SOURCE: DineEquity, Inc.

DineEquity, Inc.

March 03, 2010 07:00 ET

DineEquity, Inc. Announces Solid Fourth Quarter 2009 Financial Results

Improved Company Restaurant Operating Margin and Disciplined G&A Management Drive Cash From Operations Performance of $158 Million; Fiscal 2009 Securitized Debt Retirement at $217 Million

GLENDALE, CA--(Marketwire - March 3, 2010) - DineEquity, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill & Bar and IHOP Restaurants, today announced financial results for the fourth quarter ended December 31, 2009. DineEquity's financial performance for the fourth quarter and fiscal year 2009 included the following highlights:

--  Cash flows from operating activities for fiscal 2009 were
    $157.8 million compared to $110.8 million for fiscal 2008. The
    increase of $47.0 million is primarily the result of improvements in
    the Company's business performance, inclusive of the positive impact
    of a 53rd operating week in 2009, as well as positive changes in
    working capital.

--  Securitized debt was reduced by $74.3 million during the fourth quarter
    and by $216.6 million during fiscal 2009 due to the use of free cash
    flow for opportunistic debt retirement, normal amortization and the
    sale of seven company-operated Applebee's restaurants in 2009.

--  For the fourth quarter 2009, the Company reported a net loss available
    to common stockholders of $48.2 million, or $2.84 per diluted share,
    compared to a net loss of $136.9 million, or $8.15 per diluted share,
    in the fourth quarter 2008. For fiscal 2009, net income available to
    common shareholders was $9.2 million, or $0.55 per diluted share,
    compared to a net loss of $169.2 million, or $10.09 per diluted share,
    for fiscal 2008. Fourth quarter and fiscal 2009 and 2008 net income
    (loss) results were impacted by non-cash impairment charges primarily
    related to the write down of Applebee's intangible assets. Such amounts
    aggregated to $98.6 million and $170.7 million for the fourth quarters
    2009 and 2008, respectively, and $105.1 million and $240.6 million for
    full year 2009 and 2008, respectively.

--  Adjusted net income (loss) available to common stockholders (EPS
    excluding impairment and closure charges, gain on debt repurchases,
    gain/loss on disposition of assets, amortization of intangibles and
    non-cash interest expense substantially related to the acquisition of
    Applebee's) increased to $0.76 for the fourth quarter 2009 compared to
    $0.37 for the same quarter in 2008. For fiscal 2009, adjusted EPS
    increased to $4.06 compared to $2.14 for fiscal 2008. These
    improvements were due primarily to higher operating margins at
    company-operated Applebee's restaurants, lower interest expense as the
    result of opportunistic debt retirement, disciplined General &
    Administrative (G&A) expense management, and the impact of the 53rd
    week in fiscal year 2009. The 53rd operating week increased pre-tax
    profitability by $11 million for the fourth quarter and fiscal year
    2009. These improvements were partially offset by lower same-store
    sales and the sale of 110 Applebee's company-operated restaurants
    since 2008. (See "Non-GAAP Financial Measures" below.)

--  Free cash flow more than doubled to $133.4 million for fiscal 2009
    compared to $61.5 million in 2008. (See "Non-GAAP Financial Measures"
     below.)

--  Operating margins at Applebee's company-operated restaurants improved
    270 basis points to 13.4% for the fourth quarter 2009, and improved 270
    basis points to 14.4% for fiscal 2009 compared to the same periods in
    2008. These improvements primarily reflected better management of food
    and labor costs as Applebee's continued to enhance the profit
    performance of its company-operated restaurants despite challenged
    same-store sales results.

--  Consolidated G&A expenses decreased 5.0% for the fourth quarter 2009
    and 13.0% for fiscal 2009 compared to the same periods in 2008. These
    improvements were primarily driven by lower overhead expense as a
    result of the sale of 110 company-operated Applebee's restaurants since
    the second quarter 2008, the integration of Applebee's and IHOP shared
    services functions, other cost savings initiatives, lower stock based
    compensation expense and the elimination of non-recurring transition
    costs recognized in 2008.

