Attached files

file filename
8-K - 8-K - Dine Brands Global, Inc.a13-6152_18k.htm
EX-99.2 - EX-99.2 - Dine Brands Global, Inc.a13-6152_1ex99d2.htm
EX-99.3 - EX-99.3 - Dine Brands Global, Inc.a13-6152_1ex99d3.htm

Exhibit 99.1

 

 

 

Investor Contact

Ken Diptee

Executive Director, Investor Relations

DineEquity, Inc.

818-637-3632

 

Media Contact

Lucy Neugart and Samantha Verdile

Sard Verbinnen & Co.

415-618-8750 and 212-687-8080

 

DineEquity, Inc. Reports Fourth Quarter and Fiscal 2012 Results

 

 

Ø              Fourth quarter 2012 adjusted EPS (non-GAAP) of $0.83

Ø              Fourth quarter 2012 GAAP EPS of $0.97

 

Ø              Fiscal 2012 adjusted EPS (non-GAAP) of $4.28

Ø              Fiscal 2012 GAAP EPS of $6.63

 

Ø              Total debt reduced by $332.6 million in fiscal 2012

 

Ø              Comprehensive G&A reduction initiative implemented

 

Ø              Successfully completed Applebee’s refranchising program and transitioned to a 99% franchised system

 

 

GLENDALE, Calif., February 27, 2013 — DineEquity, Inc. (NYSE: DIN), the parent company of Applebee’s Neighborhood Grill & Bar and IHOP Restaurants, today announced financial results for the fourth quarter and full year of 2012.

 

“For DineEquity, 2012 was a year of milestones.  The year was marked by accomplishing what we set out to do when we acquired Applebee’s, completing the transition to a 99% franchised restaurant system.  In addition, we reduced total debt by over $1.0 billion since the acquisition in 2007,” said Julia A. Stewart, Chairman and Chief Executive Officer of DineEquity, Inc.  “We remain steadfast in managing our capital structure with a long-term view to maximize shareholder value.  Today’s announcement of our capital allocation strategy reflects our strong free cash flow, solid fundamentals, and less capital intensive business model.”

 

Fourth Quarter 2012 Financial Highlights

 

·                  Total debt was reduced by $77.2 million in the fourth quarter of 2012 as a result of net cash proceeds and financing obligation reductions from the refranchise and sale of Applebee’s company-operated restaurants and free cash flow.  The Company reduced Term Loan balances by $30.6 million and financing and capital lease obligations by $46.5 million.

 

·                  Adjusted net income available to common stockholders was $15.5 million, representing adjusted earnings per diluted share of $0.83 for the fourth quarter of 2012. This compares to $16.4 million, or adjusted earnings per diluted share of $0.91, for the same quarter in 2011. The decrease in adjusted earnings was mainly due to, as expected, lower segment profit caused by the

 



 

refranchise and sale of Applebee’s company-operated restaurants and higher income taxes. These items were partially offset by lower cash interest expense and lower general and administrative expenses. (See “Non-GAAP Financial Measures” below.)

 

·                  GAAP net income available to common stockholders was $18.0 million, or earnings per diluted share of $0.97 for the fourth quarter of 2012, compared to $27.3 million, or earnings per diluted share of $1.51, for the same quarter in 2011.  The decrease was primarily due to a lower gain on the disposition of assets, as expected, lower segment profit due to the refranchise and sale of Applebee’s company-operated restaurants and higher income taxes.  These items were partially offset by lower interest expense, a decline in general and administrative expenses, and the reduced impact from debt extinguishment.

 

·                  EBITDA was $74.0 million for the fourth quarter of 2012. (See “Non-GAAP Financial Measures” below.)

 

·                  Consolidated general and administrative expenses were $37.6 million for the fourth quarter of 2012 compared to $40.7 million in the fourth quarter of 2011.  The decrease was primarily due to the net savings in employee compensation associated with the Company’s previously announced restructuring initiative. The decline was partially offset by higher stock-based compensation due to stock appreciation and severance charges related to the workforce reduction announced in the third quarter of 2012.

 

Fiscal 2012 Highlights

 

·                  Total debt was reduced by $332.6 million in fiscal 2012 as a result of net cash proceeds and financing obligation reductions from the refranchise and sale of Applebee’s company-operated restaurants and free cash flow.  The Company reduced Term Loan balances by $206.3 million, Senior Notes by $3.1 million, and financing and capital lease obligations by $123.2 million.

