(Mark One)
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|
x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2018
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||
OR
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||
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from to
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Delaware
(State or other jurisdiction
of incorporation or organization)
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95-3038279
(I.R.S. Employer
Identification No.)
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450 North Brand Boulevard, Glendale, California
(Address of principal executive offices)
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91203-2306
(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $.01 Par Value
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New York Stock Exchange
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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||
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Smaller reporting company
o
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Emerging growth company
o
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Class
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February 15, 2019
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|
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Common Stock, $.01 par value
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|
17,533,991
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|
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Page
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|
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|
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|
|
•
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Our two franchise operations (each a separate operating segment) - primarily royalties, advertising fees and other income from
1,768
Applebee’s franchised restaurants and
1,831
IHOP franchised and area licensed restaurants;
|
•
|
Rental operations - primarily rental income derived from lease or sublease agreements covering
676
IHOP franchised restaurants and one Applebee’s franchised restaurant;
|
•
|
Financing operations - primarily interest income from approximately
$66 million
of receivables for equipment leases and franchise fee notes generally associated with IHOP franchised restaurants developed before 2003; and
|
•
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Company restaurant operations - retail sales from 69 Applebee's company restaurants we acquired from a former Applebee's franchisee in December 2018.
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•
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make it more difficult for us to satisfy our obligations with respect to our debt or refinance any of our debt on attractive terms, commercially reasonable terms, or at all;
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•
|
increase our vulnerability to general adverse economic and industry conditions or a downturn in our business;
|
•
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require us to dedicate a substantial portion of our cash flow from operations to debt service, thereby reducing the availability of our cash flow to pay dividends to our stockholders, repurchase shares of our common stock, fund working capital, capital expenditures and other general corporate purposes;
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•
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limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
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•
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place us at a competitive disadvantage compared to our competitors that are not as highly leveraged;
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•
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limit our ability to borrow additional funds;
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•
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prevent us from taking actions that we believe would be in the best interest of our business and make it difficult for us to successfully execute our business strategy;
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•
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subject us to risks associated with rising interest rates and uncertainty related to the proposed phase-out of the London Interbank Offered Rate (LIBOR); and
|
•
|
result in an event of default if we fail to satisfy our obligations under our debt or fail to comply with the financial and other restrictive covenants contained in our debt documents, which event of default could result in all of our debt becoming immediately due and payable and could permit certain of our lenders to foreclose on our assets securing such debt.
|
•
|
the demand for Applebee’s and IHOP restaurants and the selection of appropriate franchisee candidates;
|
•
|
costs of construction, permit issuance and regulatory compliance;
|
•
|
the availability of suitable locations and terms for potential development sites, including lease or purchase terms for new locations;
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•
|
the availability of financing, at acceptable rates and terms, to both franchisees and third-party landlords, for restaurant development and/or implementation of our business strategy through new remodel programs and other operational changes;
|
•
|
delays in obtaining construction permits and in completion of construction;
|
•
|
competition for suitable development sites;
|
•
|
changes in governmental rules, regulations, and interpretations (including interpretations of the requirements of the Americans with Disabilities Act); and
|
•
|
general economic and business conditions.
|
•
|
inability or unwillingness of franchisees to participate in implementing changes or to participate in business strategy changes;
|
•
|
inability or unwillingness of franchisees to support our marketing programs and strategic initiatives;
|
•
|
inability of franchisees to participate in business strategy changes due to financial constraints;
|
•
|
failure of franchisees to report sales information accurately;
|
•
|
greater proportional impact of general and administrative expenses on our business and financial condition; and
|
•
|
inability to retain franchisees in the future, both in terms of number and quality, and inability to attract, retain and motivate sufficient numbers of franchisees of the same caliber, including top performing franchisees.
|
•
|
changes in consumer behavior driven by macro-level shifts in retail, technology, media, e-commerce, global safety and demography which may impact where, when, whether and how often customers visit full-service restaurants;
|
•
|
declines in comparable restaurant sales growth rates due to: (i) failure to meet or adequately adapt to changing customer expectations for food type, quality and taste, or to innovate and develop new menu items to retain existing customers and attract new customers; (ii) competitive intrusions in our markets, including competitive pricing initiatives and daypart expansion by competitors; (iii) opening new restaurants that cannibalize the sales of existing restaurants; (iv) failure of national or local marketing to be effective; and (v) natural or man-made disasters or adverse weather conditions;
|
•
|
negative trends in operating expenses such as: (i) increases in food and other commodity costs; (ii) increases in labor costs due to minimum wage and other employment laws or regulations, immigration reform, the potential impact of union organizing efforts and tight labor market conditions; and (iii) increases in other operating costs including advertising, utilities, lease-related expenses and credit card processing fees;
|
•
|
the highly competitive nature of the restaurant and related industries with respect to, among other things: (i) price, service, location, personnel and the type and quality of food; (ii) the trend toward convergence in grocery, deli, retail and restaurant services, as well as the continued expansion of restaurants into the breakfast daypart; (iii) the entry of major market players in non-competing industries into the food services market; (iv) the decline in the price of groceries which may increase the attractiveness of dining at home versus dining out; and (v) the emergence of new or improved technologies and changes in consumer behavior facilitated by such technology;
|
•
|
the inability to increase menu pricing to offset increased operating expenses; and
|
•
|
failure to effectively manage further penetration into mature markets.
|
|
Applebee's (a)
|
|
IHOP (a)
|
||||||||||||||
|
Franchise
|
|
Company
|
|
Total Applebee's
|
|
Franchise
|
|
Area License
|
|
Total IHOP
|
||||||
United States
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Alabama
|
29
|
|
|
—
|
|
|
29
|
|
|
19
|
|
|
—
|
|
|
19
|
|
Alaska
|
1
|
|
|
—
|
|
|
1
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Arizona
|
22
|
|
|
—
|
|
|
22
|
|
|
45
|
|
|
—
|
|
|
45
|
|
Arkansas
|
8
|
|
|
—
|
|
|
8
|
|
|
17
|
|
|
—
|
|
|
17
|
|
California
|
114
|
|
|
—
|
|
|
114
|
|
|
233
|
|
|
—
|
|
|
233
|
|
Colorado
|
24
|
|
|
—
|
|
|
24
|
|
|
37
|
|
|
—
|
|
|
37
|
|
Connecticut
|
6
|
|
|
—
|
|
|
6
|
|
|
9
|
|
|
—
|
|
|
9
|
|
Delaware
|
12
|
|
|
—
|
|
|
12
|
|
|
7
|
|
|
—
|
|
|
7
|
|
District of Columbia
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Florida
|
105
|
|
|
—
|
|
|
105
|
|
|
—
|
|
|
146
|
|
(b)
|
146
|
|
Georgia
|
63
|
|
|
—
|
|
|
63
|
|
|
77
|
|
|
4
|
|
(b)
|
81
|
|
Hawaii
|
2
|
|
|
—
|
|
|
2
|
|
|
8
|
|
|
—
|
|
|
8
|
|
Idaho
|
12
|
|
|
—
|
|
|
12
|
|
|
8
|
|
|
—
|
|
|
8
|
|
Illinois
|
39
|
|
|
—
|
|
|
39
|
|
|
52
|
|
|
—
|
|
|
52
|
|
Indiana
|
58
|
|
|
—
|
|
|
58
|
|
|
24
|
|
|
—
|
|
|
24
|
|
Iowa
|
26
|
|
|
—
|
|
|
26
|
|
|
11
|
|
|
—
|
|
|
11
|
|
Kansas
|
32
|
|
|
—
|
|
|
32
|
|
|
28
|
|
|
—
|
|
|
28
|
|
Kentucky
|
27
|
|
|
—
|
|
|
27
|
|
|
10
|
|
|
—
|
|
|
10
|
|
Louisiana
|
15
|
|
|
—
|
|
|
15
|
|
|
31
|
|
|
—
|
|
|
31
|
|
Maine
|
12
|
|
|
—
|
|
|
12
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Maryland
|
22
|
|
|
—
|
|
|
22
|
|
|
52
|
|
|
—
|
|
|
52
|
|
Massachusetts
|
28
|
|
|
—
|
|
|
28
|
|
|
21
|
|
|
—
|
|
|
21
|
|
Michigan
|
86
|
|
|
—
|
|
|
86
|
|
|
27
|
|
|
—
|
|
|
27
|
|
Minnesota
|
50
|
|
|
—
|
|
|
50
|
|
|
9
|
|
|
—
|
|
|
9
|
|
Mississippi
|
21
|
|
|
—
|
|
|
21
|
|
|
15
|
|
|
—
|
|
|
15
|
|
Missouri
|
49
|
|
|
—
|
|
|
49
|
|
|
33
|
|
|
—
|
|
|
33
|
|
Montana
|
8
|
|
|
—
|
|
|
8
|
|
|
5
|
|
|
—
|
|
|
5
|
|
Nebraska
|
18
|
|
|
—
|
|
|
18
|
|
|
8
|
|
|
—
|
|
|
8
|
|
Nevada
|
13
|
|
|
—
|
|
|
13
|
|
|
24
|
|
|
—
|
|
|
24
|
|
New Hampshire
|
14
|
|
|
—
|
|
|
14
|
|
|
6
|
|
|
—
|
|
|
6
|
|
New Jersey
|
60
|
|
|
—
|
|
|
60
|
|
|
46
|
|
|
—
|
|
|
46
|
|
New Mexico
|
20
|
|
|
—
|
|
|
20
|
|
|
22
|
|
|
—
|
|
|
22
|
|
New York
|
109
|
|
|
—
|
|
|
109
|
|
|
57
|
|
|
—
|
|
|
57
|
|
North Carolina
|
1
|
|
|
42
|
|
|
43
|
|
|
54
|
|
|
—
|
|
|
54
|
|
North Dakota
|
11
|
|
|
—
|
|
|
11
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Ohio
|
77
|
|
|
—
|
|
|
77
|
|
|
41
|
|
|
—
|
|
|
41
|
|
Oklahoma
|
13
|
|
|
—
|
|
|
13
|
|
|
34
|
|
|
—
|
|
|
34
|
|
Oregon
|
19
|
|
|
—
|
|
|
19
|
|
|
9
|
|
|
—
|
|
|
9
|
|
Pennsylvania
|
80
|
|
|
—
|
|
|
80
|
|
|
27
|
|
|
—
|
|
|
27
|
|
Rhode Island
|
8
|
|
|
—
|
|
|
8
|
|
|
5
|
|
|
—
|
|
|
5
|
|
South Carolina
|
—
|
|
|
27
|
|
|
27
|
|
|
33
|
|
|
—
|
|
|
33
|
|
South Dakota
|
6
|
|
|
—
|
|
|
6
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Tennessee
|
30
|
|
|
—
|
|
|
30
|
|
|
41
|
|
|
—
|
|
|
41
|
|
Texas
|
97
|
|
|
—
|
|
|
97
|
|
|
209
|
|
|
—
|
|
|
209
|
|
Utah
|
10
|
|
|
—
|
|
|
10
|
|
|
21
|
|
|
—
|
|
|
21
|
|
Vermont
|
3
|
|
|
—
|
|
|
3
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Virginia
|
63
|
|
|
—
|
|
|
63
|
|
|
67
|
|
|
—
|
|
|
67
|
|
Washington
|
41
|
|
|
—
|
|
|
41
|
|
|
32
|
|
|
—
|
|
|
32
|
|
West Virginia
|
16
|
|
|
—
|
|
|
16
|
|
|
8
|
|
|
—
|
|
|
8
|
|
Wisconsin
|
40
|
|
|
—
|
|
|
40
|
|
|
15
|
|
|
—
|
|
|
15
|
|
Wyoming
|
4
|
|
|
—
|
|
|
4
|
|
|
3
|
|
|
—
|
|
|
3
|
|
Total Domestic
|
1,624
|
|
|
69
|
|
|
1,693
|
|
|
1,555
|
|
|
150
|
|
|
1,705
|
|
|
Applebee's (a)
|
|
IHOP (a)
|
||||||||||||||
|
Franchise
|
|
Company
|
|
Total Applebee's
|
|
Franchise
|
|
Area License
|
|
Total IHOP
|
||||||
International
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Bahrain
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
Brazil
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Canada
|
16
|
|
|
—
|
|
|
16
|
|
|
16
|
|
|
12
|
|
(b)
|
28
|
|
Costa Rica
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Dominican Republic
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Egypt
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Guam
|
1
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Guatemala
|
5
|
|
|
—
|
|
|
5
|
|
|
2
|
|
|
—
|
|
|
2
|
|
India
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Indonesia
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Kuwait
|
8
|
|
|
—
|
|
|
8
|
|
|
6
|
|
|
—
|
|
|
6
|
|
Lebanon
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Mexico
|
56
|
|
|
—
|
|
|
56
|
|
|
45
|
|
|
—
|
|
|
45
|
|
Northern Mariana Islands
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Panama
|
2
|
|
|
—
|
|
|
2
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Puerto Rico
|
6
|
|
|
—
|
|
|
6
|
|
|
5
|
|
|
—
|
|
|
5
|
|
Qatar
|
8
|
|
|
—
|
|
|
8
|
|
|
1
|
|
|
—
|
|
|
1
|
|
Saudi Arabia
|
22
|
|
|
—
|
|
|
22
|
|
|
17
|
|
|
—
|
|
|
17
|
|
Thailand
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
United Arab Emirates
|
10
|
|
|
—
|
|
|
10
|
|
|
6
|
|
|
—
|
|
|
6
|
|
Total International
|
144
|
|
|
—
|
|
|
144
|
|
|
114
|
|
|
12
|
|
|
126
|
|
Totals
|
1,768
|
|
|
69
|
|
|
1,837
|
|
|
1,669
|
|
|
162
|
|
|
1,831
|
|
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
Weighted average exercise price of outstanding options, warrants and rights
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
||||
(a)
|
|
(b)
|
|
(c)
|
|||||
Equity compensation plans approved by security holders
|
1,439,708
|
|
|
$
|
63.21
|
|
|
567,829
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
1,439,708
|
|
|
$
|
63.21
|
|
|
567,829
|
|
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)
|
||||
October 1, 2018 – October 28, 2018
(a)
|
|
29,253
|
|
|
$76.80
|
|
27,730
|
|
|
$
|
37,100,000
|
|
October 29, 2018 – November 25, 2018
(b)
|
|
788
|
|
|
$88.73
|
|
—
|
|
|
$
|
37,100,000
|
|
November 26, 2018 – December 30, 2018
(a)
|
|
68,057
|
|
|
$73.07
|
|
67,494
|
|
|
$
|
32,200,000
|
|
Total
|
|
98,098
|
|
|
$74.31
|
|
95,224
|
|
|
$
|
32,200,000
|
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||||
Dine Brands Global, Inc.
|
$
|
100.00
|
|
|
$
|
128.63
|
|
|
$
|
109.08
|
|
|
$
|
103.70
|
|
|
$
|
74.25
|
|
|
$
|
101.97
|
|
Standard & Poor's 500
|
100.00
|
|
|
113.69
|
|
|
115.27
|
|
|
129.06
|
|
|
157.23
|
|
|
150.34
|
|
||||||
Restaurant Index
|
100.00
|
|
|
112.21
|
|
|
135.82
|
|
|
145.60
|
|
|
180.63
|
|
|
200.74
|
|
|
Fiscal Year Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
|
|
(as adjusted)
(a)
|
|
|
|
|
||||||||||||
Revenues:
|
(In millions, except per share amounts and restaurant data)
|
||||||||||||||||||
Royalties, franchise fees and other franchise revenues
|
$
|
375.6
|
|
|
$
|
360.2
|
|
|
$
|
377.9
|
|
|
$
|
386.6
|
|
|
$
|
365.8
|
|
Advertising revenue
|
268.3
|
|
|
234.2
|
|
|
260.1
|
|
|
108.1
|
|
|
90.3
|
|
|||||
Total franchise revenues
|
643.9
|
|
|
594.4
|
|
|
638.0
|
|
|
494.7
|
|
|
456.1
|
|
|||||
Rental revenues
|
121.9
|
|
|
121.4
|
|
|
123.0
|
|
|
127.7
|
|
|
122.9
|
|
|||||
Financing revenues
|
8.0
|
|
|
8.4
|
|
|
9.2
|
|
|
10.8
|
|
|
13.5
|
|
|||||
Company restaurant sales
(c)
|
7.1
|
|
|
7.5
|
|
|
17.4
|
|
|
47.9
|
|
|
62.5
|
|
|||||
Total revenues
|
780.9
|
|
|
731.7
|
|
|
787.6
|
|
|
681.1
|
|
|
655.0
|
|
|||||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Advertising expenses
|
269.6
|
|
|
243.1
|
|
|
260.1
|
|
|
108.1
|
|
|
90.3
|
|
|||||
Other franchise expenses
|
61.0
|
|
|
50.9
|
|
|
33.4
|
|
|
30.9
|
|
|
31.5
|
|
|||||
Total franchise expenses
|
330.6
|
|
|
294.0
|
|
|
293.5
|
|
|
139.0
|
|
|
121.8
|
|
|||||
Rental revenues
|
90.7
|
|
|
90.6
|
|
|
91.5
|
|
|
94.6
|
|
|
94.7
|
|
|||||
Financing revenues
|
0.6
|
|
|
0.6
|
|
|
0.2
|
|
|
0.5
|
|
|
0.8
|
|
|||||
Company restaurant expenses
(c)
|
5.9
|
|
|
7.8
|
|
|
18.2
|
|
|
48.0
|
|
|
62.6
|
|
|||||
Total cost of revenues
|
427.8
|
|
|
393.0
|
|
|
403.4
|
|
|
282.1
|
|
|
279.9
|
|
|||||
Gross profit
|
353.1
|
|
|
338.7
|
|
|
384.1
|
|
|
399.0
|
|
|
375.1
|
|
|||||
General and administrative expenses
|
166.7
|
|
|
165.7
|
|
|
148.9
|
|
|
155.4
|
|
|
145.9
|
|
|||||
Interest expense
|
61.7
|
|
|
62.0
|
|
|
61.5
|
|
|
63.3
|
|
|
96.6
|
|
|||||
Impairment of goodwill and intangible assets
|
—
|
|
|
531.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other expense, net
(b)
|
14.1
|
|
|
7.7
|
|
|
15.9
|
|
|
11.7
|
|
|
81.0
|
|
|||||
Income before income taxes
|
110.6
|
|
|
(428.3
|
)
|
|
157.8
|
|
|
168.6
|
|
|
51.6
|
|
|||||
Income tax (provision) benefit
|
(30.3
|
)
|
|
85.6
|
|
|
(56.8
|
)
|
|
(63.7
|
)
|
|
(15.1
|
)
|
|||||
Net income (loss)
|
80.4
|
|
|
(342.8
|
)
|
|
101.0
|
|
|
104.9
|
|
|
36.5
|
|
|||||
Net income (loss) available to common stockholders
|
$
|
77.6
|
|
|
$
|
(336.0
|
)
|
|
$
|
99.6
|
|
|
$
|
103.5
|
|
|
$
|
35.9
|
|
Net income (loss) available to common stockholders per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
4.43
|
|
|
$
|
(18.96
|
)
|
|
$
|
5.52
|
|
|
$
|
5.55
|
|
|
$
|
1.92
|
|
Diluted
|
$
|
4.37
|
|
|
$
|
(18.96
|
)
|
|
$
|
5.49
|
|
|
$
|
5.52
|
|
|
$
|
1.90
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
17.5
|
|
|
17.7
|
|
|
18.0
|
|
|
18.6
|
|
|
18.8
|
|
|||||
Diluted
|
17.8
|
|
|
17.7
|
|
|
18.1
|
|
|
18.8
|
|
|
19.0
|
|
|||||
Dividends declared per common share
|
$
|
2.52
|
|
|
$
|
3.88
|
|
|
$
|
3.73
|
|
|
$
|
3.545
|
|
|
$
|
3.125
|
|
Dividends paid per common share
|
$
|
2.86
|
|
|
$
|
3.88
|
|
|
$
|
3.68
|
|
|
$
|
3.50
|
|
|
$
|
2.25
|
|
Balance Sheet Data (end of year):
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
137.2
|
|
|
$
|
117.0
|
|
|
$
|
140.5
|
|
|
$
|
144.8
|
|
|
$
|
104.0
|
|
Property and equipment, net
|
240.3
|
|
|
199.6
|
|
|
219.6
|
|
|
219.6
|
|
|
241.2
|
|
|||||
Total assets
|
1,774.7
|
|
|
1,735.6
|
|
|
2,331.9
|
|
|
2,331.9
|
|
|
2,393.7
|
|
|||||
Long-term debt, less current maturities
|
1,274.1
|
|
|
1,269.8
|
|
|
1,282.7
|
|
|
1,279.5
|
|
|
1,276.5
|
|
|||||
Capital lease and financing obligations, less current maturities
|
126.2
|
|
|
101.1
|
|
|
114.2
|
|
|
127.2
|
|
|
140.6
|
|
|||||
Stockholders' (deficit) equity
|
(202.3
|
)
|
|
(215.5
|
)
|
|
252.8
|
|
|
267.2
|
|
|
279.1
|
|
|||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows provided by operating activities
|
$
|
140.3
|
|
|
$
|
65.7
|
|
|
$
|
118.1
|
|
|
$
|
135.5
|
|
|
$
|
118.5
|
|
Capital expenditures
|
14.3
|
|
|
13.4
|
|
|
5.6
|
|
|
6.6
|
|
|
5.9
|
|
|||||
Domestic system-wide same-restaurant sales percentage change:
|
|
|
|
|
|
|
|
|
|
||||||||||
Applebee's
|
5.0
|
%
|
|
(5.3
|
)%
|
|
(5.0
|
)%
|
|
0.2
|
%
|
|
1.1
|
%
|
|||||
IHOP
|
1.5
|
%
|
|
(1.9
|
)%
|
|
(0.1
|
)%
|
|
4.5
|
%
|
|
3.9
|
%
|
|||||
Total restaurants (end of year):
|
|
|
|
|
|
|
|
|
|
||||||||||
Applebee's
|
1,837
|
|
|
1,936
|
|
|
2,016
|
|
|
2,033
|
|
|
2,017
|
|
|||||
IHOP
|
1,831
|
|
|
1,786
|
|
|
1,733
|
|
|
1,683
|
|
|
1,650
|
|
|||||
Total restaurants
|
3,668
|
|
|
3,722
|
|
|
3,749
|
|
|
3,716
|
|
|
3,667
|
|
(a)
|
We adopted a new revenue recognition standard on January 1, 2018 that was applied retrospectively to 2017 and 2016 (See Note 2 of Notes to Consolidated Financial Statements); financial information for years 2015 and 2014 has not been adjusted to reflect the new standard.
