Delaware
(State or other jurisdiction of incorporation or
organization)
|
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95-3038279
(I.R.S. Employer Identification No.)
|
|
|
|
450 North Brand Boulevard, Glendale, California
(Address of principal executive offices)
|
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91203-1903
(Zip Code)
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Large accelerated filer
x
|
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Accelerated filer
o
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|
|
|
Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
||
|
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Smaller reporting company
o
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|
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Emerging growth company
o
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Class
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|
Outstanding as of July 27, 2018
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Common Stock, $0.01 par value
|
|
17,698,278
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|
|
Page
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||
|
||
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||
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||
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||
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||
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||
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Assets
|
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June 30, 2018
|
|
December 31, 2017
|
||||
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|
(Unaudited)
|
|
(as adjusted)
|
||||
Current assets:
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
95,718
|
|
|
$
|
117,010
|
|
Receivables, net
|
|
103,015
|
|
|
140,188
|
|
||
Restricted cash
|
|
39,430
|
|
|
31,436
|
|
||
Prepaid gift card costs
|
|
29,464
|
|
|
40,725
|
|
||
Prepaid income taxes
|
|
42,107
|
|
|
45,981
|
|
||
Other current assets
|
|
6,764
|
|
|
12,615
|
|
||
Total current assets
|
|
316,498
|
|
|
387,955
|
|
||
Long-term receivables, net
|
|
118,173
|
|
|
126,570
|
|
||
Other intangible assets, net
|
|
579,369
|
|
|
582,787
|
|
||
Goodwill
|
|
339,236
|
|
|
339,236
|
|
||
Property and equipment, net
|
|
197,220
|
|
|
199,585
|
|
||
Deferred rent receivable
|
|
80,358
|
|
|
82,971
|
|
||
Non-current restricted cash
|
|
14,700
|
|
|
14,700
|
|
||
Other non-current assets, net
|
|
4,752
|
|
|
4,135
|
|
||
Total assets
|
|
$
|
1,650,306
|
|
|
$
|
1,737,939
|
|
Liabilities and Stockholders’ Deficit
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Current maturities of long-term debt
|
|
$
|
32,965
|
|
|
$
|
12,965
|
|
Accounts payable
|
|
47,694
|
|
|
55,028
|
|
||
Gift card liability
|
|
108,695
|
|
|
164,441
|
|
||
Dividends payable
|
|
11,430
|
|
|
17,748
|
|
||
Current maturities of capital lease and financing obligations
|
|
12,752
|
|
|
14,193
|
|
||
Accrued employee compensation and benefits
|
|
12,136
|
|
|
13,547
|
|
||
Deferred franchise revenue, short-term
|
|
10,765
|
|
|
11,001
|
|
||
Other accrued expenses
|
|
14,484
|
|
|
16,001
|
|
||
Total current liabilities
|
|
250,921
|
|
|
304,924
|
|
||
Long-term debt, less current maturities
|
|
1,265,093
|
|
|
1,269,849
|
|
||
Capital lease obligations, less current maturities
|
|
57,624
|
|
|
61,895
|
|
||
Financing obligations, less current maturities
|
|
38,820
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|
|
39,200
|
|
||
Deferred income taxes, net
|
|
112,073
|
|
|
119,996
|
|
||
Deferred franchise revenue, long-term
|
|
67,246
|
|
|
70,432
|
|
||
Deferred rent payable
|
|
60,853
|
|
|
69,112
|
|
||
Other non-current liabilities
|
|
20,927
|
|
|
18,071
|
|
||
Total liabilities
|
|
1,873,557
|
|
|
1,953,479
|
|
||
Commitments and contingencies
|
|
|
|
|
|
|
||
Stockholders’ deficit:
|
|
|
|
|
|
|
||
Common stock, $0.01 par value; shares: 40,000,000 authorized; June 30,2018 - 25,005,404 issued, 17,802,953 outstanding; December 31, 2017 - 25,022,312 issued, 17,993,124 outstanding
|
|
250
|
|
|
250
|
|
||
Additional paid-in-capital
|
|
254,912
|
|
|
276,408
|
|
||
Accumulated deficit
|
|
(40,154
|
)
|
|
(69,940
|
)
|
||
Accumulated other comprehensive loss
|
|
(61
|
)
|
|
(105
|
)
|
||
Treasury stock, at cost; shares: June 30, 2018 - 7,202,451; December 31, 2017 - 7,029,188
|
|
(438,198
|
)
|
|
(422,153
|
)
|
||
Total stockholders’ deficit
|
|
(223,251
|
)
|
|
(215,540
|
)
|
||
Total liabilities and stockholders’ deficit
|
|
$
|
1,650,306
|
|
|
$
|
1,737,939
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues:
|
|
|
|
|
(as adjusted)
|
|
|
|
(as adjusted)
|
|||||||
Franchise revenues
|
|
$
|
151,941
|
|
|
$
|
153,064
|
|
|
$
|
307,254
|
|
|
$
|
307,789
|
|
Rental revenues
|
|
30,324
|
|
|
30,124
|
|
|
61,165
|
|
|
60,589
|
|
||||
Financing revenues
|
|
2,206
|
|
|
2,088
|
|
|
4,215
|
|
|
4,219
|
|
||||
Company restaurant sales
|
|
—
|
|
|
3,378
|
|
|
—
|
|
|
7,518
|
|
||||
Total revenues
|
|
184,471
|
|
|
188,654
|
|
|
372,634
|
|
|
380,115
|
|
||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||
Franchise expenses
|
|
82,944
|
|
|
69,522
|
|
|
164,816
|
|
|
139,689
|
|
||||
Rental expenses
|
|
22,788
|
|
|
22,681
|
|
|
45,429
