Delaware (State or other jurisdiction of incorporation or organization) | 95-3038279 (I.R.S. Employer Identification No.) | |
450 North Brand Boulevard, Glendale, California | 91203-1903 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer x | |
Non-accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company) |
Class | Outstanding as of October 28, 2011 | |
Common Stock, $.01 par value | 18,039,682 |
Page | ||
September 30, 2011 | December 31, 2010 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 53,940 | $ | 102,309 | ||||
Restricted cash | 3,221 | 854 | ||||||
Receivables, net | 73,071 | 98,776 | ||||||
Inventories | 10,695 | 10,757 | ||||||
Prepaid income taxes | 13,763 | 34,094 | ||||||
Prepaid gift cards | 25,048 | 27,465 | ||||||
Prepaid expenses | 14,439 | 14,602 | ||||||
Deferred income taxes | 31,367 | 24,301 | ||||||
Assets held for sale | 39,972 | 37,944 | ||||||
Total current assets | 265,516 | 351,102 | ||||||
Non-current restricted cash | — | 778 | ||||||
Restricted assets related to captive insurance subsidiary | 3,675 | 3,562 | ||||||
Long-term receivables | 230,588 | 239,945 | ||||||
Property and equipment, net | 524,947 | 612,175 | ||||||
Goodwill | 697,470 | 697,470 | ||||||
Other intangible assets, net | 825,046 | 835,879 | ||||||
Other assets, net | 115,097 | 115,730 | ||||||
Total assets | $ | 2,662,339 | $ | 2,856,641 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Current maturities of long-term debt | $ | 7,420 | $ | 9,000 | ||||
Accounts payable | 29,410 | 32,724 | ||||||
Accrued employee compensation and benefits | 23,748 | 32,846 | ||||||
Gift card liability | 68,066 | 124,972 | ||||||
Accrued interest payable | 31,763 | 17,482 | ||||||
Current maturities of capital lease and financing obligations | 15,015 | 16,556 | ||||||
Facility closure liability | 20,530 | — | ||||||
Other accrued expenses | 23,359 | 31,502 | ||||||
Total current liabilities | 219,311 | 265,082 | ||||||
Long-term debt, less current maturities | 1,480,393 | 1,631,469 | ||||||
Financing obligations, less current maturities | 203,091 | 237,826 | ||||||
Capital lease obligations, less current maturities | 136,957 | 144,016 | ||||||
Deferred income taxes | 384,629 | 375,697 | ||||||
Other liabilities | 114,484 | 118,972 | ||||||
Total liabilities | 2,538,865 | 2,773,062 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Convertible preferred stock, Series B, at accreted value, shares:10,000,000 authorized; 35,000 issued; September 30, 2011 - 34,900 outstanding; December 31, 2010 - 35,000 outstanding | 43,850 | 42,055 | ||||||
Common stock, $.01 par value, shares: 40,000,000 authorized; September 30, 2011 - 24,669,129 issued, 18,034,083 outstanding; December 31, 2010 - 24,382,991 issued,18,183,083 outstanding | 247 | 243 | ||||||
Additional paid-in-capital | 203,971 | 192,214 | ||||||
Retained earnings | 168,907 | 124,250 | ||||||
Accumulated other comprehensive loss | (312 | ) | (282 | ) | ||||
Treasury stock, at cost (shares:September 30, 2011 - 6,635,046; December 31, 2010 - 6,199,908) | (293,189 | ) | (274,901 | ) | ||||
Total stockholders’ equity | 123,474 | 83,579 | ||||||
Total liabilities and stockholders’ equity | $ | 2,662,339 | $ | 2,856,641 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Segment Revenues: | ||||||||||||||||
Franchise revenues | $ | 97,679 | $ | 92,157 | $ | 300,782 | $ | 280,851 | ||||||||
Company restaurant sales | 131,618 | 206,907 | 420,955 | 642,216 | ||||||||||||
Rental revenues | 31,163 | 32,210 | 95,003 | 98,329 | ||||||||||||
Financing revenues | 4,021 | 4,241 | 16,279 | 12,319 | ||||||||||||
Total segment revenues | 264,481 | 335,515 | 833,019 | 1,033,715 | ||||||||||||
Segment Expenses: | ||||||||||||||||
Franchise expenses | 25,006 | 25,298 | 78,656 | 76,163 | ||||||||||||
Company restaurant expenses | 113,976 | 177,253 | 363,021 | 551,874 | ||||||||||||
Rental expenses | 24,521 | 24,628 | 73,734 | 74,337 | ||||||||||||
Financing expenses | 425 | 763 | 6,001 | 1,234 | ||||||||||||
Total segment expenses | 163,928 | 227,942 | 521,412 | 703,608 | ||||||||||||
Gross segment profit | 100,553 | 107,573 | 311,607 | 330,107 | ||||||||||||
General and administrative expenses | 38,712 | 39,594 | 115,152 | 116,994 | ||||||||||||
Interest expense | 32,170 | 42,814 | 101,343 | 131,530 | ||||||||||||
Impairment and closure charges | 193 | 1,143 | 26,947 | 3,725 | ||||||||||||
Debt modification costs | — | — | 4,103 | — | ||||||||||||
Amortization of intangible assets | 3,075 | 3,077 | 9,225 | 9,230 | ||||||||||||
Loss (gain) on extinguishment of debt | — | — | 7,885 | (4,640 | ) | |||||||||||
Loss (gain) on disposition of assets | 1,176 | 745 | (21,287 | ) | 923 | |||||||||||
Income before income taxes | 25,227 | 20,200 | 68,239 | 72,345 | ||||||||||||
Provision for income taxes | (8,702 | ) | (5,869 | ) | (21,667 | ) | (24,302 | ) | ||||||||
Net income | $ | 16,525 | $ | 14,331 | $ | 46,572 | $ | 48,043 | ||||||||
Net income available to common stockholders | ||||||||||||||||
Net income | $ | 16,525 | $ | 14,331 | $ | 46,572 | $ | 48,043 | ||||||||
Less: Series A preferred stock dividends | — | (5,640 | ) | — | (17,100 | ) | ||||||||||
Less: Accretion of Series B preferred stock | (647 | ) | (612 | ) | (1,915 | ) | (1,810 | ) | ||||||||
Less: Net income allocated to unvested participating restricted stock | (359 | ) | (307 | ) | (1,212 | ) | (1,113 | ) | ||||||||
Net income available to common stockholders | $ | 15,519 | $ | 7,772 | $ | 43,445 | $ | 28,020 | ||||||||
Net income available to common stockholders per share | ||||||||||||||||
Basic | $ | 0.86 | $ | 0.45 | $ | 2.43 | $ | 1.63 | ||||||||
Diluted | $ | 0.85 | $ | 0.44 | $ | 2.38 | $ | 1.60 | ||||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 17,968 | 17,227 | 17,912 | 17,168 | ||||||||||||
Diluted | 18,243 | 17,568 | 18,268 | 17,519 |
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 46,572 | $ | 48,043 | ||||
Adjustments to reconcile net income to cash flows provided by operating activities | ||||||||
Depreciation and amortization | 38,599 | 47,594 | ||||||
Non-cash interest expense | 4,582 | 31,203 | ||||||
Loss (gain) on extinguishment of debt | 7,885 | (4,640 | ) | |||||
Impairment and closure charges | 26,729 | 3,085 | ||||||
Deferred income taxes | 1,866 | (10,976 | ) | |||||
Non-cash stock-based compensation expense | 6,913 | 11,150 | ||||||
Tax benefit from stock-based compensation | 6,085 | 1,407 | ||||||
Excess tax benefit from stock options exercised | (5,713 | ) | (2,211 | ) | ||||
(Gain) loss on disposition of assets | (21,287 | ) | 923 | |||||
Other | (217 | ) | (1,847 | ) | ||||
Changes in operating assets and liabilities | ||||||||
Receivables | 25,360 | 30,930 | ||||||
Inventories | (1,202 | ) | 226 | |||||
Prepaid expenses | 2,449 | 2,649 | ||||||
Current income tax receivables and payables | 21,519 | 7,253 | ||||||
Accounts payable | (3,992 | ) | (4,699 | ) | ||||
Accrued employee compensation and benefits | (9,099 | ) | (3,460 | ) | ||||
Gift card liability | (56,906 | ) | (49,742 | ) | ||||
Other accrued expenses | 4,928 | (9,384 | ) | |||||
Cash flows provided by operating activities | 95,071 | 97,504 | ||||||
Cash flows from investing activities | ||||||||
Additions to property and equipment | (20,829 | ) | (11,421 | ) | ||||
Proceeds from sale of property and equipment and assets held for sale | 60,188 | 1,975 | ||||||
Principal receipts from notes, equipment contracts and other long-term receivables | 9,922 | 14,939 | ||||||
Other | (558 | ) | 1,842 | |||||
Cash flows provided by investing activities | 48,723 | 7,335 | ||||||
Cash flows from financing activities | ||||||||
Proceeds from issuance of long-term debt | 25,000 | — | ||||||
Repayment of long-term debt | (178,437 | ) | (80,658 | ) | ||||
Principal payments on capital lease and financing obligations | (10,296 | ) | (12,191 | ) | ||||
Dividends paid | — | (17,100 | ) | |||||
Purchase of common stock | (21,170 | ) | — | |||||
Payment of debt modification and issuance costs | (12,307 | ) | (1,008 | ) | ||||
Repurchase of restricted stock | (4,802 | ) | (1,029 | ) | ||||
Proceeds from stock options exercised | 6,326 | 2,487 | ||||||
Excess tax benefit from stock options exercised | 5,713 | 2,211 | ||||||
Change in restricted cash | (1,590 | ) | 25,377 | |||||
Other | (600 | ) | (12 | ) | ||||
Cash flows used in financing activities | (192,163 | ) | (81,923 | ) | ||||
Net change in cash and cash equivalents | (48,369 | ) | 22,916 | |||||
Cash and cash equivalents at beginning of period | 102,309 | 82,314 | ||||||
Cash and cash equivalents at end of period | $ | 53,940 | $ | 105,230 | ||||
Supplemental disclosures | ||||||||
Interest paid | $ | 95,867 | $ | 113,755 | ||||
Income taxes paid | $ | 15,685 | $ | 29,350 |
Three Months Ended | Nine Months Ended | |||||||
September 30, 2010 | ||||||||
(In thousands) | ||||||||
Total other expense, as reported | $ | 838 | $ | 2,783 | ||||
Reclassified to: | ||||||||
Rental expenses | $ | 712 | $ | 2,172 | ||||
Impairment and closure charges | 254 | 640 | ||||||
General and administrative expenses | 229 | 463 | ||||||
Interest expense | (50 | ) | 96 | |||||
Franchise revenues | (74 | ) | (289 | ) | ||||
Franchise expenses | (215 | ) | (205 | ) | ||||
Other line items | (18 | ) | (94 | ) | ||||
Total reclassified | $ | 838 | $ | 2,783 |
(In millions) | |||
Balance, December 31, 2010 | $ | 37.9 | |
Assets transferred to held for sale | 38.6 | ||
Assets sold | (35.5 | ) | |
Refranchised | (0.7 | ) | |
Other | (0.3 | ) | |
Balance, September 30, 2011 | $ | 40.0 |
September 30, 2011 | December 31, 2010 | |||||||
(In millions) | ||||||||
Senior Secured Credit Facility, due October 2017, at a variable interest rate of 4.25% and 6.0% as of September 30, 2011 and December 31, 2010, respectively | $ | 734.0 | $ | 844.0 | ||||
Senior Notes due October 2018, at a fixed rate of 9.5% | 785.3 | 825.0 | ||||||
Discount | (31.5 | ) | (28.5 | ) | ||||
Total long-term debt | 1,487.8 | 1,640.5 | ||||||
Less current maturities | (7.4 | ) | (9.0 | ) | ||||
Long-term debt, less current maturities | $ | 1,480.4 | $ | 1,631.5 |
Quarter Ended | Instrument (1) | Face Amount Retired/Repaid | Cash Paid | Loss (Gain)(2) | ||||||||||
(In millions) | ||||||||||||||
March 2011 | Term Loans | $ | 110.0 | $ | 110.0 | $ | 2.7 | |||||||
March 2011 | Senior Notes | 32.3 | 35.3 | 4.2 | ||||||||||
June 2011 | Senior Notes | 7.5 | 8.2 | 1.0 | ||||||||||
Nine months ended September 30, 2011 | $ | 149.8 | $ | 153.5 | $ | 7.9 | ||||||||
March 2010 | Class A-2-II-X Notes | $ | 48.7 | $ | 43.8 | $ | (3.5 | ) | ||||||