|
(b)
|
Includes amortization of intangible assets, closure and other impairment charges and gain/loss on disposition of assets in each year as well as $2.5 million of debt refinancing costs in 2018 and a $64.9 million loss on extinguishment of debt in 2014.
|
(c)
|
We acquired 69 Applebee's franchise restaurants in December 2018. We refranchised nine IHOP company-operated restaurants in June 2017 and 23 Applebee's company-operated restaurants in July 2015.
|
•
|
We reported net income of
$80.4 million
, or $4.37 per diluted share in 2018, compared to a loss of
$342.7 million
generated in 2017 that was primarily due to impairment charges taken in the third quarter of 2017 related to Applebee's goodwill and intangible assets;
|
•
|
Our gross profit grew
$14.4 million
, primarily due to an increase in gross profit from franchise operations;
|
•
|
Applebee's domestic same-restaurant sales grew 5.0% in 2018, the largest annual increase since our acquisition of the brand in 2007;
|
•
|
IHOP's reported system-wide sales grew 3.9% in 2018 driven by an increase in franchise restaurants due to development and a 1.5% increase in domestic same-restaurant sales;
|
•
|
The combined system-wide sales of both brands grew to nearly $7.6 billion, a 3.0% increase compared to 2017.
|
•
|
We generated cash from operating activities of $140.3 million and adjusted free cash flow (cash provided by operating activities, plus receipts from notes and equipment contract receivables, less additions to property and equipment) of $140.9 million in 2018;
|
•
|
We returned nearly $85 million to our stockholders, comprised of
$51.1 million
in cash dividends and
$33.6 million
in the form of stock repurchases;
|
•
|
IHOP franchisees opened 71 new restaurants worldwide, with net development of 45 restaurants. Applebee's franchisees closed 106 restaurants worldwide, with a net reduction of 99 restaurants. Taken together, the total number of our restaurants declined by less than 1% from last year's total; and
|
•
|
IHOP franchisees remodeled 270 domestic restaurants in 2018 under our new
Rise ‘N’ Shine
design. A total of 890 restaurants have been remodeled since the
Rise ‘N’ Shine
design was announced in late 2015.
|
|
Applebee's
|
|
IHOP
|
||
Sales percentage increase
|
2.3
|
%
|
|
3.9
|
%
|
% increase in domestic same-restaurant sales
|
5.0
|
%
|
|
1.5
|
%
|
Net franchise restaurant (reduction) development
(1)
|
(99
|
)
|
|
45
|
|
Net (decrease) increase in effective franchise restaurants
|
(87
|
)
|
|
55
|
|
Financial Summary
|
|
2018
|
|
Favorable
(Unfavorable) Variance |
|
2017
|
|
||||||
|
|
|
|
|
(as adjusted)
|
|
|||||||
|
|
(In millions, except per share amounts)
|
|
||||||||||
Income (loss) before income taxes
|
|
$
|
110.6
|
|
|
$
|
538.9
|
|
|
$
|
(428.3
|
)
|
|
Income tax (provision) benefit
|
|
(30.2
|
)
|
|
(115.8
|
)
|
|
85.6
|
|
|
|||
Net income (loss)
|
|
$
|
80.4
|
|
|
$
|
423.1
|
|
|
$
|
(342.7
|
)
|
|
|
|
|
|
Variance
|
|
|
|
||||||
Effective tax rate
|
|
27.4
|
%
|
|
(7.4
|
)%
|
|
20.0
|
%
|
|
|||
Net income (loss) per diluted share
|
|
$
|
4.37
|
|
|
$
|
23.33
|
|
|
$
|
(18.96
|
)
|
|
Weighted average diluted shares outstanding
|
|
17.8
|
|
|
(0.1
|
)
|
|
17.7
|
|
|
Applebee's Restaurant Data
|
Year Ended December 31,
|
||||||||||
Global Effective Restaurants:
(a)
|
2018
|
|
2017
|
|
2016
|
||||||
Franchise
|
1,883
|
|
|
1,970
|
|
|
2,027
|
|
|||
Company
|
3
|
|
|
—
|
|
|
—
|
|
|||
Total
|
1,886
|
|
|
1,970
|
|
|
2,027
|
|
|||
System-wide:
(b)
|
|
|
|
|
|
||||||
Domestic sales percentage change
(c)
|
2.3
|
%
|
|
(6.8
|
)%
|
|
(6.8
|
)%
|
|||
Domestic same-restaurant sales change
(d)
|
5.0
|
%
|
|
(5.3
|
)%
|
|
(5.0
|
)%
|
|||
Franchise:
(b)
|
|
|
|
|
|
||||||
Domestic sales percentage change
(c)
|
2.1
|
%
|
|
(6.8
|
)%
|
|
(6.2
|
)%
|
|||
Domestic same-restaurant sales change
(d)
|
4.9
|
%
|
|
(5.3
|
)%
|
|
(5.0
|
)%
|
|||
Domestic average weekly unit sales (in thousands)
|
$
|
46.7
|
|
|
$
|
43.6
|
|
|
$
|
45.3
|
|
IHOP Restaurant Data
|
|
|
|
|
|
||||||
Global Effective Restaurants:
(a)
|
|
|
|
|
|
||||||
Franchise
|
1,633
|
|
|
1,576
|
|
|
1,517
|
|
|||
Area license
|
162
|
|
|
164
|
|
|
166
|
|
|||
Company
|
—
|
|
|
5
|
|
|
10
|
|
|||
Total
|
1,795
|
|
|
1,745
|
|
|
1,693
|
|
|||
System-wide:
(b)
|
|
|
|
|
|
||||||
Sales percentage change
(c)
|
3.9
|
%
|
|
0.7
|
%
|
|
(0.3
|
)%
|
|||
Domestic same-restaurant sales change(d)
|
1.5
|
%
|
|
(1.9
|
)%
|
|
(0.1
|
)%
|
|||
Franchise:
(b)
|
|
|
|
|
|
||||||
Sales percentage change
(c)
|
4.4
|
%
|
|
1.2
|
%
|
|
(0.3
|
)%
|
|||
Domestic same-restaurant sales change(d)
|
1.5
|
%
|
|
(1.9
|
)%
|
|
(0.1
|
)%
|
|||
Average weekly unit sales (in thousands)
|
$
|
36.6
|
|
|
$
|
36.3
|
|
|
$
|
37.3
|
|
Area License:
(b)
|
|
|
|
|
|
||||||
IHOP sales percentage change
(c)
|
0.5
|
%
|
|
(0.7
|
)%
|
|
0.6
|
%
|
(a)
|
“Global Effective Restaurants” are the weighted average number of restaurants open in a given fiscal period, adjusted to account for restaurants open for only a portion of the period. Information is presented for all Effective Restaurants in the Applebee’s and IHOP systems, domestic and international, which includes restaurants owned by franchisees and area licensees as well as those owned by the Company.
|
(b)
|
“System-wide sales” are retail sales at Applebee’s restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated restaurants. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. An increase or decrease in franchisees' reported sales will result in a corresponding increase or decrease in our royalty revenue. Unaudited reported sales for Applebee's domestic franchise restaurants, IHOP franchise restaurants and IHOP area license restaurants for the years ended
December 31, 2018
,
December 31, 2017
and
December 31, 2016
and sale at company-operated restaurants were as follows:
|
|
Year Ended December 31,
|
||||||||||
Reported sales
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In millions)
|
||||||||||
Applebee's domestic franchise restaurant sales
|
$
|
4,204.1
|
|
|
$
|
4,117.1
|
|
|
$
|
4,418.6
|
|
Applebee's company-operated restaurants
|
7.1
|
|
|
—
|
|
|
—
|
|
|||
IHOP franchise restaurant sales
|
3,106.7
|
|
|
2,974.6
|
|
|
2,939.9
|
|
|||
IHOP area license restaurant sales
|
282.0
|
|
|
280.6
|
|
|
282.5
|
|
|||
IHOP company-operated restaurants
|
—
|
|
|
7.5
|
|
|
17.4
|
|
|||
Total
|
$
|
7,599.9
|
|
|
$
|
7,379.8
|
|
|
$
|
7,658.4
|
|
(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 sales percentage change for the year ended December 31, 2016 was impacted by a 53rd calendar week in fiscal year 2015.
|
(d)
|
“Domestic same-restaurant sales change” reflects the percentage change in sales in any given fiscal year, compared to the same weeks in the prior year, for domestic restaurants that have been operated throughout both fiscal years 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 the fiscal years being compared may be different from year to year. Domestic same-restaurant sales percentage change does not include data on IHOP area license restaurants.
|
|
Year Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Applebee's Restaurant Development Activity
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Total Applebee's restaurants, beginning of period
|
1,936
|
|
|
2,016
|
|
|
2,033
|
|
Domestic
|
1,782
|
|
|
1,858
|
|
|
1,878
|
|
International
|
154
|
|
|
158
|
|
|
155
|
|
|
|
|
|
|
|
|||
Franchise restaurants opened:
|
|
|
|
|
|
|||
Domestic
|
2
|
|
|
10
|
|
|
19
|
|
International
|
5
|
|
|
9
|
|
|
10
|
|
Total franchise restaurants opened
|
7
|
|
|
19
|
|
|
29
|
|
Franchise restaurants closed:
|
|
|
|
|
|
|||
Domestic
|
(91
|
)
|
|
(86
|
)
|
|
(39
|
)
|
International
|
(15
|
)
|
|
(13
|
)
|
|
(7
|
)
|
Total franchise restaurants closed
|
(106
|
)
|
|
(99
|
)
|
|
(46
|
)
|
Net franchise restaurant reduction
|
(99
|
)
|
|
(80
|
)
|
|
(17
|
)
|
Franchise restaurants acquired by the Company
|
(69
|
)
|
|
—
|
|
|
—
|
|
Net franchise restaurant decrease
|
(168
|
)
|
|
(80
|
)
|
|
(17
|
)
|
|
|
|
|
|
|
|||
Summary - end of period:
|
|
|
|
|
|
|||
Franchise
|
1,768
|
|
|
1,936
|
|
|
2,016
|
|
Company restaurants
(a)
|
69
|
|
|
—
|
|
|
—
|
|
Total Applebee's restaurants, end of period
|
1,837
|
|
|
1,936
|
|
|
2,016
|
|
Domestic
|
1,693
|
|
|
1,782
|
|
|
1,858
|
|
International
|
144
|
|
|
154
|
|
|
158
|
|
% Decrease in total Applebee's restaurants from prior year
|
(5.1
|
)%
|
|
(4.0
|
)%
|
|
(0.8
|
)%
|
|
Year Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
IHOP Restaurant Development Activity
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Summary - beginning of period:
|
|
|
|
|
|
|||
Franchise
|
1,622
|
|
|
1,556
|
|
|
1,507
|
|
Area license
|
164
|
|
|
167
|
|
|
165
|
|
Company
(a)
|
—
|
|
|
10
|
|
|
11
|
|
Total IHOP restaurants, beginning of period
|
1,786
|
|
|
1,733
|
|
|
1,683
|
|
Domestic
|
1,671
|
|
|
1,637
|
|
|
1,604
|
|
International
|
115
|
|
|
96
|
|
|
79
|
|
|
|
|
|
|
|
|||
Franchise/area license restaurants opened:
|
|
|
|
|
|
|||
Domestic franchise
|
51
|
|
|
48
|
|
|
43
|
|
Domestic area license
|
3
|
|
|
1
|
|
|
3
|
|
International franchise
|
17
|
|
|
28
|
|
|
20
|
|
Total franchise/area license restaurants opened
|
71
|
|
|
77
|
|
|
66
|
|
Franchise/area license restaurants closed:
|
|
|
|
|
|
|||
Domestic franchise
|
(15
|
)
|
|
(11
|
)
|
|
(12
|
)
|
Domestic area license
|
(5
|
)
|
|
(3
|
)
|
|
(1
|
)
|
International franchise
|
(6
|
)
|
|
(8
|
)
|
|
(3
|
)
|
International area license
|
—
|
|
|
(1
|
)
|
|
—
|
|
Total franchise/area license restaurants closed
|
(26
|
)
|
|
(23
|
)
|
|
(16
|
)
|
Net franchise/area license restaurant development
|
45
|
|
|
54
|
|
|
50
|
|
Refranchised from Company restaurants
|
1
|
|
|
9
|
|
|
1
|
|
Franchise restaurants reacquired by the Company
|
(1
|
)
|
|
—
|
|
|
—
|
|
Net franchise/area license restaurant additions
|
45
|
|
|
63
|
|
|
51
|
|
|
|
|
|
|
|
|||
Summary - end of period:
|
|
|
|
|
|
|||
Franchise
|
1,669
|
|
|
1,622
|
|
|
1,556
|
|
Area license
|
162
|
|
|
164
|
|
|
167
|
|
Company
(a)
|
—
|
|
|
—
|
|
|
10
|
|
Total IHOP restaurants, end of period
|
1,831
|
|
|
1,786
|
|
|
1,733
|
|
Domestic
|
1,705
|
|
|
1,671
|
|
|
1,637
|
|
International
|
126
|
|
|
115
|
|
|
96
|
|
% Increase in total IHOP restaurants from prior year
|
2.5
|
%
|
|
3.1
|
%
|
|
3.0
|
%
|
•
|
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 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 all advertising fees received 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 modified 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.
|
|
|
2018
|
|
Favorable
(Unfavorable) Variance |
|
2017
|
|
Favorable
(Unfavorable) Variance |
|
2016
|
||||||||||
Revenue
|
|
|
|
|
(as adjusted)
|
|
|
(as adjusted)
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||
Franchise operations
|
|
$
|
643.9
|
|
|
$
|
49.5
|
|
|
$
|
594.4
|
|
|
$
|
(43.6
|
)
|
|
$
|
638.0
|
|
Rental operations
|
|
121.9
|
|
|
0.5
|
|
|
121.4
|
|
|
(1.6
|
)
|
|
123.0
|
|
|||||
Financing operations
|
|
8.0
|
|
|
(0.4
|
)
|
|
8.4
|
|
|
(0.8
|
)
|
|
9.2
|
|
|||||
Company restaurant operations
|
|
7.1
|
|
|
(0.4
|
)
|
|
7.5
|
|
|
(9.9
|
)
|
|
17.4
|
|
|||||
Total revenue
|
|
$
|
780.9
|
|
|
$
|
49.2
|
|
|
$
|
731.7
|
|
|
$
|
(55.8
|
)
|
|
$
|
787.6
|
|
•
|
Franchise advertising revenue increased
$34.1 million
, of which $25 million was due to the temporary increase in the franchisee contribution rate to the Applebee's NAF discussed above under
Events Impacting Comparability of Financial Information
. Collection of amounts not recognized as revenue in the prior year and increases in domestic system-wide sales at both brands also contributed to the increase in advertising revenue.
|
•
|
Franchise royalty and fee revenue increased $15.4 million, primarily due to a 5.0% increase in Applebee's domestic same-restaurant sales, a
3.2%
increase in IHOP effective franchise restaurants due to franchisee development and revenue from the cash collection of royalties previously unrecognized due to uncertainty as to collectibility.
|
•
|
Franchise revenues decreased due to a 5.3% decline in Applebee's same-restaurant sales, an increase in Applebee's revenue we did not recognize due to uncertainty as to collectibility, an increase in closures of Applebee's restaurants, and a decrease in sales of IHOP pancake and waffle dry mix. These unfavorable items were partially offset by new restaurant development by IHOP franchisees.
|
•
|
Company restaurant revenue declined primarily due to the refranchising of nine IHOP company-operated restaurants in June 2017 as noted above under “Events Impacting Comparability of Financial Information.”
|
•
|
Rental and financing revenues decreased primarily due to the progressive decline in interest income as financed receivables were repaid.
|
|
|
2018
|
|
Favorable
(Unfavorable) Variance |
|
2017
|
|
Favorable
(Unfavorable) Variance |
|
2016
|
||||||||||
Gross Profit (Loss)
|
|
|
|
|
(as adjusted)
|
|
|
(as adjusted)
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||
Franchise operations
|
|
$
|
313.3
|
|
|
$
|
12.9
|
|
|
$
|
300.4
|
|
|
$
|
(44.1
|
)
|
|
$
|
344.5
|
|
Rental operations
|
|
31.2
|
|
|
0.4
|
|
|
30.8
|
|
|
(0.7
|
)
|
|
31.5
|
|
|||||
Financing operations
|
|
7.4
|
|
|
(0.4
|
)
|
|
7.8
|
|
|
(1.2
|
)
|
|
9.0
|
|
|||||
Company restaurant operations
|
|
1.2
|
|
|
1.5
|
|
|
(0.3
|
)
|
|
0.5
|
|
|
(0.8
|
)
|
|||||
Total gross profit
|
|
$
|
353.1
|
|
|
$
|
14.4
|
|
|
$
|
338.7
|
|
|
$
|
(45.5
|
)
|
|
$
|
384.2
|
|
Change vs. prior year
|
|
4.2
|
%
|
|
|
|
(11.8
|
)%
|
|
|
|
(3.7
|
)%
|
•
|
Franchise gross profit increased primarily due to favorable resolution of certain franchisee financial health issues in the form of lower bad debt expense and cash collections of previously unrecognized royalty revenues, as well as a lower advertising fund deficit, increases in Applebee's and IHOP domestic same-restaurant sales and IHOP restaurant development.
|
•
|
The favorable impacts on franchise gross profit were partially offset by an increase of $20.5 million in franchisor contributions to the Applebee's NAF.
|
•
|
Company-operated restaurant gross profit improved due to the reacquisition of restaurants discussed above under “Events Impacting Comparability of Financial Information.”
|
•
|
Franchise gross profit declined primarily due to the decrease in revenue described above, an increase in Applebee's bad debt expense and an increase in franchisor contributions to the Applebee's NAF.
|
•
|
Rental and financing gross profit were adversely impacted by the progressive decline in interest income as financed receivables were repaid.
|
•
|
Company-operated restaurant gross profit improved slightly due to the refranchising of nine IHOP company-operated restaurants noted above.
|
Franchise Operations
|
|
2018
|
|
Favorable
(Unfavorable) Variance |
|
2017
|
|
Favorable
(Unfavorable) Variance |
|
2016
|
||||||||||
|
|
|
|
|
(as adjusted)
|
|
|
(as adjusted)
|
||||||||||||
|
|
(In millions, except number of restaurants)
|
||||||||||||||||||
Effective Franchise Restaurants:
(1)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Applebee’s
|
|
1,883
|
|
(87)
|
|
1,970
|
|
(57)
|
|
2,027
|
||||||||||
IHOP
|
|
1,795
|
|
55
|
|
1,740
|
|
57
|
|
1,683
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Franchise Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Applebee's
|
|
$
|
176.6
|
|
|
$
|
7.8
|
|
|
$
|
168.8
|
|
|
$
|
(18.7
|
)
|
|
$
|
187.5
|
|
IHOP
|
|
199.0
|
|
|
7.6
|
|
|
191.4
|
|
|
1.0
|
|
|
190.4
|
|
|||||
Advertising
|
|
268.3
|
|
|
34.1
|
|
|
234.2
|
|
|
(25.9
|
)
|
|
260.1
|
|
|||||
Total franchise revenues
|
|
643.9
|
|
|
49.5
|
|
|
594.4
|
|
|
(43.6
|
)
|
|
638.0
|
|
|||||
Franchise Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Applebee’s
|
|
35.1
|
|
|
(7.4
|
)
|
|
27.7
|
|
|
(18.6
|
)
|
|
9.1
|
|
|||||
IHOP
|
|
25.9
|
|
|
(2.7
|
)
|
|
23.2
|
|
|
1.1
|
|
|
24.3
|
|
|||||
Advertising
|
|
269.6
|
|
|
(26.5
|
)
|
|
243.1
|
|
|
17.0
|
|
|
260.1
|
|
|||||
Total franchise expenses
|
|
330.6
|
|
|
(36.6
|
)
|
|
294.0
|
|
|
(0.5
|
)
|
|
293.5
|
|
|||||
Franchise Segment Profit:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Applebee’s
|
|
141.5
|
|
|
0.3
|
|
|
141.2
|
|
|
(37.2
|
)
|
|
178.4
|
|
|||||
IHOP
|
|
173.1
|
|
|
5.0
|
|
|
168.1
|
|
|
2.0
|
|
|
166.1
|
|
|||||
Advertising
|
|
(1.3
|
)
|
|
7.6
|
|
|
(8.9
|
)
|
|
(8.9
|
)
|
|
—
|
|
|||||
Total franchise segment profit
|
|
$
|
313.3
|
|
|
$
|
12.9
|
|
|
$
|
300.4
|
|
|
$
|
(44.1
|
)
|
|
$
|
344.5
|
|
Gross profit as % total revenue
|
|
48.7
|
%
|
|
|
|
50.5
|
%
|
|
|
|
54.0
|
%
|
|||||||
Gross profit as % franchise fees
(2)
|
|
83.8
|
%
|
|
|
|
85.9
|
%
|
|
|
|
91.2
|
%
|
•
|
Applebee's franchise revenue increased
4.6%
compared to 2017, primarily due to a 5.0% increase in Applebee's domestic same-restaurant sales. We also recognized $6.4 million of revenue from the cash collection of royalties previously unrecognized due to uncertainty as to collectibility. These favorable items were partially offset by restaurant closures that reduced revenue by $4.7 million and lower international revenue of $0.6 million.
|
•
|
IHOP franchise revenues increased
4.0%
primarily due to the impact of a
3.2%
increase in effective franchise restaurants due to franchisee development and a 1.5% increase in domestic same-restaurant on royalty and dry mix revenues.
|
•
|
Applebee's franchise expenses increased $7.4 million primarily because of a $20.5 million increase in franchisor marketing contributions. We contributed $30.0 million to the Applebee's NAF in 2018 as compared the $9.5 million contribution we made in 2017. The increase in NAF contributions was partially offset by a $13.0 million decline in bad debt expense. After resolution of the significant majority of the franchisee health issues discussed under “Significant Known Events, Trends or Uncertainties Impacting or Expected to Impact Comparisons of Reported or Future Results” above, Applebee's bad debt expense was virtually zero in 2018.
|
•
|
IHOP franchise expenses increased $2.7 million primarily due to an increase in pancake and waffle dry mix purchases related to increased sales and an increase of $0.6 million in franchisor contributions to the IHOP national advertising fund.
|
•
|
Applebee's franchise revenue decreased by approximately 10%. A 5.3% decrease in Applebee's domestic same-restaurant sales reduced revenue by $8.3 million and there was a decrease of $6.2 million of royalty revenue due to uncertainty as to its collectibility. Restaurant closures reduced revenue by $4.1 million. Lower franchise termination and transfer fees also contributed to the decrease.
