UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-15283

Dine Brands Global, Inc.

(Exact name of registrant as specified in its charter)

Delaware

95-3038279

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

450 North Brand Boulevard,

~~91203-1903~~91203-2346

Glendale,

(Address of principal executive offices)

(Zip Code)


(818)			240-6055
(Registrant’s telephone number, including area code)

______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	DIN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐

No ☒

As of April ~~28, 2021,~~27, 2022, the Registrant had ~~17,157,339~~16,751,012 shares of Common Stock outstanding.

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Dine Brands Global, Inc. and Subsidiaries

Index


		Page
PART I.	FINANCIAL INFORMATION	3
	Item 1—Financial Statements	3
	Consolidated Balance Sheets - March 31, ~~2021~~2022 (unaudited) and December 31, ~~2020~~2021	3
	Consolidated Statements of Comprehensive Income (unaudited) - Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021	4
	Consolidated Statements of Stockholders' Deficit (unaudited) - Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021	5
	Consolidated Statements of Cash Flows (unaudited) - Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021	6
	Notes to Consolidated Financial Statements (unaudited)	7
	Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	Item 3—Quantitative and Qualitative Disclosures about Market Risk	4241
	Item 4—Controls and Procedures	4241
PART II.	OTHER INFORMATION	4342
	Item 1—Legal Proceedings	4342
	Item 1A—Risk Factors	4342
	Item 2—Unregistered Sales of Equity Securities and Use of Proceeds	4342
	Item 3—Defaults Upon Senior Securities	4342
	Item 4—Mine Safety Disclosures	4342
	Item 5—Other Information	4342
	Item 6—Exhibits	4443
	Signatures	4544

Cautionary Statement Regarding Forward-Looking Statements

Statements contained in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan,” “goal” 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 Dine Brands Global, Inc. does not intend to, nor does it assume any obligation to, update or supplement any forward-looking statements after the date of this report to reflect actual results or future events or circumstances.

Factors that could cause actual results to differ materially from the projections, forecasts, estimates and expectations discussed in this Quarterly Report on Form 10-Q include, among other things: uncertainty regarding the duration and severity of the ongoing COVID-19 pandemic (including the emergence of variant strains) and its ultimate impact on our business; general economic conditions; our level of indebtedness; compliance with the terms of our securitized debt; our ability to refinance our current indebtedness or obtain additional financing; our dependence on information technology; potential cyber incidents; the implementation of restaurant development plans; our dependence on our franchisees; the concentration of our Applebee’s franchised restaurants in a limited number of franchisees; the financial health of our franchisees, including any insolvency or bankruptcy; credit risks from our IHOP franchisees operating under our previous IHOP business model in which we built and equipped IHOP restaurants and then franchised them to franchisees; insufficient insurance coverage to cover potential risks associated with the ownership and operation of restaurants; our franchisees’ and other licensees’ compliance with our quality standards and trademark usage; general risks associated with the restaurant industry; potential harm to our brands’ reputation; risks of food-borne illness or food tampering; possible future impairment charges; trading volatility and fluctuations in the price of our stock; our ability to achieve the financial guidance we provide to investors; successful implementation of our business strategy; the availability of suitable locations for new restaurants; shortages or interruptions in the supply or delivery of products from third parties or availability of utilities; the management and forecasting of appropriate inventory levels; ~~development and implementation of innovative~~

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development and implementation of innovative marketing and use of social media; changing health or dietary preference of consumers; risks associated with doing business in international markets; the results of litigation and other legal proceedings; third-party claims with respect to intellectual property assets; delivery initiatives and use of third-party delivery vendors; our allocation of human capital and our ability to attract and retain management and other key employees; compliance with federal, state and local governmental regulations; risks associated with our self-insurance; natural disasters or other serious incidents; our success with development initiatives outside of our core business; the adequacy of our internal controls over financial reporting and future changes in accounting standards; and other matters in the “Risk Factors” section of this report and our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 and in our other filings with the Securities and Exchange Commission, many of which are beyond our control.

Fiscal Quarter End

The Company’s fiscal quarters end on the Sunday closest to the last day of each calendar quarter. For convenience, the fiscal quarters of each year are referred to as ending on March 31, June 30, September 30 and December 31. The first fiscal quarter of 2022 began on January 3, 2022 and ended on April 3, 2022. The first fiscal quarter of 2021 began on January 4, 2021 and ended on April 4, 2021. ~~The first fiscal quarter of 2020 began on December 30, 2019 and ended on March 29, 2020.~~

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Dine Brands Global, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share amounts)


							March 31, 2022		December 31, 2021
Assets	Assets					Assets	(Unaudited)
		March 31, 2021		December 31, 2020
		(Unaudited)
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	179,567	$	383,369	Cash and cash equivalents	$	294,738	$	361,412

Receivables, net of allowance of $11,854 (2021) and $15,057 (2020)		107,387		121,897
Receivables, net of allowance of $4,490 (2022) and $4,959 (2021)						Receivables, net of allowance of $4,490 (2022) and $4,959 (2021)	94,009		119,968
Restricted cash	Restricted cash	60,063		39,884		Restricted cash	47,168		47,541
Prepaid gift card costs	Prepaid gift card costs	22,581		29,080		Prepaid gift card costs	23,981		28,175
Prepaid income taxes	Prepaid income taxes	6,940		6,178		Prepaid income taxes	6,867		10,529
Other current assets	Other current assets	9,171		6,098		Other current assets	10,092		6,728
Total current assets	Total current assets	385,709		586,506		Total current assets	476,855		574,353
Other intangible assets, net	Other intangible assets, net	547,098		549,671		Other intangible assets, net	536,812		539,390
Operating lease right-of-use assets	Operating lease right-of-use assets	338,572		346,086		Operating lease right-of-use assets	329,895		335,428
Goodwill	Goodwill	251,628		251,628		Goodwill	251,628		251,628
Property and equipment, net	Property and equipment, net	182,661		187,977		Property and equipment, net	175,515		179,411

Long-term receivables, net of allowance of $6,455 (2021) and $7,999 (2020)		51,605		54,512
Long-term receivables, net of allowance of $6,319 (2022) and $6,897 (2021)						Long-term receivables, net of allowance of $6,319 (2022) and $6,897 (2021)	42,651		42,493
Deferred rent receivable	Deferred rent receivable	54,713		56,449		Deferred rent receivable	48,280		50,257
Non-current restricted cash	Non-current restricted cash	32,800		32,800		Non-current restricted cash	16,400		16,400
Other non-current assets, net	Other non-current assets, net	11,503		9,316		Other non-current assets, net	10,247		10,006
Total assets	Total assets	$	1,856,289	$	2,074,945	Total assets	$	1,888,283	$	1,999,366
Liabilities and Stockholders’ Deficit	Liabilities and Stockholders’ Deficit					Liabilities and Stockholders’ Deficit
Current liabilities:	Current liabilities:					Current liabilities:
Current maturities of long-term debt		$	13,000	$	13,000

Accounts payable	Accounts payable	33,522		37,424		Accounts payable	$	38,421	$	55,956
Gift card liability	Gift card liability	121,814		144,159		Gift card liability	137,123		165,530
Current maturities of operating lease obligations	Current maturities of operating lease obligations	70,270		69,672		Current maturities of operating lease obligations	72,451		72,079
Current maturities of finance lease and financing obligations	Current maturities of finance lease and financing obligations	11,052		11,293		Current maturities of finance lease and financing obligations	10,692		10,693
Accrued employee compensation and benefits	Accrued employee compensation and benefits	14,554		21,237		Accrued employee compensation and benefits	14,240		40,785

Accrued advertising						Accrued advertising	40,681		33,752
Dividends payable						Dividends payable	—		6,919

Deferred franchise revenue, short-term	Deferred franchise revenue, short-term	8,990		7,682		Deferred franchise revenue, short-term	7,028		7,246
Accrued advertising		44,477		21,641
Other accrued expenses	Other accrued expenses	17,417		22,460		Other accrued expenses	14,134		17,770
Total current liabilities	Total current liabilities	335,096		348,568		Total current liabilities	334,770		410,730
Long-term debt	Long-term debt	1,271,438		1,491,996		Long-term debt	1,280,182		1,279,623
Operating lease obligations, less current maturities	Operating lease obligations, less current maturities	334,361		345,163		Operating lease obligations, less current maturities	313,634		320,848
Finance lease obligations, less current maturities	Finance lease obligations, less current maturities	66,234		69,012		Finance lease obligations, less current maturities	61,223		59,625
Financing obligations, less current maturities	Financing obligations, less current maturities	32,598		32,797		Financing obligations, less current maturities	30,147		31,967
Deferred income taxes, net	Deferred income taxes, net	70,006		78,293		Deferred income taxes, net	73,634		76,228
Deferred franchise revenue, long-term	Deferred franchise revenue, long-term	49,364		52,237		Deferred franchise revenue, long-term	45,141		46,100

Other non-current liabilities	Other non-current liabilities	14,594		11,530		Other non-current liabilities	14,724		17,052
Total liabilities	Total liabilities	2,173,691		2,429,596		Total liabilities	2,153,455		2,242,173
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies	0		0
Stockholders’ deficit:	Stockholders’ deficit:					Stockholders’ deficit:
Preferred stock, $1 par value, 10,000,000 shares authorized; 0 shares issued or outstanding		0		0
Common stock, $0.01 par value; shares: 40,000,000 authorized; March 31, 2021 - 25,033,181 issued, 17,142,367 outstanding; December 31, 2020 - 24,882,122 issued, 16,452,174 outstanding		250		249
Preferred stock, $1 par value, 10,000,000 shares authorized; no shares issued or outstanding						Preferred stock, $1 par value, 10,000,000 shares authorized; no shares issued or outstanding	—		—
Common stock, $0.01 par value; shares: 40,000,000 authorized; March 31, 2022 - 24,991,163 issued, 16,746,028 outstanding; December 31, 2021 - 24,992,275 issued, 17,163,946 outstanding						Common stock, $0.01 par value; shares: 40,000,000 authorized; March 31, 2022 - 24,991,163 issued, 16,746,028 outstanding; December 31, 2021 - 24,992,275 issued, 17,163,946 outstanding	250		250
Additional paid-in-capital	Additional paid-in-capital	247,498		257,625		Additional paid-in-capital	250,150		256,189
Accumulated deficit		(29,950)		(55,553)
Retained earnings						Retained earnings	52,516		35,415
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(56)		(55)		Accumulated other comprehensive loss	(60)		(59)
Treasury stock, at cost; shares: March 31, 2021 - 7,890,814; December 31, 2020 - 8,429,948		(535,144)		(556,917)
Treasury stock, at cost; shares: March 31, 2022 - 8,245,135; December 31, 2021 - 7,828,329						Treasury stock, at cost; shares: March 31, 2022 - 8,245,135; December 31, 2021 - 7,828,329	(568,028)		(534,602)
Total stockholders’ deficit	Total stockholders’ deficit	(317,402)		(354,651)		Total stockholders’ deficit	(265,172)		(242,807)
Total liabilities and stockholders’ deficit	Total liabilities and stockholders’ deficit	$	1,856,289	$	2,074,945	Total liabilities and stockholders’ deficit	$	1,888,283	$	1,999,366

See the accompanying Notes to Consolidated Financial Statements.

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Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)


		Three Months Ended						Three Months Ended
		March 31, 2021						March 31,
			2021		2020				2022		2021
Revenues:	Revenues:						Revenues:
Franchise revenues:	Franchise revenues:						Franchise revenues:
Royalties, franchise fees and other	Royalties, franchise fees and other		$	80,091	$	83,314	Royalties, franchise fees and other		$	90,349	$	80,091
Advertising revenues	Advertising revenues		60,885		61,723		Advertising revenues		70,883		60,885
Total franchise revenues	Total franchise revenues		140,976		145,037		Total franchise revenues		161,232		140,976
Company restaurant sales	Company restaurant sales		35,949		31,300		Company restaurant sales		39,416		35,949
Rental revenues	Rental revenues		26,142		29,009		Rental revenues		28,807		26,142
Financing revenues	Financing revenues		1,132		1,538		Financing revenues		968		1,132
Total revenues	Total revenues		204,199		206,884		Total revenues		230,423		204,199
Cost of revenues:	Cost of revenues:						Cost of revenues:
Franchise expenses:	Franchise expenses:						Franchise expenses:
Advertising expenses	Advertising expenses		60,885		61,723		Advertising expenses		70,883		60,885
Bad debt (credit) expense			(1,993)		518
Bad debt credit							Bad debt credit		(299)		(1,993)
Other franchise expenses	Other franchise expenses		6,051		7,209		Other franchise expenses		7,448		6,051
Total franchise expenses	Total franchise expenses		64,943		69,450		Total franchise expenses		78,032		64,943
Company restaurant expenses	Company restaurant expenses		32,884		30,332		Company restaurant expenses		37,408		32,884
Rental expenses:	Rental expenses:						Rental expenses:
Interest expense from finance leases	Interest expense from finance leases		962		1,210		Interest expense from finance leases		768		962
Other rental expenses	Other rental expenses		19,996		21,323		Other rental expenses		21,355		19,996
Total rental expenses	Total rental expenses		20,958		22,533		Total rental expenses		22,123		20,958
Financing expenses	Financing expenses		128		142		Financing expenses		107		128
Total cost of revenues	Total cost of revenues		118,913		122,457		Total cost of revenues		137,670		118,913
Gross profit	Gross profit		85,286		84,427		Gross profit		92,753		85,286
General and administrative expenses	General and administrative expenses		39,911		37,608		General and administrative expenses		41,548		39,911
Interest expense, net	Interest expense, net		16,496		15,172		Interest expense, net		15,533		16,496
Closure and impairment charges (credit)			2,010		(12)
Closure and impairment charges							Closure and impairment charges		146		2,010
Amortization of intangible assets	Amortization of intangible assets		2,688		2,826		Amortization of intangible assets		2,665		2,688

Loss (gain) on disposition of assets			167		(233)
(Gain) loss on disposition of assets							(Gain) loss on disposition of assets		(1,296)		167
Income before income taxes	Income before income taxes		24,014		29,066		Income before income taxes		34,157		24,014
Income tax benefit (provision)			1,589		(6,738)
Income tax (provision) benefit							Income tax (provision) benefit		(9,307)		1,589
Net income	Net income		25,603		22,328		Net income		24,850		25,603
Other comprehensive income net of tax:	Other comprehensive income net of tax:						Other comprehensive income net of tax:

Foreign currency translation adjustment	Foreign currency translation adjustment		(1)		0		Foreign currency translation adjustment		(1)		(1)
Total comprehensive income	Total comprehensive income		$	25,602	$	22,328	Total comprehensive income		$	24,849	$	25,602
Net income available to common stockholders:	Net income available to common stockholders:						Net income available to common stockholders:
Net income	Net income		$	25,603	$	22,328	Net income		$	24,850	$	25,603
Less: Net income allocated to unvested participating restricted stock	Less: Net income allocated to unvested participating restricted stock		(548)		(748)		Less: Net income allocated to unvested participating restricted stock		(598)		(548)
Net income available to common stockholders	Net income available to common stockholders		$	25,055	$	21,580	Net income available to common stockholders		$	24,252	$	25,055

Net income available to common stockholders per share:	Net income available to common stockholders per share:						Net income available to common stockholders per share:
Basic	Basic		$	1.52	$	1.33	Basic		$	1.45	$	1.52
Diluted	Diluted		$	1.51	$	1.31	Diluted		$	1.45	$	1.51
Weighted average shares outstanding:	Weighted average shares outstanding:						Weighted average shares outstanding:
Basic	Basic		16,460		16,263		Basic		16,722		16,460
Diluted	Diluted		16,630		16,470		Diluted		16,758		16,630

See the accompanying Notes to Consolidated Financial Statements.

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Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Deficit

(In thousands)

(Unaudited)


		Three Months ended March 31, 2020															Three Months ended March 31, 2021
		Common Stock							Accumulated Other Comprehensive Loss		Treasury Stock						Common Stock							Accumulated Other Comprehensive Loss		Treasury Stock
		Shares Outstanding	Amount		Additional Paid-in Capital		Retained Earnings				Shares	Cost		Total			Shares Outstanding	Amount		Additional Paid-in Capital		(Accumulated Deficit)				Shares	Cost		Total
Balance at December 31, 2019		16,522	$	249	$	246,192	$	61,653	$	(58)	8,404	$	(549,810)	$	(241,774)
Adoption of credit loss accounting guidance		—	—		—		(497)		—		—	—		(497)
Balance at December 31, 2020																Balance at December 31, 2020	16,452	$	249	$	257,625	$	(55,553)	$	(55)	8,430	$	(556,917)	$	(354,651)
Net income	Net income	—	—		—		22,328		—		—	—		22,328		Net income	—	—		—		25,603		—		—	—		25,603
Other comprehensive loss																Other comprehensive loss	—	—		—		—		(1)		—	—		(1)

Purchase of Company common stock		(460)	—		—		—		—		460	(26,527)		(26,527)
Reissuance of treasury stock	Reissuance of treasury stock	367	—		3,967		—		—		(368)	16,557		20,524		Reissuance of treasury stock	539	1		(2,290)		—		—		(539)	21,773		19,484
Net issuance of shares for stock plans	Net issuance of shares for stock plans	18	—		—		—		—		—	—		—		Net issuance of shares for stock plans	166	—		—		—		—		—	—		—
Repurchase of restricted shares for taxes	Repurchase of restricted shares for taxes	(26)	—		(2,000)		—		—		—	—		(2,000)		Repurchase of restricted shares for taxes	(15)	—		(1,220)		—		—		—	—		(1,220)
Stock-based compensation	Stock-based compensation	—	—		4,038		—		—		—	—		4,038		Stock-based compensation	—	—		3,094		—		—		—	—		3,094
Dividends on common stock		—	—		246		(12,715)		—		—	—		(12,469)

Balance at March 31, 2020		16,421	$	249	$	252,443	$	70,769	$	(58)	8,496	$	(559,780)	$	(236,377)

Tax payments for share settlement of restricted stock units																Tax payments for share settlement of restricted stock units	—	—		(9,711)		—		—		—	—		(9,711)
Balance at March 31, 2021																Balance at March 31, 2021	17,142	$	250	$	247,498	$	(29,950)	$	(56)	7,891	$	(535,144)	$	(317,402)


		Three Months ended March 31, 2021															Three Months ended March 31, 2022
		Common Stock							Accumulated Other Comprehensive Loss		Treasury Stock						Common Stock							Accumulated Other Comprehensive Loss		Treasury Stock
		Shares Outstanding	Amount		Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)				Shares	Cost		Total			Shares Outstanding	Amount		Additional Paid-in Capital		Retained Earnings				Shares	Cost		Total
Balance at December 31, 2020		16,452	$	249	$	257,625	$	(55,553)	$	(55)	8,430	$	(556,917)	$	(354,651)
Balance at December 31, 2021																Balance at December 31, 2021	17,164	$	250	$	256,189	$	35,415	$	(59)	7,828	$	(534,602)	$	(242,807)
Net income	Net income	—	—		—		25,603		—		—	—		25,603		Net income	—	—		—		24,850		—		—	—		24,850
Other comprehensive loss	Other comprehensive loss	—	—		—		—		(1)		—	—		(1)		Other comprehensive loss	—	—		—		—		(1)		—	—		(1)

Purchase of Company common stock																Purchase of Company common stock	(588)	—		—		—		—		588	(41,445)		(41,445)
Reissuance of treasury stock	Reissuance of treasury stock	539	1		(2,290)		—		—		(539)	21,773		19,484		Reissuance of treasury stock	171	—		(7,778)		—		—		(171)	8,019		241
Net issuance of shares for stock plans	Net issuance of shares for stock plans	166	—		—		—		—		—	—		—		Net issuance of shares for stock plans	22	—		—		—		—		—	—		—
Repurchase of restricted shares for taxes	Repurchase of restricted shares for taxes	(15)	—		(1,220)		—		—		—	—		(1,220)		Repurchase of restricted shares for taxes	(23)	—		(1,745)		—		—		—	—		(1,745)
Stock-based compensation	Stock-based compensation	—	—		3,094		—		—		—	—		3,094		Stock-based compensation	—	—		4,341		—		—		—	—		4,341

Tax withheld related to settlement of restricted stock units		—	—		(9,711)		—		—		—	—		(9,711)
Balance at March 31, 2021		17,142	$	250	$	247,498	$	(29,950)	$	(56)	7,891	$	(535,144)	$	(317,402)
Dividends on common stock																Dividends on common stock	—	—		96		(7,749)		—		—	—		(7,653)
Tax payments for share settlement of restricted stock units																Tax payments for share settlement of restricted stock units	—	—		(953)		—		—		—	—		(953)
Balance at March 31, 2022																Balance at March 31, 2022	16,746	$	250	$	250,150	$	52,516	$	(60)	8,245	$	(568,028)	$	(265,172)

See the accompanying Notes to Consolidated Financial Statements.

