SOURCE: DineEquity, Inc.

DineEquity, Inc.

May 04, 2010 07:00 ET

DineEquity, Inc. Announces Solid First Quarter 2010 Financial Results

Strong Business Fundamentals Supported by Stabilizing Same-Restaurant Sales, Solid Company Margin Performance and Retirement of $55 Million of Securitized Debt

GLENDALE, CA--(Marketwire - May 4, 2010) - DineEquity, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill & Bar and IHOP Restaurants, today announced financial results for the first quarter ended March 31, 2010. DineEquity's financial performance for the first quarter 2010 included the following highlights:

-- IHOP's domestic system-wide same-restaurant sales decreased 0.4% and
   Applebee's domestic system-wide same-restaurant decreased 2.7%
   compared to the same periods in 2009. This reflected substantial
   improvement from IHOP's negative 3.1% and Applebee's negative 4.5%
   same-restaurant sales performance for the fourth quarter 2009.

-- Securitized debt was reduced by $55.0 million for the first quarter
   2010 primarily due to the use of free cash flow for ongoing debt
   retirement efforts.

-- Net income available to common stockholders was $12.8 million, or $0.75
   per diluted share, for the first quarter 2010 compared to net income of
   $30.6 million, or $1.80 per diluted share, for the same quarter in 2009.
   The decrease was primarily due to fewer gains in 2010 with respect to
   debt repurchases and asset sales to support refranchising.

-- Adjusted net income available to common stockholders was $18.7 million,
   or $1.08 per diluted share, for the first quarter 2010 compared to $19.7
   million, or $1.17 per diluted share, for the same quarter in 2009.  The
   decrease was primarily due to a higher income tax rate and increased
   preferred dividend payments, which were partially offset by improved
   business fundamentals.  (See "Non-GAAP Financial Measures" below.)

-- Consolidated G&A expenses decreased 14.8% to $40.2 million for the first
   quarter 2010 compared to the same period in 2009, primarily as the
   result of non-recurring start-up costs related to the formation of a
   purchasing Co-operative in 2009.

-- Operating margins at Applebee's company-operated restaurants were 14.8%
   for the first quarter 2010 as the Company sustained the restaurant
   profitability improvements achieved in 2009.

-- Cash flows from operating activities for the first quarter 2010 were
   $30.3 million.  Consolidated capital expenditures were $2.6 million
   for the first three months of 2010.  Free cash flow was $28.2 million
   for the first three months of fiscal 2010.  (See "Non-GAAP Financial
   Measures" below.)

"We are pleased with our first quarter performance and are encouraged by sequential improvements in same-restaurant sales at both Applebee's and IHOP restaurants, our solid restaurant operating margins at Applebee's company-operated restaurants, reduced G&A expenses, and the retirement of an additional $55 million of securitized debt during the quarter," said Julia A. Stewart, DineEquity's chairman and chief executive officer. "We continue to deliver on our strategic plan and focus on differentiating the Applebee's and IHOP brands with innovative, compelling menu offerings and advertising efforts. While the consumer spending environment remains challenging, both brands are well positioned to drive sustainable same-restaurant sales momentum and create even greater value for our shareholders."

Same-Restaurant Sales Performance

IHOP's domestic system-wide same-restaurant sales decreased 0.4% for the first quarter 2010 compared to the same quarter in 2009. Same-restaurant sales reflect a higher average guest check and declines in guest traffic. This is a substantial improvement from IHOP's negative 3.1% same-restaurant sales performance for the fourth quarter 2009. IHOP's marketing efforts during the quarter included All You Can Eat Pancakes and Loaded Country Potatoes limited-time offers and IHOP's National Pancake Day event, among other activities.