|
•
|
IHOP franchise revenues improved primarily due to increases in effective franchise restaurants due to franchisee development and an increase in international sales. These favorable items were primarily offset by a $1.6 million decrease in sales of pancake and waffle dry mix and a 1.9% decrease in IHOP's domestic same-restaurant sales.
|
•
|
Applebee's franchise expenses increased primarily because of an $11.5 million increase in bad debt expense and an increase in franchisor marketing contributions. We contributed $9.5 million to the Applebee's NAF in 2017 to mitigate the decline in franchisee contributions that are based on sales as compared to a $2.5 million contribution in 2016.
|
•
|
IHOP franchise expenses improved due primarily to favorability in pancake and waffle dry mix purchases partially offset by a $0.8 million franchisor contribution to the IHOP national advertising fund.
|
•
|
The decrease in advertising expenses is discussed below.
|
|
|
2018
|
|
Favorable
(Unfavorable) Variance |
|
2017
|
|
Favorable
(Unfavorable) Variance |
|
2016
|
||||||||||
|
|
|
|
|
(as adjusted)
|
|
|
(as adjusted)
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||
Advertising Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Applebee's
|
|
$
|
153.0
|
|
|
$
|
30.8
|
|
|
$
|
122.2
|
|
|
$
|
(27.7
|
)
|
|
149.9
|
|
|
IHOP
|
|
115.3
|
|
|
3.3
|
|
|
112.0
|
|
|
1.8
|
|
|
110.2
|
|
|||||
Total advertising revenues
|
|
$
|
268.3
|
|
|
34.1
|
|
|
$
|
234.2
|
|
|
(25.9
|
)
|
|
$
|
260.1
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Advertising Expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Applebee’s
|
|
$
|
153.0
|
|
|
$
|
(21.9
|
)
|
|
$
|
131.1
|
|
|
$
|
18.8
|
|
|
$
|
149.9
|
|
IHOP
|
|
116.6
|
|
|
(4.6
|
)
|
|
112.0
|
|
|
(1.8
|
)
|
|
110.2
|
|
|||||
Total advertising expenses
|
|
$
|
269.6
|
|
|
$
|
(26.5
|
)
|
|
$
|
243.1
|
|
|
$
|
17.0
|
|
|
$
|
260.1
|
|
Rental Operations
|
|
|
|
Favorable
(Unfavorable) Variance |
|
|
|
Favorable
(Unfavorable) Variance |
|
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||
Rental revenues
|
|
$
|
121.9
|
|
|
$
|
0.5
|
|
|
$
|
121.4
|
|
|
$
|
(1.6
|
)
|
|
$
|
123.0
|
|
Rental expenses
|
|
90.7
|
|
|
(0.1
|
)
|
|
90.6
|
|
|
0.9
|
|
|
91.5
|
|
|||||
Rental operations segment profit
|
|
$
|
31.2
|
|
|
$
|
0.4
|
|
|
$
|
30.8
|
|
|
$
|
(0.7
|
)
|
|
$
|
31.5
|
|
Gross profit as % revenue
|
|
25.6
|
%
|
|
|
|
25.4
|
%
|
|
|
|
25.6
|
%
|
Financing Operations
|
|
|
|
Favorable
(Unfavorable) Variance |
|
|
|
Favorable
(Unfavorable) Variance |
|
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||
Financing revenues
|
|
$
|
8.0
|
|
|
$
|
(0.4
|
)
|
|
$
|
8.4
|
|
|
$
|
(0.8
|
)
|
|
$
|
9.2
|
|
Financing expenses
|
|
0.6
|
|
|
0.0
|
|
|
0.6
|
|
|
(0.4
|
)
|
|
0.2
|
|
|||||
Financing operations segment profit
|
|
$
|
7.4
|
|
|
$
|
(0.4
|
)
|
|
$
|
7.8
|
|
|
$
|
(1.2
|
)
|
|
$
|
9.0
|
|
Gross profit as % revenue
|
|
92.5
|
%
|
|
|
|
92.8
|
%
|
|
|
|
98.3
|
%
|
Company Operations
|
|
|
|
Favorable
(Unfavorable) Variance |
|
|
|
Favorable
(Unfavorable) Variance |
|
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
||||||||||||
|
|
(In millions, except number of restaurants)
|
||||||||||||||||||
Effective Company Restaurants:
(1)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Applebee’s
|
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
IHOP
|
|
—
|
|
|
(5
|
)
|
|
5
|
|
|
(5
|
)
|
|
10
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Company restaurant sales
|
|
$
|
7.1
|
|
|
$
|
(0.4
|
)
|
|
$
|
7.5
|
|
|
$
|
(9.9
|
)
|
|
$
|
17.4
|
|
Company restaurant expenses
|
|
5.9
|
|
|
1.9
|
|
|
7.8
|
|
|
10.4
|
|
|
18.2
|
|
|||||
Company restaurant segment profit (loss)
|
|
$
|
1.2
|
|
|
$
|
1.5
|
|
|
$
|
(0.3
|
)
|
|
$
|
0.5
|
|
|
$
|
(0.8
|
)
|
Gross profit (loss) as % revenue
|
|
17.1
|
%
|
|
|
|
(3.6
|
)%
|
|
|
|
(4.9
|
)%
|
General and Administrative Expenses
|
|
|
|
Favorable
(Unfavorable) Variance |
|
|
|
Favorable
(Unfavorable) Variance |
|
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||
|
|
$
|
166.7
|
|
|
$
|
(1.0
|
)
|
|
$
|
165.7
|
|
|
$
|
(16.8
|
)
|
|
$
|
148.9
|
|
Impairment of Goodwill and Intangible Assets
|
|
|
|
Favorable
(Unfavorable) Variance |
|
|
|
Favorable
(Unfavorable) Variance |
|
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||
Impairment of goodwill
|
|
$
|
—
|
|
|
$
|
358.2
|
|
|
$
|
358.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Impairment of tradename
|
|
—
|
|
|
173.4
|
|
|
173.4
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
—
|
|
|
$
|
531.6
|
|
|
$
|
531.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other Income and Expense Items
|
|
|
|
Favorable
(Unfavorable) Variance |
|
|
|
Favorable
(Unfavorable) Variance |
|
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||
Interest expense
|
|
$
|
61.7
|
|
|
$
|
0.3
|
|
|
$
|
62.0
|
|
|
$
|
(0.5
|
)
|
|
$
|
61.5
|
|
Amortization of intangible assets
|
|
10.1
|
|
|
(0.1
|
)
|
|
10.0
|
|
|
(0.0
|
)
|
|
10.0
|
|
|||||
Closure and other impairment charges
|
|
2.1
|
|
|
1.9
|
|
|
4.0
|
|
|
1.1
|
|
|
5.1
|
|
|||||
Debt refinancing costs
|
|
2.5
|
|
|
(2.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
(Gain) loss on disposition of assets
|
|
(0.6
|
)
|
|
(5.7
|
)
|
|
(6.3
|
)
|
|
7.1
|
|
|
0.8
|
|
|||||
Total
|
|
$
|
75.8
|
|
|
$
|
(6.1
|
)
|
|
$
|
69.7
|
|
|
$
|
7.7
|
|
|
$
|
77.4
|
|
Closure and Other Impairment Charges
|
|
|
|
Favorable
(Unfavorable) Variance |
|
|
|
Favorable
(Unfavorable) Variance |
|
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||
Closure charges
|
|
$
|
2.0
|
|
|
$
|
1.9
|
|
|
$
|
3.9
|
|
|
(2.7
|
)
|
|
$
|
1.2
|
|
|
Kansas City lease exit costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.9
|
|
|
2.9
|
|
|||||
Long-lived tangible asset impairments
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
0.9
|
|
|
1.0
|
|
|||||
Total closure and impairment charges
|
|
$
|
2.1
|
|
|
$
|
1.9
|
|
|
$
|
4.0
|
|
|
$
|
1.1
|
|
|
$
|
5.1
|
|
Income Tax Benefit (Provision)
|
|
|
|
Favorable
(Unfavorable) Variance |
|
|
|
Favorable
(Unfavorable) Variance |
|
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||
Income tax (provision) benefit
|
|
$
|
(30.2
|
)
|
|
$
|
(115.8
|
)
|
|
$
|
85.6
|
|
|
$
|
142.4
|
|
|
$
|
(56.8
|
)
|
Effective tax rate
|
|
27.4
|
%
|
|
(7.4
|
)%
|
|
20.0
|
%
|
|
16.0
|
%
|
|
36.0
|
%
|
Cash Flows
|
|
|
|
Favorable
(Unfavorable) Variance |
|
|
|
Favorable
(Unfavorable) Variance |
|
|
||||||||||
|
|
2018
|
|
|
2017
|
|
|
2016
|
||||||||||||
|
|
(In millions)
|
||||||||||||||||||
Net cash provided by operating activities
|
|
$
|
140.3
|
|
|
$
|
74.6
|
|
|
$
|
65.7
|
|
|
$
|
(52.4
|
)
|
|
$
|
118.1
|
|
Net cash (used in) provided by investing activities
|
|
(14.8
|
)
|
|
(22.5
|
)
|
|
7.7
|
|
|
(4.8
|
)
|
|
12.5
|
|
|||||
Net cash used in financing activities
|
|
(88.3
|
)
|
|
7.5
|
|
|
(95.8
|
)
|
|
41.4
|
|
|
(137.2
|
)
|
|||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
$
|
37.2
|
|
|
$
|
59.6
|
|
|
$
|
(22.4
|
)
|
|
$
|
(15.8
|
)
|
|
$
|
(6.6
|
)
|
|
Principal Receipts Due By Period
|
||||||||||||||||||||||||||
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
||||||||||||||
|
(In millions)
|
||||||||||||||||||||||||||
Equipment leases
(1)
|
$
|
8.5
|
|
|
$
|
9.0
|
|
|
$
|
8.9
|
|
|
$
|
8.6
|
|
|
$
|
8.1
|
|
|
$
|
22.7
|
|
|
$
|
65.8
|
|
Direct financing leases
(2)
|
11.2
|
|
|
11.2
|
|
|
9.6
|
|
|
7.2
|
|
|
3.1
|
|
|
2.6
|
|
|
44.9
|
|
|||||||
Other notes
(3)
|
4.8
|
|
|
5.2
|
|
|
4.4
|
|
|
4.1
|
|
|
3.9
|
|
|
6.6
|
|
|
29.0
|
|
|||||||
Total
|
$
|
24.5
|
|
|
$
|
25.4
|
|
|
$
|
22.9
|
|
|
$
|
19.9
|
|
|
$
|
15.1
|
|
|
$
|
31.9
|
|
|
$
|
139.7
|
|
(1)
|
Equipment lease receivables extend through the year
2029
.
|
(2)
|
Direct financing lease receivables extend through the year
2036
.
|
(3)
|
Other notes receivable extend through the year
2028
.
|
|
|
|
Favorable
(Unfavorable) Variance |
|
|
|
Favorable
(Unfavorable) Variance |
|
|
||||||||||
|
2018
|
|
|
2017
|
|
|
2016
|
||||||||||||
|
(In millions)
|
||||||||||||||||||
Cash flows provided by operating activities
|
$
|
140.3
|
|
|
$
|
74.6
|
|
|
$
|
65.7
|
|
|
$
|
(52.4
|
)
|
|
$
|
118.1
|
|
Net receipts from notes and equipment receivables
|
14.9
|
|
|
4.3
|
|
|
10.6
|
|
|
0.6
|
|
|
10.0
|
|
|||||
Additions to property and equipment
|
(14.3
|
)
|
|
(1.0
|
)
|
|
(13.3
|
)
|
|
(7.7
|
)
|
|
(5.6
|
)
|
|||||
Adjusted free cash flow
|
$
|
140.9
|
|
|
$
|
77.9
|
|
|
$
|
63.0
|
|
|
$
|
(59.5
|
)
|
|
$
|
122.5
|
|
2015 Repurchase Program
|
Shares
|
|
Cost of shares
|
|||
|
|
|
(In millions)
|
|||
Repurchased during the year ended December 31, 2018
|
478,839
|
|
|
$
|
34.9
|
|
Cumulative repurchases as of December 31, 2018
|
1,479,496
|
|
|
$
|
117.8
|
|
Remaining dollar value of shares that may be repurchased
|
n/a
|
|
$
|
32.2
|
|
|
Payments Due By Period
|
||||||||||||||||||
Contractual Obligations
|
1 Year
|
|
2 - 3 Years
|
|
4 - 5 Years
|
|
More than
5 Years
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Debt
(1)
|
$
|
79.9
|
|
|
$
|
1,379.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,459.7
|
|
Operating leases
|
91.2
|
|
|
168.4
|
|
|
122.8
|
|
|
210.6
|
|
|
593.0
|
|
|||||
Capital leases
(1)
|
21.0
|
|
|
35.4
|
|
|
25.9
|
|
|
63.5
|
|
|
145.8
|
|
|||||
Financing obligations
(1)
|
5.1
|
|
|
10.7
|
|
|
10.1
|
|
|
50.4
|
|
|
76.3
|
|
|||||
Purchase commitments
|
171.2
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
171.3
|
|
|||||
Unrecognized income tax benefits
(2)
|
1.0
|
|
|
—
|
|
|
—
|
|
|
4.2
|
|
|
5.2
|
|
|||||
Total minimum payments
|
369.4
|
|
|
1,594.4
|
|
|
158.8
|
|
|
328.7
|
|
|
2,451.3
|
|
|||||
Less interest
|
(66.7
|
)
|
|
(116.4
|
)
|
|
(15.2
|
)
|
|
(30.2
|
)
|
|
(228.5
|
)
|
|||||
Total
|
$
|
302.7
|
|
|
$
|
1,478.0
|
|
|
$
|
143.6
|
|
|
$
|
298.5
|
|
|
$
|
2,222.8
|
|
|
Expiration By Period
|
||||||||||||||||||
Commitments
|
1 Year
|
|
2 - 3 Years
|
|
4 - 5 Years
|
|
More than
5 Years
|
|
Total
|
||||||||||
|
(In millions)
|
||||||||||||||||||
Lease guarantees
(3)
|
$
|
16.7
|
|
|
$
|
31.3
|
|
|
$
|
29.2
|
|
|
$
|
207.1
|
|
|
$
|
284.3
|
|
Letters of credit
(4)
|
3.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.1
|
|
|||||
Food purchases
(5)
|
8.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.4
|
|
|||||
Total
|
$
|
28.2
|
|
|
$
|
31.3
|
|
|
$
|
29.2
|
|
|
$
|
207.1
|
|
|
$
|
295.8
|
|
|
Page
Reference
|
Dine Brands Global, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share amounts)
|
|||||||
|
December 31,
|
||||||
Assets
|
2018
|
|
2017
|
||||
|
|
|
(as adjusted)
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
137,164
|
|
|
$
|
117,010
|
|
Receivables, net
|
137,504
|
|
|
140,188
|
|
||
Restricted cash
|
48,515
|
|
|
31,436
|
|
||
Prepaid gift card costs
|
38,195
|
|
|
40,725
|
|
||
Prepaid income taxes
|
17,402
|
|
|
43,654
|
|
||
Other current assets
|
3,410
|
|
|
12,615
|
|
||
Total current assets
|
382,190
|
|
|
385,628
|
|
||
Long-term receivables, net
|
103,102
|
|
|
126,570
|
|
||
Other intangible assets, net
|
585,889
|
|
|
582,787
|
|
||
Goodwill
|
345,314
|
|
|
339,236
|
|
||
Property and equipment, net
|
240,264
|
|
|
199,585
|
|
||
Deferred rent receivable
|
77,069
|
|
|
82,971
|
|
||
Non-current restricted cash
|
14,700
|
|
|
14,700
|
|
||
Other non-current assets, net
|
26,152
|
|
|
4,135
|
|
||
Total assets
|
$
|
1,774,680
|
|
|
$
|
1,735,612
|
|
|
|
|
|
||||
Liabilities and Stockholders' Deficit
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current maturities of long-term debt
|
$
|
25,000
|
|
|
$
|
12,965
|
|
Accounts payable
|
43,468
|
|
|
55,028
|
|
||
Gift card liability
|
160,438
|
|
|
164,441
|
|
||
Dividends payable
|
11,389
|
|
|
17,748
|
|
||
Current maturities of capital lease and financing obligations
|
14,031
|
|
|
14,193
|
|
||
Accrued employee compensation and benefits
|
27,479
|
|
|
13,547
|
|
||
Deferred franchise revenue, short-term
|
10,138
|
|
|
11,001
|
|
||
Other accrued expenses
|
24,243
|
|
|
16,001
|
|
||
Total current liabilities
|
316,186
|
|
|
304,924
|
|
||
Long-term debt, net, less current maturities
|
1,274,087
|
|
|
1,269,849
|
|
||
Capital lease obligations, less current maturities
|
87,762
|
|
|
61,895
|
|
||
Financing obligations, less current maturities
|
38,482
|
|
|
39,200
|
|
||
Deferred income taxes, net
|
105,816
|
|
|
117,669
|
|
||
Deferred franchise revenue, long-term
|
64,557
|
|
|
70,432
|
|
||
Deferred rent payable
|
62,744
|
|
|
69,112
|
|
||
Other non-current liabilities
|
27,319
|
|
|
18,071
|
|
||
Total liabilities
|
1,976,953
|
|
|
1,951,152
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders' deficit:
|
|
|
|
||||
Common stock, $0.01 par value; shares: 40,000,000 authorized; 2018 - 24,984,898 issued, 17,644,267 outstanding; 2017 - 25,022,312 issued, 17,993,124 outstanding
|
250
|
|
|
250
|
|
||
Additional paid-in-capital
|
237,726
|
|
|
276,408
|
|
||
Retained earnings (accumulated deficit)
|
10,414
|
|
|
(69,940
|
)
|
||
Accumulated other comprehensive loss
|
(60
|
)
|
|
(105
|
)
|
||
Treasury stock, at cost; shares: 2018 - 7,340,631; 2017 - 7,029,188
|
(450,603
|
)
|
|
(422,153
|
)
|
||
Total stockholders' deficit
|
(202,273
|
)
|
|
(215,540
|
)
|
||
Total liabilities and stockholders' deficit
|
$
|
1,774,680
|
|
|
$
|
1,735,612
|
|
Dine Brands Global, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(In thousands, except per share amounts)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenues:
|
|
|
(as adjusted)
|
||||||||
Franchise revenues:
|
|
|
|
|
|
||||||
Royalties, franchise fees and other
|
$
|
375,640
|
|
|
$
|
360,253
|
|
|
$
|
377,855
|
|
Advertising revenue
|
268,294
|
|
|
234,165
|
|
|
260,116
|
|
|||
Total franchise revenues
|
643,934
|
|
|
594,418
|
|
|
637,971
|
|
|||
Rental revenues
|
121,934
|
|
|
121,437
|
|
|
123,037
|
|
|||
Financing revenues
|
7,979
|
|
|
8,352
|
|
|
9,191
|
|
|||
Company restaurant sales
|
7,084
|
|
|
7,518
|
|
|
17,367
|
|
|||
Total revenues
|
780,931
|
|
|
731,725
|
|
|
787,566
|
|
|||
Cost of revenues:
|
|
|
|
|
|
||||||
Franchise expenses:
|
|
|
|
|
|
||||||
Advertising expenses
|
269,590
|
|
|
243,096
|
|
|
260,116
|
|
|||
Other franchise expenses
|
61,029
|
|
|
50,890
|
|
|
33,384
|
|
|||
Total franchise expenses
|
330,619
|
|
|
293,986
|
|
|
293,500
|
|
|||
Rental expenses
|
90,756
|
|
|
90,592
|
|
|
91,540
|
|
|||
Financing expenses
|
597
|
|
|
598
|
|
|
155
|
|
|||
Company restaurant expenses
|
5,872
|
|
|
7,838
|
|
|
18,224
|
|
|||
Total cost of revenues
|
427,844
|
|
|
393,014
|
|
|
403,419
|
|
|||
Gross profit
|
353,087
|
|
|
338,711
|
|
|
384,147
|
|
|||
General and administrative expenses
|
166,683
|
|
|
165,679
|
|
|
148,935
|
|
|||
Interest expense
|
61,686
|
|
|
61,979
|
|
|
61,479
|
|
|||
Amortization of intangible assets
|
10,105
|
|
|
10,009
|
|
|
9,981
|
|
|||
Closure and other impairment charges
|
2,107
|
|
|
3,968
|
|
|
5,092
|
|
|||
Debt refinancing costs
|
2,523
|
|
|
—
|
|
|
—
|
|
|||
(Gain) loss on disposition of assets
|
(625
|
)
|
|
(6,249
|
)
|
|
809
|
|
|||
Impairment of goodwill and intangible assets
|
—
|
|
|
531,634
|
|
|
—
|
|
|||
Income (loss) before income tax (provision) benefit
|
110,608
|
|
|
(428,309
|
)
|
|
157,851
|
|
|||
Income tax (provision) benefit
|
(30,254
|
)
|
|
85,559
|
|
|
(56,849
|
)
|
|||
Net income (loss)
|
80,354
|
|
|
(342,750
|
)
|
|
101,002
|
|
|||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Adjustment to unrealized loss on available-for-sale investments
|
50
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation adjustment
|
(5
|
)
|
|
2
|
|
|
—
|
|
|||
Total comprehensive income (loss)
|
$
|
80,399
|
|
|
$
|
(342,748
|
)
|
|
$
|
101,002
|
|
Net income (loss) available to common stockholders:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
80,354
|
|
|
$
|
(342,750
|
)
|
|
$
|
101,002
|
|
Less: Net (income) loss allocated to unvested participating restricted stock
|
(2,711
|
)
|
|
6,768
|
|
|
(1,430
|
)
|
|||
Net income (loss) available to common stockholders
|
$
|
77,643
|
|
|
$
|
(335,982
|
)
|
|
$
|
99,572
|
|
Net income (loss) available to common stockholders per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
4.43
|
|
|
$
|
(18.96
|
)
|
|
$
|
5.52
|
|
Diluted
|
$
|
4.37
|
|
|
$
|
(18.96
|
)
|
|
$
|
5.49
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
17,533
|
|
|
17,725
|
|
|
18,030
|
|
|||
Diluted
|
17,789
|
|
|
17,740
|
|
|
18,125
|
|
|||
|
|
|
|
|
|
||||||
Dividends declared per common share
|
$
|
2.52
|
|
|
$
|
3.88
|
|
|
$
|
3.73
|
|
Dividends paid per common share
|
$
|
2.86
|
|
|
$
|
3.88
|
|
|
$
|
3.68
|
|
Dine Brands Global, Inc. and Subsidiaries
Consolidated Statements of Stockholders' (Deficit) Equity
(In thousands)
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
Common Stock
|
|
|
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Treasury Stock
|
|
|
||||||||||||||||
|
|
Shares
Outstanding
|
Amount
|
|
Additional
Paid-in
Capital
|
|
Retained Earnings (Accumulated Deficit)
|
|
Shares
|
Cost
|
|
Total
|
||||||||||||||||
Balance at December 31, 2015
|
|
18,535
|
|
$
|
252
|
|
|
$
|
286,952
|
|
|
$
|
351,923
|
|
|
$
|
(107
|
)
|
|
6,651
|
|
$
|
(371,797
|
)
|
|
$
|
267,223
|
|
Adoption of ASC 606
|
|
—
|
|
—
|
|