 

·                  Adjusted net income available to common stockholders was $78.1 million for fiscal 2012, representing adjusted earnings per diluted share of $4.28. This compares to $78.2 million, or adjusted earnings per diluted share of $4.29, for fiscal 2011.  The minimal decrease in adjusted earnings was primarily due to, as expected, lower segment profit primarily due to the refranchise and sale of Applebee’s company-operated restaurants and higher income taxes.  These items were offset by lower cash interest expense and lower general and administrative expenses.  (See “Non-GAAP Financial Measures” below.)

 

·                  GAAP net income available to common stockholders was $122.5 million for fiscal 2012, or earnings per diluted share of $6.63, compared to $70.7 million, or earnings per diluted share of $3.89 for fiscal 2011.  The increase was due to a higher gain on the refranchise and sale of Applebee’s company-operated restaurants, lower impairment and closure charges, and lower interest expense.  These items were partially offset by lower segment profit due to refranchising, higher income taxes, and higher general and administrative expenses due to a non-recurring litigation settlement.

 

·                  EBITDA was $300.3 million for fiscal 2012. (See “Non-GAAP Financial Measures” below.)

 

·                  For fiscal 2012, cash flows from operating activities were $52.9 million, capital expenditures were $17.0 million, and free cash flow was $48.2 million.  (See “Non-GAAP Financial Measures” below.)  For fiscal 2011, free cash flow was $108.5 million.  The decline in free cash flow in fiscal 2012 was primarily due to the increase in cash taxes paid on refranchising proceeds and, as expected, lower segment profit due to refranchising.  These items were partially offset by lower cash interest paid and lower capital expenditures.

 

2



 

·                  Applebee’s company-operated restaurant operating margin was 16.3% for fiscal 2012 compared to 14.5% for 2011.  The increase of 180 basis points was primarily due to the refranchise and sale of less profitable Applebee’s company-operated restaurants.  The refranchised company-operated restaurants had higher-than-average labor and occupancy costs.

 

Same-Restaurant Sales Performance

 

Fourth Quarter 2012

 

·                  Applebee’s domestic system-wide same-restaurant sales increased 0.9% for the fourth quarter of 2012 compared to the fourth quarter of 2011.  The increase in same-restaurant sales reflected a higher average guest check, partially offset by a decline in traffic compared to the same quarter a year ago.

 

·                  IHOP’s domestic system-wide same restaurant sales decreased 2.6% for the fourth quarter of 2012 compared to the fourth quarter of 2011.  The decline in same-restaurant sales reflected a decrease in traffic and a lower average guest check compared to the same period in 2011.

 

Fiscal 2012

 

·                  Applebee’s domestic system-wide same-restaurant sales increased 1.2% for fiscal 2012 compared to fiscal 2011.  The increase in same-restaurant sales was mainly driven by a higher average guest check, partially offset by a decline in traffic.

 

·                  IHOP’s domestic system-wide same-restaurant sales declined 1.6% for fiscal 2012 compared to fiscal 2011.  Same-restaurant sales performance reflected a decrease in traffic, partially offset by a slightly higher average guest check.

 

Investor Conference Call Today

 

The Company will host an investor conference call today (Wednesday, February 27, 2013, at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time) to discuss its fourth quarter and full year 2012 results.  To participate on the call, please dial (888) 680-0879 and reference pass code 73306646.  International callers, please dial (617) 213-4856 and reference pass code 73306646. Participants may also pre-register to obtain a unique pin number to join the live call without operator assistance by visiting the following Web site:

 

https://www.theconferencingservice.com/prereg/key.process?key=PA7HPMFPV

 

A live webcast of the call will be available on DineEquity’s Web site at www.dineequity.com, and may be accessed by visiting Calls & Presentations under the site’s Investor Information section.  Participants should allow approximately ten minutes prior to the call’s start time to visit the site and download any streaming media software needed to listen to the webcast.  A telephonic replay of the call may be accessed through 11:59 p.m. Pacific Time on March 6, 2013 by dialing (888) 286-8010 and referencing pass code 23676151.  International callers, please dial (617) 801-6888 and reference pass code 23676151.  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 3,600 restaurants combined in 17 countries, over 400 franchisees and approximately 200,000 team members (including franchisee- and company-operated restaurant employees), DineEquity is one of the largest full-

 

3



 

service restaurant companies in the world.  For more information on DineEquity, visit the Company’s Web site located at www.dineequity.com.

