IHOP 2011 Annual Report Download - page 21

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PART I
Item 1. Business
Company Overview
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," "we," "our" or "us"). Our common stock is
listed on the New York Stock Exchange ("NYSE") and trades under the ticker symbol "DIN." Our principal executive offices are
located at 450 North Brand Boulevard, Glendale, California 91203-2306 and our telephone number is [phone]. Our Internet
address is www.dineequity.com.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to those
reports and other filings with the United States Securities and Exchange Commission (the "SEC") are available free of charge
through our website as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC.
The information contained on our website is not incorporated into this annual report. Further, the SEC maintains an Internet site
that contains reports, proxy and information statements and other information regarding our filings at www.sec.gov. In addition,
the public may read and copy the materials we file with the SEC at the SEC's Public Reference Room at 100 F. Street, NE,
Washington, D.C. 20549. Information regarding the operation of the Public Reference Room may be obtained by calling the SEC.
We have a 52/53 week fiscal year that ends on the Sunday nearest to December 31 of each year. For convenience, we refer
to all fiscal years as ending on December 31 and all fiscal quarters as ending on March 31, June 30 and September 30 of the
respective fiscal year. There were 52 weeks in our 2011 and 2010 fiscal years, which ended on January 1, 2012 and January 2,
2011, respectively. There were 53 weeks in our 2009 fiscal year, which ended on January 3, 2010. In a 52-week fiscal year, each
fiscal quarter contains 13 weeks, comprised of two, four-week fiscal months followed by a five-week fiscal month. In a 53-week
fiscal year, the last month of the fourth fiscal quarter contains six weeks.
Background
The first International House of Pancakes® ("IHOP") restaurant opened in 1958 in Toluca Lake, California. Since that time,
the Company or its predecessors have engaged in the development, franchising and operation of IHOP restaurants. In November
2007, we completed the acquisition of Applebee's International, Inc. ("Applebee's"). We currently own, operate and franchise two
restaurant concepts in the casual dining and family dining categories of the restaurant industry: Applebee's Neighborhood Grill
and Bar® and IHOP®. References herein to Applebee's and IHOP restaurants are to these two restaurant concepts, and, unless the
context reflects otherwise, whether operated by franchisees, area licensees or the Company. Retail sales at restaurants that are
operated by franchisees and area licensees are not attributable to the Company. Unless the context reflects otherwise, franchisees
and area licensees are referred to collectively as franchisees and restaurants operated by them are referred to collectively as franchise
restaurants. With more than 3,500 restaurants combined in 18 countries and over 400 franchisees, DineEquity is one of the largest
full-service restaurant companies in the world.
This report should be read in conjunction with the cautionary statements on page 29 under "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations.—Forward Looking Statements."
Financial Information about Industry Segments
We identify our segments based on the organizational units used by management to monitor performance and make operating
decisions. Our segments, unchanged from prior years, are as follows: franchise operations, company restaurant operations, rental
operations and financing operations. Within each segment, as applicable, we operate two distinct restaurant concepts: Applebee's
and IHOP.
Franchise Operations Segment
As of December 31, 2011, the franchise operations segment consisted of 1,842 restaurants operated by Applebee's franchisees
in the United States, one United States territory and 15 foreign countries and 1,535 restaurants operated by IHOP franchisees and
area licensees in the United States, two United States territories and three foreign countries. Franchise operations revenue consists
primarily of franchise royalty revenues, sales of proprietary products (primarily IHOP pancake and waffle dry-mixes) and the
portion of the franchise fees allocated to IHOP and Applebee's intellectual property. Additionally, franchise fees designated for
IHOP's national advertising fund and local marketing and advertising cooperatives are recognized as revenue and expense of
franchise operations; however, Applebee's national advertising fund transactions constitute agency activity and therefore are not
recognized as franchise revenue and expense.
Franchise operations expenses include IHOP advertising expense, the cost of proprietary products, pre-opening training
expenses and other franchise-related costs.