--  For the fourth quarter 2009, IHOP's domestic system-wide same-store
    sales decreased 3.1% and Applebee's domestic system-wide same-store
    sales decreased 4.5% compared to the same quarter in 2008. For fiscal
    2009, domestic system-wide same-store sales decreased 0.8% for IHOP and
    decreased 4.5% for Applebee's compared to fiscal 2008.

--  DineEquity's predominantly franchised Applebee's and IHOP restaurant
    systems generated consolidated franchise operations revenue increases
    of 5.3% for the fourth quarter 2009 and 5.3% for fiscal 2009 compared
    to the same periods in 2008. This was primarily due to increases in the
    number of effective franchise restaurants as the result of franchising
    Applebee's company-operated restaurants and IHOP new franchise
    restaurant development. Consolidated franchise operations segment
    profit increased 9.8% for the quarter and 5.0% for fiscal 2009,
    compared to the same periods in 2008.

--  Consolidated capital expenditures were $15.4 million for fiscal 2009.

"In an environment where cautious consumer spending continues to impact same-store sales at both Applebee's and IHOP, we are pleased to have aggressively managed G&A and interest expense which resulted in adjusted earnings growth in both the fourth quarter and full year 2009," said Julia A. Stewart, DineEquity's chairman and chief executive officer. "We remain guardedly optimistic about the U.S. economy and are encouraged by improving same-store sales on a quarter over quarter basis at Applebee's. We plan to continue generating significant free cash flow and remain wholly focused on our strategic objectives of aggressively reducing securitized debt levels and differentiating the Applebee's and IHOP brands for accelerated growth when the economy recovers."

Same-Store Sales Performance

IHOP's domestic system-wide same-store sales decreased 3.1% for the fourth quarter 2009 compared to the same quarter in 2008, reflecting a lower average guest check and declines in guest traffic. For fiscal 2009, IHOP's domestic system-wide same-store sales decreased 0.8%. IHOP's marketing efforts during the quarter included IHOP's National Football League and Holiday Hotcakes limited-time offers, expanded local restaurant marketing activities around the dinner daypart, and the increased use of coupons system-wide, among other activities.

Applebee's domestic system-wide same-store sales decreased 4.5% for the fourth quarter 2009 compared to the same quarter in 2008, and decreased 4.5% for fiscal 2009 compared to fiscal 2008. Same-store sales for Applebee's domestic franchise restaurants decreased 4.6% for the quarter compared to the same quarter in 2008, and decreased 4.4% for fiscal 2009 compared to fiscal 2008. Same-store sales for Applebee's company-operated restaurants decreased 3.9% for the fourth quarter 2009 compared to the same quarter in 2008, and decreased 4.8% for fiscal 2009 compared to fiscal 2008. The performance of Applebee's company-operated restaurants for the fourth quarter 2009 reflected declines in guest traffic and a lower average guest check primarily due to unfavorable mix shift which offset a 2.2% increase in effective pricing. Applebee's marketing efforts during the quarter included Applebee's Veteran's Day event as well as its Two for $20 value offering supported by enhanced marketing activities through its sponsorship of Monday Night Football and partnership with ESPN, among other activities.

Company Operations Improvements

Applebee's company-operated restaurant operating margin improved 270 basis points to 13.4% for the quarter compared to a 10.7% operating margin in the same quarter in 2008. Applebee's improved operating margin performance for the quarter was due primarily to a reduction in hourly labor costs as a result of improved productivity, decreased food and beverage costs primarily due to vendor discounts and rebates, and a 2.2% increase in effective pricing, which was offset by an unfavorable mix shift. The 53rd operating week improved Applebee's fourth quarter 2009 margin performance by approximately 110 basis points.

Applebee's company-operated restaurant operating margin improved 270 basis points to 14.4% for fiscal 2009 compared to 11.7% for fiscal 2008. Applebee's improved operating margin performance for the year was favorably impacted by effective pricing increases of 2.7% partially offset by an unfavorable mix shift, improved labor costs primarily due to a reduction in one-time management retention costs, a reduction in hourly labor costs as a result of effective wage rate management and improved productivity, and lower group insurance costs. Decreased food and beverage costs were also a favorable margin performance factor. The 53rd operating week improved Applebee's fiscal 2009 margin performance by approximately 25 basis points.

