OREANDA-NEWS. DineEquity, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill & Bar® and IHOP® restaurants, today announced financial results for the second quarter of fiscal 2016. 

"We posted growth in adjusted earnings per diluted share for the second quarter, despite soft comparable sales at Applebee's and IHOP.  While we are dissatisfied with the comparable sales results, we are confident in our clear long-term strategies for both brands," said Julia A. Stewart, Chairman and Chief Executive Officer of DineEquity, Inc.

Ms. Stewart concluded, "These long-term strategies will build our brands across the spectrum of food and beverage innovation, social and digital marketing, development expansion as well as platforms to meet the convenience needs of today's consumer, such as delivery, to-go initiatives and mobile applications to name a few."   

Second Quarter Fiscal 2016 Financial Summary

  • GAAP net income available to common stockholders was $26.4 million for the second quarter of 2016, or earnings per diluted share of $1.45. This compares to net income available to common stockholders of $26.5 million, or earnings per diluted share of $1.40, for the second quarter of 2015. The slight decrease in GAAP net income was mainly due to higher closure and impairment charges and an increase in general and administrative expenses. The decrease was partially offset by lower income tax expense, higher gross profit and a decline in interest expense. The increase in earnings per diluted share was due to a decrease in weighted average diluted shares outstanding.
  • Adjusted net income available to common stockholders was $28.8 million, or adjusted earnings per diluted share of $1.59, for the second quarter of 2016. This compares to $28.9 million, or adjusted earnings per diluted share of $1.53, for the same period of 2015. The slight decrease in adjusted net income was mainly due to higher general and administrative expenses. The increase in adjusted earnings per diluted share was due to a decrease in weighted average diluted shares outstanding. (See "Non-GAAP Financial Measures" below.)
  • General and administrative expenses were $36.5 million for the second quarter of 2016. This compares to $34.6 million for the same period of 2015. The expected increase was mainly due to higher personnel costs for several senior management positions filled after the first quarter of 2015. Approximately $0.5 million of the general and administrative expenses was related to the strategic consolidation of our restaurant support center announced on September 3, 2015.

First Six Months of Fiscal 2016 Summary

  • GAAP net income available to common stockholders was $51.6 million for the first six months of fiscal 2016, or earnings per diluted share of $2.82. This compares to net income available to common stockholders of $54.6 million, or earnings per diluted share of $2.88, for the first six months of fiscal 2015. The decrease in GAAP net income was primarily due to higher general and administrative expenses and higher closure and impairment charges in the first six months of fiscal 2016 compared to the same period of 2015. The decrease was partially offset by lower income tax expense and a decline in interest expense. Additionally, earnings per diluted share were favorably impacted by a decrease in weighted average diluted shares outstanding.
  • Adjusted net income available to common stockholders was $58.0 million, or adjusted earnings per diluted share of $3.17, for the first six months of fiscal 2016. This compares to $60.0 million, or adjusted earnings per diluted share of $3.17, for the same period of fiscal 2015. The decline in adjusted net income was mainly due to higher general and administrative expenses. The decline was partially offset by lower income taxes and a decrease in cash interest expense. Despite the decrease in adjusted earnings, earnings per diluted share were unchanged due to a decrease in weighted average diluted shares outstanding. (See "Non-GAAP Financial Measures" below.)
  • General and administrative expenses were $75.9 million for the first six months of 2016. This compares to $68.8 million for the same period of 2015. The increase was primarily due to higher personnel costs. Approximately $2.6 million of the increase in general and administrative expenses was due to the strategic consolidation of our restaurant support center.
  • In the first six months of fiscal 2016, cash flows from operating activities were $53.9 million compared to $48.1 million in the same period of fiscal 2015. Free cash flow was $56.4 million for the first six months of fiscal 2016, compared to $49.7 million for the first six months of fiscal 2015. (See "Non-GAAP Financial Measures" below.)

Same-Restaurant Sales Performance

Second Quarter of Fiscal 2016

  • IHOP's domestic system-wide comparable same restaurant sales increased 0.2% for the second quarter of 2016. 
  • Applebee's domestic system-wide comparable same-restaurant sales declined 4.2% for the second quarter of 2016.