|
—
|
|
|
(59,641
|
)
|
|
—
|
|
|
—
|
|
—
|
|
|
(59,641
|
)
|
||||||
Net income (as adjusted)
|
|
—
|
|
—
|
|
|
—
|
|
|
101,002
|
|
|
—
|
|
|
—
|
|
—
|
|
|
101,002
|
|
||||||
Other comprehensive loss
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Purchase of Company common stock
|
|
(650
|
)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
650
|
|
(55,343
|
)
|
|
(55,343
|
)
|
||||||
Reissuance of treasury stock
|
|
137
|
|
—
|
|
|
(3,468
|
)
|
|
—
|
|
|
—
|
|
|
(137
|
)
|
4,877
|
|
|
1,409
|
|
||||||
Net issuance of shares for stock plans
|
|
(19
|
)
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Repurchase of restricted shares for taxes
|
|
(33
|
)
|
|
|
(2,859
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
(2,859
|
)
|
|||||||
Stock-based compensation
|
|
—
|
|
—
|
|
|
10,926
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
10,926
|
|
||||||
Tax benefit from stock-based compensation
|
|
—
|
|
—
|
|
|
1,132
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
1,132
|
|
||||||
Dividends on common stock
|
|
—
|
|
—
|
|
|
125
|
|
|
(67,833
|
)
|
|
—
|
|
|
—
|
|
—
|
|
|
(67,708
|
)
|
||||||
Balance at December 31, 2016
|
|
17,970
|
|
251
|
|
|
292,809
|
|
|
325,451
|
|
|
(107
|
)
|
|
7,165
|
|
(422,263
|
)
|
|
196,141
|
|
||||||
Net loss (as adjusted)
|
|
—
|
|
—
|
|
|
—
|
|
|
(342,750
|
)
|
|
—
|
|
|
—
|
|
—
|
|
|
(342,750
|
)
|
||||||
Other comprehensive gain
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
—
|
|
|
2
|
|
||||||
Purchase of Company common stock
|
|
(146
|
)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
146
|
|
(10,003
|
)
|
|
(10,003
|
)
|
||||||
Reissuance of treasury stock
|
|
281
|
|
—
|
|
|
(7,478
|
)
|
|
—
|
|
|
—
|
|
|
(281
|
)
|
10,113
|
|
|
2,635
|
|
||||||
Net issuance of shares for stock plans
|
|
(71
|
)
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Repurchase of restricted shares for taxes
|
|
(41
|
)
|
—
|
|
|
(2,396
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
(2,396
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
—
|
|
|
10,783
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
10,783
|
|
||||||
Dividends on common stock
|
|
—
|
|
—
|
|
|
407
|
|
|
(52,641
|
)
|
|
—
|
|
|
—
|
|
—
|
|
|
(52,234
|
)
|
||||||
Dividends on common stock in excess of retained earnings
|
|
—
|
|
—
|
|
|
(17,718
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
(17,718
|
)
|
||||||
Balance at December 31, 2017
|
|
17,993
|
|
250
|
|
|
276,408
|
|
|
(69,940
|
)
|
|
(105
|
)
|
|
7,029
|
|
(422,153
|
)
|
|
(215,540
|
)
|
||||||
Net income
|
|
—
|
|
—
|
|
|
—
|
|
|
80,354
|
|
|
—
|
|
|
—
|
|
—
|
|
|
80,354
|
|
||||||
Other comprehensive gain
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
—
|
|
|
45
|
|
||||||
Purchase of Company common stock
|
|
(479
|
)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
479
|
|
(34,929
|
)
|
|
(34,929
|
)
|
||||||
Reissuance of treasury stock
|
|
167
|
|
—
|
|
|
(2,551
|
)
|
|
—
|
|
|
—
|
|
|
(167
|
)
|
6,479
|
|
|
3,928
|
|
||||||
Net issuance of shares for stock plans
|
|
(11
|
)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
||||||
Repurchase of restricted shares for taxes
|
|
(27
|
)
|
—
|
|
|
(1,972
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
(1,972
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
—
|
|
|
10,546
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
10,546
|
|
||||||
Dividends on common stock in excess of retained earnings
|
|
—
|
|
—
|
|
|
(44,705
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
(44,705
|
)
|
||||||
Balance at December 31, 2018
|
|
17,644
|
|
$
|
250
|
|
|
$
|
237,726
|
|
|
$
|
10,414
|
|
|
$
|
(60
|
)
|
|
7,341
|
|
$
|
(450,603
|
)
|
|
$
|
(202,273
|
)
|
Dine Brands Global, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
80,354
|
|
|
$
|
(342,750
|
)
|
|
$
|
101,002
|
|
Adjustments to reconcile net income (loss) to cash flows provided by operating activities:
|
|
|
|
|
|
||||||
Impairment of goodwill and intangible assets
|
—
|
|
|
531,634
|
|
|
—
|
|
|||
Deferred income taxes
|
(11,847
|
)
|
|
(136,127
|
)
|
|
(12,714
|
)
|
|||
Depreciation and amortization
|
32,175
|
|
|
30,648
|
|
|
30,606
|
|
|||
Non-cash interest expense
|
3,792
|
|
|
3,364
|
|
|
3,218
|
|
|||
Closure and other impairment charges
|
2,038
|
|
|
3,834
|
|
|
2,621
|
|
|||
Non-cash stock-based compensation expense
|
10,546
|
|
|
10,752
|
|
|
10,926
|
|
|||
Tax benefit from stock-based compensation
|
—
|
|
|
—
|
|
|
1,132
|
|
|||
Excess tax benefit from stock options exercised
|
—
|
|
|
—
|
|
|
(1,019
|
)
|
|||
(Gain) loss on disposition of assets
|
(623
|
)
|
|
(6,285
|
)
|
|
809
|
|
|||
Other
|
(6,526
|
)
|
|
(10,980
|
)
|
|
(6,674
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
3,149
|
|
|
(8,430
|
)
|
|
3,820
|
|
|||
Current income tax receivables and payables
|
8,119
|
|
|
(8,490
|
)
|
|
(909
|
)
|
|||
Gift card receivables and payables
|
(1,488
|
)
|
|
(3,322
|
)
|
|
(4,288
|
)
|
|||
Prepaid expenses and other current assets
|
10,425
|
|
|
(8,247
|
)
|
|
(156
|
)
|
|||
Accounts payable
|
(9,940
|
)
|
|
7,208
|
|
|
89
|
|
|||
Accrued employee compensation and benefits
|
13,183
|
|
|
(1,126
|
)
|
|
(10,476
|
)
|
|||
Other current liabilities
|
6,989
|
|
|
4,050
|
|
|
123
|
|
|||
Cash flows provided by operating activities
|
140,346
|
|
|
65,733
|
|
|
118,110
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Principal receipts from notes, equipment contracts and other long-term receivables
|
25,771
|
|
|
20,486
|
|
|
18,689
|
|
|||
Proceeds from sale of property and equipment
|
655
|
|
|
1,100
|
|
|
—
|
|
|||
Acquisition of business
|
(20,155
|
)
|
|
—
|
|
|
—
|
|
|||
Additions to property and equipment
|
(14,279
|
)
|
|
(13,370
|
)
|
|
(5,637
|
)
|
|||
Additions to long-term receivables
|
(6,500
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
(293
|
)
|
|
(541
|
)
|
|
(503
|
)
|
|||
Cash flows (used in) provided by investing activities
|
(14,801
|
)
|
|
7,675
|
|
|
12,549
|
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Borrowings from revolving credit facilities
|
75,000
|
|
|
—
|
|
|
—
|
|
|||
Repayments of revolving credit facilities
|
(50,000
|
)
|
|
—
|
|
|
—
|
|
|||
Repayment of long-term debt
|
(13,000
|
)
|
|
(3,250
|
)
|
|
—
|
|
|||
Dividends paid on common stock
|
(51,125
|
)
|
|
(69,790
|
)
|
|
(67,429
|
)
|
|||
Repurchase of Dine Brands Global common stock
|
(33,603
|
)
|
|
(10,003
|
)
|
|
(55,343
|
)
|
|||
Principal payments on capital lease and financing obligations
|
(13,907
|
)
|
|
(12,949
|
)
|
|
(13,978
|
)
|
|||
Payment of debt issuance costs
|
(3,633
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from stock options exercised
|
3,928
|
|
|
2,635
|
|
|
1,409
|
|
|||
Tax payments for restricted stock upon vesting
|
(1,972
|
)
|
|
(2,396
|
)
|
|
(2,859
|
)
|
|||
Excess tax benefit from stock options exercised
|
—
|
|
|
—
|
|
|
1,019
|
|
|||
Cash flows used in financing activities
|
(88,312
|
)
|
|
(95,753
|
)
|
|
(137,181
|
)
|
|||
Net change in cash, cash equivalents and restricted cash
|
37,233
|
|
|
(22,345
|
)
|
|
(6,522
|
)
|
|||
Cash, cash equivalents and restricted cash at beginning of year
|
163,146
|
|
|
185,491
|
|
|
192,013
|
|
|||
Cash, cash equivalents and restricted cash at end of year
|
$
|
200,379
|
|
|
$
|
163,146
|
|
|
$
|
185,491
|
|
Supplemental disclosures
|
|
|
|
|
|
||||||
Interest paid
|
$
|
66,059
|
|
|
$
|
67,522
|
|
|
$
|
69,051
|
|
Income taxes paid
|
$
|
34,246
|
|
|
$
|
59,528
|
|
|
$
|
69,812
|
|
Non-cash conversion of accounts receivable to notes receivable
|
$
|
11,959
|
|
|
$
|
5,286
|
|
|
$
|
—
|
|
Category
|
|
Depreciable Life
|
Buildings and improvements
|
|
25 - 40 years
|
Leaseholds and improvements
|
|
Shorter of primary lease term or between three to 40 years
|
Equipment and fixtures
|
|
Three to five years
|
Internal-use software
|
|
Three to 10 years
|
Properties under capital leases
|
|
Primary lease term or remaining primary lease term
|
•
|
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 are 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.
|
•
|
Level 1 inputs are quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in active markets for similar assets or liabilities.
|
•
|
Level 3 inputs are unobservable and reflect the Company's own assumptions.
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||
|
(In millions)
|
||||||||||||||
Long-term debt, net of debt issuance costs
|
$
|
1,299.1
|
|
|
$
|
1,280.9
|
|
|
$
|
1,282.8
|
|
|
$
|
1,265.5
|
|
|
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
|
|
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
|
|
|
(20,508
|
)
|
|
117,669
|
|
|||
|
|
|
|
|
|
||||||
Equity:
|
|
|
|
|
|
||||||
Accumulated deficit
|
$
|
(1,098
|
)
|
|
$
|
(68,842
|
)
|
|
$
|
(69,940
|
)
|
|
Year ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
Franchise and restaurant revenues, as combined
|
$
|
475,030
|
|
|
$
|
501,745
|
|
|
|
|
|
||||
Franchise revenues
|
$
|
467,512
|
|
|
$
|
484,378
|
|
Company restaurant sales
|
7,518
|
|
|
17,367
|
|
||
|
$
|
475,030
|
|
|
$
|
501,745
|
|
|
|
|
|
||||
Franchise and restaurant expenses, as combined
|
$
|
171,983
|
|
|
$
|
162,860
|
|
|
|
|
|
||||
Franchise expenses
|
164,145
|
|
|
144,636
|
|
||
Company restaurant expenses
|
7,838
|
|
|
$
|
18,224
|
|
|
|
$
|
171,983
|
|
|
$
|
162,860
|
|
|
Year ended December 31, 2017, as reported
|
|
Adjustments due to ASC 606 adoption
|
|
Year ended December 31, 2017, as adjusted
|
||||||
|
(In thousands)
|
||||||||||
Franchise revenues (as shown separately above)
|
$
|
467,512
|
|
|
$
|
126,906
|
|
|
$
|
594,418
|
|
Franchise expenses (as shown separately above)
|
164,145
|
|
|
129,841
|
|
|
293,986
|
|
|||
Loss before income tax benefit
|
(425,374
|
)
|
|
(2,935
|
)
|
|
(428,309
|
)
|
|||
Income tax benefit
|
94,835
|
|
|
(9,276
|
)
|
|
85,559
|
|
|||
Net loss
|
(330,539
|
)
|
|
(12,211
|
)
|
|
(342,750
|
)
|
|||
Net loss per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(18.28
|
)
|
|
|
|
$
|
(18.96
|
)
|
||
Diluted
|
$
|
(18.28
|
)
|
|
|
|
$
|
(18.96
|
)
|
|
Year ended December 31, 2016, as reported
|
|
Adjustments due to ASC 606 adoption
|
|
Year ended December 31, 2016, as adjusted
|
||||||
|
(In thousands)
|
||||||||||
Franchise revenues (as shown separately above)
|
$
|
484,378
|
|
|
$
|
153,593
|
|
|
$
|
637,971
|
|
Franchise expenses (as shown separately above)
|
144,636
|
|
|
148,864
|
|
|
293,500
|
|
|||
Income before income tax provision
|
153,122
|
|
|
4,729
|
|
|
157,851
|
|
|||
Income tax provision
|
(55,130
|
)
|
|
(1,719
|
)
|
|
(56,849
|
)
|
|||
Net income
|
97,992
|
|
|
3,010
|
|
|
101,002
|
|
|||
Net income per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
5.36
|
|
|
|
|
$
|
5.52
|
|
||
Diluted
|
$
|
5.33
|
|
|
|
|
$
|
5.49
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
Franchise Revenue:
|
|
|
|
|
|
|
|
|
||||
Royalties
|
|
$
|
311,568
|
|
|
$
|
297,817
|
|
|
$
|
315,848
|
|
Advertising fees
|
|
268,294
|
|
|
234,165
|
|
|
260,116
|
|
|||
Pancake and waffle dry mix sales and other
|
|
52,108
|
|
|
50,538
|
|
|
52,117
|
|
|||
Franchise and development fees
|
|
11,964
|
|
|
11,898
|
|
|
9,890
|
|
|||
Total franchise revenue
|
|
$
|
643,934
|
|
|
$
|
594,418
|
|
|
$
|
637,971
|
|
|
|
Deferred Franchise Revenue (short- and long-term)
|
||
|
|
(In thousands)
|
||
Balance at December 31, 2017
|
|
$
|
81,433
|
|
Recognized as revenue during the year ended December 31, 2018
|
|
(11,220
|
)
|
|
Fees deferred during the year ended December 30, 2018
|
|
4,482
|
|
|
Balance at December 31, 2018
|
|
$
|
74,695
|
|
4. Receivables
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Accounts receivable
|
$
|
63.0
|
|
|
$
|
84.2
|
|
Gift card receivables
|
47.9
|
|
|
51.6
|
|
||
Notes receivable
|
28.9
|
|
|
11.3
|
|
||
Financing receivables:
|
|
|
|
||||
Equipment leases receivable
|
65.8
|
|
|
79.3
|
|
||
Direct financing leases receivable
|
44.9
|
|
|
55.7
|
|
||
Franchise fee notes receivable
|
0.2
|
|
|
0.3
|
|
||
Other
|
7.1
|
|
|
6.5
|
|
||
|
257.8
|
|
|
288.9
|
|
||
Less: allowance for doubtful accounts and notes receivable
|
(17.2
|
)
|
|
(22.2
|
)
|
||
|
240.6
|
|
|
266.8
|
|
||
Less: current portion
|
(137.5
|
)
|
|
(140.2
|
)
|
||
Long-term receivables
|
$
|
103.1
|
|
|
$
|
126.6
|
|
Allowance for Doubtful Accounts
|
(In millions)
|
||
Balance at December 31, 2015
|
$
|
1.2
|
|
Provision
|
2.8
|
|
|
Charge-offs
|
(0.9
|
)
|
|
Balance at December 31, 2016
|
3.1
|
|
|
Provision
|
20.3
|
|
|
Charge-offs
|
(1.2
|
)
|
|
Balance at December 31, 2017
|
22.2
|
|
|
Provision
|
10.3
|
|
|
Charge-offs
|
(15.3
|
)
|
|
Balance at December 31, 2018
|
$
|
17.2
|
|
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Leaseholds and improvements
|
$
|
255.7
|
|
|
$
|
252.2
|
|
Equipment and fixtures
|
90.1
|
|
|
90.1
|
|
||
Properties under capital lease
|
100.3
|
|
|
61.4
|
|
||
Buildings and improvements
|
57.9
|
|
|
57.9
|
|
||
Land
|
56.4
|
|
|
56.4
|
|
||
Construction in progress
|
3.7
|
|
|
1.8
|
|
||
Property and equipment, gross
|
564.1
|
|
|
519.8
|
|
||
Less: accumulated depreciation and amortization
|
(323.8
|
)
|
|
(320.2
|
)
|
||
Property and equipment, net
|
$
|
240.3
|
|
|
$
|
199.6
|
|
|
Applebee's Franchise Unit
|
|
Applebee's Company Unit
|
|
IHOP Franchise Unit
|
|
Total
|
||||||||
|
(In millions)
|
||||||||||||||
Balance at December 31, 2015
|
$
|
686.6
|
|
|
$
|
—
|
|
|
$
|
10.8
|
|
|
$
|
697.4
|
|
Balance at December 31, 2016
|
686.6
|
|
|
—
|
|
|
10.8
|
|
|
697.4
|
|
||||
Impairment
|
(358.2
|
)
|
|
—
|
|
|
—
|
|
|
(358.2
|
)
|
||||
Balance at December 31, 2017
|
328.4
|
|
|
—
|
|
|
10.8
|
|
|
339.2
|
|
||||
Acquisition of business
|
—
|
|
|
6.1
|
|
|
—
|
|
|
6.1
|
|
||||
Balance at December 31, 2018
|
$
|
328.4
|
|
|
$
|
6.1
|
|
|
$
|
10.8
|
|
|
$
|
345.3
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Applebee's Franchise Unit
|
$
|
686.6
|
|
|
$
|
(358.2
|
)
|
|
$
|
328.4
|
|
|
$
|
686.6
|
|
|
$
|
(358.2
|
)
|
|
$
|
328.4
|
|
Applebee's Company Unit
|
6.1
|
|
|
—
|
|
|
6.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
IHOP Franchise Unit
|
10.8
|
|
|
—
|
|
|
10.8
|
|
|
10.8
|
|
|
—
|
|
|
10.8
|
|
||||||
Total
|
$
|
703.5
|
|
|
$
|
(358.2
|
)
|
|
$
|
345.3
|
|
|
$
|
697.4
|
|
|
$
|
(358.2
|
)
|
|
$
|
339.2
|
|
|
Not Subject to Amortization
|
|
Subject to Amortization
|
|
|
||||||||||||||||||
|
Tradename
|
|
Other
|
|
Franchising
Rights
|
|
Reacquired Franchise Rights
|
|
Leaseholds
|
|
Total
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Balance at December 31, 2015
|
$
|
652.4
|
|
|
$
|
1.5
|
|
|
$
|
119.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
772.9
|
|
Amortization expense
|
—
|
|
|
—
|
|
|
(10.0
|
)
|
|
—
|
|
|
—
|
|
|
(10.0
|
)
|
||||||
Additions
|
—
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
||||||
Balance at December 31, 2016
|
652.4
|
|
|
2.0
|
|
|
109.0
|
|
|
—
|
|
|
—
|
|
|
763.4
|
|
||||||
Impairment
|
(173.4
|
)
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
(173.4
|
)
|
|||||||
Amortization expense
|
—
|
|
|
—
|
|
|
(10.0
|
)
|
|
—
|
|
|
—
|
|
|
(10.0
|
)
|
||||||
Additions
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
|
2.8
|
|
||||||
Balance at December 31, 2017
|
479.0
|
|
|
2.4
|
|
|
99.0
|
|
|
—
|
|
|
2.4
|
|
|
582.8
|
|
||||||
Amortization expense
|
—
|
|
|
—
|
|
|
(10.0
|
)
|
|
(0.1
|
)
|
|
(0.0
|
)
|
|
(10.1
|
)
|
||||||
Additions
|
—
|
|
|
0.3
|
|
|
—
|
|
|
11.6
|
|
|
1.3
|
|
|
13.2
|
|
||||||
Balance at December 31, 2018
|
$
|
479.0
|
|
|
$
|
2.7
|
|
|
$
|
89.0
|
|
|
$
|
11.5
|
|
|
$
|
3.7
|
|
|
$
|
585.9
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
|
(In millions)
|
||||||||||||||||||||||
Franchising rights
|
$
|
200.0
|
|
|
$
|
(111.0
|
)
|
|
$
|
89.0
|
|
|
$
|
200.0
|
|
|
$
|
(101.0
|
)
|
|
$
|
99.0
|
|
Reacquired Franchise Rights
|
11.6
|
|
|
(0.1
|
)
|
|
11.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Leaseholds
|
3.7
|
|
|
(0.0
|
)
|
|
3.7
|
|
|
2.4
|
|
|
(0.0
|
)
|
|
2.4
|
|
||||||
Total
|
$
|
215.3
|
|
|
$
|
(111.1
|
)
|
|
$
|
104.2
|
|
|
$
|
202.4
|
|
|
$
|
(101.0
|
)
|
|
$
|
101.4
|
|
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Series 2014-1 4.277% Fixed Rate Senior Secured Notes, Class A-2
|
$
|
1,283.8
|
|
|
$
|
1,296.8
|
|
Series 2018-1 Variable Funding Senior Notes Class A-1, at a variable interest rate of 4.93%as of December 31, 2018
|
25.0
|
|
|
—
|
|
||
Class A-2 Note debt issuance costs
|
(9.7
|
)
|
|
(13.9
|
)
|
||
Long-term debt, net of debt issuance costs
|
1,299.1
|
|
|
1,282.8
|
|
||
Current portion of long-term debt
|
(25.0
|
)
|
|
(13.0
|
)
|
||
Long-term debt
|
$
|
1,274.1
|
|
|
$
|
1,269.8
|
|
Fiscal Years
|
(In millions)
|
||
2019
|
$
|
5.1
|
|
2020
(1)
|
5.6
|
|
|
2021
|
5.1
|
|
|
2022
|
5.1
|
|
|
2023
|
5.0
|
|
|
Thereafter
|
50.4
|
|
|
Total minimum lease payments
|
76.3
|
|
|
Less: interest
|
(37.2
|
)
|
|
Total financing obligations
|
39.1
|
|
|
Less: current portion
(2)
|
(0.6
|
)
|
|
Long-term financing obligations
|
$
|
38.5
|
|
(1)
|
Due to the varying closing date of the Company's fiscal year,
13
monthly payments will be made in 2020.
|
(2)
|
Included in current maturities of capital lease and financing obligations on the consolidated balance sheet.