Debt Management

Securitized debt was reduced by $74.3 million during the fourth quarter 2009 due to debt retirement in the open market and scheduled payments on the Company's subordinated notes. Securitized debt was reduced by a total of $216.6 million for fiscal 2009. The decrease was primarily due to the use of free cash flow for securitized debt retirement in the open market, after-tax proceeds related to the sale of seven company-operated Applebee's restaurants, and scheduled payments on the Company's subordinated notes.

As of the end of the fourth quarter 2009, 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 5.71x compared to a required maximum threshold of 7.0x. Debt service coverage ratios (DSCR) were 3.31x for IHOP's securitized debt on a three-month unadjusted basis and 2.60x 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 3.07x, compared to a required 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 fourth quarter 2009 webcast.

Investor Conference Call Today

The Company will host an investor conference call to discuss its fourth quarter and fiscal 2009 financial results and 2010 performance guidance today, Wednesday, March 3, 2010, at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). To participate on the call, please dial (888) 713-4214 and reference pass code 31206619. 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 March 10, 2010 by dialing 888-286-8010 and referencing pass code 26600797. 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 3,400 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 "net income (loss) available to common stockholders, excluding impairment and closure charges, gain on extinguishment of debt, amortization of intangible assets, non-cash interest expense and (loss) gain on disposition of assets" and the non-GAAP financial measures "EBITDA" and "free cash flow." The former 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. For the latter, 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. 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.

[Financial Tables to Follow]


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


                              Three Months Ended         Year Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------
Revenues
  Franchise revenues        $   93,276  $   88,547  $  372,198  $  353,331
  Company restaurant sales     221,871     228,891     890,020   1,103,228
  Rental income                 34,663      32,852     133,845     131,347
  Financing revenues             5,395       5,235      17,899      25,722
                            ----------  ----------  ----------  ----------
     Total revenues            355,205     355,525   1,413,962   1,613,628
                            ----------  ----------  ----------  ----------
Costs and Expenses
  Franchise expenses            24,845      26,227     102,256      96,243
  Company restaurant
   expenses                    193,123     205,491     766,466     978,197
  Rental expenses               24,222      24,299      97,303      98,057
  Financing expenses                10       1,101         370       7,314
  General and
   administrative expenses      41,454      43,617     158,469     182,239
  Interest expense              46,862      50,443     186,473     203,141
  Impairment and closure
   charges                      98,622     170,732     105,094     240,630
  Amortization of
   intangible assets             3,250       3,076      12,306      12,132
  Gain on extinguishment
   of debt                      (6,875)    (12,808)    (45,678)    (15,242)
  (Gain) loss on
   disposition of assets           306         691      (6,947)        259
  Other expense (income),
   net                             249         968       1,266      (1,185)
                            ----------  ----------  ----------  ----------
     Total costs and
      expenses                 426,068     513,837   1,377,378   1,801,785
                            ----------  ----------  ----------  ----------
Income (loss) before income
 taxes                         (70,863)   (158,312)     36,584    (188,157)
Provision (benefit) for
 income taxes                  (26,812)    (21,188)      5,175     (33,698)
                            ----------  ----------  ----------  ----------
Net income (loss)           $  (44,051) $ (137,124) $   31,409  $ (154,459)
                            ==========  ==========  ==========  ==========
Net income (loss)           $  (44,051) $ (137,124) $   31,409  $ (154,459)
  Less: Series A preferred
   stock dividends              (5,281)     (4,750)    (19,531)    (19,000)
  Less: Accretion of
   Series B preferred stock       (585)       (551)     (2,291)     (2,151)
  Less: Net (income) loss
   allocated to unvested
   participating restricted
   stock                         1,760       5,476        (351)      6,417
                            ----------  ----------  ----------  ----------
Net income (loss) available
 to common stockholders     $  (48,157) $ (136,949) $    9,236  $ (169,193)
                            ==========  ==========  ==========  ==========
Net income (loss) available
 to common stockholders per
 share
   Basic                    $    (2.84) $    (8.15) $     0.55  $   (10.09)
                            ==========  ==========  ==========  ==========
   Diluted                  $    (2.84) $    (8.15) $     0.55  $   (10.09)
                            ==========  ==========  ==========  ==========
Weighted average shares
 outstanding
   Basic                        16,953      16,799      16,917      16,764
                            ==========  ==========  ==========  ==========
   Diluted                      16,953      16,799      16,917      16,764
                            ==========  ==========  ==========  ==========
Dividends declared per
 common share                       --  $     0.25          --  $     1.00
                            ==========  ==========  ==========  ==========
Dividends paid per common
 share                              --  $     0.25          --  $     1.00
                            ==========  ==========  ==========  ==========