First Six Months of Fiscal 2016

  • IHOP's domestic system-wide comparable same restaurant sales increased 0.8% for the first six months of fiscal 2016. 
  • Applebee's domestic system-wide comparable same-restaurant sales declined 3.9% for the first six months of fiscal 2016.

Financial Performance Guidance for Fiscal 2016

DineEquity reiterates its financial performance guidance for fiscal 2016 contained in the press release issued on February 24, 2016 and the Form 8-K filed on February 24, 2016, except for the revisions noted below.

  • Revised Applebee's comparable same-restaurant sales performance to range between negative 3.0% and negative 4.5%. This compares to the previous expectations of between negative 2.0% and positive 2.0%.
  • Revised IHOP's comparable same-restaurant sales performance to range between positive 0.5% and positive 2.0%. This compares to the previous expectations of between positive 1.0% and positive 4.0%.
  • Revised expectations for Applebee's franchisees to develop between 25 and 33 new restaurants, reflecting a reduction from previous expectations of between 35 and 45 new restaurants. IHOP franchisees and its area licensee are expected to develop between 65 and 77 new restaurants. This compares to the previous projections of between 60 and 70 new restaurants.
  • Revised expectations for Franchise segment profit to be between $342 million and $352 million. This compares to the previous expectations of between $345 million and $360 million.
  • Reiterated expectations for the Rental and Financing segments to generate roughly $40 million in combined profit.
  • Reiterated expectations for general and administrative expenses to range between $154 million and $158 million, including non-cash stock-based compensation expense and depreciation of approximately $20 million. This amount includes approximately $4 million of non-recurring costs related to our restaurant support center consolidation.
  • Reiterated expectations for interest expense to be approximately $62 million. Approximately $3 million is projected to be non-cash interest expense.
  • Revised expectations for weighted average diluted shares outstanding to be approximately 18.2 million shares. This compares to the previous expectations of approximately 18.5 million shares.
  • Reiterated expectations for the income tax rate to be approximately 37%.
  • Revised expectations for cash flows provided by operating activities to range between $112 million and $120 million. This compares to previous expectations of between $115 million and $125 million.
  • Reiterated expectations for capital expenditures to be roughly $8 million.
  • Revised expectations for free cash flow (See "Non-GAAP Financial Measures" below) to range between $113 million and $121 million. This compares to the original expectations of between $116 million and $126 million. Our guidance reflects non-recurring tax payments totaling approximately $10 million related to deferred gains from the repurchase of our debt, primarily in 2008 and 2009, approximately $9 million in pre-tax cash payments related to our restaurant support center consolidation and the impact of fiscal 2016 containing 52 weeks compared to 53 weeks in fiscal 2015, taking into account the effect on working capital, including gift card receivables.

2016 Free Cash Flow (Non-GAAP) Guidance Table
 

(In millions)

  

Cash flows from operations

$112 - 120

  

Approximate net receipts from notes and equipment contracts receivable

9

  

Approximate capital expenditures

(8)

  

Free cash flow (Non-GAAP)

$113 - 121

  

 

About DineEquity, Inc.

Based in Glendale, California, DineEquity, Inc., through its subsidiaries, franchises and operates restaurants under the Applebee's Neighborhood Grill & Bar and IHOP brands. With more than 3,700 restaurants combined in 19 countries and U.S. territories and over 400 franchisees, DineEquity is one of the largest full-service restaurant companies in the world.

Non-GAAP Financial Measures

This news release includes references to the Company's non-GAAP financial measures "adjusted net income available to common stockholders (adjusted EPS)," "free cash flow," and "segment EBITDA."  "Adjusted EPS" is computed for a given period by deducting from net income or loss available to common stockholders for such period the effect of any closure and impairment charges, any gain or loss related to debt extinguishment, any intangible asset amortization, any non-cash interest expense, any gain or loss related to the disposition of assets, and other items deemed not reflective of current operations.  This is presented on an aggregate basis and a per share (diluted) basis.  "Free cash flow" for a given period is defined as cash provided by operating activities, plus receipts from notes and equipment contracts receivable, less capital expenditures.  "Segment EBITDA" for a given period is defined as gross profit plus depreciation and amortization as well as interest charges related to the segment.  Management utilizes free cash flow to determine the amount of cash available for general corporate and strategic purposes and for the return of cash to stockholders pursuant to our capital allocation strategy. Management believes this information is helpful to investors to determine the Company's adherence to debt covenants and the Company's cash available for these purposes. Adjusted EPS and free cash flow are supplemental non-GAAP financial measures and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with United States generally accepted accounting principles.

