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Press release from Business Wire

DineEquity, Inc. Reports Third Quarter Results

<p class='bwalignc'> <b>Completes Applebee's Refranchising Initiative</b> </p> <p class='bwalignc'> <b>Significantly Reduces Total Debt by $167 Million</b> </p>

Tuesday, October 30, 2012

DineEquity, Inc. Reports Third Quarter Results08:00 EDT Tuesday, October 30, 2012 GLENDALE, Calif. (Business Wire) -- DineEquity, Inc. (NYSE: DIN), the parent company of Applebee's Neighborhood Grill & Bar and IHOP Restaurants, today announced financial results for the third quarter of 2012. “We are pleased with our results for the third quarter, which was highlighted by the great progress we made against our long-term strategic goals. Earlier this month, we achieved a significant milestone with the completion of our transition to a fully-franchised restaurant system. Our more efficient business model continued to generate strong free cash flow, enabling further debt reduction as we optimize our G&A structure to create additional value for our stockholders,” said Julia A. Stewart, Chairman and Chief Executive Officer of DineEquity, Inc. “Our strategy at Applebee's yielded solid performance in the third quarter, where our revitalization initiatives continue to fuel momentum. We continued the hard work already underway at IHOP to restore same-restaurant sales growth. Most importantly, we have strong alignment with our IHOP franchisees to execute on our plan for improvement.” Third Quarter 2012 Financial Highlights Total debt was reduced by $167.2 million in the third quarter of 2012 as a result of net cash proceeds and financing obligation reductions from the refranchise and sale of Applebee's company-operated restaurants and free cash flow. The Company reduced Term Loan balances by $106.1 million and financing and capital lease obligations by $61.1 million. Adjusted net income available to common stockholders was $18.9 million, representing adjusted earnings per diluted share of $1.03 for the third quarter of 2012. This compares to $19.1 million, or adjusted earnings per diluted share of $1.04, for the same quarter in 2011. The decrease in adjusted earnings was due to, as expected, lower segment profit caused by the execution of our strategy to refranchise Applebee's company-operated restaurants. This item was partially offset by lower cash interest expense. (See “Non-GAAP Financial Measures” below.) GAAP net income available to common stockholders was $58.7 million, or earnings per diluted share of $3.14 for the third quarter of 2012, compared to $15.5 million, or earnings per diluted share of $0.85, for the same quarter in 2011. The increase was primarily due to a higher gain on the refranchise and sale of Applebee's company-operated restaurants and lower interest expense. These items were partially offset by higher income taxes, an increase in general and administrative expenses, and, as expected, lower segment profit due to the refranchise and sale of Applebee's company-operated restaurants. Consolidated general and administrative expenses were $48.7 million for the third quarter of 2012 compared to $38.7 million in the third quarter of 2011. The increase was primarily due to a $9 million non-recurring litigation settlement and net severance charges associated with the Company's previously announced restructuring initiative to lower general and administrative expenses by approximately $10 million to $12 million on an annualized basis. These items were partially offset by the savings in employee compensation associated with the workforce reduction. Applebee's company-operated restaurant operating margin was 15.5% for the third quarter of 2012 compared to 14.2% for the same quarter in 2011, an increase of 130 basis points. The increase was primarily due to cessation of depreciation on restaurants held for sale, the refranchising of lower margin company-operated restaurants, and lower advertising expense. These items were partially offset by higher labor expense and commodity inflation. First Nine Months of 2012 Highlights Total debt was