Exhibit 99.1
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|
| Investor Contact Stacy Roughan Director, Investor Relations DineEquity, Inc. 818-637-3632
Media Contact Lucy Neugart Sard Verbinnen 415-618-8750 |
DineEquity, Inc. Announces Solid First Quarter 2010 Financial Results
Strong Business Fundamentals Supported by Stabilizing Same-Restaurant Sales, Solid Company Margin Performance and Retirement of $55 Million of Securitized Debt
GLENDALE, Calif., May 4, 2010 — DineEquity, Inc. (NYSE: DIN), the parent company of Applebee’s Neighborhood Grill & Bar and IHOP Restaurants, today announced financial results for the first quarter ended March 31, 2010. DineEquity’s financial performance for the first quarter 2010 included the following highlights:
· IHOP’s domestic system-wide same-restaurant sales decreased 0.4% and Applebee’s domestic system-wide same-restaurant decreased 2.7% compared to the same periods in 2009. This reflected substantial improvement from IHOP’s negative 3.1% and Applebee’s negative 4.5% same-restaurant sales performance for the fourth quarter 2009.
· Securitized debt was reduced by $55.0 million for the first quarter 2010 primarily due to the use of free cash flow for ongoing debt retirement efforts.
· Net income available to common stockholders was $12.8 million, or $0.75 per diluted share, for the first quarter 2010 compared to net income of $30.6 million, or $1.80 per diluted share, for the same quarter in 2009. The decrease was primarily due to fewer gains in 2010 with respect to debt repurchases and asset sales to support refranchising.
· Adjusted net income available to common stockholders was $18.7 million, or $1.08 per diluted share, for the first quarter 2010 compared to $19.7 million, or $1.17 per diluted share, for the same quarter in 2009. The decrease was primarily due to a higher income tax rate and increased preferred dividend payments, which were partially offset by improved business fundamentals. (See “Non-GAAP Financial Measures” below.)
· Consolidated G&A expenses decreased 14.8% to $40.2 million for the first quarter 2010 compared to the same period in 2009, primarily as the result of non-recurring start-up costs related to the formation of a purchasing Co-operative in 2009.
· Operating margins at Applebee’s company-operated restaurants were 14.8% for the first quarter 2010 as the Company sustained the restaurant profitability improvements achieved in 2009.
· Cash flows from operating activities for the first quarter 2010 were $30.3 million. Consolidated capital expenditures were $2.6 million for the first three months of 2010. Free cash flow was $28.2 million for the first three months of fiscal 2010. (See “Non-GAAP Financial Measures” below.)
“We are pleased with our first quarter performance and are encouraged by sequential improvements in same-restaurant sales at both Applebee’s and IHOP restaurants, our solid restaurant operating margins at Applebee’s company-operated restaurants, reduced G&A expenses, and the retirement of an additional $55 million of securitized debt during the quarter,” said Julia A. Stewart, DineEquity’s chairman and chief executive officer. “We continue to deliver on our strategic plan and focus on differentiating the Applebee’s and IHOP brands with innovative, compelling menu offerings and advertising efforts. While the consumer spending environment remains challenging, both brands are well positioned to drive sustainable same-restaurant sales momentum and create even greater value for our shareholders.”
Same-Restaurant Sales Performance
IHOP’s domestic system-wide same-restaurant sales decreased 0.4% for the first quarter 2010 compared to the same quarter in 2009. Same-restaurant sales reflect a higher average guest check and declines in guest traffic. This is a substantial improvement from IHOP’s negative 3.1% same-restaurant sales performance for the fourth quarter 2009. IHOP’s marketing efforts during the quarter included All You Can Eat Pancakes and Loaded Country Potatoes limited-time offers and IHOP’s National Pancake Day event, among other activities.
