IHOP 2012 Annual Report Download - page 48

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30
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Statement Regarding Forward-Looking Statements
Statements contained in this report may constitute forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors, which may
cause actual results to be materially different from those expressed or implied in such statements. You can identify these forward-
looking statements by words such as “may,” “will,” “should,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan” and
other similar expressions. You should consider our forward-looking statements in light of the risks discussed under the heading
“Risk Factors,” as well as our consolidated financial statements, related notes, and the other financial information appearing
elsewhere in this report and our other filings with the United States Securities and Exchange Commission. The forward-looking
statements contained in this report are made as of the date hereof and the Company assumes no obligation to update or supplement
any forward-looking statements.
You should read the following Management's Discussion and Analysis of Financial Condition and Results of Operations in
conjunction with the consolidated financial statements and the related notes that appear elsewhere in this report.
Business Overview
The Company
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. The Company was incorporated under the laws
of the State of Delaware in 1976 with the name IHOP Corp. In November 2007, the Company completed the acquisition of
Applebee's International, Inc., which became a wholly-owned subsidiary of the Company. Effective June 2, 2008, the name of the
Company was changed to DineEquity, Inc. ("DineEquity," "we" or "our"). Through various subsidiaries (see Exhibit 21,
Subsidiaries of DineEquity, Inc.) we own, franchise and operate two restaurant concepts: Applebee's Neighborhood Grill & Bar®
("Applebee's"), in the bar and grill segment of the casual dining category of the restaurant industry, and International House of
Pancakes® ("IHOP®"), in the family dining category of the restaurant industry. References herein to Applebee's and IHOP restaurants
are to these two restaurant concepts, whether operated by franchisees, area licensees or the Company.
Domestically, IHOP restaurants are located in all 50 states and the District of Columbia, while Applebee's restaurants are
located in every state except Hawaii. Internationally, IHOP restaurants are located in two United States territories and five foreign
countries; Applebee's restaurants are located in one United States territory and 15 foreign countries. With over 3,600 restaurants
combined, we believe we are the largest full-service restaurant company in the world.
Our Vision
To become the preferred franchisor of choice and deliver maximum franchisee and shareholder value.
Our Mission
To unite great franchisees, iconic brands and team members to create the world's leading restaurant company - one guest at
a time. To achieve this mission, our strategies are designed to ensure strong brands; drive profitable, organic growth; identify and
exploit complementary concepts and extensions; and create and monetize new value-added services.
2012 Highlights
2012 marked the fifth anniversary of bringing together two of the world's most-iconic dining brands under one enterprise.
The highlight of this anniversary year was the achievement of our vision of becoming a 99% franchised company with the
completion of refranchising the vast majority of the company-owned restaurants operated by Applebee’s when we closed the
acquisition five years ago. We believe a highly franchised business model requires less capital investment and general and
administrative overhead, generates higher gross profit margins and reduces the volatility of free cash flow performance, as compared
to a model based on operating a significant number of company-owned restaurants.