reduced by $255.5 million in the first nine months of 2012 as a result of net cash proceeds and financing obligation reductions from the refranchise and sale of Applebee's company-operated restaurants and free cash flow. The Company reduced Term Loan balances by $175.2 million, Senior Notes by $3.6 million, and financing and capital lease obligations by $76.7 million. Adjusted net income available to common stockholders was $62.6 million in the first nine months of 2012, representing adjusted earnings per diluted share of $3.44. This compares to $61.7 million, or adjusted earnings per diluted share of $3.37, for the same period in 2011. The increase in adjusted earnings was due to lower cash interest expense, partially offset by, as expected, lower segment profit due to the refranchise and sale of Applebee's company-operated restaurants and lower income taxes. (See “Non-GAAP Financial Measures” below.) GAAP net income available to common stockholders was $104.3 million in the first nine months of 2012, or earnings per diluted share of $5.66, compared to $43.4 million, or earnings per diluted share of $2.38 for the same period in 2011. The increase was primarily due to a higher gain on the refranchise and sale of Applebee's company-operated restaurants, lower impairment and closure charges, and lower interest expense. These items were partially offset by higher income tax expense, an increase in general and administrative expenses, and, as expected, lower segment profit due to refranchising. EBITDA was $226.3 million for the first nine months of 2012. (See “Non-GAAP Financial Measures” below.) For the first nine months of 2012, cash flows from operating activities were $68.1 million, capital expenditures were $13.5 million, and free cash flow was $64.9 million. (See “Non-GAAP Financial Measures” below.) Applebee's company-operated restaurant operating margin was 16.8% for the first nine months of 2012 compared to 14.4% for the same period in 2011. The increase of 240 basis points was primarily due to lower depreciation expense, improved control of waste, and the refranchising of lower margin company-operated restaurants. These items were partially offset by commodity inflation, new menu related expense, and higher labor expense. Refranchise and Sale of Applebee's Company-Operated Restaurants During the third quarter of 2012, DineEquity completed the sale of 33 and 65 Applebee's company-operated restaurants to American Franchise Capital, LLC and TSFR Apple Venture, respectively. After-tax net proceeds of approximately $87 million were used to retire debt. On October 3, 2012, DineEquity completed the sale of 39Applebee's company-operated restaurants located in Virginia to Potomac Family Dining Group, LLC. After-tax net proceeds of approximately $24 million were used to further reduce debt. DineEquity has now completed its Applebee's refranchising program and transitioned to a 99% franchised restaurant system and is now considered to be fully franchised. As a result, DineEquity's business model is less capital intensive with higher operating margins and the Company expects to have cash flow with substantially reduced volatility over time. The Company currently retains 23 Applebee's company-operated restaurants in the Kansas City area for test market purposes. Same-Restaurant Sales PerformanceThird Quarter 2012 Applebee's domestic system-wide same-restaurant sales increased 2.0% for the third quarter of 2012 compared to the third quarter of 2011. The increase in same-restaurant sales reflected a higher average guest check, partially offset by a decline in traffic compared to the third quarter of 2011. IHOP's domestic system-wide same restaurant sales decreased 2.0% for the third quarter of 2012 compared to the third quarter of 2011. The decline in same-restaurant sales reflected a decline in traffic, partially offset by a slightly higher average guest check compared to the third quarter of 2011. First Nine Months of 2012 Applebee's domestic system-wide same-restaurant sales increased 1.3% in the first nine months of 2012 compared to the same period in 2011. The increase