Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Dine Brands Global, Inc. | a12-6238_18k.htm |
| EX-99.2 - EX-99.2 - Dine Brands Global, Inc. | a12-6238_1ex99d2.htm |
Exhibit 99.1
Investor Contact
Ken Diptee
Executive Director, Investor Relations
DineEquity, Inc.
818-637-3632
Media Contact
Lucy Neugart
Sard Verbinnen & Co.
415-618-8750
DineEquity, Inc. Announces Solid Fourth Quarter and Fiscal 2011 Results
Strong Cash Flow Drives Major Debt Reduction
GLENDALE, Calif., March 1, 2012 — DineEquity, Inc. (NYSE: DIN), the parent company of Applebee’s Neighborhood Grill & Bar and IHOP Restaurants, today announced financial results for the fourth quarter and fiscal 2011.
“I am pleased with our results for the fourth quarter and fiscal 2011. The Company continued to generate robust free cash flow, pay down debt, manage G&A and differentiate our brands,” said Julia A. Stewart, Chairman and Chief Executive Officer of DineEquity. “Today, at 95% franchised, we are unique in the full-service restaurant segment. Our business model generates strong free cash flow with substantially reduced volatility. We remain focused on delivering value, innovation and operational excellence to our guests.”
Fiscal 2011 Financial Highlights
· Total debt was reduced by $308.6 million, or 15%, in fiscal 2011 as a result of net cash proceeds and financing obligation reductions from the refranchise and sale of 132 Applebee’s company-operated restaurants, free cash flow, and the termination of the sublease for the Applebee’s restaurant support center in Lenexa, Kansas. The Company paid down term loan balances by $161.5 million, repurchased $59.3 million of the 9.5% Senior Notes, and reduced $87.9 million of financing and capital lease obligations during fiscal 2011.
· Adjusted net income available to common stockholders was $78.2 million, or $4.29 per diluted share, excluding a one-time tax benefit, compared to $61.7 million, or $3.50 per diluted share, for fiscal 2010. The increase in adjusted net income was primarily due to the elimination of the dividend on the Series A Perpetual Preferred stock as a result of the redemption of this security in the fourth quarter of 2010, lower cash interest expense and income taxes. These items were partially offset by lower segment profit largely driven by the refranchising of 132 Applebee’s company-operated restaurants. (See “Non-GAAP Financial Measures” below.)
· Net income available to common stockholders was $70.7 million, or $3.89 per diluted share, compared to a net loss of $30.0 million, or $1.74 per diluted share, for fiscal 2010. The increase in net income was due in part to a lower loss on the extinguishment of debt, the elimination of the dividend on the Series A Perpetual Preferred stock, lower interest expense, and a higher gain on the refranchise and sale of Applebee’s company-operated restaurants. These items were partially offset by higher income taxes and impairment and closure charges primarily related to the termination of the sublease for the Applebee’s restaurant support center in Lenexa, Kansas, and lower segment profit largely driven by refranchising.
· Cash flows from operating activities were $121.7 million, capital expenditures were $26.3 million, and free cash flow was $108.5 million. (See “Non-GAAP Financial Measures” below.)
· Consolidated general and administrative expenses were $155.8 million compared to $160.3 million for fiscal 2010.
· Applebee’s company-operated restaurant operating margin was 14.5% compared to 14.8% for fiscal 2010. The main drivers for the decrease were higher labor expense, commodities inflation, and incremental local advertising costs. These items were partially offset by a higher average guest check.
· IHOP franchisees and its area licensees opened 58 new restaurants worldwide in fiscal 2011, in line with our full-year IHOP development outlook.
Fourth Quarter 2011 Financial Highlights
· Adjusted net income available to common stockholders was $16.4 million, or $0.91 per diluted share, excluding a one-time tax benefit, for the fourth quarter of 2011. This compares to $10.6 million, or $0.59 per diluted share, for the same quarter in 2010. The increase in adjusted net income was primarily due to lower cash interest expense and income taxes, partially offset by lower profit due to the refranchising of 132 Applebee’s company-operated restaurants. (See “Non-GAAP Financial Measures” below.)
· Net income available to common stockholders was $27.3 million, or $1.51 per diluted share, for the fourth quarter of 2011 compared to a net loss of $58.1 million, or $3.33 per diluted share, for the same quarter in 2010. The increase was primarily due to a higher loss on the extinguishment of debt in 2010 from our refinancing, the elimination of the dividend on the Series A Perpetual Preferred stock, and higher interest expense. These items were partially offset by higher income taxes and lower segment profit due to refranchising.
· Applebee’s company-operated restaurant operating margin was 14.8% in the fourth quarter of 2011 compared to 15.5% for the same quarter in 2010. The decrease was primarily due to incremental local advertising costs and higher labor expense, partially offset by the refranchising of lower margin company-operated restaurants and a higher average guest check.