|
|
|
45,347
|
|
||||
Financing expenses
|
|
149
|
|
|
—
|
|
|
299
|
|
|
—
|
|
||||
Company restaurant expenses
|
|
—
|
|
|
3,447
|
|
|
—
|
|
|
7,790
|
|
||||
Total cost of revenues
|
|
105,881
|
|
|
95,650
|
|
|
210,544
|
|
|
192,826
|
|
||||
Gross profit
|
|
78,590
|
|
|
93,004
|
|
|
162,090
|
|
|
187,289
|
|
||||
General and administrative expenses
|
|
38,759
|
|
|
37,366
|
|
|
80,670
|
|
|
87,671
|
|
||||
Interest expense
|
|
15,481
|
|
|
15,780
|
|
|
30,680
|
|
|
31,143
|
|
||||
Closure and impairment (credits) charges
|
|
(2,702
|
)
|
|
2,701
|
|
|
(98
|
)
|
|
2,918
|
|
||||
Amortization of intangible assets
|
|
2,506
|
|
|
2,500
|
|
|
5,008
|
|
|
5,000
|
|
||||
Gain on disposition of assets
|
|
(50
|
)
|
|
(6,243
|
)
|
|
(1,477
|
)
|
|
(6,352
|
)
|
||||
Income before income tax provision
|
|
24,596
|
|
|
40,900
|
|
|
47,307
|
|
|
66,909
|
|
||||
Income tax provision
|
|
(11,883
|
)
|
|
(18,793
|
)
|
|
(17,521
|
)
|
|
(29,207
|
)
|
||||
Net income
|
|
12,713
|
|
|
22,107
|
|
|
29,786
|
|
|
37,702
|
|
||||
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Adjustment to unrealized loss on available-for-sale investments
|
|
—
|
|
|
—
|
|
|
50
|
|
|
—
|
|
||||
Foreign currency translation adjustment
|
|
(3
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
||||
Total comprehensive income
|
|
$
|
12,710
|
|
|
$
|
22,107
|
|
|
$
|
29,830
|
|
|
$
|
37,702
|
|
Net income available to common stockholders:
|
|
|
|
|
|
|
|
|
|
|||||||
Net income
|
|
$
|
12,713
|
|
|
$
|
22,107
|
|
|
$
|
29,786
|
|
|
$
|
37,702
|
|
Less: Net income allocated to unvested participating restricted stock
|
|
(428
|
)
|
|
(356
|
)
|
|
(1,000
|
)
|
|
(635
|
)
|
||||
Net income available to common stockholders
|
|
$
|
12,285
|
|
|
$
|
21,751
|
|
|
$
|
28,786
|
|
|
$
|
37,067
|
|
Net income available to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.70
|
|
|
$
|
1.23
|
|
|
$
|
1.63
|
|
|
$
|
2.09
|
|
Diluted
|
|
$
|
0.69
|
|
|
$
|
1.23
|
|
|
$
|
1.61
|
|
|
$
|
2.09
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
|
17,544
|
|
|
17,719
|
|
|
17,623
|
|
|
17,707
|
|
||||
Diluted
|
|
17,803
|
|
|
17,725
|
|
|
17,827
|
|
|
17,721
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Dividends declared per common share
|
|
$
|
0.63
|
|
|
$
|
0.97
|
|
|
$
|
1.26
|
|
|
$
|
1.94
|
|
Dividends paid per common share
|
|
$
|
0.63
|
|
|
$
|
0.97
|
|
|
$
|
1.60
|
|
|
$
|
1.94
|
|
|
|
Six Months Ended
|
||||||
|
|
June 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
(as adjusted)
|
|||
Net income
|
|
$
|
29,786
|
|
|
$
|
37,702
|
|
Adjustments to reconcile net income to cash flows provided by operating activities:
|
|
|
|
|
|
|
||
Depreciation and amortization
|
|
15,842
|
|
|
15,422
|
|
||
Closure and impairment charges
|
|
(114
|
)
|
|
2,910
|
|
||
Non-cash interest expense
|
|
1,744
|
|
|
1,663
|
|
||
Deferred income taxes
|
|
(3,606
|
)
|
|
(7,633
|
)
|
||
Non-cash stock-based compensation expense
|
|
5,641
|
|
|
7,567
|
|
||
Gain on disposition of assets
|
|
(1,477
|
)
|
|
(6,352
|
)
|
||
Other
|
|
(8,438
|
)
|
|
(4,863
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||
Accounts receivable, net
|
|
(10,924
|
)
|
|
(694
|
)
|
||
Current income tax receivables and payables
|
|
2,776
|
|
|
(482
|
)
|
||
Gift card receivables and payables
|
|
(10,334
|
)
|
|
(14,121
|
)
|
||
Other current assets
|
|
5,851
|
|
|
(2,215
|
)
|
||
Accounts payable
|
|
3,816
|
|
|
(8,153
|
)
|
||
Accrued employee compensation and benefits
|
|
(1,411
|
)
|
|
(4,743
|
)
|
||
Other current liabilities
|
|
(3,360
|
)
|
|
4,886
|
|
||
Cash flows provided by operating activities
|
|
25,792
|
|
|
20,894
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
|
||
Additions to property and equipment
|
|
(7,339
|
)
|
|
(6,945
|
)
|
||
Proceeds from sale of property and equipment
|
|
655
|
|
|
1,100
|
|
||
Principal receipts from notes, equipment contracts and other long-term receivables
|
|
14,923
|
|
|
9,946
|
|
||
Additions to long-term receivables
|
|
(3,030
|
)
|
|
—
|
|
||
Other
|
|
(246
|
)
|
|
(292
|
)
|
||
Cash flows provided by investing activities
|
|
4,963
|
|
|
3,809
|
|
||
Cash flows from financing activities:
|
|
|
|
|
|
|||
Borrowings under Variable Funding Notes
|
|
20,000
|
|
|
—
|
|
||
Repayment of long-term debt
|
|
(6,500
|
)
|
|
—
|
|
||
Dividends paid on common stock
|
|
(28,757
|
)
|
|
(34,879
|
)
|
||
Repurchase of common stock
|
|
(20,003
|
)
|
|
(10,003
|
)
|
||
Principal payments on capital lease and financing obligations
|
|
(8,013
|
)
|
|
(7,170
|
)
|
||
Tax payments for restricted stock upon vesting
|
|
(1,400
|
)
|
|
(2,320
|
)
|
||
Proceeds from stock options exercised
|
|
620
|
|
|
2,635
|
|
||
Cash flows used in financing activities
|
|
(44,053
|
)
|
|
(51,737
|
)
|
||
Net change in cash, cash equivalents and restricted cash
|
|
(13,298
|
)
|
|
(27,034
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
|
163,146
|
|
|
185,491
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
149,848
|
|
|
$
|
158,457
|
|
Supplemental disclosures:
|
|
|
|
|
|
|
||
Interest paid in cash
|
|
$
|
33,199
|
|
|
$
|
34,007
|
|
Income taxes paid in cash
|
|
$
|
18,267
|
|
|
$
|
37,241
|
|
Non-cash conversion of accounts receivable to notes receivable
|
|
$
|
5,856
|
|
|
$
|
—
|
|
|
Balance at December 31, 2017, as reported
|
|