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Dine Brands Global, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


		Three Months Ended					Three Months Ended
		March 31,					March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	25,603	$	22,328	Net income	$	24,850	$	25,603
Adjustments to reconcile net income to cash flows provided by operating activities:
Non-cash closure and impairment charges (credit)		1,959		(12)
Adjustments to reconcile net income to cash flows (used in) provided by operating activities:						Adjustments to reconcile net income to cash flows (used in) provided by operating activities:
Depreciation and amortization	Depreciation and amortization	9,995		10,641		Depreciation and amortization	9,938		9,995
Non-cash closure and impairment charges						Non-cash closure and impairment charges	45		1,959
Non-cash stock-based compensation expense	Non-cash stock-based compensation expense	3,094		4,038		Non-cash stock-based compensation expense	4,341		3,094
Non-cash interest expense	Non-cash interest expense	712		655		Non-cash interest expense	714		712

Deferred income taxes	Deferred income taxes	(8,267)		(10,491)		Deferred income taxes	(873)		(8,267)
Deferred revenue	Deferred revenue	(1,565)		(1,417)		Deferred revenue	(1,177)		(1,565)

Loss (gain) on disposition of assets		167		(227)
(Gain) loss on disposition of assets						(Gain) loss on disposition of assets	(1,296)		167

Other	Other	(1,580)		(1,293)		Other	(1,766)		1,058
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable, net	Accounts receivable, net	(4,323)		12,077		Accounts receivable, net	(3,567)		(4,323)
Deferred rent receivable						Deferred rent receivable	1,977		1,736
Current income tax receivables and payables	Current income tax receivables and payables	(552)		6,443		Current income tax receivables and payables	2,352		(552)
Gift card receivables and payables	Gift card receivables and payables	(3,246)		11,693		Gift card receivables and payables	(2,180)		(3,246)
Other current assets	Other current assets	(3,072)		(2,347)		Other current assets	(3,365)		(3,072)
Accounts payable	Accounts payable	809		(12,748)		Accounts payable	(11,683)		809
Operating lease assets and liabilities						Operating lease assets and liabilities	(2,909)		(4,374)
Accrued employee compensation and benefits	Accrued employee compensation and benefits	(6,968)		(12,190)		Accrued employee compensation and benefits	(26,646)		(6,968)

Accrued advertising	Accrued advertising	22,836		(4,719)		Accrued advertising	6,929		22,836
Other current liabilities	Other current liabilities	(5,037)		7,214		Other current liabilities	(3,474)		(5,037)
Cash flows provided by operating activities		30,565		29,645
Cash flows (used in) provided by operating activities						Cash flows (used in) provided by operating activities	(7,790)		30,565
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Principal receipts from notes, equipment contracts and other long-term receivables	Principal receipts from notes, equipment contracts and other long-term receivables	4,651		5,544		Principal receipts from notes, equipment contracts and other long-term receivables	4,848		4,651
Net additions to property and equipment	Net additions to property and equipment	(2,357)		(5,084)		Net additions to property and equipment	(5,298)		(2,357)
Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	946		6		Proceeds from sale of property and equipment	2,862		946
Additions to long-term receivables	Additions to long-term receivables	0		(1,511)		Additions to long-term receivables	(669)		—
Other	Other	(110)		(195)		Other	(30)		(110)
Cash flows provided by (used in) investing activities		3,130		(1,240)
Cash flows provided by investing activities						Cash flows provided by investing activities	1,713		3,130
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Repayment of long-term debt	Repayment of long-term debt	(3,250)		0		Repayment of long-term debt	—		(3,250)
Borrowing from revolving credit facility		0		220,000

Repayment of revolving credit facility	Repayment of revolving credit facility	(220,000)		0		Repayment of revolving credit facility	—		(220,000)

Dividends paid on common stock	Dividends paid on common stock	0		(11,451)		Dividends paid on common stock	(14,588)		—
Repurchase of common stock	Repurchase of common stock	0		(29,853)		Repurchase of common stock	(41,585)		—
Principal payments on finance lease obligations	Principal payments on finance lease obligations	(2,621)		(2,981)		Principal payments on finance lease obligations	(2,340)		(2,621)
Proceeds from stock options exercised	Proceeds from stock options exercised	19,484		20,524		Proceeds from stock options exercised	241		19,484
Tax payments for restricted stock upon vesting		(1,220)		(2,000)
Repurchase of restricted stock for tax payments upon vesting						Repurchase of restricted stock for tax payments upon vesting	(1,745)		(1,220)
Tax payments for share settlement of restricted stock units	Tax payments for share settlement of restricted stock units	(9,711)		0		Tax payments for share settlement of restricted stock units	(953)		(9,711)
Cash flows (used in) provided by financing activities		(217,318)		194,239
Cash flows used in financing activities						Cash flows used in financing activities	(60,970)		(217,318)
Net change in cash, cash equivalents and restricted cash	Net change in cash, cash equivalents and restricted cash	(183,623)		222,644		Net change in cash, cash equivalents and restricted cash	(67,047)		(183,623)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	456,053		172,475		Cash, cash equivalents and restricted cash at beginning of period	425,353		456,053
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	272,430	$	395,119	Cash, cash equivalents and restricted cash at end of period	$	358,306	$	272,430
Supplemental disclosures:	Supplemental disclosures:					Supplemental disclosures:
Interest paid in cash	Interest paid in cash	$	17,240	$	16,446	Interest paid in cash	$	15,869	$	17,240
Income taxes paid in cash	Income taxes paid in cash	$	7,441	$	10,818	Income taxes paid in cash	$	7,945	$	7,441
Non-cash conversion of accounts receivable to notes receivable	Non-cash conversion of accounts receivable to notes receivable	$	1,269	$	0	Non-cash conversion of accounts receivable to notes receivable	$	—	$	1,269

See the accompanying Notes to Consolidated Financial Statements.

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

1. General

The accompanying unaudited consolidated financial statements of Dine Brands Global, Inc. (the “Company” or “Dine Brands Global”) have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The operating results for the three months ended March 31, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, ~~2021.~~2022.

The consolidated balance sheet at December 31, ~~2020~~2021 has been derived from the audited consolidated financial statements at that date but does not include all of information and footnotes required by U.S. GAAP for complete financial statements.

These consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

2. Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries that are consolidated in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated.

The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make assumptions and estimates that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, if any, at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates may include the calculation and assessment of the following: impairment of goodwill, other intangible assets and tangible assets; income taxes; allowance for credit losses on accounts and notes receivables; lease accounting estimates; contingencies; and stock-based compensation. On an ongoing basis, the Company evaluates its estimates based on historical experience, current conditions and various other assumptions that are believed to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.

Risks and Uncertainties

The Company was subject to risks and uncertainties as a result of the continuing outbreak of a novel strain of coronavirus, designated ~~“COVID-19.~~“COVID-19,” and evolving variants thereof. The extent of the continued impact of the COVID-19 pandemic on the Company's business ~~is highly~~remains uncertain and difficult to predict, as measures taken in response to and the effect of the pandemic ~~has~~have varied and ~~continues~~continue to vary by country, state and municipalities within states. ~~Assessments of the success of measures taken and the timing of any further restrictions, or lifting of such restrictions, is rapidly evolving.~~ The Company first began to experience impacts from the COVID-19 pandemic in March 2020, as federal, state, local and international governments ~~began to react~~reacted to the public health crisis by encouraging ~~“social distancing”~~social distancing and requiring, in varying degrees, restaurant dine-in limitations and other restrictions that largely limited the restaurants of the Company's franchisees and its company-operated restaurants to take-out and delivery ~~sales.~~sales during the initial stages of the pandemic. Subsequently, government-imposed dine-in restrictions have been relaxed or removed in many of the locations in which the Company operates as incidents of infection decline and vaccination rates increase within the respective governmental ~~jurisdictions, although dining room capacity continues to be limited to 50% or less at over two-thirds of the Company's restaurants as~~jurisdictions. As of March 31, ~~2021.~~2022, substantially all domestic Applebee's and IHOP restaurants were open and operating without government-mandated restrictions.

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

2. Basis of Presentation (Continued)

The Company took several actions to mitigate the effects of the COVID-19 pandemic on its operations and its franchisees, as follows: (i) drew down $220 million from its revolving credit facility in March 2020 and repaid the borrowing in March 2021;(ii) suspended repurchases of common stock; (iii) the Company's Board of Directors has not declared dividends after the first quarter of 2020; (iv) voluntarily increased the interest reserve for securitized debt from the required $16.4 million (approximately one quarter of estimated interest) to $32.8 million; (v) deferred franchisee payment of royalty, advertising and other fees, and lease obligations for up to two months on a case-by-case basis; (vi) deferred franchisee remodel and development obligations for up to 15 months; and (vii) negotiated deferrals and abatements for properties on which the Company was lessee.

The severity of the continued impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, how long the pandemic will last, whether/when recurrences of the virus and variants of the virus may arise, the availability and acceptance of vaccines, what restrictions on in-restaurant dining may be imposed or re-imposed, the timing and extent of customer re-engagement with the Company's brands and, in general, what the short- and long-term impact on consumer discretionary spending the COVID-19 pandemic might have on the Company and the restaurant industry as a whole, all of which are uncertain and cannot be predicted. The Company's future results of operations and liquidity could adversely be impacted by the ~~length~~resurgence of ~~time~~outbreaks of the virus and its variants that result in the re-imposition of dine-in restrictions, ~~remain in place and~~as well as the success of any initiatives or programs that the Company may undertake to address financial and operational challenges faced by itself and its franchisees. As such, the extent to which the COVID-19 pandemic may continue to materially impact the Company's financial condition, liquidity, or results of operations isremains highly uncertain.

3. Accounting Standards Adopted and Newly Issued Accounting Standards Not Yet Adopted

Accounting Standards Adopted in the Current Fiscal Year

In ~~December 2019,~~July 2021, the Financial Accounting Standards Board (“FASB”) issued ~~new~~ guidance ~~intended to simplify~~which affect lessors with lease contracts that (i) have variable lease payments that do not depend on a reference index or a rate and (ii) would have resulted in the ~~accounting~~recognition of a selling loss at lease commencement if classified as sales-type or direct financing. The amendments are effective for ~~income taxes, change the accounting for certain income tax transactions, and make other minor changes. The Company adopted the new guidance at the~~fiscal years beginning ~~of the first fiscal quarter of~~after December 15, 2021. Adoption did not have any material effect on the consolidated financial statements.

Additional new accounting guidance became effective for the Company as of the beginning of fiscal ~~2021~~2022 that the Company reviewed and concluded was either not applicable to its operations or had no material effect on its consolidated financial statements in the current or future fiscal years.

Newly Issued Accounting Standards Not Yet Adopted

In March 2020, with an update in January 2021, the FASB issued guidance which provides optional expedients and exceptions for applying current U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The guidance can be adopted immediately and is applicable to contracts entered into on or before December 31, 2022. ~~We are~~The Company is currently evaluating ~~our~~its contracts that reference LIBOR and the potential effects of adopting this new guidance.

The Company reviewed all other newly issued accounting pronouncements and concluded that they either are not applicable to the Company's operations or that no material effect is expected on the Company's financial statements when adoption is required in the future.

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

4. Revenue Disclosures

Franchise revenue and revenue from company-operated restaurants are recognized in accordance with current guidance for revenue recognition as codified in Accounting Standards Topic 606 (“ASC 606”). Under ASC 606, revenue is recognized upon transfer of control of promised services or goods to customers in an amount that reflects the consideration the Company expects to receive for those services or goods.

~~Table of Contents~~

~~Dine Brands Global, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~4. Revenue Disclosures (Continued)~~

Franchising Activities

The Company owns, franchises and operates the Applebee's Neighborhood Grill & Bar® (“Applebee's”) concept in the casual dining category of the restaurant industry and the Company owns and franchises the International House of Pancakes® (“IHOP”) concept in the family dining category of the restaurant industry. The franchise arrangement for both brands is documented in the form of a franchise agreement and, in most cases, a development agreement. The franchise arrangement between the Company as the franchisor and the franchisee as the customer requires the Company to perform various activities to support the brands that do not directly transfer goods and services to the franchisee, but instead represent a single performance obligation, which is the transfer of the franchise license. The intellectual property subject to the franchise license is symbolic intellectual property as it does not have significant standalone functionality, and substantially all the utility is derived from its association with the Company’s past or ongoing activities. The nature of the Company’s promise in granting the franchise license is to provide the franchisee with access to the respective brand’s symbolic intellectual property over the term of the license. The services provided by the Company are highly interrelated with the franchise license and as such are considered to represent a single performance obligation.

The transaction price in a standard franchise arrangement for both brands primarily consists of (a) initial franchise/development fees; (b) continuing franchise fees (royalties); and (c) advertising fees. Since the Company considers the licensing of the franchising right to be a single performance obligation, no allocation of the transaction price is required. All domestic IHOP franchise agreements require franchisees to purchase proprietary pancake and waffle dry mix from the Company.

The Company recognizes the primary components of the transaction price as follows:

•Franchise and development fees are recognized as revenue ratably on a straight-line basis over the term of the franchise agreement commencing with the restaurant opening date. As these fees are typically received in cash at or near the beginning of the franchise term, the cash received is initially recorded as a contract liability until recognized as revenue over ~~time;~~time.

•The Company is entitled to royalties and advertising fees based on a percentage of the franchisee's gross sales as defined in the franchise agreement. Royalty and advertising revenue are recognized when the franchisee's reported sales occur. Depending on timing within a fiscal period, the recognition of revenue results in either what is considered a contract asset (unbilled receivable) or once billed, accounts receivable, and are included in “receivables, net” in the Consolidated Balance Sheets.

•Revenue from the sale of proprietary pancake and waffle dry mix is recognized in the period in which distributors ship the franchisee's order; recognition of revenue results in an accounts receivable included in “receivables, net” in the Consolidated Balance Sheets.

In determining the amount and timing of revenue from contracts with customers, the Company exercises significant judgment with respect to ~~collectibility~~collectability of the amount; however, the timing of recognition does not require significant judgments as it is based on either the term of the franchise agreement, the month of reported sales by the franchisee or the date of product shipment, none of which require estimation. The Company does not incur a significant amount of contract acquisition costs in conducting franchising activities. The Company's franchising arrangements do not contain a significant financing component.

Company Restaurant Revenue

Sales by company-operated restaurants are recognized when food and beverage items are sold. Company restaurant sales are reported net of sales taxes collected from guests that are remitted to the appropriate taxing authorities.

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

4. Revenue Disclosures (Continued)

The following table disaggregates franchise revenue by major type for the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:


		Three Months Ended						Three Months Ended
		March 31,						March 31,
			2021		2020				2022		2021
			(In thousands)						(In thousands)
Franchise Revenue:	Franchise Revenue:						Franchise Revenue:
Royalties	Royalties		$	65,767	$	67,600	Royalties		$	75,242	$	65,767
Advertising fees	Advertising fees		60,885		61,723		Advertising fees		70,883		60,885
Pancake and waffle dry mix sales and other	Pancake and waffle dry mix sales and other		10,890		12,848		Pancake and waffle dry mix sales and other		12,931		10,890
Franchise and development fees	Franchise and development fees		3,434		2,866		Franchise and development fees		2,176		3,434
Total franchise revenue	Total franchise revenue		$	140,976	$	145,037	Total franchise revenue		$	161,232	$	140,976

Accounts and other receivables from franchisees as of March 31, ~~2021~~2022 and December 31, ~~2020 were $79.5~~2021 were $68.7 million (net of allowance of $0.7 million) and $66.0 million (net of allowance of ~~$7.7 million) and $76.3 million (net of allowance of $11.4~~$1.1 million), respectively, and were included in receivables, net in the Consolidated Balance Sheets.

Changes in the Company's contract liability for deferred franchise and development fees during the three months ended March 31, ~~2021 are~~2022 were as follows:


	Deferred Franchise Revenue (short- and long-term)
	(In thousands)
Balance at December 31, ~~2020~~2021	$	~~59,919~~53,346
Recognized as revenue during the three months ended March 31, ~~2021~~2022	~~(3,354)~~(2,049)
Fees deferred during the three months ended March 31, ~~2021~~2022	~~1,789~~872
Balance at March 31, ~~2021~~2022	$	~~58,354~~52,169

The balance of deferred revenue as of March 31, ~~2021~~2022 is expected to be recognized as follows:


		(In thousands)			(In thousands)
Remainder of 2021		$	7,931
2022		7,130
2022 (remaining nine months)				2022 (remaining nine months)	$	5,271
2023	2023	6,629		2023	6,915
2024	2024	6,044		2024	6,259
2025	2025	5,268		2025	5,473
2026				2026	4,653
Thereafter	Thereafter	25,352		Thereafter	23,598
Total	Total	$	58,354	Total	$	52,169

5. Current Expected Credit Losses (“CECL”)

The CECL reserve methodology requires companies to measure expected credit losses on financial instruments based on the total estimated amount to be collected over the lifetime of the instrument. Under the CECL model, reserves may be established against financial asset balances even if the risk of loss is remote or has not yet manifested itself. The Company records specific reserves against account balances of franchisees deemed at-risk when a potential loss is likely or imminent as a result of prolonged payment delinquency (greater than 90 days past due) and where notable credit deterioration has become evident. For financial assets that are not currently deemed at-risk, an allowance is recorded based on expected loss rates derived pursuant to the Company's CECL methodology that assesses four components - historical losses, current conditions, reasonable and supportable forecasts, and a reversion to history, if applicable.

Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

5. Current Expected Credit Losses (Continued)

The Company considers its portfolio segments to be the following:

Accounts Receivable (Franchise-Related)

Most of the Company’s short-term receivables due from franchisees are derived from royalty, advertising and other franchise-related fees.

Gift Card Receivables

Gift card receivables consist primarily of amounts due from third-party vendors. Receivables related to gift card sales are subject to seasonality and usually peak around ~~year end~~year-end as a result of the December holiday season.

Notes Receivable

Notes receivable balances primarily relate to the conversion of certain past due Applebee's franchisee accounts receivable to notes receivable, cash loans to franchisees for working capital purposes, a note receivable in connection with the sale of IHOP company restaurants and IHOP franchise fee and other notes. The notes are typically collateralized by the franchise. A significant portion of these notes have specific reserves recorded against them amounting to ~~$9.4~~$9.8 million as of March 31, ~~2021.~~2022.

Equipment Leases Receivable

Equipment leases receivable ~~also~~ relate to IHOP franchise development activity prior to ~~2003.~~2003 when IHOP typically leased or purchased the restaurant site, built and equipped the restaurant, then franchised the restaurant to a franchisee. Equipment lease contracts are collateralized by the equipment in the restaurant. The estimated fair value of the equipment collateralizing these lease contracts are not deemed to be significant given the very seasoned and mature nature of this portfolio. The weighted average remaining life of the Company’s equipment leases is ~~5.2~~3.1 years as of March 31, ~~2021.~~2022.

~~Direct Financing~~Real Estate Leases Receivable

~~Direct financing lease receivables~~Real estate leases receivable relate to IHOP franchise development activity prior to ~~2003 when IHOP typically leased or purchased the restaurant site, built and equipped the restaurant, then franchised the restaurant to a franchisee.~~2003. IHOP provided the financing for leasing or subleasing the site. ~~Direct financing~~Real estate leases at March 31, ~~2021,~~2022, comprised 8568 leases with a weighted average remaining life of ~~4.1~~6.7 years, and relate to locations that IHOP is leasing from third parties and subleasing to franchisees.

Distributor Receivables

Receivables due from distributors are related to the sale of IHOP’s proprietary pancake and waffle dry mix to franchisees through the Company’s network of suppliers and distributors and are included as part of Other receivables.