June 2010 | Class A-2-II-X Notes | 19.5 | 18.0 | (1.1 | ) | |||||||||
Nine months ended September 30, 2010 | $ | 68.2 | $ | 61.8 | $ | (4.6 | ) |
Fiscal Years | (In millions) | ||
Remainder of 2011 | $ | 5.6 | |
2012(1) | 20.7 | ||
2013 | 23.0 | ||
2014 | 23.2 | ||
2015 | 23.3 | ||
Thereafter | 278.9 | ||
Total minimum lease payments | 374.7 | ||
Less interest | (165.9 | ) | |
Total financing obligations | 208.8 | ||
Less current portion(2) | (5.7 | ) | |
Long-term financing obligations | $ | 203.1 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In millions) | ||||||||||||||||
Impairment and closure charges: | ||||||||||||||||
Impairment | $ | 0.1 | $ | 1.3 | $ | 4.9 | $ | 1.6 | ||||||||
Lenexa lease termination | — | — | 21.2 | — | ||||||||||||
Other closure charges | 0.1 | (0.2 | ) | 0.8 | 2.1 | |||||||||||
Total impairment and closure charges | $ | 0.2 | $ | 1.1 | $ | 26.9 | $ | 3.7 |
(In thousands) | |||
Balance, December 31, 2010 | $ | — | |
Closure cost accrual | 21,160 | ||
Payments | (630 | ) | |
Balance, September 30, 2011 | $ | 20,530 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In millions) | ||||||||||||||||
Pre-tax compensation expense | $ | 1.6 | $ | 4.7 | $ | 8.0 | $ | 12.9 | ||||||||
Tax provision | (0.6 | ) | (1.9 | ) | (3.2 | ) | (5.1 | ) | ||||||||
Total stock-based compensation expense, net of tax | $ | 1.0 | $ | 2.8 | $ | 4.8 | $ | 7.8 |
Risk-free interest rate | 1.77 | % | |
Weighted average historical volatility | 82.7 | % | |
Dividend yield | — | ||
Expected years until exercise | 4.84 | ||
Forfeitures | 11.0 | % | |
Weighted average fair value of options granted | $ | 34.72 |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in Years) | Aggregate Intrinsic Value | |||||||||||
Outstanding at December 31, 2010 | 1,523,710 | $ | 24.90 | |||||||||||
Granted | 229,449 | $ | 53.21 | |||||||||||
Exercised | (378,866 | ) | $ | 16.70 | ||||||||||
Forfeited | (43,444 | ) | $ | 28.22 | ||||||||||
Outstanding at September 30, 2011 | 1,330,849 | $ | 32.01 | 6.85 | $ | 13,961,000 | ||||||||
Vested at September 30, 2011 and Expected to Vest | 1,152,655 | $ | 32.70 | 6.62 | $ | 11,257,000 | ||||||||
Exercisable at September 30, 2011 | 614,321 | $ | 33.98 | 4.97 | $ | 4,435,000 |
Restricted Stock | Weighted Average Grant Date Fair Value | Restricted Stock Units | Weighted Average Grant Date Fair Value | |||||||||||
Outstanding at December 31, 2010 | 666,244 | $ | 28.62 | 18,000 | $ | 29.32 | ||||||||
Granted | 142,574 | $ | 54.10 | — | — | |||||||||
Released | (267,565 | ) | $ | 39.76 | — | — | ||||||||
Forfeited | (52,810 | ) | $ | 29.96 | — | — | ||||||||
Outstanding at September 30, 2011 | 488,443 | $ | 29.80 | 18,000 | $ | 29.32 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In millions) | ||||||||||||||||
Revenues from External Customers | ||||||||||||||||
Franchise operations | $ | 97.7 | $ | 92.2 | $ | 300.8 | $ | 280.9 | ||||||||
Company restaurants | 131.6 | 206.9 | 420.9 | 642.2 | ||||||||||||
Rental operations | 31.2 | 32.2 | 95.0 | 98.3 | ||||||||||||
Financing operations | 4.0 | 4.2 | 16.3 | 12.3 | ||||||||||||
Total | $ | 264.5 | $ | 335.5 | $ | 833.0 | $ | 1,033.7 | ||||||||
Interest Expense | ||||||||||||||||
Company restaurants | $ | 0.1 | $ | 0.2 | $ | 0.4 | $ | 0.6 | ||||||||
Rental operations | 4.4 | 4.6 | 13.6 | 14.3 | ||||||||||||
Corporate | 32.2 | 42.8 | 101.3 | 131.5 | ||||||||||||
Total | $ | 36.7 | $ | 47.6 | $ | 115.3 | $ | 146.4 | ||||||||
Depreciation and amortization | ||||||||||||||||
Franchise operations | $ | 2.3 | $ | 2.5 | $ | 7.4 | $ | 7.5 | ||||||||
Company restaurants | 4.0 | 7.2 | 13.5 | 22.1 | ||||||||||||
Rental operations | 3.5 | 3.5 | 10.5 | 10.4 | ||||||||||||
Corporate | 2.5 | 3.0 | 7.2 | 7.6 | ||||||||||||
Total | $ | 12.3 | $ | 16.2 | $ | 38.6 | $ | 47.6 | ||||||||
Income (loss) before income taxes | ||||||||||||||||
Franchise operations | $ | 72.7 | $ | 66.9 | $ | 222.1 | $ | 204.7 | ||||||||
Company restaurants | 17.7 | 29.7 | 57.9 | 90.3 | ||||||||||||
Rental operations | 6.6 | 7.5 | 21.3 | 24.0 | ||||||||||||
Financing operations | 3.6 | 3.5 | 10.3 | 11.1 | ||||||||||||
Corporate | (75.4 | ) | (87.4 | ) | (243.4 | ) | (257.8 | ) | ||||||||
Total | $ | 25.2 | $ | 20.2 | $ | 68.2 | $ | 72.3 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In millions) | ||||||||||||||||
Net income | $ | 16.5 | $ | 14.3 | $ | 46.6 | $ | 48.0 | ||||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Interest rate swap | — | 2.4 | — | 6.9 | ||||||||||||
Total comprehensive income | $ | 16.5 | $ | 16.7 | $ | 46.6 | $ | 54.9 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Numerator for basic and dilutive income - per common share: | ||||||||||||||||
Net income | $ | 16,525 | $ | 14,331 | $ | 46,572 | $ | 48,043 | ||||||||
Less: Series A Preferred Stock dividends | — | (5,640 | ) | — | (17,100 | ) | ||||||||||
Less: Accretion of Series B Preferred Stock | (647 | ) | (612 | ) | (1,915 | ) | (1,810 | ) | ||||||||
Less: Net income allocated to unvested participating restricted stock | (359 | ) | (307 | ) | (1,212 | ) | (1,113 | ) | ||||||||
Net income available to common stockholders - basic | 15,519 | 7,772 | 43,445 | 28,020 | ||||||||||||
Effect of unvested participating restricted stock in two-class calculation | 5 | 6 | 22 | 21 | ||||||||||||
Net income available to common stockholders - diluted | $ | 15,524 | $ | 7,778 | $ | 43,467 | $ | 28,041 | ||||||||
Denominator: | ||||||||||||||||
Weighted average outstanding shares of common stock - basic | 17,968 | 17,227 | 17,912 | 17,168 | ||||||||||||
Dilutive effect of: | ||||||||||||||||
Stock options | 275 | 341 | 356 | 351 | ||||||||||||
Weighted average outstanding shares of common stock - diluted | 18,243 | 17,568 | 18,268 | 17,519 | ||||||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.86 | $ | 0.45 | $ | 2.43 | $ | 1.63 | ||||||||
Diluted | $ | 0.85 | $ | 0.44 | $ | 2.38 | $ | 1.60 |
Fair Value Measured Using | ||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
(In millions) | ||||||||||||||||
At September 30, 2011: | ||||||||||||||||
Restricted assets of captive insurance company | $ | 3.7 | $ | 1.1 | $ | — | $ | 2.6 | ||||||||
Loan guarantees | $ | 0.2 | $ | — | $ | — | $ | 0.2 | ||||||||
At December 31, 2010: | ||||||||||||||||
Restricted assets of captive insurance company | $ | 3.6 | $ | 1.0 | $ | — | $ | 2.6 | ||||||||
Loan guarantees | $ | 0.2 | $ | — | $ | — | $ | 0.2 |
September 30, 2011 | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
(in millions) | ||||||||||||||||
Cash equivalents and money market funds | $ | 1.1 | $ | — | $ | — | $ | 1.1 | ||||||||
Auction-rate securities | $ | 2.9 | $ | — | $ | (0.3 | ) | $ | 2.6 |
December 31, 2010 | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
(in millions) | ||||||||||||||||
Cash equivalents and money market funds | $ | 1.0 | $ | — | $ | — | $ | 1.0 | ||||||||
Auction-rate securities | $ | 2.9 | $ | — | $ | (0.3 | ) | $ | 2.6 |
September 30, 2011 | December 31, 2010 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
(in millions) | ||||||||||||||||
Long-term debt, less current maturities | $ | 1,480.4 | $ | 1,484.3 | $ | 1,631.5 | $ | 1,721.0 |
Parent | Combined Guarantor Subsidiaries | Combined Non-guarantor Subsidiaries | Eliminations and Reclassification | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 34.7 | $ | 18.8 | $ | 0.5 | $ | — | $ | 54.0 | ||||||||||
Restricted cash | — | 3.2 | — | — | 3.2 | |||||||||||||||
Receivables, net | 0.1 | 72.8 | 0.1 | — | 73.0 | |||||||||||||||
Inventories | — | 10.7 | — | — | 10.7 | |||||||||||||||
Prepaid expenses | 64.3 | 38.3 | 0.2 | (49.5 | ) | 53.3 | ||||||||||||||
Deferred income taxes | 3.3 | 23.1 | 5.0 | — | 31.4 | |||||||||||||||
Assets held for sale | — | 37.7 | 2.2 | — | 39.9 | |||||||||||||||
Intercompany | (300.2 | ) | 299.4 | 0.8 | — | — | ||||||||||||||
Total current assets | (197.8 | ) | 504.0 | 8.8 | (49.5 | ) | 265.5 | |||||||||||||
Non-current restricted cash | — | — | — | — | — | |||||||||||||||
Long-term receivables | — | 230.6 | — | — | 230.6 | |||||||||||||||
Property and equipment, net | 19.3 | 505.7 | — | — | 525.0 | |||||||||||||||
Goodwill | — | 697.5 | — | — | 697.5 | |||||||||||||||
Other intangible assets, net | — | 825.0 | — | — | 825.0 | |||||||||||||||
Other assets, net | 24.7 | 93.9 | 0.1 | — | 118.7 | |||||||||||||||
Investment in subsidiaries | 1,758.3 | — | — | (1,758.3 | ) | — | ||||||||||||||
Total assets | $ | 1,604.5 | $ | 2,856.7 | $ | 8.9 | $ | (1,807.8 | ) | $ | 2,662.3 | |||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||
Current Liabilities | ||||||||||||||||||||
Current maturities of long-term debt | $ | 7.4 | $ | — | $ | — | $ | — | $ | 7.4 | ||||||||||
Accounts payable | 1.6 | 27.8 | — | — | 29.4 | |||||||||||||||
Accrued employee compensation and benefits | 4.6 | 19.0 | 0.1 | — | 23.7 | |||||||||||||||
Gift card liability | — | 68.1 | — | — | 68.1 | |||||||||||||||
Other accrued expenses | (22.4 | ) | 161.5 | 1.1 | (49.5 | ) | 90.7 | |||||||||||||
Total current liabilities | (8.8 | ) | 276.4 | 1.2 | (49.5 | ) | 219.3 | |||||||||||||
Long-term debt | 1,480.4 | — | — | — | 1,480.4 | |||||||||||||||
Financing obligations | — | 203.1 | — | — | 203.1 | |||||||||||||||
Capital lease obligations | — | 137.0 | — | — | 137.0 | |||||||||||||||
Deferred income taxes | 5.7 | 378.8 | — | — | 384.5 | |||||||||||||||
Other liabilities | 3.7 | 109.6 | 1.2 | — | 114.5 | |||||||||||||||
Total liabilities | 1,481.0 | 1,104.9 | 2.4 | (49.5 | ) | 2,538.8 | ||||||||||||||
Total stockholders’ equity | 123.5 | 1,751.8 | 6.5 | (1,758.3 | ) | 123.5 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,604.5 | $ | 2,856.7 | $ | 8.9 | $ | (1,807.8 | ) | $ | 2,662.3 |
Parent | Combined Guarantor Subsidiaries | Combined Non-guarantor Subsidiaries | Eliminations and Reclassification | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Current Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 23.4 | $ | 77.3 | $ | 1.6 | $ | — | $ | 102.3 | ||||||||||
Restricted cash | — | 0.9 | — | — | 0.9 | |||||||||||||||
Receivables, net | — | 98.7 | — | — | 98.7 | |||||||||||||||
Inventories | — | 10.7 | — | — | 10.7 | |||||||||||||||
Prepaid expenses | 2.7 | 73.8 | — | (0.3 | ) | 76.2 | ||||||||||||||
Deferred income taxes | 1.1 | 17.9 | 5.3 | — | 24.3 | |||||||||||||||
Assets held for sale | — | 35.7 | 2.3 | — | 38.0 | |||||||||||||||
Intercompany | (46.0 | ) | 46.0 | — | — | — | ||||||||||||||
Total current assets | (18.8 | ) | 361.0 | 9.2 | (0.3 | ) | 351.1 | |||||||||||||
Non-current restricted cash | — | 0.8 | — | — | 0.8 | |||||||||||||||
Long-term receivables | — | 240.0 | — | — | 240.0 | |||||||||||||||
