1 Variable Funding Senior Notes, Class A-1 (the “Revolver”), on substantially the same terms as the 2018-1 Class A-1 Notes in order to conform the term of the Revolver to the anticipated repayment dates for the 2019 Class A-2 Notes. The Revolver allows for drawings up to $225 million of variable funding notes and the issuance of letters of credit. The Revolver and the 2019 Class A-2 Notes are referred to collectively herein as the “New Notes.” The New Notes were issued in a securitization transaction pursuant to which substantially all the domestic revenue-generating assets and domestic intellectual property held by the Co-Issuers and certain other special-purpose, wholly-owned indirect subsidiaries of the Company (the “Guarantors”) were pledged as collateral to secure the New Notes. The Company used the majority of the net proceeds of the offering to repay the entire outstanding balance of approximately $1.28 billion of Series 2014-1 4.277% Fixed Rate Senior Notes, Class A-2. The Company used the remaining proceeds of the offering to pay for transactions costs associated with the securitization refinancing transaction and for general corporate purposes. 2019 Class A-2 Notes The New Notes were issued under a Base Indenture, dated as of September 30, 2014, and amended and restated as of June 5, 2019 (the “Base Indenture”), and the related Series 2019-1 Supplement to the Base Indenture, dated June 5, 2019 (the “Series 2019-1 Supplement”), among the Co-Issuers and Citibank, N.A., as the trustee (in such capacity, the “Trustee”) and securities intermediary. The Base Indenture and the Series 2019-1 Supplement (collectively, the “Indenture”) will allow the Co-Issuers to issue additional series of notes in the future subject to certain conditions set forth therein. The legal final maturity of the 2019 Class A-2 Notes is in June 2049, but rapid amortization will apply if the Class A-2-I Notes are not repaid by June 2024 (the “Class A-2-I Anticipated Repayment Date”) and for the Class A-2-II Notes if not repaid by June 2026 (the “Class A-2-II Anticipated Repayment Date”). If the Co-Issuers have not repaid or refinanced the Class A-2-I Notes by the Class A-2-I Anticipated Repayment Date or the Class A-2-II Notes by the Class A-2-II Anticipated Repayment Date, then additional interest will accrue on the Class A-2-I Notes and the Class A-2-II Notes, as applicable, at the greater of: (A) 5.0% and (B) the amount, if any, by which the sum of the following exceeds the applicable Series 2019-1 Class A-2 Note interest rate: (x) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on the applicable anticipated repayment date of the United States Treasury Security having a term closest to 10 years plus (y) 5.0%, plus (z) 2.15% for the Series 2019-1 Class A-2-I Notes and 2.64% for the Series 2019-1 Class A-2-II Notes. While the 2019 Class A-2 Notes are outstanding, payment of principal and interest is required to be made on the 2019 Class A-2 Notes on a quarterly basis. The quarterly principal payment of $3.25 million on the 2019 Class A-2 Notes may be suspended when the leverage ratio for the Company and its subsidiaries is less than or equal to 5.25x. In general, the leverage ratio is the Company's indebtedness (as defined in the Indenture) divided by adjusted EBITDA (as defined in the Indenture) for the four preceding quarterly periods. The complete definitions of all calculation elements of the leverage ratio are contained in the Base Indenture, dated as of September 30, 2014, amended and restated as of June 5, 2019. As of June 30, 2020, the Company's leverage ratio was 6.30x. As a result, the Company anticipates making a principal payment on the 2019 Class A-2 Notes of $3.25 million in the fourth quarter of 2020. Exceeding the leverage ratio of 5.25x does not violate any covenant related to the New Notes. The Company may voluntarily repay the 2019 Class A-2 Notes at any time; however, if we repay the 2019 Class A-2 Notes prior to certain dates we would be required to pay make-whole premiums. As of June 30, 2020, the make-whole premium associated with voluntary prepayment of the Class A-2-I Notes was approximately $48 million; this amount declines progressively each quarter to zero in June 2022. As of June 30, 2020, the make-whole premium associated with voluntary prepayment of the Class A-2-II Notes was approximately $87 million; this amount declines progressively each quarter to zero in June 2024. The Company would also be subject to a make-whole premium in the event of a mandatory prepayment required following a Rapid Amortization Event or certain asset dispositions. The mandatory make-whole premium requirements are considered derivatives embedded in the New Notes that must be bifurcated for separate valuation. We estimated the fair value of these derivatives to be immaterial as of June 30, 2020, based on the probability-weighted discounted cash flows associated with either event. 2019 Class A-1 Notes The Co-Issuers also entered into the Revolver that allows for drawings up to $225 million of variable funding notes and the issuance of letters of credit. The 2019 Class A-1 Notes were issued under the Indenture. Drawings and certain additional terms related to the Revolver are governed by the 2019 Class A-1 Note Purchase Agreement, dated June 5, 2019, among the Co-Issuers, certain special-purpose, wholly-owned indirect subsidiaries of the Company, each as a Guarantor, the Company, as manager, certain conduit investors, financial institutions and funding agents, and Barclays Bank PLC, as provider of letters credit, swingline lender and administrative agent (the “Purchase Agreement”). The Revolver is governed, in part, by the Purchase Agreement and by certain generally applicable terms contained in the Indenture. The applicable interest rate under the Revolver depends on the type of borrowing by the Co-Issuers. The applicable interest rate for advances is generally calculated at a per annum rate equal to the commercial paper funding rate or one-, two-, three- or six-month Eurodollar Funding Rate, in either case, plus 2.15%. The applicable interest rate for swingline advances and unreimbursed draws on outstanding letters of credit is a per annum base rate equal to the sum of (a) 1.15% plus (b) the greatest of (i) the Prime Rate in effect from time to time, (ii) the Federal Funds Rate in effect from time to time plus 0.50% and (iii) the one-month Eurodollar Funding Rate plus 1.00%. There is no upfront fee for the Revolver. There is a fee of 50 basis points on any unused portion of the revolving financing facility. Undrawn face amounts of outstanding letters of credit that are not cash collateralized accrue a fee of 2.15% per annum. During the six months ended June 30, 2020, the Company borrowed $220.0 million against the Revolver, all of which was outstanding at June 30, 2020. At June 30, 2020, $2.8 million was pledged against the Revolver for outstanding letters of credit, leaving $2.2 million available for borrowing. The letters of credit are used primarily to satisfy insurance-related collateral requirements. The maximum amount of the Revolver outstanding during the six months ended June 30, 2020 was $220.0 million and the weighted average interest rates for the three and six months ended June 30, 2020 were 3.15% and 3.18%, respectively. It is anticipated that any principal and interest on the Revolver will be repaid in full on or prior to the quarterly payment date in June 2024, subject to two additional one Covenants and Restrictions The New Notes are subject to a series of covenants and restrictions customary for transactions of this type, including: (i) that the Co-Issuers maintain specified reserve accounts to be used to make required payments in respect of the New Notes, (ii) provisions relating to optional and mandatory prepayments, and the related payment of specified amounts, including specified call redemption premiums in the case of Class A-2 Notes under certain circumstances; (iii) certain indemnification payments in the event, among other things, the transfers of the assets pledged as collateral for the New Notes are in stated ways defective or ineffective and (iv) covenants relating to recordkeeping, access to information and similar matters. The New Notes are subject to customary rapid amortization events provided for in the Indenture, including events tied to failure of the Securitization Entities (as defined in the Indenture) to maintain the stated debt service coverage ratio (“DSCR”), the sum of domestic retail sales for all restaurants being below certain levels on certain measurement dates, certain manager termination events, certain events of default and the failure to repay or refinance the Class A-2 Notes on the anticipated repayment dates. The New Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due on or with respect to the New Notes, failure of the Securitization Entities to maintain the stated DSCR, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties and certain judgments. In general, the DSCR ratio is Net Cash Flow (as defined in the Indenture) for the four quarters preceding the calculation date divided by the total debt service payments (as defined in the Indenture) of the preceding four quarters. The complete definitions of the DSCR and all calculation elements are contained in the Indenture. Failure to maintain a prescribed DSCR can trigger a Cash Flow Sweeping Event, A Rapid Amortization Event, a Manager Termination Event or a Default Event as described below. In a Cash Flow Sweeping Event, the Trustee is required to retain 50% of excess Cash Flow (as defined in the Indenture) in a restricted account. In a Rapid Amortization Event, all excess Cash Flow is retained and used to retire principal amounts of debt. In a Manager Termination Event, the Company may be replaced as manager of the assets securitized under the Indenture. In a Default Event, the outstanding principal amount and any accrued but unpaid interest can be called to become immediately due and payable. Key DSCRs are as follows: • DSCR less than 1.75x - Cash Flow Sweeping Event • DSCR less than 1.20x - Rapid Amortization Event • Interest-only DSCR less than 1.20x - Manager Termination Event • Interest-only DSCR less than 1.10x - Default Event The Company's DSCR for the reporting period ended June 30, 2020 was 3.34x. Debt Issuance Costs The Company incurred costs of approximately $12.9 million in connection with the issuance of the 2019 Class A-2 Notes. These debt issuance costs are being amortized using the effective interest method over the estimated life of each tranche of the 2019 Class A-2 Notes. Amortization costs of $0.5 million and $1.0 million were included in interest expense for the three months and six months ended June 30, 2020, respectively. The Company incurred costs of approximately $0.2 million in connection with the replacement of the 2018-1 Class A-1 Notes with the Revolver. These debt issuance costs were added to the remaining unamortized costs of approximately $2.8 million related to the 2018-1 Class A-1 Notes, the total of which costs is being amortized using the effective interest method over the estimated five-year life of the Revolver. Amortization costs of $0.1 million and $0.3 million were included in interest expense for the three and six months ended June 30, 2020, respectively. At June 30, 2020, total unamortized debt issuance costs of $13.1 million are reported as a direct reduction of the Revolver and 2019 Class A-2 Notes in the Consolidated Balance Sheets. That amount includes $2.6 million of costs related to the Revolver that were classified as other long-term assets as of December 31, 2019 because there had been no borrowing against the Revolver since it was established. For additional information on the 2019 Class A-2 Notes and the Revolver, refer to Note 8 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Maturities of Long-term Debt Face-value maturities of long-term debt for each of the next five years, assuming the Company's leverage ratio remains greater than 5.25x, are as follows: (In millions) 2020 (remaining six months) $ 3.3 2021 13.0 2022 13.0 2023 13.0 2024 903.2 Thereafter 574.5 Total $ 1,520.0 |