DineEquity, Inc. and Subsidiaries

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)
 
   

Three Months Ended

  

Six Months Ended
   

June 30,

  

June 30,
   

2016

  

2015

  

2016

  

2015

Revenues:

                

Franchise and restaurant revenues

  

$

126,989

    

$

137,768

    

$

256,775

    

$

279,586

  

Rental revenues

  

30,830

    

31,132

    

62,239

    

62,534

  

Financing revenues

  

2,439

    

2,649

    

4,768

    

5,243

  

Total revenues

  

160,258

    

171,549

    

323,782

    

347,363

  

Cost of revenues:

                

Franchise and restaurant expenses

  

39,707

    

51,423

    

80,576

    

103,449

  

Rental expenses

  

23,030

    

23,319

    

46,261

    

46,809

  

Financing expenses

  

146

    

—

    

146

    

12

  

Total cost of revenues

  

62,883

    

74,742

    

126,983

    

150,270

  

Gross profit

  

97,375

    

96,807

    

196,799

    

197,093

  

General and administrative expenses

  

36,511

    

34,577

    

75,935

    

68,807

  

Interest expense

  

15,383

    

15,677

    

30,749

    

31,323

  

Amortization of intangible assets

  

2,500

    

2,500

    

4,980

    

5,000

  

Closure and impairment charges, net

  

3,291

    

475

    

3,726

    

2,302

  

(Gain) loss on disposition of assets

  

(48)

    

66

    

566

    

57

  

Income before income tax provision

  

39,738

    

43,512

    

80,843

    

89,604

  

Income tax provision

  

(12,909)

    

(16,615)

    

(28,471)

    

(34,295)

  

Net income

  

$

26,829

    

$

26,897

    

$

52,372

    

$

55,309

  

Net income available to common stockholders:

                

Net income

  

$

26,829

    

$

26,897

    

$

52,372

    

$

55,309

  

Less: Net income allocated to unvested participating restricted stock

  

(384)

    

(359)

    

(766)

    

(726)

  

Net income available to common stockholders

  

$

26,445

    

$

26,538

    

$

51,606

    

$

54,583

  

Net income available to common stockholders per share:

                

Basic

  

$

1.46

    

$

1.41

    

$

2.84

    

$

2.90

  

Diluted

  

$

1.45

    

$

1.40

    

$

2.82

    

$

2.88

  

Weighted average shares outstanding:

                

Basic

  

18,085

    

18,763

    

18,173

    

18,819

  

Diluted

  

18,188

    

18,895

    

18,280

    

18,959

  
                 

Dividends declared per common share

  

$

0.92

    

$

0.875

    

$

1.84

    

$

1.75

  

Dividends paid per common share

  

$

0.92

    

$

0.875

    

$

1.84

    

$

1.75

  

DineEquity, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)
 
   

June 30,
 2016

  

December 31, 2015
   

(Unaudited)

    

Assets

        

Current assets:

        

Cash and cash equivalents

  

$

118,293

    

$

144,785

  

Receivables, net

  

101,081

    

139,206

  

Restricted cash

  

42,831

    

32,528

  

Prepaid gift card costs

  

36,455

    

46,792

  

Prepaid income taxes

  

—

    

5,186

  

Other current assets

  

5,637

    

4,212

  

Total current assets

  

304,297

    

372,709

  

Long-term receivables, net

  

150,922

    

160,695

  

Property and equipment, net

  

209,323

    

219,580

  

Goodwill

  

697,470

    

697,470

  

Other intangible assets, net

  

768,096

    

772,949

  

Deferred rent receivable

  

88,802

    

90,030

  

Other non-current assets, net

  

18,358

    

18,417

  