Property and equipment, net | 16.5 | 595.7 | — | — | 612.2 | |||||||||||||||
Goodwill | — | 697.5 | — | — | 697.5 | |||||||||||||||
Other intangible assets, net | — | 835.8 | 0.1 | — | 835.9 | |||||||||||||||
Other assets, net | 28.3 | 89.3 | 0.2 | 1.3 | 119.1 | |||||||||||||||
Investment in subsidiaries | 1,683.3 | — | — | (1,683.3 | ) | — | ||||||||||||||
Total assets | $ | 1,709.3 | $ | 2,820.1 | $ | 9.5 | $ | (1,682.3 | ) | $ | 2,856.6 | |||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||
Current Liabilities | ||||||||||||||||||||
Current maturities of long-term debt | $ | 9.0 | $ | — | $ | — | $ | — | $ | 9.0 | ||||||||||
Accounts payable | 3.7 | 29.1 | — | — | 32.8 | |||||||||||||||
Accrued employee compensation and benefits | 9.3 | 23.4 | 0.1 | — | 32.8 | |||||||||||||||
Gift card liability | — | 125.0 | — | — | 125.0 | |||||||||||||||
Other accrued expenses | (26.0 | ) | 90.8 | 1.0 | (0.3 | ) | 65.5 | |||||||||||||
Total current liabilities | (4.0 | ) | 268.3 | 1.1 | (0.3 | ) | 265.1 | |||||||||||||
Long-term debt | 1,631.5 | — | — | — | 1,631.5 | |||||||||||||||
Financing obligations | — | 237.8 | — | — | 237.8 | |||||||||||||||
Capital lease obligations | — | 144.0 | — | — | 144.0 | |||||||||||||||
Deferred income taxes | (5.6 | ) | 380.0 | — | 1.3 | 375.7 | ||||||||||||||
Other liabilities | 3.5 | 114.4 | 1.0 | — | 118.9 | |||||||||||||||
Total liabilities | 1,625.4 | 1,144.5 | 2.1 | 1.0 | 2,773.0 | |||||||||||||||
Total stockholders’ equity | 83.9 | 1,675.6 | 7.4 | (1,683.3 | ) | 83.6 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,709.3 | $ | 2,820.1 | $ | 9.5 | $ | (1,682.3 | ) | $ | 2,856.6 |
Parent | Combined Guarantor Subsidiaries | Combined Non-guarantor Subsidiaries | Eliminations and Reclassification | Consolidated | ||||||||||||||||
Revenues | ||||||||||||||||||||
Franchise revenues | $ | 0.6 | $ | 96.9 | $ | 0.2 | $ | — | $ | 97.7 | ||||||||||
Restaurant sales | — | 131.3 | 0.4 | — | 131.7 | |||||||||||||||
Rental revenues | — | 31.1 | — | — | 31.1 | |||||||||||||||
Financing revenues | — | 4.0 | — | — | 4.0 | |||||||||||||||
Total revenue | 0.6 | 263.3 | 0.6 | — | 264.5 | |||||||||||||||
Franchise expenses | 0.5 | 24.4 | — | — | 24.9 | |||||||||||||||
Restaurant expenses | — | 113.7 | 0.2 | — | 113.9 | |||||||||||||||
Rental expenses | — | 24.5 | 0.1 | — | 24.6 | |||||||||||||||
Financing expenses | — | 0.4 | — | — | 0.4 | |||||||||||||||
General and administrative | 6.5 | 31.7 | 0.5 | — | 38.7 | |||||||||||||||
Interest expense | 28.3 | 4.0 | — | — | 32.3 | |||||||||||||||
Impairment and closure | — | — | 0.2 | — | 0.2 | |||||||||||||||
Amortization of intangible assets | — | 3.0 | — | — | 3.0 | |||||||||||||||
Loss on extinguishment of debt | — | — | — | — | — | |||||||||||||||
Loss (gain) on disposition of assets | — | 1.2 | — | — | 1.2 | |||||||||||||||
Other | (37.0 | ) | 0.4 | (0.5 | ) | 37.1 | — | |||||||||||||
Income (loss) before income taxes | 2.3 | 60.0 | 0.1 | (37.1 | ) | 25.3 | ||||||||||||||
Benefit (provision) for income taxes | 14.3 | (23.2 | ) | 0.2 | — | (8.7 | ) | |||||||||||||
Net (loss) income | $ | 16.6 | $ | 36.8 | $ | 0.3 | $ | (37.1 | ) | $ | 16.6 |
Parent | Combined Guarantor Subsidiaries | Combined Non-guarantor Subsidiaries | Eliminations and Reclassification | Consolidated | ||||||||||||||||
Revenues | ||||||||||||||||||||
Franchise revenues | $ | — | $ | 92.2 | $ | — | $ | — | $ | 92.2 | ||||||||||
Restaurant sales | — | 206.5 | 0.4 | — | 206.9 | |||||||||||||||
Rental revenues | — | 32.2 | — | — | 32.2 | |||||||||||||||
Financing revenues | — | 4.2 | — | — | 4.2 | |||||||||||||||
Total revenue | — | 335.1 | 0.4 | — | 335.5 | |||||||||||||||
Franchise expenses | — | 25.4 | — | — | 25.4 | |||||||||||||||
Restaurant expenses | — | 176.9 | 0.4 | — | 177.3 | |||||||||||||||
Rental expenses | — | 24.5 | 0.1 | — | 24.6 | |||||||||||||||
Financing expenses | — | 0.7 | — | — | 0.7 | |||||||||||||||
General and administrative | 5.6 | 33.5 | 0.4 | — | 39.5 | |||||||||||||||
Interest expense | (0.2 | ) | 43.0 | — | — | 42.8 | ||||||||||||||
Impairment and closure | — | 1.1 | 0.1 | — | 1.2 | |||||||||||||||
Amortization of intangible assets | — | 3.0 | — | — | 3.0 | |||||||||||||||
Gain on extinguishment of debt | — | — | — | — | — | |||||||||||||||
Loss (gain) on disposition of assets | — | 0.7 | — | — | 0.7 | |||||||||||||||
Other (income) expense | 0.4 | (17.2 | ) | (0.6 | ) | 17.5 | 0.1 | |||||||||||||
Intercompany dividend | (18.5 | ) | — | — | 18.5 | — | ||||||||||||||
Income (loss) before income taxes | 12.7 | 43.5 | — | (36.0 | ) | 20.2 | ||||||||||||||
Benefit (provision) for income taxes | 2.7 | (8.6 | ) | — | — | (5.9 | ) | |||||||||||||
Net (loss) income | $ | 15.4 | $ | 34.9 | $ | — | $ | (36.0 | ) | $ | 14.3 |
Parent | Combined Guarantor Subsidiaries | Combined Non-guarantor Subsidiaries | Eliminations and Reclassification | Consolidated | ||||||||||||||||
Revenues | ||||||||||||||||||||
Franchise revenues | $ | 1.9 | $ | 298.2 | $ | 0.7 | $ | — | $ | 300.8 | ||||||||||
Restaurant sales | — | 419.8 | 1.2 | — | 421.0 | |||||||||||||||
Rental revenues | — | 94.9 | 0.1 | — | 95.0 | |||||||||||||||
Financing revenues | — | 16.3 | — | — | 16.3 | |||||||||||||||
Total revenue | 1.9 | 829.2 | 2.0 | — | 833.1 | |||||||||||||||
Franchise expenses | 1.6 | 77.1 | — | — | 78.7 | |||||||||||||||
Restaurant expenses | — | 362.3 | 0.7 | — | 363.0 | |||||||||||||||
Rental expenses | — | 73.6 | 0.1 | — | 73.7 | |||||||||||||||
Financing expenses | — | 6.0 | — | — | 6.0 | |||||||||||||||
General and administrative | 20.1 | 93.4 | 1.7 | — | 115.2 | |||||||||||||||
Interest expense | 89.2 | 12.1 | — | — | 101.3 | |||||||||||||||
Impairment and closure | — | 26.6 | 0.3 | — | 26.9 | |||||||||||||||
Amortization of intangible assets | — | 9.2 | — | — | 9.2 | |||||||||||||||
Loss on extinguishment of debt | 7.9 | — | — | — | 7.9 | |||||||||||||||
Loss (gain) on disposition of assets | — | (21.2 | ) | — | — | (21.2 | ) | |||||||||||||
Debt modification costs | 4.1 | 4.1 | ||||||||||||||||||
Other | (86.0 | ) | 20.9 | (1.4 | ) | 66.5 | — | |||||||||||||
Income (loss) before income taxes | (35.0 | ) | 169.2 | 0.6 | (66.5 | ) | 68.3 | |||||||||||||
Benefit (provision) for income taxes | 47.8 | (69.3 | ) | (0.2 | ) | — | (21.7 | ) | ||||||||||||
Net (loss) income | $ | 12.8 | $ | 99.9 | $ | 0.4 | $ | (66.5 | ) | $ | 46.6 |
Parent | Combined Guarantor Subsidiaries | Combined Non-guarantor Subsidiaries | Eliminations and Reclassification | Consolidated | ||||||||||||||||
Revenues | ||||||||||||||||||||
Franchise revenues | $ | — | $ | 280.7 | $ | 0.3 | $ | — | $ | 281.0 | ||||||||||
Restaurant sales | — | 640.6 | 1.6 | — | 642.2 | |||||||||||||||
Rental revenues | — | 98.1 | 0.1 | — | 98.2 | |||||||||||||||
Financing revenues | — | 12.3 | — | — | 12.3 | |||||||||||||||
Total revenue | — | 1,031.7 | 2.0 | — | 1,033.7 | |||||||||||||||
Franchise expenses | — | 76.1 | — | — | 76.1 | |||||||||||||||
Restaurant expenses | — | 550.1 | 1.7 | — | 551.8 | |||||||||||||||
Rental expenses | — | 74.3 | 0.1 | — | 74.4 | |||||||||||||||
Financing expenses | — | 1.2 | — | — | 1.2 | |||||||||||||||
General and administrative | 19.8 | 95.3 | 1.8 | — | 116.9 | |||||||||||||||
Interest expense | — | 131.5 | — | — | 131.5 | |||||||||||||||
Impairment and closure | — | 3.1 | 0.7 | — | 3.8 | |||||||||||||||
Amortization of intangible assets | — | 9.2 | — | — | 9.2 | |||||||||||||||
Gain on extinguishment of debt | — | (4.6 | ) | — | — | (4.6 | ) | |||||||||||||
Loss (gain) on disposition of assets | — | 1.1 | (0.1 | ) | — | 1.0 | ||||||||||||||
Other (income) expense | 0.2 | 1.1 | (1.3 | ) | — | — | ||||||||||||||
Intercompany dividend | (52.4 | ) | (54.4 | ) | — | 106.8 | — | |||||||||||||
Income (loss) before income taxes | 32.4 | 147.7 | (0.9 | ) | (106.8 | ) | 72.4 | |||||||||||||
Benefit (provision) for income taxes | 7.9 | (32.4 | ) | 0.2 | — | (24.3 | ) | |||||||||||||
Net (loss) income | $ | 40.3 | $ | 115.3 | $ | (0.7 | ) | $ | (106.8 | ) | $ | 48.1 |
Parent | Combined Guarantor Subsidiaries | Combined Non-guarantor Subsidiaries | Eliminations and Reclassification | Consolidated | |||||||||||||||
Cash flows provided by (used in) operating activities | $ | (90.4 | ) | $ | 184.7 | $ | 0.8 | — | $ | 95.1 | |||||||||
Investing cash flows | |||||||||||||||||||
Additions to property and equipment | (5.8 | ) | (15.0 | ) | — | — | (20.8 | ) | |||||||||||
Principal receipts from long-term receivables | — | 9.9 | — | — | 9.9 | ||||||||||||||
Proceeds from sale of assets | — | 60.2 | — | — | 60.2 | ||||||||||||||
Other | — | (0.6 | ) | — | — | (0.6 | ) | ||||||||||||
Cash flows provided by (used in) investing activities | (5.8 | ) | 54.5 | — | — | 48.7 | |||||||||||||
Financing cash flows | |||||||||||||||||||
Issuance of debt | 25.0 | — | — | — | 25.0 | ||||||||||||||
Payment of debt | (178.4 | ) | (10.3 | ) | — | — | (188.7 | ) | |||||||||||
Payment of debt issuance costs | (0.8 | ) | — | — | — | (0.8 | ) | ||||||||||||
Purchase of common stock | (21.2 | ) | — | — | — | (21.2 | ) | ||||||||||||
Restricted cash | (1.6 | ) | — | — | (1.6 | ) | |||||||||||||
Other | (5.3 | ) | 0.4 | — | — | (4.9 | ) | ||||||||||||
Intercompany transfers | 288.2 | (286.4 | ) | (1.8 | ) | — | — | ||||||||||||
Cash flows provided by (used in) financing activities | 107.5 | (297.9 | ) | (1.8 | ) | — | (192.2 | ) | |||||||||||
Net change | 11.3 | (58.7 | ) | (1.0 | ) | — | (48.4 | ) | |||||||||||
Beginning cash and equivalents | 23.4 | 77.3 | 1.6 | — | 102.3 | ||||||||||||||
Ending cash and equivalents | $ | 34.7 | $ | 18.6 | $ | 0.6 | — | $ | 53.9 |
Parent | Combined Guarantor Subsidiaries | Combined Non-guarantor Subsidiaries | Eliminations and Reclassification | Consolidated | |||||||||||||||
Cash flows provided by (used in) operating activities | $ | 14.0 | $ | 84.0 | $ | (0.5 | ) | — | $ | 97.5 | |||||||||
Investing cash flows | |||||||||||||||||||
Additions to property and equipment | (4.8 | ) | (6.6 | ) | — | — | (11.4 | ) | |||||||||||
Principal receipts from long-term receivables | 3.0 | 11.9 | — | — | 14.9 | ||||||||||||||
Proceeds from sale of assets | — | (0.2 | ) | 2.2 | — | 2.0 | |||||||||||||
Other | — | 1.8 | — | — | 1.8 | ||||||||||||||
Cash flows provided by (used in) investing activities | (1.8 | ) | 6.9 | 2.2 | — | 7.3 | |||||||||||||
Financing cash flows | |||||||||||||||||||
Payment of debt | — | (92.8 | ) | — | — | (92.8 | ) | ||||||||||||
Payment of debt issuance costs | (0.8 | ) | (0.3 | ) | — | — | (1.1 | ) | |||||||||||
Dividends | (17.1 | ) | — | — | (17.1 | ) | |||||||||||||
Restricted cash | — | 25.4 | — | — | 25.4 | ||||||||||||||