 

Forward-Looking Statements

 

Statements contained in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by words such as “may,” “will,” “should,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan” and other similar expressions. These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those expressed or implied in such statements. These factors include, but are not limited to: the effect of general economic conditions; the Company’s indebtedness; risk of future impairment charges; trading volatility and the price of the Company’s common stock; the Company’s results in any given period differing from guidance provided to the public; the highly competitive nature of the restaurant business; the Company’s business strategy failing to achieve anticipated results; risks associated with the restaurant industry; risks associated with locations of current and future restaurants; rising costs for food commodities and utilities; shortages or interruptions in the supply or delivery of food; ineffective marketing and guest relationship initiatives and use of social media; changing health or dietary preferences; our engagement in business in foreign markets; harm to our brands’ reputation; litigation; third-party claims with respect to intellectual property assets; environmental liability; liability relating to employees; failure to comply with applicable laws and regulations; failure to effectively implement restaurant development plans; our dependence upon our franchisees; concentration of Applebee’s franchised restaurants in a limited number of franchisees; credit risk from IHOP franchisees operating under our previous business model; termination or non-renewal of franchise agreements; franchisees breaching their franchise agreements; insolvency proceedings involving franchisees; changes in the number and quality of franchisees; inability of franchisees to fund capital expenditures; heavy dependence on information technology; the occurrence of cyber incidents or a deficiency in our cybersecurity; failure to execute on a business continuity plan; inability to attract and retain talented employees; risks associated with retail brand initiatives; failure of our internal controls; and other factors discussed from time to time in the Company’s Annual and Quarterly Reports on Forms 10-K and 10-Q and in the Company’s other filings with the Securities and Exchange Commission. The forward-looking statements contained in this release are made as of the date hereof and the Company assumes no obligation to update or supplement any forward-looking statements.

 

Non-GAAP Financial Measures

 

This news release includes references to the Company’s non-GAAP financial measures “adjusted net income available to common stockholders (adjusted EPS),” “EBITDA,” “free cash flow,” and “segment EBITDA.” “Adjusted EPS” is computed for a given period by deducting from net income (loss) available to common stockholders for such period the effect of any impairment and closure charges, any gain or loss related to debt extinguishment, any intangible asset amortization, any non-cash interest expense, any debt modification costs, any one-time litigation settlement charges, any general and administrative restructuring costs, net of savings, any gain or loss related to the disposition of assets, and any state income tax impact of deferred taxes due to refranchising 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 less interest expense, loss on retirement of debt, depreciation and amortization, impairment and closure charges, non-cash stock-based compensation, gain/loss on disposition of assets and other charge backs as defined by its credit agreement. “Free cash flow” for a given period is defined as cash provided by operating activities, plus receipts from notes and equipment contracts receivable (“long-term notes receivable”), less dividends paid and capital expenditures. “Segment EBITDA” for a given period is defined as gross segment profit plus depreciation and amortization as well as interest charges related to the segment. Management utilizes EBITDA for debt covenant purposes and free cash flow to determine the amount of cash remaining for general corporate and strategic purposes after the receipts from long-term receivables, 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

 

4



 

for these purposes. Adjusted EPS, EBITDA, free cash flow and segment EBITDA are supplemental non-GAAP financial measures and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with United States generally accepted accounting principles.

 

5



 

DineEquity, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

Segment Revenues:

 

 

 

 

 

 

 

 

 

Franchise revenues

 

$

107,917

 

$

97,757

 

$

421,459

 

$

398,539

 

Company restaurant sales

 

16,862

 

110,029

 

291,121

 

530,984

 

Rental revenues

 

30,763

 

30,957

 

122,859

 

125,960

 

Financing revenues

 

3,095

 

3,436

 

14,489

 

19,715

 

Total segment revenues

 

158,637

 

242,179

 

849,928

 

1,075,198

 

Segment Expenses:

 

 

 

 

 

 

 

 

 

Franchise expenses

 

28,774

 

26,350

 

109,900

 

105,006

 

Company restaurant expenses

 

16,998

 

95,422

 

249,296

 

458,443

 

Rental expenses

 

24,090

 

24,413

 

97,165

 

98,147

 

Financing expenses

 

37

 

(28

)

1,623

 

5,973

 

Total segment expenses

 

69,899

 

146,157

 

457,984

 

667,569

 

Gross segment profit

 

88,738

 

96,022

 

391,944

 

407,629

 

General and administrative expenses

 

37,607

 

40,670

 

163,215

 

155,822

 

Interest expense

 

25,571

 

31,364

 

114,338

 

132,707

 

Impairment and closure charges

 

2,954

 

2,918

 

4,218

 

29,865

 

Amortization of intangible assets

 

3,071

 

3,075

 