Adjustments/Reclassifications Due to ASC 606 adoption
|
|
Balance at December 31, 2017, as adjusted
|
||||||
|
(In thousands)
|
||||||||||
Assets:
|
|
|
|
|
|
||||||
Receivables, net
|
$
|
150,174
|
|
|
$
|
(9,986
|
)
|
|
$
|
140,188
|
|
Prepaid income taxes
|
43,654
|
|
|
2,327
|
|
|
45,981
|
|
|||
Long-term receivables, net
|
131,212
|
|
|
(4,642
|
)
|
|
126,570
|
|
|||
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Deferred franchise revenue (short-term)
|
—
|
|
|
11,001
|
|
|
11,001
|
|
|||
Other accrued expenses
|
17,780
|
|
|
(1,779
|
)
|
|
16,001
|
|
|||
Deferred franchise revenue (long-term)
|
—
|
|
|
70,432
|
|
|
70,432
|
|
|||
Other non-current liabilities
|
23,003
|
|
|
(4,932
|
)
|
|
18,071
|
|
|||
Deferred income taxes, net
|
138,177
|
|
|
(18,181
|
)
|
|
119,996
|
|
|||
|
|
|
|
|
|
||||||
Equity:
|
|
|
|
|
|
||||||
Accumulated deficit
|
$
|
(1,098
|
)
|
|
$
|
(68,842
|
)
|
|
$
|
(69,940
|
)
|
|
Three months ended June 30, 2017
|
|
Six months ended June 30, 2017
|
||||
|
(in thousands)
|
||||||
Franchise and restaurant revenues, as combined
|
$
|
122,987
|
|
|
$
|
246,565
|
|
|
|
|
|
||||
Franchise revenues
|
$
|
119,609
|
|
|
$
|
239,047
|
|
Company restaurant sales
|
3,378
|
|
|
7,518
|
|
||
|
$
|
122,987
|
|
|
$
|
246,565
|
|
|
|
|
|
||||
Franchise and restaurant expenses, as combined
|
$
|
40,669
|
|
|
$
|
81,676
|
|
|
|
|
|
||||
Franchise expenses
|
37,222
|
|
|
73,886
|
|
||
Company restaurant expenses
|
3,447
|
|
|
$
|
7,790
|
|
|
|
$
|
40,669
|
|
|
$
|
81,676
|
|
|
Three Months ended June 30, 2017, as reported
|
|
Adjustments due to ASC 606 adoption
|
|
Three Months ended June 30, 2017, as adjusted
|
||||||
|
(In thousands)
|
||||||||||
Franchise revenues (as shown separately above)
|
$
|
119,609
|
|
|
$
|
33,455
|
|
|
$
|
153,064
|
|
Franchise expenses (as shown separately above)
|
37,222
|
|
|
32,300
|
|
|
69,522
|
|
|||
Income before income tax provision
|
39,745
|
|
|
1,155
|
|
|
40,900
|
|
|||
Income tax provision
|
(18,465
|
)
|
|
(328
|
)
|
|
(18,793
|
)
|
|||
Net income
|
21,280
|
|
|
827
|
|
|
22,107
|
|
|||
Net income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.18
|
|
|
|
|
$
|
1.23
|
|
||
Diluted
|
$
|
1.18
|
|
|
|
|
$
|
1.23
|
|
|
Six Months ended June 30, 2017, as reported
|
|
Adjustments due to ASC 606 adoption
|
|
Six Months ended June 30, 2017, as adjusted
|
||||||
|
(In thousands)
|
||||||||||
Franchise revenues (as shown separately above)
|
$
|
239,047
|
|
|
$
|
68,742
|
|
|
$
|
307,789
|
|
Franchise expenses (as shown separately above)
|
73,886
|
|
|
65,803
|
|
|
139,689
|
|
|||
Income before income tax provision
|
63,970
|
|
|
2,939
|
|
|
66,909
|
|
|||
Income tax provision
|
(28,327
|
)
|
|
(880
|
)
|
|
(29,207
|
)
|
|||
Net income
|
35,643
|
|
|
2,059
|
|
|
37,702
|
|
|||
Net income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.98
|
|
|
|
|
$
|
2.09
|
|
||
Diluted
|
$
|
1.98
|
|
|
|
|
$
|
2.09
|
|
•
|
Franchise and development fees are recognized as revenue ratably on a straight-line basis over the term of the franchise agreement commencing with the restaurant opening date. As these fees are typically received in cash at or near the beginning of the franchise term, the cash received is initially recorded as a contract liability until recognized as revenue over time;
|
•
|
The Company is entitled to royalties and advertising fees based on a percentage of the franchisee's gross sales as defined in the franchise agreement. Royalty and advertising revenue is recognized when the franchisee's reported sales occur. Depending on timing within a fiscal period, the recognition of revenue results in either what is considered a contract asset (unbilled receivable) or, once billed, accounts receivable, on the balance sheet.
|
•
|
Revenue from the sales of proprietary pancake and waffle dry mix is recognized in the period in which distributors ship the franchisee's order; recognition of revenue results in accounts receivable on the balance sheet.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Franchise Revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||
Royalties
|
|
$
|
77,494
|
|
|
$
|
77,124
|
|
|
$
|
151,910
|
|
|
$
|
155,998
|
|
Advertising fees
|
|
58,705
|
|
|
60,462
|
|
|
122,541
|
|
|
122,162
|
|
||||
Pancake and waffle dry mix sales and other
|
|
12,780
|
|
|
12,209
|
|
|
26,558
|
|
|
23,445
|
|
||||
Franchise and development fees
|
|
2,962
|
|
|
3,269
|
|
|
6,245
|
|
|
6,184
|
|
||||
Total franchise revenue
|
|
$
|
151,941
|
|
|
$
|
153,064
|
|
|
$
|
307,254
|
|
|
$
|
307,789
|
|
|
|
Deferred Franchise Revenue (short- and long-term)
|
||
|
|
(In thousands)
|
||
Balance at December 31, 2017
|
|
$
|
81,433
|
|
Recognized as revenue during the six months ended June 30, 2018
|
|
(5,459
|
)
|
|
Fees received and deferred during the six months ended June 30, 2018
|
|
2,037
|
|
|
Balance at June 30, 2018
|
|
$
|
78,011
|
|
|
(In thousands)
|
||
Remainder of 2018
|
$
|
4,532
|
|
2019
|
10,547
|
|
|
2020
|
8,212
|
|
|
2021
|
7,636
|
|
|
2022
|
7,109
|
|
|
2023
|
6,543
|
|
|
Thereafter
|
33,432
|
|
|
Total
|
$
|
78,011
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
(In millions)
|
||||||
Series 2014-1 4.277% Fixed Rate Senior Secured Notes, Class A-2
|
$
|
1,290.3
|
|
|
$
|
1,296.8
|
|