                    DINEEQUITY, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                              (In thousands)


                                                 December 31,  December 31,
                                                     2009          2008
                                                 ------------  ------------
                                                 (Unaudited)
                    Assets
Current assets:
  Cash and cash equivalents                      $     82,314  $    114,443
  Restricted cash                                      72,690        83,355
  Receivables, net                                    104,690       117,930
  Inventories                                          12,236        10,959
  Prepaid income taxes                                  7,702        15,734
  Prepaid gift cards                                   19,878        15,375
  Prepaid expenses                                     13,425         1,692
  Deferred income taxes                                15,444        27,504
  Assets held for sale                                  8,765        11,861
                                                 ------------  ------------
     Total current assets                             337,144       398,853
                                                 ------------  ------------
Non-current restricted cash                            48,173        53,395
Restricted assets related to captive insurance
 subsidiary                                             4,344         5,849
Long-term receivables                                 259,775       277,106
Property and equipment, net                           771,372       824,482
Goodwill                                              697,470       697,470
Other intangible assets, net                          849,552       956,036
Other assets, net                                     133,038       148,026
                                                 ------------  ------------
     Total assets                                $  3,100,868  $  3,361,217
                                                 ============  ============

      Liabilities and Stockholders' Equity
Current liabilities:
  Current maturities of long-term debt           $     25,200  $     15,000
  Accounts payable                                     31,729        48,983
  Accrued employee compensation and benefits           37,397        44,299
  Gift card liability                                 105,465        95,532
  Accrued financing costs                                  --        20,071
  Other accrued expenses                               54,549        55,249
  Accrued interest payable                              3,627         3,580
                                                 ------------  ------------
     Total current liabilities                        257,967       282,714
                                                 ------------  ------------
Long-term debt, less current maturities             1,637,198     1,853,367
Financing obligations, less current maturities        309,415       318,651
Capital lease obligations, less current
 maturities                                           152,758       161,310
Deferred income taxes                                 369,127       395,448
Other liabilities                                     117,449       119,910
                                                 ------------  ------------
     Total liabilities                              2,843,914     3,131,400
Preferred stock, Series A                             187,050       187,050
Total stockholders' equity                             69,904        42,767
                                                 ------------  ------------
     Total liabilities and stockholders' equity  $  3,100,868  $  3,361,217
                                                 ============  ============