Total assets

  

$

2,237,268

    

$

2,331,850

  
         

Liabilities and Stockholders' Equity

        

Current liabilities:

        

Accounts payable

  

$

46,625

    

$

55,019

  

Gift card liability

  

114,302

    

167,657

  

Accrued employee compensation and benefits

  

14,136

    

25,085

  

Dividends payable

  

16,792

    

17,082

  

Income taxes payable

  

5,278

    

—

  

Current maturities of capital lease and financing obligations

  

14,559

    

14,320

  

Accrued advertising

  

5,948

    

8,758

  

Accrued interest payable

  

4,310

    

4,257

  

Other accrued expenses

  

13,725

    

6,251

  

Total current liabilities

  

235,675

    

298,429

  

Long-term debt, net

  

1,281,064

    

1,279,473

  

Capital lease obligations, less current maturities

  

77,116

    

84,781

  

Financing obligations, less current maturities

  

42,325

    

42,395

  

Deferred income taxes, net

  

254,758

    

269,469

  

Deferred rent payable

  

71,929

    

69,397

  

Other non-current liabilities

  

18,235

    

20,683

  

Total liabilities

  

1,981,102

    

2,064,627

  

Commitments and contingencies

        

Stockholders' equity:

        

Common stock, $0.01 par value, shares: 40,000,000 authorized; June 30, 2016 - 25,153,608 issued, 18,218,872 outstanding; December 31, 2015 - 25,186,048 issued, 18,535,027 outstanding

  

252

    

252

  

Additional paid-in-capital

  

288,279

    

286,952

  

Retained earnings

  

370,546

    

351,923

  

Accumulated other comprehensive loss

  

(106)

    

(107)

  

Treasury stock, at cost; shares: June 30, 2016 - 6,934,736; December 31, 2015 - 6,651,021

  

(402,805)

    

(371,797)

  

Total stockholders' equity

  

256,166

    

267,223

  

Total liabilities and stockholders' equity

  

$

2,237,268

    

$

2,331,850

  

DineEquity, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)
 
   

Six Months Ended
   

June 30,
   

2016

  

2015

Cash flows from operating activities:

        

Net income

  

$

52,372

    

$

55,309

  

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

        

Depreciation and amortization

  

15,554

    

15,855

  

Non-cash interest expense

  

1,591

    

1,519

  

Deferred income taxes

  

(11,896)

    

(12,612)

  

Non-cash stock-based compensation expense

  

5,647

    

4,593

  

Tax benefit from stock-based compensation

  

1,169

    

4,688

  

Excess tax benefit from stock-based compensation

  

(865)

    

(4,572)

  

Closure and impairment charges

  

1,249

    

2,302

  

Loss on disposition of assets

  

566

    

57

  

Other

  

416

    

(1,534)

  

Changes in operating assets and liabilities:

        

Accounts receivable, net

  

880

    

(11,249)

  

Current income tax receivables and payables

  

5,291

    

5,561

  

Gift card receivables and payables

  

(18,311)

    

(3,256)

  

Other current assets

  

(1,424)

    

(2,299)

  

Accounts payable

  

8,544

    

6,024

  

Accrued employee compensation and benefits

  

(10,949)

    

(10,790)

  

Accrued interest payable

  

53

    

(10,240)

  

Other current liabilities

  

4,024

    

8,767

  

Cash flows provided by operating activities

  

53,911

    

48,123

  

Cash flows from investing activities:

        

Additions to property and equipment

  

(1,931)

    

(4,612)

  

Proceeds from sale of property and equipment

  

—

    

800

  

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

  

8,658

    

9,517

  

Other

  

(250)

    

(110)

  

Cash flows provided by investing activities

  

6,477

    

5,595

  

Cash flows from financing activities:

        

Principal payments on capital lease and financing obligations

  

(6,853)

    

(5,975)

  

Repurchase of common stock

  

(35,008)

    

(35,007)

  

Dividends paid on common stock

  

(34,029)

    

(33,271)

  

Tax payments for restricted stock upon vesting

  

(2,432)

    

(3,010)

  

Proceeds from stock options exercised

  

880

    

8,374

  