Applebee's domestic system-wide same-restaurant sales decreased 2.7% for the first quarter 2010, which reflected substantial improvement from Applebee's negative 4.5% performance for the fourth quarter 2009. Domestic franchise same-restaurant sales decreased 2.6% for the first quarter 2010, and company-operated Applebee's same-restaurant sales decreased 3.4% for the first quarter 2010 compared to the same quarter in 2009. Results at Company restaurants reflected declines in guest traffic and a lower average guest check primarily due to unfavorable mix shift, offsetting a 1.4% increase in effective pricing. Applebee's marketing efforts during the quarter included the introduction of its Great Tasting and Under 550 Calories menu offering, Ultimate Trios promotion and gift card redemption activity, as well as other enhanced marketing and promotional activities.

Applebee's Restaurant Operating Margins

Applebee's company-operated restaurant operating margin was 14.8% in the first quarter 2010 compared to 16.3% for the first quarter 2009. The unfavorable comparison was primarily due to promotional activities employed to drive sales and the de-leveraging impact of lower same-restaurant sales on fixed costs, which were partially offset by better labor productivity.

Debt Management

Securitized debt was reduced by $55.0 million during the first quarter 2010 as a result of open market purchases and scheduled payments on the Company's subordinated notes. DineEquity has reduced its total outstanding debt levels by $375.5 million, or 15.2%, since the acquisition of Applebee's in November 2007.

As of the end of the first quarter 2010, DineEquity remained comfortably in compliance with the debt covenants set forth in the Company's securitized debt agreements. The Company's consolidated leverage ratio was 5.83x compared to a required threshold of 7.0x. Debt service coverage ratios (DSCR) were 3.85x for IHOP's securitized debt on a three-month unadjusted basis and 4.10x for the Applebee's securitized debt on a three-month adjusted basis, both compared to a minimum required threshold of 1.85x. Applebee's 12-month adjusted DSCR was 3.13x, compared to a minimum required threshold of 2.20x.

DineEquity has provided supplemental information to this news release regarding its compliance with its debt covenants, which may be accessed by visiting the Calls & Presentations section of DineEquity's Investor Relations Web site at http://investors.dineequity.com and referring to supporting materials for the Company's first quarter 2010 webcast.

2010 Financial Performance Guidance

DineEquity reiterates its previously announced fiscal 2010 financial outlook of:

-- Consolidated free cash flow to range between $118 and $128 million.
   Free cash flow consists of consolidated cash from operations ranging
   between $145 and $155 million plus approximately $16 million generated
   from the structural run-off of the Company's long-term notes receivable.
   Uses of cash include consolidated capital expenditures of approximately
   $20 million and approximately $23 million in preferred stock dividend
   payments.  The Company plans to use available free cash flow to fund
   further securitized debt reductions this year.

-- Applebee's domestic system-wide same-restaurant sales performance to
   range between flat and negative 3% for fiscal 2010, with Applebee's
   franchisees slated to open between 25 and 30 new restaurants this year.

-- Operating margin at Applebee's company-operated restaurants to range
   between 13.5% and 14.5% for the full year 2010.

-- IHOP's domestic system-wide same-restaurant sales performance to range
   between positive 1% and negative 1% for fiscal 2010, with IHOP
   franchisees slated to open between 60 and 70 new restaurants this year.

-- Consolidated G&A expenses to range between $158 million and $161
   million for fiscal 2010, including non-cash stock based compensation
   expense and depreciation of approximately $20 million.

-- Consolidated interest expense on securitized debt to range between $175
   million and $180 million for fiscal 2010, approximately $40 million of
   which is non-cash interest expense.  Depreciation and amortization
   should range between $65 million and $70 million.  The Company's income
   tax rate is expected to be approximately 34%.

The Company's 2010 financial performance guidance excludes any impact from the future sales of Applebee's company-operated restaurants, the timing of which could be highly variable due to factors including the economy, the availability of buyer financing, acceptable valuations, and the operating wherewithal of the acquiring franchisee. Should company-operated Applebee's restaurants be sold this year, DineEquity plans to update its performance guidance accordingly in conjunction with its regular quarterly reporting schedule following any transaction announcement.