March 31, 2021 December 31, 2020
(In millions)
Accounts receivable $ 84.8 $ 85.7
Gift card receivables 5.4 22.5
Notes receivable 20.4 18.6
Financing receivables:
     Equipment leases receivable 40.8 43.9
     Direct financing leases receivable 20.1 22.7
     Franchise fee notes receivable 0.1 0.1
Other 5.7 6.0
177.3 199.5
Less: allowance for credit losses (18.3) (23.1)
159.0 176.4
Less: current portion (107.4) (121.9)
Long-term receivables $ 51.6 $ 54.5


	March 31, 2022		December 31, 2021
	(In millions)
Accounts receivable	$	66.0	$	63.6
Gift card receivables	5.3		33.4
Notes receivable	18.8		19.7
Financing receivables:
Equipment leases receivable	31.8		33.4
Real estate leases receivable	17.7		16.7


Other	7.9		7.6
	147.5		174.4
Less: allowance for credit losses	(10.8)		(11.9)
	136.7		162.5
Less: current portion	(94.0)		(120.0)
Long-term receivables	$	42.7	$	42.5

Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

5. Current Expected Credit Losses (Continued)

The Company's primary credit quality indicator for all portfolio segments is delinquency. Changes in the allowance for credit losses during the three months ended March 31, ~~2021~~2022 were as follows:


		Accounts Receivable		Notes receivable, short-term		Notes receivable, long-term		Lease Receivables		Equipment Notes		Other (1)		Total			Accounts Receivable		Notes receivable, short-term		Notes receivable, long-term		Lease Receivables		Equipment Notes		Other (1)		Total
		(In millions)															(In millions)
Balance, December 31, 2020		$	11.2	$	3.6	$	5.3	$	0.4	$	2.3	$	0.3	$	23.1
Balance, December 31, 2021																Balance, December 31, 2021	$	1.0	$	3.8	$	6.6	$	0.2	$	0.1	$	0.2	$	11.9

Bad debt (credit) expense for the three months ended March 31, 2021		(2.0)		0.5		(0.0)		(0.3)		(0.1)		(0.1)		(2.0)
Bad debt (credit) expense																Bad debt (credit) expense	(0.1)		0.1		(0.3)		(0.0)		0.0		0.0		(0.3)
Advertising provision adjustment	Advertising provision adjustment	(1.4)		(0.0)		0		0		0		0		(1.4)		Advertising provision adjustment	(0.0)		(0.0)		(0.2)		—		—		—		(0.2)
Write-offs	Write-offs	(0.2)		0		0		0.0		(1.2)		0		(1.4)		Write-offs	(0.2)		(0.3)		—		—		—		(0.2)		(0.7)
Recoveries	Recoveries	0		0		0		0.0		0		0		0.0		Recoveries	0.1		—		—		—		0.0		—		0.1
Balance, March 31, 2021		$	7.6	$	4.1	$	5.3	$	0.1	$	1.0	$	0.2	$	18.3
Balance, March 31, 2022																Balance, March 31, 2022	$	0.8	$	3.6	$	6.1	$	0.2	$	0.1	$	0.0	$	10.8

(1) Primarily distributor receivables, gift card receivables and credit card receivables

The ~~Company's primary credit quality indicator for all portfolio segments is delinquency. The~~ delinquency status of receivables (other than accounts receivable, gift card receivables and distributor receivables) at March 31, ~~2021~~2022 was as follows:


		Notes receivable, short-term		Notes receivable, long-term		Lease Receivables		Equipment Notes		Other (1)		Total			Notes receivable, short-term		Notes receivable, long-term		Lease Receivables		Equipment Notes		Other (1)		Total
		(In millions)													(In millions)
Current	Current	$	5.2	$	12.7	$	20.1	$	40.8	$	2.2	$	81.0	Current	$	4.5	$	12.7	$	17.7	$	31.8	$	2.6	$	69.3
30-59 days	30-59 days	0.1		0		0		0		0		0.1		30-59 days	0.1		—		—		—		—		0.1
60-89 days	60-89 days	0.1		0		0		0		0		0.1		60-89 days	0.0		—		—		—		—		0.0
90-119 days	90-119 days	0.1		0		0		0		0		0.1		90-119 days	0.0		—		—		—		—		0.0
120+ days	120+ days	2.2		0		0		0		0		2.2		120+ days	1.5		—		—		—		—		1.5
Total	Total	$	7.7	$	12.7	$	20.1	$	40.8	$	2.2	$	83.5	Total	$	6.1	$	12.7	$	17.7	$	31.8	$	2.6	$	70.9

(1) Primarily credit card receivables

The year of origination of the Company's notes receivable and financing receivables is as follows:


		Notes receivable, short and long-term		Lease Receivables		Equipment Notes		Total			Notes receivable, short and long-term		Lease Receivables		Equipment Notes		Total
		(In millions)									(In millions)
2022										2022	$	0.3	$	2.9	$	—	$	3.2
2021	2021	$	2.2	$	0	$	0	$	2.2	2021	12.2		2.6		—		14.8
2020	2020	1.2		1.5		0		2.7		2020	0.5		1.4		—		1.9
2019	2019	2.6		0.9		0		3.5		2019	0.2		0.8		—		1.0
2018	2018	8.0		0		0		8.0		2018	—		—		—		0.0
2017	2017	6.3		0		0		6.3		2017	5.5		—		—		5.5
2016		0.1		17.7		40.8		58.6
Prior										Prior	0.1		10.0		31.8		41.9
Total	Total	$	20.4	$	20.1	$	40.8	$	81.3	Total	$	18.8	$	17.7	$	31.8	$	68.3

The Company does not place its financing receivables in non-accrual status.

6. Lease Disclosures

The Company engages in leasing activity as both a lessee and a lessor. The Company currently leases from third parties the real property on which approximately ~~550~~540 IHOP franchisee-operated restaurants and 1 Applebee's franchisee-operated restaurant are located; the Company (as lessor) subleases the property to the franchisees that operate those restaurants. The Company also leases property it owns to the franchisees that operate approximately 5550 IHOP restaurants and 1 Applebee's restaurant. The Company leases from third parties the real property on which 69 Applebee's company-operated restaurants are located. The Company also leases office space for its principal corporate office in Glendale, California and restaurant support centers in Leawood, Kansas ~~City, Missouri~~ and Raleigh, North Carolina. The Company does not have a significant amount of non-real estate leases.

Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

6. Lease Disclosures (Continued)

The Company's existing leases/subleases related to IHOP restaurants generally provide for an initial term of 20 to 25 years, with most having one or more five-year renewal options. Leases related to Applebee's restaurants generally have an initial term of 10 to 20 years, with renewal terms of five to 20 years. Option periods were not included in determining liabilities and right-of-use assets related to operating leases. Approximately ~~240~~260 of the Company's leases met the sales levels that required variable rent payments to the Company (as lessor), based on a percentage of restaurant sales during the three months ended March 31, ~~2021.~~2022. Approximately 3040 of the leases met the sales levels that required variable rent payments by the Company (as lessee), based on a percentage of restaurant sales during the three months ended March 31, ~~2021.~~2022.

The Company's lease cost for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 was as follows:


		Three months ended March 31,							Three months ended March 31,
				2021		2020					2022		2021
			(In millions)							(In millions)
Finance lease cost:	Finance lease cost:							Finance lease cost:
Amortization of right-of-use assets	Amortization of right-of-use assets			$	1.2	$	1.3	Amortization of right-of-use assets			$	1.1	$	1.2
Interest on lease liabilities	Interest on lease liabilities			1.4		1.7		Interest on lease liabilities			1.3		1.5
Operating lease cost(1)	Operating lease cost(1)			25.1		26.5		Operating lease cost(1)			21.1		21.3
Variable lease cost	Variable lease cost			0.3		0.4		Variable lease cost			1.7		0.3
Short-term lease cost	Short-term lease cost			0.0		0.0		Short-term lease cost			0.0		0.0
Sublease income	Sublease income			(24.2)		(26.6)		Sublease income			(26.4)		(24.2)
Lease cost				$	3.8	$	3.3
Lease (income) cost								Lease (income) cost			$	(1.2)	$	0.1

(1)Operating lease cost for the three months ended March 31, 2021 previously disclosed as $25.1 million was overstated due to the inclusion of certain finance lease activity.The correct operating lease cost for the three months ended March 31, 2021 was $21.3 million as reflected in the above table. The overstatement only impacted this note disclosure, and there was no impact to the Consolidated Statement of Comprehensive Income.

Future minimum lease payments under noncancelable leases as lessee as of March 31, ~~2021~~2022 were as follows:


		Finance Leases		Operating Leases			Finance Leases		Operating Leases
		(In millions)					(In millions)
2021 (remaining nine months)		$	11.7	$	69.0
2022		14.4		86.2
2022 (remaining nine months)						2022 (remaining nine months)	$	10.8	$	69.2
2023	2023	11.6		71.0		2023	11.9		77.8
2024	2024	9.7		65.8		2024	10.2		73.3
2025	2025	8.5		57.0		2025	8.5		60.7
2026						2026	7.9		51.2
Thereafter	Thereafter	50.8		146.6		Thereafter	48.4		135.4
Total minimum lease payments	Total minimum lease payments	106.7		495.6		Total minimum lease payments	97.7		467.6
Less: interest/imputed interest	Less: interest/imputed interest	(30.2)		(90.9)		Less: interest/imputed interest	(26.6)		(81.5)
Total obligations	Total obligations	76.5		404.7		Total obligations	71.1		386.1
Less: current portion	Less: current portion	(10.3)		(70.3)		Less: current portion	(9.9)		(72.5)
Long-term lease obligations	Long-term lease obligations	$	66.2	$	334.4	Long-term lease obligations	$	61.2	$	313.6

The weighted average remaining lease term as of March 31, ~~2021~~2022 was ~~7.2~~9.9 years for finance leases and ~~9.2~~6.7 years for operating leases. The weighted average discount rate as of March 31, ~~2021~~2022 was ~~10.2%~~10.0% for finance leases and ~~5.6%~~5.5% for operating leases.

Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

6. Lease Disclosures (Continued)

During the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company made the following cash payments for leases:


		Three months ended March 31,							Three months ended March 31,
				2021		2020				2022		2021
			(In millions)							(In millions)
Principal payments on finance lease obligations	Principal payments on finance lease obligations			$	2.6	$	3.0	Principal payments on finance lease obligations		$	2.3	$	2.6
Interest payments on finance lease obligations	Interest payments on finance lease obligations			$	1.5	$	1.7	Interest payments on finance lease obligations		$	1.3	$	1.5
Payments on operating leases	Payments on operating leases			$	23.0	$	23.4	Payments on operating leases		$	23.0	$	23.0
Variable lease payments	Variable lease payments			$	0.3	$	0.1	Variable lease payments		$	2.1	$	0.3

The Company's income from operating leases for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 was as follows:


		Three months ended March 31,							Three months ended March 31,
				2021		2020					2022		2021
			(In millions)							(In millions)
Minimum lease payments	Minimum lease payments			$	23.8	$	25.4	Minimum lease payments			$	24.4	$	23.8
Variable lease income	Variable lease income			1.6		2.4		Variable lease income			3.9		1.6
Total operating lease income	Total operating lease income			$	25.4	$	27.8	Total operating lease income			$	28.3	$	25.4

Minimum payments to be received as lessor under noncancelable operating leases as of March 31, ~~2021~~2022 were as follows:


		(In millions)			(In millions)
2021 (remaining nine months)		$	75.6
2022		98.8
2022 (remaining nine months)				2022 (remaining nine months)	$	76.8
2023	2023	95.0		2023	98.6
2024	2024	86.9		2024	90.2
2025	2025	75.0		2025	77.2
2026				2026	62.9
Thereafter	Thereafter	164.3		Thereafter	133.9
Total minimum rents receivable	Total minimum rents receivable	$	595.6	Total minimum rents receivable	$	539.6

The Company's income from ~~direct financing~~real estate leases for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 was as follows:


		Three months ended March 31,							Three months ended March 31,
				2021		2020					2022		2021
			(In millions)							(In millions)
Interest income	Interest income			$	0.6	$	1.0	Interest income			$	0.4	$	0.6
Variable lease income	Variable lease income			0.1		0.2		Variable lease income			0.1		0.1
Total operating lease income				$	0.7	$	1.2
Total real estate lease income								Total real estate lease income			$	0.5	$	0.7

Minimum payments to be received as lessor under noncancelable ~~direct financing~~real estate leases as of March 31, ~~2021~~2022 were as follows:


		(In millions)			(In millions)
2021 (remaining nine months)		$	7.5
2022		7.5
2022 (remaining nine months)				2022 (remaining nine months)	$	5.3
2023	2023	3.6		2023	3.6
2024	2024	1.5		2024	1.4
2025	2025	0.7		2025	0.7
2026				2026	0.6
Thereafter	Thereafter	3.1		Thereafter	2.6
Total minimum rents receivable	Total minimum rents receivable	23.9		Total minimum rents receivable	14.2
Less: unearned income	Less: unearned income	(3.8)		Less: unearned income	(2.1)
Total net investment in direct financing leases		20.1
Total net investment in real estate leases				Total net investment in real estate leases	12.1
Less: current portion	Less: current portion	(7.9)		Less: current portion	(5.7)
Long-term investment in direct financing leases		$	12.2
Long-term investment in real estate leases				Long-term investment in real estate leases	$	6.4

Table of Contents

Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

7. Long-Term Debt

At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, long-term debt consisted of the following:


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(In millions)					(In millions)
Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I	Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I	$	696.5	$	698.3	Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I	$	693.0	$	693.0
Series 2019-1 4.723% Fixed Rate Senior Secured Notes, Class A-2-II	Series 2019-1 4.723% Fixed Rate Senior Secured Notes, Class A-2-II	597.0		598.5		Series 2019-1 4.723% Fixed Rate Senior Secured Notes, Class A-2-II	594.0		594.0
Series 2019-1 Variable Funding Senior Notes Class A-1, variable interest rate of 2.42% at December 31, 2020		0		220.0

Debt issuance costs	Debt issuance costs	(9.1)		(11.8)		Debt issuance costs	(6.8)		(7.4)
Long-term debt, net of debt issuance costs	Long-term debt, net of debt issuance costs	1,284.4		1,505.0		Long-term debt, net of debt issuance costs	1,280.2		1,279.6
Current portion of long-term debt	Current portion of long-term debt	(13.0)		(13.0)		Current portion of long-term debt	—		—
Long-term debt	Long-term debt	$	1,271.4	$	1,492.0	Long-term debt	$	1,280.2	$	1,279.6

principal amount of $600 million (the “Class A-2-II Notes” and, together with the Class A-2-I Notes, the “2019 Class A-2 Notes”). The 2019 Class A-2 Notes were issued pursuant to an offering exempt from registration under the Securities Act of 1933, as amended.

The Co-Issuers also entered into a revolving financing facility, the 2019-1 Variable Funding Senior Notes, Class A-1 (the “Credit Facility”), that allows for drawings up to $225 million of variable funding notes and the issuance of letters of credit. The Credit Facility and the 2019 Class A-2 Notes are referred to collectively herein as the “New Notes.” The New Notes were issued in a securitization transaction pursuant to which substantially all the domestic revenue-generating assets and domestic intellectual property held by the Co-Issuers and certain other special-purpose, wholly-owned indirect subsidiaries of the Company (the “Guarantors”) were pledged as collateral to secure the New Notes.

The New Notes were issued under a Base Indenture, dated as of September 30, 2014, and amended and restated as of June 5, 2019 (the “Base Indenture”), and the related Series 2019-1 Supplement to the Base Indenture, dated June 5, 2019 (the “Series 2019-1 Supplement”), among the Co-Issuers and Citibank, N.A., as the trustee (in such capacity, the “Trustee”) and securities intermediary. The Base Indenture and the Series 2019-1 Supplement (collectively, the “Indenture”) will allow the Co-Issuers to issue additional series of notes in the future subject to certain conditions set forth therein.

2019 Class A-2 Notes

The legal final maturity of the 2019 Class A-2 Notes is in June 2049, but rapid amortization will apply if the Class A-2-I Notes are not repaid by June 2024 (the “Class A-2-I Anticipated Repayment Date”) and for the Class A-2-II Notes if not repaid by June 2026 (the “Class A-2-II Anticipated Repayment Date”). If the Co-Issuers have not repaid or refinanced the Class A-2-I Notes by the Class A-2-I Anticipated Repayment Date or the Class A-2-II Notes by the Class A-2-II Anticipated Repayment Date, then additional interest will accrue on the Class A-2-I Notes and the Class A-2-II Notes, as applicable, at the greater of: (A) 5.0% and (B) the amount, if any, by which the sum of the following exceeds the applicable Series 2019-1 Class A-2 Note interest rate: (x) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on the applicable anticipated repayment date of the United States Treasury Security having a term closest to 10 years plus (y) 5.0%, plus (z) 2.15% for the Series 2019-1 Class A-2-I Notes and 2.64% for the Series 2019-1 Class A-2-II Notes.

As of March 31, 2022, the Company's leverage ratio was 4.05x. As a result, quarterly principal payments on the 2019 Class A-2 Notes of $3.25 million currently are not required.

Table of Contents

Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

7. Long-Term Debt (Continued)

As of March 31, 2021, the Company's leverage ratio was 7.02x. As a result, quarterly principal payments on the 2019 Class A-2 Notes of $3.25 million continue to be required. Exceeding the leverage ratio of 5.25x does not violate any covenant related to the New Notes.

The Company may voluntarily repay the 2019 Class A-2 Notes at any time; however, if the 2019 Class A-2 Notes are repaid prior to certain dates, the Company would be required to pay make-whole premiums. As of March 31, ~~2021,~~2022, the make-whole premium associated with voluntary prepayment of the Class A-2-I Notes was approximately ~~$29~~$3 million; this amount declines progressively each quarter to zero in June 2022. As of March 31, ~~2021,~~2022, the make-whole premium associated with voluntary prepayment of the Class A-2-II Notes was approximately ~~$59~~$18 million; this amount declines progressively each quarter to zero in June 2024. The Company would also be subject to a make-whole premium in the event of a mandatory prepayment required following a Rapid Amortization Event or certain asset dispositions. The mandatory make-whole premium requirements are considered derivatives embedded in the New Notes that must be bifurcated for separate valuation. The Company estimated the fair value of these derivatives to be immaterial as of March 31, ~~2021,~~2022, based on the probability-weighted discounted cash flows associated with either event.

2019 Class A-1 Notes

The Co-Issuers entered into the Credit Facility that allows for drawings up to $225 million of variable funding notes and the issuance of letters of credit. The applicable interest rate under the Credit Facility depends on the type of borrowing by the Co-Issuers. The applicable interest rate for advances is generally calculated at a per annum rate equal to the commercial paper funding rate or one-, two-, three- or six-month Eurodollar Funding Rate, in either case, plus 2.15%. The applicable interest rate for swingline advances and unreimbursed draws on outstanding letters of credit is a per annum base rate equal to the sum of (a) 1.15% plus (b) the greatest of (i) the Prime Rate in effect from time to time, (ii) the Federal Funds Rate in effect from time to time plus 0.50% and (iii) the one-month Eurodollar Funding Rate plus 1.00%. There is no upfront fee for the Credit Facility. There is a fee of 50 basis points on any unused portion of the revolving financing facility. Undrawn face amounts of outstanding letters of credit that are not cash collateralized accrue a fee of 2.15% per annum.

In March 2020, the Company borrowed $220.0 million against the Credit Facility. The ~~maximum amount of borrowings from the Credit Facility outstanding during the three months ended March 31, 2021 was $220.0 million. The~~ $220.0 million was repaid on March 5, 2021, and asthere have been no new borrowings since that date. As of March 31, ~~2021,~~2022, there were no outstanding borrowings under the Credit Facility. The interest rate for borrowings under the Credit Facility is the three-month LIBOR rate plus 2.15% for 60% of the advances and the commercial paper funding rate of our conduit investor plus 2.15% for 40% of the advances. ~~The weighted average interest rate on Credit Facility borrowings for the period outstanding during the three months ended March 31, 2021 was 2.4%.~~

At March 31, ~~2021, $3.3~~2022, $3.5 million was pledged against the Credit Facility for outstanding letters of credit, leaving ~~$221.7~~$221.5 million available for borrowing. The letters of credit are used primarily to satisfy insurance-related collateral requirements.

Covenants and Restrictions

The New Notes are subject to a series of covenants and restrictions customary for transactions of this type, including: (i) that the Co-Issuers maintain specified reserve accounts to be used to make required payments in respect of the New Notes, (ii) provisions relating to optional and mandatory prepayments, and the related payment of specified amounts, including specified call redemption premiums in the case of Class A-2 Notes under certain circumstances; (iii) certain indemnification payments in the event, among other things, the transfers of the assets pledged as collateral for the New Notes are in stated ways defective or ineffective and (iv) covenants relating to recordkeeping, access to information and similar matters. The New Notes are subject to customary rapid amortization events provided for in the Indenture, including events tied to failure of the Securitization Entities (as defined in the Indenture) to maintain the stated debt service coverage ratio (“DSCR”), the sum of domestic retail sales for all restaurants being below certain levels on certain measurement dates, certain manager termination events, certain events of default and the failure to repay or refinance the Class A-2 Notes on the anticipated repayment dates. The New Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due on or with respect to the New Notes, failure of the Securitization Entities to maintain the stated DSCR, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties and certain judgments.