in same-restaurant sales was mainly driven by a higher average guest check, partially offset by a decline in traffic compared to the first nine months of 2011. IHOP's domestic system-wide same-restaurant sales declined 1.3% in the first nine months of 2012 compared to the same period in 2011. The decline in same-restaurant sales reflected a decline in traffic, partially offset by a higher average guest check compared to the first nine months of 2011. Investor Conference Call Today The Company will host an investor conference call today (Tuesday, October 30, 2012, at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time) to discuss its third quarter results. To participate on the call, please dial (888) 679-8038 and reference pass code 80617185. International callers, please dial (617) 213-4850 and reference pass code 80617185. Participants may also pre-register to obtain a unique pin number to join the live call without operator assistance by visiting the following Web site: https://www.theconferencingservice.com/prereg/key.process?key=PXPLWDFMU 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. Participants should allow approximately ten minutes prior to the call's start time to visit the site and download any streaming media software needed to listen to the webcast. A telephonic replay of the call may be accessed through 11:59 p.m. Eastern Time (8:59 p.m. Pacific Time) on November 6, 2012 by dialing (888) 286-8010 and referencing pass code 77612832. International callers, please dial (617) 801-6888 and reference pass code 77612832. 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 under the Applebee's Neighborhood Grill & Bar and IHOP brands. With more than 3,500 restaurants combined in 18 countries, over 400 franchisees and approximately 200,000 team members (including franchisee- and company-operated restaurant employees), DineEquity is one of the largest full-service restaurant companies in the world. For more information on DineEquity, visit the Company's Web site located at www.dineequity.com. Forward-Looking Statements Statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by words such as "may," "will," "should," "expect," "anticipate," "believe," "estimate," "intend," "plan" and other similar expressions. These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from those expressed or implied in such statements. These factors include, but are not limited to: the effect of general economic conditions; the Company's substantial indebtedness; risk of future impairment charges; the Company's results in any given period differing from guidance provided to the public; the highly competitive nature of the restaurant business; the Company's business strategy failing to achieve anticipated results; risks associated with the restaurant industry; shortages or interruptions in the supply or delivery of food; changing health or dietary preferences; our dependence upon our franchisees; our engagement in business in foreign markets; harm to our brands' reputation; litigation; environmental liability; liability relating to employees; failure to comply with applicable laws and regulations; failure to effectively implement restaurant development plans; concentration of Applebee's franchised restaurants in a limited number of franchisees; credit risk from IHOP franchisees operating under our previous business model; termination or non-renewal of franchise agreements; franchisees breaching their franchise agreements; insolvency proceedings involving franchisees; changes in the number and quality of franchisees; inability of franchisees to fund capital expenditures; third-party claims with respect to intellectual property assets; heavy dependence on information technology; failure to protect the integrity and security of individually identifiable information; failure to execute on a business continuity plan; inability to attract and retain talented employees; risks associated with retail brand initiatives; failure of our internal controls; and other factors discussed from time to time in the Company's Annual and Quarterly Reports on Forms 10-K and 10-Q