Stockholders' Deficit
Stockholders' Deficit | 3 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Deficit | Stockholders' Deficit Dividends During the six months ended June 30, 2020, the Company paid dividends on common stock of $23.9 million, representing a cash dividend of $0.69 per share declared in the fourth quarter of 2019, paid on January 10, 2020 to stockholders of record at the close of business on December 20, 2019 and a cash dividend of $0.76 per share declared in the first quarter of 2020, paid on April 3, 2020 to stockholders of record at the close of business on March 20, 2020. Dividends declared and paid per share for the three months and six months ended June 30, 2020 and 2019 were as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Dividends declared per common share $ — $ 0.69 $ 0.76 $ 1.38 Dividends paid per common share $ 0.76 $ 0.69 $ 1.45 $ 1.32 Stock Repurchase Program In February 2019, the Company’s Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $200 million of the Company’s common stock (the “2019 Repurchase Program”) on an opportunistic basis from time to time in the open market or in privately negotiated transactions based on business, market, applicable legal requirements and other considerations. The 2019 Repurchase Program, as approved by the Board of Directors, does not require the repurchase of a specific number of shares and can be terminated at any time. A summary of shares repurchased under the 2019 Repurchase Program, during three and six months ended June 30, 2020 and cumulatively, is as follows: Shares Cost of shares (In millions) Repurchased during the three months ended June 30, 2020 — $ — Repurchased during the six months ended June 30, 2020 459,899 $ 26.5 Cumulative (life-of-program) repurchases 1,697,597 $ 129.8 Remaining dollar value of shares that may be repurchased n/a $ 70.2 Treasury Stock |
Income Taxes
Income Taxes | 3 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company's effective tax rate was 4.5% for the six months ended June 30, 2020 as compared to 24.5% for the six months ended June 30, 2019. The effective tax rate of 4.5% for the six months ended June 30, 2020 (the tax benefit of $5.3 million on the pretax book loss of $117.7 million) was significantly different than the rate of the prior comparable period and the statutory federal tax rate of 21% because the $92.2 million impairment of goodwill is not deductible for federal income tax purposes and therefore has no associated tax benefit. The Company did recognize a deferred tax benefit of $3.4 million as a discrete item related to the $14.3 million impairment of Applebee's tradename and reacquired franchise rights in the second quarter of 2020. The total gross unrecognized tax benefit as of June 30, 2020 and December 31, 2019 was $7.9 million and $7.6 million, respectively, excluding interest, penalties and related tax benefits. The Company estimates the unrecognized tax benefit as of June 30, 2020 may decrease over the upcoming 12 months by an amount up to $1.5 million related to settlements with taxing authorities, statutes of limitations expirations and method changes. For the remaining liability, due to the uncertainties related to these tax matters, the Company is unable to make a reasonable estimate as to when cash settlement with a taxing authority will occur. As of June 30, 2020, accrued interest was $2.9 million and accrued penalties were less than $0.1 million, excluding any related income tax benefits. As of December 31, 2019, accrued interest was $2.5 million and accrued penalties were less than $0.1 million, excluding any related income tax benefits. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as a component of its income tax provision recognized in its Consolidated Statements of Comprehensive (Loss) Income. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The following table summarizes the components of stock-based compensation expense included in general and administrative expenses in the Consolidated Statements of Comprehensive (Loss) Income: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Total stock-based compensation expense: Equity classified awards expense $ 2.6 $ 1.8 $ 6.7 $ 5.9 Liability classified awards expense (credit) 0.1 1.4 (0.5) 2.4 Total pre-tax stock-based compensation expense 2.7 3.2 6.2 8.3 Book income tax benefit (0.7) (0.9) (1.6) (2.2) Total stock-based compensation expense, net of tax $ 2.0 $ 2.3 $ 4.6 $ 6.1 As of June 30, 2020, total unrecognized compensation expense of $17.0 million related to restricted stock and restricted stock units and $3.8 million related to stock options are expected to be recognized over a weighted average period of 1.3 years for restricted stock and restricted stock units and 1.5 years for stock options. Fair Value Assumptions The Company granted 167,969 stock options during the six months ended June 30, 2020 for which the fair value was estimated using a Black-Scholes option pricing model. The following summarizes the assumptions used in the Black-Scholes model: Risk-free interest rate 1.2 % Weighted average historical volatility 30.5 % Dividend yield 3.5 % Expected years until exercise 4.6 Weighted average fair value of options granted $17.53 Equity Classified Awards - Stock Options Stock option balances at June 30, 2020, and activity for the six months ended June 30, 2020 were as follows: Shares Weighted Weighted Average Aggregate Outstanding at December 31, 2019 1,217,438 $ 66.43 Granted 167,969 87.17 Exercised (270,024) 76.01 Expired (48,119) 112.58 Forfeited (30,106) 85.14 Outstanding at June 30, 2020 1,037,158 64.61 7.1 $ — Vested at June 30, 2020 and Expected to Vest 980,893 64.41 7.0 $ — Exercisable at June 30, 2020 559,407 $ 59.79 8.0 $ — The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price of the Company’s common stock on the last trading day of the second quarter of 2020 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2020. The aggregate intrinsic value will change based on the fair market value of the Company’s common stock and the number of in-the-money options. Equity Classified Awards - Restricted Stock and Restricted Stock Units Outstanding balances as of June 30, 2020, and activity related to restricted stock and restricted stock units for the six months ended June 30, 2020 were as follows: Restricted Weighted Stock-Settled Restricted Weighted Outstanding at December 31, 2019 224,515 $ 70.52 357,807 $ 30.35 Granted 110,583 79.32 27,893 87.17 Released (74,826) 57.38 (30,032) 64.76 Forfeited (23,675) 83.45 — — Outstanding at June 30, 2020 236,597 $ 78.16 355,668 $ 28.19 Liability Classified Awards - Cash-settled Restricted Stock Units The Company has granted cash-settled restricted stock units to certain employees. These instruments are recorded as liabilities at fair value as of the respective period end. Cash-Settled Restricted Outstanding at December 31, 2019 63,852 Granted 2,658 Forfeited (10,085) Outstanding at June 30, 2020 56,425 For the three months ended June 30, 2020 and 2019, an expense of $0.4 million and $0.5 million, respectively, was included as stock-based compensation expense related to cash-settled restricted stock units. For the six months ended June 30, 2020 and 2019, a credit of $0.9 million and an expense of $1.1 million, respectively, was included as stock-based compensation expense related to cash-settled restricted stock units. At June 30, 2020 and December 31, 2019, liabilities of $1.3 million and $2.3 million, respectively, related to cash-settled restricted stock units were included as part of accrued employee compensation and benefits in the Consolidated Balance Sheets. Liability Classified Awards - Long-Term Incentive Awards three |
Segments
Segments | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segments | Segments The Company identifies its reporting segments based on the organizational units used by management to monitor performance and make operating decisions. The Company currently has five operating segments: Applebee's franchise operations, Applebee's company-operated restaurant operations, IHOP franchise operations, rental operations and financing operations. The Company has four reportable segments: franchise operations, (an aggregation of Applebee's and IHOP franchise operations), company-operated restaurant operations, rental operations and financing operations. The Company considers these to be its reportable segments, regardless of whether any segment exceeds 10% of consolidated revenues, income before income tax provision or total assets. As of June 30, 2020, the franchise operations segment consisted of (i) 1,680 restaurants operated by Applebee’s franchisees in the United States, two U.S. territories and 11 countries outside the United States and (ii) 1,823 restaurants operated by IHOP franchisees and area licensees in the United States, two U.S. territories and 13 countries outside the United States. Franchise operations revenue consists primarily of franchise royalty revenues, franchise advertising revenue, sales of proprietary products to franchisees (primarily pancake and waffle dry mixes for the IHOP restaurants), and franchise fees. Franchise operations expenses include advertising expenses, the cost of IHOP proprietary products, bad debt expense, franchisor contributions to marketing funds, pre-opening training expenses and other franchise-related costs. Company restaurant sales are retail sales at 69 Applebee's company-operated restaurants. Company restaurant expenses are operating expenses at company-operated restaurants and include food, labor, utilities, rent and other restaurant operating costs. Rental operations revenue includes revenue from operating leases and interest income from direct financing leases. Rental operations expenses are costs of operating leases and interest expense from finance leases on which the Company is the lessee. Financing revenues primarily consist of interest income from the financing of IHOP equipment leases and franchise fees, sales of equipment associated with refranchised IHOP restaurants and interest income on Applebee's notes receivable from franchisees. Financing expenses are primarily the cost of restaurant equipment associated with refranchised IHOP restaurants. Information on segments is as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Revenues from external customers: Franchise operations $ 67.8 $ 162.7 $ 212.9 $ 331.6 Rental operations 23.7 29.9 52.7 60.6 Company restaurants 16.8 33.7 48.1 69.5 Financing operations 1.4 1.8 2.9 3.6 Total $ 109.7 $ 228.1 $ 316.6 $ 465.3 Interest expense: Rental operations $ 1.5 $ 1.9 $ 3.1 $ 4.3 Company restaurants 0.5 0.5 1.0 1.1 Corporate 17.1 14.6 32.3 30.0 Total $ 19.1 $ 17.0 $ 36.4 $ 35.4 Depreciation and amortization: Franchise operations $ 2.6 $ 2.6 $ 5.1 $ 5.1 Rental operations 3.1 3.4 6.3 6.9 Company restaurants 1.7 1.8 3.2 3.1 Corporate 3.4 2.8 6.7 5.7 Total $ 10.7 $ 10.6 $ 21.3 $ 20.8 Gross profit, by segment: Franchise operations $ 30.8 $ 83.8 $ 106.4 $ 172.4 Rental operations 2.4 7.0 8.9 15.0 Company restaurants (4.4) 2.5 (3.4) 6.7 Financing operations 1.2 1.6 2.6 3.3 Total gross profit 30.0 94.9 114.5 197.4 Corporate and unallocated expenses, net (176.9) (65.8) (232.2) (127.2) (Loss) income before income tax provision $ (146.8) $ 29.1 $ (117.7) $ 70.2 |