~~Table of Contents~~

~~Dine Brands Global, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~7. Long-Term Debt (Continued)~~

Table of Contents

Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

7. Long-Term Debt (Continued)

Indenture) in a restricted account. In a Rapid Amortization Event, all excess Cash Flow is retained and used to retire principal amounts of debt. In a Manager Termination Event, the Company may be replaced as manager of the assets securitized under the Indenture. In a Default Event, the outstanding principal amount and any accrued but unpaid interest can be called to become immediately due and payable. Key DSCRs are as follows:

•DSCR less than 1.75x - Cash Flow Sweeping Event

•DSCR less than 1.20x - Rapid Amortization Event

•Interest-only DSCR less than 1.20x - Manager Termination Event

•Interest-only DSCR less than 1.10x - Default Event

The Company's DSCR for the reporting period ended March 31, ~~2021~~2022 was approximately ~~3.45x.~~4.6x.

Debt Issuance Costs

Amortization of costs incurred in connection with the issuance of the 2019 Class A-2 Notes of $0.5 million and $0.5 million were included in interest expense for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. Amortization costs incurred in connection with the Company's Credit Facility and prior credit facility of $0.2 million and $0.2 million were included in interest expense for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

At March 31, ~~2021,~~2022, total unamortized debt issuance costs related to the 2019 Class A-2 Notes of ~~$9.1~~$6.8 million are reported as a direct reduction of the 2019 Class A-2 Notes in the Consolidated Balance Sheets. At March 31, ~~2021,~~2022, total unamortized debt issuance costs of ~~$2.0~~$1.4 million related to the Credit Facility and prior credit facility are classified as other long-term assets because there are no borrowings outstanding against the Credit Facility.

Maturities of Long-term Debt

•The anticipated repayment date of the Class A-2-I Notes is June 2024.

•The anticipated repayment date of the Class A-2-II Notes is in June 2026.

•Quarterly principal payments on the Class A-2-I and Class A-2-II Notes totaling $3.25 million ($13.0 million per annum) are required if the Company's leverage ratio is greater than 5.25x.

8. Stockholders' Deficit

Dividends

Dividends declared and paid per share for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 were as follows:


		Three months ended March 31,						Three months ended March 31,
			2021		2020				2022		2021
Dividends declared per common share	Dividends declared per common share		$	0	$	0.76	Dividends declared per common share		$	0.46	$	—
Dividends paid per common share	Dividends paid per common share		$	0	$	0.69	Dividends paid per common share		$	0.86	$	—

On October 28, 2021, the Board of Directors declared a fourth quarter 2021 cash dividend of $0.40 per share of common

stock, paid on January 7, 2022 to the stockholders of record as of the close of business on December 17, 2021.

On February 17, 2022, the Company's Board of Directors declared a first quarter 2022 cash dividend of $0.46 per share of

common stock, paid on April 1, 2022 to the stockholders of record as of the close of business on March 21, 2022.

Stock Repurchase Program

In February 2019, the Company’s Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $200 million of the Company’s common stock (the “2019 Repurchase Program”) on an opportunistic basis from time to time in the open market or in privately negotiated transactions based on business, market, applicable legal requirements and other considerations. The 2019 Repurchase Program, as approved by the Board of Directors, does not require the repurchase of a specific number of shares and can be terminated at any time.

Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

8. Stockholders' Deficit (Continued)

On February 17, 2022, the Company's Board of Directors authorized a new share repurchase program, effective April 1, 2022, of up to $250 million (the “2022 Repurchase Program”). In connection with the approval of the 2022 Repurchase Program, the 2019 Share Repurchase Program terminated effective April 1, 2022.

~~The Company did 0t repurchase any shares during three months ended March 31, 2021, as compared to repurchasing 459,899 shares during~~During the three months ended March 31, ~~2020. As~~2022, the Company repurchased 588,108 shares of ~~March 31, 2021, cumulative repurchases~~common stock at a cost of ~~stock total 1,697,597~~$41.4 million. Cumulatively, the Company repurchased 2,344,804 shares at a cost of ~~$129.8~~$175.8 million ~~with a dollar value of $70.2 million remaining for repurchase~~ under the 2019 Repurchase ~~Program.~~Program through April 1, 2022, the effective date of termination as noted above.

Treasury Stock

Repurchases of the Company's common stock are included in treasury stock at the cost of shares repurchased plus any transaction costs. Treasury stock may be re-issued when stock options are exercised, when restricted stock awards are granted and when restricted stock units settle in stock upon vesting. The cost of treasury stock re-issued is determined using the first-in, first-out (“FIFO”) method. During the three months ended March 31, ~~2021,~~2022, the Company re-issued ~~539,134~~171,302 shares of treasury stock at a total FIFO cost of ~~$21.8~~$8.0 million.

9. Income Taxes

The Company's effective tax rate was 27.2% (a tax provision of $9.3 million on pre-tax book income of $34.2 million) for the three months ended March 31, 2022, as compared to (6.6)% (a tax benefit of $1.6 million on ~~the pretax~~pre-tax book income of $24.0 million) for the three months ended March 31, ~~2021, as compared to 23.2% for the three months ended March 31, 2020.~~2021. The effective tax rate for the three months ended March 31, ~~2021~~2022 was ~~lower~~different than the rate of the prior ~~year~~comparable period primarily due to the recognition of excess tax benefits on stock-based ~~compensation.~~compensation related to the departure of the Company's previous chief executive officer in the first quarter of 2021.

The total gross unrecognized tax benefit as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 was ~~$2.5~~$2.2 million and ~~$2.2~~$1.9 million, respectively, excluding interest, penalties and related tax benefits. The Company estimates the unrecognized tax benefit as of March 31, ~~2021~~2022 may decrease over the upcoming 12 months by an amount up to ~~$0.8~~$0.3 million related to settlements with taxing authorities and expiring statutes of limitations. For the remaining liability, due to the uncertainties related to these tax matters, the Company is unable to make a reasonable estimate as to when cash settlement with a taxing authority will occur.

As of March 31, ~~2021,~~2022, accrued interest was ~~$0.9~~$0.7 million and accrued penalties were less than $0.1 million, excluding any related income tax benefits. As of December 31, ~~2020,~~2021, accrued interest was ~~$0.9~~$0.6 million and accrued penalties were less than $0.1 million, excluding any related income tax benefits. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as a component of its income tax provision recognized in its Consolidated Statements of Comprehensive Income.

The Company files federal income tax returns and the Company or one of its subsidiaries file income tax returns in various state and international jurisdictions. With few exceptions, the Company is no longer subject to federal tax examinations by tax authorities for years before 2017 and state or non-United States tax examinations by tax authorities for years before 2011. The Company believes that adequate reserves have been provided related to all matters contained in the tax periods open to examination.

On March 11, 2021, the American Rescue Plan Act of 2021 (“ARP Act”) was enacted in response to the COVID-19 pandemic. The Company is continuing to evaluate the impact of the ARP Act, but at present does not expect the ARP Act would result in a material impact to our income tax benefit or provision.

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

10. Stock-Based Compensation

The following table summarizes the components of stock-based compensation expense included in general and administrative expenses in the Consolidated Statements of Comprehensive Income:


		Three months ended March 31,							Three months ended March 31,
				2021		2020					2022		2021
Total stock-based compensation expense:	Total stock-based compensation expense:		(In millions)					Total stock-based compensation expense:		(In millions)

Equity classified awards expense	Equity classified awards expense			$	3.1	$	4.1	Equity classified awards expense			$	4.4	$	3.1
Liability classified awards expense (credit)				1.5		(0.6)
Liability classified awards expense								Liability classified awards expense			0.4		1.5
Total pre-tax stock-based compensation expense	Total pre-tax stock-based compensation expense			4.6		3.5		Total pre-tax stock-based compensation expense			4.8		4.6
Book income tax benefit	Book income tax benefit			(1.1)		(0.9)		Book income tax benefit			(1.2)		(1.1)
Total stock-based compensation expense, net of tax	Total stock-based compensation expense, net of tax			$	3.5	$	2.6	Total stock-based compensation expense, net of tax			$	3.6	$	3.5

As of March 31, ~~2021,~~2022, total unrecognized compensation expense of ~~$23.6~~$26.3 million related to restricted stock and restricted stock units and $4.6 million related to stock options are expected to be recognized over a weighted average period of 1.7 years for restricted stock and restricted stock units and 1.8 years for stock options.

Fair Value Assumptions

The ~~Company granted 91,743~~following table summarizes the assumptions used in the Black-Scholes model for stock options granted during the three months ended March 31, ~~2021 for which the fair value was estimated using a Black-Scholes option pricing model. The following summarizes the weighted average assumptions used in the Black-Scholes model:~~2022.


Risk-free interest rate	~~0.5~~1.7	%
Historical volatility	~~67.7~~70.1	%
Dividend yield	02.6	%
Expected years until exercise	4.5
Fair value of options granted	$~~39.85~~33.23

Equity Classified Awards - Stock Options

Stock option balances at March 31, ~~2021,~~2022, and activity for the three months ended March 31, ~~2021~~2022 were as follows:

Shares Weighted
Average
Exercise
Price Weighted Average
Remaining
Contractual Term
(in Years) Aggregate
Intrinsic
Value (in Millions)
Outstanding at December 31, 2020 1,014,670 $ 64.16
Granted 91,743 74.57
Exercised (428,376) 45.48
Expired (20,169) 98.11
Forfeited (36,093) 88.46
Outstanding at March 31, 2021 621,775 76.06 6.7 $ 10.5
Vested at March 31, 2021 and Expected to Vest 595,541 75.87 6.6 $ 10.2
Exercisable at March 31, 2021 423,603 $ 72.91 5.6 $ 8.7


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)	Aggregate Intrinsic Value (in Millions)
Outstanding at December 31, 2021	475,904	$	76.65
Granted	75,795	70.08
Exercised	(3,505)	68.08

Forfeited	(2,635)	90.54
Outstanding at March 31, 2022	545,559	75.72		7.0	$	3.9
Vested at March 31, 2022 and Expected to Vest	522,263	75.82		6.9	$	3.7
Exercisable at March 31, 2022	374,716	$	75.93	6.0	$	3.1

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price of the Company’s common stock on the last trading day of the first quarter of ~~2021~~2022 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, ~~2021.~~2022. The aggregate intrinsic value will change based on the fair market value of the Company’s common stock and the number of in-the-money options.

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

10. Stock-Based Compensation (Continued)

Equity Classified Awards - Restricted Stock and Restricted Stock Units

Outstanding balances as of March 31, ~~2021,~~2022, and activity related to restricted stock and restricted stock units for the three months ended March 31, ~~2021~~2022 were as follows:


		Restricted Stock	Weighted Average Grant Date Fair Value		Stock-Settled Restricted Stock Units	Weighted Average Grant Date Fair Value			Restricted Stock	Weighted Average Grant Date Fair Value		Stock-Settled Restricted Stock Units	Weighted Average Grant Date Fair Value
Outstanding at December 31, 2020		254,331	$	76.50	355,570	$	28.01
Outstanding at December 31, 2021								Outstanding at December 31, 2021	276,611	$	80.85	105,592	$	71.00
Granted	Granted	110,840	82.44		68,578	62.92		Granted	167,797	70.09		59,002	46.64
Released	Released	(40,416)	66.16		(314,713)	22.84		Released	(56,687)	89.34		(40,599)	66.31
Forfeited	Forfeited	(18,644)	84.15		0	0		Forfeited	(6,667)	86.86		—	—
Outstanding at March 31, 2021		306,111	$	79.55	109,435	$	64.76
Outstanding at March 31, 2022								Outstanding at March 31, 2022	381,054	$	74.77	123,995	$	61.01

Liability Classified Awards - Cash-settled Restricted Stock Units

The Company has granted cash-settled restricted stock units to certain employees. These instruments are recorded as liabilities at fair value as of the respective period end.


						Cash-Settled Restricted Stock Units
Outstanding at December 31, ~~2020~~2021						~~52,956~~ 12,799
Granted						67
Released						(12,866)

~~Released~~						~~(38,171)~~
~~Forfeited~~						~~(54)~~
Outstanding at March 31, ~~2021~~2022						~~14,731~~—

For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, an expense of ~~$1.4~~$0.2 million and ~~a credit of $1.3~~$1.4 million ~~respectively,~~, respectively, was included as stock-based compensation expense related to cash-settled restricted stock units. At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, liabilities ~~of $0.8 million~~were zero and ~~$2.1~~$0.9 million, respectively, related to cash-settled restricted stock units were included as part of accrued employee compensation and benefits in the Consolidated Balance Sheets.

Liability Classified Awards - Long-Term Incentive Awards

The Company has granted cash long-term incentive awards (“LTIP awards”) to certain employees. Annual LTIP awards vest over a three-year period and are determined using multipliers from 0% to 200% of the target award based on the total stockholder return of Dine Brands Global common stock compared to the total stockholder returns of a peer group of companies. The awards are considered stock-based compensation and are classified as liabilities measured at fair value as of the respective period end. For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, an expense of ~~$0.1~~$0.2 million and ~~$0.8~~$0.1 million, respectively, were included in total stock-based compensation expense related to LTIP awards. At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, liabilities of ~~$0.8~~$1.2 million and ~~$2.1~~$1.5 million, respectively, related to LTIP awards were included as part of accrued employee compensation and benefits in the Consolidated Balance Sheets.

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

11. Net Income per Share

The computation of the Company's basic and diluted net income per share is as follows:



	Three months ended March 31,
		2022		2021
		(In thousands, except per share data)
Numerator for basic and diluted income per common share:
Net income		$	24,850	$	25,603
Less: Net income allocated to unvested participating restricted stock		(598)		(548)
Net income available to common stockholders - basic		24,252		25,055
Effect of unvested participating restricted stock in two-class calculation		1		6

Net income available to common stockholders - diluted		$	24,253	$	25,061
Denominator:
Weighted average outstanding shares of common stock - basic		16,722		16,460
Dilutive effect of stock options		36		170
Weighted average outstanding shares of common stock - diluted		16,758		16,630
Net income per common share:
Basic		$	1.45	$	1.52
Diluted		$	1.45	$	1.51

12. Segments

The Company identifies its reporting segments based on the organizational units used by management to monitor performance and make operating decisions. The Company currently has 5 operating segments: Applebee's franchise operations, Applebee's company-operated restaurant operations, IHOP franchise operations, rental operations and financing operations. The Company has 4 reportable segments: franchise operations, (an aggregation of Applebee's and IHOP franchise operations), company-operated restaurant operations, rental operations and financing operations. The Company

considers these to be its reportable segments, regardless of whether any segment exceeds 10% of consolidated revenues, income before income tax provision or total assets.

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~~Dine Brand Global, Inc. and Subsidiaries~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~11. Segments (Continued)~~

As of March 31, ~~2021,~~2022, the franchise operations segment consisted of (i) ~~1,636~~1,606 restaurants operated by Applebee’s franchisees in the United States, 2 U.S. territories and 11 countries outside the United States and (ii) ~~1,749~~1,756 restaurants operated by IHOP franchisees and area licensees in the United States, 2 U.S. territories and 7 countries outside the United States. Franchise operations revenue consists primarily of franchise royalty revenues, franchise advertising revenue, sales of proprietary products to franchisees (primarily pancake and waffle dry mixes for the IHOP restaurants), and franchise fees. Franchise operations expenses include advertising expenses, the cost of IHOP proprietary products, bad debt expense, franchisor contributions to marketing funds, pre-opening training expenses and other franchise-related costs.

Company restaurant sales are retail sales at 69 Applebee's company-operated restaurants. Company restaurant expenses are operating expenses at company-operated restaurants and include food, labor, utilities, rent and other restaurant operating costs.

Rental operations revenue includes revenue from operating leases and interest income from ~~direct financing~~real estate leases. Rental operations expenses are costs of operating leases and interest expense from finance leases on which the Company is the lessee.

Financing revenues primarily consist of interest income from the financing of IHOP equipment leases and franchise fees and interest income on Applebee's notes receivable from franchisees. Financing expenses are the cost of taxes related to IHOP equipment leases.

~~Information on segments is as follows:~~

Three months ended March 31,
2021 2020
(In millions)
Revenues from external customers:
Franchise operations $ 141.0 $ 145.1
Rental operations 26.1 29.0
Company restaurants 36.0 31.3
Financing operations 1.1 1.5
Total $ 204.2 $ 206.9
Interest expense:
Rental operations $ 1.3 $ 1.6
Company restaurants 0.9 0.5
Corporate 16.5 15.2
Total $ 18.7 $ 17.3
Depreciation and amortization:
Franchise operations $ 2.5 $ 2.6
Rental operations 2.8 3.1
Company restaurants 1.8 1.6
Corporate 2.9 3.3
Total $ 10.0 $ 10.6
Gross profit, by segment:
Franchise operations $ 76.0 $ 75.6
Rental operations 5.2 6.5
Company restaurants 3.1 1.0
Financing operations 1.0 1.3
Total gross profit 85.3 84.4
Corporate and unallocated expenses, net (61.3) (55.3)
Income before income taxes $ 24.0 $ 29.1

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Dine ~~Brands~~Brand Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

12. Segments (Continued)

~~12. Net Income per Share~~

~~The computation of the Company's basic and diluted net income per share~~Information on segments is as follows:

Three months ended March 31,
2021 2020
(In thousands, except per share data)
Numerator for basic and diluted income per common share:
Net income $ 25,603 $ 22,328
Less: Net income allocated to unvested participating restricted stock (548) (748)
Net income available to common stockholders - basic 25,055 21,580
Effect of unvested participating restricted stock in two-class calculation 6 4
Net income available to common stockholders - diluted $ 25,061 $ 21,584
Denominator:
Weighted average outstanding shares of common stock - basic 16,460 16,263
Dilutive effect of stock options 170 207
Weighted average outstanding shares of common stock - diluted 16,630 16,470
Net income per common share:
Basic $ 1.52 $ 1.33
Diluted $ 1.51 $ 1.31



	Three months ended March 31,
		2022		2021
		(In millions)
Revenues from external customers:

Franchise operations		$	161.2	$	141.0
Rental operations		28.8		26.1
Company restaurants		39.4		36.0
Financing operations		1.0		1.1
Total		$	230.4	$	204.2

Interest expense:

Rental operations		$	1.1	$	1.3
Company restaurants		0.8		0.9
Corporate		15.5		16.5
Total		$	17.4	$	18.7

Depreciation and amortization:

Franchise operations		$	2.5	$	2.5
Rental operations		2.6		2.8
Company restaurants		1.9		1.8
Corporate		2.9		2.9
Total		$	9.9	$	10.0

Gross profit (loss), by segment:

Franchise operations		$	83.2	$	76.0
Rental operations		6.7		5.2
Company restaurants		2.0		3.1
Financing operations		0.9		1.0
Total gross profit		92.8		85.3
Corporate and unallocated expenses, net		(58.6)		(61.3)
Income (loss) before income taxes		$	34.2	$	24.0

13. Closure and Impairment Charges

Closure and ~~Long-lived Asset Impairment Charges~~

~~Closure and long-lived tangible asset~~ impairment charges for the three months ended March 31, 2022 and 2021 were as follows:

Three Months Ended
March 31,
2021 2020
(In millions)
Closure charges $ 1.9 $ (0.0)
Long-lived tangible asset impairment 0.1 0.0
Total closure and long-lived asset impairment charges $ 2.0 $ (0.0)


Closure and Impairment Charges	Three months ended March 31,
		2022		2021
		(In millions)
Closure charges		$	0.1	$	1.9
Long-lived tangible asset impairment		—		0.1



Total impairment and closure charges		$	0.1	$	2.0

~~Closure Charges~~

The closure charges for the three months ended March 31, 2022 related to revisions to existing closure reserves, including accretion, primarily for 28 IHOP restaurants closed prior to December 31, 2021.

The closure charges of $1.9 million for the three months ended March 31, 2021 related to the establishment of or ~~revision~~revisions to existing closure reserves for approximately 35 IHOP restaurants.

~~Long-lived Tangible Asset Impairment~~

The long-lived asset impairment of ~~$0.1~~$0.1 millionfor the three months ended March 31, 2021 related 1 to one IHOP franchisee-operated ~~restaurant~~restaurants for which the carrying amount exceeded the undiscounted cash flows. The impairment recorded represented the difference between the carrying value and the estimated fair value. The impairment related to operating lease right-of-use assets that had been recorded in 2019 upon adoption of new lease accounting guidance codified in Accounting Standards Codification Topic 842.