Other | 3.7 | — | — | — | 3.7 | ||||||||||||||
Intercompany transfers | 2.0 | (0.4 | ) | (1.6 | ) | — | — | ||||||||||||
Cash flows provided by (used in) financing activities | (12.2 | ) | (68.1 | ) | (1.6 | ) | — | (81.9 | ) | ||||||||||
Net change | — | 22.8 | 0.1 | — | 22.9 | ||||||||||||||
Beginning cash and equivalents | — | 80.9 | 1.4 | — | 82.3 | ||||||||||||||
Ending cash and equivalents | $ | — | $ | 103.7 | $ | 1.5 | — | $ | 105.2 |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||
(unaudited) | ||||||||||||
Applebee’s Restaurant Development Activity | ||||||||||||
Beginning of period | 2,012 | 2,001 | 2,010 | 2,008 | ||||||||
New openings | ||||||||||||
Franchisee-developed | 4 | 3 | 12 | 11 | ||||||||
Total new openings | 4 | 3 | 12 | 11 | ||||||||
Closings | ||||||||||||
Company | — | (1 | ) | — | (7 | ) | ||||||
Franchise | (6 | ) | (4 | ) | (12 | ) | (13 | ) | ||||
Total closings | (6 | ) | (5 | ) | (12 | ) | (20 | ) | ||||
End of period | 2,010 | 1,999 | 2,010 | 1,999 | ||||||||
Summary-end of period | ||||||||||||
Franchise | 1,767 | 1,607 | 1,767 | 1,607 | ||||||||
Company | 243 | 392 | 243 | 392 | ||||||||
Total | 2,010 | 1,999 | 2,010 | 1,999 | ||||||||
Restaurant Franchising Activity | ||||||||||||
Domestic franchisee-developed | 2 | 3 | 8 | 5 | ||||||||
International franchisee-developed | 2 | — | 4 | 6 | ||||||||
Refranchised | 1 | — | 66 | — | ||||||||
Total restaurants franchised | 5 | 3 | 78 | 11 | ||||||||
Closings | ||||||||||||
Domestic franchise | (1 | ) | (3 | ) | (3 | ) | (11 | ) | ||||
International franchise | (5 | ) | (1 | ) | (9 | ) | (2 | ) | ||||
Total franchise closings | (6 | ) | (4 | ) | (12 | ) | (13 | ) | ||||
Net franchise restaurant additions (reductions) | (1 | ) | (1 | ) | 66 | (2 | ) |
Contractual Opening of Restaurants by Year | ||||||
2011 | 2012 | |||||
Domestic development agreements | 13 | 19 | ||||
International development agreements | 11 | 14 | ||||
Total | 24 | 33 |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||
(unaudited) | ||||||||||||
IHOP Restaurant Development Activity | ||||||||||||
Beginning of period | 1,522 | 1,476 | 1,504 | 1,456 | ||||||||
New openings | ||||||||||||
Franchisee-developed | 13 | 9 | 36 | 35 | ||||||||
Area license | 1 | 1 | 3 | 3 | ||||||||
Total new openings | 14 | 10 | 39 | 38 | ||||||||
Closings | ||||||||||||
Company | — | — | — | (2 | ) | |||||||
Franchise | (4 | ) | (3 | ) | (7 | ) | (6 | ) | ||||
Area license | — | — | (4 | ) | (3 | ) | ||||||
Total closings | (4 | ) | (3 | ) | (11 | ) | (11 | ) | ||||
End of period | 1,532 | 1,483 | 1,532 | 1,483 | ||||||||
Summary-end of period | ||||||||||||
Franchise | 1,356 | 1,309 | 1,356 | 1,309 | ||||||||
Company | 13 | 10 | 13 | 10 | ||||||||
Area license | 163 | 164 | 163 | 164 | ||||||||
Total | 1,532 | 1,483 | 1,532 | 1,483 | ||||||||
Restaurant Franchising Activity | ||||||||||||
Domestic franchisee-developed | 12 | 7 | 29 | 32 | ||||||||
International franchisee-developed | 1 | 2 | 7 | 3 | ||||||||
Area license | 1 | — | 3 | — | ||||||||
Refranchised | 1 | 2 | 2 | 3 | ||||||||
Total restaurants franchised | 15 | 11 | 41 | 38 | ||||||||
Closings | ||||||||||||
Domestic franchise | (4 | ) | (3 | ) | (7 | ) | (6 | ) | ||||
Area license | — | — | (4 | ) | — | |||||||
Total franchise closings | (4 | ) | (3 | ) | (11 | ) | (6 | ) | ||||
Reacquired by the Company | (3 | ) | (2 | ) | (4 | ) | (2 | ) | ||||
Net franchise restaurant additions | 8 | 6 | 26 | 30 |
Contractual Openings of Restaurants by Year | Number of Signed Agreements at 9/30/11 | Rest of 2011 | 2012 | 2013 | 2014 | 2015 and thereafter | Total | |||||||||
Single-store development agreements | 7 | 4 | 3 | 0 | 0 | 0 | 7 | |||||||||
Non-traditional development agreements | 3 | 3 | 0 | 0 | 0 | 0 | 3 | |||||||||
Multi-store development agreements | 70 | 28 | 30 | 33 | 27 | 103 | 221 | |||||||||
International territory agreements | 11 | 2 | 7 | 12 | 12 | 68 | 101 | |||||||||
Total | 91 | 37 | 40 | 45 | 39 | 171 | 332 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(unaudited) | ||||||||||||||||
Applebee’s Restaurant Data | ||||||||||||||||
Effective restaurants(a) | ||||||||||||||||
Franchise | 1,766 | 1,607 | 1,757 | 1,606 | ||||||||||||
Company | 243 | 393 | 253 | 394 | ||||||||||||
Total | 2,009 | 2,000 | 2,010 | 2,000 | ||||||||||||
System-wide(b) | ||||||||||||||||
Sales percentage change(c) | (0.1%) | 3.4 | % | 2.6 | % | (0.9 | )% | |||||||||
Domestic same-restaurant sales percentage change(d) | (0.3%) | 3.3 | % | 2.3 | % | (0.5 | )% | |||||||||
Franchise(b)(e)(g) | ||||||||||||||||
Sales percentage change(c) | (1.3%) | 4.1 | % | 1.8 | % | (0.2 | )% | |||||||||
Domestic same-restaurant sales percentage change(d) | (0.4%) | 3.8 | % | 2.5 | % | (0.2 | )% | |||||||||
Average weekly domestic unit sales (in thousands) | $ | 44.2 | $ | 44.8 | $ | 47.0 | $ | 46.2 | ||||||||
Company(g) | ||||||||||||||||
Sales percentage change(c) | 1.4 | % | 0.4 | % | 1.0 | % | (3.9 | )% | ||||||||
Same-restaurant sales percentage change(d) | 0.1 | % | 1.2 | % | 0.5 | % | (1.7 | )% | ||||||||
Average weekly domestic unit sales (in thousands) | $ | 40.2 | $ | 39.7 | $ | 41.3 | $ | 40.9 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(unaudited) | ||||||||||||||||
IHOP Restaurant Data | ||||||||||||||||
Effective restaurants(a) | ||||||||||||||||
Franchise | 1,347 | 1,297 | 1,339 | 1,289 | ||||||||||||
Company | 10 | 10 | 10 | 11 | ||||||||||||
Area license | 163 | 164 | 163 | 164 | ||||||||||||
Total | 1,520 | 1,471 | 1,512 | 1,464 | ||||||||||||
System-wide(b) | ||||||||||||||||
Sales percentage change(c) | 2.6 | % | 2.9 | % | 1.7 | % | 3.4 | % | ||||||||
Domestic same-restaurant sales percentage change(d) | (1.5 | )% | 0.1 | % | (2.4 | )% | (0.4 | )% | ||||||||
Franchise(b)(e)(g) | ||||||||||||||||
Sales percentage change(c) | 2.5 | % | 3.0 | % | 1.6 | % | 3.5 | % | ||||||||
Domestic same-restaurant sales percentage change(d) | (1.5 | )% | 0.1 | % | (2.4 | )% | (0.4 | )% | ||||||||
Average weekly domestic unit sales (in thousands) | $ | 34.4 | $ | 34.9 | $ | 34.6 | $ | 35.3 | ||||||||
Company(f)(g) | n.m. | n.m. | n.m. | n.m. | ||||||||||||
Area License(e) | ||||||||||||||||
Sales percentage change(c) | 4.4 | % | 2.2 | % | 2.5 | % | 3.3 | % |
(e) | Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(In millions) | ||||||||||||||||
Reported sales (unaudited) | ||||||||||||||||
Applebee’s franchise restaurant sales | $ | 932.6 | $ | 852.4 | $ | 2,957.2 | $ | 2,639.8 | ||||||||
IHOP franchise restaurant sales | $ | 602.7 | $ | 588.1 | $ | 1,805.5 | $ | 1,777.0 | ||||||||
IHOP area license restaurant sales | $ | 55.1 | $ | 52.8 | $ | 172.0 | $ | 167.8 |
Domestic System-wide Same Restaurant Sales | |||||||||||||||||||||||||||||||||
Increase (Decrease) | |||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | |||||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||||||||||||
Applebee’s | |||||||||||||||||||||||||||||||||
Quarter | (3.0 | )% | (4.3 | )% | (6.5 | )% | (4.5 | )% | (2.7 | )% | (1.6 | )% | 3.3 | % | 2.9 | % | 3.9 | % | 3.1 | % | (0.3 | )% | |||||||||||
YTD | (3.0 | )% | (3.6 | )% | (4.5 | )% | (4.5 | )% | (2.7 | )% | (2.2 | )% | (0.5 | )% | 0.3 | % | 3.9 | % | 3.5 | % | 2.3 | % | |||||||||||
IHOP | |||||||||||||||||||||||||||||||||
Quarter | 2.0 | % | (0.6 | )% | (1.1 | )% | (3.1 | )% | (0.4 | )% | (1.0 | )% | 0.1 | % | 1.1 | % | (2.7 | )% | (2.9 | )% | (1.5 | )% | |||||||||||
YTD | 2.0 | % | 0.7 | % | 0.2 | % | (0.8 | )% | (0.4 | )% | (0.7 | )% | (0.4 | )% | 0.0 | % | (2.7 | )% | (2.8 | )% | (2.4 | )% |
Three Months Ended | Favorable (Unfavorable) | |||||||||||
September 30, | ||||||||||||
2011 | 2010 | Variance | ||||||||||
(In millions) | ||||||||||||
Franchise operations | $ | 72.7 | $ | 66.9 | $ | 5.8 | ||||||
Company restaurant operations | 17.7 | 29.7 | (12.0 | ) | ||||||||
Rental operations | 6.6 | 7.5 | (0.9 | ) | ||||||||
Financing operations | 3.6 | 3.5 | 0.1 | |||||||||
Total | $ | 100.6 | $ | 107.6 | $ | (7.0 | ) |
Three Months Ended | Favorable (Unfavorable) | ||||||||||||||
September 30, | |||||||||||||||
2011 | 2010 | Variance | % Change(1) | ||||||||||||
(In millions) | |||||||||||||||
Franchise Revenues | |||||||||||||||
Applebee’s | $ | 40.1 | $ | 36.5 | $ | 3.6 | 9.8 | % | |||||||
IHOP | 38.7 | 37.0 | 1.7 | 4.5 | % | ||||||||||
IHOP advertising | 18.9 | 18.6 | 0.3 | 1.5 | % | ||||||||||
Total franchise revenues | 97.7 | 92.1 | 5.6 | 6.0 | % | ||||||||||
Franchise Expenses | |||||||||||||||
Applebee’s | 0.6 | 0.5 | 0.1 | 28.0 | % | ||||||||||
IHOP | 5.5 | 6.2 | (0.7 | ) | (11.2 | )% | |||||||||
IHOP advertising | 18.9 | 18.6 | 0.3 | 1.5 | % | ||||||||||
Total franchise expenses | 25.0 | 25.3 | (0.3 | ) | (1.2 | )% | |||||||||
Franchise Segment Profit | |||||||||||||||
Applebee’s | 39.5 | 36.1 | 3.4 | 9.6 | % | ||||||||||
IHOP | 33.2 | 30.8 | 2.4 | 7.7 | % | ||||||||||
Total franchise segment profit | $ | 72.7 | $ | 66.9 | $ | 5.8 | 8.7 | % | |||||||
Segment profit as % of revenue | 74.4 | % | 72.5 | % |
Three Months Ended | Favorable (Unfavorable) | ||||||||||||||
September 30, | |||||||||||||||
2011 | 2010 | Variance | % Change(1) | ||||||||||||
(In millions) | |||||||||||||||
Company restaurant sales | $ | 131.6 | $ | 206.9 | $ | (75.3 | ) | (36.4 | )% | ||||||
Company restaurant expenses | 113.9 | 177.2 | 63.3 | 35.7 | % | ||||||||||
Company restaurant segment profit | $ | 17.7 | $ | 29.7 | $ | (12.0 | ) | (40.4 | )% | ||||||
Segment profit as % of revenue | 13.4 | % | 14.3 | % |
Favorable (Unfavorable) | ||||||||||||||||||
Three Months Ended | Components of Total Variance | |||||||||||||||||
Applebee's Company-operated Expenses | September 30, | Total | Refranchising | Sales | All other | |||||||||||||
As Percentage of Restaurant Sales | 2011 | 2010 | Variance | and Closures | Impacts (b) | Impacts | ||||||||||||
Revenue | 100.0 | % | 100.0 | % | ||||||||||||||
Food and beverage | 25.9 | % | 25.1 | % | (0.8 | )% | (0.2 | )% | — | % | (0.5 | )% | ||||||
Labor | 32.6 | % | 33.9 | % | 1.3 | % | 1.0 | % | — | % | 0.2 | % | ||||||
Direct and occupancy | 27.3 | % | 26.2 | % | (1.1 | )% | (0.3 | )% | — | % | (0.9 | )% | ||||||
Company Restaurant Operating Profit (a) | 14.2 | % | 14.8 | % | (0.6 | )% | 0.6 | % | — | % | (1.2 | )% |
Three Months Ended | Favorable (Unfavorable) | ||||||||||||||
September 30, | |||||||||||||||
2011 | 2010 | Variance | % Change(1) | ||||||||||||
(In millions) | |||||||||||||||
Rental revenues | $ | 31.1 | $ | 32.2 | $ | (1.1 | ) | (3.3 | )% | ||||||
Rental expenses | 24.5 | 24.7 | 0.2 | 0.6 | % | ||||||||||
Rental operations segment profit | $ | 6.6 | $ | 7.5 | $ | (0.9 | ) | (12.0 | )% | ||||||