12,293

 

12,300

 

Loss on extinguishment of debt

 

637

 

3,274

 

5,554

 

11,159

 

Debt modification costs

 

 

(72

)

 

4,031

 

Gain on disposition of assets

 

(12,955

)

(21,966

)

(102,597

)

(43,253

)

Income before income taxes

 

31,853

 

36,759

 

194,923

 

104,998

 

Income tax provision

 

(13,034

)

(8,139

)

(67,249

)

(29,806

)

Net income

 

$

18,819

 

$

28,620

 

$

127,674

 

$

75,192

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders:

 

 

 

 

 

 

 

 

 

Net income

 

$

18,819

 

$

28,620

 

$

127,674

 

$

75,192

 

Less: Accretion of Series B preferred stock

 

(464

)

(658

)

(2,498

)

(2,573

)

Less: Net income allocated to unvested participating restricted stock

 

(318

)

(623

)

(2,718

)

(1,886

)

Net income available to common stockholders

 

$

18,037

 

$

27,339

 

$

122,458

 

$

70,733

 

Net income available to common stockholders per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.98

 

$

1.55

 

$

6.81

 

$

3.96

 

Diluted

 

$

0.97

 

$

1.51

 

$

6.63

 

$

3.89

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

18,391

 

17,646

 

17,992

 

17,846

 

Diluted

 

18,637

 

18,578

 

18,877

 

18,185

 

 

6



 

DineEquity, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 

 

 

December 31,

 

 

 

2012

 

2011

 

 

 

(Unaudited)

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

64,537

 

$

60,691

 

Receivables, net

 

128,610

 

115,667

 

Prepaid income taxes

 

16,080

 

13,922

 

Prepaid gift cards

 

50,242

 

45,412

 

Deferred income taxes

 

21,772

 

20,579

 

Assets held for sale

 

 

9,363

 

Other current assets

 

13,214

 

11,313

 

Total current assets

 

294,455

 

276,947

 

Long-term receivables

 

212,269

 

226,526

 

Property and equipment, net

 

294,375

 

474,154

 

Goodwill

 

697,470

 

697,470

 

Other intangible assets, net

 

806,093

 

822,361

 

Other assets, net

 

110,738

 

116,836

 

Total assets

 

$

2,415,400

 

$

2,614,294

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current maturities of long-term debt

 

$

7,420

 

$

7,420

 

Accounts payable

 

30,751

 

29,013

 

Accrued employee compensation and benefits

 

22,435

 

26,191

 

Gift card liability

 

161,689

 

146,955

 

Accrued interest payable

 

13,236

 

12,537

 

Current maturities of capital lease and financing obligations

 

10,878

 

13,480

 

Other accrued expenses

 

21,351

 

22,048

 

Total current liabilities

 

267,760

 

257,644

 

Long-term debt, less current maturities

 

1,202,063

 

1,411,448

 

Financing obligations, less current maturities

 

52,049

 

162,658

 

Capital lease obligations, less current maturities

 

124,375

 

134,407

 

Deferred income taxes

 

362,171

 

383,810

 

Other liabilities

 

98,177

 

109,107

 

Total liabilities

 

2,106,595

 

2,459,074

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Convertible preferred stock, Series B, at accreted value; shares: 10,000,000 authorized; 2012 - no shares issued or outstanding; 2011 - 35,000 issued, 34,900 outstanding

 

 

44,508

 

Common stock, $0.01 par value; shares: 40,000,000 authorized; 2012 - 25,362,946 issued, 19,197,899 outstanding; 2011 - 24,658,985 issued, 18,060,206 outstanding

 

254

 

247

 

Additional paid-in-capital

 

264,342

 

205,663

 

Retained earnings

 

322,045

 

196,869

 

Accumulated other comprehensive loss

 

(152

)

(294

)

Treasury stock, at cost; shares: 2012 - 6,165,047; 2011 - 6,598,779

 

(277,684

)

(291,773

)

Total stockholders’ equity

 

308,805

 

155,220

 

Total liabilities and stockholders’ equity

 

$

2,415,400

 

$

2,614,294

 

 

7



 

DineEquity, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

 

 

(Unaudited)

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

127,674

 

$

75,192

 

Adjustments to reconcile net income to cash flows provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

39,538

 

50,220

 

Non-cash interest expense

 

5,985

 

6,160

 

Loss on extinguishment of debt

 

5,554

 

11,159

 

Impairment and closure charges

 

3,931

 

8,448

 

Deferred income taxes

 

(22,832

)

11,835

 