Investor Conference Call Today

The Company will host an investor conference call today to discuss its first quarter 2010 financial results on Tuesday, May 4, 2010 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). To participate on the call, please dial (888) 679-8040 and reference pass code 35523572. A live webcast of the call will be available on DineEquity's Web site at www.dineequity.com, and may be accessed by visiting Calls & Presentations under the site's Investor Information section. A telephonic replay of the call may be accessed through May 11, 2010 by dialing 888-286-8010 and referencing pass code 56471951. An online archive of the webcast also will be available on the Investor Information section of DineEquity's Web site.

About DineEquity, Inc.

Based in Glendale, California, DineEquity, Inc., through its subsidiaries, franchises and operates restaurants under the Applebee's Neighborhood Grill & Bar and IHOP brands. With more than 3,450 restaurants combined, DineEquity is the largest full-service restaurant company in the world. For more information on DineEquity, visit the Company's Web site located at www.dineequity.com.

Forward-Looking Statements

There are forward-looking statements contained in this news release. They use such words as "may," "will," "expect," "believe," "plan," or other similar terminology. These statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results to be materially different than those expressed or implied in such statements. These factors include, but are not limited to: the implementation of DineEquity, Inc.'s (the "Company") strategic growth plan; the availability of suitable locations and terms for sites designated for development; the ability of franchise developers to fulfill their commitments to build new restaurants in the numbers and time frames covered by their development agreements; legislation and government regulation including the ability to obtain satisfactory regulatory approvals; risks associated with the Company's indebtedness; conditions beyond the Company's control such as weather, natural disasters, disease outbreaks, epidemics or pandemics impacting the Company's customers or food supplies, or acts of war or terrorism; availability and cost of materials and labor; cost and availability of capital; competition; potential litigation and associated costs; continuing acceptance of the International House of Pancakes ("IHOP") and Applebee's brands and concepts by guests and franchisees; the Company's overall marketing, operational and financial performance; economic and political conditions; adoption of new, or changes in, accounting policies and practices; and other factors discussed from time to time in the Company's news releases, public statements and/or filings with the Securities and Exchange Commission, especially the "Risk Factors" sections of Annual and Quarterly Reports on Forms 10-K and 10-Q. Forward-looking information is provided by the Company pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of these factors. In addition, the Company disclaims any intent or obligation to update these forward-looking statements.

Non-GAAP Financial Measures

This news release includes references to the Company's non-GAAP financial measures "adjusted net income available to common stockholders (adjusted EPS)," "EBITDA," and "free cash flow." Adjusted EPS is computed for a given period by deducting from net income (loss) available to common stockholders for such period the effect of any impairment and closure charges, any gain related to debt extinguishment, any intangible asset amortization, any non-cash interest expense and any gain or loss related to the disposition of assets incurred in such period. This is presented on an aggregate basis and a per share (diluted) basis. The Company defines "EBITDA" for a given period as income before income taxes (including gain on extinguishment of debt) less interest expense, depreciation and amortization, impairment and closure charges, stock-based compensation, gain/loss on sale of assets and non-cash amounts related to a captive insurance subsidiary. "EBITDAR" for a given period is defined as EBITDA plus annualized operating lease expense (Rent). "Free cash flow" for a given period is defined as cash provided by operating activities, plus receipts from notes and equipment contracts receivable ("long-term notes receivable"), less dividends paid and capital expenditures. Management utilizes EBITDA for debt covenant purposes and free cash flow to determine the amount of cash remaining for general corporate and strategic purposes after the receipts from long-term notes receivable, and the funding of operating activities, capital expenditures and preferred dividends. Management believes this information is helpful to investors to determine the Company's adherence to debt covenants and the Company's cash available for these purposes. Adjusted EPS, EBITDA 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 generally accepted accounting principles.