Segment profit as % of revenue | 21.3 | % | 23.4 | % |
Three Months Ended | Favorable (Unfavorable) | ||||||||||||||
September 30, | |||||||||||||||
2011 | 2010 | Variance | % Change(1) | ||||||||||||
(In millions) | |||||||||||||||
Financing revenues | $ | 4.0 | $ | 4.2 | $ | (0.2 | ) | (5.2 | )% | ||||||
Financing expenses | 0.4 | 0.7 | 0.3 | 43.3 | % | ||||||||||
Financing operations segment profit | $ | 3.6 | $ | 3.5 | $ | 0.1 | 3.0 | % | |||||||
Segment profit as % of revenue | 89.4 | % | 82.3 | % |
Three Months Ended | Favorable (Unfavorable) | ||||||||||||||
September 30, | |||||||||||||||
2011 | 2010 | Variance | % Change(1) | ||||||||||||
(In millions) | |||||||||||||||
General and administrative expenses | $ | 38.7 | $ | 39.6 | $ | 0.9 | 2.2 | % | |||||||
Interest expense | 32.2 | 42.8 | 10.6 | 24.9 | % | ||||||||||
Impairment and closure charges | 0.2 | 1.1 | 1.0 | 83.1 | % | ||||||||||
Amortization of intangible assets | 3.1 | 3.1 | — | 0.1 | % | ||||||||||
Loss on disposition of assets | 1.2 | 0.7 | (0.4 | ) | (57.9 | )% | |||||||||
Income tax provision | 8.7 | 5.9 | (2.8 | ) | (48.3 | )% |
Nine Months Ended | Favorable (Unfavorable) | |||||||||||
September 30, | ||||||||||||
2011 | 2010 | Variance | ||||||||||
(In millions) | ||||||||||||
Franchise operations | $ | 222.1 | $ | 204.7 | $ | 17.4 | ||||||
Company restaurant operations | 57.9 | 90.3 | (32.4 | ) | ||||||||
Rental operations | 21.3 | 24.0 | (2.7 | ) | ||||||||
Financing operations | 10.3 | 11.1 | (0.8 | ) | ||||||||
Total | $ | 311.6 | $ | 330.1 | $ | (18.5 | ) |
Nine Months Ended | Favorable (Unfavorable) | ||||||||||||||
September 30, | |||||||||||||||
2011 | 2010 | Variance | % Change(1) | ||||||||||||
(In millions) | |||||||||||||||
Franchise Revenues | |||||||||||||||
Applebee’s | $ | 128.3 | $ | 113.5 | $ | 14.8 | 13.0 | % | |||||||
IHOP | 115.8 | 111.5 | 4.3 | 3.9 | % | ||||||||||
IHOP advertising | 56.7 | 55.9 | 0.8 | 1.5 | % | ||||||||||
Total franchise revenues | 300.8 | 280.9 | 19.9 | 7.1 | % | ||||||||||
Franchise Expenses | |||||||||||||||
Applebee’s | 2.2 | 1.6 | 0.6 | 39.6 | % | ||||||||||
IHOP | 19.8 | 18.8 | 1.0 | 5.5 | % | ||||||||||
IHOP advertising | 56.7 | 55.9 | 0.8 | 1.5 | % | ||||||||||
Total franchise expenses | 78.7 | 76.3 | 2.4 | 3.3 | % | ||||||||||
Franchise Segment Profit | |||||||||||||||
Applebee’s | 126.1 | 111.9 | 14.1 | 12.6 | % | ||||||||||
IHOP | 96.0 | 92.8 | 3.3 | 3.6 | % | ||||||||||
Total franchise segment profit | $ | 222.1 | $ | 204.7 | $ | 17.4 | 8.5 | % | |||||||
Segment profit as % of revenue | 73.8 | % | 72.9 | % |
Nine Months Ended | Favorable (Unfavorable) | ||||||||||||||
September 30, | |||||||||||||||
2011 | 2010 | Variance | % Change(1) | ||||||||||||
(In millions) | |||||||||||||||
Company restaurant sales | $ | 420.9 | $ | 642.2 | $ | (221.3 | ) | (34.5 | )% | ||||||
Company restaurant expenses | 363.0 | 551.9 | 188.9 | 34.2 | % | ||||||||||
Company restaurant segment profit | $ | 57.9 | $ | 90.3 | $ | (32.4 | ) | (35.9 | )% | ||||||
Segment profit as % of revenue | 13.8 | % | 14.1 | % |
Favorable (Unfavorable) | ||||||||||||||||||
Nine Months Ended | Components of Total Variance | |||||||||||||||||
Applebee's Company-operated Expenses | September 30, | Total | Refranchising | Sales | All other | |||||||||||||
As Percentage of Restaurant Sales | 2011 | 2010 | Variance | and Closures | Impacts (b) | Impacts | ||||||||||||
Revenue | 100.0 | % | 100.0 | % | ||||||||||||||
Food and beverage | 25.6 | % | 25.5 | % | (0.1 | )% | (0.2 | )% | — | % | — | % | ||||||
Labor | 32.9 | % | 33.5 | % | 0.6 | % | 0.9 | % | 0.1 | % | (0.5 | )% | ||||||
Direct and occupancy | 27.1 | % | 26.5 | % | (0.7 | )% | — | % | 0.1 | % | (0.6 | )% | ||||||
Company Restaurant Operating Profit (a) | 14.4 | % | 14.6 | % | (0.2 | )% | 0.8 | % | 0.2 | % | (1.1 | )% |
Nine Months Ended | Favorable (Unfavorable) | ||||||||||||||
September 30, | |||||||||||||||
2011 | 2010 | Variance | % Change(1) | ||||||||||||
(In millions) | |||||||||||||||
Rental revenues | $ | 95.0 | $ | 98.3 | $ | (3.3 | ) | (3.4 | )% | ||||||
Rental expenses | 73.7 | 74.3 | 0.6 | 0.8 | % | ||||||||||
Rental operations segment profit | $ | 21.3 | $ | 24.0 | $ | (2.7 | ) | (11.3 | )% | ||||||
Segment profit as % of revenue | 22.4 | % | 24.4 | % |
Nine Months Ended | Favorable (Unfavorable) | ||||||||||||||
September 30, | |||||||||||||||
2011 | 2010 | Variance | % Change(1) | ||||||||||||
(In millions) | |||||||||||||||
Financing revenues | $ | 16.3 | $ | 12.3 | $ | 4.0 | 32.1 | % | |||||||
Financing expenses | 6.0 | 1.2 | (4.8 | ) | (386.3 | )% | |||||||||
Financing operations segment profit | $ | 10.3 | $ | 11.1 | $ | (0.8 | ) | (7.3 | )% | ||||||
Segment profit as % of revenue | 63.1 | % | 90.0 | % |
Nine Months Ended | Favorable (Unfavorable) | ||||||||||||||
September 30, | |||||||||||||||
2011 | 2010 | Variance | % Change(1) | ||||||||||||
(In millions) | |||||||||||||||
General and administrative expenses | $ | 115.2 | $ | 117.0 | $ | 1.8 | 1.6 | % | |||||||
Interest expense | 101.3 | 131.5 | 30.2 | 23.0 | % | ||||||||||
Impairment and closure charges | 26.9 | 3.7 | (23.2 | ) | (623.4 | )% | |||||||||
Debt modification costs | 4.1 | — | (4.1 | ) | n.m. | ||||||||||
Amortization of intangible assets | 9.2 | 9.2 | — | 0.1 | % | ||||||||||
Loss (gain) on extinguishment of debt | 7.9 | (4.6 | ) | (12.5 | ) | 269.9 | % | ||||||||
(Gain) loss on disposition of assets | (21.3 | ) | 0.9 | 22.2 | n.m. | ||||||||||
Income tax provision | 21.7 | 24.3 | 2.6 | 10.8 | % |
Quarter Ended | Instrument (1) | Face Amount Retired/Repaid | Cash Paid | Loss (Gain)(2) | ||||||||||
(In millions) | ||||||||||||||
March 2011 | Term Loans | $ | 110.0 | $ | 110.0 | $ | 2.7 | |||||||
March 2011 | Senior Notes | 32.3 | 35.3 | 4.2 | ||||||||||
June 2011 | Senior Notes | 7.5 | 8.2 | 1.0 | ||||||||||
Nine months ended September 30, 2011 | $ | 149.8 | $ | 153.5 | $ | 7.9 | ||||||||
March 2010 | Class A-2-II-X Notes | 48.7 | 43.8 | (3.5 | ) | |||||||||
June 2010 | Class A-2-II-X Notes | $ | 19.5 | $ | 18.0 | $ | (1.1 | ) | ||||||
Nine months ended September 30, 2010 | $ | 68.2 | $ | 61.8 | $ | (4.6 | ) |
(In thousands) | |||
U.S. GAAP loss before income taxes | $ | (16,187 | ) |
Interest charges | 160,206 | ||
Loss on retirement of debt and Series A Preferred Stock | 119,528 | ||
Depreciation and amortization | 52,432 | ||
Non-cash stock-based compensation | 8,848 | ||
Impairment and closure charges | 27,122 | ||
Other | 6,689 | ||
Gain on sale of assets | (35,782 | ) | |
EBITDA | $ | 322,856 |
Nine Months Ended | ||||||||||||
September 30, | ||||||||||||
2011 | 2010 | Variance | ||||||||||
(In millions) | ||||||||||||
Net cash provided by operating activities | $ | 95.1 | $ | 97.5 | $ | (2.4 | ) | |||||
Net cash provided by investing activities | 48.7 | 7.3 | 41.4 | |||||||||
Net cash used in financing activities | (192.2 | ) | (81.9 | ) | (110.3 | ) | ||||||
Net (decrease) increase in cash and cash equivalents | $ | (48.4 | ) | $ | 22.9 | $ | (71.3 | ) |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs (b) | Approximate dollar value of shares that may yet be purchased under the plans or programs (b) | |||||||||
July 4 – July 31, 2011 (a) | 1,081 | $ | 55.01 | — | — | ||||||||
August 1 – August 28, 2011 | 248,488 | $ | 40.24 | 248,488 | $35,000,012 | ||||||||
August 29 – October 2, 2011 | 285,613 | $ | 39.11 | 285,613 | $23,830,346 | ||||||||
Total | 535,182 | $ | 39.67 | 534,101 | $23,830,346 |
3.1 | Restated Certificate of Incorporation of DineEquity, Inc. (Exhibit 3.1 to DineEquity, Inc.’s Report on Form 8-K filed June 2, 2008 is incorporated herein by reference). | ||
3.2 | Amended Bylaws of DineEquity, Inc. (Exhibit 3.2 to DineEquity, Inc.’s Report on Form 8-K filed June 2, 2008 is incorporated herein by reference). | ||
12.1 | Computation of Consolidated Leverage Ratio and Cash Interest Coverage Ratio for the trailing twelve months ended September 30, 2011.* | ||
31.1 | Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | ||
31.2 | Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | ||
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | ||
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | ||
101.INS | XBRL Instance Document.*** | ||
101.SCH | XBRL Schema Document.*** | ||
101.CAL | XBRL Calculation Linkbase Document.*** | ||
101.DEF | XBRL Definition Linkbase Document.*** | ||
101.LAB | XBRL Label Linkbase Document.*** | ||
101.PRE | XBRL Presentation Linkbase Document.*** |
DineEquity, Inc. (Registrant) | ||
November 3, 2011 | BY: | /s/ Julia A. Stewart |
(Date) | Julia A. Stewart Chairman and Chief Executive Officer (Principal Executive Officer) | |
November 3, 2011 | /s/ Thomas W. Emrey | |
(Date) | Thomas W. Emrey Chief Financial Officer (Principal Financial Officer) | |
November 3, 2011 | /s/ Greggory Kalvin | |
(Date) | Greggory Kalvin Senior Vice President, Corporate Controller (Principal Accounting Officer) |
Consolidated Leverage Ratio Calculation: | |||
Financial Covenant Debt(1) | $ | 1,836,037 | |
Consolidated EBITDA(1) | 322,856 | ||
Consolidated Leverage Ratio | 5.7 | ||
Consolidated Interest Coverage Ratio Calculation: | |||
Consolidated EBITDA(1) | $ | 322,856 | |
Consolidated Cash Interest Charges(1) | 142,680 | ||
Consolidated Interest Coverage Ratio | 2.3 |
Date: November 3, 2011 | |
/s/ Julia A. Stewart | |
Julia A. Stewart Chairman and Chief Executive Officer (Principal Executive Officer) |
Date: November 3, 2011 | |
/s/ Thomas W. Emrey | |
Thomas W. Emrey Chief Financial Officer (Principal Financial Officer) |
Date: November 3, 2011 | |
/s/ Julia A. Stewart | |
Julia A. Stewart Chairman and Chief Executive Officer (Principal Executive Officer) |
Date: November 3, 2011 | |
/s/ Thomas W. Emrey | |
Thomas W. Emrey Chief Financial Officer (Principal Financial Officer) |
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Convertible preferred stock, Series B, shares authorized | 10,000,000 | 10,000,000 |
Convertible preferred stock, Series B, shares issued | 35,000 | 35,000 |
Convertible preferred stock, Series B, shares outstanding | 34,900 | 35,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 24,669,129 | 24,382,991 |
Common stock, shares outstanding | 18,034,083 | 18,183,083 |
Treasury stock, shares | 6,635,046 | 6,199,908 |
Document and Entity Information | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Oct. 28, 2011 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | DineEquity, Inc. | |
Entity Central Index Key | 0000049754 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2011 | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding | 18,039,682 |