Net Income per Share
Net Income per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Income per Share | Net (Loss) Income per Share The computation of the Company's basic and diluted net income per share is as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In thousands, except per share data) Numerator for basic and diluted (loss) income per common share: Net (loss) income $ (134,779) $ 21,390 $ (112,451) $ 53,033 Less: Net loss (income) allocated to unvested participating restricted stock 4,763 (719) 3,961 (1,827) Net (loss) income available to common stockholders - basic (130,016) 20,671 (108,490) 51,206 Effect of unvested participating restricted stock in two-class calculation 3 7 — 20 Net (loss) income available to common stockholders - diluted $ (130,013) $ 20,678 $ (108,490) $ 51,226 Denominator: Weighted average outstanding shares of common stock - basic 16,177 17,181 16,215 17,262 Dilutive effect of stock options — 382 — 364 Weighted average outstanding shares of common stock - diluted 16,177 17,563 16,215 17,626 Net (loss) income per common share: Basic $ (8.04) $ 1.20 $ (6.69) $ 2.97 Diluted $ (8.04) $ 1.18 $ (6.69) $ 2.91 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company does not have a material amount of financial assets or liabilities that are required under U.S. GAAP to be measured on a recurring basis at fair value. The Company is not a party to any material derivative financial instruments. The Company does not have a material amount of non-financial assets or non-financial liabilities that are required under U.S. GAAP to be measured at fair value on a recurring basis. The Company has not elected to use the fair value measurement option, as permitted under U.S. GAAP, for any assets or liabilities for which fair value measurement is not presently required. The Company believes the fair values of cash equivalents, accounts receivable and accounts payable approximate their carrying amounts due to their short duration. The fair values of the Company's 2019 Class A-2 Notes at June 30, 2020 and December 31, 2019 were as follows: June 30, 2020 December 31, 2019 (In millions) Face Value of Class A-2 Notes $ 1,300.0 $ 1,300.0 Fair Value of Class A-2 Notes $ 1,122.8 $ 1,326.3 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation, Claims and Disputes The Company is subject to various lawsuits, administrative proceedings, audits and claims arising in the ordinary course of business. Some of these lawsuits purport to be class actions and/or seek substantial damages. The Company is required under U.S. GAAP to record an accrual for litigation loss contingencies that are both probable and reasonably estimable. Legal fees and expenses associated with the defense of all of the Company's litigation are expensed as such fees and expenses are incurred. Management regularly assesses the Company's insurance coverage, analyzes litigation information with the Company's attorneys and evaluates the Company's loss experience in connection with pending legal proceedings. While the Company does not presently believe that any of the legal proceedings to which it is currently a party will ultimately have a material adverse impact on the Company, there can be no assurance that the Company will prevail in all the proceedings the Company is party to, or that the Company will not incur material losses from them. Lease Guarantees |
Restricted Cash
Restricted Cash | 6 Months Ended |
Jun. 30, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Restricted Cash | Restricted CashCurrent restricted cash of $31.2 million at June 30, 2020 primarily consisted of $29.5 million of funds required to be held in trust in connection with the Company's securitized debt and $1.6 million of funds from Applebee's franchisees pursuant to franchise agreements, usage of which was restricted to advertising activities. Current restricted cash of $40.7 million at December 31, 2019 primarily consisted of $38.4 million of funds required to be held in trust in connection with the Company's securitized debt and $2.3 million of funds from Applebee's franchisees pursuant to franchise agreements, usage of which was restricted to advertising activities. Non-current restricted cash of $32.8 million at June 30, 2020 and $15.7 million at December 31, 2019 represents interest reserves required to be set aside for the duration of the Company's securitized debt. During the six months ended June 30, 2020, the Company voluntarily increased the reserve from the required $16.4 million (one quarter of interest and fees related to the 2019 Class A-1 Notes and 2019 Class A-2 Notes) to the current balance of $32.8 million. |
Accounting Standards Adopted _2
Accounting Standards Adopted and Newly Issued Accounting Standards Not Yet Adopted (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Fiscal Period | The Company’s fiscal quarters end on the Sunday closest to the last day of each calendar quarter. For convenience, the fiscal quarters of each year are referred to as ending on March 31, June 30, September 30 and December 31. The first fiscal quarter of 2020 began on December 30, 2019 and ended on March 29, 2020; the second fiscal quarter of 2020 ended on June 28, 2020. The first fiscal quarter of 2019 began on December 31, 2018 and ended on March 31, 2019; the second fiscal quarter of 2019 ended on June 30, 2019. |
Risks and Uncertainties | Risks and UncertaintiesThe Company was subject to risks and uncertainties as a result of the rapidly spreading outbreak of a novel strain of coronavirus, designated “COVID-19.” The extent of the continued impact of the COVID-19 pandemic on the Company's business is highly uncertain and difficult to predict, as measures taken in response to and the effect of the pandemic has varied and continues to vary by state and municipalities within states. Assessments of the success of measures taken and the timing of any further restrictions, or lifting of such restrictions, is rapidly evolving. The Company first began to experience impacts from COVID-19 in March 2020, as federal, state and local governments began to react to the public health crisis by encouraging “social distancing” and requiring, in varying degrees, restaurant dine-in limitations and other restrictions that largely limited the restaurants of the Company's franchisees and its company-operated restaurants to take-out and delivery sales. Many international restaurants were temporarily closed for at least a part of March as well as a result of government restrictions put in place in various countries. During the three months ended June 30, 2020, government-imposed dine-in restrictions were relaxed in many of the locations in which we operate, although dining room capacity is limited to 50% or less at most restaurants. Additionally, economies worldwide also have been negatively impacted by the COVID-19 pandemic, which possibly could cause a domestic and/or global economic recession. |
Accounting Standards Adopted in the Current Fiscal Year and Not Yet Adopted | Accounting Standards Adopted in the Current Fiscal Year In February 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance on the measurement of current expected credit losses (“CECL”) on financial instruments. The new guidance has replaced the incurred loss methodology of recognizing credit losses on financial instruments with a methodology that estimates the expected credit loss on financial instruments and reflects the net amount expected to be collected on the financial instrument. The Company adopted this change in accounting principle as of the first day of the first fiscal quarter of 2020 using the modified retrospective method. Accordingly, financial information for periods prior to the date of initial application has not been adjusted. Upon adoption of the new CECL guidance, the Company recognized an increase to its allowance for credit losses of $0.7 million. The Company recognized an adjustment to retained earnings upon adoption of $0.5 million, net of tax of $0.2 million. Additional new accounting guidance became effective for the Company as of the beginning of fiscal 2020 that the Company reviewed and concluded was either not applicable to its operations or had no material effect on its consolidated financial statements in the current or future fiscal years. Newly Issued Accounting Standards Not Yet Adopted In December 2019, the FASB issued new guidance intended to simplify the accounting for income taxes, change the accounting for certain income tax transactions, and make other minor changes. The Company will be required to adopt the new guidance beginning with its first fiscal quarter of 2021; early adoption in any interim period after issuance of the new guidance is permitted. The Company is currently assessing the impact this guidance will have on its consolidated financial statements but does not expect this standard to have a material effect on its financial statements. The Company does not intend to adopt the standard early. The Company reviewed all other newly issued accounting pronouncements and concluded that they either are not applicable to the Company's operations or that no material effect is expected on the Company's financial statements when adoption is required in the future. |
Impairment and Closure Charge_2
Impairment and Closure Charges (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes in the carrying amount of goodwill for the six months ended June 30, 2020 are as follows: Applebee's Franchise Unit Applebee's Company Unit IHOP Franchise Unit Total (In millions) Balance at December 31, 2019: $ 328.4 $ 4.6 $ 10.8 $ 343.9 Impairment loss (92.2) — — (92.2) Balance at June 30, 2020: $ 236.2 $ 4.6 $ 10.8 $ 251.6 |
Schedule of Indefinite-Lived Intangible Assets | Changes in the carrying amount of intangible assets for the six months ended June 30, 2020 are as follows: Not Subject to Amortization Subject to Amortization Tradename Other Franchising Rights Reacquired Franchising Rights Leaseholds Total (In millions) Balance at December 31, 2019: $ 479.0 $ 3.2 $ 79.0 $ 9.8 $ 4.1 $ 575.1 Impairment loss (11.0) — — (3.3) — (14.3) Amortization expense — — (5.0) (0.5) 0.0 — (5.5) Additions — 0.2 — — — 0.2 Balance at June 30, 2020: $ 468.0 $ 3.4 $ 74.0 $ 6.0 $ 4.1 $ 555.5 |
Schedule of Finite-Lived Intangible Assets | Changes in the carrying amount of intangible assets for the six months ended June 30, 2020 are as follows: Not Subject to Amortization Subject to Amortization Tradename Other Franchising Rights Reacquired Franchising Rights Leaseholds Total (In millions) Balance at December 31, 2019: $ 479.0 $ 3.2 $ 79.0 $ 9.8 $ 4.1 $ 575.1 Impairment loss (11.0) — — (3.3) — (14.3) Amortization expense — — (5.0) (0.5) 0.0 — (5.5) Additions — 0.2 — — — 0.2 Balance at June 30, 2020: $ 468.0 $ 3.4 $ 74.0 $ 6.0 $ 4.1 $ 555.5 |
Details of Impairment of Long-Lived Assets Held and Used by Asset | Long-lived tangible asset impairment and closure charges for the three and six months ended June 30, 2020 were as follows: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 (In millions) Long-lived tangible asset impairment $ 17.2 $ — $ 17.2 $ — Closure charges 0.7 0.3 0.7 0.5 Total long-lived asset impairment and closure charges $ 17.9 $ 0.3 $ 17.9 $ 0.5 |
Schedule of Restructuring Reserve by Type of Cost | Long-lived tangible asset impairment and closure charges for the three and six months ended June 30, 2020 were as follows: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 (In millions) Long-lived tangible asset impairment $ 17.2 $ — $ 17.2 $ — Closure charges 0.7 0.3 0.7 0.5 Total long-lived asset impairment and closure charges $ 17.9 $ 0.3 $ 17.9 $ 0.5 |