Series 2014-1 Variable Funding Senior Notes Class A-1, at a variable interest rate of 4.525% as of June 30, 2018
|
20.0
|
|
|
—
|
|
||
Debt issuance costs
|
(12.2
|
)
|
|
(13.9
|
)
|
||
Long-term debt, net of debt issuance costs
|
1,298.1
|
|
|
1,282.8
|
|
||
Current portion of long-term debt
|
(33.0
|
)
|
|
(13.0
|
)
|
||
Long-term debt
|
$
|
1,265.1
|
|
|
$
|
1,269.8
|
|
2015 Repurchase Program
|
Shares
|
|
Cost of shares
|
|||
|
|
|
(In millions)
|
|||
Repurchased during the three months ended June 30, 2018
|
137,163
|
|
|
$
|
10.0
|
|
Repurchased during the six months ended June 30, 2018
|
275,801
|
|
|
$
|
20.0
|
|
Cumulative (life-of-program) repurchases as of June 30, 2018
|
1,276,458
|
|
|
$
|
102.9
|
|
Remaining dollar value of shares that may be repurchased
|
n/a
|
|
$
|
47.1
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(In millions)
|
||||||||||||||
Total stock-based compensation expense:
|
|
|
|
|
|
|
|
||||||||
Equity classified awards expense
|
$
|
2.3
|
|
|
$
|
1.5
|
|
|
$
|
5.7
|
|
|
$
|
7.7
|
|
Liability classified awards expense (credit)
|
0.4
|
|
|
(1.3
|
)
|
|
0.9
|
|
|
(1.1
|
)
|
||||
Total pre-tax stock-based compensation expense
|
2.7
|
|
|
0.2
|
|
|
6.6
|
|
|
6.6
|
|
||||
Book income tax benefit
|
(0.7
|
)
|
|
(0.1
|
)
|
|
(1.7
|
)
|
|
(2.5
|
)
|
||||
Total stock-based compensation expense, net of tax
|
$
|
2.0
|
|
|
$
|
0.1
|
|
|
$
|
4.9
|
|
|
$
|
4.1
|
|
Risk-free interest rate
|
2.6
|
%
|
Weighted average historical volatility
|
26.1
|
%
|
Dividend yield
|
3.6
|
%
|
Expected years until exercise
|
4.6
|
|
Weighted average fair value of options granted
|
$11.94
|
Risk-free interest rate
|
2.4
|
%
|
Weighted average historical volatility
|
33.0
|
%
|
Dividend yield
|
3.7
|
%
|
Expected years until exercise
|
3.0
|
|
Weighted average fair value of options granted
|
$9.79
|
|
Weighted average fair value of restricted stock units granted
|
$34.53
|
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted Average
Remaining
Contractual Term
(in Years)
|
|
Aggregate
Intrinsic
Value (in Millions)
|
|||||
Outstanding at December 31, 2017
|
|
1,272,048
|
|
|
$
|
61.44
|
|
|
|
|
|
|
|
Granted
|
|
248,899
|
|
|
69.12
|
|
|
|
|
|
|
||
Exercised
|
|
(12,460
|
)
|
|
49.75
|
|
|
|
|
|
|
||
Outstanding at June 30, 2018
|
|
1,508,487
|
|
|
62.81
|
|
|
7.0
|
|
$
|
24.6
|
|
|
Vested at June 30, 2018 and Expected to Vest
|
|
1,323,639
|
|
|
64.44
|
|
|
6.6
|
|
$
|
20.2
|
|
|
Exercisable at June 30, 2018
|
|
634,238
|
|
|
$
|
75.29
|
|
|
3.9
|
|
$
|
5.8
|
|
|
|
Restricted
Stock
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Restricted
Stock Units
|
|
Weighted
Average
Grant Date
Fair Value
|
||||||
Outstanding at December 31, 2017
|
|
275,191
|
|
|
$
|
65.81
|
|
|
303,348
|
|
|
$
|
28.39
|
|
Granted
|
|
90,078
|
|
|
68.89
|
|
|
52,711
|
|
|
48.13
|
|
||
Released
|
|
(52,342
|
)
|
|
87.69
|
|
|
(15,737
|
)
|
|
98.54
|
|
||
Forfeited
|
|
(12,816
|
)
|
|
61.16
|
|
|
(71
|
)
|
|
53.49
|
|
||
Outstanding at June 30, 2018
|
|
300,111
|
|
|
$
|
63.13
|
|
|
340,251
|
|
|
$
|
27.70
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2018
|
|
2017 (as adjusted)
|
|
2018
|
|
2017 (as adjusted)
|
||||||||
|
(In millions)
|
||||||||||||||
Revenues from external customers:
|
|
|
|
|
|
|
|
|
|
||||||
Franchise operations
|
$
|
151.9
|
|
|
$
|
153.1
|
|
|
$
|
307.2
|
|
|
$
|
307.8
|
|
Rental operations
|
30.4
|
|
|
30.1
|
|
|
61.2
|
|
|
60.6
|
|
||||
Company restaurants
|
—
|
|
|
3.4
|
|
|
—
|
|
|
7.5
|
|
||||
Financing operations
|
2.2
|
|
|
2.1
|
|
|
4.2
|
|
|
4.2
|
|
||||
Total
|
$
|
184.5
|
|
|
$
|
188.7
|
|
|
$
|
372.6
|
|
|
$
|
380.1
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense:
|
|
|
|
|
|
|
|
|
|
||||||
Rental operations
|
$
|
2.3
|
|
|
$
|
2.6
|
|
|
$
|
4.8
|
|
|
$
|
5.4
|
|
Company restaurants
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.2
|
|
||||
Corporate
|
15.5
|
|
|
15.8
|
|
|
30.7
|
|
|
31.1
|
|
||||
Total
|
$
|
17.8
|
|
|
$
|
18.5
|
|
|
$
|
35.5
|
|
|
$
|
36.7
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
||||||
Franchise operations
|
$
|
2.7
|
|
|
$
|
2.7
|
|
|
$
|
5.3
|
|
|
$
|
5.4
|
|
Rental operations
|
2.9
|
|
|
3.0
|
|
|
5.8
|
|
|
6.0
|
|
||||
Company restaurants
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||
Corporate
|
2.3
|
|
|
2.0
|
|
|
4.7
|
|
|
3.9
|
|
||||
Total
|
$
|
7.9
|
|
|
$
|
7.7
|
|
|
$
|
15.8
|
|
|
$
|
15.4
|
|
|
|
|
|
|
|
|
|
||||||||
Gross profit, by segment:
|
|
|
|
|
|
|
|
|
|
||||||
Franchise operations
|
$
|
69.0
|
|
|
$
|
83.6
|
|
|
$
|
142.4
|
|
|
$
|
168.1
|
|
Rental operations
|
7.6
|
|
|
7.5
|
|
|
15.8
|
|
|
15.3
|
|
||||
Company restaurants
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.3
|
)
|
||||
Financing operations
|
2.0
|
|
|
2.0
|
|
|
3.9
|
|
|
4.2
|
|
||||
Total gross profit
|
78.6
|
|
|
93.0
|
|
|
162.1
|
|
|
187.3
|
|
||||
Corporate and unallocated expenses, net
|
(54.0
|
)
|
|
(52.1
|
)
|
|
(114.8
|
)
|
|
(120.4
|
)
|
||||
Income before income tax provision
|
$
|
24.6
|
|
|
$
|
40.9
|
|
|
$
|
47.3
|
|
|
$
|
66.9
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
(as adjusted)
|
|
|
|
(as adjusted)
|
||||||||
|
(In thousands, except per share data)
|
||||||||||||||
Numerator for basic and diluted income per common share:
|
|
|
|
|
|
|
|
|
|
||||||
Net income
|
$
|
12,713
|
|
|
$
|
22,107
|
|
|
$
|
29,786
|
|
|
$
|
37,702
|
|