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Impairment and Closure Charges | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment And Closure Charges Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment and Closure Charges | 7. Impairment and Closure Charges The Company assesses tangible long-lived assets for impairment when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. The following table summarizes the components of impairment and closure charges for the three months and nine months ended September 30, 2011 and 2010:
Impairment and closure charges for the nine months ended September 30, 2011 totaled $26.9 million and primarily related to termination of the Company’s sublease of the commercial space currently occupied by Applebee’s Restaurant Support Center in Lenexa, Kansas. The Company recognized a charge of $21.3 million for the termination fee and other closing costs and a $4.5 million impairment charge related to furniture, fixtures and leasehold improvements at the Restaurant Support Center, the book value of which was not realizable as the result of the termination of the sublease. Impairment and closure charges for the nine months ended September 30, 2010 totaled $3.7 million. Impairment charges of $1.6 million primarily related to Applebee's company-operated restaurants reclassified as held for sale. Closure charges of $2.1 million related primarily to two company-operated IHOP Cafe restaurants, a non-traditional restaurant format development of which was ended after initial evaluation, and the closure of an Applebee's company-operated restaurant in China. The following table summarizes changes in the closure liability for the Applebee’s Restaurant Support Center in Lenexa, Kansas:
Substantially all of the closure liability is expected to be paid in the fourth quarter of 2011. |
Net Income (Loss) Per Share | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net (Loss) Income per Share | 12. Net Income per Share The computation of the Company’s basic and diluted net income per share is as follows:
The effect of adding shares from the assumed conversion of Series B Convertible Preferred stock to the denominator and the related add-back of the dividends on Series B Convertible Preferred stock to the numerator is anti-dilutive for the three months and nine months ended September 30, 2011 and 2010, respectively. |
Accounting Policies | 9 Months Ended |
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Sep. 30, 2011 | |
Accounting Policies Disclosure [Abstract] | |
Accounting Policies | 3. Accounting Policies Newly Issued Accounting Standards In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, Fair Value Measurement — Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (“ASU 2011-04”). The amendments result in common fair value measurement and disclosure requirements in U.S. GAAP and international financial reporting standards (“IFRS”). To improve consistency in application across jurisdictions, some wording changes are necessary to ensure that U.S. GAAP and IFRS fair value measurement and disclosure requirements are described in the same way. ASU 2011-04 also provides for certain changes in current U.S. GAAP disclosure requirements. The amendments in ASU 2011-04 are to be applied prospectively, and will be effective for the Company’s fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of ASU 2011-04 is not expected to have a material impact on the Company’s consolidated balance sheets, statements of income or statements of cash flows. In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income — Presentation of Comprehensive Income (“ASU 2011-05”). ASU 2011-05 will require the presentation of the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income, nor does it affect how earnings per share is calculated or presented. Current U.S. GAAP allows reporting entities three alternatives for presenting other comprehensive income and its components in financial statements. One of those presentation options is to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity, which is the presentation format the Company currently uses. This update eliminates that option. The changes to the presentation format are required to be applied retrospectively, and will be effective for the Company’s fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of ASU 2011-05 is not expected to have a material impact on the Company’s consolidated balance sheets, statements of income or statements of cash flows. In September 2011, the FASB issued ASU No. 2011-08, Intangibles-Goodwill and Other — Testing Goodwill for Impairment ("ASU 2011-08"). The amendments in ASU No. 2011-08 are intended to simplify goodwill impairment testing by adding a qualitative review step to assess whether the required quantitative impairment analysis that exists today is necessary. Under these amendments, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on the qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. ASU No. 2011-08 will be effective for the Company's fiscal years beginning after December 15, 2011; earlier adoption is permitted. As the amendments do not change the underlying principle that the carrying value of goodwill should not exceed its implied fair value, the adoption of ASU 2011-08 is not expected to have a material impact on the Company’s consolidated balance sheets, statements of income or statements of cash flows. The Company reviewed all other significant newly issued accounting pronouncements and concluded that they either are not applicable to the Company’s operations or that no material effect is expected on the consolidated financial statements as a result of future adoption. |
Stock-Based Compensation | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | 9. Stock-Based Compensation From time to time, the Company has granted nonqualified stock options, restricted stock awards, cash-settled and stock-settled restricted stock units and performance units to officers, other employees and non-employee directors of the Company. Currently, the Company is authorized to grant nonqualified stock options, stock appreciation rights, restricted stock awards, cash-settled and stock-settled restricted stock units and performance units to officers, other employees and nonemployee directors under the DineEquity, Inc. 2011 Stock Incentive Plan (the “2011 Plan”). The 2011 Plan was approved by stockholders on May 17, 2011 and permits the issuance of up to 1,500,000 shares of the Company’s common stock for incentive stock awards. The 2011 Plan will expire in May 2021. The nonqualified stock options generally vest over a three-year period and have a term of ten years from the effective issuance date. Option exercise prices equal the closing price of the Company’s common stock on the New York Stock Exchange on the date of grant. Restricted stock awards and restricted stock units are issued at no cost to the holder and vest over terms determined by the Compensation Committee of the Company’s Board of Directors, generally three years. The following table summarizes the components of the Company’s stock-based compensation expense included in general and administrative expenses in the consolidated financial statements:
As of September 30, 2011, $7.8 million and $8.9 million (including estimated forfeitures) of total unrecognized compensation cost related to restricted stock and stock options, respectively, is expected to be recognized over a weighted average period of 1.55 years for restricted stock and 1.46 years for stock options. The estimated fair values of the options granted during 2011 were calculated using a Black-Scholes option pricing model. The following summarizes the assumptions used in the Black-Scholes model:
Option balances as of September 30, 2011 and activity related to the Company’s stock options during the nine months then ended were as follows:
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price of the Company’s common stock on the last trading day of the third quarter of 2011 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2011. The amount of aggregate intrinsic value will change based on the fair market value of the Company’s common stock and the number of in-the-money options. A summary of restricted stock activity for the nine months ended September 30, 2011 is presented below:
The Company has issued 44,957 shares of cash-settled restricted stock units to members of the Board of Directors, of which 41,957 are outstanding at September 30, 2011. As these instruments only can be settled in cash, they are recorded as liabilities based on the closing price of the Company’s common stock as of September 30, 2011. For the nine months ended September 30, 2011 and 2010, $0.3 million and $1.1 million, respectively, were included as pre-tax stock-based compensation expense for the cash-settled restricted stock units. |
Commitments and Contingencies | 9 Months Ended |
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Sep. 30, 2011 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 14. Commitments and Contingencies Litigation, Claims and Disputes The Company is subject to various lawsuits, claims and governmental inspections or audits arising in the ordinary course of business. Some of these lawsuits purport to be class actions and/or seek substantial damages. In the opinion of management, these matters are adequately covered by insurance or, if not so covered, are without merit or are of such a nature or involve amounts that would not have a material adverse impact on the Company’s business or consolidated financial statements. Gerald Fast v. Applebee’s The Company is currently defending a collective action in United States District Court for the Western District of Missouri, Central Division filed on July 14, 2006 under the Fair Labor Standards Act styled Gerald Fast v. Applebee’s International, Inc., in which named plaintiffs claim that tipped workers in company restaurants perform excessive amounts of non-tipped work for which they should be compensated at the minimum wage. The court has conditionally certified a nationwide class of servers and bartenders who have worked in company-operated Applebee’s restaurants since June 19, 2004. Unlike a class action, a collective action requires potential class members to “opt in” rather than “opt out.” On February 12, 2008, 5,540 opt-in forms were filed with the court. In cases of this type, conditional certification of the plaintiff class is granted under a lenient standard. On January 15, 2009, we filed a motion seeking