                    DINEEQUITY, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME
                 (In thousands, except per share amounts)
                                (Unaudited)

                                              Three Months Ended March 31,
                                              ----------------------------
                                                  2010           2009
                                              -------------  -------------
Revenues
   Franchise revenues                         $      95,276  $      98,210
   Company restaurant sales                         224,614        239,524
   Rental income                                     33,932         33,709
   Financing revenues                                 4,150          4,113
                                              -------------  -------------
     Total revenues                                 357,972        375,556
                                              -------------  -------------
Costs and Expenses
   Franchise expenses                                24,905         28,298
   Company restaurant expenses                      192,559        201,856
   Rental expenses                                   24,400         24,542
   Financing expenses                                   469              7
   General and administrative expenses               40,185         47,159
   Interest expense                                  44,878         48,410
   Amortization of intangible assets                  3,077          3,019
   Gain on extinguishment of debt                    (3,585)       (26,354)
   Gain on disposition of assets                       (186)        (5,137)
   Other expense (income) net                         1,498           (128)
                                              -------------  -------------
     Total costs and expenses                       328,200        321,672
                                              -------------  -------------
Income before income taxes                           29,772         53,884
Provision for income taxes                          (10,101)       (16,743)
                                              -------------  -------------
Net income                                    $      19,671  $      37,141
                                              =============  =============
Net income                                    $      19,671  $      37,141
   Less: Series A preferred stock dividends          (5,760)        (4,750)
   Less: Accretion of Series B preferred
    stock                                              (595)          (560)
   Less: Net income allocated to unvested
    participating restricted stock                     (509)        (1,203)
                                              -------------  -------------
Net income available to common stockholders   $      12,807  $      30,628
                                              =============  =============
Net income available to common stockholders
 per share
   Basic                                      $        0.75  $        1.82
                                              =============  =============
   Diluted                                    $        0.75  $        1.80
                                              =============  =============
Weighted average shares outstanding
   Basic                                             17,011         16,842
                                              =============  =============
   Diluted                                           17,972         17,394
                                              =============  =============







                    DINEEQUITY, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
            (In thousands, except share and per share amounts)


                                                              December 31,
                                              March 31, 2010      2009
                                              -------------- --------------
                                               (Unaudited)
                    Assets
Current assets:
   Cash and cash equivalents                  $       68,459 $       82,314
   Restricted cash                                    69,584         72,690
   Receivables, net                                   77,706        104,690
   Inventories                                        12,208         12,236
   Prepaid income taxes                                   --          7,702
   Prepaid gift cards                                 15,114         19,878
   Prepaid expenses                                   16,689         13,425
   Deferred income taxes                              15,731         15,444
   Assets held for sale                                6,237          8,765
                                              -------------- --------------
     Total current assets                            281,728        337,144
                                              -------------- --------------
Non-current restricted cash                           45,799         48,173
Restricted assets related to captive
 insurance subsidiary                                  4,138          4,344
Long-term receivables                                254,171        259,775
Property and equipment, net                          760,362        771,372
Goodwill                                             697,470        697,470
Other intangible assets, net                         846,871        849,552
Other assets, net                                    128,958        133,038
                                              -------------- --------------
Total assets                                  $    3,019,497 $    3,100,868
                                              ============== ==============
    Liabilities and Stockholders' Equity
Current liabilities:
   Current maturities of long-term debt       $       25,200 $       25,200
   Accounts payable                                   31,016         31,729
   Accrued employee compensation and benefits         28,496         37,397
   Gift card liability                                65,294        105,465
   Other accrued expenses                             66,535         54,549
   Accrued interest payable                            3,326          3,627
                                              -------------- --------------
     Total current liabilities                       219,867        257,967
                                              -------------- --------------
Long-term debt, less current maturities            1,584,795      1,637,198
Financing obligations, less current
 maturities                                          307,265        309,415
Capital lease obligations, less current
 maturities                                          150,724        152,758
Deferred income taxes                                363,907        369,127
Other liabilities                                    114,154        117,449
                                              -------------- --------------
     Total liabilities                             2,740,712      2,843,914

Commitments and contingencies
Preferred stock, Series A                            187,050        187,050
Total stockholders' equity                            91,735         69,904
                                              -------------- --------------
     Total liabilities and stockholders'
      equity                                  $    3,019,497 $    3,100,868
                                              ============== ==============








                    DINEEQUITY, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In thousands)
                                (Unaudited)