and in the Company's other filings with the Securities and Exchange Commission. The forward-looking statements contained in this release are made as of the date hereof and the Company assumes no obligation to update or supplement any forward-looking statements. Non-GAAP Financial Measures This news release includes references to the Company's non-GAAP financial measures "adjusted net income available to common stockholders (adjusted EPS)," "EBITDA," "free cash flow," and "segment EBITDA." "Adjusted EPS" is computed for a given period by deducting from net income (loss) available to common stockholders for such period the effect of any impairment and closure charges, any gain or loss related to debt extinguishment, any intangible asset amortization, any non-cash interest expense, any debt modification costs, any one-time litigation settlement charges, any general and administrative restructuring costs, net of savings, any gain or loss related to the disposition of assets, and any state income tax impact of deferred taxes due to refranchising incurred in such period. This is presented on an aggregate basis and a per share (diluted) basis. The Company defines "EBITDA" for a given period is defined as income before income taxes less interest expense, loss on retirement of debt, depreciation and amortization, impairment and closure charges, non-cash stock-based compensation, gain/loss on disposition of assets and other charge backs as defined by its credit agreement. "Free cash flow" for a given period is defined as cash provided by operating activities, plus receipts from notes and equipment contracts receivable ("long-term notes receivable"), less dividends paid and capital expenditures. "Segment EBITDA" for a given period is defined as gross segment profit plus depreciation and amortization as well as interest charges related to the segment. Management utilizes EBITDA for debt covenant purposes and free cash flow to determine the amount of cash remaining for general corporate and strategic purposes after the receipts from long-term 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, free cash flow and segment EBITDA are supplemental non-GAAP financial measures and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with United States generally accepted accounting principles. DineEquity, Inc. and SubsidiariesConsolidated Statements of Income(In thousands, except per share amounts)(Unaudited)     Three Months EndedNine Months EndedSeptember 30,September 30,2012   20112012   2011Segment Revenues: Franchise revenues $ 102,674 $ 97,679 $ 313,542 $ 300,782 Company restaurant sales 79,572 131,618 274,259 420,955 Rental revenues 30,920 31,163 92,096 95,003 Financing revenues 3,152   4,021   11,394   16,279   Total segment revenues 216,318   264,481   691,291   833,019   Segment Expenses: Franchise expenses 27,148 25,006 81,126 78,656 Company restaurant expenses 68,541 113,976 232,298 363,021 Rental expenses 24,237 24,521 73,075 73,734 Financing expenses 15   425   1,586   6,001   Total segment expenses 119,941   163,928   388,085   521,412   Gross segment profit 96,377 100,553 303,206 311,607 General and administrative expenses 48,737 38,733 125,608 115,152 Interest expense 28,896 32,170 88,767 101,343 Impairment and closure charges 420 193 1,264 26,947 Amortization of intangible assets 3,072 3,075 9,222 9,225 Loss (gain) on disposition of assets (73,650 ) 1,176 (89,642 ) (21,287 ) Loss on extinguishment of debt 2,306 — 4,917 7,885 Debt modification costs —   (21 ) —   4,103   Income before income taxes 86,596 25,227 163,070 68,239 Provision for income taxes (26,023 ) (8,702 ) (54,215 ) (21,667 ) Net income $ 60,573   $ 16,525   $ 108,855   $ 46,572     Net income available to common stockholders: Net income $ 60,573 $ 16,525 $ 108,855 $ 46,572 Less: Accretion of Series B Convertible Preferred Stock (688 ) (647 ) (2,033 ) (1,915 )   Less: Net income allocated to unvested participating restricted stock (1,187 ) (359 ) (2,477 ) (1,212 ) Net income available to common stockholders $ 58,698   $ 15,519   $ 104,345   $ 43,445   Net income available to common stockholders