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

14. Fair Value Measurements

The Company does not have a material amount of financial assets or liabilities that are required under U.S. GAAP to be measured on a recurring basis at fair value. The Company is not a party to any material derivative financial instruments. The Company does not have a material amount of non-financial assets or non-financial liabilities that are required under U.S. GAAP to be measured at fair value on a recurring basis. The Company has not elected to use the fair value measurement option, as permitted under U.S. GAAP, for any assets or liabilities for which fair value measurement is not presently required.

The Company believes the fair values of cash equivalents, accounts receivable and accounts payable approximate their carrying amounts due to their short duration.

The fair values of the Company's 2019 Class A-2 Notes at March 31, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(In millions)					(In millions)
Face Value of Class A-2 Notes	Face Value of Class A-2 Notes	$	1,293.5	$	1,296.8	Face Value of Class A-2 Notes	$	1,287.0	$	1,287.0
Fair Value of Class A-2 Notes	Fair Value of Class A-2 Notes	$	1,338.5	$	1,259.5	Fair Value of Class A-2 Notes	$	1,275.8	$	1,312.9

The fair values were determined based on Level 2 inputs, including information gathered from brokers who trade in the Company’s 2019 Class A-2 Notes, as well as information on notes that are similar to those of the Company.

15. Commitments and Contingencies

Litigation, Claims and Disputes

The Company is subject to various lawsuits, administrative proceedings, audits and claims arising in the ordinary course of business. Some of these lawsuits purport to be class actions and/or seek substantial damages. The Company is required under U.S. GAAP to record an accrual for litigation loss contingencies that are both probable and reasonably estimable. Legal fees and expenses associated with the defense of all of the Company's litigation are expensed as such fees and expenses are incurred. Management regularly assesses the Company's insurance coverage, analyzes litigation information with the Company's attorneys and evaluates the Company's loss experience in connection with pending legal proceedings. While the Company does not presently believe that any of the legal proceedings to which it is currently a party will ultimately have a material adverse impact on the Company, there can be no assurance that the Company will prevail in all the proceedings the Company is party to, or that the Company will not incur material losses from them.

Lease Guarantees

In connection with the sale of Applebee’s restaurants to franchisees, the Company has, in certain cases, guaranteed or has potential continuing liability for lease payments totaling ~~$235.9~~$219.6 million as of March 31, ~~2021.~~2022. This amount represents the maximum potential liability for future payments under these leases. These leases have been assigned to the buyers and expire at the end of the respective lease terms, which range from ~~2021~~2022 through 2048. Excluding unexercised option periods, the Company's potential liability for future payments under these leases is ~~$34.2~~$48.0 million. In the event of default, the indemnity and default clauses in the sale or assignment agreements govern the Company's ability to pursue and recover damages incurred.

16. Cash, Cash Equivalents and Restricted Cash

Cash and Cash Equivalents

The Company considers all highly liquid investment securities with remaining maturities at the date of purchase of three months or less to be cash equivalents. These cash equivalents are stated at cost which approximates market value. Cash held related to IHOP advertising funds and the Company's gift card programs is not considered to be restricted cash as there are no restrictions on the use of these funds.

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Dine Brands Global, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

16. Cash, Cash Equivalents and Restricted Cash (Continued)

The components of cash and cash equivalents were as follows:


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(In millions)					(In millions)
Money market funds	Money market funds	$	30.0	$	175.0	Money market funds	$	15.0	$	30.0
IHOP advertising funds and gift card programs	IHOP advertising funds and gift card programs	72.0		71.6		IHOP advertising funds and gift card programs	92.4		101.5
Other depository accounts	Other depository accounts	77.6		136.8		Other depository accounts	187.3		229.9
Total cash and cash equivalents	Total cash and cash equivalents	$	179.6	$	383.4	Total cash and cash equivalents	$	294.7	$	361.4

~~The decrease in total cash and cash equivalents between December 31, 2020 and March 31, 2021 was due to the repayment of $220.0 million previously drawn on the Company's Credit Facility.~~

Current Restricted Cash

Current restricted cash primarily consisted of funds required to be held in trust in connection with the Company's securitized debt and funds from Applebee's franchisees pursuant to franchise agreements, usage of which was restricted to advertising activities. The components of current restricted cash were as follows:


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(In millions)					(In millions)
Securitized debt reserves	Securitized debt reserves	$	33.9	$	27.0	Securitized debt reserves	$	30.6	$	29.9
Applebee's advertising funds	Applebee's advertising funds	26.1		12.8		Applebee's advertising funds	16.5		17.5
Other	Other	0.1		0.1		Other	0.1		0.1
Total current restricted cash	Total current restricted cash	$	60.1	$	39.9	Total current restricted cash	$	47.2	$	47.5

Non-current Restricted Cash

Non-current restricted cash was ~~$32.8~~$16.4 million and $16.4 million at ~~both~~ March 31, ~~2021~~2022 and December 31, ~~2020~~2021, respectively, and represents interest reserves required to be set aside for the duration of the Company's securitized debt. The required reserve is approximately one quarter's interest payment on the Company's securitized debt, currently approximately $16 million. The Company voluntarily increased the amount held in non-current cash to twice the required amount during the year ended December 31, 2020.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) in conjunction with the consolidated financial statements and the related notes that appear elsewhere in this report. Statements contained in this report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please refer to the section of this report under the heading “Cautionary Statement Regarding Forward-Looking Statements” for more information.

Overview

The following discussion and analysis provides information which we believe is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The discussion should be read in conjunction with the consolidated financial statements and the notes thereto included in Item 1 of Part I of this Quarterly Report and the audited consolidated financial statements and notes thereto and the MD&A contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021. Except where the context indicates otherwise, the words “we,” “us,” “our,” “Dine Brands Global” and the “Company” refer to Dine Brands Global, Inc., together with its subsidiaries that are consolidated in accordance with United States generally accepted accounting principles (“U.S. GAAP”). The financial tables appearing in MD&A present amounts in millions of dollars that are rounded from our consolidated financial statements presented in thousands of dollars. As a result, the tables may not foot or crossfoot due to rounding.

Through various subsidiaries, we own, franchise and operate the Applebee's Neighborhood Grill & Bar® (“Applebee's”) concept in the bar and grill segment within the casual dining category of the restaurant industry and we own and franchise the International House of Pancakes® (“IHOP”) concept 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 and their sub-licensees (collectively, “area licensees”) or by us. With ~~3,458~~3,431 restaurants combined, ~~the substantial majority~~98% of which are franchised, we believe we are one of the largest full-service restaurant companies in the world.

We identify our business segments based on the organizational units used by management to monitor performance and make operating decisions. We currently have five operating segments: Applebee's franchise operations, Applebee's company-operated restaurant operations, IHOP franchise operations, rental operations and financing operations. We have four reportable segments: franchise operations (an aggregation of Applebee's and IHOP franchise operations), company-operated restaurant operations, rental operations and financing operations. We consider these to be our reportable segments, regardless of whether any segment exceeds 10% of consolidated revenues, income before income tax provision or total assets.

~~Ongoing Impact~~Events Impacting Comparability of ~~COVID-19 Pandemic~~Financial Information

~~The global pandemic declared~~Comparisons of financial results for the three months ended March 31, 2022 with those for the three months ended March 31, 2021 were impacted by the extent of restrictions in place on restaurant operations in 2021. In March 2020, by the World Health Organization declared a global pandemic related to the outbreak of a novel strain of coronavirus, designated “~~COVID-19,~~“COVID-19.” ~~continued~~Initially, federal, state, local and international governments reacted to ~~have an adverse impact on our operations during~~ the ~~three months ended March 31, 2021.~~ COVID-19 pandemic by encouraging or requiring social distancing, instituting shelter-in-place orders, and requiring, in varying degrees, reduced operating hours, restaurant dine-in and/or indoor dining limitations, capacity limitations or other restrictions.

The operating status of our restaurants was fluid ~~throughout~~during the ~~first quarter of~~three months ended March 31, 2021 and subject to ~~change as governmental authorities increased or reduced restrictions~~change. Restrictions on restaurant operations were relaxed, removed or increased in response to changes in the number of COVID-19 infections, ~~and in~~ the availability and acceptance of vaccines and an increase in vaccination rates within ~~their~~the respective governmental jurisdictions. ~~While the significant majority of our restaurants were open for in-restaurant dining~~Generally speaking, during the ~~three months ended March 31,~~second quarter of 2021, many federal, state and local ~~and~~governments began to relax or remove the restrictive protocols noted above, while most international governments maintained ~~protocols that limited restaurant dine-in occupancy levels to less than 100%~~the restrictions, the degree of ~~capacity.~~which varied by country.

As of March 31, 2022, almost all domestic Applebee's and IHOP restaurants were open and operating without government-mandated restrictions. This represents a significant improvement from March 31, 2021, ~~the~~at which time approximately 23% of domestic Applebee's restaurants and 11% of domestic IHOP restaurants were operating ~~status~~without government-mandated restrictions. Internationally, government-mandated restrictions vary by country, with many international restaurants still under restrictions. As of ~~our~~March 31, 2022, approximately 58% of international restaurants ~~was as follows:~~

Status as of March 31, 2021
Domestic
Dining room capacity %/other status Applebee's IHOP International
100% capacity 374 183 —
> 50% capacity 142 135 31
26%-50% capacity 959 1,086 112
Up to 25% capacity 106 209 28
Off-premise/outdoors only and other 9 21 22
Restaurants temporarily closed 6 26 9
Total 1,596 1,660 202

were operating without restrictions, an improvement from March 31, 2021, at which time no international restaurants were operating without restrictions.

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~~Federal, state, local and international governments, began~~Government-mandated restrictions notwithstanding, almost half of IHOP restaurants that operated 24 hours a day for all or parts of a week prior to ~~implement restrictions on in-restaurant dining around~~ the ~~second week of March, 2020. Accordingly,~~pandemic are currently closed during the three months ended March 31, 2020, our restaurants essentially operated without restriction for the first 10 weeks of the quarter, followed by an increasing level of restriction over the final three weeks of the quarter. overnight hours. As of March 31, ~~2020, the~~2022, approximately 450 IHOP restaurants were operating ~~status of our~~24 hours a day, seven days a week, with approximately 75 restaurants ~~was as follows :~~

Status as of March 31, 2020
Domestic
Restaurant status Applebee's IHOP International
Dining rooms open* 4 204 63
Off-premise/outdoors only and other 1,402 1,158 55
Restaurants temporarily closed 251 347 131
Total 1,657 1,709 249

* In most instances limited to 50% capacity or less, and/or reduced operating ~~hours.~~

~~Note that at the onset~~24 hours a day for some portion of the week. As of December 31, 2019, the last reporting period prior to the pandemic, information as to restaurant capacity was not available in the same detail as current data and therefore the dining room capacity details are unavailable as of March 31, 2020. Temporary closures can occurapproximately 845 IHOP restaurants were operating 24 hours a day, seven days a week, with approximately 245 restaurants operating 24 hours a day for ~~a variety of reasons, and all temporary closures shown in the tables above were not necessarily related to COVID-19 restrictions.~~

~~Updates to several actions taken over the past 12 months to mitigate the effects~~some portion of the ~~COVID-19 pandemic on the Company, its operations and its franchisees, are discussed below:~~

•In March 2021, we repaid $220 million of borrowings outstanding under our revolving credit facility that initially had been drawn in March 2020. At the time of the initial draw, we had no immediate need for additional liquidity, but in light of then-current market conditions and significant uncertainty related to the COVID-19 pandemic, we drew on the revolving facility to maximize our financial flexibility. As of March 31, 2021, our borrowing capacity under the credit facility was $221.7 million. See ~~Liquidity and Capital Resources of the Company.~~

•We offered Applebee's franchisees the opportunity to defer payment of their royalty, advertising and other fees, primarily amounts due for the months of March and April 2020. A total of 30 franchisees representing 94% of Applebee’s restaurants deferred payments totaling $33.4 million. Repayment of deferred amounts, scheduled over up to nine months, began in the third quarter of 2020. As of March 31, 2021, the outstanding balance of these deferrals was $3.9 million, with approximately $9.4 million collected during the three months ended March 31, 2021. Five franchisees have repaid their deferred balances in full.

•We offered IHOP franchisees the opportunity to defer their royalty, advertising, equipment rent and sublease rent payments, primarily amounts due for the months of March and April 2020. Initially, 193 franchisees representing 58% of IHOP restaurants deferred payments totaling $24.1 million. Including subsequent deferrals made on a case-by case basis, the deferral program totaled $28.5 million. Repayment of deferred amounts, scheduled over up to 36 weeks, began in the third quarter of 2020. In certain instances, repayments were temporarily paused for up to 60 days. As of March 31, 2021, the outstanding balance of these deferrals was $9.6 million, with approximately $6.8 million collected during the three months ended March 31, 2021. A total of 73 franchisees have repaid their deferred balances in full.

•We received rent deferrals and abatements on properties we lease of approximately $11 million during fiscal 2020, primarily related to rent deferrals for properties on which IHOP restaurants are located. As of March 31, 2021, the deferred rent balance of those deferrals was $2.4 million, with approximately $2.5 million paid during the three months ended March 31, 2021.

•We suspended our repurchasing of common stock after the first quarter of 2020. Our Board of Directors did not declare a dividend for the second, third and fourth quarters of 2020 and has decided not to declare a dividend for the first quarter of 2021. We evaluate dividend payments on common stock and repurchases of common stock within the context of our overall capital allocation strategy with our Board of Directors on an ongoing basis, giving consideration to our current and forecast earnings, financial condition, cash requirements and other factors. We will continue to evaluate our capital allocation strategy as industry conditions improve.week.

We have experienced a number of temporary and permanent closures of our restaurants during the COVID-19 pandemic. These closures occurred for a variety of reasons, and all closures were not necessarily related to the impact of the COVID-19 pandemic or related restrictions. We cannot predict ~~how long~~ the ~~COVID-19 pandemic and its impact on our operations will last, whether or when~~ recurrences of the virus and the emergence of new variants of the virus, ~~may arise,~~ the ~~availability and~~ acceptance of vaccines ~~what~~and booster vaccines worldwide and the availability of vaccines internationally, restrictions on in-restaurant dining that may be ~~imposed or~~ re-imposed, ~~the timing and extent of customer re-engagement with our brands~~ and, in general, what the short- and long-term impact on consumer discretionary spending the COVID-19 pandemic might have on our operations and the restaurant industry as a whole.

~~Table of Contents~~

Key Financial Results

Three months ended March 31, Favorable
(Unfavorable) Variance
2021 2020
(In millions, except per share data)
Income before income taxes $ 24.0 $ 29.1 $ (5.1)
Income tax benefit (provision) 1.6 (6.7) 8.3
Net income $ 25.6 $ 22.3 $ 3.3
Effective tax rate (6.6) % 23.2 % 29.8 %
Net income per diluted share $ 1.51 $ 1.31 $ 0.20
% increase
Weighted average diluted shares 16.6 16.5 1.0 %

The financial tables appearing in MD&A present amounts in millions of dollars that are rounded from our consolidated financial statements presented in thousands of dollars. As a result, the tables may not foot or crossfoot due to rounding.


	Three months ended March 31,				Favorable (Unfavorable) Variance
	2022	2021

		(In millions, except per share data)
Income before income taxes		$	34.2		$	24.0		$	10.2
Income tax (provision) benefit		(9.3)			1.6			(10.9)
Net income		$	24.9		$	25.6		$	(0.7)


Effective tax rate		27.2		%	(6.6)		%	(33.8)		%


Net income per diluted share		$	1.45		$	1.51		$	(0.06)
								% increase
Weighted average diluted shares		16.8			16.6			0.8		%

The effective tax ~~benefit recognized~~rate for the three months ended March 31, ~~2021~~2022 was different than the rate of the prior comparable period primarily ~~was~~ due to the ~~one-time~~ recognition of excess tax benefits on stock-based compensation related to the departure of ~~our~~the Company's previous chief executive ~~officer.~~officer in the first quarter of 2021.

The following table highlights the primary components of the ~~decrease~~increase in our income before income taxes for the three months ended March 31, ~~2021,~~2022, compared to our income before income taxes ~~from~~for the ~~same period of 2020:~~three ended March 31, 2021:


	Favorable (Unfavorable) Variance
		Three months ended March 31, 2022
	(In millions)
Increase ~~(decrease)~~ in gross profit:
Applebee's franchise operations		$	~~1.0~~5.6
IHOP franchise operations		~~(0.6)~~1.6
Company restaurant operations		~~2.1~~ (1.1)
Rental and financing operations		~~(1.6)~~1.4
Total increase in gross profit		~~0.9~~7.5
~~Closure~~Decrease in closure and impairment charges		~~(2.0)~~1.9
Increase in general and administrative ("G&A&A") expenses		~~(2.3)~~(1.6)


Other ~~income and expense items~~		~~(1.6)~~2.4
~~Decrease~~Increase in income before income taxes		$	~~(5.1)~~10.1

~~We recognized closure and impairment charges~~

Table of ~~$2.0 million during~~Contents

Total gross profit for the three months ended March 31, ~~2021,~~2022 increased compared with the same period of the prior year, primarily ~~$1.9 million related~~due to ~~establishment~~the increased revenue from franchise and rental operations, partially offset by higher costs for food, beverage and labor in company restaurant operations. Additionally, the increase in income before income taxes included a decrease in closure and impairment charges and a gain on the disposition of ~~or revision~~assets, offset by an increase in G&A expenses.

Increases in commodity, labor and other restaurant operating costs experienced at restaurants owned and operated by our franchisees could impact us to ~~closure reserves for approximately 35 IHOP properties, as well as~~the extent our franchisees are adversely impacted by a ~~$0.1 million impairment to one IHOP property. There were no similar charges during the three months ended~~sustained decline in their operating margins. At company operated restaurants, increases in commodity, labor and other restaurant operating costs impact us directly. As of March 31, ~~2020.~~2022, we operate 69 Applebee’s restaurants, representing 2% of the 3,431 restaurants comprising our system.

See “Consolidated Results of Operations - Comparison of theThree Months ended March 31, ~~2021~~2022 and March 31, ~~2020”~~2021” for additional discussion of the changes shown above.

Key Performance Indicators

In evaluating the performance of each restaurant concept, we consider the key performance indicators to be the system-wide sales percentage change, the percentage change in domestic system-wide same-restaurant sales (“domestic same-restaurant sales”), net franchise restaurant development and the change in effective restaurants. Changes in both domestic same-restaurant sales and in the number of Applebee's and IHOP restaurants will impact our system-wide retail sales that drive franchise royalty revenues. Restaurant development also impacts franchise revenues in the form of initial franchise fees and, in the case of IHOP restaurants, sales of proprietary pancake and waffle dry mix.

~~Table of Contents~~

Our key performance indicators for the three months ended March 31, ~~2021~~2022 were as follows:

Average Weekly Unit Sales Three months ended March 31, 2021
Applebee's IHOP
Sales percentage increase (decrease) in reported retail sales 1.2 % (12.1) %
% increase (decrease) in domestic system-wide same-restaurant sales 11.9 % (0.9) %
Net franchise restaurant reduction (1)
(4) (19)
Net decrease in total effective restaurants (2)
(69) (101)


	Three months ended March 31, 2022
		Applebee's		IHOP
Sales percentage increase in reported retail sales - 2022 vs. 2021		13.9	%	19.9	%
% increase in domestic system-wide same-restaurant sales - 2022 vs. 2021		14.3	%	18.1	%

Net franchise restaurant (reduction) increase (1)		(5)		5
Net (decrease) increase in total effective restaurants (2)		(21)		21

(1) Franchise and area license restaurant closings, net of openings, during the three months ended March 31, ~~2021.~~2022.

(2) Change in the weighted average number of franchise, area license and company-operated restaurants open during the three months ended March 31, ~~2021,~~2022, compared to the weighted average number of those open during the same period of ~~2020.~~2021.

The changes in sales percentage and domestic same-restaurant sales of both brands were impacted by the varying degrees of restrictions on in-restaurant dining in effect during ~~each period. Restrictions were first initiated in early March of 2020 by federal, state, local and international governments in response to the declaration of the COVID-19 pandemic. As a result, for~~ the first ~~10 weeks~~quarter of 2021 that substantially had been relaxed during the ~~2020~~ first quarter ~~our restaurants operated without restriction, but during~~of 2022, as discussed under “Events Impacting the ~~last three weeks~~Comparability of that quarter, in-restaurant dining was essentially eliminated as most of our restaurants were either limited only to off-premise sales or were temporarily closed. For all 13 weeks of the 2021 first quarter, most of our restaurants were open for in-restaurant dining, however, the majority of restaurants that were open were operating with some degree of capacity limitation. Additionally, the calculation of the percentage change in domestic same-restaurant sales was also impacted by a shift in the weeks of comparison because of a 53rd week in fiscal 2020.

