IHOP 2008 Annual Report Download - page 5
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3
a signicantly reduced level of spending a full two years
earlier than our previous expectations, while allowing for a
generous amount of maintenance capital required to service
our remaining Applebee’s company-operated restaurants.
Due to the strength of the Applebee’s and IHOP franchise
systems, DineEquity generates a signicant amount of
cash each year to meet our obligations and comfortably
run our business. Through a combination of refranchising
and sale-leaseback proceeds, rental obligation assignments,
and the use of free cash ow to retire debt, DineEquity
reduced its leverage levels by approximately $500 million
in 2008. Our plans for 2009 include more of the same with
the use of refranchising proceeds for further debt reduction
as well as the allocation of a signicant proportion of excess
free cash ow toward opportunistic debt retirement. We
believe this to be a prudent step that is expected to maximize
our nancial exibility and create value for shareholders.
With these proactive steps and by executing our plan for
2009, we are condent that we will remain in compliance
with our debt covenants. We also understand the sensitivities
inherent in our business model and the actions we can take
to remain in compliance, should the economic environment
deteriorate beyond what we contemplate in our 2009
operating plan.
Who We Are is How We Win
We have maximized our nancial exibility in a prudent
way and are now focused on moving forward in 2009,
executing our strategic agenda for the Applebee’s and
IHOP brands. I am very proud of the progress we are
making in revitalizing and restructuring the Applebee’s
business. We have a strong management team in place,
a tireless employee base, and franchisees who are dedicated
to our vision of becoming number one in grill & bar. The
resilient, sustainable momentum present within the
IHOP system remains a testament to what an organization
can achieve when it executes consistently and passionately
toward a vision to be number one.
It has been a little more than a year since we closed the
acquisition of Applebee’s. The economic environment has
certainly changed and is, undoubtedly, a challenging one.
Despite that, we delivered on our key commitments for 2008
and are committed to do the same in 2009 by focusing on
those things we can control while remaining dedicated to
our strategic growth agendas for Applebee’s and IHOP. These
are our core operating principles that exemplify “who we
are is how we win.” We are a nimble, responsive team with
an unwavering focus on managing our business for the long
term. Thank you to our Board members, our franchisees
and all of our employees for their dedication — and, most
of all to you, our shareholders, for your continued support.
Sincerely,
Julia A. Stewart
Chairman and Chief Executive Ofcer
DineEquity, Inc.