IHOP 2008 Annual Report Download - page 90

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DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
1. The Company
The Company was incorporated under the laws of the State of Delaware in 1976 with the name
IHOP Corp. Effective June 2, 2008, the name of the Company was changed to DineEquity, Inc. The
Company owns and operates two restaurant concepts: Applebee’s Neighborhood Grill and Bar, or
Applebee’s in the bar and grill segment of the casual dining category of the restaurant industry , and
International House of Pancakes, or IHOP in the family dining category of the restaurant industry .
The first International House of Pancakes restaurant opened in 1958 in Toluca Lake, California. Shortly
thereafter the Company’s predecessor began developing and franchising additional restaurants. As of
December 31, 2008, there were a total of 1,396 IHOP restaurants of which 1,225 were subject to
franchise agreements, 160 were subject to area license agreements and 11 were company-operated
restaurants. IHOP restaurants are located in 49 states in the United States, and internationally in
Canada and Mexico.
In November 2007, the Company completed the acquisition of Applebee’s International, Inc.
(‘‘Applebee’s’’), which became a wholly owned subsidiary of the Company. As of December 31, 2008,
franchisees operated 1,598 of these restaurants and 406 restaurants were company-operated. The
restaurants were located in 49 states, 16 countries outside of the United States and one U.S. territory.
References herein to Applebee’s and IHOP restaurants are to these two restaurant concepts,
whether operated by franchisees or the Company. Retail sales at restaurants that are owned by
franchisees and area licensees are not attributable to the Company.
2. Basis of Presentation and Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of DineEquity, Inc. and its wholly
owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
However, the subsidiaries have not guaranteed the obligations of the Company, and the assets of the
subsidiaries generally are not available to pay creditors of the Company. Also, the Company has not
guaranteed the obligations of the subsidiaries, and the assets of the Company generally are not
available to pay creditors of the subsidiaries.
Fiscal Periods
The Company has a 52/53 week fiscal year that ends on the Sunday nearest to December 31 of
each year. For convenience, the Company refers to all fiscal years as ending on December 31 and fiscal
quarters as ending on March 31, June 30 and September 30. The 2008, 2007 and 2006 fiscal years
presented herein ended December 28, 2008, December 30, 2007, and December 31, 2006, respectively,
and each contained 52 weeks.
Reclassifications
Certain reclassifications have been made to prior year information to conform to the fiscal 2008
presentation. The most significant reclassifications are (i) the 2008 presentation of Series B Preferred
Stock at accreted value of $35.2 million as of December 31, 2007 as compared to par value of $35,000
as originally reported in the 2007 Form 10-K, with an offsetting reclassification to additional paid in
capital, and (ii) discontinued operations acquired with Applebee’s and reported as such in the 2007
Form 10-K have been reclassified into their discrete line items in the Consolidated Balance Sheet and
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