Applebee’s domestic system-wide same-restaurant sales decreased 2.7% for the first quarter 2010, which reflected substantial improvement from Applebee’s negative 4.5% performance for the fourth quarter 2009. Domestic franchise same-restaurant sales decreased 2.6% for the first quarter 2010, and company-operated Applebee’s same-restaurant sales decreased 3.4% for the first quarter 2010 compared to the same quarter in 2009. Results at Company restaurants reflected declines in guest traffic and a lower average guest check primarily due to unfavorable mix shift, offsetting a 1.4% increase in effective pricing. Applebee’s marketing efforts during the quarter included the introduction of its Great Tasting and Under 550 Calories menu offering, Ultimate Trios promotion and gift card redemption activity, as well as other enhanced marketing and promotional activities.
Applebee’s Restaurant Operating Margins
Applebee’s company-operated restaurant operating margin was 14.8% in the first quarter 2010 compared to 16.3% for the first quarter 2009. The unfavorable comparison was primarily due to promotional activities employed to drive sales and the de-leveraging impact of lower same-restaurant sales on fixed costs, which were partially offset by better labor productivity.
Debt Management
Securitized debt was reduced by $55.0 million during the first quarter 2010 as a result of open market purchases and scheduled payments on the Company’s subordinated notes. DineEquity
has reduced its total outstanding debt levels by $375.5 million, or 15.2%, since the acquisition of Applebee’s in November 2007.
As of the end of the first quarter 2010, DineEquity remained comfortably in compliance with the debt covenants set forth in the Company’s securitized debt agreements. The Company’s consolidated leverage ratio was 5.83x compared to a required threshold of 7.0x. Debt service coverage ratios (DSCR) were 3.85x for IHOP’s securitized debt on a three-month unadjusted basis and 4.10x for the Applebee’s securitized debt on a three-month adjusted basis, both compared to a minimum required threshold of 1.85x. Applebee’s 12-month adjusted DSCR was 3.13x, compared to a minimum required threshold of 2.20x.
DineEquity has provided supplemental information to this news release regarding its compliance with its debt covenants, which may be accessed by visiting the Calls & Presentations section of DineEquity’s Investor Relations Web site at http://investors.dineequity.com and referring to supporting materials for the Company’s first quarter 2010 webcast.
2010 Financial Performance Guidance
DineEquity reiterates its previously announced fiscal 2010 financial outlook of:
· Consolidated free cash flow to range between $118 and $128 million. Free cash flow consists of consolidated cash from operations ranging between $145 and $155 million plus approximately $16 million generated from the structural run-off of the Company’s long-term notes receivable. Uses of cash include consolidated capital expenditures of approximately $20 million and approximately $23 million in preferred stock dividend payments. The Company plans to use available free cash flow to fund further securitized debt reductions this year.
· Applebee’s domestic system-wide same-restaurant sales performance to range between flat and negative 3% for fiscal 2010, with Applebee’s franchisees slated to open between 25 and 30 new restaurants this year.
· Operating margin at Applebee’s company-operated restaurants to range between 13.5% and 14.5% for the full year 2010.
· IHOP’s domestic system-wide same-restaurant sales performance to range between positive 1% and negative 1% for fiscal 2010, with IHOP franchisees slated to open between 60 and 70 new restaurants this year.
· Consolidated G&A expenses to range between $158 million and $161 million for fiscal 2010, including non-cash stock based compensation expense and depreciation of approximately $20 million.
· Consolidated interest expense on securitized debt to range between $175 million and $180 million for fiscal 2010, approximately $40 million of which is non-cash interest expense. Depreciation and amortization should range between $65 million and $70 million. The Company’s income tax rate is expected to be approximately 34%.
The Company’s 2010 financial performance guidance excludes any impact from the future sales of Applebee’s company-operated restaurants, the timing of which could be highly variable due to factors including the economy, the availability of buyer financing, acceptable valuations, and
the operating wherewithal of the acquiring franchisee. Should company-operated Applebee’s restaurants be sold this year, DineEquity plans to update its performance guidance accordingly in conjunction with its regular quarterly reporting schedule following any transaction announcement.