Revenue Disclosures (Tables)
Revenue Disclosures (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table disaggregates franchise revenue by major type for the three and six months ended June 30, 2020 and 2019: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 June 30, 2020 June 30, 2019 (In thousands) Franchise Revenue: Royalties $ 31,011 $ 75,747 $ 98,611 $ 154,382 Advertising fees 29,095 71,738 90,818 144,368 Pancake and waffle dry mix sales and other 4,037 12,526 16,885 26,957 Franchise and development fees 3,733 2,657 6,599 5,887 Total franchise revenue $ 67,876 $ 162,668 $ 212,913 $ 331,594 |
Schedule of Changes in Deferred Revenue | Changes in the Company's contract liability for deferred franchise and development fees during the six months ended June 30, 2020 are as follows: Deferred Franchise Revenue (short- and long-term) (In thousands) Balance at December 31, 2019 $ 67,030 Recognized as revenue during the six months ended June 30, 2020 (6,473) Fees deferred during the six months ended June 30, 2020 1,633 Balance at June 30, 2020 $ 62,190 |
Schedule of Remaining Performance Obligations | The balance of deferred revenue as of June 30, 2020 is expected to be recognized as follows: (In thousands) Remainder of 2020 $ 4,022 2021 8,775 2022 7,221 2023 6,695 2024 6,070 Thereafter 29,407 Total $ 62,190 |
Current Expected Credit Losses
Current Expected Credit Losses (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Credit Loss [Abstract] | |
Schedule of Changes in Allowance for Credit Losses | Changes in the allowance for credit losses during the six months ended June 30, 2020 were as follows: Accounts Receivable Notes receivable, short-term Notes receivable, long-term Lease Receivables Equipment Notes Other (1) Total (In thousands) Balance, December 31, 2019 $ 0.7 $ 2.4 $ 8.2 $ — $ — $ — $ 11.3 Increase due to CECL adoption 0.3 0.0 0.1 0.1 0.1 0.1 0.7 Bad debt expense for the six months ended June 30, 2020 3.9 2.0 (0.7) 0.1 0.1 0.2 5.6 Advertising provision adjustment 2.1 (0.2) — — — — 1.9 Write-offs 0.1 0.1 — — — — 0.2 Recoveries — — — 0.0 — — 0.0 Balance, June 30, 2020 $ 7.1 $ 4.3 $ 7.6 $ 0.2 $ 0.2 $ 0.3 $ 19.7 (1) Primarily distributor receivables, gift card receivables and credit card receivables |
Schedule of Delinquency Status of Receivable | The Company's primary credit quality indicator for all portfolio segments is delinquency. The delinquency status of receivables (other than accounts receivable, gift card receivables and distributor receivables) at June 30, 2020 was as follows: Notes receivable, short-term Notes receivable, long-term Lease Receivables Equipment Notes Other (1) Total (In millions) Current $ 4.1 $ 19.5 $ 10.3 $ 19.6 $ 1.2 $ 54.7 30-59 days 0.3 1.2 5.5 10.6 — 17.6 60-89 days 0.4 1.9 9.4 17.2 — 28.9 90-119 days 0.1 0.6 1.1 2.2 — 4.0 120+ days 1.2 — — 0.4 — 1.6 Total $ 6.1 $ 23.2 $ 26.3 $ 50.0 $ 1.2 $ 106.8 (1) Primarily c redit card receivables |
Financing Receivable Credit Quality Indicators | The year of origination of the Company's financing receivables is as follows: Notes receivable, short and long-term Lease Receivables Equipment Notes Total (In millions) 2020 $ 1.7 $ — $ — $ 1.7 2019 7.9 0.9 — 8.8 2018 13.1 — — 13.1 2017 6.4 — — 6.4 2016 — 1.3 — 1.3 Prior 0.2 24.1 50.0 74.3 Total $ 29.3 $ 26.3 $ 50.0 $ 105.6 |
Schedule of Accounts, Notes, Loans and Financing Receivable | June 30, 2020 December 31, 2019 (In millions) Accounts receivable $ 103.7 $ 60.8 Gift card receivables 5.8 46.7 Notes receivable 29.2 28.9 Financing receivables: Equipment leases receivable 50.0 56.3 Direct financing leases receivable 26.3 34.0 Franchise fee notes receivable 0.1 0.1 Other 3.2 7.3 218.3 234.2 Less: allowance for doubtful accounts and notes receivable (19.7) (11.3) 198.6 222.9 Less: current portion (124.6) (136.9) Long-term receivables $ 74.0 $ 86.0 |
Lease Disclosures (Tables)
Lease Disclosures (Tables) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Leases [Abstract] | ||
Schedule of Lease Cost | The Company's lease cost for the three and six months ended June 30, 2020 and 2019 was as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Finance lease cost: Amortization of right-of-use assets $ 1.3 $ 1.3 $ 2.5 $ 2.6 Interest on lease liabilities 1.6 2.0 3.4 4.1 Operating lease cost 26.6 26.8 53.1 53.2 Variable lease cost (0.1) 0.6 0.3 1.3 Short-term lease cost 0.0 0.0 0.0 0.0 Sublease income (21.5) (27.3) (48.1) (55.4) Lease cost $ 7.9 $ 3.4 $ 11.2 $ 5.8 | |
Schedule of Operating Lease Liability Future Maturity | Future minimum lease payments under noncancelable leases as lessee as of June 30, 2020 were as follows: Finance Operating (In millions) 2020 (remaining six months) $ 10.5 $ 52.3 2021 16.6 85.4 2022 14.9 77.9 2023 11.8 64.9 2024 9.6 59.6 Thereafter 58.2 184.7 Total minimum lease payments 121.6 524.8 Less: interest/imputed interest (35.0) (102.6) Total obligations 86.6 422.2 Less: current portion (12.5) (71.8) Long-term lease obligations $ 74.1 $ 350.4 | |
Schedule of Finance Lease Liability Future Maturity | Future minimum lease payments under noncancelable leases as lessee as of June 30, 2020 were as follows: Finance Operating (In millions) 2020 (remaining six months) $ 10.5 $ 52.3 2021 16.6 85.4 2022 14.9 77.9 2023 11.8 64.9 2024 9.6 59.6 Thereafter 58.2 184.7 Total minimum lease payments 121.6 524.8 Less: interest/imputed interest (35.0) (102.6) Total obligations 86.6 422.2 Less: current portion (12.5) (71.8) Long-term lease obligations $ 74.1 $ 350.4 | |
Schedule of Lease Payments | During the three and six months ended June 30, 2020 and 2019, the Company made the following cash payments for leases: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Principal payments on finance lease obligations $ 3.0 $ 3.5 $ 6.0 $ 7.0 Interest payments on finance lease obligations $ 1.6 $ 2.0 $ 3.4 $ 4.1 Payments on operating leases $ 23.0 $ 22.8 $ 46.5 $ 45.8 Variable lease payments $ 0.2 $ 0.6 $ 0.5 $ 1.5 | |
Schedule of Operating Lease Income | The Company's income from operating leases for the three and six months ended June 30, 2020 and 2019 was as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Minimum lease payments $ 22.5 $ 25.4 $ 47.9 $ 51.1 Variable lease income 0.4 2.8 2.8 6.0 Total operating lease income $ 22.9 $ 28.2 $ 50.7 $ 57.1 | |
Schedule of Future Minimum Payments as a Lessor Under Operating Leases | Minimum payments to be received as lessor under noncancelable operating leases as of June 30, 2020 were as follows: (In millions) 2020 (remaining six months) $ 53.0 2021 99.4 2022 96.7 2023 93.0 2024 85.3 Thereafter 217.6 Total minimum rents receivable $ 645.0 | |
Schedule of Direct Finance Lease Income | The Company's income from direct financing leases for the three and six months ended June 30, 2020 and 2019 was as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Interest income $ 0.8 $ 1.3 $ 1.8 $ 2.7 Variable lease income 0.0 0.3 0.2 0.7 Total operating lease income $ 0.8 $ 1.6 $ 2.0 $ 3.4 | |
Schedule of Future Minimum Payments as a Lessor Under Direct Financing Leases | Minimum payments to be received as lessor under noncancelable direct financing leases as of June 30, 2020 were as follows: (In millions) 2020 (remaining six months) $ 6.4 2021 10.5 2022 7.6 2023 3.5 2024 1.3 Thereafter 2.5 Total minimum rents receivable 31.8 Less: unearned income (5.5) Total net investment in direct financing leases 26.3 Less: current portion (9.3) Long-term investment in direct financing leases $ 17.0 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | At June 30, 2020 and December 31, 2019, long-term debt consisted of the following: June 30, 2020 December 31, 2019 (In millions) Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I $ 700.0 $ 700.0 Series 2019-1 4.723% Fixed Rate Senior Secured Notes, Class A-2-II 600.0 600.0 Series 2019-1 Variable Funding Senior Notes Class A-1, variable interest rate of 3.18% at June 30, 2020 220.0 — Debt issuance costs (13.1) (11.8) Long-term debt, net of debt issuance costs 1,506.9 1,288.2 Current portion of long-term debt (9.8) — Long-term debt $ 1,497.1 $ 1,288.2 |
Schedule of Maturities of Long-term Debt | Face-value maturities of long-term debt for each of the next five years, assuming the Company's leverage ratio remains greater than 5.25x, are as follows: (In millions) 2020 (remaining six months) $ 3.3 2021 13.0 2022 13.0 2023 13.0 2024 903.2 Thereafter 574.5 Total $ 1,520.0 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Dividends Declared | Dividends declared and paid per share for the three months and six months ended June 30, 2020 and 2019 were as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 Dividends declared per common share $ — $ 0.69 $ 0.76 $ 1.38 Dividends paid per common share $ 0.76 $ 0.69 $ 1.45 $ 1.32 |
Class of Treasury Stock | A summary of shares repurchased under the 2019 Repurchase Program, during three and six months ended June 30, 2020 and cumulatively, is as follows: Shares Cost of shares (In millions) Repurchased during the three months ended June 30, 2020 — $ — Repurchased during the six months ended June 30, 2020 459,899 $ 26.5 Cumulative (life-of-program) repurchases 1,697,597 $ 129.8 Remaining dollar value of shares that may be repurchased n/a $ 70.2 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Components of the Company’s stock-based compensation expense | The following table summarizes the components of stock-based compensation expense included in general and administrative expenses in the Consolidated Statements of Comprehensive (Loss) Income: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Total stock-based compensation expense: Equity classified awards expense $ 2.6 $ 1.8 $ 6.7 $ 5.9 Liability classified awards expense (credit) 0.1 1.4 (0.5) 2.4 Total pre-tax stock-based compensation expense 2.7 3.2 6.2 8.3 Book income tax benefit (0.7) (0.9) (1.6) (2.2) Total stock-based compensation expense, net of tax $ 2.0 $ 2.3 $ 4.6 $ 6.1 |
Schedule of stock option valuation assumptions | The following summarizes the assumptions used in the Black-Scholes model: Risk-free interest rate 1.2 % Weighted average historical volatility 30.5 % Dividend yield 3.5 % Expected years until exercise 4.6 Weighted average fair value of options granted $17.53 |
Schedule of stock option activity | Stock option balances at June 30, 2020, and activity for the six months ended June 30, 2020 were as follows: Shares Weighted Weighted Average Aggregate Outstanding at December 31, 2019 1,217,438 $ 66.43 Granted 167,969 87.17 Exercised (270,024) 76.01 Expired (48,119) 112.58 Forfeited (30,106) 85.14 Outstanding at June 30, 2020 1,037,158 64.61 7.1 $ — Vested at June 30, 2020 and Expected to Vest 980,893 64.41 7.0 $ — Exercisable at June 30, 2020 559,407 $ 59.79 8.0 $ — |
Schedule of restricted stock unit activity | Outstanding balances as of June 30, 2020, and activity related to restricted stock and restricted stock units for the six months ended June 30, 2020 were as follows: Restricted Weighted Stock-Settled Restricted Weighted Outstanding at December 31, 2019 224,515 $ 70.52 357,807 $ 30.35 Granted 110,583 79.32 27,893 87.17 Released (74,826) 57.38 (30,032) 64.76 Forfeited (23,675) 83.45 — — Outstanding at June 30, 2020 236,597 $ 78.16 355,668 $ 28.19 |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | The Company has granted cash-settled restricted stock units to certain employees. These instruments are recorded as liabilities at fair value as of the respective period end. Cash-Settled Restricted Outstanding at December 31, 2019 63,852 Granted 2,658 Forfeited (10,085) Outstanding at June 30, 2020 56,425 |
Segments (Tables)