Same-Restaurant Sales Performance
Fiscal 2011
· Applebee’s fiscal 2011 domestic system-wide same-restaurant sales increased 2.0% compared to fiscal 2010. The increase in fiscal year same-restaurant sales was mainly driven by a higher average guest check with essentially flat traffic.
· IHOP’s fiscal 2011 domestic system-wide same-restaurant sales declined 2.0% compared to fiscal 2010. The decline in fiscal year same-restaurant sales reflected a decline in traffic, partially offset by a higher average guest check compared to fiscal 2010.
Fourth Quarter 2011
· Applebee’s domestic system-wide same-restaurant sales increased 1.0% for the fourth quarter of 2011 compared to the same period in 2010. This marked sequential improvement from the third quarter of 2011.
· IHOP domestic system-wide same restaurant sales decreased 1.0% for the fourth quarter of 2011 compared to the same period in 2010. This also marked sequential improvement from the third quarter of 2011.
Refranchise and Sale of Applebee’s Company-Operated Restaurants
In the fourth quarter of 2011, DineEquity successfully completed the refranchise and sale of 66 Applebee’s company-operated restaurants located in the New England area. The transaction resulted in net proceeds after taxes of approximately $49 million and reduced sale-leaseback related financing obligations by $7 million.
In the first quarter of 2012, DineEquity completed the refranchise and sale of 17 Applebee’s company-operated restaurants located in a six-state market area geographically centered around Memphis, Tennessee. The transaction resulted in net proceeds after taxes of approximately $16 million and reduced sale-leaseback related financing obligations by $9 million.
Investor Conference Call Today
The Company will host an investor conference call today (Thursday, March 1, 2012, at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time) to discuss its fourth quarter and fiscal 2011 results. To participate on the call, please dial (888) 713-4213 and reference pass code 69335062. 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=PFFHB3Y7J
A live webcast of the call will be available on DineEquity’s Web site at www.dineequity.com, and may be accessed by visiting Calls & Presentations under the site’s Investor Information section. Participants should allow approximately ten minutes prior to the call’s start time to visit the site and download any streaming media software needed to listen to the webcast. A telephonic replay of the call may be accessed through March 8, 2012 by dialing (888) 286-8010 and referencing pass code 56756189. 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 3,500 restaurants combined in 18 countries, over 400 franchisees and approximately 200,000 team members (including franchisee- and company-operated restaurant employees), we believe DineEquity is one of the largest full-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 release 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 substantial indebtedness; risk of future impairment charges; the Company’s results in any given period differing from guidance provided to the public; the highly competitive nature of the restaurant business; the Company’s business strategy failing to achieve anticipated results; risks associated with the restaurant industry; shortages or interruptions in the supply or delivery of food; changing health or dietary preferences; our dependence upon our franchisees; our engagement in business in foreign markets; harm to our brands’ reputation; litigation; environmental liability; liability relating to employees; failure to comply with applicable laws and regulations; failure to effectively implement restaurant development plans; concentration of Applebee’s franchised restaurants in a limited number of franchisees; credit risk from IHOP franchisees operating under our previous business model; termination or non-renewal of franchise agreements; franchisees breaching their franchise agreements; insolvency proceedings involving franchisees; changes in the number and quality of franchisees; inability of franchisees to fund capital expenditures; third-party claims with respect to intellectual property assets; heavy dependence on information technology; failure to protect the integrity and security of individually identifiable information; 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 is computed 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 gain or loss related to the disposition of assets and any income tax impact of operational restructuring 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 is defined as income before income taxes less interest expense, loss on retirement of debt and Series A preferred stock, 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 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, 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.
DINEEQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
|
|
|
Three Months Ended |
|
Twelve Months Ended |
| ||||||||
|
|
|
December 31, |
|
December 31, |
| ||||||||
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Segment Revenues: |
|
|
|
|
|
|
|
|
| ||||
|
Franchise revenues |
|
$ |
97,757 |
|
$ |
96,286 |
|
$ |
398,539 |
|
$ |
377,137 |
|
|
Company restaurant sales |
|
110,029 |
|
173,356 |
|
530,984 |
|
815,572 |
| ||||
|
Rental revenues |
|
30,957 |
|
26,179 |
|
125,960 |
|
124,508 |
| ||||
|
Financing revenues |
|
3,436 |
|
4,105 |
|
19,715 |
|
16,424 |
| ||||
|
Total segment revenues |
|
242,179 |
|
299,926 |
|
1,075,198 |
|
1,333,641 |
| ||||
|
Segment Expenses: |
|
|
|
|
|
|
|
|
| ||||
|
Franchise expenses |
|
26,350 |
|
27,342 |
|
105,006 |
|
103,505 |
| ||||
|
Company restaurant expenses |
|
95,422 |
|
147,462 |
|
458,443 |
|
699,336 |
| ||||
|
Rental expenses |
|
24,413 |
|
24,693 |
|
98,147 |
|
99,030 |
| ||||
|
Financing expenses |
|
(28 |
) |
735 |
|
5,973 |
|
1,969 |
| ||||
|
Total segment expenses |
|
146,157 |
|
200,232 |
|
667,569 |
|
903,840 |
| ||||
|
Gross segment profit |
|
96,022 |
|
99,694 |
|
407,629 |
|
429,801 |
| ||||
|
General and administrative expenses |
|
40,670 |
|
43,336 |
|
155,822 |
|
160,330 |
| ||||
|
Interest expense |
|
31,364 |
|
40,007 |
|
132,707 |
|
171,537 |
| ||||
|
Impairment and closure charges |
|
2,918 |
|
560 |
|
29,865 |
|
4,285 |
| ||||
|
Debt modification costs |
|
(72 |
) |
— |
|
4,031 |
|
— |
| ||||
|
Amortization of intangible assets |
|
3,075 |
|
3,070 |
|
12,300 |
|
12,300 |
| ||||
|
Loss on extinguishment of debt |
|
3,274 |
|
111,643 |
|
11,159 |
|
107,003 |
| ||||
|
Gain on disposition of assets |
|
(21,966 |
) |
(14,497 |
) |
(43,253 |
) |
(13,574 |
) | ||||
|
Income before income taxes |
|
36,759 |
|
(84,425 |
) |
104,998 |
|
(12,080 |
) | ||||
|
(Provision) benefit for income taxes |
|
(8,139 |
) |
33,594 |
|
(29,806 |
) |
9,292 |
| ||||
|
Net income (loss) |
|
$ |
28,620 |
|
$ |
(50,831 |
) |
$ |
75,192 |
|
$ |
(2,788 |
) |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income (loss) available to common stockholders |
|
|
|
|
|
|
|
|
| ||||
|
Net income (loss) |
|
$ |
28,620 |
|
$ |
(50,831 |
) |
$ |
75,192 |
|
$ |
(2,788 |
) |
|
Less: Series A preferred stock dividends |
|
— |
|
(8,827 |
) |
— |
|
(25,927 |
) | ||||
|
Less: Accretion of Series B preferred stock |
|
(658 |
) |
(622 |
) |
(2,573 |
) |
(2,432 |
) | ||||
|
Less: Net (income) loss allocated to unvested participating restricted stock |
|
(623 |
) |
2,176 |
|
(1,886 |
) |
1,173 |
| ||||
|
Net income (loss) available to common stockholders |
|
$ |
27,339 |
|
$ |
(58,104 |
) |
$ |
70,733 |
|
$ |
(29,974 |
) |
|
Net income (loss) available to common stockholders per share |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
$ |
1.55 |
|
$ |
(3.33 |
) |
$ |
3.96 |
|
$ |
(1.74 |
) |
|
Diluted |
|
$ |
1.51 |
|
$ |
(3.33 |
) |
$ |
3.89 |
|
$ |
(1.74 |
) |
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
17,646 |
|
17,455 |
|
17,846 |
|
17,240 |
| ||||
|
Diluted |
|
18,578 |
|
17,455 |
|
18,185 |
|
17,240 |
| ||||
DINEEQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
|
|
|
December 31, 2011 |
|
December 31, 2010 |
| ||
|
|
|
(Unaudited) |
| ||||
|
Assets |
|
|
|
|
| ||
|
Current assets: |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
60,691 |
|
$ |
102,309 |
|
|
Receivables, net |
|
115,667 |
|
98,776 |
| ||
|
Inventories |
|
12,031 |
|
10,757 |
| ||
|
Prepaid income taxes |
|
13,922 |
|
34,094 |
| ||
|
Prepaid gift cards |
|
36,643 |
|
27,465 |
| ||
|
Deferred income taxes |
|
20,579 |
|
24,301 |
| ||
|
Assets held for sale |
|
9,363 |
|
37,944 |
| ||
|
Other current assets |
|
8,051 |
|
15,456 |
| ||
|
Total current assets |
|
276,947 |
|
351,102 |
| ||
|
Long-term receivables |
|
226,526 |
|