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Total minimum rents receivable
|
$
|
57.3
|
|
|
$
|
74.5
|
|
Less: unearned income
|
(12.4
|
)
|
|
(18.8
|
)
|
||
Net investment in direct financing leases receivable
|
44.9
|
|
|
55.7
|
|
||
Less: current portion
|
(11.2
|
)
|
|
(10.8
|
)
|
||
Long-term direct financing leases receivable
|
$
|
33.7
|
|
|
$
|
44.9
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Total minimum leases receivable
|
$
|
89.9
|
|
|
$
|
106.4
|
|
Less: unearned income
|
(24.1
|
)
|
|
(27.1
|
)
|
||
Net investment in equipment leases receivable
|
65.8
|
|
|
79.3
|
|
||
Less: current portion
|
(8.5
|
)
|
|
(8.2
|
)
|
||
Long-term equipment leases receivable
|
$
|
57.3
|
|
|
$
|
71.1
|
|
|
Capital
Leases
|
|
Operating
Leases
|
||||
|
(In millions)
|
||||||
2019
|
$
|
21.0
|
|
|
$
|
91.2
|
|
2020
(1)
|
19.3
|
|
|
92.8
|
|
||
2021
|
16.2
|
|
|
75.7
|
|
||
2022
|
14.3
|
|
|
67.6
|
|
||
2023
|
11.6
|
|
|
55.2
|
|
||
Thereafter
|
63.4
|
|
|
210.5
|
|
||
Total minimum lease payments
|
145.8
|
|
|
$
|
593.0
|
|
|
Less: interest
|
(44.6
|
)
|
|
|
|
||
Capital lease obligations
|
101.2
|
|
|
|
|
||
Less: current portion
(2)
|
(13.4
|
)
|
|
|
|
||
Long-term capital lease obligations
|
$
|
87.8
|
|
|
|
|
|
Direct
Financing
Leases
|
|
Operating
Leases
|
||||
|
(In millions)
|
||||||
2019
|
$
|
16.2
|
|
|
$
|
105.9
|
|
2020
(1)
|
14.8
|
|
|
106.3
|
|
||
2021
|
11.7
|
|
|
100.2
|
|
||
2022
|
8.2
|
|
|
96.2
|
|
||
2023
|
3.5
|
|
|
91.8
|
|
||
Thereafter
|
2.9
|
|
|
271.8
|
|
||
Total minimum rents receivable
|
$
|
57.3
|
|
|
$
|
772.2
|
|
|
|
Repurchases
|
|
Remaining Value that may be Repurchased
|
|||||||
Year Ended December 31,
|
|
Shares
|
|
Amount
|
|
||||||
|
|
|
|
(Dollars in millions)
|
|||||||
2018
|
|
478,839
|
|
|
$
|
34.9
|
|
|
$
|
32.2
|
|
2017
|
|
145,786
|
|
|
$
|
10.0
|
|
|
$
|
67.1
|
|
2016
|
|
650,384
|
|
|
$
|
55.3
|
|
|
$
|
77.1
|
|
Year ended December 31, 2018
|
Declaration Date
|
|
Payment Date
|
|
Dividends declared per share
|
|
Dividends paid per share
|
|
Total dividends paid
(1)
|
||||||
|
|
|
|
|
|
|
|
|
(In millions)
|
||||||
Payment of prior year declaration
|
(3)
|
|
January 5, 2018
|
|
—
|
|
|
$
|
0.97
|
|
|
$
|
17.7
|
|
|
First quarter
|
February 14, 2018
|
|
April 6, 2018
|
|
$
|
0.63
|
|
|
0.63
|
|
|
11.5
|
|
||
Second quarter
|
May 14, 2018
|
|
July 6, 2018
|
|
0.63
|
|
|
0.63
|
|
|
11.4
|
|
|||
Third quarter
|
August 2, 2018
|
|
October 5, 2018
|
|
0.63
|
|
|
0.63
|
|
|
11.4
|
|
|||
Fourth quarter
|
October 6, 2018
|
|
(2)
|
|
0.63
|
|
|
—
|
|
|
—
|
|
|||
Total
|
|
|
|
|
$
|
2.52
|
|
|
$
|
2.86
|
|
|
$
|
52.0
|
|
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||
Payment of prior year declaration
|
(4)
|
|
January 6, 2017
|
|
—
|
|
|
$
|
0.97
|
|
|
$
|
17.5
|
|
|
First quarter
|
February 22, 2017
|
|
April 7, 2017
|
|
$
|
0.97
|
|
|
0.97
|
|
|
17.5
|
|
||
Second quarter
|
May 15, 2017
|
|
July 7, 2017
|
|
0.97
|
|
|
0.97
|
|
|
17.5
|
|
|||
Third quarter
|
August 10, 2017
|
|
October 6, 2017
|
|
0.97
|
|
|
0.97
|
|
|
17.8
|
|
|||
Fourth quarter
|
October 6, 2017
|
|
(3)
|
|
0.97
|
|
|
—
|
|
|
—
|
|
|||
Total
|
|
|
|
|
$
|
3.88
|
|
|
$
|
3.88
|
|
|
$
|
70.3
|
|
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||
Payment of prior year declaration
|
(5)
|
|
January 8, 2016
|
|
$
|
—
|
|
|
$
|
0.92
|
|
|
$
|
17.1
|
|
First quarter
|
February 23, 2016
|
|
April 8, 2016
|
|
$
|
0.92
|
|
|
0.92
|
|
|
17.0
|
|
||
Second quarter
|
May 16, 2016
|
|
July 8, 2016
|
|
0.92
|
|
|
0.92
|
|
|
16.8
|
|
|||
Third quarter
|
July 28, 2016
|
|
October 7, 2016
|
|
0.92
|
|
|
0.92
|
|
|
16.7
|
|
|||
Fourth quarter
|
October 31, 2016
|
|
(4)
|
|
0.97
|
|
|
—
|
|
|
—
|
|
|||
Total
|
|
|
|
|
$
|
3.73
|
|
|
$
|
3.68
|
|
|
$
|
67.6
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In millions)
|
||||||||||
Dividends declared from retained earnings
|
$
|
—
|
|
|
$
|
(52.6
|
)
|
|
$
|
(67.8
|
)
|
Dividends declared from additional paid-in capital
|
$
|
(44.7
|
)
|
|
$
|
(17.7
|
)
|
|
$
|
—
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In millions)
|
||||||||||
Closure charges
|
$
|
2.0
|
|
|
$
|
3.9
|
|
|
$
|
1.2
|
|
Kansas City lease exit costs
|
—
|
|
|
—
|
|
|
2.9
|
|
|||
Long-lived tangible asset impairment
|
0.1
|
|
|
0.1
|
|
|
1.0
|
|
|||
Total closure and impairment charges
|
$
|
2.1
|
|
|
$
|
4.0
|
|
|
$
|
5.1
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In millions)
|
||||||||||
Total stock-based compensation expense:
|
|
|
|
|
|
||||||
Equity classified awards expense
|
$
|
10.6
|
|
|
$
|
10.9
|
|
|
$
|
11.0
|
|
Liability classified awards (credit)
|
3.1
|
|
|
(1.0
|
)
|
|
(0.5
|
)
|
|||
Total pretax stock-based compensation expense
|
13.7
|
|
|
9.9
|
|
|
10.5
|
|
|||
Book income tax benefit
|
(3.5
|
)
|
|
(3.8
|
)
|
|
(3.9
|
)
|
|||
Total stock-based compensation expense, net of tax
|
$
|
10.2
|
|
|
$
|
6.1
|
|
|
$
|
6.6
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Risk free interest rate
|
2.6
|
%
|
|
1.9
|
%
|
|
1.1
|
%
|
|||
Weighted average historical volatility
|
26.1
|
%
|
|
22.9
|
%
|
|
27.1
|
%
|
|||
Dividend yield
|
3.6
|
%
|
|
7.3
|
%
|
|
4.0
|
%
|
|||
Expected years until exercise
|
4.6
|
|
|
4.5
|
|
|
4.5
|
|
|||
Weighted average fair value of options granted
|
$
|
11.94
|
|
|
$
|
4.31
|
|
|
$
|
13.55
|
|
|
2018
|
2017
|
||||
Risk free interest rate
|
2.5
|
%
|
1.6
|
%
|
||
Weighted average historical volatility
|
34.4
|
%
|
30.0
|
%
|
||
Dividend yield
|
3.4
|
%
|
9.6
|
%
|
||
Expected years until exercise
|
3.0
|
|
3.4
|
|
||
Weighted average fair value of options granted
|
$
|
9.79
|
|
$
|
3.07
|
|
Weighted average fair value of restricted stock units granted
|
$
|
53.72
|
|
$
|
10.19
|
|
|
Number of
Shares Under Option
|
|
Weighted Average
Exercise Price
Per Share
|
|
Weighted Average
Remaining Contractual
Term (in Years)
|
|
Aggregate Intrinsic
Value (in Millions)
|
|||||
Outstanding at December 31, 2015
|
504,462
|
|
|
$
|
69.99
|
|
|
|
|
|
|
|
Granted
|
255,825
|
|
|
90.90
|
|
|
|
|
|
|
||
Exercised
|
(48,021
|
)
|
|
29.33
|
|
|
|
|
|
|
||
Forfeited
|
(7,924
|
)
|
|
94.30
|
|
|
|
|
|
|
||
Expired
|
(3,208
|
)
|
|
89.17
|
|
|
|
|
|
|
||
Outstanding at December 31, 2016
|
701,134
|
|
|
80.04
|
|
|
|
|
|
|
||
Granted
|
887,030
|
|
|
48.35
|
|
|
|
|
|
|
||
Exercised
|
(64,916
|
)
|
|
40.59
|
|
|
|
|
|
|
||
Forfeited
|
(171,847
|
)
|
|
65.82
|
|
|
|
|
|
|
||
Expired
|
(79,353
|
)
|
|
87.02
|
|
|
|
|
|
|
||
Outstanding at December 31, 2017
|
1,272,048
|
|
|
61.44
|
|
|
|
|
|
|
||
Granted
|
248,899
|
|
|
69.12
|
|
|
|
|
|
|
||
Exercised
|
(74,930
|
)
|
|
52.43
|
|
|
|
|
|
|
||
Forfeited
|
(6,309
|
)
|
|
68.80
|
|
|
|
|
|
|
||
Expired
|
—
|
|
|
—
|
|
|
|
|
|
|
||
Outstanding at December 31, 2018
|
1,439,708
|
|
|
$
|
63.21
|
|
|
6.6
|
|
$
|
15.9
|
|
Vested and Expected to Vest at December 31, 2018
|
1,301,066
|
|
|
$
|
64.62
|
|
|
6.4
|
|
$
|
13.4
|
|
Exercisable at December 31, 2018
|
571,768
|
|
|
$
|
77.73
|
|
|
3.6
|
|
$
|
2.9
|
|
|
Shares of Restricted Stock
|
|
Weighted
Average
Grant-Date Per
Share
Fair Value
|
|
Restricted
Stock Units
|
|
Weighted
Average
Grant-Date
Per Share
Fair Value
|
||||||
Outstanding at December 31, 2015
|
257,594
|
|
|
$
|
89.99
|
|
|
35,116
|
|
|
$
|
86.30
|
|
Granted
|
88,797
|
|
|
88.90
|
|
|
13,053
|
|
|
90.90
|
|
||
Released
|
(77,712
|
)
|
|
78.70
|
|
|
(14,027
|
)
|
|
72.01
|
|
||
Forfeited
|
(33,207
|
)
|
|
92.82
|
|
|
(84
|
)
|
|
101.25
|
|
||
Outstanding at December 31, 2016
|
235,472
|
|
|
92.91
|
|
|
34,058
|
|
|
93.95
|
|
||
Granted
|
216,269
|
|
|
51.89
|
|
|
281,973
|
|
|
22.37
|
|
||
Released
|
(92,968
|
)
|
|
88.62
|
|
|
(12,683
|
)
|
|
81.63
|
|
||
Forfeited
|
(83,582
|
)
|
|
79.52
|
|
|
—
|
|
|
—
|
|
||
Outstanding at December 31, 2017
|
275,191
|
|
|
65.97
|
|
|
303,348
|
|
|
28.39
|
|
||
Granted
|
92,466
|
|
|
69.20
|
|
|
86,990
|
|
|
57.21
|
|
||
Released
|
(74,253
|
)
|
|
81.07
|
|
|
(15,737
|
)
|
|
98.54
|
|
||
Forfeited
|
(26,162
|
)
|
|
61.27
|
|
|
(72
|
)
|
|
53.49
|
|
||
Outstanding at December 31, 2018
|
267,242
|
|
|
$
|
63.35
|
|
|
374,529
|
|
|
$
|
31.05
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Provision (benefit) for income taxes:
|
(In millions)
|
||||||||||
Current
|
|
|
|
|
|
||||||
Federal
|
$
|
33.6
|
|
|
$
|
42.6
|
|
|
$
|
60.8
|
|
State
|
6.4
|
|
|
5.1
|
|
|
6.4
|
|
|||
Foreign
|
2.1
|
|
|
2.9
|
|
|
2.3
|
|
|||
|
42.1
|
|
|
50.6
|
|
|
69.5
|
|
|||
Deferred
|
|
|
|
|
|
||||||
Federal
|
(7.8
|
)
|
|
(131.0
|
)
|
|
(9.5
|
)
|
|||
State
|
(4.0
|
)
|
|
(5.1
|
)
|
|
(3.2
|
)
|
|||
|
(11.8
|
)
|
|
(136.1
|
)
|
|
(12.7
|
)
|
|||
Provision (benefit) for income taxes
|
$
|
30.3
|
|
|
$
|
(85.6
|
)
|
|
$
|
56.8
|
|
|
Year Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Statutory federal income tax rate
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Non-deductibility of goodwill impairment
|
—
|
|
|
(29.3
|
)
|
|
—
|
|
Change in federal tax rate
|
—
|
|
|
15.5
|
|
|
—
|
|
State and other taxes, net of federal tax benefit
|
3.6
|
|
|
0.4
|
|
|
2.7
|
|
Change in unrecognized tax benefits
|
3.3
|
|
|
(0.7
|
)
|
|
0.4
|
|
Change in valuation allowance
|
0.4
|
|
|
0.3
|
|
|
—
|
|
Domestic production activity deduction
|
—
|
|
|
0.3
|
|
|
(0.6
|
)
|
Changes in tax rates and state tax laws
|
(1.6
|
)
|
|
(0.3
|
)
|
|
(1.7
|
)
|
Change in accounting for excess tax deficiencies/benefits
|
0.1
|
|
|
(0.5
|
)
|
|
—
|
|
Other
|
0.6
|
|
|
(0.7
|
)
|
|
0.2
|
|
Effective tax rate
|
27.4
|
%
|
|
20.0
|
%
|
|
36.0
|
%
|
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Differences in capitalization and depreciation and amortization of reacquired franchises and equipment
|
$
|
—
|
|
|
$
|
—
|
|
Differences in acquisition financing costs
|
—
|
|
|
0.1
|
|
||
Employee compensation
|
9.0
|
|
|
7.6
|
|
||
Deferred gain on sale of assets
|
—
|
|
|
0.7
|
|
||
Book/tax difference in revenue recognition
|
34.3
|
|
|
14.2
|
|
||
Other
|
16.8
|
|
|
42.2
|
|
||
Deferred tax assets
|
60.1
|
|
|
64.8
|
|
||
Valuation allowance
|
(0.4
|
)
|
|
—
|
|
||
Total deferred tax assets after valuation allowance
|
59.7
|
|
|
64.8
|
|
||
Differences between financial and tax accounting in the recognition of franchise and equipment sales
|
(16.8
|
)
|
|
(20.7
|
)
|
||
Differences in capitalization and depreciation
(1)
|
(139.2
|
)
|
|
(147.5
|
)
|
||
Differences in acquisition financing costs
|
(0.6
|
)
|
|
—
|
|
||
Book/tax difference in revenue recognition
|
—
|
|
|
(2.4
|
)
|
||
Differences between book and tax basis of property and equipment
|
(8.1
|
)
|
|
(8.5
|
)
|
||
Other
|
(0.8
|
)
|
|
(3.5
|
)
|
||
Deferred tax liabilities
|
(165.5
|
)
|
|
(182.6
|
)
|
||
Net deferred tax liabilities
|
$
|
(105.8
|
)
|
|
$
|
(117.8
|
)
|
(1)
|
Primarily related to the 2007 Applebee's acquisition.
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Unrecognized tax benefit as of January 1
|
$
|
5.9
|
|
|
$
|
3.9
|
|
|
$
|
3.9
|
|
Changes for tax positions of prior years
|
3.8
|
|
|
2.8
|
|
|
0.6
|
|
|||
Increases for tax positions related to the current year
|
0.4
|
|
|
0.6
|
|
|
0.1
|
|
|||
Decreases relating to settlements and lapsing of statutes of limitations
|
(4.9
|
)
|
|
(1.4
|
)
|
|
(0.7
|
)
|
|||
Unrecognized tax benefit as of December 31
|
$
|
5.2
|
|
|
$
|
5.9
|
|
|
$
|
3.9
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(In thousands, except per share data)
|
||||||||||
Numerator for basic and diluted income per common share:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
80,354
|
|
|
$
|
(342,750
|
)
|
|
$
|
101,002
|
|
Less: Net (income) loss allocated to unvested participating restricted stock
|
(2,711
|
)
|
|
6,768
|
|
|
(1,430
|
)
|
|||
Net income (loss) available to common stockholders - basic
|
77,643
|
|
|
(335,982
|
)
|
|
99,572
|
|
|||
Effect of unvested participating restricted stock
|
16
|
|
|
—
|
|
|
2
|
|
|||
Numerator - net income (loss) available to common shareholders - diluted
|
$
|
77,659
|
|
|
$
|
(335,982
|
)
|
|
$
|
99,574
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Weighted average outstanding shares of common stock - basic
|
17,533
|
|
|
17,725
|
|
|
18,030
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Stock options
|
256
|
|
|
15
|
|
|
95
|
|
|||
Weighted average outstanding shares of common stock - diluted
|
17,789
|
|
|
17,740
|
|
|
18,125
|
|
|||
Net income (loss) per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
4.43
|
|
|
$
|
(18.96
|
)
|
|
$
|
5.52
|
|
Diluted
|
$
|
4.37
|
|
|
$
|
(18.96
|
)
|
|
$
|
5.49
|
|
|
2018
|
||
|
(In millions)
|
||
Reacquired franchise rights
|
$
|
11.6
|
|
Equipment and fixtures
|
10.0
|
|
|
Inventory
|
1.4
|
|
|
Total identifiable assets acquired
|
23.0
|
|
|
|
|
||
Above-market leaseholds, net
|
(6.5
|
)
|
|
Other liabilities
|
(1.0
|
)
|
|
Net identifiable assets acquired
|
15.5
|
|
|
Goodwill
|
6.1
|
|
|
Consideration transferred
|
$
|
21.6
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
|
(as adjusted)
|
||||||||
Revenues
|
|
|
(In millions)
|
|
|
||||||
Franchise operations
|
$
|
643.9
|
|
|
$
|
594.4
|
|
|
$
|
638.0
|
|
Rental operations
|
121.9
|
|
|
121.4
|
|
|
123.0
|
|
|||
Company restaurants
|
7.1
|
|
|
7.5
|
|
|
17.4
|
|
|||
Financing operations
|
8.0
|
|
|
8.4
|
|
|
9.2
|
|
|||
Total
|
$
|
780.9
|
|
|
$
|
731.7
|
|
|
$
|
787.6
|
|
|
|
|
|
|
|
||||||
Gross profit (loss), by segment
|
|
|
|
|
|
||||||
Franchise operations
|
$
|
313.3
|
|
|
$
|
300.4
|
|
|
$
|
344.5
|
|
Rental operations
|
31.2
|
|
|
30.8
|
|
|
31.5
|
|
|||
Company restaurants
|
1.2
|
|
|
(0.3
|
)
|
|
(0.8
|
)
|
|||
Financing operations
|
7.4
|
|
|
7.8
|
|
|
9.0
|
|
|||
Total gross profit
|
353.1
|
|
|
338.7
|
|
|
384.2
|
|
|||
Corporate and unallocated expenses, net
|
(242.5
|
)
|
|
(767.0
|
)
|
|
(226.3
|
)
|
|||
Income (loss) before income taxes
|
$
|
110.6
|
|
|
$
|
(428.3
|
)
|
|
$
|
157.9
|
|
|
|
|
|
|
|
||||||
Interest expense
|
|
|
|
|
|
||||||
Rental operations
|
$
|
9.2
|
|
|
$
|
10.5
|
|
|
$
|
11.8
|
|
Company restaurants
|
0.1
|
|
|
0.2
|
|
|
0.4
|
|
|||
Corporate
|
61.7
|
|
|
62.0
|
|
|
61.5
|
|
|||
Total
|
$
|
71.0
|
|
|
$
|
72.7
|
|
|
$
|
73.7
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
|
|
|
|
||||||
Franchise operations
|
$
|
10.5
|
|
|
$
|
10.8
|
|
|
$
|
10.6
|
|
Rental operations
|
11.7
|
|
|
12.0
|
|
|
12.4
|
|
|||
Company restaurants
|
0.4
|
|
|
0.1
|
|
|
0.4
|
|
|||
Corporate
|
9.6
|
|
|
7.7
|
|
|
7.2
|
|
|||
Total
|
$
|
32.2
|
|
|
$
|
30.6
|
|
|
$
|
30.6
|
|
|
|
|
|
|
|
||||||
Impairment of goodwill and intangible assets, closure and other impairment charges
|
|
|
|
|
|
||||||
Franchise operations
|
$
|
—
|
|
|
$
|
531.6
|
|
|
$
|
—
|
|
Company restaurants
|
2.1
|
|
|
4.0
|
|
|
2.2
|
|
|||
Corporate
|
—
|
|
|
—
|
|
|
2.9
|
|
|||
Total
|
$
|
2.1
|
|
|
$
|
535.6
|
|
|
$
|
5.1
|
|
|
|
|
|
|
|
||||||
Capital expenditures
|
|
|
|
|
|
||||||
Company restaurants
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
0.3
|
|
Corporate
|
14.3
|
|
|
13.3
|
|
|
5.3
|
|
|||
Total
|
$
|
14.3
|
|
|
$
|
13.4
|
|
|
$
|
5.6
|
|
|
|
|
|
|
|
||||||
Goodwill
(franchise segment)
|
$
|
345.3
|
|
|
$
|
339.2
|
|
|
$
|
697.4
|
|
|
|
|
|
|
|
||||||
Total assets
|
|
|
|
|
|
||||||
Franchise operations
|
$
|
1,152.1
|
|
|
$
|
1,188.0
|
|
|
$
|
1,608.7
|
|
Rental operations
|
255.6
|
|
|
278.8
|
|
|
339.5
|
|
|||
Company restaurants
|
66.5
|
|
|
—
|
|
|
126.8
|
|
|||
Financing operations
|
73.7
|
|
|
87.5
|
|
|
88.2
|
|
|||
Corporate
|
226.8
|
|
|
181.3
|
|
|
115.4
|
|
|||
Total
|
$
|
1,774.7
|
|
|
$
|
1,735.6
|
|
|
$
|
2,278.6
|
|
|
Revenues
|
|
Gross Profit
|
|
Net Income (Loss)
|
|
Net Income
(Loss)
Per Share—
Basic
(3)
|
|
Net Income
(Loss)
Per Share—
Diluted
(3)
|
||||||||||
|
(In thousands, except per share amounts)
|
||||||||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
||||||||||
1
st
Quarter
|
$
|
188,163
|
|
|
$
|
83,500
|
|
|
$
|
17,073
|
|
|
$
|
0.93
|
|
|
$
|
0.92
|
|
2
nd
Quarter
|
184,471
|
|
|
78,590
|
|
|
12,713
|
|
|
0.70
|
|
|
0.69
|
|
|||||
3
rd
Quarter
(1)
|
194,099
|
|
|
92,626
|
|
|
23,587
|
|
|
1.31
|
|
|
1.29
|
|
|||||
4
th
Quarter
|
214,198
|
|
|
98,371
|
|
|
26,981
|
|
|
1.49
|
|
|
1.47
|
|
|||||
2017
|
|
|
|
|
|
|
|
|
|
||||||||||
1
st
Quarter
(1)
|
$
|
191,461
|
|
|
$
|
94,285
|
|
|
$
|
15,595
|
|
|
$
|
0.87
|
|
|
$
|
0.86
|
|
2
nd
Quarter
(1)
|
188,654
|
|
|
93,004
|
|
|
22,107
|
|
|
1.23
|
|
|
1.23
|
|
|||||
3
rd
Quarter
(1) (2)
|
174,903
|
|
|
82,086
|
|
|
(450,352
|
)
|
|
(24.91
|
)
|
|
(24.91
|
)
|
|||||
4
th
Quarter
(1)
|
176,708
|
|
|
69,336
|
|
|
69,900
|
|
|
3.82
|
|
|
3.82
|
|
•
|
Reports of Independent Registered Public Accounting Firm.
