IHOP 2009 Annual Report Download - page 93
Download and view the complete annual report
Please find page 93 of the 2009 IHOP annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1 -
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44
-
45
-
46
-
47
-
48
-
49
-
50
-
51
-
52
-
53
-
54
-
55
-
56
-
57
-
58
-
59
-
60
-
61
-
62
-
63
-
64
-
65
-
66
-
67
-
68
-
69
-
70
-
71
-
72
-
73
-
74
-
75
-
76
-
77
-
78
-
79
-
80
-
81
-
82
-
83 -
84 -
85 -
86 -
87 -
88 -
89 -
90 -
91 -
92 -
93 -
94 -
95 -
96 -
97 -
98 -
99 -
100 -
101 -
102 -
103 -
104
-
105
-
106
-
107
-
108
-
109
-
110
-
111
-
112
-
113
-
114
-
115
-
116
-
117
-
118
-
119
-
120
-
121
-
122
-
123
-
124
-
125
-
126
-
127
-
128
-
129
-
130
-
131
-
132
-
133
-
134
-
135
-
136
-
137
-
138
-
139
-
140
-
141
-
142
-
143
-
144
-
145
-
146
-
147
-
148
-
149
-
150
-
151
-
152
-
153
-
154
-
155
-
156
-
157
-
158
-
159
-
160
-
161
-
162
-
163
-
164
-
165
-
166
-
167
-
168
-
169
-
170
-
171
-
172
-
173
-
174
 |
 |
At December 31, 2009, we had $125.0 million of variable rate debt. If the interest on our variable
rate debt were to increase or decrease by 1% for the year, annual interest expense would increase or
decrease by approximately $1.25 million based on the amount of outstanding variable rate debt at
December 31, 2009.
Commodity Prices
Many of the food products purchased by us and our franchisees and area licensees are affected by
commodity pricing and are, therefore, subject to unpredictable price volatility. Extreme changes in
commodity prices and/or long-term changes could affect our franchisees, area licensees and company-
operated restaurants adversely. We expect that, in most cases, the IHOP and Applebee’s systems would
be able to pass increased commodity prices through to our consumers via increases in menu prices.
From time to time, competitive circumstances could limit short-term menu price flexibility, and in those
cases, margins would be negatively impacted by increased commodity prices. We believe that any
changes in commodity pricing that cannot be adjusted for by changes in menu pricing or other
strategies would not be material to our financial condition, results of operations or cash flows.
In February 2009, the Company and owners of Applebee’s and IHOP franchise restaurants formed
Centralized Supply Chain Services, LLC (‘‘CSCS’’ or the ‘‘Co-op’’) to manage procurement activities
for the Applebee’s and IHOP restaurants choosing to join the Co-op. We believe the larger scale
created by combining the supply chain requirements of both brands under one organization can provide
cost savings and efficiency in the purchasing function. As of December 31, 2009, 100% of Applebee’s
franchise restaurants and over 95% of IHOP franchise restaurants are members of CSCS. While the
majority of the food products utilized by IHOP and Applebee’s systems are sourced through CSCS, in
some instances, we enter into commitments to purchase food and other items on behalf of the IHOP
and Applebee’s systems. None of these food product contracts or agreements is a derivative instrument.
At December 31, 2009, our outstanding purchase commitments for food products were less than
$1 million.
74