239,945 |
| ||
|
Property and equipment, net |
|
474,154 |
|
612,175 |
| ||
|
Goodwill |
|
697,470 |
|
697,470 |
| ||
|
Other intangible assets, net |
|
822,361 |
|
835,879 |
| ||
|
Other assets, net |
|
116,836 |
|
120,070 |
| ||
|
Total assets |
|
$ |
2,614,294 |
|
$ |
2,856,641 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
| ||
|
Current liabilities: |
|
|
|
|
| ||
|
Current maturities of long-term debt |
|
$ |
7,420 |
|
$ |
9,000 |
|
|
Accounts payable |
|
29,013 |
|
32,724 |
| ||
|
Accrued employee compensation and benefits |
|
26,191 |
|
32,846 |
| ||
|
Gift card liability |
|
146,955 |
|
124,972 |
| ||
|
Accrued interest payable |
|
12,537 |
|
17,482 |
| ||
|
Current maturities of capital lease and financing obligations |
|
13,480 |
|
16,556 |
| ||
|
Other accrued expenses |
|
22,048 |
|
31,502 |
| ||
|
Total current liabilities |
|
257,644 |
|
265,082 |
| ||
|
Long-term debt, less current maturities |
|
1,411,448 |
|
1,631,469 |
| ||
|
Financing obligations, less current maturities |
|
162,658 |
|
237,826 |
| ||
|
Capital lease obligations, less current maturities |
|
134,407 |
|
144,016 |
| ||
|
Deferred income taxes |
|
383,810 |
|
375,697 |
| ||
|
Other liabilities |
|
109,107 |
|
118,972 |
| ||
|
Total liabilities |
|
2,459,074 |
|
2,773,062 |
| ||
|
Commitments and contingencies |
|
|
|
|
| ||
|
Stockholders’ equity: |
|
|
|
|
| ||
|
Convertible preferred stock, Series B, at accreted value; shares: 10,000,000 authorized; 35,000 issued; 2011 - 34,900 outstanding; 2010 - 35,000 outstanding |
|
44,508 |
|
42,055 |
| ||
|
Common stock, $0.01 par value; shares: 40,000,000 authorized; 2011 - 24,658,985 issued, 18,060,206 outstanding; 2010 - 24,382,991 issued, 18,183,083 outstanding |
|
247 |
|
243 |
| ||
|
Additional paid-in-capital |
|
205,663 |
|
192,214 |
| ||
|
Retained earnings |
|
196,869 |
|
124,250 |
| ||
|
Accumulated other comprehensive loss |
|
(294 |
) |
(282 |
) | ||
|
Treasury stock, at cost; shares: 2011 - 6,598,779; 2010 - 6,199,908 |
|
(291,773 |
) |
(274,901 |
) | ||
|
Total stockholders’ equity |
|
155,220 |
|
83,579 |
| ||
|
Total liabilities and stockholders’ equity |
|
$ |
2,614,294 |
|
$ |
2,856,641 |
|
DINEEQUITY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|
|
Year Ended December 31, |
| ||||
|
|
|
2011 |
|
2010 |
| ||
|
|
|
(Unaudited) |
| ||||
|
Cash flows from operating activities |
|
|
|
|
| ||
|
Net income (loss) |
|
$ |
75,192 |
|
$ |
(2,788 |
) |
|
Adjustments to reconcile net (loss) income to cash flows provided by operating activities |
|
|
|
|
| ||
|
Depreciation and amortization |
|
50,220 |
|
61,427 |
| ||
|
Non-cash interest expense |
|
6,160 |
|
34,379 |
| ||
|
Loss on extinguishment of debt and Series A Preferred Stock |
|
11,159 |
|
107,003 |
| ||
|
Impairment and closure charges |
|
8,448 |
|
3,482 |
| ||
|
Deferred income taxes |
|
11,835 |
|
(15,484 |
) | ||
|
Non-cash stock-based compensation expense |
|
9,492 |
|
13,085 |
| ||
|
Tax benefit from stock-based compensation |
|
6,494 |
|
2,692 |
| ||
|
Excess tax benefit from stock options exercised |
|
(5,443 |
) |
(4,775 |
) | ||
|
Gain on disposition of assets |
|
(43,253 |
) |
(13,574 |
) | ||
|
Other |
|
(1,765 |
) |
5,431 |
| ||
|
Changes in operating assets and liabilities: |
|
|
|
|
| ||
|
Receivables |
|
(16,722 |
) |
3,736 |
| ||
|
Inventories |
|
(3,723 |
) |
(263 |
) | ||
|
Prepaid expenses |
|
(1,631 |
) |
(9,148 |
) | ||
|
Current income tax receivables and payables |
|
20,479 |
|
(27,703 |
) | ||
|
Accounts payable |
|
(3,533 |
) |
27 |
| ||
|
Accrued employee compensation and benefits |
|
(6,656 |
) |
(5,000 |
) | ||
|
Gift card liability |
|
21,983 |
|
19,507 |
| ||
|
Other accrued expenses |
|
(17,050 |
) |
7,248 |
| ||
|
Cash flows provided by operating activities |
|
121,686 |
|
179,282 |
| ||
|
Cash flows from investing activities |