Non-cash stock-based compensation expense

 

11,442

 

9,492

 

Tax benefit from stock-based compensation

 

6,814

 

6,494

 

Excess tax benefit from stock options exercised

 

(5,669

)

(5,443

)

Gain on disposition of assets

 

(102,597

)

(43,253

)

Other

 

(8,991

)

(1,765

)

Changes in operating assets and liabilities:

 

 

 

 

 

Receivables

 

(11,629

)

(16,722

)

Current income tax receivables and payables

 

1,272

 

20,479

 

Other current assets

 

(9,119

)

(5,354

)

Accounts payable

 

1,778

 

(3,533

)

Accrued employee compensation and benefits

 

(3,756

)

(6,656

)

Gift card liability

 

14,735

 

21,983

 

Other accrued expenses

 

(1,251

)

(17,050

)

Cash flows provided by operating activities

 

52,879

 

121,686

 

Cash flows from investing activities:

 

 

 

 

 

Additions to property and equipment

 

(16,952

)

(26,332

)

Proceeds from sale of property and equipment and assets held for sale

 

168,881

 

115,642

 

Principal receipts from notes, equipment contracts and other long-term receivables

 

12,250

 

13,122

 

Other

 

1,238

 

(753

)

Cash flows provided by investing activities

 

165,417

 

101,679

 

Cash flows from financing activities:

 

 

 

 

 

Borrowings under revolving credit facilities

 

50,000

 

40,000

 

Repayments under revolving credit facilities

 

(50,000

)

(40,000

)

Repayment of long-term debt (including premiums)

 

(216,037

)

(225,681

)

Payment of debt issuance costs

 

 

(12,295

)

Purchase of DineEquity common stock

 

 

(21,170

)

Principal payments on capital lease and financing obligations

 

(10,849

)

(13,391

)

Repurchase of restricted stock

 

(1,740

)

(5,080

)

Proceeds from stock options exercised

 

9,254

 

6,725

 

Excess tax benefit from share-based compensation

 

5,669

 

5,443

 

Change in restricted cash

 

(747

)

466

 

Cash flows used in financing activities

 

(214,450

)

(264,983

)

Net change in cash and cash equivalents

 

3,846

 

(41,618

)

Cash and cash equivalents at beginning of year

 

60,691

 

102,309

 

Cash and cash equivalents at end of year

 

$

64,537

 

$

60,691

 

 

8



 

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, loss on extinguishment of debt, amortization of intangible assets, non-cash interest expense, debt modification costs, a one-time litigation settlement, general and administrative (“G&A”) restructuring costs, net of savings, gain on disposition of assets, all items net of taxes, and the income tax impact of refranchising and restructuring, and related per share data:

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

Net income available to common stockholders, as reported

 

$

18,037

 

$

27,339

 

$

122,459

 

$

70,733

 

Impairment and closure charges

 

2,954

 

2,871

 

4,218

 

29,600

 

Loss on extinguishment of debt

 

637

 

3,274

 

5,554

 

11,159

 

Amortization of intangible assets

 

3,071

 

3,075

 

12,293

 

12,300

 

Non-cash interest expense

 

1,438

 

1,578

 

5,985

 

6,160

 

Debt modification costs

 

 

(72

)

 

4,031

 

Litigation settlement

 

77

 

 

9,124

 

 

G&A restructuring costs, net of savings

 

495

 

 

1,764

 

 

Gain on disposition of assets

 

(12,955

)

(21,966

)

(102,597

)

(43,253

)

Income tax benefit

 

1,655

 

4,474

 

24,598

 

(7,959

)

Income tax impact of refranchising and restructuring

 

 

(4,422

)

(6,258

)

(4,422

)

Net income allocated to unvested participating restricted stock

 

45

 

248

 

984

 

(197

)

Net income available to common stockholders, as adjusted

 

$

15,454

 

$

16,399

 

$

78,124

 

$

78,152

 

 

 

 

 

 

 

 

 

 

 

Diluted net income available to common stockholders per share:

 

 

 

 

 

 

 

 

 

Net income available to common stockholders, as reported

 

$

0.97

 

$

1.51

 

$

6.63

 

$

3.89

 

Impairment and closure charges

 

0.10

 

0.10

 

0.13

 

0.95

 

Loss on extinguishment of debt

 

0.02

 

0.11

 

0.18

 

0.36

 

Amortization of intangible assets

 

0.10

 

0.10

 

0.40

 

0.39

 

Non-cash interest expense

 

0.05

 

0.05

 

0.20

 

0.20

 