Excess tax benefit from stock-based compensation

  

865

    

4,572

  

Change in restricted cash

  

(10,303)

    

11,007

  

Other

  

—

    

(29)

  

Cash flows used in financing activities

  

(86,880)

    

(53,339)

  

Net change in cash and cash equivalents

  

(26,492)

    

379

  

Cash and cash equivalents at beginning of period

  

144,785

    

104,004

  

Cash and cash equivalents at end of period

  

$

118,293

    

$

104,383

  

NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts)

(Unaudited)
 

Reconciliation of net income available to common stockholders to net income available to common stockholders, as adjusted for the following items: Kansas City Support Center consolidation costs; amortization of intangible assets; closure and impairment charges; non-cash interest expense; gain or loss on disposition of assets; and the combined tax effect of the preceding adjustments; and deferred tax adjustments considered unrelated to current period operations, as well as related per share data:
 
 
   

Three Months Ended

  

Six Months Ended
   

June 30,

  

June 30,
   

2016

  

2015

  

2016

  

2015

Net income available to common stockholders, as reported

  

$

26,445

    

$

26,538

    

$

51,606

    

$

54,583

  

Kansas City Support Center consolidation costs(1)

  

2,966

    

—

    

5,032

    

—

  

Amortization of intangible assets

  

2,500

    

2,500

    

4,980

    

5,000

  

Closure and impairment charges

  

820

    

475

    

1,255

    

2,302

  

Non-cash interest expense

  

800

    

764

    

1,591

    

1,519

  

(Gain) loss on disposition of assets

  

(48)

    

66

    

566

    

57

  

Income tax provision

  

(2,605)

    

(1,446)

    

(4,967)

    

(3,373)

  

Deferred tax adjustments(2)

  

(2,002)

    

—

    

(2,002)

    

—

  

Net income allocated to unvested participating restricted stock

  

(35)

    

(30)

    

(97)

    

(73)

  

Net income available to common stockholders, as adjusted

  

$

28,841

    

$

28,867

    

$

57,964

    

$

60,015

  
                 

Diluted net income available to common stockholders per share:

                

Net income available to common stockholders, as reported

  

$

1.45

    

$

1.40

    

$

2.82

    

$

2.88

  

Kansas City Support Center consolidation costs(1)

  

0.10

    

—

    

0.17

    

—

  

Amortization of intangible assets

  

0.08

    

0.08

    

0.17

    

0.16

  

Closure and impairment charges

  

0.03

    

0.02

    

0.04

    

0.08

  

Non-cash interest expense

  

0.03

    

0.03

    

0.05

    

0.05

  

(Gain) loss on disposition of assets

  

(0.00)

    

0.00

    

0.02

    

0.00

  

Deferred tax adjustments(2)

  

(0.11)

    

—

    

(0.11)

    

—

  

Net income allocated to unvested participating restricted stock

  

(0.00)

    

(0.00)

    

(0.00)

    

(0.00)

  

Rounding

  

0.01

    

—

    

0.01

    

—

  

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

  

$

1.59

    

$

1.53

    

$

3.17

    

$

3.17

  
                 

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

  

$

28,841

    

$

28,867

    

$

57,964

    

$

60,015

  

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

  

1

    

1

    

2

    

3

  

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

  

$

28,842

    

$

28,868

    

$

57,966

    

$

60,018

  
                 

Denominator for basic EPS-weighted-average shares

  

18,085

    

18,763

    

18,173

    

18,819

  

Dilutive effect of stock options

  

103

    

132

    

107

    

140

  

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

  

18,188

    

18,895

    

18,280

    

18,959

  
   

(1)

Includes $2,471 of lease termination costs for the three and six months ended June 30, 2016 reported in "closure and impairment charges" in the Consolidated Statements of Comprehensive Income

(2)

Adjustments to deferred tax balances primarily due to reduction of effective state tax rate because of Support Center consolidation.

DineEquity, Inc. and Subsidiaries

Non-GAAP Financial Measures

(Unaudited)
 

Reconciliation of the Company's cash provided by operating activities to "free cash flow" (cash provided by operating activities, plus receipts from notes and equipment contracts receivable, less additions to property and equipment). We believe this information is helpful to investors to determine our cash available for general corporate purposes and for the return of cash to stockholders pursuant to our capital allocation strategy, and is the same measure used by management for these purposes.
     