Investor Conference Call Today
The Company will host an investor conference call today to discuss its first quarter 2010 financial results on Tuesday, May 4, 2010 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). To participate on the call, please dial (888) 679-8040 and reference pass code 35523572. A live webcast of the call will be available on DineEquity’s Web site at www.dineequity.com, and may be accessed by visiting Calls & Presentations under the site’s Investor Information section. A telephonic replay of the call may be accessed through May 11, 2010 by dialing 888-286-8010 and referencing pass code 56471951. An online archive of the webcast also will be available on the Investor Information section of DineEquity’s Web site.
About DineEquity, Inc.
Based in Glendale, California, DineEquity, Inc., through its subsidiaries, franchises and operates restaurants under the Applebee’s Neighborhood Grill & Bar and IHOP brands. With more than 3,450 restaurants combined, DineEquity is the largest full-service restaurant company in the world. For more information on DineEquity, visit the Company’s Web site located at www.dineequity.com.
Forward-Looking Statements
There are forward-looking statements contained in this news release. They use such words as “may,” “will,” “expect,” “believe,” “plan,” or other similar terminology. These statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results to be materially different than those expressed or implied in such statements. These factors include, but are not limited to: the implementation of DineEquity, Inc.’s (the “Company”) strategic growth plan; the availability of suitable locations and terms for sites designated for development; the ability of franchise developers to fulfill their commitments to build new restaurants in the numbers and time frames covered by their development agreements; legislation and government regulation including the ability to obtain satisfactory regulatory approvals; risks associated with the Company’s indebtedness; conditions beyond the Company’s control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting the Company’s customers or food supplies, or acts of war or terrorism; availability and cost of materials and labor; cost and availability of capital; competition; potential litigation and associated costs; continuing acceptance of the International House of Pancakes (“IHOP”) and Applebee’s brands and concepts by guests and franchisees; the Company’s overall marketing, operational and financial performance; economic and political conditions; adoption of new, or changes in, accounting policies and practices; and other factors discussed from time to time in the Company’s news releases, public statements and/or filings with the Securities and Exchange Commission, especially the “Risk Factors” sections of Annual and Quarterly Reports on Forms 10-K and 10-Q. Forward-looking information is provided by the Company pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of these factors. In addition, the Company disclaims any intent or obligation to update these forward-looking statements.
Non-GAAP Financial Measures
This news release includes references to the Company’s non-GAAP financial measures “adjusted net income available to common stockholders (adjusted EPS),” “EBITDA,” and “free cash flow.” Adjusted EPS is computed for a given period by deducting from net income (loss) available to common stockholders for such period the effect of any impairment and closure charges, any gain related to debt extinguishment, any intangible asset amortization, any non-cash interest expense and any gain or loss related to the disposition of assets incurred in such period. This is presented on an aggregate basis and a per share (diluted) basis. The Company defines “EBITDA” for a given period as income before income taxes (including gain on extinguishment of debt) less interest expense, depreciation and amortization, impairment and closure charges, stock-based compensation, gain/loss on sale of assets and non-cash amounts related to a captive insurance subsidiary. “EBITDAR” for a given period is defined as EBITDA plus annualized operating lease expense (Rent). “Free cash flow” for a given period is defined as cash provided by operating activities, plus receipts from notes and equipment contracts receivable (“long-term notes receivable”), less dividends paid and capital expenditures. Management utilizes EBITDA for debt covenant purposes and free cash flow to determine the amount of cash remaining for general corporate and strategic purposes after the receipts from long-term notes receivable, and the funding of operating activities, capital expenditures and preferred dividends. Management believes this information is helpful to investors to determine the Company’s adherence to debt covenants and the Company’s cash available for these purposes. Adjusted EPS, EBITDA and free cash flow are supplemental non-GAAP financial measures and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles.