Segments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information by segment | Information on segments is as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In millions) Revenues from external customers: Franchise operations $ 67.8 $ 162.7 $ 212.9 $ 331.6 Rental operations 23.7 29.9 52.7 60.6 Company restaurants 16.8 33.7 48.1 69.5 Financing operations 1.4 1.8 2.9 3.6 Total $ 109.7 $ 228.1 $ 316.6 $ 465.3 Interest expense: Rental operations $ 1.5 $ 1.9 $ 3.1 $ 4.3 Company restaurants 0.5 0.5 1.0 1.1 Corporate 17.1 14.6 32.3 30.0 Total $ 19.1 $ 17.0 $ 36.4 $ 35.4 Depreciation and amortization: Franchise operations $ 2.6 $ 2.6 $ 5.1 $ 5.1 Rental operations 3.1 3.4 6.3 6.9 Company restaurants 1.7 1.8 3.2 3.1 Corporate 3.4 2.8 6.7 5.7 Total $ 10.7 $ 10.6 $ 21.3 $ 20.8 Gross profit, by segment: Franchise operations $ 30.8 $ 83.8 $ 106.4 $ 172.4 Rental operations 2.4 7.0 8.9 15.0 Company restaurants (4.4) 2.5 (3.4) 6.7 Financing operations 1.2 1.6 2.6 3.3 Total gross profit 30.0 94.9 114.5 197.4 Corporate and unallocated expenses, net (176.9) (65.8) (232.2) (127.2) (Loss) income before income tax provision $ (146.8) $ 29.1 $ (117.7) $ 70.2 |
Net Income per Share (Tables)
Net Income per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Computation of the Company’s basic and diluted net income per share | The computation of the Company's basic and diluted net income per share is as follows: Three months ended June 30, Six months ended June 30, 2020 2019 2020 2019 (In thousands, except per share data) Numerator for basic and diluted (loss) income per common share: Net (loss) income $ (134,779) $ 21,390 $ (112,451) $ 53,033 Less: Net loss (income) allocated to unvested participating restricted stock 4,763 (719) 3,961 (1,827) Net (loss) income available to common stockholders - basic (130,016) 20,671 (108,490) 51,206 Effect of unvested participating restricted stock in two-class calculation 3 7 — 20 Net (loss) income available to common stockholders - diluted $ (130,013) $ 20,678 $ (108,490) $ 51,226 Denominator: Weighted average outstanding shares of common stock - basic 16,177 17,181 16,215 17,262 Dilutive effect of stock options — 382 — 364 Weighted average outstanding shares of common stock - diluted 16,177 17,563 16,215 17,626 Net (loss) income per common share: Basic $ (8.04) $ 1.20 $ (6.69) $ 2.97 Diluted $ (8.04) $ 1.18 $ (6.69) $ 2.91 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of non-current financial liabilities | The fair values of the Company's 2019 Class A-2 Notes at June 30, 2020 and December 31, 2019 were as follows: June 30, 2020 December 31, 2019 (In millions) Face Value of Class A-2 Notes $ 1,300.0 $ 1,300.0 Fair Value of Class A-2 Notes $ 1,122.8 $ 1,326.3 |
Basis of Presentation - Narrati
Basis of Presentation - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Debt Instrument [Line Items] | |||||
Proceeds from line of credit | $ 220,000 | $ 0 | |||
Interest expense, net | $ 17,127 | $ 14,602 | 32,299 | $ 29,995 | |
Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Interest expense, net | 32,800 | $ 16,400 | |||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Proceeds from line of credit | 220,000 | ||||
Line of credit, remaining borrowing capacity | $ 2,000 | $ 2,000 |
Accounting Standards Adopted _3
Accounting Standards Adopted and Newly Issued Accounting Standards Not Yet Adopted - Narrative (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Allowance for credit losses | $ 19,700 | $ 19,700 | $ 11,300 | ||||
(Accumulated deficit) retained earnings | (64,010) | (64,010) | $ 61,653 | ||||
Income tax provision | $ (11,992) | $ 7,677 | $ (5,254) | $ 17,166 | |||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201602Member | ||||
Cumulative Effect, Period Of Adoption, Adjustment | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Allowance for credit losses | $ 700 | $ 700 | |||||
(Accumulated deficit) retained earnings | (500) | ||||||
Income tax provision | $ (200) |
Impairment and Closure Charge_3
Impairment and Closure Charges (Details) $ in Thousands | Jan. 01, 2020 | Jun. 30, 2020USD ($)Restaurant | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)Restaurant | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018 |
Goodwill [Line Items] | |||||||
Impairment loss | $ 92,200 | ||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201602Member | ||||
Long-lived tangible asset impairment | $ 17,200 | $ 0 | 17,200 | $ 0 | |||
Subject to Amortization | Reacquired Franchise Rights | |||||||
Goodwill [Line Items] | |||||||
Impairment of intangible assets, finite-lived | 3,300 | ||||||
Minimum | |||||||
Goodwill [Line Items] | |||||||
Long-lived tangible asset impairment | 5 | ||||||
Maximum | |||||||
Goodwill [Line Items] | |||||||
Long-lived tangible asset impairment | 1,300 | ||||||
Land, Building And Leasehold Improvement [Member] | |||||||
Goodwill [Line Items] | |||||||
Long-lived tangible asset impairment | 7,800 | ||||||
Revision of Prior Period, Accounting Standards Update, Adjustment | |||||||
Goodwill [Line Items] | |||||||
Operating lease, impairment loss | $ 9,400 | ||||||
Applebee's | |||||||
Goodwill [Line Items] | |||||||
Impairment loss | $ 0 | ||||||
Number Of restaurants impacted by long-lived asset impairment | Restaurant | 46 | 46 | |||||
IHOP | |||||||
Goodwill [Line Items] | |||||||
Number Of restaurants impacted by long-lived asset impairment | Restaurant | 33 | 33 | |||||
Franchised Units | Applebee's | |||||||
Goodwill [Line Items] | |||||||
Impairment loss | $ 92,200 | ||||||
Franchised Units | IHOP | |||||||
Goodwill [Line Items] | |||||||
Impairment loss | 0 | ||||||
Trade Names | |||||||
Goodwill [Line Items] | |||||||
Impairment | $ 11,000 | ||||||
Trade Names | Applebee's | Reacquired Franchise Rights | |||||||
Goodwill [Line Items] | |||||||
Impairment | $ 14,300 |
Impairment and Closure Charge_4
Impairment and Closure Charges Changes in the carrying amount of goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Goodwill [Line Items] | ||
Goodwill, gross | $ 343,900 | |
Impairment loss | $ (92,200) | |
Goodwill | 251,628 | 343,862 |
Applebee's | ||
Goodwill [Line Items] | ||
Goodwill, gross | 4,600 | |
Impairment loss | 0 | |
Goodwill | 4,600 | |
Applebee's | Franchised Units | ||
Goodwill [Line Items] | ||
Goodwill, gross | 328,400 | |
Impairment loss | (92,200) | |
Goodwill | 236,200 | |
IHOP | Franchised Units | ||
Goodwill [Line Items] | ||
Goodwill, gross | $ 10,800 | |
Impairment loss | 0 | |
Goodwill | $ 10,800 |
Impairment and Closure Charge_5
Impairment and Closure Charges Changes in the carrying amount of intangible assets (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Indefinite-lived Intangible Assets [Roll Forward] | |
Indefinite-lived intangible assets balance, end | $ 555,500 |
Finite-lived Intangible Assets [Roll Forward] | |
Amortization expense | (5,500) |
Finite And Indefinite Lived Intangible Assets [Roll Forward] | |
Intangible assets balance, beginning | 575,103 |
Impairment loss | (14,300) |
Intangible assets balance, end | 555,495 |
Not Subject to Amortization | |
Indefinite-lived Intangible Assets [Roll Forward] | |
Additions | 200 |
Franchise Rights | Subject to Amortization | |
Finite-lived Intangible Assets [Roll Forward] | |
Finite-lived intangible assets, balance, beginning | 79,000 |
Amortization expense | (5,000) |
Finite-lived intangible assets, balance, end | 74,000 |
Reacquired Franchise Rights | Subject to Amortization | |
Finite-lived Intangible Assets [Roll Forward] | |
Finite-lived intangible assets, balance, beginning | 9,800 |
Impairment loss | (3,300) |
Amortization expense | (500) |
Finite-lived intangible assets, balance, end | 6,000 |
Leasehold Improvements | Subject to Amortization | |
Finite-lived Intangible Assets [Roll Forward] | |
Finite-lived intangible assets, balance, beginning | 4,100 |
Finite-lived intangible assets, balance, end | 4,100 |
Trade Names | |
Indefinite-lived Intangible Assets [Roll Forward] | |
Impairment | (11,000) |
Trade Names | Not Subject to Amortization | |
Indefinite-lived Intangible Assets [Roll Forward] | |
Indefinite-lived intangible assets balance, beginning | 479,000 |
Impairment | (11,000) |
Indefinite-lived intangible assets balance, end | 468,000 |
Other Intangible Assets | Not Subject to Amortization | |
Indefinite-lived Intangible Assets [Roll Forward] | |
Indefinite-lived intangible assets balance, beginning | 3,200 |
Indefinite-lived intangible assets balance, end | $ 3,400 |
Impairment and Closure Charge_6
Impairment and Closure Charges - Long-lived tangible asset impairment and closure charges (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Long-lived tangible asset impairment | $ 17.2 | $ 0 | $ 17.2 | $ 0 |
Closure charges | 0.7 | 0.3 | 0.7 | 0.5 |
Total long-lived asset impairment and closure charges | $ 17.9 | $ 0.3 | $ 17.9 | $ 0.5 |
Revenue Disclosures - Disaggreg
Revenue Disclosures - Disaggregation of Franchise Revenue by Major Type (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Franchise revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Total franchise revenue | $ 67,876 | $ 162,668 | $ 212,913 | $ 331,594 |
Royalties | ||||
Disaggregation of Revenue [Line Items] | ||||
Total franchise revenue | 31,011 | 75,747 | 98,611 | 154,382 |
Advertising fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total franchise revenue | 29,095 | 71,738 | 90,818 | 144,368 |
Pancake and waffle dry mix sales and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total franchise revenue | 4,037 | 12,526 | 16,885 | 26,957 |
Franchise and development fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Total franchise revenue | $ 3,733 | $ 2,657 | $ 6,599 | $ 5,887 |
Revenue Disclosures - Changes i
Revenue Disclosures - Changes in the Company's contract liability for deferred franchise and development fees (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Change in Contract with Customer, Liability [Roll Forward] | |
Balance at December 31, 2019 | $ 67,030 |
Recognized as revenue during the six months ended June 30, 2020 | (6,473) |
Fees deferred during the six months ended June 30, 2020 | 1,633 |
Balance at June 30, 2020 | $ 62,190 |
Revenue Disclosures - (Details)
Revenue Disclosures - (Details) - Receivables from Franchise Revenue Transactions - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Billed and unbilled receivables | $ 97.3 | $ 63.5 |
Billed and unbilled receivables, accumulated allowance for credit loss | $ 7.1 | $ 0.7 |
Revenue Disclosures - Deferred
Revenue Disclosures - Deferred revenue expected to be recognized (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 62,190 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 4,022 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 8,775 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 7,221 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 6,695 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 6,070 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations expected to be satisfied | $ 29,407 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations expected to be satisfied, expected timing |
Current Expected Credit Losse_2
Current Expected Credit Losses - Narrative (Details) $ in Millions | Jun. 30, 2020USD ($)properties | Mar. 29, 2020 |
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Finance lease, weighted average remaining lease term | 8 years 10 months 24 days | |
Operating lease, weighted average remaining lease term | 7 years 6 months | |
Notes Receivable | Applebee's | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Accounts and financing receivable, allowance for credit loss | $ | $ 11.8 | |
Lease Receivables | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Finance lease, weighted average remaining lease term | 3 years 7 months 6 days | |
