UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 26, 2013
DineEquity, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware |
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001-15283 |
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95-3038279 |
(State or other jurisdiction
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(Commission File No.) |
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(I.R.S. Employer |
450 North Brand Boulevard, Glendale, California |
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91203-2306 |
(Address of principal executive offices) |
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(Zip Code) |
(818) 240-6055
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On February 27, 2013, DineEquity, Inc. (the Corporation), a Delaware corporation, issued a press release announcing its fourth quarter and fiscal 2012 financial results. A copy of the press release is attached hereto as Exhibit 99.1, and is incorporated herein by reference.
The information contained in this Item 2.02, including the related information set forth in the press release attached hereto as Exhibit 99.1 and incorporated by reference herein, is being furnished and shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise. The information in this Item 2.02 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or into any filing or other document pursuant to the Exchange Act, except as otherwise expressly stated in any such filing.
Item 7.01 Regulation FD Disclosure.
On February 27, 2013, the Corporation also issued a press release regarding fiscal 2013 financial outlook. A copy of the press release is attached hereto as Exhibit 99.2, and is incorporated herein by reference.
The Corporation will host an investor conference call on February 27, 2013 to discuss its fourth quarter and fiscal 2012 financial results and its fiscal 2013 outlook. The investor call will begin at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). A live webcast of the conference call will be available on the Investor Info section of the Corporations website in the Calls and Presentations section.
Finally, the Corporation also announced today that on February 26, 2013, the Board of Directors of the Corporation declared a first quarter cash dividend of $0.75 per share of common stock, payable on March 29, 2013, to the Corporations stockholders of record as of March 15, 2013. The Corporation also announced that its Board of Directors approved a $100 million share repurchase authorization, effective immediately, which replaces the $45 million share repurchase authorization previously announced by the Corporation in August 2011. A copy of the press release is attached hereto as Exhibit 99.3, and is incorporated herein by reference.
The information contained in this Item 7.01, including the related information set forth in the press releases attached hereto as Exhibits and incorporated by reference herein, is being furnished and shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise. The information in this Item 7.01 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, or into any filing or other document pursuant to the Exchange Act, except as otherwise expressly stated in any such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit |
|
Description |
99.1 |
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Press Release Regarding Fourth Quarter and Fiscal 2012 Financial Results issued by the Corporation on February 27, 2013. |
99.2 |
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Press Release Regarding Guidance for Fiscal 2013 issued by the Corporation on February 27, 2013. |
99.3 |
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Press Release Regarding Capital Allocation Strategy issued by the Corporation on February 27, 2013. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: February 27, 2013 |
DINEEQUITY, INC. | |
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|
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By: |
/s/ Thomas W. Emrey |
|
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Thomas W. Emrey |
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Chief Financial Officer |
Exhibit 99.1
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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 Applebees refranchising program and transitioned to a 99% franchised system
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GLENDALE, Calif., February 27, 2013 DineEquity, Inc. (NYSE: DIN), the parent company of Applebees 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 Applebees, 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. Todays 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 Applebees 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 Applebees 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 Applebees 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 Companys 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 Applebees 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 Applebees 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 Applebees 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.
· Applebees 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 Applebees company-operated restaurants. The refranchised company-operated restaurants had higher-than-average labor and occupancy costs.
Same-Restaurant Sales Performance
Fourth Quarter 2012
· Applebees 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.
· IHOPs 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
· Applebees 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.
· IHOPs 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 DineEquitys Web site at www.dineequity.com, and may be accessed by visiting Calls & Presentations under the sites Investor Information section. Participants should allow approximately ten minutes prior to the calls 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 DineEquitys Web site.
About DineEquity, Inc.