[Financial Tables to Follow]
DINEEQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
|
| Three Months Ended March 31, |
| ||||
|
| 2010 |
| 2009 |
| ||
Revenues |
|
|
|
|
| ||
Franchise revenues |
| $ | 95,276 |
| $ | 98,210 |
|
Company restaurant sales |
| 224,614 |
| 239,524 |
| ||
Rental income |
| 33,932 |
| 33,709 |
| ||
Financing revenues |
| 4,150 |
| 4,113 |
| ||
Total revenues |
| 357,972 |
| 375,556 |
| ||
Costs and Expenses |
|
|
|
|
| ||
Franchise expenses |
| 24,905 |
| 28,298 |
| ||
Company restaurant expenses |
| 192,559 |
| 201,856 |
| ||
Rental expenses |
| 24,400 |
| 24,542 |
| ||
Financing expenses |
| 469 |
| 7 |
| ||
General and administrative expenses |
| 40,185 |
| 47,159 |
| ||
Interest expense |
| 44,878 |
| 48,410 |
| ||
Amortization of intangible assets |
| 3,077 |
| 3,019 |
| ||
Gain on extinguishment of debt |
| (3,585 | ) | (26,354 | ) | ||
Gain on disposition of assets |
| (186 | ) | (5,137 | ) | ||
Other expense (income) net |
| 1,498 |
| (128 | ) | ||
Total costs and expenses |
| 328,200 |
| 321,672 |
| ||
Income before income taxes |
| 29,772 |
| 53,884 |
| ||
Provision for income taxes |
| (10,101 | ) | (16,743 | ) | ||
Net income |
| $ | 19,671 |
| $ | 37,141 |
|
Net income |
| $ | 19,671 |
| $ | 37,141 |
|
Less: Series A preferred stock dividends |
| (5,760 | ) | (4,750 | ) | ||
Less: Accretion of Series B preferred stock |
| (595 | ) | (560 | ) | ||
Less: Net income allocated to unvested participating restricted stock |
| (509 | ) | (1,203 | ) | ||
Net income available to common stockholders |
| $ | 12,807 |
| $ | 30,628 |
|
Net income available to common stockholders per share |
|
|
|
|
| ||
Basic |
| $ | 0.75 |
| $ | 1.82 |
|
Diluted |
| $ | 0.75 |
| $ | 1.80 |
|
Weighted average shares outstanding |
|
|
|
|
| ||
Basic |
| 17,011 |
| 16,842 |
| ||
Diluted |
| 17,972 |
| 17,394 |
| ||
DINEEQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
|
| March 31, 2010 |
| December 31, |
| ||
|
| (Unaudited) |
|
|
| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 68,459 |
| $ | 82,314 |
|
Restricted cash |
| 69,584 |
| 72,690 |
| ||
Receivables, net |
| 77,706 |
| 104,690 |
| ||
Inventories |
| 12,208 |
| 12,236 |
| ||
Prepaid income taxes |
| — |
| 7,702 |
| ||
Prepaid gift cards |
| 15,114 |
| 19,878 |
| ||
Prepaid expenses |
| 16,689 |
| 13,425 |
| ||
Deferred income taxes |
| 15,731 |
| 15,444 |
| ||
Assets held for sale |
| 6,237 |
| 8,765 |
| ||
Total current assets |
| 281,728 |
| 337,144 |
| ||
Non-current restricted cash |
| 45,799 |
| 48,173 |
| ||
Restricted assets related to captive insurance subsidiary |
| 4,138 |
| 4,344 |
| ||
Long-term receivables |
| 254,171 |
| 259,775 |
| ||
Property and equipment, net |
| 760,362 |
| 771,372 |
| ||
Goodwill |
| 697,470 |
| 697,470 |
| ||
Other intangible assets, net |
| 846,871 |
| 849,552 |
| ||
Other assets, net |
| 128,958 |
| 133,038 |
| ||
Total assets |
| $ | 3,019,497 |
| $ | 3,100,868 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Current maturities of long-term debt |
| $ | 25,200 |
| $ | 25,200 |
|
Accounts payable |
| 31,016 |
| 31,729 |
| ||
Accrued employee compensation and benefits |
| 28,496 |
| 37,397 |
| ||
Gift card liability |
| 65,294 |
| 105,465 |
| ||
Other accrued expenses |
| 66,535 |
| 54,549 |
| ||
Accrued interest payable |
| 3,326 |
| 3,627 |
| ||
Total current liabilities |
| 219,867 |
| 257,967 |
| ||
Long-term debt, less current maturities |