per share: Basic $ 3.26   $ 0.86   $ 5.84   $ 2.43   Diluted $ 3.14   $ 0.85   $ 5.66   $ 2.38   Weighted average shares outstanding: Basic 18,006   17,968   17,859   17,912   Diluted 18,924   18,243   18,801   18,268     DineEquity, Inc. and SubsidiariesConsolidated Balance Sheets(In thousands, except share and per share amounts)     September 30,December 31,20122011Assets(Unaudited) Current assets: Cash and cash equivalents $ 71,838 $ 60,691 Receivables, net 75,532 115,667 Prepaid income taxes 312 13,922 Prepaid gift cards 39,879 45,412 Deferred income taxes 23,659 20,579 Assets held for sale 16,372 9,363 Other current assets 15,311 11,313 Total current assets 242,903 276,947 Long-term receivables 214,772 226,526 Property and equipment, net 345,603 474,154 Goodwill 697,470 697,470 Other intangible assets, net 809,217 822,361 Other assets, net 111,792 116,836 Total assets $ 2,421,757 $ 2,614,294 Liabilities and Stockholders' Equity Current liabilities: Current maturities of long-term debt $ 7,420 $ 7,420 Accounts payable 31,959 29,013 Accrued employee compensation and benefits 19,701 26,191 Gift card liability 84,115 146,955 Accrued interest payable 31,452 12,537 Current maturities of capital lease and financing obligations 12,848 13,480 Other accrued expenses 25,398 22,048 Total current liabilities 212,893 257,644 Long-term debt, less current maturities 1,232,707 1,411,448 Financing obligations, less current maturities 93,774 162,658 Capital lease obligations, less current maturities 127,198 134,407 Deferred income taxes 366,529 383,810 Other liabilities 105,551 109,107 Total liabilities 2,138,652 2,459,074 Commitments and contingencies Stockholders' equity:   Series B Convertible Preferred Stock, at accreted value, shares:10,000,000 authorized; 35,000 issued; September 30, 2012 and December 31, 2011 - 34,900 outstanding 46,541 44,508   Common stock, $0.01 par value, shares: 40,000,000 authorized; September 30, 2012 - 24,694,241 issued, 18,418,903 outstanding; December 31, 2011 - 24,658,985 issued,18,060,206 outstanding 247 247 Additional paid-in-capital 214,440 205,663 Retained earnings 303,691 196,869 Accumulated other comprehensive loss (150 ) (294 )   Treasury stock, at cost; shares: September 30, 2012 - 6,275,338; December 31, 2011 - 6,598,779 (281,664 ) (291,773 ) Total stockholders' equity 283,105 155,220 Total liabilities and stockholders' equity $ 2,421,757 $ 2,614,294   DineEquity, Inc. and SubsidiariesConsolidated Statements of Cash Flows(In thousands)   Nine Months EndedSeptember 30,2012   2011 Cash flows from operating activities: (Unaudited) Net income $ 108,855 $ 46,572 Adjustments to reconcile net income to cash flows provided by operating activities: Depreciation and amortization 30,756 38,599 Non-cash interest expense 4,547 4,582 Loss on extinguishment of debt 4,917 7,885 Impairment and closure charges 991 26,729 Deferred income taxes (20,361 ) 1,866 Non-cash stock-based compensation expense 8,799 6,913 Tax benefit from stock-based compensation 6,334 6,085 Excess tax benefit from stock options exercised (4,757 ) (5,713 ) Gain on disposition of assets (89,642 ) (21,287 ) Other (1,768 ) (217 ) Changes in operating assets and liabilities: Receivables 41,422 25,360 Prepaid expenses 7,414 1,247 Current income tax receivables and payables 12,512 21,519 Accounts payable 2,080 (3,992 ) Accrued employee compensation and benefits (6,490 ) (9,099 ) Gift card liability (62,841 ) (56,906 ) Other accrued expenses 25,298   4,928   Cash flows provided by operating activities68,066   95,071   Cash flows from investing activities: Additions to property and equipment (13,477 ) (20,829 ) Proceeds from sale of property and equipment and assets held for sale 137,449 60,188 Principal receipts from notes, equipment contracts and other long-term receivables 10,276 9,922 Other 964   (558 ) Cash flows provided by investing activities135,212   48,723   Cash flows from financing activities: Borrowings under revolving credit facilities 50,000 25,000 Repayments under revolving credit facilities (50,000 ) (25,000 ) Repayment of long-term debt (including premiums) (184,237 ) (153,437 ) Principal payments on capital lease and financing obligations (8,246 ) (10,296 ) Payment of debt modification and issuance costs — (12,307 ) Purchase of DineEquity common stock — (21,170 ) Repurchase of restricted stock (1,690 ) (4,802 ) Proceeds from stock options exercised 5,443 6,326 Excess tax benefit from share-based compensation 4,757 5,713 Change in restricted cash (8,158 ) (1,590 ) Other —   (600 ) Cash flows used in financing activities(192,131)(192,163)Net change in cash and cash equivalents11,147(48,369) Cash and cash equivalents at beginning of period 60,691   102,309   Cash and cash equivalents at end of period$71,838   $53,940     NON-GAAP FINANCIAL MEASURES(In thousands, except per share amounts)(Unaudited) Reconciliation of (i) net income available to common stockholders to (ii) net income available to common stockholders excluding impairment and closure charges; loss on extinguishment of debt; amortization of intangible assets; non-cash interest expense; debt modification costs; a one-time litigation settlement; general and administrative ("G&A") restructuring costs, net of savings; gain/loss on disposition of assets; and the state income tax impact of deferred taxes due to refranchising, all items net of taxes (as appropriate), and related per share data:     Three Months Ended   Nine Months EndedSeptember 30,September 30,2012   20112012   2011 Net income available to common stockholders, as reported $ 58,698 $ 15,519 $ 104,345 $ 43,445 Impairment and closure charges 420 189 1,264 26,729 Loss on extinguishment of debt 2,306 — 4,917 7,885 Amortization of intangible assets 3,072 3,075 9,222 9,225 Noncash interest expense 1,502 1,594 4,547 4,582 Debt modification costs — (21 ) — 4,103 Litigation settlement 9,047 — 9,047 — G&A restructuring costs, net of savings 1,269 — 1,269 — (Gain)/loss on disposition of assets (73,650 ) 1,176 (89,642 ) (21,287 ) Income tax provision (benefit) 21,652 (2,393 ) 22,943 (12,432 ) State income tax impact on deferred taxes due to refranchising (6,258 ) — (6,258 ) — Net income allocated to unvested participating restricted stock 806   (82 ) 990   (511 ) Net income available to common stockholders, as adjusted $ 18,864   $ 19,057   $ 62,644   $ 61,739     Diluted net income available to common stockholders per share: Net income available to common stockholders, as reported $ 3.14 $ 0.85 $ 5.66 $ 2.38 Impairment and closure charges 0.01 0.01 0.04 0.85 Loss on extinguishment of debt 0.07 — 0.16 0.25 Amortization of intangible assets 0.10 0.10 0.30 0.29 Noncash interest expense 0.05 0.05 0.15 0.14 Repricing expenses — 0.00 — 0.13 Litigation settlement 0.29 — 0.30 — G&A restructuring costs, net of savings 0.04 — 0.04 — (Gain)/loss on disposition of assets (2.39 ) 0.04 (2.93 ) (0.68 ) State income tax impact on deferred taxes due to refranchising (0.33 ) — (0.33 ) — Net income allocated to unvested participating restricted stock 0.04 0.00 0.05 (0.03 ) Change due increase in net income 0.01   (0.01 ) 0.00   0.04   Diluted net income available to common stockholders per share, as adjusted $ 1.03   $ 1.04   $ 3.44   $ 3.37     Numerator for basic EPS-income available to common stockholders, as adjusted $ 18,864 $ 19,057 $ 62,644 $ 61,739 Effect of unvested participating restricted stock using the two-class method 18 21 73 87 Effect of dilutive securities: Convertible Series B preferred stock 688   647   2,033   1,915   Numerator for diluted EPS-income available to common stockholders after assumed conversions, as adjusted $ 19,570   $ 19,725   $ 64,750   $ 63,741     Denominator for basic EPS-weighted-average shares 18,006 17,968 17,859 17,912 Effect of dilutive securities: Stock options 246 275 270 356 Convertible Series B preferred stock 672   634   672   634   Denominator for diluted EPS-weighted-average shares and assumed conversions 18,924   18,877   18,801   18,902     DineEquity, Inc. and SubsidiariesNon-GAAP Financial Measures(In thousands)(Unaudited) Reconciliation of U.S. GAAP income before income taxes to EBITDA:   Nine MonthsEnded   TwelveMonths EndedSeptember 30, 2012 U.S. GAAP income before