Based in Glendale, California, DineEquity, Inc., through its subsidiaries, franchises and operates restaurants under the Applebees 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-
service restaurant companies in the world. For more information on DineEquity, visit the Companys 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 Companys indebtedness; risk of future impairment charges; trading volatility and the price of the Companys common stock; the Companys results in any given period differing from guidance provided to the public; the highly competitive nature of the restaurant business; the Companys 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 Applebees 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 Companys Annual and Quarterly Reports on Forms 10-K and 10-Q and in the Companys 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 Companys 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 Companys adherence to debt covenants and the Companys 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 Income
(In thousands, except per share amounts)
(Unaudited)
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Three Months Ended |
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Twelve Months Ended |
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December 31, |
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December 31, |
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2012 |
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2011 |
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2012 |
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2011 |
| ||||
Segment Revenues: |
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|
|
|
|
| ||||
Franchise revenues |
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$ |
107,917 |
|
$ |
97,757 |
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$ |
421,459 |
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$ |
398,539 |
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Company restaurant sales |
|
16,862 |
|
110,029 |
|
291,121 |
|
530,984 |
| ||||
Rental revenues |
|
30,763 |
|
30,957 |
|
122,859 |
|
125,960 |
| ||||
Financing revenues |
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3,095 |
|
3,436 |
|
14,489 |
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19,715 |
| ||||
Total segment revenues |
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158,637 |
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242,179 |
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849,928 |
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1,075,198 |
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Segment Expenses: |
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|
|
|
|
|
|
|
| ||||
Franchise expenses |
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28,774 |
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26,350 |
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109,900 |
|
105,006 |
| ||||
Company restaurant expenses |
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16,998 |
|
95,422 |
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249,296 |
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458,443 |
| ||||
Rental expenses |
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24,090 |
|
24,413 |
|
97,165 |
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98,147 |
| ||||
Financing expenses |
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37 |
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(28 |
) |
1,623 |
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5,973 |
| ||||
Total segment expenses |
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69,899 |
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146,157 |
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457,984 |
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667,569 |
| ||||
Gross segment profit |
|
88,738 |
|
96,022 |
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391,944 |
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407,629 |
| ||||
General and administrative expenses |
|
37,607 |
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40,670 |
|
163,215 |
|
155,822 |
| ||||
Interest expense |
|
25,571 |
|
31,364 |
|
114,338 |
|
132,707 |
| ||||
Impairment and closure charges |
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2,954 |
|
2,918 |
|
4,218 |
|
29,865 |
| ||||
Amortization of intangible assets |
|
3,071 |
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3,075 |
|
12,293 |
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12,300 |
| ||||
Loss on extinguishment of debt |
|
637 |
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3,274 |
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5,554 |
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11,159 |
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Debt modification costs |
|
|
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(72 |
) |
|
|
4,031 |
| ||||
Gain on disposition of assets |
|
(12,955 |
) |
(21,966 |
) |
(102,597 |
) |
(43,253 |
) | ||||
Income before income taxes |
|
31,853 |
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36,759 |
|
194,923 |
|
104,998 |
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Income tax provision |
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(13,034 |
) |
(8,139 |
) |
(67,249 |
) |
(29,806 |
) | ||||
Net income |
|
$ |
18,819 |
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$ |
28,620 |
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$ |
127,674 |
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$ |
75,192 |
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|
|
|
|
|
|
|
|
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Net income available to common stockholders: |
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|
|
|
|
|
|
|
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Net income |
|
$ |
18,819 |
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$ |
28,620 |
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$ |
127,674 |
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$ |
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 |
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$ |
70,733 |
|
Net income available to common stockholders per share: |
|
|
|
|
|
|
|
|
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Basic |
|
$ |
0.98 |
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$ |
1.55 |
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$ |
6.81 |
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$ |
3.96 |
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Diluted |
|
$ |
0.97 |
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$ |
1.51 |
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$ |
6.63 |
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$ |
3.89 |
|
Weighted average shares outstanding: |
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|
|
|
|
|
|
|
| ||||
Basic |
|
18,391 |
|
17,646 |
|
17,992 |
|
17,846 |
| ||||
Diluted |
|
18,637 |
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18,578 |
|
18,877 |
|
18,185 |
|
DineEquity, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
|
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December 31, |
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|
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2012 |
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2011 |
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(Unaudited) |
| ||||
Assets |
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Current assets: |
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|
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Cash and cash equivalents |
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$ |
64,537 |
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$ |
60,691 |
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Receivables, net |
|
128,610 |
|
115,667 |
| ||
Prepaid income taxes |
|
16,080 |
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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 |
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294,455 |
|
276,947 |
| ||
Long-term receivables |
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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 |
|
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 |
|
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 |
|
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 Companys 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 |
|
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 - |
|
Franchise - |
|
Company |
|
Rental |
|
Financing |
|
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 - |
|
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 |
|
|
|
Twelve months ended December 31, 2012 |
| ||||||||||||||||
|
|
Franchise - |
|
Franchise - |
|
Company |
|
Rental |
|
Financing |
|
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 - |
|
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 |
|
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 Applebees 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 Applebees 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) |
| ||||||||||
Applebees 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 |
% | ||||
(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 Applebees 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 Applebees 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. Applebees 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) |
|
|
|
|
|
|
|
|
| ||||
Applebees 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 Applebees franchise and company-operated restaurants was impacted by the refranchising of 154 company-operated restaurants in 2012 and 132 company-operated restaurants during 2011.