| 1,584,795 |
| 1,637,198 |
| ||
Financing obligations, less current maturities |
| 307,265 |
| 309,415 |
| ||
Capital lease obligations, less current maturities |
| 150,724 |
| 152,758 |
| ||
Deferred income taxes |
| 363,907 |
| 369,127 |
| ||
Other liabilities |
| 114,154 |
| 117,449 |
| ||
Total liabilities |
| 2,740,712 |
| 2,843,914 |
| ||
Commitments and contingencies |
|
|
|
|
| ||
Preferred stock, Series A |
| 187,050 |
| 187,050 |
| ||
Total stockholders’ equity |
| 91,735 |
| 69,904 |
| ||
Total liabilities and stockholders’ equity |
| $ | 3,019,497 |
| $ | 3,100,868 |
|
DINEEQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
| Three Months Ended March 31, |
| ||||
|
| 2010 |
| 2009 |
| ||
Cash flows from operating activities |
|
|
|
|
| ||
Net income |
| $ | 19,671 |
| $ | 37,141 |
|
Adjustments to reconcile net income to cash flows provided by operating activities |
|
|
|
|
| ||
Depreciation and amortization |
| 16,156 |
| 16,210 |
| ||
Non-cash interest expense |
| 10,371 |
| 9,904 |
| ||
Gain on extinguishment of debt |
| (3,585 | ) | (26,354 | ) | ||
Deferred income taxes |
| (7,009 | ) | (1,320 | ) | ||
Non-cash stock-based compensation expense |
| 3,956 |
| 3,198 |
| ||
Tax benefit from stock-based compensation |
| 1,035 |
| 317 |
| ||
Excess tax benefit from stock options exercised |
| (1,792 | ) | — |
| ||
Gain on disposition of assets |
| (186 | ) | (5,137 | ) | ||
Other |
| 155 |
| (1,718 | ) | ||
Changes in operating assets and liabilities |
|
|
|
|
| ||
Receivables |
| 26,008 |
| 36,603 |
| ||
Inventories |
| 3 |
| (167 | ) | ||
Prepaid expenses |
| 8,581 |
| 10,680 |
| ||
Accounts payable |
| (1,147 | ) | 1,256 |
| ||
Accrued employee compensation and benefits |
| (9,031 | ) | (437 | ) | ||
Gift card liability |
| (40,171 | ) | (43,465 | ) | ||
Other accrued expenses |
| 7,255 |
| 20,958 |
| ||
Cash flows provided by operating activities |
| 30,270 |
| 57,669 |
| ||
Cash flows from investing activities |
|
|
|
|
| ||
Additions to property and equipment |
| (2,649 | ) | (3,162 | ) | ||
Proceeds from sale of property and equipment and assets held for sale |
| 2,784 |
| 8,834 |
| ||
Principal receipts from notes and equipment contracts receivable |
| 6,299 |
| 4,505 |
| ||
Other |
| 1,109 |
| 982 |
| ||
Cash flows provided by investing activities |
| 7,543 |
| 11,159 |
| ||
Cash flows from financing activities |
|
|
|
|
| ||
Repayment of long-term debt |
| (50,100 | ) | (61,605 | ) | ||
Principal payments on capital lease and financing obligations |
| (3,791 | ) | (3,467 | ) | ||
Dividends paid |
| (5,700 | ) | (4,750 | ) | ||
Repurchase of restricted stock |
| (577 | ) | (264 | ) | ||
Proceeds from stock options exercised |
| 1,275 |
| — |
| ||
Excess tax benefit from stock options exercised |
| 1,792 |
| — |
| ||
Restricted cash related to securitization |
| 5,479 |
| (15,666 | ) | ||
Other |
| (46 | ) | (63 | ) | ||
Cash flows used in financing activities |
| (51,668 | ) | (85,815 | ) | ||
Net change in cash and cash equivalents |
| (13,855 | ) | (16,987 | ) | ||
Cash and cash equivalents at beginning of year |
| 82,314 |
| 114,443 |
| ||
Cash and cash equivalents at end of period |
| $ | 68,459 |
| $ | 97,456 |
|
NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
(Unaudited)