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


                                                 Year Ended December 31,
                                               ---------------------------
                                                   2009           2008
                                               ------------   ------------
Cash flows from operating activities
Net income (loss)                              $     31,409   $   (154,459)
  Adjustments to reconcile net income (loss)
   to cash flows provided by operating
   activities
     Depreciation and amortization                  65,379         72,934
     Non-cash interest expense                      39,422         39,083
     Gain on extinguishment of debt                (45,678)       (15,242)
     Impairment and closure charges                105,094        240,630
     Deferred income taxes                         (19,875)       (65,226)
     Stock-based compensation expense               10,710         12,089
     Tax benefit from stock-based compensation         531          1,864
     Excess tax benefit from stock options
      exercised                                        (48)          (315)
     Gain on disposition of assets                  (6,947)           259
     Other                                          (5,816)         1,172
     Changes in operating assets and
      liabilities
        Receivables                                  11,607         (2,441)
        Inventories                                  (1,474)           182
        Prepaid expenses                            (25,273)          (146)
        Accounts payable                            (14,867)       (23,749)
        Accrued employee compensation and
         benefits                                    (8,119)       (11,609)
        Gift card liability                           7,180         18,480
        Other accrued expenses                       14,613         (2,667)
                                               ------------   ------------
           Cash flows provided by operating
            activities                              157,848        110,839
                                               ------------   ------------
Cash flows from investing activities
     Additions to property and equipment            (15,372)       (31,765)
     (Additions) reductions to long-term
      receivables                                     2,528         (4,743)
     Payment of accrued acquisition costs                --        (10,261)
     Collateral released by captive insurance
      subsidiary                                      1,549          4,559
     Proceeds from sale of property and
      equipment and assets held for sale             15,777         61,137
     Principal receipts from notes and
      equipment contracts receivable                 15,025         15,797
     Other                                             (672)           471
                                               ------------   ------------
           Cash flows provided by investing
            activities                               18,835         35,195
                                               ------------   ------------
Cash flows from financing activities
     Proceeds from issuance of long-term debt        10,000         35,000
     Proceeds from financing obligations                 --        370,502
     Repayment of long-term debt                   (173,777)      (421,325)
     Principal payments on capital lease and
      financing obligations                         (16,160)        (9,854)
     Dividends paid                                 (24,091)       (33,362)
     Proceeds from stock options exercised              324            989
     Excess tax benefit from stock options
      exercised                                          48            315
     Payment of accrued debt issuance costs         (20,300)       (48,902)
     Restricted cash related to securitization       15,878         49,216
     Other                                             (734)        (1,008)
                                               ------------   ------------
           Cash flows used in financing
            activities                             (208,812)       (58,429)
                                               ------------   ------------
     Net change in cash and cash equivalents        (32,129)        87,605
     Cash and cash equivalents at beginning
      of year                                       114,443         26,838
                                               ------------   ------------
     Cash and cash equivalents at end of year  $     82,314   $    114,443
                                               ============   ============





                    DINEEQUITY, INC. AND SUBSIDIARIES

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

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


                              Three Months Ended         Year Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------
Net (loss) income available
 to common stockholders,
 as reported                $  (48,157) $ (136,949) $    9,236  $ (169,193)
Impairment and closure
 charges                        98,622     170,732     105,094     240,630
Gain on extinguishment of
 debt                           (6,875)    (12,808)    (45,678)    (15,242)
Amortization of intangible
 assets                          3,250       3,076      12,306      12,132
Non-cash interest expense       10,084      10,136      39,422      39,083
Loss (gain) on disposition
 of assets                         306         691      (6,947)        259
Income tax (provision)
 benefit                       (41,944)    (22,862)    (41,470)    (64,036)
Net income allocated to
 unvested participating
 restricted stock               (2,237)     (5,728)     (2,294)     (7,773)
                            ----------  ----------  ----------  ----------
Net income available to
 common stockholders, as
 adjusted                   $   13,049  $    6,288  $   69,669  $   35,860
                            ==========  ==========  ==========  ==========

Diluted net income available
 to common stockholders per
 share:
Net (loss) income available
 to common stockholders per
 share, as reported         $    (2.84) $    (8.15) $     0.55  $   (10.09)
Impairment and closure
 charges per share                5.52       10.16        5.92       14.35
Gain on extinguishment of
 debt per share                  (0.38)      (0.76)      (2.57)      (0.91)
Amortization of intangible
 assets per share                 0.18        0.18        0.69        0.72
Non-cash interest expense
 per share                        0.56        0.60        2.22        2.33
Loss (gain) on disposition
 of assets per share              0.02        0.04       (0.39)       0.02
Income tax (provision)
 benefit per share               (2.35)      (1.36)      (2.33)      (3.82)
Net income allocated to
 unvested participating
 restricted stock per share      (0.13)      (0.34)      (0.13)      (0.46)
Per share effect of
 dilutive calculation
 adjustments                      0.18          --        0.10          --
                            ----------  ----------  ----------  ----------
Diluted net income available
 to common stockholders per
 share, as adjusted         $     0.76  $     0.37  $     4.06  $     2.14
                            ==========  ==========  ==========  ==========

Numerator for basic
 EPS-income available to
 common stockholders, as
 adjusted                   $   13,049  $    6,288  $   69,669  $   35,860
Effect of unvested
 participating restricted
 stock using the two-class
 method                             24          --         123          --
Effect of dilutive
 securities:
Stock options                       --          --          --          --
Convertible Series B
 preferred stock                   585          --       2,291          --
                            ----------  ----------  ----------  ----------
Numerator for diluted
 EPS-income available to
 common stockholders after
 assumed conversions, as
 adjusted                   $   13,658  $    6,288  $   72,083  $   35,860
                            ==========  ==========  ==========  ==========