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) |
| ||||||
Applebees 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 |
|
Exhibit 99.2
|
|
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
DineEquity, Inc. Provides Financial Guidance for Fiscal 2013
GLENDALE, Calif., February 27, 2013 DineEquity, Inc. (NYSE: DIN), the parent company of Applebees Neighborhood Grill & Bar and IHOP Restaurants, today announced financial guidance for fiscal 2013, reflecting its transition to a 99% franchised model.
We believe it is appropriate to provide guidance in some greater detail this year given the successful transition to a fully franchised business model, said Julia A. Stewart, Chairman and Chief Executive Officer of DineEquity, Inc.
Fiscal 2013 Key Financial Performance Guidance
Now that the Companys is 99% franchised, we are focused on driving same-restaurant sales and traffic to support franchisees. The Company expects its business model to generate continued strong free cash flow in 2013. (See Non-GAAP Financial Measures below.)
· Applebees domestic system-wide same-restaurant sales performance to range between negative 1.5% and positive 1.5%.
· IHOPs domestic system-wide same-restaurant sales performance to range between negative 1.5% and positive 1.5%.
· Applebees franchisees to develop between 40 and 50 new restaurants, the majority of which are expected to be opened in the U.S.
· IHOP franchisees and its area licensee to develop between 50 and 60 new restaurants, the majority of which are expected to be domestic openings.
· Franchise segment profit is expected to be between $312 million and $325 million.
· DineEquity will operate its remaining company-operated restaurants to primarily test new products, operational improvements, technology, and service platforms. Given the nature of these restaurants, they are expected to generate a profit of approximately $1
million on an annualized basis. This is net of approximately $2 million of depreciation and amortization.
· The Rental and Financing segments are expected to generate approximately $34 million to $35 million in combined profit. This reflects revenue and expenses mainly generated from franchise restaurant development by IHOP prior to 2003. A structural run off applies to both the rental and financing segments.
· Consolidated general and administrative expenses are expected to decrease to between $144 million and $147 million, including non-cash stock-based compensation expense and depreciation of approximately $19 million, due to the comprehensive general and administrative cost reduction initiatives implemented in 2012.
· Consolidated interest expense is expected to be between $101 million and $103 million due to the reduction of long-term debt balances and the decrease of financing obligations as a result of refranchising. Approximately $6 million is expected to be non-cash interest expense.
· The Federal income tax rate is expected to be approximately 38% compared to the effective Federal income tax rate of 34.5% for fiscal 2012. The higher tax rate is primarily due to the decrease in the Federal employment tip credit now that the Company is 99% franchised.
· Consolidated cash from operations is expected to range between $88 million and $102 million.
· The structural run-off of the Companys long-term receivables is expected to be approximately $14 million.
· Principal payments on capital leases and financing obligations will be approximately $10 million.
· Consolidated capital expenditures are expected to decline to between $8 million and $10 million mainly due to significantly fewer company-operated restaurants.
· A mandatory annual repayment of 1% on the current outstanding Term Loan principal balance will be $4.7 million.