Number of Properties Subject to Ground Leases | properties | 102 | |
Equipment Notes | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Operating lease, weighted average remaining lease term | 5 years 10 months 24 days |
Current Expected Credit Losse_3
Current Expected Credit Losses - Changes in the Allowance for Credit Losses (Details) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, December 31, 2019 | $ 11,300,000 |
Bad debt expense for the six months ended June 30, 2020 | 5,600,000 |
Advertising provision adjustment | 1,900,000 |
Write-offs | 200,000 |
Recoveries | 0 |
Balance, June 30, 2020 | 19,700,000 |
Cumulative Effect, Period Of Adoption, Adjustment | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, December 31, 2019 | 700,000 |
Accounts Receivable | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, December 31, 2019 | 700,000 |
Bad debt expense for the six months ended June 30, 2020 | 3,900,000 |
Advertising provision adjustment | 2,100,000 |
Write-offs | 100,000 |
Recoveries | 0 |
Balance, June 30, 2020 | 7,100,000 |
Accounts Receivable | Cumulative Effect, Period Of Adoption, Adjustment | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, December 31, 2019 | 300,000 |
Notes receivable, short-term | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, December 31, 2019 | 2,400,000 |
Bad debt expense for the six months ended June 30, 2020 | 2,000,000 |
Advertising provision adjustment | (200,000) |
Write-offs | 100,000 |
Recoveries | 0 |
Balance, June 30, 2020 | 4,300,000 |
Notes receivable, short-term | Cumulative Effect, Period Of Adoption, Adjustment | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, December 31, 2019 | 0 |
Notes receivable, long-term | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, December 31, 2019 | 8,200,000 |
Bad debt expense for the six months ended June 30, 2020 | (700,000) |
Advertising provision adjustment | 0 |
Write-offs | 0 |
Recoveries | 0 |
Balance, June 30, 2020 | 7,600,000 |
Notes receivable, long-term | Cumulative Effect, Period Of Adoption, Adjustment | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, December 31, 2019 | 100,000 |
Lease Receivables | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, December 31, 2019 | 0 |
Bad debt expense for the six months ended June 30, 2020 | 100,000 |
Advertising provision adjustment | 0 |
Write-offs | 0 |
Recoveries | 0 |
Balance, June 30, 2020 | 200,000 |
Lease Receivables | Cumulative Effect, Period Of Adoption, Adjustment | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, December 31, 2019 | 100,000 |
Equipment Notes | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, December 31, 2019 | 0 |
Bad debt expense for the six months ended June 30, 2020 | 100,000 |
Advertising provision adjustment | 0 |
Write-offs | 0 |
Recoveries | 0 |
Balance, June 30, 2020 | 200,000 |
Equipment Notes | Cumulative Effect, Period Of Adoption, Adjustment | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, December 31, 2019 | 100,000 |
Other | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, December 31, 2019 | 0 |
Bad debt expense for the six months ended June 30, 2020 | 200,000 |
Advertising provision adjustment | 0 |
Write-offs | 0 |
Recoveries | 0 |
Balance, June 30, 2020 | 300,000 |
Other | Cumulative Effect, Period Of Adoption, Adjustment | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, December 31, 2019 | $ 100,000 |
Current Expected Credit Losse_4
Current Expected Credit Losses - Delinquency Status of Receivables (Details) $ in Millions | Jun. 30, 2020USD ($) |
Financing Receivable, Past Due [Line Items] | |
Current | $ 54.7 |
Total | 106.8 |
30-59 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 17.6 |
60-89 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 28.9 |
90-119 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 4 |
120+ days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 1.6 |
Notes receivable, short-term | |
Financing Receivable, Past Due [Line Items] | |
Current | 4.1 |
Total | 6.1 |
Notes receivable, short-term | 30-59 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 0.3 |
Notes receivable, short-term | 60-89 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 0.4 |
Notes receivable, short-term | 90-119 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 0.1 |
Notes receivable, short-term | 120+ days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 1.2 |
Notes receivable, long-term | |
Financing Receivable, Past Due [Line Items] | |
Current | 19.5 |
Total | 23.2 |
Notes receivable, long-term | 30-59 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 1.2 |
Notes receivable, long-term | 60-89 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 1.9 |
Notes receivable, long-term | 90-119 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 0.6 |
Notes receivable, long-term | 120+ days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 0 |
Lease Receivables | |
Financing Receivable, Past Due [Line Items] | |
Current | 10.3 |
Total | 26.3 |
Lease Receivables | 30-59 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 5.5 |
Lease Receivables | 60-89 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 9.4 |
Lease Receivables | 90-119 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 1.1 |
Lease Receivables | 120+ days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 0 |
Equipment Notes | |
Financing Receivable, Past Due [Line Items] | |
Current | 19.6 |
Total | 50 |
Equipment Notes | 30-59 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 10.6 |
Equipment Notes | 60-89 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 17.2 |
Equipment Notes | 90-119 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 2.2 |
Equipment Notes | 120+ days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 0.4 |
Other | |
Financing Receivable, Past Due [Line Items] | |
Current | 1.2 |
Total | 1.2 |
Other | 30-59 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 0 |
Other | 60-89 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 0 |
Other | 90-119 days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | 0 |
Other | 120+ days | |
Financing Receivable, Past Due [Line Items] | |
Financing receivable, past due | $ 0 |
Current Expected Credit Losse_5
Current Expected Credit Losses - Year of Origination of Financing Receivables (Details) $ in Millions | Jun. 30, 2020USD ($) |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | $ 1.7 |
2019 | 8.8 |
2018 | 13.1 |
2017 | 6.4 |
2016 | 1.3 |
Prior | 74.3 |
Total | 105.6 |
Notes receivable, short-term | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 1.7 |
2019 | 7.9 |
2018 | 13.1 |
2017 | 6.4 |
2016 | 0 |
Prior | 0.2 |
Total | 29.3 |
Lease Receivables | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 0 |
2019 | 0.9 |
2018 | 0 |
2017 | 0 |
2016 | 1.3 |
Prior | 24.1 |
Total | 26.3 |
Equipment Notes | |
Financing Receivable, Credit Quality Indicator [Line Items] | |
2020 | 0 |
2019 | 0 |
2018 | 0 |
2017 | 0 |
2016 | 0 |
Prior | 50 |
Total | $ 50 |
Current Expected Credit Losse_6
Current Expected Credit Losses - Components of Receivables (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 103.7 | $ 60.8 |
Gift card receivables | 5.8 | 46.7 |
Notes receivable | 29.2 | 28.9 |
Financing receivables: | 105.6 | |
Accounts and financing receivable, before allowance for credit loss | 218.3 | 234.2 |
Less: allowance for doubtful accounts and notes receivable | (19.7) | (11.3) |
Accounts and financing receivable, after allowance for credit loss | 198.6 | 222.9 |
Less: current portion | (124.6) | (136.9) |
Long-term receivables | 74 | 86 |
Equipment leases receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Financing receivables: | 50 | 56.3 |
Direct financing leases receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Financing receivables: | 26.3 | 34 |
Franchise fee notes receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Financing receivables: | 0.1 | 0.1 |
Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Financing receivables: | $ 3.2 | $ 7.3 |
Lease Disclosures Narrative (De
Lease Disclosures Narrative (Details) | Jun. 30, 2020restaurant_conceptpropertiesreal_property |
Lessee, Lease, Description [Line Items] | |
Number of company-operated restaurants located on leased real estate properties | properties | 69 |
Lessor, number of leases requiring additional rent payments based on a percentage of restaurant sales | real_property | 140 |
Lessee, number of leases requiring additional rent payments based on a percentage of restaurant sales | real_property | 250 |
Finance lease, weighted average remaining lease term | 8 years 10 months 24 days |
Operating lease, weighted average remaining lease term | 7 years 6 months |
Finance lease, weighted average discount rate, percent | 10.30% |
Operating lease, weighted average discount rate, percent | 5.70% |
IHOP | |
Lessee, Lease, Description [Line Items] | |
Number of franchisee-operated restaurants | 600 |
Number of properties leased | 60 |
Lessee, operating lease, renewal term | 5 years |
Applebee's | |
Lessee, Lease, Description [Line Items] | |
Number of franchisee-operated restaurants | 1 |
Number of properties leased | 1 |
Minimum | IHOP | |
Lessee, Lease, Description [Line Items] | |
Lessee, operating lease, term of contract | 20 years |
Minimum | Applebee's | |
Lessee, Lease, Description [Line Items] | |
Lessee, operating lease, term of contract | 10 years |
Lessee, operating lease, renewal term | 5 years |
Maximum | IHOP | |
Lessee, Lease, Description [Line Items] | |
Lessee, operating lease, term of contract | 25 years |
Maximum | Applebee's | |
Lessee, Lease, Description [Line Items] | |
Lessee, operating lease, term of contract | 20 years |
Lessee, operating lease, renewal term | 20 years |
Lease Disclosures Components of
Lease Disclosures Components of Lease Cost (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Finance lease cost: | ||||
Amortization of right-of-use assets | $ 1.3 | $ 1.3 | $ 2.5 | $ 2.6 |
Interest on lease liabilities | 1.6 | 2 | 3.4 | 4.1 |
Operating lease cost | 26.6 | 26.8 | 53.1 | 53.2 |
Variable lease cost | (0.1) | 0.6 | 0.3 | 1.3 |
Short-term lease cost | 0 | 0 | 0 | 0 |
Sublease income | (21.5) | (27.3) | (48.1) | (55.4) |
Lease cost | $ 7.9 | $ 3.4 | $ 11.2 | $ 5.8 |
Lease Disclosures Future minimu
Lease Disclosures Future minimum lease payments under noncancelable leases as lessee (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Finance Leases | ||
2020 (remaining six months) | $ 10,500 | |
2021 | 16,600 | |
2022 | 14,900 | |
2023 | 11,800 | |
2024 | 9,600 | |
Thereafter | 58,200 | |
Total minimum lease payments | 121,600 | |
Less: interest/imputed interest | (35,000) | |
Total obligations | 86,600 | |
Less: current portion | (12,500) | |
Long-term lease obligations | 74,051 | $ 77,393 |
Operating Leases | ||
2020 (remaining six months) | 52,300 | |
2021 | 85,400 | |
2022 | 77,900 | |
2023 | 64,900 | |
2024 | 59,600 | |
Thereafter | 184,700 | |
Total minimum lease payments | 524,800 | |
Less: interest/imputed interest | (102,600) | |
Total obligations | 422,200 | |
Less: current portion | (71,837) | (72,815) |
Long-term lease obligations | $ 350,418 | $ 359,025 |
Lease Disclosures Payment for L
Lease Disclosures Payment for Leases (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Leases [Abstract] | ||||
Principal payments on finance lease obligations | $ 3 | $ 3.5 | $ 6 | $ 7 |
Interest payments on finance lease obligations | 1.6 | 2 | 3.4 | 4.1 |
Payments on operating leases | 23 | 22.8 | 46.5 | 45.8 |
Variable lease payments | $ 0.2 | $ 0.6 | $ 0.5 | $ 1.5 |
Lease Disclosures Components _2
Lease Disclosures Components of Lease Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Leases [Abstract] | ||||