Reconciliation of (i) net income available to common stockholders to (ii) net income available to common stockholders excluding impairment and closure charges, gain on extinguishment of debt, amortization of intangible assets, non-cash interest expense and gain on disposition of assets, and related per share data:
|
| Three Months Ended |
| ||||
|
| 2010 |
| 2009 |
| ||
Net income available to common stockholders, as reported |
| $ | 12,807 |
| $ | 30,628 |
|
Impairment and closure charges |
| 509 |
| (351 | ) | ||
Gain on extinguishment of debt |
| (3,585 | ) | (26,354 | ) | ||
Amortization of intangible assets |
| 3,077 |
| 3,019 |
| ||
Non-cash interest expense |
| 10,371 |
| 9,936 |
| ||
Gain on disposition of assets |
| (186 | ) | (5,137 | ) | ||
Income tax (provision) benefit |
| (4,054 | ) | 7,517 |
| ||
Net income allocated to unvested participating restricted stock |
| (234 | ) | 430 |
| ||
Net income available to common stockholders, as adjusted |
| $ | 18,705 |
| $ | 19,688 |
|
|
|
|
|
|
| ||
Diluted net income available to common stockholders per share: |
|
|
|
|
| ||
Net income available to common stockholders per share, as reported |
| $ | 0.75 |
| $ | 1.80 |
|
Impairment and closure charges per share |
| 0.03 |
| (0.02 | ) | ||
Gain on extinguishment of debt per share |
| (0.20 | ) | (1.52 | ) | ||
Amortization of intangible assets per share |
| 0.17 |
| 0.17 |
| ||
Non-cash interest expense per share |
| 0.58 |
| 0.57 |
| ||
Gain on disposition of assets per share |
| (0.01 | ) | (0.30 | ) | ||
Income tax (provision) benefit per share |
| (0.23 | ) | 0.43 |
| ||
Net income allocated to unvested participating restricted stock per share |
| (0.01 | ) | 0.02 |
| ||
Per share effect of dilutive calculation adjustments |
| (0.00 | ) | 0.02 |
| ||
Diluted net income available to common stockholders per share, as adjusted |
| $ | 1.08 |
| $ | 1.17 |
|
|
|
|
|
|
| ||
Numerator for basic EPS-income available to common stockholders, as adjusted |
| $ | 18,705 |
| $ | 19,688 |
|
Effect of unvested participating restricted stock using the two-class method |
|
|
|
|
| ||
Effect of dilutive securities: |
| 39 |
| 23 |
| ||
Stock options |
| — |
| — |
| ||
Convertible Series B preferred stock |
| 595 |
| 560 |
| ||
Numerator for diluted EPS-income available to common stockholders after assumed conversions, as adjusted |
| $ | 19,339 |
| $ | 20,271 |
|
|
|
|
|
|
| ||
Denominator for basic EPS-weighted-average shares |
| 17,011 |
| 16,842 |
| ||
Effect of dilutive securities: |
|
|
|
|
| ||
Stock options |
| 380 |
| 4 |
| ||
Convertible Series B preferred stock |
| 581 |
| 548 |
| ||
Denominator for diluted EPS-weighted-average shares and assumed conversions |
| 17,972 |
| 17,394 |
| ||
NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
Reconciliation of (i) income before income taxes to (ii) EBITDA and to (ii) EBITDAR:
Trailing Twelve Months Ended March 31, 2010
Income before income taxes (including gain on extinguishment of debt) |
| $ | 13,077 |
|
Interest expense |
| 203,488 |
| |
Depreciation and amortization |
| 65,323 |
| |
Impairment and closure charges |
| 105,955 |
| |
Non-cash stock-based compensation |
| 11,467 |
| |
Gain on sale of assets |
| (2,134 | ) | |
Non-cash amounts related to captive insurance subsidiary |
| 282 |
| |
EBITDA |
| 397,458 |
| |
Annualized operating lease expense |
| 98,371 |
| |
EBITDAR |
| $ | 495,829 |
|
Reconciliation of the Company’s cash provided by operating activities to free cash flow:
|
| Three Months Ended |
|
|
| ||||
|
| 2010 |
| 2009 |
| 2010 Guidance |