Debt modification costs

 

 

0.00

 

 

0.13

 

Litigation settlement

 

 

 

0.30

 

 

G&A restructuring costs, net of savings

 

0.02

 

 

0.06

 

 

Gain on disposition of assets

 

(0.43

)

(0.73

)

(3.33

)

(1.38

)

Income tax impact of refranchising and restructuring

 

 

(0.25

)

(0.33

)

(0.23

)

Net income allocated to unvested participating restricted stock

 

0.00

 

0.01

 

0.05

 

(0.01

)

Change due to increase in net income

 

 

0.01

 

(0.01

)

(0.01

)

Diluted net income available to common stockholders per share, as adjusted

 

$

0.83

 

$

0.91

 

$

4.28

 

$

4.29

 

 

 

 

 

 

 

 

 

 

 

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

 

$

15,454

 

$

16,399

 

$

78,124

 

$

78,152

 

Effect of unvested participating restricted stock using the two-class method

 

4

 

6

 

81

 

105

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

Convertible Series B preferred stock

 

 

 

2,497

 

2,573

 

Numerator for diluted EPS-income available to common stockholders after assumed conversions, as adjusted

 

$

15,458

 

$

16,405

 

$

80,702

 

$

80,830

 

 

 

 

 

 

 

 

 

 

 

Denominator for basic EPS-weighted-average shares

 

18,391

 

17,646

 

17,992

 

17,846

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

Stock options

 

246

 

289

 

264

 

339

 

Convertible Series B preferred stock

 

 

 

621

 

643

 

Denominator for diluted EPS-weighted-average shares and assumed conversions

 

18,637

 

17,935

 

18,877

 

18,828

 

 

9



 

DineEquity, Inc. and Subsidiaries

Non-GAAP Financial Measures

(In thousands)

(Unaudited)

 

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

 

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

U.S. GAAP income before income taxes

 

$

194,923

 

$

104,998

 

Interest charges

 

131,869

 

151,332

 

Loss on extinguishment of debt

 

5,554

 

11,159

 

Depreciation and amortization

 

39,538

 

50,220

 

Non-cash stock-based compensation

 

11,442

 

9,492

 

Impairment and closure charges

 

4,218

 

29,643

 

Other

 

15,304

 

6,830

 

Gain on sale of assets

 

(102,597

)

(43,253

)

EBITDA

 

$

300,251

 

$

320,421

 

 

Reconciliation of the Company’s cash provided by operating activities to free cash flow:

 

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

Cash flows provided by operating activities

 

$

52,879

 

$

121,686

 

Principal receipts from notes, equipment contracts and other long-term receivables

 

12,250

 

13,122

 

Additions to property and equipment

 

(16,952

)

(26,332

)

Free cash flow

 

$

48,177

 

$

108,476

 

 

10



 

DineEquity, Inc. and Subsidiaries

Non-GAAP Financial Measures

(In thousands)

(Unaudited)

 

Reconciliation of U.S. GAAP gross segment profit to segment EBITDA:

 

 

 

Three months ended December 31, 2012

 

 

 

Franchise -
Applebee’s

 

Franchise -
IHOP

 

Company
Restaurants

 

Rental
Operations

 

Financing
Operations

 

Total

 

Revenue

 

$

48,364

 

$

59,553

 

$

16,862

 

$

30,763

 

$

3,095

 

$

158,637

 

Expense

 

2,389

 

26,385

 

16,998

 

24,090

 

37

 

69,899

 

Gross segment profit

 

45,975

 

33,168

 

(136

)

6,673

 

3,058

 

88,738

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation/amortization

 

2,351

 

 

599

 

3,383

 

 

6,333

 

Interest charges

 

 

 

92

 

4,161

 

 

4,253

 

Segment EBITDA

 

$

48,326

 

$

33,168

 

$

555

 

$

14,217

 

$

3,058

 

$

99,324

 

 

 

 

Three months ended December 31, 2011

 

 

 

Franchise -
Applebee’s

 

Franchise -
IHOP

 

Company
Restaurants

 

Rental
Operations

 

Financing
Operations

 

Total

 

Revenue

 

$

40,941

 

$

56,816

 

$

110,029

 

$

30,957

 

$

3,436

 

$

242,179

 

Expense

 

602

 

25,748

 

95,422

 

24,413

 

(28

)

146,157

 

Gross segment profit

 

40,339

 

31,068

 

14,607

 

6,544

 

3,464

 

96,022

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation/amortization

 

2,484

 

 

3,113

 

3,482

 

 

9,079

 