|
|
|
|
| ||
|
Additions to property and equipment |
|
(26,332 |
) |
(18,677 |
) | ||
|
Proceeds from sale of property and equipment and assets held for sale |
|
115,642 |
|
51,642 |
| ||
|
Principal receipts from notes, equipment contracts and other long-term receivables |
|
13,122 |
|
19,452 |
| ||
|
Other |
|
(753 |
) |
1,087 |
| ||
|
Cash flows provided by investing activities |
|
101,679 |
|
53,504 |
| ||
|
Cash flows from financing activities |
|
|
|
|
| ||
|
Borrowings under revolving credit facilities |
|
40,000 |
|
— |
| ||
|
Repayments under revolving credit facilities |
|
(40,000 |
) |
— |
| ||
|
Proceeds from issuance of long-term debt |
|
— |
|
1,725,000 |
| ||
|
Repayment of long-term debt (including tender premiums) |
|
(225,681 |
) |
(1,777,946 |
) | ||
|
Redemption of Series A Preferred Stock |
|
— |
|
(190,000 |
) | ||
|
Payment of debt issuance costs |
|
(12,295 |
) |
(57,602 |
) | ||
|
Principal payments on capital lease and financing obligations |
|
(13,391 |
) |
(16,118 |
) | ||
|
Purchase of DineEquity common stock |
|
(21,170 |
) |
— |
| ||
|
Dividends paid (including redemption premiums on Series A Preferred Stock) |
|
— |
|
(26,117 |
) | ||
|
Repurchase of restricted stock |
|
(5,080 |
) |
(1,884 |
) | ||
|
Proceeds from stock options exercised |
|
6,725 |
|
7,968 |
| ||
|
Excess tax benefit from stock options exercised |
|
5,443 |
|
4,775 |
| ||
|
Restricted cash related to securitization |
|
466 |
|
119,133 |
| ||
|
Cash flows used in financing activities |
|
(264,983 |
) |
(212,791 |
) | ||
|
Net change in cash and cash equivalents |
|
(41,618 |
) |
19,995 |
| ||
|
Cash and cash equivalents at beginning of year |
|
102,309 |
|
82,314 |
| ||
|
Cash and cash equivalents at end of year |
|
$ |
60,691 |
|
$ |
102,309 |
|
NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
(Unaudited)
Reconciliation of (i) net income (loss) available to common stockholders to (ii) net income 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, gain on disposition of assets, income tax impact of operational restructuring and Series A redemption premium, and related per share data:
|
|
|
Three Months Ended |
|
Twelve Months Ended |
| ||||||||
|
|
|
December 31, |
|
December 31, |
| ||||||||
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income (loss) available to common stockholders, as reported |
|
$ |
27,339 |
|
$ |
(58,104 |
) |
$ |
70,733 |
|
$ |
(29,974 |
) |
|
Impairment and closure charges |
|
2,871 |
|
397 |
|
29,600 |
|
3,482 |
| ||||
|
Loss on extinguishment of debt |
|
3,274 |
|
111,643 |
|
11,159 |
|
107,003 |
| ||||
|
Amortization of intangible assets |
|
3,075 |
|
3,070 |
|
12,300 |
|
12,300 |
| ||||
|
Non-cash interest expense |
|
1,578 |
|
3,176 |
|
6,160 |
|
34,379 |
| ||||
|
Debt modification costs |
|
(72 |
) |
— |
|
4,031 |
|
— |
| ||||
|
Gain on disposition of assets |
|
(21,966 |
) |
(14,496 |
) |
(43,253 |
) |
(13,574 |
) | ||||
|
Income tax benefit (provision) |
|
4,474 |
|
(40,094 |
) |
(7,959 |
) |
(55,919 |
) | ||||
|
Income tax impact of operational restructuring |
|
(4,422 |
) |
— |
|
(4,422 |
) |
— |
| ||||
|
Series A redemption premium |
|
— |
|
7,600 |
|
— |
|
7,600 |
| ||||
|
Net income allocated to unvested participating restricted stock |
|
248 |
|
(2,574 |
) |
(197 |
) |
(3,589 |
) | ||||
|
Net income available to common stockholders, as adjusted |
|
$ |
16,399 |
|
$ |
10,618 |
|
$ |
78,152 |
|
$ |
61,708 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Diluted net income available to common stockholders per share: |
|
|
|
|
|
|
|
|
| ||||
|
Net income available to common stockholders , as reported |
|
$ |
1.51 |
|
$ |
(3.33 |
) |
$ |
3.89 |
|
$ |
(1.74 |
) |
|
Impairment and closure charges |
|
0.10 |
|
0.01 |
|
0.95 |
|
0.12 |
| ||||
|
Loss on extinguishment of debt |
|
0.11 |
|