   

Six Months Ended
   

June 30,
   

2016

  

2015
   

(In millions)

Cash flows provided by operating activities

  

$

53.9

    

$

48.1

  

Receipts from notes and equipment contracts receivable

  

4.4

    

6.2

  

Additions to property and equipment

  

(1.9)

    

(4.6)

  

Free cash flow

  

56.4

    

49.7

  

Dividends paid on common stock

  

(34.0)

    

(33.3)

  

Repurchase of DineEquity common stock

  

(35.0)

    

(35.0)

  
   

$

(12.6)

    

$

(18.6)

  

DineEquity, Inc. and Subsidiaries

Non-GAAP Financial Measures

(In thousands)

(Unaudited)
 

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

Three months ended June 30, 2016
   

Franchise - Applebee's

  

Franchise - IHOP

  

Company Restaurants

  

Rental Operations

  

Financing Operations

  

Total

Revenue

  

$

48,376

    

$

74,144

    

$

4,469

    

$

30,830

    

$

2,439

    

$

160,258

  

Expense

  

1,715

    

33,303

    

4,689

    

23,030

    

146

    

62,883

  

Gross profit

  

46,661

    

40,841

    

(220)

    

7,800

    

2,293

    

97,375

  

Plus:

                        

Depreciation/amortization

  

2,625

    

—

    

104

    

3,138

    

—

    

5,867

  

Interest charges

  

—

    

—

    

96

    

3,012

    

—

    

3,108

  

Segment EBITDA

  

$

49,286

    

$

40,841

    

$

(20)

    

$

13,950

    

$

2,293

    

$

106,350

  
   

Three months ended June 30, 2015
   

Franchise - Applebee's

  

Franchise - IHOP

  

Company Restaurants

  

Rental Operations

  

Financing Operations

  

Total

Revenue

  

$

49,920

    

$

70,361

    

$

17,487

    

$

31,132

    

$

2,649

    

$

171,549

  

Expense

  

1,730

    

32,338

    

17,355

    

23,319

    

—

    

74,742

  

Gross profit

  

48,190

    

38,023

    

132

    

7,813

    

2,649

    

96,807

  

Plus:

                        

Depreciation/amortization

  

2,588

    

—

    

184

    

3,196

    

—

    

5,968

  

Interest charges

  

—

    

—

    

98

    

3,374

    

—

    

3,472

  

Segment EBITDA

  

$

50,778

    

$

38,023

    

$

414

    

$

14,383

    

$

2,649

    

$

106,247

  
   

Six months ended June 30, 2016
   

Franchise - Applebee's

  

Franchise - IHOP

  

Company Restaurants

  

Rental Operations

  

Financing Operations

  

Total

Revenue

  

$

99,461

    

$

148,033

    

$

9,281

    

$

62,239

    

$

4,768

    

$

323,782

  

Expense

  

3,600

    

67,075

    

9,901

    

46,261

    

146

    

126,983

  

Gross profit

  

95,861

    

80,958

    

(620)

    

15,978

    

4,622

    

196,799

  

Plus:

                        

Depreciation/amortization

  

5,221

    

—

    

215

    

6,280

    

—

    

11,716

  

Interest charges

  

—

    

—

    

192

    

6,122

    

—

    

6,314

  

Segment EBITDA

  

$

101,082

    

$

80,958

    

$

(213)

    

$

28,380

    

$

4,622

    

$

214,829

  
   

Six months ended June 30, 2015
   

Franchise - Applebee's

  

Franchise - IHOP

  

Company Restaurants

  

Rental Operations

  

Financing Operations

  

Total

Revenue

  

$

102,351

    

$

142,472

    

$

34,763

    

$

62,534

    

$

5,243

    

$

347,363

  

Expense

  

3,326

    

66,259

    

33,864

    

46,809

    

12

    

150,270

  

Gross profit

  

99,025

    

76,213

    

899

    

15,725

    

5,231

    

197,093

  

Plus:

                        