|
•
|
Consolidated Balance Sheets as of
December 31, 2018
and
December 31, 2017
.
|
•
|
Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the period ended
|
•
|
Consolidated Statements of Stockholders' (Deficit) Equity for each of the three years in the period ended
|
•
|
Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 2018
.
|
•
|
Notes to the Consolidated Financial Statements.
|
†10.7
|
|
|
†10.8
|
|
|
†10.9
|
|
|
†10.10
|
|
|
†10.11
|
|
|
†10.12
|
|
|
†10.13
|
|
|
†10.14
|
|
|
†10.15
|
|
|
†10.16
|
|
|
†10.17
|
|
|
†10.18
|
|
|
†10.19
|
|
|
†10.20
|
|
|
*†10.21
|
|
|
†10.22
|
|
|
†10.23
|
|
|
†10.24
|
|
|
†10.25
|
|
|
†10.26
|
|
|
†10.27
|
|
†10.50
|
|
|
*†10.51
|
|
|
†10.52
|
|
|
*†10.53
|
|
|
*†10.54
|
|
|
10.55
|
|
|
10.56
|
|
|
10.57
|
|
|
10.58
|
|
|
*21
|
|
|
*23.1
|
|
|
*31.1
|
|
|
*31.2
|
|
|
*32.1
|
|
|
*32.2
|
|
*
|
Filed herewith.
|
†
|
A contract, compensatory plan or arrangement in which directors or executive officers are eligible to participate.
|
#
|
Portions of this exhibit have been omitted per an Order Granting Confidential Treatment Under the Securities Exchange Act of 1934 issued by the Securities and Exchange Commission on January 3, 2018.
|
|
DINE BRANDS GLOBAL, INC.
|
|
|
By:
|
/s/ STEPHEN P. JOYCE
|
|
|
Stephen P. Joyce
Chief Executive Officer
|
Name
|
|
Title
|
|
|
|
/s/ STEPHEN P. JOYCE
|
|
Chief Executive Officer (Principal Executive Officer), Director
|
Stephen P. Joyce
|
|
|
|
|
|
/s/ THOMAS H. SONG
|
|
Chief Financial Officer (Principal Financial Officer)
|
Thomas H. Song
|
|
|
|
|
|
/s/ RICHARD J. DAHL
|
|
Director
|
Richard J. Dahl
|
|
|
|
|
|
/s/ HOWARD M. BERK
|
|
Director
|
Howard M. Berk
|
|
|
|
|
|
/s/ DANIEL J. BRESTLE
|
|
Director
|
Daniel J. Brestle
|
|
|
|
|
|
/s/ LARRY A. KAY
|
|
Director
|
Larry A. Kay
|
|
|
|
|
|
/s/ CAROLINE W. NAHAS
|
|
Director
|
Caroline W. Nahas
|
|
|
|
|
|
/s/ DOUGLAS M. PASQUALE
|
|
Director
|
Douglas M. Pasquale
|
|
|
|
|
|
/s/ GILBERT T. RAY
|
|
Director
|
Gilbert T. Ray
|
|
|
|
|
|
/s/ LILIAN C. TOMOVICH
|
|
Director
|
Lilian C.Tomovich
|
|
|
By:
|
Stephen P. Joyce Chief Executive Officer |
1.
|
Performance Criteria
. Fifty percent (50%) of the Performance Units shall be earned based on Average Annual AEPS Growth and fifty percent (50%) of the Performance Units shall be earned based on TSR Performance, in accordance with the matrices below.
|
(a)
|
Average Annual AEPS Growth
. The target number of Performance Units subject to attainment of Average Annual AEPS Growth goals shall be fifty percent (50%) of the Target Award (the “Target AEPS Growth Units”).
|
(b)
|
TSR Performance
. The target number of Performance Units subject to attainment of TSR goals shall be fifty percent (50%) of the Target Award (the “Target TSR Units”).
|
Percentile Rank of Company’s TSR Performance Among TSR Comparator Group Over Performance Period
|
Percentage of Target TSR Units Earned
|
<33
rd
Percentile
|
0%
|
33
rd
Percentile
|
50%
|
50
th
Percentile
|
100%
|
60
th
Percentile
|
125%
|
70
th
Percentile
|
150%
|
≥80
th
Percentile
|
200%
|
a.
|
Payment Amount
.
|
ARTICLE 1
DEFINITIONS
|
1
|
1.1
|
“Account Balance” 1
|
1.2
|
“Annual Account” 1
|
1.3
|
“Annual Deferral Amount” 1
|
1.4
|
“Annual Installment Method” 2
|
1.5
|
“Base Salary” 2
|
1.6
|
“Beneficiary” 2
|
1.7
|
“Beneficiary Designation Form” 2
|
1.8
|
“Benefit Distribution Date” 2
|
1.9
|
“Board” 2
|
1.10
|
“Bonus” 3
|
1.11
|
“Change in Control” 3
|
1.12
|
“Code” 4
|
1.13
|
“Committee” 4
|
1.14
|
“Company” 4
|
1.15
|
“Company Contribution Amount” 4
|
1.16
|
“Director” 4
|
1.17
|
“Director Fees” 4
|
1.18
|
“Disability” or “Disabled” 4
|
1.19
|
“Election Form” 5
|
1.20
|
“Employee” 5
|
1.21
|
“Employer(s)” 5
|
1.22
|
“ERISA” 5
|
1.23
|
“401(k) Plan” 6
|
1.24
|
“LTI Awards” 6
|
1.26
|
“LTIP Amounts” 6
|
1.27
|
“Participant” 6
|
1.28
|
“Performance-Based Compensation” 6
|
1.29
|
“Plan” 6
|
1.30
|
“Plan Agreement” 6
|
1.31
|
“Plan Year” 6
|
1.32
|
“Retirement,” “Retire(s)” or “Retired” 7
|
1.33
|
“Separation from Service” 7
|
1.34
|
“Specified Employee” 8
|
1.35
|
“Stock” 8
|
1.36
|
“Stock Incentive Plan” 8
|
1.37
|
“Trust” 8
|
1.38
|
“Unforeseeable Emergency” 8
|
1.39
|
“Years of Service” 9
|
ARTICLE 2
SELECTION, ENROLLMENT, ELIGIBILITY
|
9
|
2.1
|
Selection by Committee 9
|
2.2
|
Enrollment and Eligibility Requirements; Commencement of Participation 9
|
ARTICLE 3
DEFERRAL COMMITMENTS/COMPANY CONTRIBUTION AMOUNTS/VESTING/CREDITING/TAXES
|
10
|
3.1
|
Maximum Deferral 10
|
3.2
|
Timing of Deferral Elections; Effect of Election Form 10
|
3.3
|
Withholding and Crediting of Annual Deferral Amounts 12
|
3.4
|
Company Contribution Amount 13
|
3.5
|
Vesting 13
|
3.6
|
Crediting/Debiting of Account Balances 14
|
3.7
|
FICA and Other Taxes 17
|
ARTICLE 4
SCHEDULED DISTRIBUTIONS; UNFORESEEABLE EMERGENCIES
|
17
|
4.1
|
Scheduled Distributions 17
|
4.2
|
Postponing Scheduled Distributions 18
|
4.3
|
Other Benefits Take Precedence Over Scheduled Distributions 18
|
4.4
|
Unforeseeable Emergencies 19
|
ARTICLE 5
CHANGE IN CONTROL BENEFIT
|
19
|
5.1
|
Change in Control Benefit 19
|
5.2
|
Payment of Change in Control Benefit 20
|
ARTICLE 6
RETIREMENT BENEFIT
|
20
|
6.1
|
Retirement Benefit 20
|
6.2
|
Payment of Retirement Benefit 20
|
ARTICLE 7
TERMINATION BENEFIT
|
21
|
7.1
|
Termination Benefit 21
|
7.2
|
Payment of Termination Benefit 21
|
ARTICLE 8
DISABILITY BENEFIT
|
22
|
8.1
|
Disability Benefit 22
|
8.2
|
Payment of Disability Benefit 22
|
ARTICLE 9
DEATH BENEFIT
|
22
|
9.1
|
Death Benefit 22
|
9.2
|
Payment of Death Benefit 22
|
ARTICLE 10
BENEFICIARY DESIGNATION
|
22
|
10.1
|
Beneficiary 22
|
10.2
|
Beneficiary Designation; Change; Spousal Consent 22
|
10.3
|
Acknowledgment 23
|
10.4
|
No Beneficiary Designation 23
|
10.5
|
Doubt as to Beneficiary 23
|
10.6
|
Discharge of Obligations 23
|
ARTICLE 11
LEAVE OF ABSENCE
|
23
|
11.1
|
Paid Leave of Absence 23
|
11.2
|
Unpaid Leave of Absence 23
|
ARTICLE 12
TERMINATION OF PLAN, AMENDMENT OR MODIFICATION
|
24
|
12.1
|
Termination of Plan 24
|
12.2
|
Amendment 24
|
12.3
|
Plan Agreement 24
|
12.4
|
Effect of Payment 24
|
ARTICLE 13
ADMINISTRATION
|
25
|
13.1
|
Committee Duties 25
|
13.2
|
Administration Upon Change In Control 25
|
13.3
|
Agents 25
|
13.4
|
Binding Effect of Decisions 25
|
13.5
|
Indemnity of Committee 25
|
13.6
|
Employer Information 26
|
ARTICLE 14
OTHER BENEFITS AND AGREEMENTS
|
26
|
14.1
|
Coordination with Other Benefits 26
|
ARTICLE 15
CLAIMS PROCEDURES
|
26
|
15.1
|
Presentation of Claim 26
|
15.2
|
Notification of Decision 26
|
15.3
|
Review of a Denied Claim 27
|
15.4
|
Decision on Review 27
|
15.5
|
Legal Action 28
|
ARTICLE 16
TRUST
|
28
|
16.1
|
Establishment of the Trust 28
|
16.2
|
Interrelationship of the Plan and the Trust 28
|
16.3
|
Distributions From the Trust 28
|
ARTICLE 17
MISCELLANEOUS
|
28
|
17.1
|
Status of Plan 28
|
17.2
|
Unsecured General Creditor 28
|
17.3
|
Employer's Liability 29
|
17.4
|
Nonassignability 29
|
17.5
|
Not a Contract of Employment 29
|
17.6
|
Furnishing Information 29
|
17.7
|
Terms 29
|
17.8
|
Captions 29
|
17.9
|
Governing Law 30
|
17.10
|
Notice 30
|
17.11
|
Successors 30
|
17.12
|
Spouse's Interest 30
|
17.13
|
Validity 30
|
17.14
|
Incompetent 30
|
17.15
|
Domestic Relations Orders 30
|
17.16
|
Distribution in the Event of Income Inclusion Under Code Section 409A 31
|
17.17
|
Deduction Limitation on Benefit Payments 31
|
1.1
|
“
Account Balance
” shall mean, with respect to a Participant, an entry on the records of the Employer equal to the sum of the Participant’s Annual Accounts. The Account Balance shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.
|
1.2
|
“
Annual Account
”shall mean, with respect to a Participant, an entry on the records of the Employer equal to (a) the sum of the Participant’s Annual Deferral Amount and Company Contribution Amount and for any one Plan Year, plus (b) amounts credited or debited to such amounts pursuant to this Plan, less (c) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Annual Account for such Plan Year. The Annual Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.
|
1.3
|
“
Annual Deferral Amount
” shall mean that portion of a Participant’s Base Salary, Bonus, Director Fees, LTI Awards and LTIP Amounts that a Participant defers in accordance with Article 3 for any one Plan Year, without regard to whether such amounts are withheld and credited during such Plan Year.
|
1.4
|
“
Annual Installment Method
” shall mean the method used to determine the amount of each payment due to a Participant who has elected to receive a benefit over a period of years in accordance with the applicable provisions of the Plan. The amount of each annual payment due to the Participant shall be calculated by multiplying the balance of the Participant’s benefit by a fraction, the numerator of which is one and the denominator of which is the remaining number of annual payments due to the Participant. The amount of the first annual payment shall be calculated as of the close of business on or around the Participant’s Benefit Distribution Date, and the amount of each subsequent annual payment shall be calculated on or around each anniversary of such Benefit Distribution Date. For purposes of this Plan, the right to receive a benefit payment in annual installments shall be treated as the entitlement to a single payment.
|
1.5
|
“
Base Salary
” shall mean the annual cash compensation relating to services performed during any calendar year, excluding distributions from nonqualified deferred compensation plans, bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments, non-monetary awards, director fees and other fees, and automobile and other allowances paid to a Participant for employment services rendered (whether or not such allowances are included in the Employee’s gross income). Base Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or nonqualified plans of any Employer and shall be calculated to include amounts not otherwise included in the Participant's gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by any Employer; provided, however, that all such amounts will be included in compensation only to the extent that had there been no such plan, the amount would have been payable in cash to the Employee.
|
1.6
|
“
Beneficiary
” shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article 10, that are entitled to receive benefits under this Plan upon the death of a Participant.
|
1.7
|
“
Beneficiary Designation Form
” shall mean the form established from time to time by the Committee that a Participant completes, signs and returns to the Committee to designate one or more Beneficiaries.
|
1.8
|
“
Benefit Distribution Date
” shall mean the date upon which all or an objectively determinable portion of a Participant’s vested benefits will become eligible for distribution. Except as otherwise provided in the Plan, a Participant’s Benefit Distribution Date shall be determined based on the earliest to occur of an event or scheduled date set forth in Articles 4 through 9, as applicable.
|
1.9
|
“
Board
” shall mean the board of directors of the Company.
|
1.10
|
“
Bonus
” shall mean any compensation, in addition to Base Salary, LTI Awards and LTIP Amounts, earned by a Participant under any Employer's annual bonus and cash incentive plans.
|
1.11
|
“
Change in Control
” shall mean the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of a corporation, as determined in accordance with this Section.
|
(a)
|
A “change in the ownership” of the applicable corporation shall occur on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of such corporation that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of such corporation, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(v). If a person or group is considered either to own more than 50% of the total fair market value or total voting power of the stock of such corporation, or to have effective control of such corporation within the meaning of part (b) of this Section, and such person or group acquires additional stock of such corporation, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the ownership” of such corporation.
|
(b)
|
A “change in the effective control” of the applicable corporation shall occur on either of the following dates:
|
(c)
|
A “change in the ownership of a substantial portion of the assets” of the applicable corporation shall occur on the date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the corporation immediately before such acquisition or acquisitions, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vii). A transfer of assets shall not be treated as a “change in the ownership of a substantial portion of the assets” when such transfer is made to an entity that is controlled by the shareholders of the transferor corporation, as determined in accordance with Treas. Reg. §1.409A- 3(i)(5)(vii)(B).
|
1.12
|
“
Code
” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time.
|
1.13
|
“
Committee
” shall mean the committee described in Article 13.
|
1.14
|
“
Company
” shall mean Dine Brands Global, Inc., a Delaware corporation, and any successor to all or substantially all of the Company’s assets or business.
|
1.15
|
“
Company Contribution Amount
” shall mean, for any one Plan Year, the amount determined in accordance with Section 3.4.
|
1.16
|
“
Director
” shall mean any member of the board of directors of any Employer.
|
1.17
|
“
Director Fees
” shall mean the annual fees earned by a Director from any Employer, including retainer fees and meetings fees, as compensation for serving on the board of directors.
|
1.18
|
“
Disability” or “Disabled
” shall mean that a Participant is either (a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (b) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Participant’s Employer. For purposes of this Plan, a Participant shall be deemed Disabled if determined to be totally disabled by the Social Security Administration. A Participant shall also be deemed Disabled if determined to be disabled in accordance with the applicable disability insurance program of such Participant’s Employer, provided that the definition of “disability” applied under such disability insurance program complies with the requirements of this Section.
|
1.19
|
“
Election Form
” shall mean the form, which may be in electronic format, established from time to time by the Committee that a Participant completes, signs and returns to the Committee to make an election under the Plan.
|
1.20
|
“
Employee
” shall mean a person who is an employee of an Employer.
|
1.21
|
“
Employer(s)
” shall be defined as follows:
|
(a)
|
Except as otherwise provided in part (b) of this Section, the term “Employer” shall mean the Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Board to participate in the Plan and have adopted the Plan as a sponsor.
|
(b)
|
For the purpose of determining whether a Participant has experienced a Separation from Service, the term “Employer” shall mean:
|
1.22
|
“
ERISA
” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.
|
1.23
|
“
401(k) Plan
” shall mean, with respect to an Employer, a plan qualified under Code Section 401(a) that contains a cash or deferral arrangement described in Code Section 401(k), adopted by the Employer, as it may be amended from time to time, or any successor thereto.
|
1.24
|
“
LTI Awards
” shall mean any portion of any compensation attributable to a Plan Year that is denominated in shares of Stock and is earned by a Participant under the Company’s Stock Incentive Plan or any other long-term incentive arrangement maintained by the Company or an Employer and designated by the Committee, and including restricted stock unit awards, performance awards, bonus share awards and any other awards granted by the Company, in each case to the extent deferral of such award is permitted by the Committee, but excluding any stock options and stock appreciation rights granted by the Company.
|
1.25
|
“
LTIP Amounts
” shall mean any portion of the compensation attributable to a Plan Year that is denominated in cash and is earned by a Participant under any long-term incentive arrangement maintained by the Company or an Employer and designated by the Committee, in each case to the extent deferral of such award is permitted by the Committee.
|
1.26
|
“
Participant
” shall mean any Employee or Director (a) who is selected to participate in the Plan, (b) whose executed Plan Agreement, Election Form and Beneficiary Designation Form are accepted by the Committee, and (c) whose Plan Agreement has not terminated.
|
1.27
|
“
Performance-Based Compensation
” shall mean compensation the entitlement to or amount of which is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(e).
|
1.28
|
“
Plan
” shall mean the Dine Brands Global, Inc. Nonqualified Deferred Compensation Plan, which shall be evidenced by this instrument, as it may be amended from time to time, and by any other documents that together with this instrument define a Participant’s rights to amounts credited to his or her Account Balance.
|
1.29
|
“
Plan Agreement
” shall mean a written agreement in the form prescribed by or acceptable to the Committee that evidences a Participant’s agreement to the terms of the Plan and which may establish additional terms or conditions of Plan participation for a Participant. Unless otherwise determined by the Committee, the most recent Plan Agreement accepted with respect to a Participant shall supersede any prior Plan Agreements for such Participant. Plan Agreements may vary among Participants and may provide additional benefits not set forth in the Plan or limit the benefits otherwise provided under the Plan.
|
1.30
|
“
Plan Year
” shall mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year.
|
1.31
|
“
Retirement,” “Retire(s)” or “Retired
” shall mean with respect to a Participant who is an Employee, a Separation from Service on or after date on which such Participant's age plus Years of Service equals at least 70, and shall mean with respect to a Participant who is a Director, a Separation from Service on or after the date the Director attains age 70. If a Participant is both an Employee and a Director and participates in the Plan in each capacity, (a) the determination of whether the Participant qualifies for Retirement as an Employee shall be made when the Participant experiences a Separation from Service as an Employee and such determination shall only apply to the applicable Account Balance established in accordance with Section 1.1 for amounts deferred under the Plan as an Employee, and (b) the determination of whether the Participant qualifies for Retirement as a Director shall be made at the time the Participant experiences a Separation from Service as a Director and such determination shall only apply to the applicable Account Balance established in accordance with Section 1.1 for amounts deferred under the Plan as a Director.