3.81 |
|
0.36 |
|
3.72 |
| ||||
|
Amortization of intangible assets |
|
0.10 |
|
0.10 |
|
0.39 |
|
0.42 |
| ||||
|
Non-cash interest expense |
|
0.05 |
|
0.11 |
|
0.20 |
|
1.17 |
| ||||
|
Debt modification costs |
|
0.00 |
|
— |
|
0.13 |
|
— |
| ||||
|
Gain on disposition of assets |
|
(0.73 |
) |
(0.49 |
) |
(1.38 |
) |
(0.46 |
) | ||||
|
Income tax impact of operational restructuring |
|
(0.25 |
) |
— |
|
(0.23 |
) |
— |
| ||||
|
Series A redemption premium |
|
— |
|
0.42 |
|
— |
|
0.43 |
| ||||
|
Net income allocated to unvested participating restricted stock |
|
0.01 |
|
(0.14 |
) |
(0.01 |
) |
(0.20 |
) | ||||
|
Change due to increase in net income |
|
0.01 |
|
0.10 |
|
(0.01 |
) |
0.04 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Diluted net income available to common stockholders per share, as adjusted |
|
$ |
0.91 |
|
$ |
0.59 |
|
$ |
4.29 |
|
$ |
3.50 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Numerator for basic EPS-income available to common stockholders, as adjusted |
|
$ |
16,399 |
|
$ |
10,618 |
|
$ |
78,152 |
|
$ |
61,708 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Effect of unvested participating restricted stock using the two-class method |
|
6 |
|
10 |
|
105 |
|
50 |
| ||||
|
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
| ||||
|
Stock options |
|
— |
|
— |
|
— |
|
— |
| ||||
|
Convertible Series B preferred stock |
|
— |
|
— |
|
2,573 |
|
— |
| ||||
|
Numerator for diluted EPS-income available to common stockholders after assumed conversions, as adjusted |
|
$ |
16,405 |
|
$ |
10,628 |
|
$ |
80,830 |
|
$ |
61,758 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Denominator for basic EPS-weighted-average shares |
|
17,646 |
|
17,455 |
|
17,846 |
|
17,240 |
| ||||
|
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
| ||||
|
Stock options |
|
289 |
|
486 |
|
339 |
|
385 |
| ||||
|
Convertible Series B preferred stock |
|
— |
|
— |
|
643 |
|
— |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Denominator for diluted EPS-weighted-average shares and assumed conversions |
|
17,935 |
|
17,941 |
|
18,828 |
|
17,625 |
| ||||
NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
Reconciliation of U.S. GAAP income before income taxes to EBITDA:
|
|
|
Twelve Months |
| |
|
|
|
December 31, 2011 |
| |
|
U.S. GAAP income before income taxes |
|
$ |
104,998 |
|
|
Interest charges |
|
151,332 |
| |
|
Loss on extinguishment of debt |
|
11,159 |
| |
|
Depreciation and amortization |
|
50,220 |
| |
|
Non-cash stock-based compensation |
|
9,492 |
| |
|
Impairment and closure charges |
|
29,643 |
| |
|
Other |
|
6,830 |
| |
|
Gain on disposition of assets |
|
(43,253 |
) | |
|
EBITDA |
|
$ |
320,421 |
|
Reconciliation of the Company’s cash provided by operating activities to free cash flow:
|
|
|
Twelve Months Ended |
| ||||
|
|
|
December 31, |
| ||||
|
|
|
2011 |
|
2010 |
| ||
|
Cash flows provided by operating activities |
|
$ |
121,686 |
|
$ |
179,282 |
|
|
Principal receipts from notes, equipment contracts and other long-term receivables |
|
13,122 |
|
19,452 |
| ||
|
Dividends paid |
|
— |
|
(26,117 |
) | ||
|
Additions to property and equipment |
|
(26,332 |
) |
(18,677 |
) | ||
|
Free cash flow |
|
$ |
108,476 |
|
$ |
153,940 |
|
NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
Reconciliation of U.S. GAAP gross segment profit to segment EBITDA:
|
|
|
Three Months Ended December 31, 2011 |
| ||||||||||||||||
|
|
|
Franchise |
|
Franchise |
|
Company |
|
Rental |
|
Financing |
|
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 |
|
|
|
|
Three Months Ended December 31, 2010 |
| ||||||||||||||||
|
|
|
Franchise |
|
Franchise |
|
Company |
|
Rental |
|
Financing |
|
Total |
| ||||||
|
Revenue |
|
$ |
39,961 |
|
$ |
56,325 |
|
$ |
173,356 |
|
$ |
26,179 |
|
$ |
4,105 |
|
$ |
299,926 |
|
|
Expense |