· Consolidated free cash flow (see Non-GAAP Measures below) to range between $77 million and $93 million. Consolidated free cash flow is defined as consolidated cash from operations, plus principal receipts from long-term receivables, less principal payments on capital leases and financing obligations, consolidated capital expenditures, and the mandatory annual repayment of 1% on our Term Loan principal balance.
· Net income allocated to unvested participating restricted stock is expected to total approximately $1.5 million.
· Weighted average diluted shares outstanding are expected to be approximately 19.3 million. This increase from the prior year is primarily due to the fourth quarter 2012 conversion of the Series B Convertible Preferred Stock into the Companys common stock. No estimate is made in this number for any potential share repurchases.
About DineEquity, Inc.
Based in Glendale, California, DineEquity, Inc., through its subsidiaries, franchises and operates restaurants under the Applebees 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-service restaurant companies in the world. For more information on DineEquity, visit the Companys 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 Companys indebtedness; risk of future impairment charges; trading volatility and the price of the Companys common stock; the Companys results in any given period differing from guidance provided to the public; the highly competitive nature of the restaurant business; the Companys 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 Applebees 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 Companys Annual and Quarterly Reports on Forms 10-K and 10-Q and in the Companys 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 Companys non-GAAP financial measure free cash flow. 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 receivable), less principal payments on capital leases and financing obligations, less capital expenditures and less a mandatory annual 1% repayment on the outstanding Term Loan principal balance.
2013 Financial Performance Guidance Table
|
|
(in millions) |
|
Cash from operations |
|
$88 - 102 |
|
Principal receipts from long-term receivables |
|
14 |
|
Principal payments on capital leases and financing obligations |
|
(10) |
|
Capital expenditures |
|
(8 - 10) |
|
Mandatory annual 1% repayment on Term Loan |
|
(5) |
|
Free cash flow |
|
$77 - 93 |
|
Exhibit 99.3
|
|
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. Announces Capital Allocation Strategy
Ø Board Declares a First Quarter 2013 Dividend of $0.75 Per Share of Common Stock
Ø Board Approves $100 Million Share Repurchase Authorization
|
GLENDALE, Calif., February 27, 2013 DineEquity, Inc. (NYSE: DIN), the parent company of Applebees Neighborhood Grill & Bar and IHOP Restaurants, today announced a capital allocation strategy that includes the approval by its Board of Directors of a first quarter cash dividend of $0.75 per share of common stock. DineEquitys Board of Directors today declared the dividend, payable on March 29, 2013, to the Companys shareholders of record as of the close of business on March 15, 2013.
The Board of Directors also approved a $100 million share repurchase authorization, effective immediately, which replaces the $45 million share repurchase authorization previously announced by the Company in August 2011. The Company remains subject to certain mandatory debt reduction requirements related to capital leases and the annual amortization payment of $4.7 million associated with the recently announced re-pricing of its senior secured credit facility.
With the successful completion of our refranchising program and a less capital intensive business model, the time is right to announce our capital allocation plan. With continual long- term shareholder value creation clearly in mind, we are initiating a meaningful dividend and will also opportunistically seek to repurchase shares of common stock with strong free cash flow. said Julia A. Stewart, Chairman and Chief Executive Officer of DineEquity, Inc. The dividend, combined with the share repurchase authorization of $100 million, underscores our commitment to returning cash to our shareholders. While we expect dividends and share repurchases to be the primary components of our capital allocation strategy, we will also reduce debt when it is in the best interests of the Company to do so. We will continue to prudently manage our capital structure with a long-term view, placing real importance on positioning ourselves to potentially refinance our overall debt in the next few years.
About DineEquity, Inc.
Based in Glendale, California, DineEquity, Inc., through its subsidiaries, franchises and operates restaurants under the Applebees 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-service restaurant companies in the world. For more information on DineEquity, visit the Companys 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 Companys indebtedness; risk of future impairment charges; trading volatility and the price of the Companys common stock; the Companys results in any given period differing from guidance provided to the public; the highly competitive nature of the restaurant business; the Companys 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 Applebees 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 Companys Annual and Quarterly Reports on Forms 10-K and 10-Q and in the Companys 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.
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