| ||
Cash flows from operating activities |
| $ | 30,270 |
| $ | 57,669 |
| $145,000 to 155,000 |
|
Receipts from long-term notes receivable |
| 6,299 |
| 4,505 |
| 16,000 |
| ||
Dividends paid |
| (5,700 | ) | (4,750 | ) | (23,000) |
| ||
Capital expenditures |
| (2,649 | ) | (3,162 | ) | (20,000) |
| ||
Free cash flow |
| $ | 28,220 |
| $ | 54,262 |
| $118,000 to 128,000 |
|
Restaurant Data
The following table sets forth, for the three-month periods ended March 31, 2010 and 2009, the number of effective restaurants in the Applebee’s and IHOP systems and information regarding the percentage change in sales at those restaurants compared to the same periods in the prior year. “Effective restaurants” are the number of restaurants in a given period, adjusted to account for restaurants open for only a portion of the period. Information is presented for all effective restaurants in the IHOP and Applebee’s systems, which includes restaurants owned by the Company, as well as those owned by franchisees and area licensees. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. However, we believe that presentation of this information is useful in analyzing our revenues because franchisees and area licensees pay us royalties and advertising fees that are generally based on a percentage of their sales, as well as rental payments under leases that are usually based on a percentage of their sales. Management also uses this information to make decisions about future plans for the development of additional restaurants as well as evaluation of current operations.
|
| Three Months Ended March 31, |
| ||||||||||||
|
| 2010 |
| 2009 |
| 2010 |
| 2009 |
| ||||||
|
| IHOP |
| Applebee’s |
| ||||||||||
|
| (unaudited) |
| ||||||||||||
Restaurant Data |
|
|
|
|
|
|
|
|
| ||||||
Effective restaurants(a) |
|
|
|
|
|
|
|
|
| ||||||
Franchise |
| 1,279 |
| 1,225 |
| 1,604 |
| 1,588 |
| ||||||
Company |
| 12 |
| 11 |
| 397 |
| 404 |
| ||||||
Area license |
| 164 |
| 160 |
| — |
| — |
| ||||||
Total |
| 1,455 |
| 1,396 |
| 2,001 |
| 1,992 |
| ||||||
System-wide(b) |
|
|
|
|
|
|
|
|
| ||||||
Sales percentage change(c) |
| 3.3 | % | 5.6 | % | (3.2 | )% | (2.5 | )% | ||||||
Domestic same-restaurant sales percentage change(d) |
| (0.4 | )% | 2.0 | % | (2.7 | )% | (3.0 | )% | ||||||
Franchise(b)(e) |
|
|
|
|
|
|
|
|
| ||||||
Sales percentage change(c)(g) |
| 3.0 | % | 6.4 | % | (2.4 | )% | 4.7 | % | ||||||
Same-restaurant sales percentage change(d) |
| (0.4 | )% | 2.0 | % | (2.6 | )% | (2.9 | )% | ||||||
Average weekly domestic unit sales (in thousands) |
| $ | 36.1 |
| $ | 36.5 |
| $ | 48.1 |
| $ | 49.4 |
| ||
Company (f) |
|
|
|
|
|
|
|
|
| ||||||
Sales percentage change(c)(g) |
| n.m. |
| n.m. |
| (6.4 | )% | (23.5 | )% | ||||||
Same-restaurant sales percentage change(d) |
| n.m. |
| n.m. |
| (3.4 | )% | (3.2 | )% | ||||||
Average weekly domestic unit sales (in thousands) |
| n.m. |
| n.m. |
| $ | 42.6 |
| $ | 44.6 |
| ||||
Area License(h) |
|
|
|
|
|
|
|
|
| ||||||
Sales percentage change(c) |
| 6.3 | % | (1.4 | )% | — |
| — |
| ||||||
(a) “Effective restaurants” are the number of restaurants in a given fiscal period adjusted to account for restaurants open for only a portion of the period. Information is presented for all effective restaurants in the IHOP and Applebee’s systems, which includes restaurants owned by the Company as well as those owned by franchisees and area licensees.