|
250 |
|
27,092 |
|
147,462 |
|
24,693 |
|
735 |
|
200,232 |
| ||||||
|
Gross segment profit |
|
39,711 |
|
29,233 |
|
25,894 |
|
1,486 |
|
3,370 |
|
99,694 |
| ||||||
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Depreciation/amortization |
|
2,504 |
|
— |
|
5,207 |
|
3,454 |
|
— |
|
11,165 |
| ||||||
|
Interest charges |
|
— |
|
— |
|
200 |
|
4,603 |
|
— |
|
4,803 |
| ||||||
|
Segment EBITDA |
|
$ |
42,215 |
|
$ |
29,233 |
|
$ |
31,301 |
|
$ |
9,543 |
|
$ |
3,370 |
|
$ |
115,662 |
|
|
|
|
Twelve Months Ended December 31, 2011 |
| ||||||||||||||||
|
|
|
Franchise |
|
Franchise |
|
Company |
|
Rental |
|
Financing |
|
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 |
|
|
|
|
Twelve Months Ended December 31, 2010 |
| ||||||||||||||||
|
|
|
Franchise |
|
Franchise |
|
Company |
|
Rental |
|
Financing |
|
Total |
| ||||||
|
Revenue |
|
$ |
153,484 |
|
$ |
223,653 |
|
$ |
815,572 |
|
$ |
124,508 |
|
$ |
16,424 |
|
$ |
1,333,641 |
|
|
Expense |
|
1,825 |
|
101,680 |
|
699,336 |
|
99,030 |
|
1,969 |
|
903,840 |
| ||||||
|
Gross segment profit |
|
151,659 |
|
121,973 |
|
116,236 |
|
25,478 |
|
14,455 |
|
429,801 |
| ||||||
|
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Depreciation/amortization |
|
10,025 |
|
— |
|
27,144 |
|
13,895 |
|
— |
|
51,064 |
| ||||||
|
Interest charges |
|
— |
|
— |
|
821 |
|
18,867 |
|
— |
|
19,688 |
| ||||||
|
Segment EBITDA |
|
$ |
161,684 |
|
$ |
121,973 |
|
$ |
144,201 |
|
$ |
58,240 |
|
$ |
14,455 |
|
$ |
500,553 |
|
Notes:
· Company restaurants are substantially all Applebee’s
· Rental operations are substantially all IHOP
· Financing operations are all IHOP
Restaurant Data
The following table sets forth, for the three-month and twelve-month periods ended December 31, 2011 and 2010, 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 |
|
Twelve Months Ended |
| ||||||||
|
|
|
December 31, |
|
December 31, |
| ||||||||
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| ||||
|
|
|
(unaudited) |
| ||||||||||
|
Applebee’s Restaurant Data |
|
|
|
|
|
|
|
|
| ||||
|
Effective restaurants(a) |
|
|
|
|
|
|
|
|
| ||||
|
Franchise |
|
1,808 |
|
1,667 |
|
1,770 |
|
1,621 |
| ||||
|
Company |
|
203 |
|
338 |
|
240 |
|
380 |
| ||||
|
Total |
|
2,011 |
|
2,005 |
|
2,010 |
|
2,001 |
| ||||
|
System-wide(b) |
|
|
|
|
|
|
|
|
| ||||
|
Sales percentage change(c) |
|
1.5 |
% |
(4.2 |
)% |
2.6 |
% |
(1.8 |
)% | ||||
|
Domestic same-restaurant sales percentage change(d) |
|
1.0 |
% |
2.9 |
% |
2.0 |
% |
0.3 |
% | ||||
|
Franchise(b)(e)(g) |
|
|
|
|
|
|
|
|
| ||||
|
Sales percentage change(c) |
|
9.0 |
% |
0.2 |
% |
11.3 |
% |
(0.1 |
)% | ||||
|
Same-restaurant sales percentage change(d) |
|
0.8 |
% |
3.4 |
% |
2.0 |
% |
0.6 |
% | ||||
|
Average weekly domestic unit sales (in thousands) |
|
$ |
44.3 |
|
$ |
44.5 |
|
$ |
46.4 |
|
$ |
45.8 |
|
|
Company(f)(g) |
|
|
|
|
|
|
|
|
| ||||
|
Sales percentage change(c) |
|
(37.9 |
)% |
(22.0 |
)% |
(35.7 |
)% |
(8.4 |
)% | ||||
|
Same-restaurant sales percentage change(d) |
|
3.4 |
% |
0.3 |
% |
1.8 |
% |
(1.3 |
)% | ||||
|
Average weekly domestic unit sales (in thousands) |
|
$ |
39.8 |
|
$ |
38.6 |
|
$ |
41.0 |
|
$ |
40.4 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
IHOP Restaurant Data |
|
|
|
|
|
|
|
|
| ||||
|
Effective restaurants(a) |
|
|
|
|
|
|
|
|
| ||||
|
Franchise |
|
1,357 |
|
1,315 |
|
1,343 |
|
1,296 |
| ||||
|
Company |
|
14 |
|
10 |
|
11 |
|
11 |
| ||||
|
Area license |
|
164 |
|
164 |
|
163 |
|
164 |
| ||||
|
Total |
|
1,535 |
|
1,489 |
|
1,517 |
|
1,471 |
| ||||
|
System-wide(b) |
|
|
|
|
|
|
|
|
| ||||
|
Sales percentage change(c) |
|
2.4 |
% |
(1.5 |
)% |
1.9 |
% |
2.2 |
% | ||||
|
Domestic same-restaurant sales percentage change(d) |
|
(1.0 |
)% |
1.1 |
% |
(2.0 |
)% |
0.0 |
% | ||||
|
Franchise(b)(e)(g) |
|
|
|
|
|
|
|
|
| ||||
|
