IHOP 2010 Annual Report Download - page 64
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Financing Operations
Favorable
(Unfavorable) %
2010 2009 Variance Change(1)
(In millions)
Financing revenues .................. $16.2 $17.9 $(1.7) (9.2)%
Financing expenses .................. 2.0 0.4 (1.6) (431.9)%
Financing operations segment profit ...... $14.2 $17.5 $(3.3) (18.5)%
Segment profit as % of revenue(1) ...... 87.9% 97.9%
(1) Percentages calculated on actual, not rounded, amounts
All of our financing operations relate to IHOP restaurants. Financing revenues were lower due to
a decline in franchise and equipment note interest as note balances decline and the impact of the
53rd week in 2009, partially offset by an increase in revenue from resale of rehabilitated franchise
restaurants. Financing expenses were higher due to an increase in the cost associated with resale of
rehabilitated franchise restaurants.
The 53rd week contributed additional financing segment profit of approximately $0.3 million in
2009.
Other Expense and Income Components
Favorable
(Unfavorable) %
2010 2009 Variance Change(1)
(In millions)
General and administrative expenses .... $159.7 $158.5 $ (1.2) (0.6)%
Interest expense ................... 171.5 186.5 15.0 8.0%
Impairment and closure charges ........ 3.5 105.1 101.6 96.7%
Amortization of intangible assets ....... 12.3 12.3 — —
Loss (gain) on extinguishment of debt and
temporary equity ................. 107.0 (45.7) (152.7) (334.1)%
Gain on disposition of assets .......... (13.6) (6.9) 6.7 95.4%
Other expense (income) .............. 3.6 1.3 (2.3) (183.1)%
Income tax (benefit) provision ......... (9.3) 5.2 14.5 279.6%
(1) Percentages calculated on actual, not rounded, amounts
General and Administrative Expenses
General and administrative expenses increased $1.2 million, primarily due to an increase in stock-
based compensation expenses, higher salaries and benefits, higher travel costs and higher recruiting and
relocation costs. Stock-based compensation costs increased primarily due to the acceleration of
expenses due to changes resulting from vesting of certain equity grants to directors and the retirement
of an executive and the impact of a higher stock price on equity grants accounted for as liabilities. The
increase in salaries and benefits is primarily due to an increase in managers and related training costs
and the filling of open positions at Applebee’s. The increase in recruiting costs was primarily due to the
hiring of more executive level positions in 2010.
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