In light of the distortive effects of both the pandemic and a 53rd week in fiscal 2020 on the key performance indicators as noted above, we believe a comparison of average weekly unit sales, a function of reported retail sales and the number of effective restaurants, for the months of January, February and March of 2021 and 2020, provides additional insight into each brand's performance during the three months ended March 31, 2021 as compared to the same period of the prior year:

Applebee's IHOP
2021 2020 Increase (decrease) 2021 2020 Increase (decrease)
(in thousands)
January $ 39.5 $ 49.8 $ (10.3) $ 24.8 $ 36.1 $ (11.3)
February $ 43.5 $ 49.7 $ (6.2) $ 27.4 $ 35.0 $ (7.6)
March $ 54.3 $ 35.1 $ 19.2 $ 35.1 $ 25.4 $ 9.7
Financial Information.”

The ~~decrease~~change in total effective restaurants for each brand reflects both permanent closures, net of openings, over the past 12 months as well as the weighted effect of restaurants temporarily closed during ~~the three months ended March 31, 2021.~~each period.

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Domestic Same-Restaurant Sales

Applebee’s system-wide domestic same-restaurant sales increased ~~11.9%~~14.3% for the three months ended March 31, ~~2021~~2022 compared to the ~~three months ended March 31, 2020.~~same period of 2021. The increase was due to an increase in customer traffic as well as increase in average check. The increase in customer traffic primarily was due to ~~a substantial increase~~the positive changes in ~~average check partially offset by a decline in customer traffic.~~ restaurant operating status as discussed under “Events Impacting the Comparability of Financial Information,” as well as increased consumer desire to patronize restaurants after the relaxation of pandemic restrictions.The increase in average check was primarily due to favorable mix shifts related to a reduction in core menu items, successful promotional food and beverage offerings and a larger number of items purchased with off-premise ~~orders. We believe the distribution of the latest round of government stimulus checks that began in March~~orders, as well as menu price increases by franchisees.


Applebee's Off-premise Sales Data	Three months ended March 31,
		2022			2021
Off-premise sales (in millions) (1)		$	297.0		$	344.4
% sales mix		27.6		%	36.7		%

(1) Primarily to-go, delivery and catering sales for comparable 2022 and 2021 ~~favorably impacted consumer spending behavior as well.~~restaurants.

Based on data from Black Box Intelligence, a restaurant sales reporting firm (“Black Box”), Applebee's increase in same-restaurant sales for the three months ended March 31, ~~2021 outperformed~~2022 underperformed the casual dining segment of the restaurant industry (excluding Applebee's) during ~~that~~the same period. During the three months ended March 31, 2021, the casual dining segment also experienced an increase in same-restaurant sales that was due to an increase in average check and an increase in customer traffic. Applebee's increase in average check for the three months ended March 31, 2021 was significantly larger than thatperiod of ~~the casual dining segment.~~

Off-premise sales totaled approximately $344 million and comprised 36.7% of sales mix for the three months ended March 31, 2021, as compared to approximately $153 million of sales comprising 16.3% of sales mix for the three months ended March 31, 2020.

2022.

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IHOP's system-wide domestic same-restaurant sales ~~decreased 0.9%~~increased 18.1% for the three months ended March 31, ~~2021~~2022 as compared to the ~~three months ended March 31, 2020.~~same period of 2021. The ~~decrease~~improvement was due to ~~a decline in customer traffic that was nearly offset by~~ an increase in average ~~check.~~check as well as an increase in customer traffic. The increase in average check was primarily due to ~~consumer spending generally~~an increase in menu prices as well as ~~increases~~a general increase in ~~both menu prices and delivery prices. We believe the distribution of the latest round of government stimulus checks that began in March 2021 favorably impacted~~ consumer spending ~~behavior.~~due to larger party sizes and greater spending per person. The increase in customer traffic was primarily due to the positive changes in restaurant operating status as discussed under “Events Impacting the Comparability of Financial Information,” as well as increased consumer desire to patronize restaurants after the relaxation of pandemic restrictions.


IHOP Off-premise Sales Data	Three months ended March 31,
		2022			2021
Off-premise sales (in millions) (1)		$	161.7		$	182.8
% sales mix		24.6		%	33.3		%

(1) Primarily to-go, delivery and catering sales for comparable 2022 and 2021 restaurants

Based on data from Black Box, IHOP's ~~decrease~~increase in same-restaurant sales for the three months ended March 31, ~~2021 outperformed~~2022 underperformed the family dining segment of the restaurant industry (excluding IHOP) during that same period. During the three months ended March 31, 2021, the family dining segment experienced a decrease in same-restaurant sales that was due to a decrease in traffic that was partially offset by an increase in average check. IHOP's decrease in traffic for the three months ended March 31, 2021 was smaller than thatperiod of ~~the family dining segment.~~

Off-premise sales totaled approximately $183 million and comprised 33.3% of sales mix for the three months ended March 31, 2021, as compared to approximately $80 million of sales comprising 12.8% of sales mix for the three months ended March 31, 2020.

2022.

Restaurant Data

The following table sets forth the number of “Effective Restaurants” in the Applebee’s and IHOP systems and information regarding the percentage change in sales at those restaurants compared to the same ~~periods~~period of the prior year. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company and, as such, the percentage change in sales at Effective Restaurants is based on non-GAAP sales data. However, we believe that presentation of this information is useful in analyzing our revenues because franchisees and area licensees pay us royalties and advertising fees that are based on a percentage of their sales, and, where applicable, rental payments under leases that partially may be based on a percentage of their sales. Management also uses this information to make decisions about plans for future development of additional restaurants as well as evaluation of current operations.

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		Three months ended March 31,								Three months ended March 31,
			2021			2020					2022			2021
Applebee's Restaurant Data	Applebee's Restaurant Data		(Unaudited)						Applebee's Restaurant Data		(Unaudited)
Effective Restaurants(a)	Effective Restaurants(a)								Effective Restaurants(a)
Franchise	Franchise		1,628			1,697			Franchise		1,607			1,628
Company	Company		69			69			Company		69			69
Total	Total		1,697			1,766			Total		1,676			1,697

System-wide(b)	System-wide(b)								System-wide(b)
Domestic sales percentage change(c)	Domestic sales percentage change(c)		1.2		%	(12.1)		%	Domestic sales percentage change(c)		13.9		%	1.2		%
Domestic same-restaurant sales percentage change(d)	Domestic same-restaurant sales percentage change(d)		11.9		%	(10.6)		%	Domestic same-restaurant sales percentage change(d)		14.3		%	11.9		%
Franchise(b)	Franchise(b)								Franchise(b)
Domestic sales percentage change(c)	Domestic sales percentage change(c)		0.7		%	(12.1)		%	Domestic sales percentage change(c)		14.1		%	0.7		%
Domestic same-restaurant sales percentage change(d)	Domestic same-restaurant sales percentage change(d)		11.5		%	(10.6)		%	Domestic same-restaurant sales percentage change(d)		14.5		%	11.5		%
Average weekly domestic unit sales (in thousands)	Average weekly domestic unit sales (in thousands)		$	46.8		$	44.6		Average weekly domestic unit sales (in thousands)		$	53.9		$	46.8

IHOP Restaurant Data	IHOP Restaurant Data								IHOP Restaurant Data

Effective Restaurants(a)	Effective Restaurants(a)								Effective Restaurants(a)
Franchise	Franchise		1,563			1,660			Franchise		1,586			1,563
Area license	Area license		157			161			Area license		155			157

Total	Total		1,720			1,821			Total		1,741			1,720

System-wide(b)	System-wide(b)								System-wide(b)
Sales percentage change(c)	Sales percentage change(c)		(12.1)		%	(14.2)		%	Sales percentage change(c)		19.9		%	(12.1)		%
Domestic same-restaurant sales percentage change, including area license restaurants(d)	Domestic same-restaurant sales percentage change, including area license restaurants(d)		(0.9)		%	(14.7)		%	Domestic same-restaurant sales percentage change, including area license restaurants(d)		18.1		%	(0.9)		%

Franchise(b)	Franchise(b)								Franchise(b)
Sales percentage change(c)	Sales percentage change(c)		(12.9)		%	(14.3)		%	Sales percentage change(c)		20.5		%	(12.9)		%
Domestic same-restaurant sales percentage change(d)	Domestic same-restaurant sales percentage change(d)		(1.9)		%	(14.7)		%	Domestic same-restaurant sales percentage change(d)		18.6		%	(1.9)		%
Average weekly unit sales (in thousands)	Average weekly unit sales (in thousands)		$	29.4		$	31.7		Average weekly unit sales (in thousands)		$	34.9		$	29.4

Area License(b)	Area License(b)								Area License(b)
Sales percentage change(c)	Sales percentage change(c)		(3.7)		%	(13.8)		%	Sales percentage change(c)		14.4		%	(3.7)		%

(a) “Effective Restaurants” are the weighted average number of restaurants open in each fiscal period, adjusted to account for restaurants open for only a portion of the period. Information is presented for all Effective Restaurants in the Applebee’s and IHOP systems, which consist of restaurants owned by franchisees and area licensees as well as those owned by the Company. Effective Restaurants do not include units operated as ghost kitchens (small kitchens with no store-front presence, used to fill off-premise orders).

(b) “System-wide sales” are retail sales at Applebee’s restaurants operated by franchisees and IHOP restaurants operated by franchisees and area licensees, as reported to the Company, in addition to retail sales at company-operated Applebee's restaurants. System-wide sales do not include retail sales of ghost kitchens. Sales at restaurants that are owned by franchisees and area licensees are not attributable to the Company. An increase in franchisees' reported sales will result in a corresponding increase in our royalty revenue, while a decrease in franchisees' reported sales will result in a corresponding decrease in our royalty revenue. Unaudited reported sales for Applebee's domestic franchise restaurants, Applebee's company-operated restaurants, IHOP franchise restaurants and IHOP area license restaurants were as follows:


		Three months ended March 31,							Three months ended March 31,
				2021		2020					2022		2021
Reported sales (in millions)	Reported sales (in millions)		(Unaudited)					Reported sales (in millions)		(Unaudited)

Applebee's domestic franchise restaurant sales	Applebee's domestic franchise restaurant sales			$	924.7	$	918.2	Applebee's domestic franchise restaurant sales			$	1,055.0	$	924.7
Applebee's company-operated restaurants	Applebee's company-operated restaurants			35.9		31.3		Applebee's company-operated restaurants			39.4		35.9
IHOP franchise restaurant sales	IHOP franchise restaurant sales			596.7		684.8		IHOP franchise restaurant sales			719.6		596.7
IHOP area license restaurant sales	IHOP area license restaurant sales			61.7		64.0		IHOP area license restaurant sales			70.5		61.7
Total	Total			$	1,619.0	$	1,698.3	Total			$	1,884.5	$	1,619.0

(c) “Sales percentage change” reflects, for each category of restaurants, the percentage change in sales in any given fiscal period compared to the prior fiscal period for all restaurants in that category.

(d) “Domestic same-restaurant sales percentage change” reflects the percentage change in sales in any given fiscal period, compared to the same weeks in the prior fiscal period, for domestic restaurants that have been operated during both fiscal periods that are being compared and have been open for at least 18 months. Because of new restaurant openings and restaurant closures, the domestic restaurants open throughout both fiscal periods being compared may be different from period to period.

Table of Contents


Restaurant Development Activity	Three months ended March 31,
			2022	2021
Applebee's		(Unaudited)
Summary - beginning of period:
Franchise			1,611	1,640
Company			69	69
Beginning of period			1,680	1,709

Franchise restaurants opened:
Domestic			1	2
International			—	—
Total franchise restaurants opened			1	2
Franchise restaurants permanently closed:
Domestic			(4)	(4)
International			(2)	(2)
Total franchise restaurants permanently closed			(6)	(6)
Net franchise restaurant reduction			(5)	(4)



Summary - end of period:
Franchise			1,606	1,636
Company			69	69
Total Applebee's restaurants, end of period			1,675	1,705
Domestic			1,575	1,596
International			100	109




IHOP
Summary - beginning of period:
Franchise	1,595	1,611
Area license	156	158
Company	—	3
Total IHOP restaurants, beginning of period	1,751	1,772

Franchise/area license restaurants opened:
Domestic franchise	7	8
Domestic area license	1	—
International franchise	2	—

Total franchise/area license restaurants opened	10	8
Franchise/area license restaurants permanently closed:
Domestic franchise	(3)	(16)
Domestic area license	(1)	(2)
International franchise	(1)	(9)
International area license	—	—
Total franchise/area license restaurants permanently closed	(5)	(27)
Net franchise/area license restaurant additions (reductions)	5	(19)
Refranchised by the Company	—	—
Franchise restaurants reacquired by the Company	—	(1)
Net increase (decrease) in franchise/area license restaurants	5	(20)

Summary - end of period:
Franchise	1,600	1,593
Area license	156	156
Company	—	4
Total IHOP restaurants, end of period	1,756	1,753
Domestic	1,661	1,660
International	95	93

Table of Contents

Restaurant Development Activity Three months ended March 31,
2021 2020
Applebee's (Unaudited)
Summary - beginning of period:
Franchise 1,640 1,718
Company restaurants 69 69
Beginning of period 1,709 1,787
Franchise restaurants opened:
Domestic 2 —
Total franchise restaurants opened 2 —
Franchise restaurants permanently closed:
Domestic (4) (8)
International (2) (4)
Total franchise restaurants permanently closed (6) (12)
Net franchise restaurant reduction (4) (12)
Summary - end of period:
Franchise 1,636 1,706
Company restaurants 69 69
Total Applebee's restaurants, end of period 1,705 1,775
Domestic 1,596 1,657
International 109 118

IHOP
Summary - beginning of period:
Franchise 1,611 1,680
Area license 158 161
Company 3 —
Total IHOP restaurants, beginning of period 1,772 1,841
Franchise/area license restaurants opened:
Domestic franchise 8 6
Domestic area license — 1
International franchise — 2
Total franchise/area license restaurants opened 8 9
Franchise/area license restaurants permanently closed:
Domestic franchise (16) (6)
Domestic area license (2) (2)
International franchise (9) (2)
Total franchise/area license restaurants permanently closed (27) (10)
Net franchise/area license restaurant closures (19) (1)
Franchise restaurants reacquired by the Company (1) —
Net reduction in franchise/area license restaurants (20) (1)
Summary - end of period:
Franchise 1,593 1,680
Area license 156 160
Company 4 —
Total IHOP restaurants, end of period 1,753 1,840
Domestic 1,660 1,709
International 93 131

The restaurant counts and activity presented above do not include ~~three~~two domestic Applebee's ghost kitchens (small kitchens with no store-front presence, used to fill off-premise orders), 10 international Applebee's ghost kitchens and ~~two~~19 international IHOP ghost kitchens. The Applebee's franchise restaurant count at the beginning of the period ended March 31, 2021 was adjusted downward by two restaurants, representing ghost kitchens that had been included in the total reported as of December 31, 2020.

~~Table of Contents~~

The closures presented in the tables above represent permanent closures of restaurants. Temporary closures, which can occur for a variety of reasons, are not reflected as reductions in this table and ~~temporarily closed restaurants~~ are included in the summary counts at the beginning and end of each period shown. Temporary closures are reflected in the weighted calculation of Effective Restaurants presented in the preceding Restaurant Data table.

Closures of Applebee's and IHOP restaurants adversely impact our system-wide retail sales that drive our franchise royalty revenues as well as, in the case of IHOP restaurants, sales of proprietary pancake and waffle dry mix. Further, with certain restaurants, we own or lease the underlying property and sublease it to the applicable franchisee. Thus, our rental income also could be adversely affected due to the loss of such income, as well as our obligation to make rental or other payments for such properties.

CONSOLIDATED RESULTS OF OPERATIONS

Comparison of the Three Months ended March 31, ~~2021~~2022 and ~~2020~~2021

Financial Results


Revenue	Revenue	Three months ended March 31,				Favorable (Unfavorable) Variance		Revenue				Three months ended March 31,		Favorable (Unfavorable) Variance
		2021	2020									2022	2021

			(In millions)											(In millions)
Franchise operations	Franchise operations		$	141.0		$	145.1		$	(4.1)	Franchise operations			$	161.2		$	141.0	$	20.2
Rental operations	Rental operations		26.1			29.0			(2.9)		Rental operations			28.8			26.1		2.7
Company restaurant operations	Company restaurant operations		36.0			31.3			4.7		Company restaurant operations			39.4			36.0		3.4
Financing operations	Financing operations		1.1			1.5			(0.4)		Financing operations			1.0			1.1		(0.1)
Total revenue	Total revenue		$	204.2		$	206.9		$	(2.7)	Total revenue			$	230.4		$	204.2	$	26.2
Change vs. prior period	Change vs. prior period		(1.3)		%						Change vs. prior period			12.8		%

Total revenue ~~for franchise and rental operations~~ for the three months ended March 31, ~~2021 decreased~~2022 increased compared with the same ~~periods~~period of the prior ~~year, primarily due~~year. As discussed under “Events Impacting the Comparability of Financial Information,” during the 2022 period, many governmental authorities relaxed or eliminated restrictions on restaurant operations that had been in place during the 2021 period in response to declines in the number of COVID-19 infections, the availability of vaccines and an increase of the number of vaccinated individuals within their respective jurisdictions. This had a favorable impact on same-restaurant sales and customer traffic in our franchise and company restaurant ~~closures and lease-buy-outs over the past 12 months, while financing revenues declined due to the progressive decline in interest~~operations as well as a favorable impact on rental revenue ~~as note balances are repaid. Rental operations revenue was also impacted a decline in rent paid~~ based on a percentage of franchisees' retail sales. These declines were partially offset by an increase in revenue from Applebee's company-operated restaurants due to a higher average check and increased traffic during the three months ended March 31, 2021 as compared to the same period of the prior year.


Gross Profit	Gross Profit	Three months ended March 31,						Favorable (Unfavorable) Variance		Gross Profit				Three months ended March 31,		Favorable (Unfavorable) Variance
			2021				2020								2022				Favorable (Unfavorable) Variance

				(In millions)												(In millions)
Franchise operations	Franchise operations			$	76.0			$	75.6		$	0.4	Franchise operations			$	83.2			$	76.0	$	7.2
Rental operations	Rental operations			5.2				6.5			(1.3)		Rental operations			6.7				5.2		1.5
Company restaurant operations	Company restaurant operations			3.1				1.0			2.1		Company restaurant operations			2.0				3.1		(1.1)
Financing operations	Financing operations			1.0				1.3			(0.3)		Financing operations			0.9				1.0		(0.1)
Total gross profit	Total gross profit			$	85.3			$	84.4		$	0.9	Total gross profit			$	92.8			$	85.3	$	7.5
Change vs. prior period	Change vs. prior period			1.0		%							Change vs. prior period			8.8		%

Table of Contents

Total gross profit for the three months ended March 31, ~~2021~~2022 increased compared with the same period of the prior year, primarily due to the increased revenue from ~~Applebee's~~franchise, company-operated ~~restaurants,~~restaurant and rental operations, partially offset by ~~a decline~~higher costs of food, beverage and labor in ~~revenue from rental~~company restaurant operations.