Depreciation/amortization

  

5,180

    

—

    

373

    

6,420

    

—

    

11,973

  

Interest charges

  

—

    

—

    

197

    

6,875

    

—

    

7,072

  

Segment EBITDA

  

$

104,205

    

$

76,213

    

$

1,469

    

$

29,020

    

$

5,231

    

$

216,138

  

Restaurant Data

 

The following table sets forth, for the three and six months ended June 30, 2016 and 2015, the number of "Effective Restaurants" in the Applebee's and IHOP systems and information regarding the percentage change in sales at those restaurants compared to the same periods in the prior year. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. However, we believe that presentation of this information is useful in analyzing our revenues because franchisees and area licensees pay us royalties and advertising fees that are generally based on a percentage of their sales, and, where applicable, rental payments under leases that  may be partially based on a percentage of their sales. Management also uses this information to make decisions about future plans for the development of additional restaurants as well as evaluation of current operations.
   

Three Months Ended

  

Six Months Ended
   

June 30,

  

June 30,
   

2016

  

2015

  

2016

  

2015
   

(unaudited)

Applebee's Restaurant Data

                

Effective Restaurants(a)

                

Franchise

  

2,028

    

1,990

    

2,029

    

1,991

  

Company

  

—

    

23

    

—

    

23

  

Total

  

2,028

    

2,013

    

2,029

    

2,014

  
                 

System-wide(b)

                

Sales percentage change(c)

  

(4.4)

%

  

2.0

%

  

(4.2)

%

  

2.9

%

Domestic same-restaurant sales percentage change(d)

  

(4.2)

%

  

1.0

%

  

(3.9)

%

  

2.0

%
                 

Franchise(b)

                

Sales percentage change(c)

  

(3.4)

%

  

2.0

%

  

(3.2)

%

  

2.9

%

Domestic same-restaurant sales percentage change(d)

  

(4.2)

%

  

1.0

%

  

(3.9)

%

  

2.0

%

Average weekly domestic unit sales (in thousands)

  

$

46.5

    

$

48.9

    

$

47.6

    

$

50.0

  
                                 
   

Three Months Ended

  

Six Months Ended
   

June 30,

  

June 30,
   

2016

  

2015

  

2016

  

2015
   

(unaudited)

IHOP Restaurant Data

                

Effective Restaurants(a)

                

Franchise

  

1,510

    

1,471

    

1,508

    

1,471

  

Area license

  

165

    

167

    

165

    

167

  

Company

  

11

    

13

    

11

    

13

  

Total

  

1,686

    

1,651

    

1,684

    

1,651

  
                 

System-wide(b)

                

Sales percentage change(c)

  

2.5

%

  

7.1

%

  

2.4

%

  

6.6

%

Domestic same-restaurant sales percentage change(d)

  

0.2

%

  

6.2

%

  

0.8

%

  

5.5

%
                 

Franchise(b)

                

Sales percentage change(c)

  

2.8

%

  

6.8

%

  

2.6

%

  

6.4

%

Domestic same-restaurant sales percentage change(d)

  

0.2

%

  

6.2

%

  

0.8

%

  

5.5

%

Average weekly domestic unit sales (in thousands)

  

$

37.5

    

$

37.4

    

$

37.6

    

$

37.6

  
                 

Area License (b)

                

Sales percentage change(c)

  

0.5

%

  

7.7

%

  

0.4

%

  

7.4

%
                                 

(a)

"Effective Restaurants" are the weighted average number of restaurants open in a given fiscal period, adjusted to account for restaurants open for only a portion of the period. Information is presented for all Effective Restaurants in the Applebee's and IHOP systems, which includes restaurants owned by franchisees and area licensees as well as those owned by the Company.