                                              Three Months Ended March 31,
                                              ----------------------------
                                                  2010           2009
                                              -------------  -------------
Cash flows from operating activities
Net income                                    $      19,671  $      37,141
  Adjustments to reconcile net income to cash
   flows provided by operating activities
    Depreciation and amortization                    16,156         16,210
    Non-cash interest expense                        10,371          9,904
    Gain on extinguishment of debt                   (3,585)       (26,354)
    Deferred income taxes                            (7,009)        (1,320)
    Non-cash stock-based compensation expense         3,956          3,198
    Tax benefit from stock-based compensation         1,035            317
    Excess tax benefit from stock options
     exercised                                       (1,792)            --
    Gain on disposition of assets                      (186)        (5,137)
    Other                                               155         (1,718)
    Changes in operating assets and
     liabilities
      Receivables                                    26,008         36,603
      Inventories                                         3           (167)
      Prepaid expenses                                8,581         10,680
      Accounts payable                               (1,147)         1,256
      Accrued employee compensation and
       benefits                                      (9,031)          (437)
      Gift card liability                           (40,171)       (43,465)
      Other accrued expenses                          7,255         20,958
                                              -------------  -------------
        Cash flows provided by operating
         activities                                  30,270         57,669
                                              -------------  -------------
Cash flows from investing activities
    Additions to property and equipment              (2,649)        (3,162)
    Proceeds from sale of property and
     equipment and assets held for sale               2,784          8,834
    Principal receipts from notes and
     equipment contracts receivable                   6,299          4,505
    Other                                             1,109            982
                                              -------------  -------------
        Cash flows provided by investing
         activities                                   7,543         11,159
                                              -------------  -------------
Cash flows from financing activities
    Repayment of long-term debt                     (50,100)       (61,605)
    Principal payments on capital lease and
     financing obligations                           (3,791)        (3,467)
    Dividends paid                                   (5,700)        (4,750)
    Repurchase of restricted stock                     (577)          (264)
    Proceeds from stock options exercised             1,275             --
    Excess tax benefit from stock options
     exercised                                        1,792             --
    Restricted cash related to securitization         5,479        (15,666)
    Other                                               (46)           (63)
                                              -------------  -------------
        Cash flows used in financing
         activities                                 (51,668)       (85,815)
                                              -------------  -------------
    Net change in cash and cash equivalents         (13,855)       (16,987)
    Cash and cash equivalents at beginning of
     year                                            82,314        114,443
                                              -------------  -------------
    Cash and cash equivalents at end of
     period                                   $      68,459  $      97,456
                                              =============  =============







                        NON-GAAP FINANCIAL MEASURES
                 (In thousands, except per share amounts)
                                (Unaudited)

Reconciliation of (i) net income available to common stockholders to (ii)
net income available to common stockholders excluding impairment and
closure charges, gain on extinguishment of debt, amortization of intangible
assets, non-cash interest expense and gain on disposition of assets, and
related per share data:


                                                        Three Months Ended
                                                            March 31,
                                                        ------------------
                                                          2010      2009
                                                        --------  --------
Net income available to common stockholders, as
 reported                                               $ 12,807  $ 30,628
Impairment and closure charges                               509      (351)
Gain on extinguishment of debt                            (3,585)  (26,354)
Amortization of intangible assets                          3,077     3,019
Non-cash interest expense                                 10,371     9,936
Gain on disposition of assets                               (186)   (5,137)
Income tax (provision) benefit                            (4,054)    7,517
Net income allocated to unvested participating
 restricted stock                                           (234)      430
                                                        --------  --------
Net income available to common stockholders, as
 adjusted                                               $ 18,705  $ 19,688
                                                        ========  ======== 