Denominator for basic
 EPS-weighted-average
 shares                         16,953      16,799      16,917      16,764
Effect of dilutive
 securities:
Stock options                      354          --         275          --
Convertible Series B
 preferred stock                   573          --         573          --
                            ----------  ----------  ----------  ----------
Denominator for diluted
 EPS-weighted-average
 shares and assumed
 conversions                    17,880      16,799      17,765      16,764
                            ==========  ==========  ==========  ==========





                    DINEEQUITY, INC. AND SUBSIDIARIES

                        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 December 31, 2009

Income before income taxes (including gain
 on extinguishment of debt)                                     $   36,584
Interest expense                                                   207,297
Depreciation and amortization                                       65,378
Impairment and closure charges                                     105,094
Stock-based compensation                                            10,710
Gain on sale of assets                                              (7,087)
Non-cash amounts related to captive
 insurance subsidiary                                                  261
                                                                ----------
EBITDA                                                             418,237
Annualized operating lease expense                                  98,433
                                                                ----------
EBITDAR                                                         $  516,670
                                                                ==========


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

                                                   Year Ended December 31,
                                                   -----------------------
                                                      2009         2008
                                                   ----------   ----------
Cash flows from operating activities               $  157,848   $  110,839
Receipts from long-term notes receivable               15,025       15,797
Dividends paid                                        (24,091)     (33,362)
Capital expenditures                                  (15,372)     (31,765)
                                                   ----------   ----------
Free cash flow                                     $  133,410   $   61,509
                                                   ==========   ==========





                    DINEEQUITY, INC. AND SUBSIDIARIES
                             RESTAURANT DATA

The following table sets forth, for the three-month and twelve-month
periods ended December 31 of the current year and prior year, information
regarding the percentage change in sales at effective restaurants in the
IHOP and Applebee's systems 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 system, 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        Year Ended
                                 December 31,           December 31,
                             --------------------    -------------------
                               2009        2008        2009        2008
                             --------    --------    --------    --------
Applebee's Restaurant Data                   (unaudited)
Effective restaurants(a)
  Franchise                     1,605       1,555       1,595       1,504
  Company                         399         442         401         486
                             --------    --------    --------    --------
     Total                      2,004       1,997       1,996       1,990
                             ========    ========    ========    ========
System-wide(b)
  Domestic sales percentage
   change(c)                      5.2%       (3.4)%      (2.1)%      (0.4)%
  Domestic same-store sales
   percentage change(d)          (4.5)%      (4.6)%      (4.5)%      (2.2)%
Franchise(b)(e)
  Domestic sales percentage
   change(c)(g)                   7.5%        1.7%        3.6%        1.6%
  Domestic same-store sales
   percentage change(d)          (4.6)%      (4.7)%      (4.4)%      (2.4)%
  Domestic average weekly
   unit sales (in thousands) $   42.7    $   43.9   $    45.3   $    47.2
Company
  Domestic sales percentage
   change(c)(g)                  (3.2)%     (18.3)%     (19.7)%      (6.1)%
  Domestic same-store sales
   percentage change(d)          (3.9)%      (4.2)%      (4.8)%      (1.3)%
  Domestic average weekly
   unit sales (in thousands) $   39.0    $   39.2    $   41.1    $   43.1


                              Three Months Ended        Year Ended
                                 December 31,           December 31,
                             --------------------    -------------------
                               2009        2008        2009        2008
                             --------    --------    --------    --------
IHOP Restaurant Data                         (unaudited)
Effective restaurants(a)
  Franchise                     1,266       1,206       1,245       1,189
  Company                          12          11          11          10
  Area license                    163         159         161         158
                             --------    --------    --------    --------
     Total                      1,441       1,376       1,417       1,357
                             ========    ========    ========    ========
System-wide(b)
  Sales percentage change(c)      9.4%        3.6%        5.6%        5.5%
  Domestic same-store sales
   percentage change(d)          (3.1)%      (1.0)%      (0.8)%       1.5%
Franchise(b)(e)
  Sales percentage change(c)     10.9%        3.4%        6.3%        5.9%
  Same-store sales percentage
   change(d)                     (3.2)%      (1.0)%      (0.8)%       1.5%
  Average weekly unit sales
   (in thousands)            $   33.9    $   34.4    $   35.1    $   35.2
Company(f)                        n.m.        n.m.        n.m.        n.m.
Area License(h)
  Sales percentage change(c)     (5.1)%       6.2%       (1.6)%       3.1%


(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 system, which includes restaurants owned by the Company as
    well as those owned by franchisees and area licensees.