(b)

"System-wide" sales are retail sales at Applebee's restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated restaurants.  Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. Unaudited reported sales for Applebee's domestic franchise restaurants, IHOP franchise restaurants and IHOP area license restaurants for the three and six months ended June 30, 2016 and 2015 were as follows:
       
 

Three Months Ended

  

Six Months Ended
 

June 30,

  

June 30,
 

2016

  

2015

  

2016

  

2015
 

(In millions)

Reported sales (unaudited)

              

Applebee's domestic franchise restaurant sales

$

1,134.2

    

$

1,174.6

    

$

2,323.2

    

$

2,400.6

  

IHOP franchise restaurant sales

735.4

    

$

715.1

    

1,474.3

    

$

1,436.4

  

IHOP area license restaurant sales

70.2

    

$

69.8

    

145.5

    

$

144.8

  

Total

$

1,939.8

    

$

1,959.5

    

$

3,943.0

    

$

3,981.8

  
   

(c)

"Sales percentage change" reflects, for each category of restaurants, the percentage change in sales in any given fiscal period compared to the prior fiscal period for all restaurants in that category.

(d)

"Domestic same-restaurant sales percentage change" reflects the percentage change in sales, in any given fiscal period, compared to the same weeks in the prior year for domestic restaurants that have been operated throughout both fiscal periods that are being compared and have been open for at least 18 months. Because of new unit openings and restaurant closures, the domestic restaurants open throughout both fiscal periods being compared may be different from period to period. Same-restaurant sales percentage change does not include data on IHOP area license restaurants located in Florida.

DineEquity, Inc. and Subsidiaries

Restaurant Data

 (unaudited)
 

The following table summarizes our restaurant development activity:
 
 

Three Months Ended

  

Six Months Ended
 

June 30,

  

June 30,
 

2016

  

2015

  

2016

  

2015

Applebee's Restaurant Development Activity

          

Summary - beginning of period:

              

Franchise

2,029

    

1,991

    

2,033

    

1,994

  

Company restaurants

—

    

23

    

—

    

23

  

Total Applebee's restaurants, beginning of period

2,029

    

2,014

    

2,033

    

2,017

  

Franchise restaurants opened:

              

Domestic

2

    

6

    

7

    

10

  

International

3

    

2

    

4

    

4

  

Total franchise restaurants opened

5

    

8

    

11

    

14

  

Franchise restaurants closed:

              

Domestic

(6)

    

(4)

    

(12)

    

(8)

  

International

(1)

    

(2)

    

(5)

    

(7)

  

Total  franchise restaurants closed

(7)

    

(6)

    

(17)

    

(15)

  

Net franchise restaurant (reduction) development

(2)

    

2

    

(6)

    

(1)

  

Summary - end of period:

              

Franchise

2,027

    

1,993

    

2,027

    

1,993

  

Company restaurants

—

    

23

    

—

    

23

  

Total Applebee's restaurants, end of period

2,027

    

2,016

    

2,027

    

2,016

  
   

IHOP Restaurant Development Activity

              

Summary - beginning of period:

              

Franchise

1,509

    

1,470

    

1,507

    

1,472

  

Area license

164

    

167

    

165

    

167

  

Company

11

    

13

    

11

    

11

  

Total IHOP restaurants, beginning of period

1,684

    

1,650

    

1,683

    

1,650

  

Franchise/area license restaurants opened:

          

Domestic franchise

13

    

7

    

19

    

13

  

Domestic area license

2

    

1

    

2

    

2

  

International franchise

2

    

3

    

3

    

3

  

Total franchise/area license restaurants opened

17

    

11

    

24

    

18

  

Franchise/area license restaurants closed:

              

Domestic franchise

(5)

    

(1)

    

(8)

    

(7)

  

Domestic area license

—

    

(2)

    

(1)

    

(3)

  

International franchise

(1)

    

—

    

(3)

    

—

  

Total franchise/area license restaurants closed

(6)

    

(3)

    

(12)

    

(10)

  

Net franchise/area license restaurant development

11

    

8

    

12

    

8

  

Refranchised from Company restaurants

1

    

—

    

1

    

1

  

Franchise restaurants reacquired by the Company

—

    

—

    

—

    

(3)

  

Net franchise/area license restaurant additions (reductions)

12

    

8

    

13

    

6

  

Summary - end of period

              

Franchise

1,519

    

1,479

    

1,519

    

1,479

  

Area license

166

    

166

    

166

    

166

  

Company

10

    

13

    

10

    

13

  

Total IHOP restaurants, end of period

1,695

    

1,658

    

1,695

    

1,658