Diluted net income available to common stockholders
 per share:
Net income available to common stockholders per share,
 as reported                                            $   0.75  $   1.80
Impairment and closure charges per share                    0.03     (0.02)
Gain on extinguishment of debt per share                   (0.20)    (1.52)
Amortization of intangible assets per share                 0.17      0.17
Non-cash interest expense per share                         0.58      0.57
Gain on disposition of assets per share                    (0.01)    (0.30)
Income tax (provision) benefit per share                   (0.23)     0.43
Net income allocated to unvested participating
 restricted stock per share                                (0.01)     0.02
Per share effect of dilutive calculation adjustments       (0.00)     0.02
                                                        --------  --------
Diluted net income available to common stockholders per
 share, as adjusted                                     $   1.08  $   1.17
                                                        ========  ========

Numerator for basic EPS-income available to common
 stockholders, as adjusted                              $ 18,705  $ 19,688
Effect of unvested participating restricted stock using
 the two-class method
Effect of dilutive securities:                                39        23
Stock options                                                 --        --
Convertible Series B preferred stock                         595       560
                                                        --------  --------
Numerator for diluted EPS-income available to common
 stockholders after assumed conversions, as adjusted    $ 19,339  $ 20,271
                                                        ========  ========

Denominator for basic EPS-weighted-average shares         17,011    16,842
Effect of dilutive securities:
Stock options                                                380         4
Convertible Series B preferred stock                         581       548
                                                        --------  --------
Denominator for diluted EPS-weighted-average shares and
 assumed conversions                                      17,972    17,394
                                                        ========  ========







                        NON-GAAP FINANCIAL MEASURES
                              (In thousands)
                                (Unaudited)


Reconciliation of (i) income before income taxes to (ii) EBITDA and to (ii)
EBITDAR:

                Trailing Twelve Months Ended March 31, 2010
Income before income taxes (including gain on extinguishment of
 debt)                                                           $  13,077
Interest expense                                                   203,488
Depreciation and amortization                                       65,323
Impairment and closure charges                                     105,955
Non-cash stock-based compensation                                   11,467
Gain on sale of assets                                              (2,134)
Non-cash amounts related to captive insurance subsidiary               282
                                                                 ---------
EBITDA                                                             397,458
Annualized operating lease expense                                  98,371
                                                                 ---------
EBITDAR                                                          $ 495,829
                                                                 =========

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

                                  Three Months Ended
                                      March 31,
                                  ------------------
                                    2010      2009        2010 Guidance
                                  --------  --------  --------------------
Cash flows from operating
 activities                       $ 30,270  $ 57,669  $ 145,000 to 155,000
Receipts from long-term notes
 receivable                          6,299     4,505         16,000
Dividends paid                      (5,700)   (4,750)       (23,000)
Capital expenditures                (2,649)   (3,162)       (20,000)
                                  --------  --------  --------------------
Free cash flow                    $ 28,220  $ 54,262  $ 118,000 to 128,000
                                  ========  ========  ====================







Restaurant Data

The following table sets forth, for the three-month periods ended March 31,
2010 and 2009, the number of effective restaurants in the Applebee's and
IHOP systems and information regarding the percentage change in sales at
those restaurants compared to the same periods in the prior year.
"Effective restaurants" are the number of restaurants in a given period,
adjusted to account for restaurants open for only a portion of the period.
Information is presented for all effective restaurants in the IHOP and
Applebee's systems, which includes restaurants owned by the Company, as
well as those owned by franchisees and area licensees. Sales at restaurants
that are owned by franchisees and area licensees are not attributable to
the Company. However, we believe that presentation of this information is
useful in analyzing our revenues because franchisees and area licensees pay
us royalties and advertising fees that are generally based on a percentage
of their sales, as well as rental payments under leases that are usually
based on a percentage of their sales. Management also uses this information
to make decisions about future plans for the development of additional
restaurants as well as evaluation of current operations.