income taxes $ 163,070 $ 199,829 Interest charges 101,974 137,849 Loss on extinguishment of debt 4,917 8,191 Depreciation and amortization 30,756 42,377 Non-cash stock-based compensation 8,799 11,379 Impairment and closure charges 1,264 4,182 Other 5,158 5,394 Gain on sale of assets (89,642 )   (111,609 ) EBITDA $ 226,296     $ 297,592     Reconciliation of the Company's cash provided by operating activities to free cash flow:   Nine Months EndedSeptember 30,2012   2011 Cash flows provided by operating activities $ 68,066 $ 95,071 Principal receipts from notes, equipment contracts and other long-term receivables 10,276 9,922 Additions to property and equipment (13,477 )   (20,829 ) Free cash flow $ 64,865     $ 84,164     DineEquity, Inc. and SubsidiariesNon-GAAP Financial Measures(In millions)(Unaudited)   Reconciliation of U.S. GAAP gross segment profit to segment EBITDA:   Three Months Ended September 30, 2012 Franchise -Applebee's   Franchise -IHOP   CompanyRestaurants   RentalOperations   FinancingOperations   Total Revenue $ 43,771 $ 58,903 $ 79,572 $ 30,920 $ 3,152 $ 216,318 Expense 1,129 26,019 68,541 24,237 15 119,941 Gross segment profit 42,642 32,884 11,031 6,683 3,137 96,377 Plus: Depreciation/amortization 2,478 — 1,645 3,362 — 7,485 Interest charges — — 93 4,189 — 4,282 Segment EBITDA $ 45,120 $ 32,884 $ 12,769 $ 14,234 $ 3,137 $ 108,144   Three Months Ended September 30, 2011 Franchise -Applebee's Franchise -IHOP CompanyRestaurants RentalOperations FinancingOperations Total Revenue $ 40,128 $ 57,551 $ 131,618 $ 31,163 $ 4,021 $ 264,481 Expense 603 24,403 113,976 24,521 425 163,928 Gross segment profit 39,525 33,148 17,642 6,642 3,596 100,553 Plus: Depreciation/amortization 2,324 — 3,983 3,491 — 9,798 Interest charges — — 118 4,432 — 4,550 Segment EBITDA $ 41,849 $ 33,148 $ 21,743 $ 14,565 $ 3,596 $ 114,901   Nine Months Ended September 30, 2012 Franchise -Applebee's Franchise -IHOP CompanyRestaurants RentalOperations FinancingOperations Total Revenue $ 137,540 $ 176,002 $ 274,259 $ 92,096 $ 11,394 $ 691,291 Expense 3,075 78,051 232,298 73,075 1,586 388,085 Gross segment profit 134,465 97,951 41,961 19,021 9,808 303,206 Plus: Depreciation/amortization 7,416 — 6,354 10,271 — 24,041 Interest charges — — 285 12,835 — 13,120 Segment EBITDA $ 141,881 $ 97,951 $ 48,600 $ 42,127 $ 9,808 $ 340,367   Nine Months Ended September 30, 2011 Franchise -Applebee's Franchise -IHOP CompanyRestaurants RentalOperations FinancingOperations Total Revenue $ 128,289 $ 172,493 $ 420,955 $ 95,003 $ 16,279 $ 833,019 Expense 2,199 76,457 363,021 73,734 6,001 521,412 Gross segment profit 126,090 96,036 57,934 21,269 10,278 311,607 Plus: Depreciation/amortization 7,401 — 13,471 10,547 — 31,419 Interest charges — — 395 13,598 — 13,993 Segment EBITDA $ 133,491 $ 96,036 $ 71,800 $ 45,414 $ 10,278 $ 357,019   Restaurant Data The following table sets forth, for the three and nine months ended September 30, 2012 and 2011, 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 Applebee's and IHOP systems, which includes restaurants owned by the Company, as well as those owned by franchisees and area licensees. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. However, we believe that presentation of this information is useful in analyzing our revenues because franchisees and area licensees pay us royalties and advertising fees that are generally based on a percentage of their sales, as well as rental payments under leases that are usually based on a percentage of their sales. Management also uses this information to make decisions about future plans for the development of additional restaurants as well as evaluation of current operations.   