|
1.32
|
“
Separation from Service
” shall mean a termination of services provided by a Participant to his or her Employer, whether voluntarily or involuntarily, other than by reason of death or Disability, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(h). In determining whether a Participant has experienced a Separation from Service, the following provisions shall apply:
|
(a)
|
For a Participant who provides services to an Employer as an Employee, except as otherwise provided in part (c) of this Section, a Separation from Service shall occur when such Participant has experienced a termination of employment with such Employer. A Participant shall be considered to have experienced a termination of employment when the facts and circumstances indicate that the Participant and his or her Employer reasonably anticipate that either (i) no further services will be performed for the Employer after a certain date, or (ii) that the level of bona fide services the Participant will perform for the Employer after such date (whether as an Employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by such Participant (whether as an Employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Employer if the Participant has been providing services to the Employer less than 36 months).
|
(b)
|
If a Participant is on military leave, sick leave, or other bona fide leave of absence, the employment relationship between the Participant and the Employer shall be treated as continuing intact, provided that the period of such leave does not exceed 6 months, or if longer, so long as the Participant retains a right to reemployment with the Employer under an applicable statute or by contract. If the period of a military leave, sick leave, or other bona fide leave of absence exceeds 6 months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship shall be considered to be terminated for purposes of this Plan as of the first day immediately following the end of such 6-month period. In applying the provisions of this paragraph, a leave of absence shall be considered a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer.
|
(c)
|
Notwithstanding the foregoing provisions in part (a) of this Section, if a Participant provides services for an Employer as both an Employee and as a Director, to the extent permitted by Treas. Reg. §1.409A-1(h)(5) the services provided by such Participant as a Director shall not be taken into account in determining whether the Participant has experienced a Separation from Service as an Employee, and the services provided by such Participant as an Employee shall not be taken into account in determining whether the Participant has experienced a Separation from Service as a Director.
|
1.33
|
“
Specified Employee
” shall mean any Participant who is determined to be a “key employee” (as defined under Code Section 416(i) without regard to paragraph (5) thereof) for the applicable period, as determined annually by the Committee in accordance with Treas. Reg. §1.409A-1(i). In determining whether a Participant is a Specified Employee, the following provisions shall apply:
|
(a)
|
The Committee’s identification of the individuals who fall within the definition of “key employee” under Code Section 416(i) (without regard to paragraph (5) thereof) shall be based upon the 12-month period ending on each December 31st (referred to below as the “identification date”). In applying the applicable provisions of Code Section 416(i) to identify such individuals, “compensation” shall be determined in accordance with Treas. Reg. §1.415(c)-2; and
|
(b)
|
Each Participant who is among the individuals identified as a “key employee” in accordance with part (a) of this Section shall be treated as a Specified Employee for purposes of this Plan if such Participant experiences a Separation from Service during the 12-month period that begins on the April 1
st
following the applicable identification date.
|
1.34
|
“
Stock
” shall mean Dine Brands Global, Inc. common stock, $.01 par value, or any other equity securities or the Company as designated by the Committee.
|
1.35
|
“
Stock Incentive Plan
” shall mean the Company’s 2016 Stock Incentive Plan or any successor thereto.
|
1.36
|
“
Trust
” shall mean one or more trusts established by the Company in accordance with Article 16.
|
1.37
|
“
Unforeseeable Emergency
” shall mean a severe financial hardship of the Participant resulting from (a) an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary or the Participant’s dependent (as defined in Code Section 152 without regard to paragraphs (b)(1), (b)(2) and (d)(1)(b) thereof), (b) a loss of the Participant’s property due to casualty, or (c) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined by the Committee based on the relevant facts and circumstances.
|
1.38
|
“
Years of Service
” shall mean the total number of full years in which a Participant has been employed by one or more Employers. For purposes of this definition, a year of employment shall be a 365 day period (or 366 day period in the case of a leap year) that, for the first year of employment, commences on the Employee's date of hiring and that, for any subsequent year, commences on an anniversary of that hiring date. A partial year of employment shall not be treated as a Year of Service.
|
2.1
|
Selection by Committee
. Participation in the Plan shall be limited to Directors and, as determined by the Committee in its sole discretion, a select group of management or highly compensated Employees. From that group, the Committee shall select, in its sole discretion, those individuals who may actually participate in this Plan.
|
2.2
|
Enrollment and Eligibility Requirements; Commencement of Participation
.
|
(a)
|
As a condition to participation, each Director or selected Employee shall complete, execute and return to the Committee a Plan Agreement, an Election Form and a Beneficiary Designation Form by the deadline(s) established by the Committee in accordance with the applicable provisions of this Plan. In addition, the Committee shall establish from time to time such other enrollment requirements as it determines, in its sole discretion, are necessary.
|
(b)
|
Each Director or selected Employee who is eligible to participate in the Plan shall commence participation in the Plan on the date that the Committee determines that the Director or Employee has met all enrollment requirements set forth in this Plan and required by the Committee, including returning all required documents to the Committee within the specified time period.
|
(c)
|
If a Director or an Employee fails to meet all requirements established by the Committee within the period required, that Director or Employee shall not be eligible to participate in the Plan during such Plan Year.
|
3.1
|
Maximum Deferral
.
|
(a)
|
Annual Deferral Amount
. For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Salary, Bonus, LTI Awards, LTIP Amounts and/or Director Fees up to the following maximum percentages for each deferral elected; provided that the Committee may provide for lower or higher maximum percentages with respect to any particular award that is eligible for deferral.
|
Deferral
|
Maximum Percentage
|
Base Salary
|
80%
|
Bonus
|
100%
|
LTI Awards
|
100%
|
LTIP Amounts
|
100%
|
Director Fees
|
100%
|
(b)
|
Short Plan Year
. Notwithstanding the foregoing, if a Participant first becomes a Participant after the first day of a Plan Year, then to the extent required by Section 3.2 and Code Section 409A and related Treasury Regulations, the maximum amount of the Participant’s Base Salary, Bonus, LTI Awards, LTIP Amounts or Director Fees that may be deferred by the Participant for the Plan Year shall be determined by applying the percentages set forth in Section 3.1(a) to the portion of such compensation attributable to services performed after the date that the Participant’s deferral election is made.
|
3.2
|
Timing of Deferral Elections; Effect of Election Form
.
|
(a)
|
General Timing Rule for Deferral Elections
. Except as otherwise provided in this Section 3.2, in order for a Participant to make a valid election to defer Base Salary, Bonus, Director Fees, LTI Awards and/or LTIP Amounts, the Participant must submit an Election Form on or before the deadline established by the Committee, which in no event shall be later than the December 31
st
preceding the Plan Year in which such compensation will be earned.
|
(b)
|
Timing of Deferral Elections for Newly Eligible Plan Participants
. A Director or selected Employee who first becomes eligible to participate in the Plan on or after the beginning of a Plan Year, as determined in accordance with Treas. Reg. §1.409A- 2(a)(7)(ii) and the “plan aggregation” rules provided in Treas. Reg. §1.409A-1(c)(2), may be permitted to make an election to defer the portion of Base Salary, Bonus, Director Fees, LTI Awards and/or LTIP Amounts attributable to services to be performed after such election, provided that the Participant submits an Election Form on or before the deadline established by the Committee, which in no event shall be later than 30 days after the Participant first becomes eligible to participate in the Plan.
|
(c)
|
Timing of Deferral Elections for Performance-Based Compensation
. Subject to the limitations described below, the Committee may determine that an irrevocable deferral election for an amount that qualifies as Performance-Based Compensation may be made by submitting an Election Form on or before the deadline established by the Committee, which in no event shall be later than 6 months before the end of the performance period.
|
(d)
|
Timing Rule for Deferral of Compensation Subject to Risk of Forfeiture
. With respect to compensation (i) to which a Participant has a legally binding right to payment in a subsequent year, and (ii) that is subject to a forfeiture condition requiring the Participant’s continued services for a period of at least 12 months from the date the Participant obtains the legally binding right, the Committee may determine that an irrevocable deferral election for such compensation may be made by timely delivering an Election Form to the Committee in accordance with its rules and procedures, no later than the 30
th
day after the Participant obtains the legally binding right to the compensation, provided that the election is made at least 12 months in advance of the earliest date at which the forfeiture condition could lapse, as determined in accordance with Treas. Reg. §1.409A-2(a)(5) (which disregards accelerated vesting due to death, disability or a change in control event (as each term is defined under Section 409A of the Code), but not other acceleration events).
|
(e)
|
Timing Rule for Deferral of Unvested Compensation Subject to Five-Year Minimum Deferral
. With respect to compensation to which a Participant
has a legally binding right to a payment in a subsequent year that, absent a deferral election, would be treated as a short-term deferral within the meaning of Treas. Reg. §1.409A-1(b)(4),
the Committee may determine that an irrevocable deferral election for such compensation may be made by (A) timely delivering an Election Form to the Committee in accordance with its rules and procedures, at least 12 months in advance of the date on which the applicable forfeiture condition lapses and (B) electing a Benefit Distribution Date pursuant to Section 4.1 that is not less than five years after the date on which such forfeiture condition lapses; provided that the Benefit Distribution Date may accelerate due to the Participant’s death or Disability, an Unforeseeable Emergency or a Change in Control, to the extent provided under the Plan, the Participant’s Election Form and Section 409A of the Code. Such election shall be null and void if such forfeiture condition lapses within 12 months after the date the Participant delivers the Election Form to the Committee.
|
3.3
|
Withholding and Crediting of Annual Deferral Amounts
. For each Plan Year, the Base Salary portion of the Annual Deferral Amount shall be withheld from each regularly scheduled Base Salary payroll in equal amounts, as adjusted from time to time for increases and decreases in Base Salary. The Bonus, LTI Awards, LTIP Amounts and/or Director Fees portion of the Annual Deferral Amount shall be withheld at the time the Bonus, LTI Awards, LTIP Amounts or Director Fees are or otherwise would be paid to the Participant, whether or not this occurs during the Plan Year itself. Annual Deferral Amounts shall be credited to the Participant’s Annual Account for such Plan Year at the time such amounts would otherwise have been paid to the Participant.
|
3.4
|
Company Contribution Amount
.
|
(a)
|
For each Plan Year, an Employer may be required to credit amounts to a Participant’s Annual Account in accordance with employment or other agreements entered into between the Participant and the Employer, which amounts shall be part of the Participant’s Company Contribution Amount for that Plan Year. Such amounts shall be credited to the Participant’s Annual Account for the applicable Plan Year on the date or dates prescribed by such agreements.
|
(b)
|
For each Plan Year, an Employer, in its sole discretion, may, but is not required to, credit any amount it desires to any Participant’s Annual Account under this Plan, which amount shall be part of the Participant’s Company Contribution Amount for that Plan Year. The amount so credited to a Participant may be smaller or larger than the amount credited to any other Participant, and the amount credited to any Participant for a Plan Year may be zero, even though one or more other Participants receive a Company Contribution Amount for that Plan Year. The Company Contribution Amount described in this Section 3.4(b), if any, shall be credited to the Participant’s Annual Account for the applicable Plan Year on a date or dates to be determined by the Committee.
|
(c)
|
If not otherwise specified in the Participant’s employment or other agreement entered into between the Participant and the Employer, the amount (or the method or formula for determining the amount) of a Participant’s Company Contribution Amount shall be set forth in writing in one or more documents, which shall be deemed to be incorporated into this Plan in accordance with Section 1.27, no later than the date on which such Company Contribution Amount is credited to the applicable Annual Account of the Participant.
|
3.5
|
Vesting
.
|
(a)
|
A Participant shall at all times be 100% vested in the portion of his or her Account Balance attributable to Annual Deferral Amounts, plus amounts credited or debited on such amounts pursuant to Section 3.6.
|
(b)
|
A Participant shall be vested in the portion of his or her Account Balance attributable to any Company Contribution Amounts, plus amounts credited or debited on such amounts pursuant to Section 3.6, in accordance with the vesting schedule(s) set forth in his or her Plan Agreement, employment agreement or any other agreement entered into between the Participant and his or her Employer. If not addressed in such agreements, a Participant shall vest in the portion of his or her Account Balance attributable to any Company Contribution Amounts, plus amounts credited or debited on such amounts pursuant to Section 3.6, in accordance with the following schedule:
|
Years of Service
|
Vested Percentage
|
Less than 3 years
|
0%
|
3 years or more
|
100%
|
(c)
|
Notwithstanding anything to the contrary contained in this Section 3.5, but subject to the terms of a Participant’s Plan Agreement, employment agreement or other agreement entered into between the Participant and his or her Employer, in the event of a Change in Control, or upon a Participant’s Disability, Separation from Service on or after qualifying for Retirement, or death prior to Separation from Service, any amounts that are not vested in accordance with Section 3.5(b) above, shall immediately become 100% vested.
|
(d)
|
Notwithstanding any other provision of this Plan, if by reason of Section 280G of the Code any payment or benefit received or to be received by a Participant in connection with a Change in Control or the termination of the Participant's employment (whether payable pursuant to the terms of this Plan (“Plan Payments”) or any other plan, arrangements or agreement with the Company or an affiliate (collectively with the Plan Payments, “Total Payments”)) would not be deductible (in whole or part) by the Company, an affiliate or other person making such payment or providing such benefit, then the Total Payments shall be subject to reduction in accordance with the terms of the Company’s Amended and Restated Executive Severance and Change in Control Policy.
|
3.6
|
Crediting/Debiting of Account Balances
. In accordance with, and subject to, the rules and procedures that are established from time to time by the Committee, in its sole discretion, amounts shall be credited or debited to a Participant's Account Balance in accordance with the following rules:
|
(a)
|
Measurement Funds
. Subject to the restrictions found in Section 3.7(c) below, the Participant may elect one or more of the measurement funds selected by the Committee, in its sole discretion, which are based on certain mutual funds (the “Measurement Funds”), for the purpose of crediting or debiting additional amounts to his or her Account Balance. As necessary, the Committee may, in its sole discretion, discontinue, substitute or add a Measurement Fund. Each such action will take effect as of the first day of the first calendar quarter that begins at least 30 days after the day on which the Committee gives Participants advance written notice of such change.
|
(b)
|
Election of Measurement Funds
. Subject to the restrictions found in Section 3.7(c) below, a Participant, in connection with his or her initial deferral election in accordance with Section 3.2 above, shall elect, on the Election Form, one or more Measurement Fund(s) (as described in Section 3.6(a) above) to be used to determine the amounts to be credited or debited to his or her Account Balance. If a Participant does not elect any of the Measurement Funds as described in the previous sentence, the Participant’s Account Balance shall automatically be allocated into the lowest-risk Measurement Fund, as determined by the Committee, in its sole discretion. Subject to the restrictions found in Section 3.7(c) below, the Participant may (but is not required to) elect, by submitting an Election Form to the Committee that is accepted by the Committee, to add or delete one or more Measurement Fund(s) to be used to determine the amounts to be credited or debited to his or her Account Balance, or to change the portion of his or her Account Balance allocated to each previously or newly elected Measurement Fund. If an election is made in accordance with the previous sentence, it shall apply as of the first business day deemed reasonably practicable by the Committee, in its sole discretion, and shall continue thereafter for each subsequent day in which the Participant participates in the Plan, unless changed in accordance with the previous sentence. Notwithstanding the foregoing, the Committee, in its sole discretion, may impose limitations on the frequency with which one or more of the Measurement Funds elected in accordance with this Section 3.6(b) may be added or deleted by such Participant; furthermore, the Committee, in its sole discretion, may impose limitations on the frequency with which the Participant may change the portion of his or her Account Balance allocated to each previously or newly elected Measurement Fund.
|
(c)
|
Dine Brands Global, Inc. Stock Unit Fund
.
|
(d)
|
Proportionate Allocation
. In making any election described in Section 3.6(b) above, the Participant shall specify on the Election Form, in increments of one percent (1%), the percentage of his or her Account Balance or Measurement Fund, as applicable, to be allocated/reallocated.
|
(e)
|
Crediting or Debiting Method
. The performance of each Measurement Fund (either positive or negative) will be determined on a daily basis based on the manner in which such Participant’s Account Balance has been hypothetically allocated among the Measurement Funds by the Participant.
|
(f)
|
No Actual Investment
. Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant's election of any such Measurement Fund, the allocation of his or her Account Balance thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant's Account Balance shall not be considered or construed in any manner as an actual investment of his or her Account Balance in any such Measurement Fund. In the event that the Company or the Trustee (as that term is defined in the Trust), in its own discretion, decides to invest funds in any or all of the investments on which the Measurement Funds are based, no Participant shall have any rights in or to such investments themselves. Without limiting the foregoing, a Participant's Account Balance shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Company or the Trust; the Participant shall at all times remain an unsecured creditor of the Company.
|
3.7
|
FICA and Other Taxes
.
|
(a)
|
Annual Deferral Amounts
. For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant, the Participant’s Employer(s) shall withhold from that portion of the Participant’s Base Salary, Bonus, LTI Awards and/or LTIP Amounts that is not being deferred, in a manner determined by the Employer(s), the Participant’s share of FICA and other employment taxes on such Annual Deferral Amount. If necessary, the Committee may reduce the Annual Deferral Amount in order to comply with this Section 3.7.
|
(b)
|
Company Contribution Amounts
. When a Participant becomes vested in a portion of his or her Account Balance attributable to any Company Contribution Amounts, the Participant’s Employer(s) shall withhold from that portion of the Participant’s Base Salary, Bonus, LTI Awards and/or LTIP Amounts that is not deferred, in a manner determined by the Employer(s), the Participant’s share of FICA and other employment taxes on such amounts. If necessary, the Committee may reduce the vested portion of the Participant’s Company Contribution Amount, as applicable, in order to comply with this Section 3.7.
|
(c)
|
Distributions
. The Participant’s Employer(s), or the trustee of the Trust, shall withhold from any payments made to a Participant under this Plan all federal, state and local income, employment and other taxes required to be withheld by the Employer(s), or the trustee of the Trust, in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Employer(s) and the trustee of the Trust.
|
4.1
|
Scheduled Distributions
. In connection with each election to defer an Annual Deferral Amount, a Participant may elect to receive all or a specified portion of such Annual Deferral Amount, plus amounts credited or debited on that amount pursuant to Section 3.6, in the form of a lump sum payment (or, to the extent permitted by the Committee and elected by the Participant at the time of his or her deferral election, in the form of installments over a period of not more than five years), calculated as of the close of business on or around the Benefit Distribution Date designated by the Participant in accordance with this Section (a “Scheduled Distribution”). The Benefit Distribution Date for the amount subject to a Scheduled Distribution election shall be the first day of any Plan Year designated by the Participant, which may be no sooner than three Plan Years after the end of the Plan Year to which the Participant’s deferral election relates, unless otherwise provided on an Election Form approved by the Committee. The Committee may permit Participants to make separate distribution elections for each separate award or component of compensation deferred under the Plan.
|
4.2
|
Postponing Scheduled Distributions
. A Participant may elect to postpone a Scheduled Distribution described in Section 4.1 above, and have such amount paid out (or commence) during a 60 day period commencing immediately after an allowable alternative Benefit Distribution Date designated in accordance with this Section 4.2. In order to make such an election, the Participant must submit an Election Form to the Committee in accordance with the following criteria:
|
(a)
|
The election of the new Benefit Distribution Date shall have no effect until at least 12 months after the date on which the election is made;
|
(b)
|
The new Benefit Distribution Date selected by the Participant for such Scheduled Distribution must be the first day of a Plan Year that is no sooner than five years after the previously designated Benefit Distribution Date; and
|
(c)
|
The election must be made at least 12 months prior to the Participant's previously designated Benefit Distribution Date for such Scheduled Distribution.
|
4.3
|
Other Benefits Take Precedence Over Scheduled Distributions
. Should an event occur prior to any
Benefit Distribution Date designated for a Scheduled Distribution that would trigger a benefit under Articles 5 through 9, as applicable, all amounts subject to a Scheduled Distribution election shall be
paid in accordance with the other applicable provisions of the Plan and not in accordance with this Article 4.
|
4.4
|
Unforeseeable Emergencies
.
|
(a)
|
If a Participant experiences an Unforeseeable Emergency prior to the occurrence of a distribution event described in Articles 5 through 9, as applicable, the Participant may petition the Committee to receive a partial or full payout from the Plan. The payout, if any, from the Plan shall not exceed the lesser of (i) the Participant's vested Account Balance, calculated as of the close of business on or around the Benefit Distribution Date
for such payout, as determined by the Committee in accordance with provisions set forth below, or (ii) the amount necessary to satisfy the Unforeseeable Emergency, plus amounts necessary to pay Federal, state, or local income taxes or penalties reasonably anticipated as a result of the distribution. A Participant shall not be eligible to receive a payout from the Plan to the extent that the Unforeseeable Emergency is or may be relieved (A) through reimbursement or compensation by insurance or otherwise, (B) by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship or (C) by cessation of deferrals under this Plan.
|
(b)
|
A Participant’s deferral elections under this Plan shall also be cancelled to the extent the Committee determines that such action is required for the Participant to obtain a hardship distribution from an Employer’s 401(k) Plan pursuant to Treas. Reg. §1.401(k)-1(d)(3).
|
5.1
|
Change in Control Benefit
. A Participant, in connection with his or her commencement of participation in the Plan, shall have an opportunity to irrevocably elect to receive his or her vested Account Balance in the form of a lump sum payment in the event that a Change in Control occurs prior to the Participant’s Separation from Service, Disability or death (the “Change in Control Benefit”). The Benefit Distribution Date for the Change in Control Benefit, if any, shall be the date on which the Change in Control occurs.
|
5.2
|
Payment of Change in Control Benefit
.