Less: Net income allocated to unvested participating restricted stock
|
(428
|
)
|
|
(356
|
)
|
|
(1,000
|
)
|
|
(635
|
)
|
||||
Net income available to common stockholders - basic
|
12,285
|
|
|
21,751
|
|
|
28,786
|
|
|
37,067
|
|
||||
Effect of unvested participating restricted stock in two-class calculation
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Net income available to common stockholders - diluted
|
$
|
12,285
|
|
|
$
|
21,751
|
|
|
$
|
28,789
|
|
|
$
|
37,067
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average outstanding shares of common stock - basic
|
17,544
|
|
|
17,719
|
|
|
17,623
|
|
|
17,707
|
|
||||
Dilutive effect of stock options
|
259
|
|
|
6
|
|
|
204
|
|
|
14
|
|
||||
Weighted average outstanding shares of common stock - diluted
|
17,803
|
|
|
17,725
|
|
|
17,827
|
|
|
17,721
|
|
||||
Net income per common share:
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
0.70
|
|
|
$
|
1.23
|
|
|
$
|
1.63
|
|
|
$
|
2.09
|
|
Diluted
|
$
|
0.69
|
|
|
$
|
1.23
|
|
|
$
|
1.61
|
|
|
$
|
2.09
|
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||
|
|
(In millions)
|
||||||||||||||
Long-term debt, current and long-term
|
|
$
|
1,290.3
|
|
|
$
|
1,278.6
|
|
|
$
|
1,282.8
|
|
|
$
|
1,265.5
|
|
|
|
Three months ended June 30,
|
|
Favorable
(Unfavorable) Variance |
|
Six months ended June 30,
|
|
Favorable
(Unfavorable) Variance |
||||||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|||||||||||||||
|
|
|
|
(as adjusted)
|
|
|
|
|
|
(as adjusted)
|
|
|
||||||||||||
|
|
(In millions, except per share data)
|
||||||||||||||||||||||
Gross profit
|
|
$
|
78.6
|
|
|
$
|
93.0
|
|
|
$
|
(14.4
|
)
|
|
$
|
162.1
|
|
|
$
|
187.3
|
|
|
$
|
(25.2
|
)
|
General and administrative expenses
|
|
38.8
|
|
|
37.4
|
|
|
(1.4
|
)
|
|
80.7
|
|
|
87.7
|
|
|
7.0
|
|
||||||
Other expense and income items, net
|
|
15.2
|
|
|
14.7
|
|
|
(0.5
|
)
|
|
34.1
|
|
|
32.7
|
|
|
(1.4
|
)
|
||||||
Income before income taxes
|
|
$
|
24.6
|
|
|
$
|
40.9
|
|
|
$
|
(16.3
|
)
|
|
$
|
47.3
|
|
|
$
|
66.9
|
|
|
$
|
(19.6
|
)
|
Income tax provision
|
|
(11.9
|
)
|
|
(18.8
|
)
|
|
6.9
|
|
|
(17.5
|
)
|
|
(29.2
|
)
|
|
11.7
|
|
||||||
Net income
|
|
$
|
12.7
|
|
|
$
|
22.1
|
|
|
$
|
(9.4
|
)
|
|
$
|
29.8
|
|
|
$
|
37.7
|
|
|
$
|
(7.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effective tax rate
|
|
48.3
|
%
|
|
45.9
|
%
|
|
(2.4
|
)%
|
|
37.0
|
%
|
|
43.7
|
%
|
|
6.6
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income per diluted share
|
|
$
|
0.69
|
|
|
$
|
1.23
|
|
|
$
|
(0.54
|
)
|
|
$
|
1.61
|
|
|
$
|
2.09
|
|
|
$
|
(0.48
|
)
|
|
Three months ended June 30, 2018
|
|
Six months ended June 30, 2018
|
||||
|
(In millions)
|
||||||
Decrease in gross profit:
|
|
|
|
||||
Applebee's franchise operations decrease
|
$
|
(15.1
|
)
|
|
$
|
(28.4
|
)
|
IHOP franchise operations increase
|
0.5
|
|
|
2.7
|
|
||
All other operations increase
|
0.2
|
|
|
0.5
|
|
||
Total gross profit decrease
|
(14.4
|
)
|
|
(25.2
|
)
|
||
Change in General and Administrative (“G&A”) expenses:
|
|
|
|
||||
Decrease due to executive separation costs in 2017
|
—
|
|
|
8.8
|
|
||
Increase in all other G&A (net)
|
(1.4
|
)
|
|
(1.8
|
)
|
||
Total G&A (increase) decrease
|
(1.4
|
)
|
|
7.0
|
|
||
Decrease in closure charges
|
5.4
|
|
|
3.0
|
|
||
Decrease in gain on disposition of assets
|
(6.2
|
)
|
|
(4.9
|
)
|
||
Other
|
0.3
|
|
|
0.5
|
|
||
Decrease in income before income taxes
|
$
|
(16.3
|
)
|
|
$
|
(19.6
|
)
|
|
Three months ended June 30, 2018
|
|
Six months ended June 30, 2018
|
||||||||
|
Applebee's
|
|
IHOP
|
|
Applebee's
|
|
IHOP
|
||||
Sales percentage increase
|
3.2
|
%
|
|
3.1
|
%
|
|
2.0
|
%
|
|
3.5
|
%
|
% increase in domestic same-restaurant sales
|
5.7
|
%
|
|
0.7
|
%
|
|
4.5
|
%
|
|
0.9
|
%
|
Net franchise restaurant (reduction) development
(1)
|
(29
|
)
|
|
14
|
|
|
(53
|
)
|
|
19
|
|
Net (decrease) increase in effective franchise restaurants
|
(84
|
)
|
|
59
|
|
|
(83
|
)
|
|
61
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Applebee's Restaurant Data
|
|
(Unaudited)
|
||||||||||||||
Effective Restaurants
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Franchise
|
|
1,900
|
|
|
1,984
|
|
|
1,912
|
|
|
1,995
|
|
||||
System-wide
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Domestic sales percentage change
(c)
|
|
3.2
|
%
|
|
(7.5
|
)%
|
|
2.0
|
%
|
|
(8.1
|
)%
|
||||
Domestic same-restaurant sales percentage change
(d)
|
|
5.7
|
%
|
|
(6.2
|
)%
|
|
4.5
|
%
|
|
(7.0
|
)%
|
||||
Average weekly domestic unit sales (in thousands)
|
|
$
|
47.6
|
|
|
$
|
44.2
|
|
|
$
|
47.6
|
|
|
$
|
44.7
|
|
|
|
|
|
|
|
|
|
|
||||||||
IHOP Restaurant Data
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Effective Restaurants
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Franchise
|
|
1,627
|
|
|
1,565
|
|
|
1,623
|
|
|
1,559
|
|
||||
Area license
|
|
163
|
|
|
166
|
|
|
163
|
|
|
166
|
|
||||
Company
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
||||
Total
|
|
1,790
|
|
|
1,740
|
|
|
1,786
|
|
|
1,734
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
System-wide
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales percentage change
(c)
|
|
3.1
|
%
|
|
0.2
|
%
|
|
3.5
|
%
|
|
0.2
|
%
|
||||
Domestic same-restaurant sales percentage change
(d)
|
|
0.7
|
%
|
|
(2.6
|
)%
|
|
0.9
|