(b) “System-wide sales” are retail sales at IHOP and Applebee’s restaurants operated by franchisees and IHOP restaurants operated by area licensees, as reported to the Company, in addition to retail sales at company-operated restaurants. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company.
(c) “Sales percentage change” reflects, for each category of restaurants, the percentage change in sales in any given fiscal period compared to the prior fiscal period for all restaurants in that category.
(d) “Same-restaurant sales percentage change” reflects the percentage change in sales, in any given fiscal period compared to the same weeks in the prior year, for restaurants that have been operated throughout both fiscal periods that are being compared and have been open for at least 18 months. Because of new unit openings and restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period. Same-restaurant sales percentage change does not include data on IHOP restaurants located in Florida.
(e) IHOP franchise restaurant sales were $599.6 million and $582.0 million for the three months ended March 31, 2010 and 2009, respectively. Applebee’s franchise restaurant sales were $917.1 million and 939.9 million for the three months ended March 31, 2010 and 2009, respectively.
(f) Sales percentage change and same-restaurant sales percentage change for IHOP company-operated restaurants are not meaningful due to the relatively small number and test-market nature of the restaurants, along with the periodic inclusion of restaurants reacquired from franchisees that are temporarily operated by the Company.
(g) The sales percentage change for Applebee’s franchise and company-operated restaurants is impacted by the franchising of 103 company-operated restaurants during 2008 and seven company-operated restaurants in 2009.
(h) Sales at IHOP area license restaurants were $60.1 million and $56.5 million for the three months ended March 31, 2010 and 2009, respectively.
DINEEQUITY, INC. AND SUBSIDIARIES
RESTAURANT DATA
The following table summarizes our restaurant development activity:
|
| Three Months Ended |
| ||
|
| 2010 |
| 2009 |
|
|
| (unaudited) |
| ||
Applebee’s Restaurant Development Activity |
|
|
|
|
|
Beginning of period |
| 2,008 |
| 2,004 |
|
New openings |
|
|
|
|
|
Company-developed |
| — |
| — |
|
Franchise-developed |
| 3 |
| 5 |
|
Total new openings |
| 3 |
| 5 |
|
Closings |
|
|
|
|
|
Company |
| (6 | ) | — |
|
Franchise |
| (6 | ) | (17 | ) |
Total closings |
| (12 | ) | (17 | ) |
End of period |
| 1,999 |
| 1,992 |
|
Summary-end of period |
|
|
|
|
|
Franchise |
| 1,606 |
| 1,591 |
|
Company |
| 393 |
| 401 |
|
Total |
| 1,999 |
| 1,992 |
|
|
|
|
|
|
|
IHOP Restaurant Development Activity |
|
|
|
|
|
Beginning of period |
| 1,456 |
| 1,396 |
|
New openings |
|
|
|
|
|
Company-developed |
| — |
| — |
|
Franchise-developed |
| 6 |
| 11 |
|
Area license |
| 1 |
| — |
|
Total new openings |
| 7 |
| 11 |
|
Closings |
|
|
|
|
|
Company |
| — |
| — |
|
Franchise |
| (1 | ) | (4 | ) |
Area license |
| (1 | ) | (1 | ) |
Total closings |
| (2 | ) | (5 | ) |
End of period |
| 1,461 |
| 1,402 |
|
Summary-end of period |
|
|
|
|
|
Franchise |
| 1,285 |
| 1,231 |
|
Company |
| 12 |
| 12 |
|
Area license |
| 164 |
| 159 |
|
Total |
| 1,461 |
| 1,402 |
|