~~Table of Contents~~


		Three months ended March 31,						Favorable (Unfavorable) Variance						Three months ended March 31,		Favorable (Unfavorable) Variance
Franchise Operations	Franchise Operations		2021				2020				Franchise Operations				2022				Favorable (Unfavorable) Variance
				(In millions, except number of restaurants)												(In millions, except number of restaurants)
Effective Franchise Restaurants:(1)	Effective Franchise Restaurants:(1)												Effective Franchise Restaurants:(1)
Applebee’s	Applebee’s			1,628				1,697			(69)		Applebee’s			1,607							1,628			(21)
IHOP	IHOP			1,720				1,821			(101)		IHOP			1,741				1,720				21

Franchise Revenues:	Franchise Revenues:												Franchise Revenues:
Applebee’s franchise fees	Applebee’s franchise fees			$	38.7			$	37.8		$	0.9	Applebee’s franchise fees			$	44.1			$	38.7			$	5.4
IHOP franchise fees	IHOP franchise fees			41.4				45.5			(4.1)		IHOP franchise fees			46.2				41.4				4.8
Advertising fees	Advertising fees			60.9				61.8			(0.9)		Advertising fees			70.9				60.9				10.0
Total franchise revenues	Total franchise revenues			141.0				145.1			(4.1)		Total franchise revenues			161.2				141.0				20.2
Franchise Expenses:	Franchise Expenses:												Franchise Expenses:
Applebee’s	Applebee’s			1.1				1.2			0.1		Applebee’s			0.9				1.1				0.2
IHOP	IHOP			3.0				6.5			3.5		IHOP			6.2				3.0				(3.2)
Advertising expenses	Advertising expenses			60.9				61.8			0.9		Advertising expenses			70.9				60.9				(10.0)
Total franchise expenses	Total franchise expenses			65.0				69.5			4.5		Total franchise expenses			78.0				65.0				(13.0)
Franchise Gross Profit:	Franchise Gross Profit:												Franchise Gross Profit:
Applebee’s	Applebee’s			37.6				36.6			1.0		Applebee’s			43.2				37.6				5.6
IHOP	IHOP			38.4				39.0			(0.6)		IHOP			40.0				38.4				1.6
Total franchise gross profit	Total franchise gross profit			$	76.0			$	75.6		$	0.4	Total franchise gross profit			$	83.2			$	76.0			$	7.2
Gross profit as % of revenue (2)				53.9		%		52.1		%
Gross profit as % of franchise revenue (2)													Gross profit as % of franchise revenue (2)			51.6		%		53.9		%
Gross profit as % of franchise fees (2)(3)	Gross profit as % of franchise fees (2)(3)			94.9		%		90.7		%			Gross profit as % of franchise fees (2)(3)			92.1		%		94.9		%

_____________________________________________________

(1) Effective Franchise Restaurants are the weighted average number of franchise and area license restaurants open in each fiscal period, adjusted to account for restaurants open for only a portion of the period.

(2) Percentages calculated on actual amounts, not rounded amounts presented above.

(3) From time to time, advertising fee revenue may be different from advertising expenses in a given accounting period. Over the long term, advertising activity should not generate gross profit or loss.

~~Applebee’s~~Applebee's franchise fee revenue for the three months ended March 31, ~~2021~~2022 increased ~~2.2%~~14.0% as compared towith the same period of the prior ~~year. Approximately $1.3 million of the increase was~~year, primarily due to the favorable impact on royalties of a 14.3% increase in domestic same-restaurant sales. Applebee's international revenues increased $1.0 million due to improvement in domestic franchise same-restaurant sales, approximately $1.0 million was due to improved collectibility and a slightly higher effective royalty rate, and $0.6 million was due to an increase in other franchise fees. These favorable items were partially offset by a $1.0 million decrease in royalty revenue due to restaurant closures, a $0.5 million increase in delivery credits that reduce royalty revenue and an $0.8 million decrease in international revenues.sales.

The decrease in Applebee's franchise expenses for the three months ended March 31, ~~2021~~2022 compared with the same period of the prior year primarily was due to ~~a decrease in~~the recovery of bad debt expense. ~~Bad debt expense~~Applebee's reduced its allowance for ~~the three months ended March 31, 2021 was less than $0.1 million as compared to~~ bad ~~debt expense of $0.3~~debts by $0.2 million during the three months ended March 31, ~~2020.~~2022 as compared to bad debt expense of less than $0.1 million in the prior year period.

~~IHOP~~IHOP's franchise fee revenue for the three months ended March 31, ~~2021 decreased 8.9%~~2022 increased 11.6% as compared towith the same period of the prior year, primarily due to ~~lower royalty~~the favorable impact on royalties and pancake and waffle dry mix ~~revenues resulting from a decrease~~revenue of an 18.1% increase in domestic ~~franchise~~ same-restaurant sales, ~~a decline of $0.9 million in international revenues and a decrease of $0.6 million due to restaurant closures. These unfavorable changes were~~ partially offset by a ~~$1.6~~$1.7 million ~~increase~~decrease in termination fees and a $0.6 million decrease in other franchise fees.

IHOP franchise expenses for the three months ended March 31, ~~2021 declined from the~~2022 increased $3.2 million as compared with same period of the prior year, primarily due to ~~a $2.3 million decrease in~~lower recovery of bad debt expense of $1.9 million and ~~a decline~~an increase in purchases of pancake and waffle dry mix. IHOP reduced its allowance for bad debts by ~~$2.1~~$0.2 million during the three months ended March 31, ~~2021~~2022 as compared to a ~~bad debt expense~~reduction of ~~$0.2~~$2.1 million in the ~~prior year period. Favorable changes to the aging status~~first quarter of ~~certain franchisee receivables resulted in a downward revision of estimated reserve requirements.~~2021.

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Advertising revenue and expense by brand for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 were as follows:


		Three months ended March 31,					Increase (decrease)					Three months ended March 31,		Increase
			2021			2020							2022			Increase
				(In millions)										(In millions)
Advertising Revenues and Expenses:	Advertising Revenues and Expenses:										Advertising Revenues and Expenses:
Applebee’s	Applebee’s			$	38.6		$	36.6	$	2.0	Applebee’s			$	44.4		$	38.6	$	5.8
IHOP	IHOP			22.3			25.2		(2.9)		IHOP			26.4			22.3		4.1
Total advertising revenues and expenses	Total advertising revenues and expenses			$	60.9		$	61.8	$	(0.9)	Total advertising revenues and expenses			$	70.8		$	60.9	$	9.9

Applebee's ~~advertising revenue~~ and expense for the three months ended March 31, 2021 increased 5.7% compared to the same period of the prior year. Approximately $2.1 million of the increase was due to improved collectibilty from franchisees, and $1.4 million was due to the increase in domestic franchise same-restaurant sales. Partially offsetting the increases was a decrease of $1.1 million due to permanent domestic restaurant closures and a $0.5 million increase in delivery credits that reduce advertising revenue. IHOP's advertising revenue and expense for the three months ended March 31, ~~2021 decreased 11.6%~~2022 increased 15.0% and 18.4%, respectively, compared to the same period of the prior year primarily due to the ~~decrease~~increases in ~~domestic franchise same-restaurant sales,~~customer traffic and average check as ~~well as a $0.5 million decrease due to permanent restaurant closures.~~noted above.

It is our accounting policy to recognize any deficiency in advertising fee revenue compared to advertising expenditure or any recovery of a previously recognized deficiency in advertising fee revenue compared to advertising expenditure in the fourth quarter of our fiscal year.


Rental Operations	Rental Operations	Three months ended March 31,						Favorable (Unfavorable) Variance			Rental Operations				Three months ended March 31,		Favorable (Unfavorable) Variance
			2021				2020									2022				Favorable (Unfavorable) Variance
				(In millions)													(In millions)
Rental revenues	Rental revenues			$	26.1			$	29.0			$	(2.9)	Rental revenues			$	28.8						$	26.1			$	2.7

Rental expenses	Rental expenses			20.9				22.5				1.6		Rental expenses			22.1				20.9					(1.2)
Rental operations gross profit	Rental operations gross profit			$	5.2			$	6.5			$	(1.3)	Rental operations gross profit			$	6.7			$	5.2				$	1.5
Gross profit as % of revenue (1)	Gross profit as % of revenue (1)			19.8		%		22.3		%				Gross profit as % of revenue (1)			23.2		%		19.8		%

(1) Percentages calculated on actual amounts, not rounded amounts presented above.

Rental operations relate primarily to IHOP franchise restaurants. Rental income includes sublease revenue from operating leases and interest income from ~~direct financing~~real estate leases. Rental expenses are costs of prime operating leases and interest expense on prime finance leases.

Rental segment revenue for the three months ended March 31, ~~2021 decreased~~2022 increased as compared to the same period of the prior year, primarily due to a ~~$0.9~~$1.3 million ~~decrease~~increase in rental income based on a percentage of franchisees' retail ~~sales, a $0.9~~sales. Additionally, rental revenue increased $1.3 million ~~decrease~~ due to ~~restaurant closures~~the gross presentation of certain elements of variable sublease income, such as common area maintenance payments received from franchisees and ~~lease buy-outs,~~remitted to landlords, which previously were reported on a ~~$0.7 million progressive decline in level rent adjustments and a progressive decline of $0.4 million in interest income as direct financing leases are repaid.~~net basis. Rental segment expenses for the three months ended March 31, ~~2021 decreased~~2022 increased compared to the same period of the prior year, ~~due to an $0.8 million decrease in rental expenses,~~ primarily due to ~~restaurant closures and lease buy-outs,~~ a ~~$0.4~~$1.3 million ~~decrease in depreciation expense, a $0.2 million decrease in rent paid based on a percentage~~gross-up of ~~franchisees' retail sales and a $0.2 million decrease in interest expense as finance lease obligations are repaid.~~

lease-related expenses.

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Company Restaurant Operations


		Three months ended March 31,						Favorable (Unfavorable) Variance						Three months ended March 31,		Favorable (Unfavorable) Variance
			2021				2020								2022				Favorable (Unfavorable) Variance

Effective Restaurants	Effective Restaurants			69				69			—		Effective Restaurants			69				69			—
				(In millions)												(In millions)
Applebee's Company restaurant sales (1)	Applebee's Company restaurant sales (1)			$	36.0			$	31.3		$	4.7	Applebee's Company restaurant sales (1)			$	39.4			$	36.0		$	3.4
Applebee's Company restaurant expenses (1)	Applebee's Company restaurant expenses (1)			32.7				30.3			(2.4)		Applebee's Company restaurant expenses (1)			37.4				32.7			(4.7)
IHOP restaurant expenses (2)	IHOP restaurant expenses (2)			0.2				—			(0.2)		IHOP restaurant expenses (2)			—				0.2			0.2
Company restaurant gross profit	Company restaurant gross profit			$	3.1			$	1.0		$	2.1	Company restaurant gross profit			$	2.0			$	3.1		$	(1.1)
Average weekly sales (in thousands)				$	39.9			$	34.8

Gross profit as % of revenue (3)	Gross profit as % of revenue (3)			9.0		%		3.1		%			Gross profit as % of revenue (3)			5.1		%		9.0		%

(1) Related to 69 Applebee's company-operated restaurants.

(2) Costs associated with IHOP restaurants in the process of being refranchised.

(3) Calculated for Applebee's company-operated restaurants only. Percentages calculated on actual amounts, not rounded amounts presented above.

Applebee's company ~~restaurant~~same-restaurant sales for the three months ended March 31, ~~2021~~2022 increased 9.9% compared to the same period of ~~2020,~~2021, the significant majority of which was due to an increase in ~~average check as well as an increase in~~customer traffic.

The increase in ~~average check~~customer traffic primarily was due to the favorable ~~product mix and daypart shifts. We believe the distribution~~change in operating capacity of the ~~latest round~~restaurants during the three months ended March 31, 2022 compared to the same period of ~~government stimulus checks in March 2021 favorably impacted both traffic and average check.~~2021. All 69 of the Applebee's company-operated restaurants are located in South Carolina or North Carolina. Since the second week of January 2021, the 27 restaurants in South Carolina have operated without capacity limitations, while the 42 restaurants in North Carolina ~~have~~ operated at 50% ~~capacity. In comparison, all 69~~capacity until June 1, 2021, from which point those 42 restaurants ~~operated~~also were able to operate without ~~restriction for the first 10 weeks of the 2020 first quarter but essentially were limited to off-premise sales for the last three weeks of the first quarter of 2020.~~capacity limitations.

Gross profit and gross profit as a percentage of revenue for the three months ended March 31, ~~2021 improved~~2022 were unfavorable compared the same period of the prior year, due to ~~gross profit for the three months ended March 31, 2020, which was adversely impacted by the COVID-19-related operating constraints described above.~~higher food, labor and delivery costs.

~~In addition,~~ Company segment restaurant expenses ~~for the three months ended March 31, 2021~~ include ~~approximately $0.2 million of~~ costs associated with reacquired IHOP restaurants in the process of being refranchised. ~~None of the~~There were no reacquired IHOP restaurants ~~were operated~~expenses during the three months ended March 31, 2022 and approximately $0.2 million of expenses during the three months ended March 31, 2021.

Financing Operations

Financing revenues primarily consist of interest income from the financing of IHOP equipment leases and franchise fees as well as interest income on Applebee's notes receivable from franchisees. Financing expenses are the cost of taxes related to IHOP equipment leases.

Financing revenue and gross profit for the three months ended March 31, ~~2021~~2022 declined compared to the same period of the prior year, primarily because of progressive decline in interest income as note balances are repaid.


G&A Expenses	G&A Expenses	Three months ended March 31,					Favorable (Unfavorable) Variance		G&A Expenses				Three months ended March 31,		Increase
			2021			2020								2022			Increase
				(In millions)											(In millions)
Total G&A expenses	Total G&A expenses			$	39.9		$	37.6		$	(2.3)	Total G&A expenses			$	41.5		$	39.9	$	(1.6)

G&A expenses for the three months ended March 31, ~~2021~~2022 increased ~~6.1%~~4.1% compared to the same period of the prior year, primarily due to ~~an increase~~increases in travel and conference expenses, personnel-related costs and professional services, partially offset by a decrease in ~~travel~~recruitment costs. ~~The increase in personnel-related costs primarily was due to higher costs of equity-based and other incentive compensation.~~ Included in total G&A expenses for the three months ended March 31, ~~2021 were $1.2~~2022 was $1.3 million of ~~expenses~~expense related to company-operated restaurants, an ~~amount similar to~~increase of $0.1 million from the same period of the prior year.

Table of Contents


Closure and Impairment Charges	Closure and Impairment Charges	Three months ended March 31,					Favorable (Unfavorable) Variance		Closure and Impairment Charges				Three months ended March 31,		Favorable (Unfavorable) Variance
			2021			2020								2022			Favorable (Unfavorable) Variance
				(In millions)											(In millions)
Closure charges	Closure charges			$	1.9		$	(0.0)		$	(1.9)	Closure charges			$	0.1				$	1.9			$	1.8
Long-lived tangible asset impairment	Long-lived tangible asset impairment			0.1			—			$	(0.1)	Long-lived tangible asset impairment			—			0.1				0.1
Total closure and impairment charges				$	2.0		$	(0.0)		$	(2.0)

Total impairment and closure charges												Total impairment and closure charges			$	0.1		$	2.0			$	1.9

~~Closure~~The closure charges for the three months ended March 31, 2022 were minimal and primarily related to the revisions to existing closure reserves, including accretion, primarily for 28 IHOP restaurants. The closure charges for the three months ended March 31, 2021 related to the establishment of or ~~revision~~revisions to existing closure reserves, including accretion, primarily for ~~approximately~~ 35 IHOP restaurants. ~~The $0.1 million of~~Long-lived tangible asset impairment charges for the three months ended March 31, 2021 related to the impairment of operating lease right-of-use asset of one IHOP restaurant.

Other Income and Expense Items
Three months ended March 31, Favorable
(Unfavorable) Variance
2021 2020
(In millions)
Interest expense, net $ 16.5 $ 15.2 $ (1.3)
Amortization of intangible assets 2.7 2.8 0.1
Loss (gain) on disposition of assets 0.2 (0.2) (0.4)
Total $ 19.4 $ 17.8 $ (1.6)


Other Income and Expense Items	Three months ended March 31,					Favorable (Unfavorable) Variance
		2022			2021
			(In millions)
Interest expense, net			$	15.5		$	16.5	$	1.0

Amortization of intangible assets			2.7			2.7		0.0
(Gain) loss on disposition of assets			(1.3)			0.2		1.5
Total			$	16.9		$	19.4	$	2.5

Interest expense, net

Interest expense, net for the three months ended March 31, ~~2021 was higher than~~2022 declined compared to the same period of the prior year ~~primarily~~ due to ~~an increase~~a decrease in interest expense on ~~$220.0 million borrowed~~our Credit Facility. We had no borrowings outstanding under our Credit Facility induring the three months ended March ~~2020. The $220.0~~31, 2022, whereas we had $220 million ~~was~~ outstanding for approximately nine weeks during the three months ended March 31, ~~2021, compared to $220.0 million outstanding for less than two weeks during the three months ended March 31, 2020.~~2021. See “Liquidity and Capital Resources” for additional discussion related to ~~the borrowing.~~our Credit Facility.

~~Loss~~(Gain) loss on disposition of assets

The gain on disposition of assets for the three months ended March 31, 2022 primarily related to sale of land and buildings for two IHOP restaurants located on sites owned by us. There were no individually significant ~~losses~~gains or ~~gains~~losses on disposition of assets during the three months ended March 31, ~~2021 and 2020.~~2021.

Income Taxes Three months ended March 31, Favorable
(Unfavorable) Variance
2021 2020
(In millions)
Income before income taxes $ 24.0 $ 29.1 $ (5.1)
Income tax (benefit) provision $ (1.6) $ 6.7 $ 8.3
Effective tax rate (6.6) % 23.2 % 29.8 %


Income Taxes	Three months ended March 31,						Favorable (Unfavorable) Variance
		2022				2021
			(In millions)
Income before income taxes			$	34.2			$	24.0		$	10.2
Income tax provision (benefit)			$	9.3			$	(1.6)		$	(10.9)
Effective tax rate			27.2		%		(6.6)		%	(33.8)		%

Our income tax provision or benefit will vary from period to period in our normal course of business for two reasons: a change in income before income taxes and a change in the effective tax rate. Changes in our income before income taxes were addressed in the preceding sections of “Consolidated Results of Operations - Comparison of the Three Months Ended March 31, ~~2021~~2022 and ~~2020.~~2021.”

Our effective tax rate for the three months ended March 31, ~~2021~~2022 was ~~significantly~~ different than the rate of the prior comparable period ~~and the statutory federal tax rate of 21%,~~ primarily due to the ~~one-time~~ recognition of excess tax benefits on stock-based compensation related to the departure of ~~our~~the Company's previous chief executive ~~officer.~~

officer in the first quarter of 2021.

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Liquidity and Capital Resources

On June 5, 2019, Applebee’s Funding LLC and IHOP Funding LLC (the “Co-Issuers”), each a special purpose, wholly-owned indirect subsidiary of the Company, issued two tranches of fixed rate senior secured notes, the Series 2019-1 4.194% Fixed Rate Senior Secured Notes, Class A-2-I (“Class A-2-I Notes”) in an initial aggregate principal amount of $700 million and the Series 2019-1 4.723% Fixed Rate Senior Secured Notes, Class A-2-II (“Class A-2-II Notes”) in an initial aggregate principal amount of $600 million (the “Class A-2-II Notes” and, together with the Class A-2-I Notes, the “2019 Class A-2 Notes”). The 2019 Class A-2 Notes were issued pursuant to an offering exempt from registration under the Securities Act of 1933, as amended.

The Co-Issuers also established a new revolving financing facility, the 2019-1 Variable Funding Senior Notes, Class A-1 (the “Credit Facility”) that allows for drawings up to $225 million of variable funding notes and the issuance of letters of credit. The 2019 Class A-2 Notes and the Credit Facility are referred to collectively herein as the “New Notes.” The New Notes were issued in a securitization transaction pursuant to which substantially all the domestic revenue-generating assets and domestic intellectual property held by the Co-Issuers and certain other special-purpose, wholly-owned indirect subsidiaries of the Company (the “Guarantors”) were pledged as collateral to secure the New Notes.

While the 2019 Class A-2 Notes are outstanding, payment of principal and interest is required to be made on the 2019 Class A-2 Notes on a quarterly basis. The quarterly principal payment totaling $3.25 million on the 2019 Class A-2 Notes may be suspended when the leverage ratio for the Company and its subsidiaries is less than or equal to 5.25x. The leverage ratio is not a maintenance covenant and exceeding the leverage ratio of 5.25x does not violate any covenant related to the New Notes. The complete definitions of all calculation elements of the leverage ratio are contained in the Base Indenture, dated as of September 30, 2014, amended and restated as of June 5, 2019 (the “Base Indenture”), as supplemented by the related Series 2019-1 Supplement to the Base Indenture, dated June 5, 2019 (the “Series 2019-1 Supplement”), among the Co-Issuers and Citibank, N.A., as the trustee (in such capacity, the “Trustee”) and securities intermediary (the Base Indenture and the Series 2019-1 Supplement, collectively, the “Indenture”). In general, the leverage ratio is our indebtedness (as defined in the Indenture) divided by adjusted EBITDA (as defined in the Indenture) for the four preceding quarterly periods.