%
|
|
(2.1
|
)%
|
||||
Franchise
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales percentage change
(c)
|
|
3.7
|
%
|
|
0.5
|
%
|
|
4.3
|
%
|
|
0.6
|
%
|
||||
Domestic same-restaurant sales percentage change
(d)
|
|
0.7
|
%
|
|
(2.6
|
)%
|
|
0.9
|
%
|
|
(2.1
|
)%
|
||||
Average weekly domestic unit sales (in thousands)
|
|
$
|
36.2
|
|
|
$
|
36.3
|
|
|
$
|
36.7
|
|
|
$
|
36.6
|
|
Area License
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales percentage change
(c)
|
|
1.8
|
%
|
|
(1.4
|
)%
|
|
0.8
|
%
|
|
(2.6
|
)%
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Reported sales (in millions)
|
(Unaudited)
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||
Applebee's domestic franchise restaurant sales
|
$
|
1,082.9
|
|
|
$
|
1,049.6
|
|
|
$
|
2,178.5
|
|
|
$
|
2,135.8
|
|
IHOP franchise restaurant sales
|
766.6
|
|
|
739.2
|
|
|
1,547.2
|
|
|
1,483.4
|
|
||||
IHOP area license restaurant sales
|
70.4
|
|
|
69.2
|
|
|
142.8
|
|
|
141.7
|
|
||||
Total
|
$
|
1,919.9
|
|
|
$
|
1,858.0
|
|
|
$
|
3,868.5
|
|
|
$
|
3,760.9
|
|
Restaurant Development Activity
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Applebee's
|
(Unaudited)
|
||||||||||
Beginning of period
|
1,912
|
|
|
1,998
|
|
|
1,936
|
|
|
2,016
|
|
|
|
|
|
|
|
|
|
||||
Franchise restaurants opened:
|
|
|
|
|
|
|
|
|
|
||
Domestic
|
1
|
|
|
4
|
|
|
1
|
|
|
5
|
|
International
|
1
|
|
|
4
|
|
|
3
|
|
|
4
|
|
Total franchise restaurants opened
|
2
|
|
|
8
|
|
|
4
|
|
|
9
|
|
Franchise restaurants closed:
|
|
|
|
|
|
|
|
|
|
||
Domestic
|
(30
|
)
|
|
(33
|
)
|
|
(52
|
)
|
|
(52
|
)
|
International
|
(1
|
)
|
|
(5
|
)
|
|
(5
|
)
|
|
(5
|
)
|
Total franchise restaurants closed
|
(31
|
)
|
|
(38
|
)
|
|
(57
|
)
|
|
(57
|
)
|
Net franchise restaurant reduction
|
(29
|
)
|
|
(30
|
)
|
|
(53
|
)
|
|
(48
|
)
|
|
|
|
|
|
|
|
|
||||
Total Applebee's restaurants, end of period
|
1,883
|
|
|
1,968
|
|
|
1,883
|
|
|
1,968
|
|
Domestic
|
1,731
|
|
|
1,811
|
|
|
1,731
|
|
|
1,811
|
|
International
|
152
|
|
|
157
|
|
|
152
|
|
|
157
|
|
IHOP
|
|
|
|
|
|
|
|
|
|
||
Summary - beginning of period:
|
|
|
|
|
|
|
|
||||
Franchise
|
1,627
|
|
|
1,564
|
|
|
1,622
|
|
|
1,556
|
|
Area license
|
164
|
|
|
167
|
|
|
164
|
|
|
167
|
|
Company
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
Total IHOP restaurants, beginning of period
|
1,791
|
|
|
1,741
|
|
|
1,786
|
|
|
1,733
|
|
|
|
|
|
|
|
|
|
||||
Franchise/area license restaurants opened:
|
|
|
|
|
|
|
|
||||
Domestic franchise
|
9
|
|
|
9
|
|
|
22
|
|
|
20
|
|
Domestic area license
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
International franchise
|
5
|
|
|
8
|
|
|
8
|
|
|
12
|
|
Total franchise/area license restaurants opened
|
16
|
|
|
17
|
|
|
32
|
|
|
32
|
|
Franchise/area license restaurants closed:
|
|
|
|
|
|
|
|
|
|
||
Domestic franchise
|
(1
|
)
|
|
(2
|
)
|
|
(6
|
)
|
|
(9
|
)
|
Domestic area license
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
International franchise
|
—
|
|
|
(2
|
)
|
|
(6
|
)
|
|
(2
|
)
|
Total franchise/area license restaurants closed
|
(2
|
)
|
|
(5
|
)
|
|
(13
|
)
|
|
(12
|
)
|
Net franchise/area license restaurant development
|
14
|
|
|
12
|
|
|
19
|
|
|
20
|
|
Refranchised from Company restaurants
|
—
|
|
|
9
|
|
|
1
|
|
|
9
|
|
Franchise restaurants reacquired by the Company
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
Net franchise/area license restaurant additions
|
14
|
|
|
21
|
|
|
19
|
|
|
29
|
|
|
|
|
|
|
|
|
|
||||
Summary - end of period:
|
|
|
|
|
|
|
|
||||
Franchise
|
1,640
|
|
|
1,586
|
|
|
1,640
|
|
|
1,586
|
|
Area license
|
165
|
|
|
166
|
|
|
165
|
|
|
166
|
|
Company
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total IHOP restaurants, end of period
|
1,805
|
|
|
1,752
|
|
|
1,805
|
|
|
1,752
|
|
Domestic
|
1,688
|
|
|
1,646
|
|
|
1,688
|
|
|
1,646
|
|
International
|
117
|
|
|
106
|
|
|
117
|
|
|
106
|
|
•
|
Prior to the adoption of ASC 606, we did not record advertising fees received under Applebee's franchise agreements as franchise revenue and expense; we did record advertising fees received under IHOP franchise agreements as franchise revenue and expense. In evaluating advertising activity under the guidance of ASC 606, we consider ourselves to be primarily responsible for fulfilling the promise to provide all of the services specified in the contract, including advertising activities, which are not considered to be distinct services in the context of providing the right to the symbolic intellectual property. Accordingly, under ASC 606, we are recording advertising fees received under Applebee's franchise agreements as franchise revenue. Under previous accounting guidance for franchisors, advertising revenue and expense were recognized in the same amount in each period. That guidance was superceded by ASC 606, such that advertising expense may now be recognized in a different period than the advertising revenue recognized as described above.
|
•
|
Prior to the adoption of ASC 606, the Company generally recognized the entire franchise and/or development fee as revenue at the restaurant opening date. Under ASC 606, franchise and development fees are recognized as revenue ratably on a straight-line basis over the term of the franchise agreement commencing with the restaurant opening date.