Interest charges

 

 

 

116

 

4,374

 

 

4,490

 

Segment EBITDA

 

$

42,823

 

$

31,068

 

$

17,836

 

$

14,400

 

$

3,464

 

$

109,591

 

 

 

 

Twelve months ended December 31, 2012

 

 

 

Franchise -
Applebee’s

 

Franchise -
IHOP

 

Company
Restaurants

 

Rental
Operations

 

Financing
Operations

 

Total

 

Revenue

 

$

185,904

 

$

235,555

 

$

291,121

 

$

122,859

 

$

14,489

 

$

849,928

 

Expense

 

5,464

 

104,436

 

249,296

 

97,165

 

1,623

 

457,984

 

Gross segment profit

 

180,440

 

131,119

 

41,825

 

25,694

 

12,866

 

391,944

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation/amortization

 

9,762

 

 

6,953

 

13,654

 

 

30,369

 

Interest charges

 

 

 

377

 

16,996

 

 

17,373

 

Segment EBITDA

 

$

190,202

 

$

131,119

 

$

49,155

 

$

56,344

 

$

12,866

 

$

439,686

 

 

 

 

Twelve months ended December 31, 2011

 

 

 

Franchise -
Applebee’s

 

Franchise -
IHOP

 

Company
Restaurants

 

Rental
Operations

 

Financing
Operations

 

Total

 

Revenue

 

$

169,231

 

$

229,308

 

$

530,984

 

$

125,960

 

$

19,715

 

$

1,075,198

 

Expense

 

2,801

 

102,205

 

458,443

 

98,147

 

5,973

 

667,569

 

Gross segment profit

 

166,430

 

127,103

 

72,541

 

27,813

 

13,742

 

407,629

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation/amortization

 

9,885

 

 

16,584

 

14,029

 

 

40,498

 

Interest charges

 

 

 

511

 

17,972

 

 

18,483

 

Segment EBITDA

 

$

176,315

 

$

127,103

 

$

89,636

 

$

59,814

 

$

13,742

 

$

466,610

 

 

11



 

Restaurant Data

 

The following table sets forth, for the three and twelve months ended December 31, 2012 and 2011, the number of effective restaurants in the Applebee’s and IHOP systems and information regarding the percentage change in sales at those restaurants compared to the same periods in the prior year. “Effective restaurants” are the number of restaurants in a given period, adjusted to account for restaurants open for only a portion of the period. Information is presented for all effective restaurants in the Applebee’s and IHOP systems, which includes restaurants 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

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

(unaudited)

 

Applebee’s Restaurant Data

 

 

 

 

 

 

 

 

 

Effective restaurants(a)

 

 

 

 

 

 

 

 

 

Franchise

 

1,992

 

1,808

 

1,894

 

1,770

 

Company

 

26

 

203

 

123

 

240

 

Total

 

2,018

 

2,011

 

2,017

 

2,010

 

System-wide(b)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

1.5

%

1.5

%

1.7

%

2.6

%

Domestic same-restaurant sales percentage change(d)

 

0.9

%

1.0

%

1.2

%

2.0

%

Franchise(b)(f)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

11.5

%

9.0

%

8.1

%

11.3

%

Domestic same-restaurant sales percentage change(d)

 

0.9

%

0.8

%

1.3

%

2.0

%

Average weekly domestic unit sales (in thousands)

 

$

44.5

 

$

44.3

 

$

46.6

 

$

46.4

 

Company (f)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

(89.3

)%

(37.9

)%

(47.4

)%

(35.7

)%

Same-restaurant sales percentage change(d)

 

(3.3

)%

3.4

%

0.6

%

1.8

%

Average weekly domestic unit sales (in thousands)

 

$

33.2

 

$

39.8

 

$

42.0

 

$

41.0

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

(unaudited)

 

IHOP Restaurant Data

 

 

 

 

 

 

 

 

 

Effective restaurants(a)

 

 

 

 

 

 

 

 

 

Franchise

 

1,390

 

1,357

 

1,379

 

1,343

 

Area license

 

165

 

164

 

165

 

163

 

Company

 

16

 

14

 

15

 

11

 

Total

 

1,571

 

1,535

 

1,559

 

1,517

 

System-wide(b)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

0.6

%

2.4

%

1.6

%

1.9

%

Domestic same-restaurant sales percentage change(d)

 

(2.6

)%

(1.0

)%

(1.6

)%

(2.0

)%

Franchise(b)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

0.5

%

2

%

1.3

%

1.7

%

Domestic same-restaurant sales percentage change(d)