                                         Three Months Ended March 31,
                                    -------------------------------------
                                      2010      2009      2010      2009
                                    -------   -------   -------   -------
                                          IHOP             Applebee's
                                    -----------------   -----------------
Restaurant Data                                  (unaudited)
Effective restaurants(a)
   Franchise                          1,279     1,225     1,604     1,588
   Company                               12        11       397       404
   Area license                         164       160        --        --
                                    -------   -------   -------   -------
     Total                            1,455     1,396     2,001     1,992
                                    =======   =======   =======   =======
System-wide(b)
   Sales percentage change(c)           3.3 %     5.6 %    (3.2)%    (2.5)%
   Domestic same-restaurant sales
    percentage change(d)               (0.4)%     2.0 %    (2.7)%    (3.0)%
Franchise(b)(e)
   Sales percentage change(c)(g)        3.0 %     6.4 %    (2.4)%     4.7 %
   Same-restaurant sales percentage
    change(d)                          (0.4)%     2.0 %    (2.6)%    (2.9)%
   Average weekly domestic unit
    sales (in thousands)            $  36.1   $  36.5   $  48.1   $  49.4
Company (f)
   Sales percentage change(c)(g)       n.m.      n.m.      (6.4)%   (23.5)%
   Same-restaurant sales percentage
    change(d)                          n.m.      n.m.      (3.4)%    (3.2)%
   Average weekly domestic unit
    sales (in thousands)               n.m.      n.m.   $  42.6   $  44.6
Area License(h)
   Sales percentage change(c)          6.3  %    (1.4)%      --        --




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

(b) "System-wide sales" are retail sales at IHOP and Applebee's
    restaurants operated by franchisees and IHOP restaurants operated by
    area licensees, as reported to the Company, in addition to retail
    sales at company-operated restaurants.  Sales at restaurants that
    are owned by franchisees and area licensees are not attributable to
    the Company.

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

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

(e) IHOP franchise restaurant sales were $599.6 million and $582.0 million
    for the three months ended March 31, 2010 and 2009, respectively.
    Applebee's franchise restaurant sales were $917.1 million and 939.9
    million for the three months ended March 31, 2010 and 2009,
    respectively.

(f) Sales percentage change and same-restaurant sales percentage change for
    IHOP company-operated restaurants are not meaningful due to the
    relatively small number and test-market nature of the restaurants,
    along with the periodic inclusion of restaurants reacquired from
    franchisees that are temporarily operated by the Company.

(g) The sales percentage change for Applebee's franchise and
    company-operated restaurants is impacted by the franchising of 103
    company-operated restaurants during 2008 and seven company-operated
    restaurants in 2009.

(h) Sales at IHOP area license restaurants were $60.1 million and $56.5
    million for the three months ended March 31, 2010 and 2009,
    respectively.





                    DINEEQUITY, INC. AND SUBSIDIARIES
                              RESTAURANT DATA

The following table summarizes our restaurant development activity:



                                                        Three Months Ended
                                                             March 31,
                                                        ------------------
                                                          2010      2009
                                                        --------  --------
                                                           (unaudited)
Applebee's Restaurant Development Activity
Beginning of period                                        2,008     2,004
New openings
   Company-developed                                          --        --
   Franchise-developed                                         3         5
                                                        --------  --------
     Total new openings                                        3         5
Closings
   Company                                                    (6)       --
   Franchise                                                  (6)      (17)
                                                        --------  --------
     Total closings                                          (12)      (17)
                                                        --------  --------
End of period                                              1,999     1,992
                                                        ========  ========
Summary-end of period
Franchise                                                  1,606     1,591
Company                                                      393       401
                                                        --------  --------
     Total                                                 1,999     1,992
                                                        ========  ========

IHOP Restaurant Development Activity
Beginning of period                                        1,456     1,396
New openings
   Company-developed                                          --        --
   Franchise-developed                                         6        11
   Area license                                                1        --
                                                        --------  --------
     Total new openings                                        7        11
Closings
   Company                                                    --        --
   Franchise                                                  (1)       (4)
   Area license                                               (1)       (1)
                                                        --------  --------
     Total closings                                           (2)       (5)
                                                        --------  --------
End of period                                              1,461     1,402
                                                        ========  ========
Summary-end of period
Franchise                                                  1,285     1,231
Company                                                       12        12
Area license                                                 164       159
                                                        --------  --------
     Total                                                 1,461     1,402
                                                        ========  ========