|
Revenue
|
|
Three months ended June 30,
|
|
Favorable
(Unfavorable) Variance |
|
Six months ended June 30,
|
|
Favorable
(Unfavorable) Variance |
||||||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|||||||||||||||
|
|
|
|
(as adjusted)
|
|
|
|
|
|
(as adjusted)
|
|
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||
Franchise operations
|
|
$
|
151.9
|
|
|
$
|
153.1
|
|
|
$
|
(1.2
|
)
|
|
$
|
307.2
|
|
|
$
|
307.8
|
|
|
$
|
(0.6
|
)
|
Rental operations
|
|
30.4
|
|
|
30.1
|
|
|
0.3
|
|
|
61.2
|
|
|
60.6
|
|
|
0.6
|
|
||||||
Company restaurant operations
|
|
—
|
|
|
3.4
|
|
|
(3.4
|
)
|
|
—
|
|
|
7.5
|
|
|
(7.5
|
)
|
||||||
Financing operations
|
|
2.2
|
|
|
2.1
|
|
|
0.1
|
|
|
4.2
|
|
|
4.2
|
|
|
(0.0
|
)
|
||||||
Total revenue
|
|
$
|
184.5
|
|
|
$
|
188.7
|
|
|
$
|
(4.2
|
)
|
|
$
|
372.6
|
|
|
$
|
380.1
|
|
|
$
|
(7.5
|
)
|
Change vs. prior period
|
|
(2.2
|
)%
|
|
|
|
|
|
(2.0
|
)%
|
|
|
|
|
Gross Profit (Loss)
|
|
Three months ended June 30,
|
|
Favorable
(Unfavorable) Variance
|
|
Six months ended June 30,
|
|
Favorable
(Unfavorable) Variance
|
||||||||||||||||
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||||||||||||
|
|
|
|
(as adjusted)
|
|
|
|
|
|
(as adjusted)
|
|
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||
Franchise operations
|
|
$
|
69.0
|
|
|
$
|
83.6
|
|
|
$
|
(14.6
|
)
|
|
$
|
142.4
|
|
|
$
|
168.1
|
|
|
$
|
(25.7
|
)
|
Rental operations
|
|
7.6
|
|
|
7.5
|
|
|
0.1
|
|
|
15.8
|
|
|
15.3
|
|
|
0.5
|
|
||||||
Company restaurant operations
|
|
—
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
—
|
|
|
(0.3
|
)
|
|
0.3
|
|
||||||
Financing operations
|
|
2.0
|
|
|
2.0
|
|
|
(0.0
|
)
|
|
3.9
|
|
|
4.2
|
|
|
(0.3
|
)
|
||||||
Total gross profit
|
|
$
|
78.6
|
|
|
$
|
93.0
|
|
|
$
|
(14.4
|
)
|
|
$
|
162.1
|
|
|
$
|
187.3
|
|
|
$
|
(25.2
|
)
|
Change vs. prior period
|
|
(15.5
|
)%
|
|
|
|
|
|
(13.5
|
)%
|
|
|
|
|
|
|
Three months ended June 30,
|
|
Favorable
(Unfavorable) Variance
|
|
Six months ended June 30,
|
|
Favorable
(Unfavorable) Variance
|
||||||||||||||||
Franchise Operations
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||||||||||||
|
|
(In millions, except number of restaurants)
|
||||||||||||||||||||||
Effective Franchise Restaurants:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Applebee’s
|
|
1,900
|
|
|
1,984
|
|
|
(84
|
)
|
|
1,912
|
|
|
1,995
|
|
|
(83
|
)
|
||||||
IHOP
|
|
1,790
|
|
|
1,731
|
|
|
59
|
|
|
1,786
|
|
|
1,725
|
|
|
61
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Franchise Revenues:
|
|
|
|
|
(as adjusted)
|
|
|
|
|
|
|
|
|
(as adjusted)
|
|
|
|
|||||||
Applebee’s
|
|
$
|
44.3
|
|
|
$
|
44.6
|
|
|
$
|
(0.3
|
)
|
|
$
|
85.0
|
|
|
$
|
90.0
|
|
|
$
|
(5.0
|
)
|
IHOP
|
|
48.9
|
|
|
48.0
|
|
|
0.9
|
|
|
99.7
|
|
|
95.6
|
|
|
4.1
|
|
||||||
Advertising
|
|
58.7
|
|
|
60.5
|
|
|
(1.8
|
)
|
|
122.5
|
|
|
122.2
|
|
|
0.3
|
|
||||||
Total franchise revenues
|
|
151.9
|
|
|
153.1
|
|
|
(1.2
|
)
|
|
307.2
|
|
|
307.8
|
|
|
(0.6
|
)
|
||||||
Franchise Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Applebee’s
|
|
18.1
|
|
|
3.3
|
|
|
(14.8
|
)
|
|
29.5
|
|
|
6.1
|
|
|
(23.4
|
)
|
||||||
IHOP
|
|
6.1
|
|
|
5.7
|
|
|
(0.4
|
)
|
|
12.8
|
|
|
11.4
|
|
|
(1.4
|
)
|
||||||
Advertising
|
|
58.7
|
|
|
60.5
|
|
|
1.8
|
|
|
122.5
|
|
|
122.2
|
|
|
(0.3
|
)
|
||||||
Total franchise expenses
|
|
82.9
|
|
|
69.5
|
|
|
(13.4
|
)
|
|
164.8
|
|
|
139.7
|
|
|
(25.1
|
)
|
||||||
Franchise Gross Profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Applebee’s
|
|
26.2
|
|
|
41.3
|
|
|
(15.1
|
)
|
|
55.5
|
|
|
83.9
|
|
|
(28.4
|
)
|
||||||
IHOP
|
|
42.8
|
|
|
42.3
|
|
|
0.5
|
|
|
86.9
|
|
|
84.2
|
|
|
2.7
|
|
||||||
Total franchise gross profit
|
|
$
|
69.0
|
|
|
$
|
83.6
|
|
|
$
|
(14.6
|
)
|
|
$
|
142.4
|
|
|
$
|
168.1
|
|
|
$
|
(25.7
|
)
|
Gross profit as % of revenue
(2)
|
|
45.4
|
%
|
|
54.6
|
%
|
|
|
|
46.4
|
%
|
|
54.6
|
%
|
|
|
Rental Operations
|
|
Three months ended June 30,
|
|
Favorable
(Unfavorable) Variance |
|
Six months ended June 30,
|
|
Favorable
(Unfavorable) Variance |
||||||||||||||||
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||
Rental revenues
|
|
$
|
30.4
|
|
|
$
|
30.1
|
|
|
$
|
0.3
|
|
|
$
|
61.2
|
|
|
$
|
60.6
|
|
|
$
|
0.6
|
|
Rental expenses
|
|
22.8
|
|
|
22.6
|
|
|
(0.2
|
)
|
|
45.4
|
|
|
45.3
|
|
|
(0.1
|
)
|
||||||
Rental operations gross profit
|
|
$
|
7.6
|
|
|
$
|
7.5
|
|
|
$
|
0.1
|
|
|
$
|
15.8
|
|
|
$
|
15.3
|
|
|
$
|
0.5
|
|
Gross profit as % of revenue
(1)
|
|
24.9
|
%
|
|
24.7
|
%
|
|
|
|
25.7
|
%
|
|
25.2
|
%
|
|
|
G&A Expenses
|
|
Three months ended June 30,
|
|
Favorable
(Unfavorable) Variance |
|
Six months ended June 30,
|
|
Favorable
(Unfavorable) Variance |
||||||||||||||||
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||
|
|
$
|
38.8
|
|
|
$
|
37.4
|
|
|
$
|
(1.4
|
)
|
|
$
|
80.7
|
|
|
$
|
87.7
|
|
|
$
|
7.0
|
|
|
|
Three months ended June 30,
|
|
Favorable
(Unfavorable) Variance |
|
Six months ended June 30,
|
|
Favorable
(Unfavorable) Variance |
||||||||||||||||
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||
|
|
$
|
(0.1
|
)
|
|
$
|
(6.2
|
)
|
|
$
|
(6.2
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
(6.4
|
)
|
|
$
|
(4.9
|
)
|
Other Income and Expense Items
|
|
Three months ended June 30,
|
|
Favorable
(Unfavorable) Variance |
|
Six months ended June 30,
|
|
Favorable
(Unfavorable) Variance |
||||||||||||||||
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||||||||||||