Minimum lease payments | $ 22.5 | $ 25.4 | $ 47.9 | $ 51.1 |
Variable lease income | 0.4 | 2.8 | 2.8 | 6 |
Total operating lease income | $ 22.9 | $ 28.2 | $ 50.7 | $ 57.1 |
Lease Disclosures Future mini_2
Lease Disclosures Future minimum payments to be received as lessor under noncancelable operating leases (Details) $ in Millions | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
2020 (remaining six months) | $ 53 |
2021 | 99.4 |
2022 | 96.7 |
2023 | 93 |
2024 | 85.3 |
Thereafter | 217.6 |
Total minimum rents receivable | $ 645 |
Lease Disclosures Schedule of i
Lease Disclosures Schedule of income from direct financing leases (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Leases [Abstract] | ||||
Interest income | $ 0.8 | $ 1.3 | $ 1.8 | $ 2.7 |
Variable lease income | 0 | 0.3 | 0.2 | 0.7 |
Total operating lease income | $ 0.8 | $ 1.6 | $ 2 | $ 3.4 |
Lease Disclosures Future mini_3
Lease Disclosures Future minimum payments to be received as lessor under noncancelable direct financing leases (Details) $ in Millions | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
2020 (remaining six months) | $ 6.4 |
2021 | 10.5 |
2022 | 7.6 |
2023 | 3.5 |
2024 | 1.3 |
Thereafter | 2.5 |
Total minimum rents receivable | 31.8 |
Less: unearned income | (5.5) |
Total net investment in direct financing leases | 26.3 |
Less: current portion | (9.3) |
Long-term investment in direct financing leases | $ 17 |
Long-Term Debt (Schedule of Deb
Long-Term Debt (Schedule of Debt) (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 05, 2019 |
Debt Instrument [Line Items] | |||
Debt issuance costs | $ (13,100) | $ (11,800) | |
Long-term debt, net of debt issuance costs | 1,506,900 | 1,288,200 | |
Current portion of long-term debt | (9,750) | 0 | |
Long-term debt | $ 1,497,116 | $ 1,288,248 | |
Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I | |||
Debt Instrument [Line Items] | |||
Debt interest rate (percent) | 4.194% | 4.194% | 4.194% |
Senior notes | $ 700,000 | $ 700,000 | |
Series 2019-1 4.723% Fixed Rate Senior Secured Notes, Class A-2-II | |||
Debt Instrument [Line Items] | |||
Debt interest rate (percent) | 4.723% | 4.723% | |
Senior notes | $ 600,000 | $ 600,000 | |
Series 2019-1 Variable Funding Senior Notes Class A-1, variable interest rate of 3.18% at June 30, 2020 | |||
Debt Instrument [Line Items] | |||
Debt interest rate (percent) | 3.18% | ||
Senior notes | $ 220,000 | $ 0 |
Long-Term Debt (Narrative) (Det
Long-Term Debt (Narrative) (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2026 | Jun. 30, 2020USD ($)Rate | Jun. 30, 2020USD ($)numberOfExtensionTermRate | Dec. 31, 2019USD ($) | Jun. 05, 2019USD ($) | |
Debt Instrument [Line Items] | |||||
Ratio of indebtedness to net capital | Rate | 630.00% | 630.00% | |||
DSCR less than 1.20x - Rapid Amortization Event | Rate | 120.00% | 120.00% | |||
Interest-only DSCR less than 1.20x - Manager Termination Event | Rate | 120.00% | 120.00% | |||
Interest-only DSCR less than 1.10x - Default Event | Rate | 110.00% | 110.00% | |||
Debt service coverage ratio | Rate | 334.00% | 334.00% | |||
Debt issuance costs, gross | $ 12,900,000 | $ 12,900,000 | |||
Amortization of debt issuance costs | 500,000 | ||||
Unamortized debt issuance costs | 13,100,000 | $ 13,100,000 | $ 11,800,000 | ||
Incurred cost | $ 200,000 | ||||
Eurodollar | Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.00% | ||||
Base Rate | Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 1.15% | ||||
Federal Funds Rate | Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 0.50% | ||||
Maximum | |||||
Debt Instrument [Line Items] | |||||
DSCR less than 1.75x - Cash Flow Sweeping Event | Rate | 175.00% | 175.00% | |||
Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate (percent) | 4.194% | 4.194% | 4.194% | 4.194% | |
Debt instrument, face amount | $ 700,000,000 | ||||
Debt Instrument, Periodic Payment, Principal | $ 3,250,000 | ||||
Make-whole premium | $ 48,000,000 | $ 48,000,000 | |||
Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I | Forecast | |||||
Debt Instrument [Line Items] | |||||
Additional interest on fixed rate | 5.00% | ||||
Debt instrument, term | 10 years | ||||
Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I | Ten Year United States Treasury Bill Rate | Forecast | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.15% | ||||
Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I | Maximum | |||||
Debt Instrument [Line Items] | |||||
Ratio of indebtedness to net capital | Rate | 525.00% | 525.00% | |||
Series 2019-1 4.723% Fixed Rate Senior Secured Notes, Class A-2-II | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate (percent) | 4.723% | 4.723% | 4.723% | ||
Debt instrument, face amount | 600,000,000 | ||||
Make-whole premium | $ 87,000,000 | $ 87,000,000 | |||
Series 2019-1 4.723% Fixed Rate Senior Secured Notes, Class A-2-II | Ten Year United States Treasury Bill Rate | Forecast | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.64% | ||||
Series 2019-1 Variable Funding Senior Notes Class A-1, variable interest rate of 3.18% at June 30, 2020 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate (percent) | 3.18% | 3.18% | |||
Letters of credit outstanding, amount | $ 2,800,000 | $ 2,800,000 | |||
Line of credit facility, current borrowing capacity | 2,200,000 | 2,200,000 | |||
Series 2019-1 Variable Funding Senior Notes Class A-1, variable interest rate of 3.18% at June 30, 2020 | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Long-term Line of Credit | 220,000,000 | 220,000,000 | |||
Line of credit facility, maximum borrowing capacity | $ 225,000,000 | $ 225,000,000 | $ 225,000,000 | ||
Long-term debt, weighted average interest rate, over time | 3.15% | 3.18% | |||
Number of additional extension terms | numberOfExtensionTerm | 2 | ||||
Extension term | 1 year | ||||
Unamortized debt issuance costs | $ 2,600,000 | $ 2,600,000 | |||
Series 2019-1 Variable Funding Senior Notes Class A-1, variable interest rate of 3.18% at June 30, 2020 | Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.15% | ||||
Series 2019-1 Variable Funding Senior Notes Class A-1, variable interest rate of 3.18% at June 30, 2020 | Eurodollar | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate | 2.15% | ||||
Series 2014-1 4.277% Fixed Rate Senior Secured Notes, Class A-2 | |||||
Debt Instrument [Line Items] | |||||
Debt interest rate (percent) | 4.277% | 4.277% | |||
Repayments of debt | $ 1,280,000,000 | ||||
Series 2018-1 Variable Funding Senior Notes Class A-1, variable interest rate of 4.93% at December 31, 2018 | |||||
Debt Instrument [Line Items] | |||||
Amortization of debt issuance costs | 100,000 | ||||
Unamortized debt issuance costs | $ 2,800,000 | $ 2,800,000 |
Long-Term Debt (Schedule of Mat
Long-Term Debt (Schedule of Maturities of Long-Term Debt) (Details) $ in Millions | Jun. 30, 2020USD ($) |
Debt Disclosure [Abstract] | |
2020 (remaining six months) | $ 3.3 |
2021 | 13 |
2022 | 13 |
2023 | 13 |
2024 | 903.2 |
Thereafter | 574.5 |
Long-term Debt | $ 1,520 |
Stockholders' Deficit - Narrati
Stockholders' Deficit - Narrative (Details) - USD ($) | Apr. 03, 2020 | Jan. 10, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Feb. 20, 2019 |
Equity, Class of Treasury Stock [Line Items] | ||||||||
Dividends paid on common stock | $ 23,934,000 | $ 23,346,000 | ||||||
Dividends declared per common share (USD per share) | $ 0 | $ 0.69 | $ 0.76 | $ 1.38 | $ 0.69 | |||
Dividends payable | $ 0 | $ 0 | $ 11,702,000 | |||||
Dividends paid per common share (USD per share) | $ 0.76 | $ 0.69 | $ 0.76 | $ 0.69 | $ 1.45 | $ 1.32 | ||
Treasury stock reissued (shares) | 380,607 | |||||||
Reissuance of treasury stock | $ (1,000) | $ 170,000 | $ 20,523,000 | $ 6,938,000 | ||||
Treasury Stock | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Treasury stock reissued (shares) | 13,000 | 19,000 | 381,000 | 187,000 | ||||
Reissuance of treasury stock | $ 599,000 | $ 822,000 | $ 17,156,000 | $ 8,257,000 | ||||
2019 Repurchase Program | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Stock repurchase program, authorized amount | $ 200,000,000 |
Stockholders' Deficit - Dividen
Stockholders' Deficit - Dividends declared and paid per share (Details) - $ / shares | Apr. 03, 2020 | Jan. 10, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 |
Equity [Abstract] | |||||||
Dividends declared per common share (USD per share) | $ 0 | $ 0.69 | $ 0.76 | $ 1.38 | $ 0.69 | ||
Dividends paid per common share (USD per share) | $ 0.76 | $ 0.69 | $ 0.76 | $ 0.69 | $ 1.45 | $ 1.32 |
Stockholders' Deficit - Share R
Stockholders' Deficit - Share Repurchases (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Class of Stock [Line Items] | ||||
Stock repurchased during period, value | $ 35,341 | $ 26,527 | $ 47,356 | |
2019 Repurchase Program | ||||
Class of Stock [Line Items] | ||||
Stock repurchased during period (in shares) | 0 | 459,899 | ||
Stock repurchased during period, value | $ 0 | $ 26,500 | ||
Cumulative amount of shares repurchased (in shares) | 1,697,597 | 1,697,597 | ||
Cumulative payments for repurchase of common stock | $ 129,800 | $ 129,800 | ||
Remaining dollar value of shares that may be repurchased | $ 70,200 | $ 70,200 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Income Tax Contingency [Line Items] | ||||
Effective income tax rate (percent) | 4.50% | 24.50% | ||
Effective income tax rate reconciliation, change in enacted tax rate, amount | $ 5,300 | |||
Income (loss), before tax | (117,700) | |||
Impairment loss | 92,200 | |||
Deferred income tax expense (benefit) | (10,793) | $ (3,186) | ||
Gross unrecognized tax benefit | $ 7,900 | 7,900 | $ 7,600 | |
Expected change in unrecognized tax benefits | 1,500 | 1,500 | ||
Accrued interest on income taxes | 2,900 | 2,900 | 2,500 | |
Accrued penalties on income taxes, less than | 100 | 100 | $ 100 | |
Trade Names | ||||
Income Tax Contingency [Line Items] | ||||
Impairment | 11,000 | |||
Applebee's | ||||
Income Tax Contingency [Line Items] | ||||
Impairment loss | 0 | |||
Applebee's | Trade Names | Reacquired Franchise Rights | ||||
Income Tax Contingency [Line Items] | ||||
Deferred income tax expense (benefit) | (3,400) | |||
Impairment | $ 14,300 | |||
Franchised Units | Applebee's | ||||
Income Tax Contingency [Line Items] | ||||
Impairment of goodwill, nondeductible | 92,200 | |||
Impairment loss | $ 92,200 |
Stock-Based Compensation (Compo
Stock-Based Compensation (Components of Stock-Based Compensation Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | ||||
Equity classified awards expense | $ 2.6 | $ 1.8 | $ 6.7 | $ 5.9 |
Liability classified awards expense (credit) | 0.1 | 1.4 | (0.5) | 2.4 |
Total pre-tax stock-based compensation expense | 2.7 | 3.2 | 6.2 | 8.3 |
Book income tax benefit | (0.7) | (0.9) | (1.6) | (2.2) |
Total stock-based compensation expense, net of tax | $ 2 | $ 2.3 | $ 4.6 | $ 6.1 |
Stock-Based Compensation (Narra
Stock-Based Compensation (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Grants in period (in shares) | 167,969 | ||||
Share-based compensation expense | $ 2,700 | $ 3,200 | $ 6,200 | $ 8,300 | |
Liability classified awards (credit) expense | (100) | (1,400) | 500 | (2,400) | |
Accrued employee compensation and benefits | 10,568 | 10,568 | $ 23,904 | ||
Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total compensation cost not yet recognized | 17,000 | $ 17,000 | |||
Total compensation cost not yet recognized, period for recognition (in years) | 1 year 3 months 18 days | ||||
Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total compensation cost not yet recognized | 3,800 | $ 3,800 | |||
Total compensation cost not yet recognized, period for recognition (in years) | 1 year 6 months | ||||