Three Months Ended   Nine Months EndedSeptember 30,September 30,2012   20112012   2011Applebee's Restaurant Data(unaudited) Effective restaurants(a) Franchise 1,871 1,766 1,861 1,757 Company 144   243   156   253   Total 2,015   2,009   2,017   2,010   System-wide(b) Sales percentage change(c) 2.4 % (0.1 )% 1.7 % 2.6 % Domestic same-restaurant sales percentage change(d) 2.0 % (0.3 )% 1.3 % 2.3 % Franchise(b)(f) Sales percentage change(c) 8.4 % (1.3 )% 7.0 % 1.8 % Domestic same-restaurant sales percentage change(d) 2.2 % (0.4 )% 1.2 % 2.5 % Average weekly domestic unit sales (in thousands) $ 45.1 $ 44.2 $ 47.4 $ 47.0 Company (f) Sales percentage change(c) (42.2 )% 1.4 % (36.7 )% 1.0 % Same-restaurant sales percentage change(d) 0.5 % 0.1 % 2.7 % 0.5 % Average weekly domestic unit sales (in thousands) $ 39.3 $ 40.2 $ 42.5 $ 41.3     Three Months Ended   Nine Months EndedSeptember 30,September 30,2012   20112012   2011(unaudited)IHOP Restaurant Data Effective restaurants(a) Franchise 1,377 1,347 1,375 1,339 Area license 165 163 165 163 Company 17   10   15   10   Total 1,559   1,520   1,555   1,512   System-wide(b) Sales percentage change(c) 0.9 % 2.6 % 1.9 % 1.7 % Domestic same-restaurant sales percentage change(d) (2.0 )% (1.5 )% (1.3 )% (2.4 )% Franchise(b) Sales percentage change(c) 0.4 % 2.5 % 1.6 % 1.6 % Domestic same-restaurant sales percentage change(d) (2.0 )% (1.5 )% (1.2 )% (2.4 )% Average weekly domestic unit sales (in thousands) $ 33.8 $ 34.4 $ 34.2 $ 34.6   Company (e) n/m n/m n/m n/m   Area License(b) Sales percentage change(c) 4.0 % 4.4 % 3.5 % 2.5 %   (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 Applebee's and IHOP systems, which includes restaurants owned by the Company as well as those owned by franchisees and area licensees.   (b) “System-wide” sales are retail sales at 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. Applebee's domestic franchise restaurant sales, IHOP franchise restaurant sales and IHOP area license restaurant sales for the three and nine months ended September 30, 2012 and 2011 were as follows:     Three Months Ended   Nine Months EndedSeptember 30,September 30,2012   20112012   2011(In millions)Reported sales (unaudited) Applebee's franchise restaurant sales $ 1,011.4 $ 932.6 $ 3,165.4 $ 2,957.2 IHOP franchise restaurant sales $ 604.8 $ 602.7 $ 1,834.6 $ 1,805.5 IHOP area license restaurant sales $ 57.3 $ 55.1 $ 178.1 $ 172.0   (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.   (e) Sales percentage changes and domestic same-restaurant sales percentage change for IHOP company-operated restaurants are not meaningful (“n/m”) because there are few such restaurants, consisting of a relatively small number of restaurants in a single test market, along with a variable, small number of restaurants that are reacquired from franchisees from time-to-time and temporarily operated by the Company.   (f) The sales percentage change for the three and nine months ended September 30, 2012 and 2011 for Applebee's franchise and company-operated restaurants was impacted by the refranchising of 115 company-operated restaurants in 2012 and 132 company-operated restaurants during 2011.   DineEquity, Inc. and SubsidiariesRestaurant Data   The following table summarizes our restaurant development activity:     Three Months EndedNine Months EndedSeptember 30,   September 30,   2012   20112012   2011(unaudited)Applebee's Restaurant Development Activity Beginning of period 2,018 2,012 2,019 2,010 New openings: Franchise 5   4   14   12   Total new openings 5   4   14   12   Closings: Franchise (7 ) (6 ) (17 ) (12 ) Total closings (7 ) (6 ) (17 ) (12 ) End of period 2,016   2,010   2,016   2,010   Summary - end of period: Franchise 1,954 1,767 1,954 1,767 Company 62   243   62   243   Total 2,016   2,010   2,016   2,010       Three Months EndedNine Months EndedSeptember 30,   September 30,   2012201120122011(unaudited)IHOP Restaurant Development Activity Beginning of period 1,557 1,522 1,550 1,504 New openings: Franchise 12 13 27 36 Area license —   1   1   3   Total new openings 12   14   28   39   Closings: Franchise (4 ) (4 ) (11 ) (7 ) Area license —   —   (2 ) (4 ) Total closings (4 ) (4 ) (13 ) (11 ) End of period 1,565   1,532   1,565   1,532   Summary-end of period: Franchise 1,383 1,356 1,383 1,356 Area license 165 163 165 163 Company 17   13   17   13   Total 1,565   1,532   1,565   1,532   Investor ContactDineEquity, Inc.Ken DipteeExecutive Director, Investor Relations818-637-3632orMedia ContactSard Verbinnen & Co.Lucy Neugart and Samantha Verdile415-618-8750