 

(2.6

)%

(1

)%

(1.6

)%

(2.0

)%

Average weekly domestic unit sales (in thousands)

 

$

33.3

 

$

34.0

 

$

34.0

 

$

34.4

 

 

 

 

 

 

 

 

 

 

 

Company (e)

 

n/m

 

n/m

 

n/m

 

n/m

 

 

 

 

 

 

 

 

 

 

 

Area License(b)

 

 

 

 

 

 

 

 

 

Sales percentage change(c)

 

0.2

%

4.3

%

2.7

%

2.9

%

 

12



 


(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 Applebee’s and IHOP systems, which includes restaurants owned by the Company as well as those owned by franchisees and area licensees.

 

(b)         “System-wide” sales are retail sales at Applebee’s restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated restaurants.  Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. Applebee’s domestic franchise restaurant sales, IHOP franchise restaurant sales and IHOP area license restaurant sales for the three and twelve months ended December 31, 2012 and 2011 were as follows:

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

(In millions)

 

Reported sales (unaudited)

 

 

 

 

 

 

 

 

 

Applebee’s franchise restaurant sales

 

$

1,069.5

 

$

959.2

 

$

4,234.9

 

$

3,916.4

 

IHOP franchise restaurant sales

 

$

602.6

 

$

599.8

 

$

2,437.2

 

$

2,405.3

 

IHOP area license restaurant sales

 

$

56.6

 

$

56.5

 

$

234.7

 

$

228.6

 

 

(c)          “Sales percentage change” reflects, for each category of restaurants, the percentage change in sales in any given fiscal period compared to the prior fiscal period for all restaurants in that category.

 

(d)         “Domestic same-restaurant sales percentage change” reflects the percentage change in sales, in any given fiscal period, compared to the same weeks in the prior year for 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)          Sales percentage changes and domestic same-restaurant sales percentage change for IHOP company-operated restaurants are not meaningful (“n/m”) because there are few such restaurants, consisting of a relatively small number of restaurants in a single test market, along with a variable, small number of restaurants that are reacquired from franchisees from time-to-time and temporarily operated by the Company.

 

(f)           The sales percentage change for the three and twelve months ended December 31, 2012 and 2011 for Applebee’s franchise and company-operated restaurants was impacted by the refranchising of 154 company-operated restaurants in 2012 and 132 company-operated restaurants during 2011.

 

13



 

DineEquity, Inc. and Subsidiaries

Restaurant Data

 

The following table summarizes our restaurant development activity:

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

(unaudited)

 

Applebee’s Restaurant Development Activity

 

 

 

 

 

 

 

 

 

Beginning of period

 

2,016

 

2,010

 

2,019

 

2,010

 

New openings:

 

 

 

 

 

 

 

 

 

Franchise

 

20

 

12

 

34

 

24

 

Total new openings

 

20

 

12

 

34

 

24

 

Closings:

 

 

 

 

 

 

 

 

 

Franchise

 

(2

)

(3

)

(19

)

(15

)

Total closings

 

(2

)

(3

)

(19

)

(15

)

End of period

 

2,034

 

2,019

 

2,034

 

2,019

 

Summary - end of period:

 

 

 

 

 

 

 

 

 

Franchise

 

2,011

 

1,842

 

2,011

 

1,842

 

Company

 

23

 

177

 

23

 

177

 

Total

 

2,034

 

2,019

 

2,034

 

2,019

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

(unaudited)

 

IHOP Restaurant Development Activity

 

 

 

 

 

 

 

 

 

Beginning of period

 

1,565

 

1,532

 

1,550

 

1,504

 

New openings:

 

 

 

 

 

 

 

 

 

Franchise

 

20

 

16

 

47

 

52

 

Area license

 

 

3

 

1

 

6

 

Total new openings

 

20

 

19

 

48

 

58

 

Closings:

 

 

 

 

 

 

 

 

 

Company

 

(1

)

 

(1

)

 

Franchise

 

(3

)

(1

)

(14

)

(8

)

Area license

 

 

 

(2

)

(4

)

Total closings

 

(4

)

(1

)

(17

)

(12

)

End of period

 

1,581

 

1,550

 

1,581

 

1,550

 

Summary-end of period:

 

 

 

 

 

 

 

 

 

Franchise

 

1,404

 

1,369

 

1,404

 

1,369

 

Area license

 

165

 

166

 

165

 

166

 

Company

 

12

 

15

 

12

 

15

 

Total

 

1,581

 

1,550

 

1,581

 

1,550

 

 

14