Cash-settled Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation expense | 400 | 500 | 1,100 | ||
Liability classified awards (credit) expense | $ (900) | ||||
Accrued employee compensation and benefits | 1,300 | $ 1,300 | 2,300 | ||
LTIP | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting period (in years) | 3 years | ||||
Share-based compensation expense | $ 800 | $ 400 | $ 1,200 | ||
Liability classified awards (credit) expense | (300) | ||||
Accrued employee compensation and benefits | $ 1,800 | $ 1,800 | $ 2,900 | ||
LTIP | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Multiplier for target award based on total shareholder return on common stock (percent) | 0.00% | ||||
LTIP | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Multiplier for target award based on total shareholder return on common stock (percent) | 200.00% |
Stock-Based Compensation (Optio
Stock-Based Compensation (Options Value Assumptions) (Details) - Stock Options | 6 Months Ended |
Jun. 30, 2020$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate (percent) | 1.20% |
Weighted average historical volatility (percent) | 30.50% |
Dividend yield (percent) | 3.50% |
Expected years until exercise (years) | 4 years 7 months 6 days |
Weighted average fair value of options granted (USD per share) | $ 17.53 |
Stock-Based Compensation (Stock
Stock-Based Compensation (Stock Option Activity) (Details) - Stock Options $ / shares in Units, $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | |
Shares | |
Options, outstanding, beginning of period (in shares) | shares | 1,217,438 |
Options, granted (in shares) | shares | 167,969 |
Options, exercised (in shares) | shares | (270,024) |
Options, expired (in shares) | shares | (48,119) |
Options, forfeited (in shares) | shares | (30,106) |
Options, outstanding, end of period (in shares) | shares | 1,037,158 |
Options, vested and expected to vest (in shares) | shares | 980,893 |
Options, exercisable (in shares) | shares | 559,407 |
Weighted Average Exercise Price | |
Weighted average exercise price, beginning of period (per share) | $ / shares | $ 66.43 |
Weighted average exercise price, granted (per share) | $ / shares | 87.17 |
Weighted average exercise price, exercised (per share) | $ / shares | 76.01 |
Weighted average exercise price, expired (per share) | $ / shares | 112.58 |
Weighted average exercise price, forfeited (per share) | $ / shares | 85.14 |
Weighted average exercise price, end of period (per share) | $ / shares | 64.61 |
Weighted average exercise price, vested and expected to vest (per share) | $ / shares | 64.41 |
Weighted average exercise price, exercisable (per share) | $ / shares | $ 59.79 |
Weighted average remaining contractual term (in years) | 7 years 1 month 6 days |
Weighted average remaining contractual term, vested and expected to vest (in years) | 7 years |
Weighted average remaining contractual term, exercisable (in years) | 8 years |
Options, outstanding, intrinsic value | $ | $ 0 |
Options, vested and expected to vest, intrinsic value | $ | 0 |
Options, vested and expected to vest, exercisable | $ | $ 0 |
Stock-Based Compensation (Restr
Stock-Based Compensation (Restricted Stock) (Details) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward] | |
Restricted stock, beginning of period (in shares) | shares | 224,515 |
Restricted stock, granted (in shares) | shares | 110,583 |
Restricted stock, released (in shares) | shares | (74,826) |
Restricted stock, forfeited (in shares) | shares | (23,675) |
Restricted stock, end of period (in shares) | shares | 236,597 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | |
Weighted average grant date fair value, beginning balance (per share) | $ / shares | $ 70.52 |
Weighted average grant date fair value, granted (per share) | $ / shares | 79.32 |
Weighted average grant date fair value, released (per share) | $ / shares | 57.38 |
Weighted average grant date fair value, forfeited (per share) | $ / shares | 83.45 |
Weighted average grant date fair value, ending balance (per share) | $ / shares | $ 78.16 |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward] | |
Restricted stock, beginning of period (in shares) | shares | 357,807 |
Restricted stock, granted (in shares) | shares | 27,893 |
Restricted stock, released (in shares) | shares | (30,032) |
Restricted stock, forfeited (in shares) | shares | 0 |
Restricted stock, end of period (in shares) | shares | 355,668 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | |
Weighted average grant date fair value, beginning balance (per share) | $ / shares | $ 30.35 |
Weighted average grant date fair value, granted (per share) | $ / shares | 87.17 |
Weighted average grant date fair value, released (per share) | $ / shares | 64.76 |
Weighted average grant date fair value, forfeited (per share) | $ / shares | 0 |
Weighted average grant date fair value, ending balance (per share) | $ / shares | $ 28.19 |
Stock-Based Compensation (Liabi
Stock-Based Compensation (Liability Classified Awards - Cash-settled Restricted Stock Units) (Details) - Cash-settled Restricted Stock Units | 6 Months Ended |
Jun. 30, 2020shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward] | |
Restricted stock, beginning of period (in shares) | 63,852 |
Restricted stock, granted (in shares) | 2,658 |
Restricted stock, forfeited (in shares) | (10,085) |
Restricted stock, end of period (in shares) | 56,425 |
Segments - Narrative (Details)
Segments - Narrative (Details) | 6 Months Ended |
Jun. 30, 2020CountryRestaurantsegmentTerritory | |
Franchisor Disclosure [Line Items] | |
Number of operating segments (segment) | segment | 5 |
Number of reportable segments (segment) | segment | 4 |
Applebee's | |
Franchisor Disclosure [Line Items] | |
Number of territories in which entity operates (territory) | Territory | 2 |
Number of countries in which entity operates (country) | Country | 11 |
IHOP | |
Franchisor Disclosure [Line Items] | |
Number of territories in which entity operates (territory) | Territory | 2 |
Number of countries in which entity operates (country) | Country | 13 |
Franchised Units | Applebee's | |
Franchisor Disclosure [Line Items] | |
Number of restaurants (restaurant) | 1,680 |
Franchised Units | IHOP | |
Franchisor Disclosure [Line Items] | |
Number of restaurants (restaurant) | 1,823 |
Entity Operated Units | Applebee's | |
Franchisor Disclosure [Line Items] | |
Number of restaurants (restaurant) | 69 |
Segments - Schedule of Segment
Segments - Schedule of Segment Reporting Information by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Rental revenues | $ 23,707 | $ 29,878 | $ 52,716 | $ 60,589 |
Total revenues | 109,712 | 228,080 | 316,596 | 465,262 |
Interest expense | 19,100 | 17,000 | 36,400 | 35,400 |
Depreciation and amortization | 10,700 | 10,600 | 21,345 | 20,800 |
Segment profit | (146,771) | 29,067 | (117,705) | 70,199 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Segment profit | 30,000 | 94,900 | 114,500 | 197,400 |
Corporate and unallocated expenses, net | ||||
Segment Reporting Information [Line Items] | ||||
Segment profit | (176,900) | (65,800) | (232,200) | (127,200) |
Franchise operations | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | 2,600 | 2,600 | 5,100 | 5,100 |
Segment profit | 30,800 | 83,800 | 106,400 | 172,400 |
Rental operations | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Rental revenues | 23,700 | 29,900 | 52,700 | 60,600 |
Interest expense | 1,500 | 1,900 | 3,100 | 4,300 |
Depreciation and amortization | 3,100 | 3,400 | 6,300 | 6,900 |
Segment profit | 2,400 | 7,000 | 8,900 | 15,000 |
Company restaurants | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Interest expense | 500 | 500 | 1,000 | 1,100 |
Depreciation and amortization | 1,700 | 1,800 | 3,200 | 3,100 |
Segment profit | (4,400) | 2,500 | (3,400) | 6,700 |
Financing operations | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Segment profit | 1,200 | 1,600 | 2,600 | 3,300 |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Interest expense | 17,100 | 14,600 | 32,300 | 30,000 |
Depreciation and amortization | 3,400 | 2,800 | 6,700 | 5,700 |
Franchise revenues | ||||
Segment Reporting Information [Line Items] | ||||
Revenue from contract with customer, excluding assessed tax | 67,876 | 162,668 | 212,913 | 331,594 |
Franchise revenues | Franchise operations | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue from contract with customer, excluding assessed tax | 67,800 | 162,700 | 212,900 | 331,600 |
Company restaurant sales | ||||
Segment Reporting Information [Line Items] | ||||
Revenue from contract with customer, excluding assessed tax | 16,774 | 33,751 | 48,074 | 69,486 |
Company restaurant sales | Company restaurants | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue from contract with customer, excluding assessed tax | 16,800 | 33,700 | 48,100 | 69,500 |
Financing revenues | ||||
Segment Reporting Information [Line Items] | ||||
Revenue from contract with customer, excluding assessed tax | 1,355 | 1,783 | 2,893 | 3,593 |
Financing revenues | Financing operations | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue from contract with customer, excluding assessed tax | $ 1,400 | $ 1,800 | $ 2,900 | $ 3,600 |
Net Income per Share - Computat
Net Income per Share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Net (loss) income | $ (134,779) | $ 21,390 | $ (112,451) | $ 53,033 |
Less: Net loss (income) allocated to unvested participating restricted stock | 4,763 | (719) | 3,961 | (1,827) |
Net (loss) income available to common stockholders - basic | (130,016) | 20,671 | (108,490) | 51,206 |
Dilutive Securities, Effect on Basic Earnings Per Share, Options and Restrictive Stock Units | 3 | 7 | 0 | 20 |
Net (loss) income available to common stockholders - diluted | $ (130,013) | $ 20,678 | $ (108,490) | $ 51,226 |
Weighted average outstanding shares of common stock - basic (in shares) | 16,177,000 | 17,181,000 | 16,215,000 | 17,262,000 |
Dilutive effect of stock options (in shares) | 0 | 382,000 | 0 | 364,000 |
Weighted average outstanding shares of common stock - diluted (in shares) | 16,177,000 | 17,563,000 | 16,215,000 | 17,626,000 |
Net income per common share - basic (USD per share) | $ (8.04) | $ 1.20 | $ (6.69) | $ 2.97 |
Net income per common share - diluted (USD per share) | $ (8.04) | $ 1.18 | $ (6.69) | $ 2.91 |
Antidilutive securities excluded from computation of earnings per share (in shares) | 101,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Non-Current Financial Liabilities (Details) - Level 2 - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Carrying amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt, fair value | $ 1,300 | $ 1,300 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt, fair value | $ 1,122.8 | $ 1,326.3 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - Applebee's - Property Lease Guarantee $ in Millions | Jun. 30, 2020USD ($) |
Loss Contingencies [Line Items] | |
Potential liability for guaranteed leases | $ 250.3 |
Potential liability for guaranteed leases excluding unexercised option periods | $ 36.8 |
Restricted Cash (Details)
Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 |
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Current restricted cash | $ 31,184 | $ 40,732 | |
Non-current restricted cash | 32,800 | 15,700 | |
Secured Debt | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Non-current restricted cash | 32,800 | $ 16,400 | |
Held in Trust Deposits | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Current restricted cash | 29,500 | 38,400 | |
Held for Advertising Activity Deposits | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Current restricted cash | $ 1,600 | $ 2,300 |