to have the class de-certified and the plaintiffs filed a motion for summary judgment, both of which were denied by the court. The parties stipulated to a bench trial which was set to begin on September 8, 2009 in Jefferson City, Missouri. Just prior to trial, however, the court vacated the trial setting in order to submit key legal issues to the Eighth Circuit Court of Appeals for review on interlocutory appeal. On April 21, 2011, the Eighth Circuit Court of Appeals issued its decision on the interlocutory appeal, affirming the trial court’s ruling that the tip credit is subject to a 20% limit on “related duties in a tipped occupation that are not themselves tip producing” based on guidance in the Department of Labor’s Field Operations Handbook. On May 5, 2011, the Company filed a petition for rehearing en banc with the Eighth Circuit Court of Appeals, which was denied on July 6, 2011 with four judges dissenting. On October 4, 2011, the Company filed a petition for certiorari asking the United States Supreme Court to review the decision of the Eighth Circuit Court of Appeals. The Company believes it has meritorious defenses and intends to vigorously defend this case. An estimate of the possible loss, if any, or the range of the loss cannot be made and, therefore, the Company has not accrued a loss contingency related to this matter. Lease Guarantees In connection with the sale of Applebee’s restaurants or previous brands to franchisees and other parties, the Company has, in certain cases, guaranteed or had potential continuing liability for lease payments totaling $214.5 million as of September 30, 2011. This amount represents the maximum potential liability of future payments under these leases. These leases have been assigned to the buyers and expire at the end of the respective lease terms, which range from 2011 through 2048. In the event of default, the indemnity and default clauses in our sale or assignment agreements govern our ability to pursue and recover damages incurred. No material liabilities have been recorded as of September 30, 2011. |
Segments | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments | 10. Segments The Company’s revenues and expenses are recorded in four segments: franchise operations, company restaurant operations, rental operations and financing operations. As of September 30, 2011, the franchise operations segment consisted of (i) 1,767 restaurants operated by Applebee’s franchisees in the United States, one U.S. territory and 14 countries outside the United States; and (ii) 1,519 restaurants operated by IHOP franchisees and area licensees in the United States, two U.S. territories and three countries outside the United States. Franchise operations revenue consists primarily of franchise royalty revenues, sales of proprietary products, certain franchise advertising fees and the portion of the franchise fees allocated to intellectual property. Franchise operations expenses include advertising expense, the cost of proprietary products, pre-opening training expenses and costs related to intellectual property provided to certain franchisees. As of September 30, 2011, the company restaurant operations segment consisted of 243 Applebee’s company-operated restaurants and 13 IHOP company-operated restaurants, all in the United States. Company restaurant sales are retail sales at company-operated restaurants. Company restaurant expenses are operating expenses at company-operated restaurants and include food, labor, benefits, utilities, rent and other restaurant operating costs. Rental operations revenue includes revenue from operating leases and interest income from direct financing leases. Rental operations expenses are costs of operating leases and interest expense on capital leases on franchisee-operated restaurants. Financing operations revenue consists of interest income from the financing of franchise fees and equipment leases, as well as sales of equipment and the portion of franchise fees not allocated to intellectual property. Financing expenses are primarily the costs of restaurant equipment. Information on segments is as follows:
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Income Taxes | 9 Months Ended |
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Sep. 30, 2011 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes The effective tax rate was 34.5% and 31.8% for the three months and nine months ended September 30, 2011, respectively. The effective tax rate of 31.8% is lower than the federal statutory rate of 35% for the nine months ended September 30, 2011 primarily due to tax credits and the release of liabilities for unrecognized tax benefits. The tax credits are primarily FICA tip and other compensation-related tax credits associated with Applebee's company-owned restaurant operations. At September 30, 2011, the Company had a liability for unrecognized tax benefits, including potential interest and penalties net of related tax benefit, totaling $11.7 million, of which approximately $2.9 million is expected to be paid within one year. For the remaining liability, due to the uncertainties related to these tax matters, the Company is unable to make a reasonably reliable estimate when cash settlements with taxing authorities will occur. As of September 30, 2011, accrued interest and penalties were $5.0 million and $0.7 million, respectively, excluding any related income tax benefits. As of December 31, 2010, accrued interest and penalties were $8.9 million and $0.5 million, respectively, excluding any related income tax benefits. The decrease of $3.9 million of accrued interest is primarily related to the release of liabilities for unrecognized tax benefits surrounding gift card income deferral as a result of the issuance of new guidance by the U.S. Internal Revenue Service ("IRS"), partially offset by the accrual of interest on the remaining liability for unrecognized tax benefits during the nine months ended September 30, 2011. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as a component of income tax expense which is recognized in the Consolidated Statements of Income. The Company or one of its subsidiaries files federal income tax returns and income tax returns in various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to federal, state or non-U.S. tax examinations by tax authorities for years before 2006 for federal returns and other jurisdictions. Applebee's is currently under audit by the IRS for the period ended November 29, 2007. The Company is currently under audit by the IRS for the period ended December 31, 2007. |
General | 9 Months Ended |
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Sep. 30, 2011 | |
General Disclosure [Abstract] | |
General | 1. General The accompanying unaudited consolidated financial statements of DineEquity, Inc. (the “Company”) have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. The consolidated balance sheet at December 31, 2010 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. |
Assets Held for Sale | 9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||
Assets Held For Sale Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Assets Held for Sale | 4. Assets Held for Sale The Company classifies assets as held for sale and ceases the depreciation and amortization of the assets when there is a plan for disposal of the assets and those assets meet the held for sale criteria, as defined in applicable U.S. GAAP. The balance of assets held for sale at December 31, 2010 of $37.9 million was comprised of assets of 36 Applebee’s company-operated restaurants in the St. Louis market area, 30 Applebee’s company-operated restaurants in the Washington, D.C. market, three parcels of land on which Applebee’s franchised restaurants are situated, three parcels of land previously intended for future restaurant development and one IHOP restaurant held for refranchising. During the nine months ended September 30, 2011, the Company entered into an agreement for the franchising and sale of related restaurant assets of 66 Applebee’s company-operated restaurants located in Massachusetts, New Hampshire, Maine, Rhode Island, Vermont and parts of New York. Additionally, the Company entered into a sale-leaseback agreement for a single Applebee's company-operated restaurant and took back one IHOP franchise restaurant to be refranchised. Accordingly, $38.6 million, representing the net book value of the assets related to these restaurants, was transferred to assets held for sale. During the nine months ended September 30, 2011, the Company sold 36 Applebee’s company-operated restaurants in the St. Louis market area, 30 Applebee’s company-operated restaurants in the Washington, D.C. market and two parcels of land on which Applebee’s franchised restaurants are situated. Additionally, the two IHOP restaurants held for sale were refranchised. The balance of assets held for sale at September 30, 2011 of $40.0 million was comprised of 66 Applebee’s company-operated restaurants located in Massachusetts, New Hampshire, Maine, Rhode Island, Vermont and parts of New York, one parcel of land on which an Applebee’s franchised restaurant is situated and three parcels of land previously acquired and held for future development. There were no IHOP restaurants held for refranchising in assets held for sale. The following table summarizes the changes in the balance of assets held for sale during 2011:
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | 5. Long-Term Debt Long-term debt consists of the following components:
For a description of the respective instruments, refer to Note 8 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. Amendment of Credit Agreement On February 25, 2011, the Company entered into Amendment No. 1 (the ‘‘Amendment’’) to the Credit Agreement dated as of October 8, 2010 (the “Credit Agreement”) under which a senior secured credit facility (“Credit Facility”) was established among the Company, lenders and the agents named therein. Pursuant to the Amendment, the interest rate margin applicable to LIBOR-based term loans made under the Credit Facility (“Term Loans”) was reduced from 4.50% to 3.00%, and the interest rate floors used to determine the LIBOR and Base Rate reference rates for Term Loans was reduced from 1.50% to 1.25% for LIBOR-based Term Loans and from 2.50% to 2.25% for Base Rate-denominated Term Loans. In addition, the Amendment increased the lender commitments under the Company’s revolving credit facility (the “Revolving Credit Facility”) available under the Credit Facility from $50 million to $75 million. The Amendment also modified certain restrictive covenants of the Credit Agreement, including those relating to repurchases of other debt securities, permitted acquisitions and payments on equity. The Company paid $12.3 million in fees and costs related to the Amendment. $7.4 million in fees were paid to lenders and recorded as additional discount on debt and $0.8 million of costs related to the increase in the Revolving Credit Facility were recorded as deferred financing costs. Fees paid to third parties of $4.1 million were recorded as “Debt modification costs” in the Consolidated Statements of Income for the nine months ended September 30, 2011. Loss (Gain) on Extinguishment of Debt During the nine months ended September 30, 2011 and September 30, 2010, the Company recognized the following losses and gains on the extinguishment of debt:
(1) For a description of the respective instruments, refer to Note 8 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. (2) Including write-off of the discount and deferred financing costs related to the debt retired. Compliance with Covenants and Restrictions The Company was in compliance with all the covenants and restrictions related to its Credit Facility and Senior Notes as of September 30, 2011. |
Fair Value Measurements | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 13. Fair Value Measurements The Company has two types of financial instruments which are required under U.S. GAAP to be measured on a recurring basis at fair value—restricted assets related to Applebee’s captive insurance subsidiary and certain loan guarantees. None of the Company’s non-financial assets or non-financial liabilities is required to be measured at fair value on a recurring basis. The Company has not elected to use fair value measurement, as provided under U.S. GAAP, for any assets or liabilities for which fair value measurement is not presently required. Financial instruments measured at fair value on a recurring basis at September 30, 2011 and December 31, 2010 are as follows:
The level 3 inputs used for the restricted assets consist of a discounted cash flow under the income approach using primarily assumptions as to future interest payments and a discount rate. The fair value of the guarantees was determined by assessing the financial health of each of the four franchisees that have open notes and assessing the likelihood of default. There was no change in the valuation methodologies between the periods presented. The Company believes the fair values of cash equivalents, accounts receivable, accounts payable and the current portion of long-term debt approximate their carrying amounts due to their short duration. At September 30, 2011 and December 31, 2010, the cost and market value of our financial instruments measured at fair value (restricted assets related to Applebee’s captive insurance subsidiary) are as follows:
The scheduled maturity of one auction-rate security valued at $0.6 million is December 2030. The remaining balance of auction-rate securities is in mutual funds invested in auction rate securities with no scheduled maturity for the funds. The fair values of non-current financial liabilities at September 30, 2011 and December 31, 2010 were as follows:
At September 30, 2011 and December 31, 2010, the fair value of the non-current financial liabilities was determined based on Level 2 inputs. |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Obligations | 6. Financing Obligations As of September 30, 2011, future minimum lease payments under financing obligations during the initial terms of the leases related to sale-leaseback transactions are as follows:
(1) Due to the varying closing dates of the Company’s fiscal years, 11 monthly payments will be made in fiscal 2012. (2) Included in “current maturities of capital lease and financing obligations” on the consolidated balance sheet. During the nine months ended September 30, 2011, the Company’s continuing involvement with 17 properties subject to financing obligations was ended by assignment of the lease obligations to a qualified franchisee. As a result, the Company’s financing obligations were reduced by $32.7 million. |
Consolidating Financial Information | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Consolidated Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidating Financial Information | 16. Consolidating Financial Information Certain of our subsidiaries have guaranteed our obligations under the Credit Facility. The following presents the condensed consolidating financial information separately for: (i) the parent Company, the issuer of the guaranteed obligations; (ii) the guarantor subsidiaries, on a combined basis, as specified in the Credit Agreement; (iii) the non-guarantor subsidiaries, on a combined basis; (iv) consolidating eliminations and reclassifications; and (v) DineEquity, Inc. and Subsidiaries, on a consolidated basis. Each guarantor subsidiary is 100% owned by the Company at the date of each balance sheet presented. The notes are fully and unconditionally guaranteed on a joint and several basis by each guarantor subsidiary. Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements. Supplemental Condensed Consolidating Balance Sheet September 30, 2011 (In millions)
Supplemental Condensed Consolidating Balance Sheet December 31, 2010 (In millions)
Supplemental Condensed Consolidating Statement of Operations For the Three Months Ended September 30, 2011 (In millions)
Supplemental Condensed Consolidating Statement of Operations For the Three Months Ended September 30, 2010 (In millions)
Supplemental Condensed Consolidating Statement of Operations For the Nine Months Ended September 30, 2011 (In millions)
Supplemental Condensed Consolidating Statement of Operations For the Nine Months Ended September 30, 2010 (In millions)
Supplemental Condensed Consolidating Statement of Cash Flows For the Nine Months Ended September 30, 2011 (In millions)
Supplemental Condensed Consolidating Statement of Cash Flows For the Nine Months Ended September 30, 2010 (In millions)
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Subsequent Events | 9 Months Ended |
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Sep. 30, 2011 | |
Subsequent Events [Abstract] | |
Subsequent Events | 17. Subsequent Events On October 13, 2011, the Company entered into an asset purchase agreement for the refranchising and sale of related restaurant assets of 17 Applebee’s company-operated restaurants located in a six-state market area geographically centered around Memphis, Tennessee. This sale is expected to close in the fiscal first quarter of 2012. On November 2, 2011, the Company completed the sale of 62 of 66 Applebee's company-operated restaurants located in Massachusetts, New Hampshire, Maine, Rhode Island, Vermont and parts of New York state. The Company expects to recognize a gain of approximately $23 million on the sale of the 66 restaurants. |
Basis of Presentation | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Basis Of Presentation Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | 2. Basis of Presentation The Company’s fiscal quarters end on the Sunday closest to the last day of each quarter. For convenience, the fiscal quarters are reported as ending on March 31, June 30, September 30 and December 31. The first three fiscal quarters of 2011 ended April 3, July 3, and October 2, 2011, respectively; the first three fiscal quarters of 2010 ended April 4, July 4, and October 3, 2010, respectively. The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries that are consolidated in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to provisions for doubtful accounts, legal contingencies, income taxes, long-lived assets, goodwill and intangible assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to prior year information to conform to the current year presentation. These reclassifications had no effect on the net income or financial position previously reported. The following items previously reported as “other expense, net” for the three months and nine months ended September 30, 2010 have been reclassified as follows:
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income | 11. Other Comprehensive Income The components of comprehensive income, net of taxes, are as follows:
The amount of income tax benefit allocated to the interest rate swap was $1.5 million and $4.5 million for the three months and nine months ended September 30, 2010, respectively. The loss related to an interest rate swap designated as a cash flow hedge that was being reclassified into earnings as interest expense over the expected life of the related debt, which was estimated to be approximately five years. The entire amount of loss remaining at the time of retirement of the related designated debt was reclassified into earnings in October 2010. The accumulated comprehensive loss of $0.3 million (net of tax) reflected in the Consolidated Balance Sheet as of September 30, 2011 and December 31, 2010 is primarily comprised of a temporary decline in available-for-sale securities. |
Involvement with Variable Interest Entities | 9 Months Ended |
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Sep. 30, 2011 | |
Involvement With Variable Interest Entities Disclosure [Abstract] | |
Involvement with Variable Interest Entities | 15. Involvement with Variable Interest Entities In February 2009, the Company and owners of Applebee’s and IHOP franchise restaurants formed Centralized Supply Chain Services, LLC (“CSCS”), a purchasing co-operative, to manage procurement activities for the Applebee’s and IHOP restaurants choosing to join CSCS. CSCS is a variable interest entity (“VIE”) as defined under U.S. GAAP. Under the terms of the membership agreements, each member restaurant belonging to CSCS has equal and identical voting rights, ownership rights and obligations. The Company does not have voting control of CSCS. Accordingly, the Company is not considered to be the primary beneficiary of the VIE and therefore does not consolidate the results of CSCS. The Company reaffirmed this assessment as of September 30, 2011 as there have been no changes in the significant facts and circumstances related to the Company’s involvement with CSCS. Each member restaurant is responsible only for the goods and services it chooses to purchase and bears no responsibility or risk of loss for goods and services purchased by other member restaurants. Based on these facts, the Company believes its maximum estimated loss related to its membership in the CSCS is insignificant. |