The Change in Control Benefit, if any, shall be calculated as of the close of business on or around the Participant’s Benefit Distribution Date, as determined by the Committee, and paid to the
Participant
no
later
than
60 days
after
the Participant’s Benefit Distribution Date.
|
6.1
|
Retirement Benefit
.
|
(a)
|
If a Participant experiences a Separation from Service that qualifies as a Retirement, the Participant shall be eligible to receive his or her vested Account Balance in either a lump sum or annual installment payments, as elected by the Participant in accordance with Section 6.2 (the “Retirement Benefit”). A Participant’s Retirement Benefit shall be calculated as of the close of business on or around the applicable Benefit Distribution Date for such benefit, which shall be (i) the first day after the end of the 6-month period immediately following the date on which the Participant experiences such Separation from Service if the Participant is a Specified Employee, and (ii) for all other Participants, the date on which the Participant experiences a Separation from Service; provided, however, if a Participant changes the form of distribution for one or more Annual Accounts in accordance with Section 6.2(b), the Benefit Distribution Date for the Annual Account(s) subject to such change shall be determined in accordance with Section 6.2(b).
|
(b)
|
Notwithstanding Section 6.1(a), if a Participant elected to defer compensation pursuant to Section 3.2(e) of the Plan, the Benefit Distribution Date shall not occur earlier than the date determined pursuant to Section 3.2(e) (i.e., the 5
th
anniversary of the applicable vesting date, the Participant’s death or Disability, an Unforeseeable Emergency or a Change in Control), except to the extent otherwise permitted under Section 409A of the Code.
|
6.2
|
Payment of Retirement Benefit
.
|
(a)
|
In connection with a Participant’s election to defer an Annual Deferral Amount, the Participant shall elect the form in which his or her Annual Account for such Plan Year will be paid. The Participant may elect to receive each Annual Account in the form of a lump sum or pursuant to an Annual Installment Method of 5 years. If a Participant does not make any election with respect to the payment of an Annual Account, then the Participant shall be deemed to have elected to receive such Annual Account as a lump sum.
|
(b)
|
A Participant may change the form of payment for an Annual Account by submitting an Election Form to the Committee in accordance with the following criteria:
|
(c)
|
The lump sum payment shall be made, or installment payments shall commence, no later than 60 days after the applicable Benefit Distribution Date. Remaining installments, if any, shall continue in accordance with the Participant’s election for each Annual Account and shall be paid no later than 60 days after each anniversary of the Benefit Distribution Date.
|
7.1
|
Termination Benefit
. If a Participant experiences a Separation from Service that does not qualify as a Retirement, the Participant shall receive his or her vested Account Balance in the form of a lump sum payment (the “Termination Benefit”); provided that the Committee may, in its sole discretion, permit a Participant to elect to receive his or her Termination Benefit in the form of installments in accordance with Section 6.2, as though the Participant was eligible for Retirement. A Participant’s Termination Benefit shall be calculated as of the close of business on or around the Benefit Distribution Date for such benefit, which shall be (i) the first day after the end of the 6-month period immediately following the date on which the Participant experiences such Separation from Service if the Participant is a Specified Employee, and (ii) for all other Participants, the date on which the Participant experiences a Separation from Service.
|
7.2
|
Payment of Termination Benefit
. The Termination Benefit shall be paid, or installment payments shall commence, to the Participant no later than 60 days after the Participant’s Benefit Distribution Date. Notwithstanding this Section 7.2, if a Participant elected to defer compensation pursuant to Section 3.2(e) of the Plan, the Benefit Distribution Date shall not occur earlier than the date determined pursuant to Section 3.2(e) (i.e., the 5
th
anniversary of the applicable vesting date, the Participant’s death or Disability, an Unforeseeable Emergency or a Change in Control) except to the extent otherwise permitted under Section 409A of the Code.
|
8.1
|
Disability Benefit
. If a Participant becomes Disabled prior to the occurrence of a distribution event described in Articles 5 through 7, as applicable, the Participant shall receive his or her vested Account Balance in the form of a lump sum payment (the “Disability Benefit”); provided that the Committee may, in its sole discretion, permit a Participant to elect to receive his or her Disability Benefit in the form of installments in accordance with Section 6.2, as though the Participant was eligible for Retirement. The Disability Benefit shall be calculated as of the close of business on or around the Participant’s Benefit Distribution Date for such benefit, which shall be the date on which the Participant becomes Disabled.
|
8.2
|
Payment of Disability Benefit
. The Disability Benefit shall be paid, or installment payments shall commence, to the Participant no later than 60 days after the Participant’s Benefit Distribution Date.
|
9.1
|
Death Benefit
. In the event of a Participant’s death prior to the complete distribution of his or her vested Account Balance, the Participant's Beneficiary(ies) shall receive the Participant's unpaid vested Account Balance in a lump sum payment (the “Death Benefit”); provided that the Committee may, in its sole discretion, permit a Participant to elect to receive his or her Death Benefit in the form of installments in accordance with Section 6.2, as though the Participant was eligible for Retirement. The Death Benefit shall be calculated as of the close of business on or around the Benefit Distribution Date for such benefit, which shall be the date on which the Committee is provided with proof that is satisfactory to the Committee of the Participant’s death.
|
9.2
|
Payment of Death Benefit
. The Death Benefit shall be paid, or installment payments shall commence, to the Participant’s Beneficiary(ies) no later than 60 days after the Participant’s Benefit Distribution Date.
|
10.1
|
Beneficiary
. Each Participant shall have the right, at any time, to designate his or her Beneficiary(ies) (both primary as well as contingent) to receive any benefits payable under the Plan to a beneficiary upon the death of a Participant. The Beneficiary designated under this Plan may be the same as or different from the Beneficiary designation under any other plan of an Employer in which the Participant participates.
|
10.2
|
Beneficiary Designation; Change; Spousal Consent
. A Participant shall designate his or her Beneficiary by completing and signing the Beneficiary Designation Form, and returning it to the Committee or its designated agent. A Participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Committee's rules and procedures, as in effect from time to time. If the Participant names someone other than his or her spouse as a Beneficiary, the Committee may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Committee, executed by such Participant's spouse and returned to the Committee. Upon the acceptance by the Committee of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be canceled. The Committee shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Committee prior to his or her death.
|
10.3
|
Acknowledgment
. No designation or change in designation of a Beneficiary shall be effective until received and acknowledged in writing by the Committee or its designated agent.
|
10.4
|
No Beneficiary Designation
. If a Participant fails to designate a Beneficiary as provided in Sections 10.1, 10.2 and 10.3 above or, if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then the Participant's designated Beneficiary shall be deemed to be his or her surviving spouse. If the Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a Beneficiary shall be payable to the executor or personal representative of the Participant's estate.
|
10.5
|
Doubt as to Beneficiary
. If the Committee has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the Committee shall have the right, exercisable in its discretion, to cause the Participant's Employer to withhold such payments until this matter is resolved to the Committee's satisfaction.
|
10.6
|
Discharge of Obligations
. The payment of benefits under the Plan to a Beneficiary shall fully and completely discharge all Employers and the Committee from all further obligations under this Plan with respect to the Participant, and that Participant's Plan Agreement shall terminate upon such full payment of benefits.
|
11.1
|
Paid Leave of Absence
. If a Participant is authorized by the Participant's Employer to take a paid leave of absence from the employment of the Employer, and such leave of absence does not constitute a Separation from Service, (a) the Participant shall continue to be considered eligible for the benefits provided under the Plan, and (b) the Annual Deferral Amount shall continue to be withheld during such paid leave of absence in accordance with Section 3.2.
|
11.2
|
Unpaid Leave of Absence
. If a Participant is authorized by the Participant's Employer to take an unpaid leave of absence from the employment of the Employer for any reason, and such leave of absence does not constitute a Separation from Service, such Participant shall continue to be eligible for the benefits provided under the Plan. During the unpaid leave of absence, the Participant shall not be allowed to make any additional deferral elections. However, if the Participant returns to employment, the Participant may elect to defer an Annual Deferral Amount for the Plan Year following his or her return to employment and for every Plan Year thereafter while a Participant in the Plan, provided such deferral elections are otherwise allowed and an Election Form is delivered to and accepted by the Committee for each such election in accordance with Section 3.2 above.
|
12.1
|
Termination of Plan
. Although each Employer anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that any Employer will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, each Employer reserves the right to terminate the Plan with respect to all of its Participants. In the event of a Plan termination no new deferral elections shall be permitted for the affected Participants and such Participants shall no longer be eligible to receive new company contributions. However, after the Plan termination the Account Balances of such Participants shall continue to be credited with Annual Deferral Amounts attributable to a deferral election that was in effect prior to the Plan termination to the extent deemed necessary to comply with Code Section 409A and related Treasury Regulations, and additional amounts shall continue to credited or debited to such Participants’ Account Balances pursuant to Section 3.6. The Measurement Funds available to Participants following the termination of the Plan shall be comparable in number and type to those Measurement Funds available to Participants in the Plan Year preceding the Plan Year in which the Plan termination is effective. In addition, following a Plan termination, Participant Account Balances shall remain in the Plan and shall not be distributed until such amounts become eligible for distribution in accordance with the other applicable provisions of the Plan. Notwithstanding the preceding sentence, to the extent permitted by Treas. Reg. §1.409A-3(j)(4)(ix), the Employer may provide that upon termination of the Plan, all Account Balances of the Participants shall be distributed, subject to and in accordance with any rules established by such Employer deemed necessary to comply with the applicable requirements and limitations of Treas. Reg. §1.409A-3(j)(4)(ix).
|
12.2
|
Amendment
. Any Employer may, at any time, amend or modify the Plan in whole or in part with respect to that Employer. Notwithstanding the foregoing, no amendment or modification shall be effective to decrease the value of a Participant's vested Account Balance in existence at the time the amendment or modification is made.
|
12.3
|
Plan Agreement
. Despite the provisions of Sections 12.1, if a Participant's Plan Agreement contains benefits or limitations that are not in this Plan document, the Employer may only amend or terminate such provisions with the written consent of the Participant.
|
12.4
|
Effect of Payment
. The full payment of the Participant’s vested Account Balance in accordance with the applicable provisions of the Plan shall completely discharge all obligations to a Participant and his or her designated Beneficiaries under this Plan, and the Participant's Plan Agreement shall terminate.
|
13.1
|
Committee Duties
. Except as otherwise provided in this Article 13, this Plan shall be administered by a Committee, which shall consist of the Board, or such committee as the Board shall appoint. Members of the Committee may be Participants under this Plan. The Committee shall also have the discretion and authority to (a) make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan, and (b) decide or resolve any and all questions, including benefit entitlement determinations and interpretations of this Plan, as may arise in connection with the Plan. Any individual serving on the Committee who is a Participant shall not vote or act on any matter relating solely to himself or herself. When making a determination or calculation, the Committee shall be entitled to rely on information furnished by a Participant or the Company.
|
13.2
|
Administration Upon Change In Control
. Within 120 days following a Change in Control, the individuals who comprised the Committee immediately prior to the Change in Control (whether or not such individuals are members of the Committee following the Change in Control) may, by written consent of the majority of such individuals, appoint an independent third party administrator (the “Administrator”) to perform any or all of the Committee’s duties described in Section 13.1 above, including without limitation, the power to determine any questions arising in connection with the administration or interpretation of the Plan, and the power to make benefit entitlement determinations. Upon and after the effective date of such appointment, (a) the Company must pay all reasonable administrative expenses and fees of the Administrator, and (b) the Administrator may only be terminated with the written consent of the majority of Participants with an Account Balance in the Plan as of the date of such proposed termination.
|
13.3
|
Agents
. In the administration of this Plan, the Committee or the Administrator, as applicable, may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel.
|
13.4
|
Binding Effect of Decisions
. The decision or action of the Committee or Administrator, as applicable, with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.
|
13.5
|
Indemnity of Committee
. All Employers shall indemnify and hold harmless the members of the Committee, any Employee to whom the duties of the Committee may be delegated, and the Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Committee, any of its members, any such Employee or the Administrator.
|
13.6
|
Employer Information
. To enable the Committee and/or Administrator to perform its functions, the Company and each Employer shall supply full and timely information to the Committee and/or Administrator, as the case may be, on all matters relating to the Plan, the Trust, the Participants and
their Beneficiaries, the Account Balances
of
the
Participants,
the
compensation
of
its Participants, the date and circumstances of the Separation from Service, Disability or death of its Participants, and
such
other
pertinent
information
as
the
Committee
or
Administrator
may reasonably require.
|
14.1
|
Coordination with Other Benefits
. The benefits provided for a Participant and Participant's Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Participant's Employer. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.
|
15.1
|
Presentation of Claim
. Any Participant or Beneficiary of
a
deceased
Participant
(such Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the Committee a
written claim for a determination with respect to the amounts distributable to such Claimant from the Plan. If such a claim relates to the contents of a notice received by the Claimant, the claim must be
made within 60 days after such notice was received by the Claimant. All other claims must be made within 180 days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.
|
15.2
|
Notification of Decision
. The Committee shall consider a Claimant's claim within a reasonable time, but no later than 90 days after receiving the claim. If the Committee determines that special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial 90 day period. In no event shall such extension exceed a period of 90 days from the end of the initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Committee expects to render the benefit determination. The Committee shall notify the Claimant in writing:
|
(a)
|
that the Claimant's requested determination has been made, and that the claim has been allowed in full; or
|
(b)
|
that the Committee has reached a conclusion contrary, in whole or in part, to the Claimant's requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:
|
15.3
|
Review of a Denied Claim
. On or before 60 days after receiving a notice from the Committee that a claim has been denied, in whole or in part, a Claimant (or the Claimant's duly authorized representative) may file with the Committee a written request for a review of the denial of the claim. The Claimant (or the Claimant's duly authorized representative):
|
(a)
|
may, upon request and free of charge, have reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claim for benefits;
|
(b)
|
may submit written comments or other documents; and/or
|
(c)
|
may request a hearing, which the Committee, in its sole discretion, may grant.
|
15.4
|
Decision on Review
. The Committee shall render its decision on review promptly, and no later than 60 days after the Committee receives the Claimant’s written request for a review of the denial of the claim. If the Committee determines that special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial 60 day period. In no event shall such extension exceed a period of 60 days from the end of the initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Committee expects to render the benefit determination. In rendering its decision, the Committee shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The decision must be written in a manner calculated to be understood by the Claimant, and it must contain:
|
(a)
|
specific reasons for the decision;
|
(b)
|
specific reference(s) to the pertinent Plan provisions upon which the decision was based;
|
(c)
|
a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for benefits; and
|
(d)
|
a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a).
|
15.5
|
Legal Action
. A Claimant's compliance with the foregoing provisions of this Article 15 is a mandatory prerequisite to a Claimant's right to commence any legal action with respect to any claim for benefits under this Plan.
|
16.1
|
Establishment of the Trust
. In order to provide assets from which to fulfill its obligations to the Participants and their Beneficiaries under the Plan, the Company may establish a trust by a trust agreement with a third party, the trustee, to which each Employer may, in its discretion, contribute cash or other property, including securities issued by the Company, to provide for the benefit payments under the Plan (the “Trust”).
|
16.2
|
Interrelationship of the Plan and the Trust
. The provisions of the Plan and the Plan Agreement shall govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust shall govern the rights of the Employers, Participants and the creditors of the Employers to the assets transferred to the Trust. Each Employer shall at all times remain liable to carry out its obligations under the Plan.
|
16.3
|
Distributions From the Trust
. Each Employer's obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution shall reduce the Employer's obligations under this Plan.
|
17.1
|
Status of Plan
. The Plan is intended to be a plan that is not qualified within the meaning of Code Section 401(a) and that “is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted (a) to the extent possible in a manner consistent with the intent described in the preceding sentence, and (b) in accordance with Code Section 409A and related Treasury guidance and Regulations.
|
17.2
|
Unsecured General Creditor
. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of an Employer. For purposes of the payment of benefits under this Plan, any and all of an Employer's assets shall be, and remain, the general, unpledged unrestricted assets of the Employer. An Employer's obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.
|
17.3
|
Employer's Liability
. An Employer's liability for the payment of benefits shall be defined only by the Plan and the Plan Agreement, as entered into between the Employer and a Participant. An Employer shall have no obligation to a Participant under the Plan except as expressly provided in the Plan and his or her Plan Agreement.
|
17.4
|
Nonassignability
. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non- transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.
|
17.5
|
Not a Contract of Employment
. The terms and conditions of this Plan shall not be deemed to constitute a contract of
employment
between
any
Employer
and
the
Participant.
Such employment is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, unless expressly provided in a written employment agreement. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of any Employer, either as an Employee or a
Director, or to interfere with the right of any Employer
to
discipline or discharge the Participant at any time.
|
17.6
|
Furnishing Information
. A Participant or his or her Beneficiary will cooperate with the Committee by furnishing any and all information requested by the Committee and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder, including but not limited to taking such physical examinations as the Committee may deem necessary.
|
17.7
|
Terms
. Whenever any words are used herein in the masculine, they shall be construed as though they were in the feminine in all cases where they would so apply; and whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.
|
17.8
|
Captions
. The captions of the articles, sections and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.
|
17.9
|
Governing Law
. Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the internal laws of the State of California without regard to its conflicts of laws principles.
|
17.10
|
Notice
. Any notice or filing required or permitted to be given to the Committee under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:
|
Dine Brands Global, Inc.
|
Attn: General Counsel
|
450 N. Brand Blvd.
|
Glendale, CA 91203
|
17.11
|
Successors
. The provisions of this Plan shall bind and inure to the benefit of the Participant's Employer and its successors and assigns and the Participant and the Participant's designated Beneficiaries.
|
17.12
|
Spouse's Interest
. The interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant shall automatically pass to the Participant and shall not be transferable by
such spouse in any manner, including but not limited to such spouse's will, nor shall such interest pass under the laws of intestate succession.
|
17.13
|
Validity
. In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.
|
17.14
|
Incompetent
. If the Committee determines in its discretion that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling the disposition of that person's property, the Committee may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Committee may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Participant and the Participant's Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount.
|
17.15
|
Domestic Relations Orders
. If necessary to comply with a domestic relations order, as defined in Code Section 414(p)(1)(B), pursuant to which a court has determined that a spouse or former spouse of a Participant has an interest in the Participant’s benefits under the Plan, the Committee shall have the right to immediately distribute the spouse’s or former spouse’s interest in the Participant’s benefits under the Plan to such spouse or former spouse.
|
17.16
|
Distribution in the Event of Income Inclusion Under Code Section 409A
If any portion of a Participant’s Account Balance under this Plan is required to be included in income by the Participant prior to receipt due to a failure of this Plan to comply with the requirements of Code Section 409A and related Treasury Regulations, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of (i) the portion of his or her Account Balance required to be included in income as a result of the failure of the Plan to comply with the requirements of Code Section 409A and related Treasury Regulations, or (ii) the unpaid vested Account Balance.
|
17.17
|
Deduction Limitation on Benefit Payments
. If an Employer reasonably anticipates that the Employer’s deduction with respect to any distribution from this Plan would be limited or eliminated by application of Code Section 162(m), then to the extent permitted by Treas. Reg. §1.409A-2(b)(7)(i), payment shall be delayed as deemed necessary to ensure that the entire amount of any distribution from this Plan is deductible. Any amounts for which distribution is delayed pursuant to this Section shall continue to be credited/debited with additional amounts in accordance with Section 3.6. The delayed amounts (and any amounts credited thereon) shall be distributed to the Participant (or his or her Beneficiary in the event of the Participant’s death) at the earliest date the Employer reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m). In the event that such date is determined to be after a Participant’s Separation from Service and the Participant to whom the payment relates is determined to be a Specified Employee, then to the extent deemed necessary to comply with Treas. Reg. §1.409A-3(i)(2), the delayed payment shall not made before the end of the six-month period following such Participant’s Separation from Service.
|
1.
|
Section 6.2(a) is hereby amended in its entirety to read as follows:
|
(a)
|
In connection with a Participant’s election to defer an Annual Deferral Amount, the Participant shall elect the form in which his or her Annual Account for such Plan Year will be paid. The Participant may elect to receive each Annual Account in the form of a lump sum or pursuant to an Annual Installment Method of 10 years (or such other period of installments as set forth in the applicable Election Form, as permitted by the Company for the applicable Plan Year). If a Participant does not make any election with respect to the payment of an Annual Account, then the Participant shall be deemed to have elected to receive such Annual Account as a lump sum.
|
Name of Entity
|
State or Other
Jurisdiction of
Incorporation or
Organization
|
Dine Brands Global, Inc.
|
DE
|
DineEquity International, Inc.
|
DE
|
International House of Pancakes, LLC
|
DE
|
III Industries of Canada, LTD.
|
Canada
|
IHOP of Canada ULC
|
Canada
|
IHOP TPGC, LLC
|
OH
|
IHOP SPV Guarantor, LLC
|
DE
|
IHOP Funding, LLC
|
DE
|
IHOP Restaurants, LLC
|
DE
|
IHOP Franchisor, LLC
|
DE
|
IHOP Property, LLC
|
DE
|
IHOP Leasing, LLC
|
DE
|
ACM Cards, Inc.
|
FL
|
Applebee's Brazil, LLC
|
KS
|
Applebee's Canada Corp.
|
Canada
|
Applebee's International, Inc.
|
DE
|
Applebee's Investments, LLC
|
KS
|
Applebee's Restaurantes De Mexico S.de R.L. de C.V.
|
Mexico
|
Applebee's UK, LLC
|
KS
|
Applebee's Restaurant Holdings, LLC
|
DE
|
Applebee's Restaurants Kansas, LLC
|
KS
|
Applebee's Restaurants Mid-Atlantic, LLC
|
DE
|
Applebee's Restaurants North, LLC
|
DE
|
Applebee's Restaurants Texas, LLC
|
TX
|
Applebee's Restaurants Vermont, Inc.
|
VT
|
Applebee's Restaurants West, LLC
|
DE
|
Applebee's Restaurants, Inc.
|
KS
|
Applebee's Services, Inc.
|
KS
|
Applebee's SPV Guarantor, LLC
|
DE
|
Applebee's Funding, LLC
|
DE
|
Applebee's Restaurants LLC
|
DE
|
Applebee's Franchisor LLC
|
DE
|
Gourmet Systems of Brazil, LLC
|
KS
|
Gourmet Systems of Massachusetts, LLC
|
MA
|
Gourmet Systems of New York, Inc.
|
NY
|
Gourmet Systems of Tennessee, Inc.
|
TN
|
Gourmet Systems USA, LLC
|
KS
|
Neighborhood Insurance, Inc.
|
VT
|
Shanghai Applebee's Restaurant Management Co. LTD.
|
Xuhui District, Puxi, China
|
DineEquity Foundation, Inc. (dba The Heidi Fund, Inc.)
|
KS
|
DineEquity Philippines Holdings, Inc.
|
Philippines
|
•
|
Form S-8 No. 333-71768 pertaining to the IHOP Corp. 2001 Stock Incentive Plan of DineEquity, Inc. and Subsidiaries
|
•
|
Form S-8 No. 333-151682 pertaining to the DineEquity, Inc. 2001 Stock Incentive Plan of DineEquity, Inc. and Subsidiaries
|
•
|
Form S-8 No. 333-174847 pertaining to the DineEquity, Inc. 2011 Stock Incentive Plan
|
•
|
Form S-8 No. 333- 211429 pertaining to Dine Brands Global, Inc. 2016 Stock Incentive Plan
|
Dated:
|
21st day of February, 2019
|
/s/ Stephen P. Joyce
|
|
|
Stephen P. Joyce
Chief Executive Officer
(Principal Executive Officer)
|
Dated:
|
21st day of February, 2019
|
/s/ Thomas H. Song
|
|
|
Thomas H. Song
Chief Financial Officer
(Principal Financial Officer)
|
Dated:
|
21st day of February, 2019
|
/s/ Stephen P. Joyce
|
|
|
Stephen P. Joyce
Chief Executive Officer
(Principal Executive Officer)
|
Dated:
|
21st day of February, 2019
|
/s/ Thomas H. Song
|
|
|
Thomas H. Song
Chief Financial Officer
(Principal Financial Officer)
|