(b) "System-wide sales" are retail sales of Applebee's and IHOP 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 year compared to the
    prior fiscal year for all restaurants in that category. The fourth
    quarter and fiscal year ended December 31, 2009 contained 14 and 53
    weeks, respectively, while the fourth quarter and fiscal year ended
    December 31, 2008 contained 13 and 52 weeks, respectively.

(d) "Same-store sales percentage change" reflects the percentage change in
    sales, in any given fiscal year compared to the prior fiscal 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 store closures, the restaurants open
    throughout both fiscal periods being compared will be different from
    period to period. Same-store sales percentage change does not include
    data on IHOP restaurants located in Florida.

(e) IHOP franchise restaurant sales were $598.7 million and $2.3 billion
    for the fourth quarter and fiscal year ended December 31, 2009,
    respectively. IHOP franchise restaurant sales were $539.7 million and
    $2.2 billion for the fourth quarter and fiscal year ended December 31,
    2008, respectively. Applebee's domestic franchise restaurant sales were
    $878.1 million and $3.5 billion for the fourth quarter and fiscal year
    ended December 31, 2009, respectively. Applebee's domestic franchise
    restaurant sales were $817.1 million and $3.4 billion for the fourth
    quarter and fiscal year ended December 31, 2008, respectively.

(f) Sales percentage change and same-store 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) IHOP area license restaurants are located in Florida and Georgia in the
    U.S. and in British Columbia, Canada. Sales at IHOP area license
    restaurants were $52.3 million and $214.9 million for the fourth
    quarter and fiscal year ended December 31, 2009, respectively. Sales at
    IHOP area license restaurants were $55.2 million and $218.4 million for
    the fourth quarter and fiscal year ended December 31, 2008,
    respectively.





                    DINEEQUITY, INC. AND SUBSIDIARIES
                              RESTAURANT DATA

The following table summarizes our restaurant development activity:


                              Three Months Ended         Year Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------
                                              (unaudited)
Applebee's Restaurant
 Development Activity
Beginning of period              2,002       1,997       2,004       1,976
New openings
  Company-developed                 --          --          --           1
  Franchisee-developed              10          14          33          48
                            ----------  ----------  ----------  ----------
     Total new openings             10          14          33          49
Closings
  Company                           --          --          --          (3)
  Franchise                         (4)         (7)        (29)        (18)
                            ----------  ----------  ----------  ----------
End of period                    2,008       2,004       2,008       2,004
                            ==========  ==========  ==========  ==========
Summary-end of period
Franchise                        1,609       1,598       1,609       1,598
Company                            399         406         399         406
                            ----------  ----------  ----------  ----------
Total                            2,008       2,004       2,008       2,004
                            ==========  ==========  ==========  ==========

IHOP Restaurant Development
 Activity
Beginning of period              1,433       1,375       1,396       1,344
New openings
  Company-developed                  1           1           1           1
  Franchisee-developed              26          22          69          65
  Area license                       2           3           6           5
                            ----------  ----------  ----------  ----------
     Total new openings             29          26          76          71
Closings
  Company                          --          --          --          (1)
  Franchise                        (6)         (5)        (14)        (16)
  Area license                     --          --          (2)         (2)
                            ----------  ----------  ----------  ----------
End of period                    1,456       1,396       1,456       1,396
                            ==========  ==========  ==========  ==========
Summary-end of period
Franchise                        1,279       1,225       1,279       1,225
Company                             13          11          13          11
Area license                       164         160         164         160
                            ----------  ----------  ----------  ----------
     Total                       1,456       1,396       1,456       1,396
                            ==========  ==========  ==========  ==========