Sales percentage change(c) |
|
2.0 |
% |
(1.8 |
)% |
1.7 |
% |
2.1 |
% | ||||
|
Same-restaurant sales percentage change(d) |
|
(1.0 |
)% |
1.1 |
% |
(2.0 |
)% |
(0.1 |
)% | ||||
|
Average weekly domestic unit sales (in thousands) |
|
$ |
34.0 |
|
$ |
34.4 |
|
$ |
34.4 |
|
$ |
35.1 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Company(f)(g) |
|
n.m. |
|
n.m. |
|
n.m. |
|
n.m. |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Area License(e) |
|
|
|
|
|
|
|
|
| ||||
|
Sales percentage change(c) |
|
4.3 |
% |
3.6 |
% |
2.9 |
% |
3.3 |
% | ||||
(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)
|
|
|
Three Months Ended |
|
Twelve Months Ended |
| ||||||||
|
|
|
December 31, |
|
December 31, |
| ||||||||
|
|
|
(In millions) |
| ||||||||||
|
Reported sales (unaudited) |
|
2011 |
|
2010 |
|
2011 |
|
2010 |
| ||||
|
Applebee’s franchise restaurant sales |
|
$ |
959.2 |
|
$ |
879.6 |
|
$ |
3,916.4 |
|
$ |
3,519.4 |
|
|
IHOP franchise restaurant sales |
|
$ |
599.8 |
|
$ |
587.8 |
|
$ |
2,405.3 |
|
$ |
2,364.7 |
|
|
IHOP area license restaurant sales |
|
$ |
56.5 |
|
$ |
54.2 |
|
$ |
228.6 |
|
$ |
220.0 |
|
(f) Sales percentage change and same-restaurant sales percentage change for IHOP company-operated restaurants are not meaningful (“n.m.”) due to the relatively small number and test-market nature of the restaurants, along with the periodic inclusion of restaurants reacquired from franchisees that are temporarily operated by the Company.
(g) The sales percentage change for the three months and twelve months ended December 31, 2011 for Applebee’s franchise and company-operated restaurants was impacted by the refranchising of 132 company-operated restaurants during 2011 and 83 company-operated restaurants during 2010.
DINEEQUITY, INC. AND SUBSIDIARIES
RESTAURANT DATA
The following table summarizes our restaurant development activity:
|
|
|
Three Months Ended |
|
Twelve Months Ended |
| ||||
|
|
|
December 31, |
|
December 31, |
| ||||
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
|
|
|
(unaudited) |
| ||||||
|
Applebee’s Restaurant Development Activity |
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
2,010 |
|
1,999 |
|
2,010 |
|
2,008 |
|
|
New openings |
|
|
|
|
|
|
|
|
|
|
Franchisee-developed |
|
12 |
|
16 |
|
24 |
|
27 |
|
|
Total new openings |
|
12 |
|
16 |
|
24 |
|
27 |
|
|
Closings |
|
|
|
|
|
|
|
|
|
|
Company |
|
— |
|
— |
|
— |
|
(7 |
) |
|
Franchise |
|
(3 |
) |
(5 |
) |
(15 |
) |
(18 |
) |
|
Total closings |
|
(3 |
) |
(5 |
) |
(15 |
) |
(25 |
) |
|
End of period |
|
2,019 |
|
2,010 |
|
2,019 |
|
2,010 |
|
|
Summary-end of period |
|
|
|
|
|
|
|
|
|
|
Franchise |
|
1,842 |
|
1,701 |
|
1,842 |
|
1,701 |
|
|
Company |
|
177 |
|
309 |
|
177 |
|
309 |
|
|
Total |
|
2,019 |
|
2,010 |
|
2,019 |
|
2,010 |
|
|
|
|
Three Months Ended |
|
Twelve Months Ended |
| ||||
|
|
|
December 31, |
|
December 31, |
| ||||
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
|
|
|
(unaudited) |
| ||||||
|
IHOP Restaurant Development Activity |
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
1,532 |
|
1,483 |
|
1,504 |
|
1,456 |
|
|
New openings |
|
|
|
|
|
|
|
|
|
|
Franchisee-developed |
|
16 |
|
25 |
|
52 |
|
60 |
|
|
Area license |
|
3 |
|
1 |
|
6 |
|
4 |
|
|
Total new openings |
|
19 |
|
26 |
|
58 |
|
64 |
|
|
Closings |
|
|
|
|
|
|
|
|
|
|
Company |
|
— |
|
— |
|
— |
|
(2 |
) |
|
Franchise |
|
(1 |
) |
(4 |
) |
(8 |
) |
(10 |
) |
|
Area license |
|
— |
|
(1 |
) |
(4 |
) |
(4 |
) |
|
Total closings |
|
(1 |
) |
(5 |
) |
(12 |
) |
(16 |
) |
|
End of period |
|
1,550 |
|
1,504 |
|
1,550 |
|
1,504 |
|
|
Summary-end of period |
|
|
|
|
|
|
|
|
|
|
Franchise |
|
1,369 |
|
1,329 |
|
1,369 |
|
1,329 |
|
|
Company |
|
15 |
|
11 |
|
15 |
|
11 |
|
|
Area license |
|
166 |
|
164 |
|
166 |
|
164 |
|
|
Total |
|
1,550 |
|
1,504 |
|
1,550 |
|
1,504 |
|