|
|
(In millions)
|
||||||||||||||||||||||
Interest expense
|
|
$
|
15.5
|
|
|
$
|
15.8
|
|
|
$
|
0.3
|
|
|
$
|
30.7
|
|
|
$
|
31.1
|
|
|
$
|
0.5
|
|
Amortization of intangible assets
|
|
2.5
|
|
|
2.5
|
|
|
(0.0
|
)
|
|
5.0
|
|
|
5.0
|
|
|
(0.0
|
)
|
||||||
Total
|
|
$
|
18.0
|
|
|
$
|
18.3
|
|
|
$
|
0.3
|
|
|
$
|
35.7
|
|
|
$
|
36.1
|
|
|
$
|
0.5
|
|
Income Taxes
|
|
Three months ended June 30,
|
|
Favorable
(Unfavorable) Variance |
|
Six months ended June 30,
|
|
Favorable
(Unfavorable) Variance |
|
||||||||||||||||
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
||||||||||||||
|
|
(In millions)
|
|
||||||||||||||||||||||
Income tax provision
|
|
$
|
11.9
|
|
|
$
|
18.8
|
|
|
$
|
6.9
|
|
|
$
|
17.5
|
|
|
$
|
29.2
|
|
|
$
|
11.7
|
|
|
Effective tax rate
|
|
48.3
|
%
|
|
45.9
|
%
|
|
(2.4
|
)%
|
|
37.0
|
%
|
|
43.7
|
%
|
|
6.7
|
%
|
|
|
Shares
|
|
Cost of shares
|
|||
|
|
|
(In millions)
|
|||
Repurchased during the three months ended June 30, 2018
|
137,163
|
|
|
$
|
10.0
|
|
Repurchased during the six months ended June 30, 2018
|
275,801
|
|
|
$
|
20.0
|
|
Cumulative (life-of-program) repurchases as of June 30, 2018
|
1,276,458
|
|
|
$
|
102.9
|
|
Remaining dollar value of shares that may be repurchased
|
n/a
|
|
$
|
47.1
|
|
|
Six months ended June 30,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Variance
|
||||||
|
(In millions)
|
||||||||||
Net cash provided by operating activities
|
$
|
25.8
|
|
|
$
|
20.9
|
|
|
$
|
4.9
|
|
Net cash provided by investing activities
|
5.0
|
|
|
3.8
|
|
|
1.2
|
|
|||
Net cash used in financing activities
|
(44.1
|
)
|
|
(51.7
|
)
|
|
7.6
|
|
|||
Net decrease in cash, cash equivalents and restricted cash
|
$
|
(13.3
|
)
|
|
$
|
(27.0
|
)
|
|
$
|
13.7
|
|
|
Six months ended June 30,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Variance
|
||||||
|
(In millions)
|
||||||||||
Cash flows provided by operating activities
|
$
|
25.8
|
|
|
$
|
20.9
|
|
|
$
|
4.9
|
|
Receipts from notes and equipment contracts receivable
|
9.6
|
|
|
5.2
|
|
|
4.4
|
|
|||
Additions to property and equipment
|
(7.3
|
)
|
|
(6.9
|
)
|
|
(0.4
|
)
|
|||
Adjusted free cash flow
|
$
|
28.1
|
|
|
$
|
19.2
|
|
|
$
|
8.9
|
|
Purchases of Equity Securities by the Company
|
||||||||||||||
Period
|
|
Total number of
shares
purchased
|
|
Average price
paid per
share
|
|
Total number of
shares purchased as
part of publicly
announced plans or
programs (c)
|
|
Approximate dollar value of
shares that may yet be
purchased under the
plans or programs (c)
|
||||||
April 2, 2018 – April 29, 2018
(a)
|
|
85,674
|
|
|
$
|
74.82
|
|
|
84,790
|
|
|
$
|
50,800,000
|
|
April 30, 2018 – May 27, 2018
(a)
|
|
55,722
|
|
|
69.81
|
|
|
52,373
|
|
|
$
|
47,100,000
|
|
|
May 28, 2018 – July 1, 2018
(b)
|
|
221
|
|
|
75.54
|
|
|
—
|
|
|
$
|
47,100,000
|
|
|
Total
|
|
141,617
|
|
|
$
|
72.85
|
|
|
137,163
|
|
|
$
|
47,100,000
|
|
3.1
|
|
|
|
3.2
|
|
|
|
*†10.1
|
|
|
|
†10.2
|
|
|
|
†10.3
|
|
|
|
*12.1
|
|
|
|
*31.1
|
|
|
|
*31.2
|
|
|
|
*32.1
|
|
|
|
*32.2
|
|
|
|
101.INS
|
|
|
XBRL Instance Document.***
|
101.SCH
|
|
|
XBRL Schema Document.***
|
101.CAL
|
|
|
XBRL Calculation Linkbase Document.***
|
101.DEF
|
|
|
XBRL Definition Linkbase Document.***
|
101.LAB
|
|
|
XBRL Label Linkbase Document.***
|
101.PRE
|
|
|
XBRL Presentation Linkbase Document.***
|
**
|
The certifications attached as Exhibits 32.1 and 32.2 accompany this Quarterly Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
|
***
|
Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
|
†
|
A contract, compensatory plan or arrangement in which directors or executive officers are eligible to participate.
|
#
|
Portions of this exhibit have been omitted pending a determination by the Securities and Exchange Commission as to whether these portions should be granted confidential treatment.
|
|
|
Dine Brands Global, Inc.
(Registrant)
|
|
|
|
|
|
|
|
|
|
Dated:
|
August 1, 2018
|
By:
|
/s/ Stephen P. Joyce
|
|
|
|
Stephen P. Joyce
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
Dated:
|
August 1, 2018
|
By:
|
/s/ Thomas H. Song
|
|
|
|
Thomas H. Song
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
|
|
|
|
Dated:
|
August 1, 2018
|
By:
|
/s/ Greggory H. Kalvin
|
|
|
|
Greggory H. Kalvin
Senior Vice President, Corporate Controller
(Principal Accounting Officer)
|
Leverage Ratio Calculation:
|
|
||
Indebtedness, net
(1)
|
$
|
1,305,761
|
|
Covenant Adjusted EBITDA
(1)
|
227,992
|
|
|
Leverage Ratio
|
5.73
|
|
|
Debt Service Coverage Ratio (DSCR) Calculation:
|
|
||
Net Cash Flow
(1)
|
$
|
261,393
|
|
Debt Service
(1)
|
69,765
|
|
|
DSCR
|
3.75
|
|
(1)
|
Definitions of all components used in calculating the above ratios are found in the Base Indenture and the related Series 2014-1 Supplement to the Base Indenture, dated September 30, 2014, filed as Exhibits 4.1 and 4.2, respectively, to our Current Report on Form 8-K filed on October 3, 2014.
|
Dated:
|
August 1, 2018
|
/s/ Stephen P. Joyce
|
|
|
Stephen P. Joyce
Chief Executive Officer
(Principal Executive Officer)
|
Dated:
|
August 1, 2018
|
/s/ Thomas H. Song
|
|
|
Thomas H. Song
Chief Financial Officer
(Principal Accounting Officer)
|
Dated:
|
August 1, 2018
|
/s/ Stephen P. Joyce
|
|
|
Stephen P. Joyce
Chief Executive Officer
(Principal Executive Officer)
|
Dated:
|
August 1, 2018
|
/s/ Thomas H. Song
|
|
|
Thomas H. Song
Chief Financial Officer
(Principal Accounting Officer)
|