As of March 31, ~~2021,~~2022, our leverage ratio was ~~7.02x.~~4.05x. As a result, quarterly principal payments on the 2019 Class A-2 Notes ~~of $3.25 million continue to be~~are not required. ~~The leverage ratio is not a maintenance covenant and exceeding the leverage ratio of 5.25x does not violate any covenant related to the New Notes.~~

The Company may voluntarily repay the 2019 Class A-2 Notes at any time; however, if we repay the 2019 Class A-2 Notes prior to certain dates we would be required to pay make-whole premiums. As of March 31, ~~2021,~~2022, the make-whole premium associated with voluntary prepayment of the Class A-2-I Notes was approximately ~~$29~~$3 million; this amount declines each quarter to zero in June 2022. As of March 31, ~~2021,~~2022, the make-whole premium associated with voluntary prepayment of the Class A-2-II Notes was approximately ~~$59~~$18 million; this amount declines each quarter to zero in June 2024. We would also be subject to a make-whole premium in the event of a mandatory prepayment required following a Rapid Amortization Event or certain asset dispositions. The mandatory make-whole premium requirements are considered derivatives embedded in the New Notes that must be bifurcated for separate valuation. We estimated the fair value of these derivatives to be immaterial as of March 31, ~~2021,~~2022, based on the probability-weighted discounted cash flows associated with either event.

Covenants and Restrictions

The New Notes are subject to a series of covenants and restrictions customary for transactions of this type, including: (i) that the Co-Issuers maintain specified reserve accounts to be used to make required payments in respect of the New Notes, (ii) provisions relating to optional and mandatory prepayments, and the related payment of specified amounts, including specified call redemption premiums in the case of Class A-2 Notes under certain circumstances; (iii) certain indemnification payments in the event, among other things, the transfers of the assets pledged as collateral for the New Notes are in stated ways defective or ineffective and (iv) covenants relating to recordkeeping, access to information and similar matters. The New Notes are subject to customary rapid amortization events provided for in the Indenture, including events tied to failure of the Securitization Entities to maintain the stated debt service coverage ratio (“DSCR”), the sum of domestic retail sales for all restaurants being below certain levels on certain measurement dates, certain manager termination events, certain events of default and the failure to repay or refinance the Class A-2 Notes on the anticipated repayment dates. The New Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due, ~~on or with respect to the New Notes,~~ failure of the Securitization Entities to maintain the stated DSCR, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties and certain judgments.

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In general, the DSCR ratio is Net Cash Flow (as defined in the Indenture) for the four quarters preceding the calculation date divided by the total debt service payments (as defined in the Indenture) of the preceding four quarters. The complete definitions of the DSCR and all calculation elements are contained in the Indenture. Failure to maintain a prescribed DSCR can trigger a Cash Flow Sweeping Event, A Rapid Amortization Event, a Manager Termination Event or a Default Event as described below. In a Cash Flow Sweeping Event, the Trustee is required to retain 50% of excess Cash Flow (as defined in the Indenture) in a restricted account. In a Rapid Amortization Event, all excess Cash Flow is retained and used to retire principal amounts of debt. In a Manager Termination Event, the Company may be replaced as manager of the assets securitized under the Indenture. In a Default Event, the outstanding principal amount and any accrued but unpaid interest can be called to become immediately due and payable. Key DSCRs are as follows:

•DSCR less than 1.75x - Cash Flow Sweeping Event

•DSCR less than 1.20x - Rapid Amortization Event

•Interest-only DSCR less than 1.20x - Manager Termination Event

•Interest-only DSCR less than 1.10x - Default Event

Our DSCR for the reporting period ended March 31, ~~2021~~2022 was approximately ~~3.45x.~~4.6x.

During the second quarter of 2020, we voluntarily increased the interest reserve set aside for our securitized debt from the required $16.4 million to $32.8 million, which represented an estimated six months of interest and fees related to the 2019 Class A-2 Notes and the Credit Facility. In April 2021, we reduced the balance of the interest reserve to $16.4 million, the required three months of interest and fees related to the 2019 Class A-2 Notes and the Credit Facility. Also, during the second quarter of 2020, we voluntarily began accelerating the funding of interest on the 2019 Class A-2 Notes and the Credit Facility with the redirection of cash receipts within our securitization structure. As of April 27, 2021, the interest payments on the 2019 Class A-2 Notes and the Credit Facility that are due June 7, 2021 and September 7, 2021 have been fully funded within the securitization structure, in addition to the $16.4 million of interest reserve noted above.

Use of Credit Facilities

In March 2020, the Co-Issuers drew down a total of $220.0 million from the Credit Facility. The $220.0 million borrowing was repaid on March 5, ~~2021.~~2021, and there have been no borrowings subsequent to that date. The current interest rate for borrowings under the Credit Facility is the three-month LIBOR rate plus 2.15% for 60% of the advances and the commercial paper funding rate of our conduit investor plus 2.15% for 40% of the advances. ~~The weighted average interest rate on Credit Facility borrowings for the period outstanding during the three months ended March 31, 2021 was 2.4%.~~

At March 31, ~~2021,~~2022, there were no outstanding borrowings under the Credit Facility. At March 31, ~~2021, $3.3~~2022, $3.5 million was pledged against the Credit Facility for outstanding letters of credit, leaving ~~$221.7~~$221.5 million available for borrowing. The letters of credit are used primarily to satisfy insurance-related collateral requirements.

Capital Allocation

~~We evaluate~~To maintain financial flexibility in light of the COVID-19 pandemic, we suspended our repurchasing of common stock and the declaration of dividends on our common stock after the first quarter of 2020. After evaluating repurchases of common stock and dividend payments on ~~common stock and repurchases of~~ common stock within the context of our overall capital allocation strategy, ~~with our Board of Directors on an ongoing basis,~~ giving consideration to our current and forecast earnings, financial condition, cash requirements and other ~~factors. To maintain financial flexibility in light of the COVID-19 pandemic,~~factors, we ~~have not declared any dividends after the first quarter of 2020 and have suspended~~resumed repurchasing our common ~~stock. We will continue~~stock under the 2019 Share Repurchase Program and the declaration of dividends on our common stock in the fourth quarter of 2021.

Additionally, on February 17, 2022, the Company's Board of Directors authorized a new share repurchase program, effective April 1, 2022, of up to ~~evaluate our capital allocation strategy as industry conditions evolve and normal restaurant operations resume.~~$250 million (the “2022 Repurchase Program”). In connection with the approval of the 2022 Repurchase Program, the 2019 Share Repurchase Program terminated effective April 1, 2022.

Dividends

~~We did not declare or pay dividends during~~Dividends declared and paid per share for the three months ended March 31, 2022 and 2021 were as follows:


	Three months ended March 31,
		2022		2021
Dividends declared per common share		$	0.46	$	—
Dividends paid per common share		$	0.86	$	—

On October 28, 2021, the Board of Directors declared a fourth quarter 2021 cash dividend of $0.40 per share of common

stock, paid on January 7, 2022 to the stockholders of record as of the close of business on December 17, 2021.

~~Stock Repurchases~~

InOn February ~~2019,~~17, 2022, the ~~Company’s~~Company's Board of Directors ~~approved~~declared a first quarter 2022 cash dividend of $0.46 per share of

common stock, ~~repurchase program authorizing~~paid on April 1, 2022 to the ~~Company to repurchase up to $200 million~~stockholders of record as of the ~~Company’s common stock (the “2019 Repurchase Program”)~~close of business on an opportunistic basis from time to time in the open market or in privately negotiated transactions based on business, market, applicable legal requirements and other considerations. The 2019 Repurchase Program, as approved by the Board of Directors, does not require the repurchase of a specific number of shares and can be terminated at any time.

March 21, 2022.

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~~We did not repurchase any shares under the 2019 Repurchase Program during~~

Stock Repurchases

During the three months ended March 31, ~~2021. As~~2022, the Company repurchased 588,108 shares of ~~March 31, 2021, cumulative repurchases~~common stock at a cost of ~~stock total 1,697,597~~$41.4 million. Cumulatively, we repurchased 2,344,804 shares at a cost of ~~$129.8~~$175.8 million ~~with a dollar value of $70.2 million remaining for repurchase~~ under the 2019 Repurchase ~~Program.~~Program through April 1, 2022, the effective date of termination as noted above.

From time to time, we also repurchase shares owned and tendered by employees to satisfy tax withholding obligations on the vesting of restricted stock awards. Shares are deemed purchased at the closing price of our common stock on the vesting date. See Part II, Item 2 for detail on this stock repurchase activity during the first quarter of ~~2021.~~2022.

Cash Flows

In summary, our cash flows for the three months ended March 31, ~~2021~~2022 and March 31, ~~2020~~2021 were as follows:

Three months ended March 31,
2021 2020 Variance
(In millions)
Net cash provided by operating activities $ 30.6 $ 29.6 $ 1.0
Net cash provided by (used in) investing activities 3.1 (1.2) 4.3
Net cash (used in) provided by financing activities (217.3) 194.2 (411.5)
Net (decrease) increase in cash, cash equivalents and restricted cash $ (183.6) $ 222.6 $ (406.2)


	Three months ended March 31,
	2022		2021		Variance
	(In millions)
Net cash (used in) provided by operating activities	$	(7.8)	$	30.6	$	(38.4)
Net cash provided by investing activities	1.7		3.1		(1.4)
Net cash used in financing activities	(61.0)		(217.3)		156.3
Net decrease in cash, cash equivalents and restricted cash	$	(67.1)	$	(183.6)	$	116.5

Operating Activities

Cash provided by operating activities ~~increased $1.0~~decreased $38.4 million during the three months ended March 31, ~~2021~~2022 compared to the same period of the prior year. Our net income plus the non-cash reconciling items shown in our statements of cash flows (primarily depreciation, impairment and closure charges, stock-based compensation and ~~impairment charges, depreciation,~~ deferred ~~taxes and stock-based compensation)~~taxes) increased ~~$5.9~~$2.0 million from ~~2020.~~2021. This was primarily due to ~~the recognition of excess tax benefits on stock-based compensation and~~ an increase in gross profit, partially offset by an increase in G&A expenses and the recognition of excess tax benefits on stock-based compensation in 2021 that did not recur in 2022 , each of which was discussed in preceding sections of the MD&A. Net changes in working capital ~~provided~~used cash of ~~$0.4~~$42.6 million during the three months ended March 31, ~~2021~~2022 compared to ~~providing~~using cash of ~~$5.4~~$2.2 million during the same period of the prior year, an unfavorable change of ~~$5.0~~$40.4 million. The unfavorable change in working capital was primarily due to ~~a decrease in cash from trade and gift card receivables. Typically we see~~ an increase in cash collections in the first fiscal quarter of the year due to gift card sales during the preceding holiday season. Due to the pandemic, gift card sales in the fourth quarter of 2020 were lower than the fourth quarter of 2019, resulting in lower cash collections in the first quarter of 2021 compared to the first quarter of 2020. This was partially offset bypayments for corporate bonuses and other employee compensation and the timing of marketing disbursements.

Investing Activities

Investing activities provided net cash of ~~$3.1~~$1.7 million for the three months ended March 31, ~~2021.~~2022. Principal receipts from notes, equipment contracts and other long-term receivables of ~~$4.7~~$4.8 million and proceeds from asset sales of ~~$1.0~~$2.9 million were partially offset by capital expenditures of ~~$2.4~~$5.3 million and additions to long-term receivables of $0.7 million. ~~Investing~~

Financing Activities

Financing activities used net cash of ~~$1.2~~$61.0 million for the three months ended March 31, ~~2020. The variance between~~2022. We repurchased common stock in the ~~two periods primarily was due to a decrease in capital expenditures during the three months ended March 31, 2021 compared to the same period~~amount of ~~the prior year.~~

~~Financing Activities~~

~~Financing activities used net cash~~$41.6 million, paid dividends of ~~$217.3~~$14.6 million ~~for the three months ended March 31, 2021. As discussed above under~~ ~~Use of Credit Facilities, we repaid $220.0 million borrowed from our Credit Facility. We also paid $9.7 million for taxes withheld for vesting of restricted stock units~~ and made payments ~~totaling $5.9 million~~ on ~~long-term debt and capital~~finance lease ~~obligations. We had a net~~obligations of $2.3 million. The decrease in cash ~~inflow of approximately $18.3 million related to equity compensation awards~~.

~~Financing~~used by financing activities ~~provided net cash of $194.2 million for the three months ended March 31, 2020, primarily~~was due to a $220 million ~~drawdown from our~~repayment of Credit Facility ~~and $20.5 million~~ in ~~proceeds from stock option exercises,~~2021 that did not recur in 2022, partially offset by ~~stock~~the resumption of dividend repurchases and dividend payments ~~totaling $41.3 million. The variance of $411.5 million between periods primarily was due to the $440 million swing~~ in ~~use of the Credit Facility, partially offset by our not having repurchased stock or paid dividends during the three months ended March 31,~~2022 that had been suspended in 2021.

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Cash and Cash Equivalents

Our total cash balances as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 were ~~are~~as follows:


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(In millions)					(In millions)
Cash and cash equivalents	Cash and cash equivalents	$	179.6	$	383.4	Cash and cash equivalents	$	294.7	$	361.4
Restricted cash, current	Restricted cash, current	60.1		39.9		Restricted cash, current	47.2		47.5
Restricted cash, non-current	Restricted cash, non-current	32.8		32.8		Restricted cash, non-current	16.4		16.4
Total	Total	$	272.5	$	456.1	Total	$	358.3	$	425.3

Cash and cash equivalents include ~~$72.0~~$92.4 million and ~~$71.6~~$101.5 million of cash held for gift card programs and advertising funds as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The decrease in cash and cash equivalents between ~~December~~March 31, ~~2020~~2022 and ~~March~~December 31, 2021 was primarily due to ~~the repayment of $220.0 million discussed above under~~ ~~Use of Credit Facilities.~~payments to repurchase common stock, dividend payments and other payments including employee bonuses and advertising.

We believe that our unrestricted cash and cash equivalents on hand, cash flow from operations, and the ~~$221.7~~$221.5 million of borrowing capacity available under our Credit Facility will provide us with adequate liquidity for the next twelve months.

Adjusted Free Cash Flow

We define “adjusted free cash flow” for a given period as cash provided by operating activities, plus receipts from notes and equipment contract receivables, less additions to property and equipment. Management uses this liquidity measure in its periodic assessment of, among other things, payment of cash dividends ~~per share of~~on common stock and repurchases of common stock and we believe it is important for investors to have the same measure used by management for that purpose. Adjusted free cash flow does not represent residual cash flow available for discretionary purposes.

Adjusted free cash flow is a non-U.S. GAAP measure. This non-U.S. GAAP measure is not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies. Non-U.S. GAAP measures should be considered in addition to, and not as a substitute for, the U.S. GAAP information contained within our financial statements. Reconciliation of the cash provided by operating activities to adjusted (negative) free cash flow is as follows:


		Three months ended March 31,							Three months ended March 31,
		2021		2020		Variance			2022		2021		Variance
		(In millions)							(In millions)
Cash flows provided by operating activities		$	30.6	$	29.6	$	1.0
Cash flows (used in) provided by operating activities								Cash flows (used in) provided by operating activities	$	(7.8)	$	30.6	$	(38.4)
Receipts from notes and equipment contracts receivable	Receipts from notes and equipment contracts receivable	2.5		3.0		(0.5)		Receipts from notes and equipment contracts receivable	3.0		2.5		0.5
Additions to property and equipment	Additions to property and equipment	(2.4)		(5.1)		2.7		Additions to property and equipment	(5.3)		(2.4)		(2.9)
Adjusted free cash flow		$	30.7	$	27.5	$	3.2
Adjusted (negative) free cash flow								Adjusted (negative) free cash flow	$	(10.1)	$	30.7	$	(40.8)

~~Off-Balance Sheet Arrangements~~

~~We have obligations~~Adjusted free cash flow for ~~guarantees on certain franchisee lease agreements, as disclosed~~the three months ended March 31, 2022 declined compared to the same period of the prior year due to the decrease in ~~Note 15 - Commitments~~cash flows provided by operating activities and ~~Contingencies,~~the increase in capital expenditures, partially offset by an increase in receipts from notes and equipment contracts receivable, each of ~~Notes to Consolidated Financial Statements of Part I, Item 1~~which was discussed in preceding sections of this ~~Form 10-Q. Other than such guarantees, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4) of SEC Regulation S-K as of March 31, 2021.~~

~~Table of Contents~~

MD&A.

Contractual Obligations and Commitments

~~As discussed above, in March 2021, we repaid $220 million of borrowings outstanding under our Credit Facility. Other than this repayment, there~~There were no material changes to the contractual obligations ~~table~~ as disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

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Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenues and expenses in the reporting period. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. We continually review the estimates and underlying assumptions to ensure they are appropriate for the circumstances. Accounting assumptions and estimates are inherently uncertain and actual results may differ materially from our estimates.

A summary of our critical accounting estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. During the three months ended March 31, ~~2021,~~2022, there were no significant changes in our critical accounting policies or in our critical accounting estimates.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

~~The following change~~There were no material changes from the information contained in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020 took place during the three months ended March 31, 2021:~~2021.

~~Interest Rate Risk~~

We are only exposed to interest rate risk on borrowings we make under our Credit Facility, borrowings from which are subject to variable interest rates. As of March 2021, we have no borrowings outstanding under the Credit Facility and currently are not exposed to interest rate risk.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures.

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting.

There have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings.

We are subject to various lawsuits, administrative proceedings, audits and claims arising in the ordinary course of business. Some of these lawsuits purport to be class actions and/or seek substantial damages. We are required to record an accrual for litigation loss contingencies that are both probable and reasonably estimable. Legal fees and expenses associated with the defense of all of our litigation are expensed as such fees and expenses are incurred. Management regularly assesses our insurance deductibles, analyzes litigation information with our attorneys and evaluates our loss experience in connection with pending legal proceedings. While we do not presently believe that any of the legal proceedings to which we are currently a party will ultimately have a material adverse impact on us, there can be no assurance that we will prevail in all the proceedings we are party to, or that we will not incur material losses from them.

Item 1A. Risk Factors.

There are no material changes from the risk factors set forth under Item 1A of Part I of the Company’s Annual Report on

Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Purchases of Equity Securities by the Company
Period Total number of
shares
purchased Average price
paid per
share Total number of
shares purchased as
part of publicly
announced plans or
programs (b) Approximate dollar value of
shares that may yet be
purchased under the
plans or programs (b)
January 4, 2021 - January 31, 2021(a)
902 $ 70.48 — $ 70,200,000
February 1, 2021 - February 28, 2021(a)
11,733 80.74 — $ 70,200,000
March 1, 2021 - April 4, 2021(a)
2,366 88.55 — $ 70,200,000
15,001 $ 81.35 — $ 70,200,000


Purchases of Equity Securities by the Company
Period	Total number of shares purchased (a)	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs (b)	Approximate dollar value of shares that may yet be purchased under the plans or programs (b)
January 3, 2022 - January 30, 2022	71,018	$	69.63	70,780	$	60,700,000
January 31, 2022 - February 27, 2022	50,450	76.13		40,886	$	57,700,000
February 28, 2022 - April 3, 2022	489,612	70.27		476,442	$	24,200,000
	611,080	$	70.68	588,108	$	24,200,000

(a) These amounts represent shares owned and tendered by employees to satisfy tax withholding obligations arising upon vesting of restricted stock awards. Shares so surrendered by the participants are repurchased by us pursuant to the terms of the plan and the applicable individual award agreements under which the shares were issued and not pursuant to publicly announced repurchase authorizations.

(b) In February 2019, the Company’s Board of Directors approved the 2019 Repurchase Program authorizing the Company to repurchase up to $200 million of the Company's common stock. On February 17, 2022, the Company's Board of Directors authorized a new share repurchase program, effective April 1, 2022, of up to $250 million (the “2022 Repurchase Program”). In connection with the approval of the 2022 Repurchase Program, the 2019 Share Repurchase Program terminated effective April 1, 2022. The ~~2019~~2022 Repurchase Program, as approved by the Board of Directors, does not require the repurchase of a specific number of shares and can be terminated at any time.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.


*†10.1						~~Nonqualified Stock Option~~Employment Agreement, dated ~~January 4, 2021,~~effective March 9, 2022 by and between Dine Brands Global, Inc. and John C. Cywinski(Exhibit 10.1 to Registrant’s Form 8-K filed on February 18, 2022 is incorporated herein by reference.)
†10.2						Employment Agreement, dated effective March 9, 2022 by and between the Registrant and ~~John W. Peyton.~~
*†Jay D. Johns (Exhibit 10.2						~~Restricted Stock Unit Agreement, dated January 4, 2021,~~ to Registrant’s Form 8-K filed on February 18, 2022 is incorporated herein by ~~and between the Registrant and John W. Peyton.~~reference.)
*31.1						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
*31.2						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
*32.1						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
*32.2						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						Inline XBRL Schema Document.***
101.CAL						Inline XBRL Calculation Linkbase Document.***
101.DEF						Inline XBRL Definition Linkbase Document.***
101.LAB						Inline XBRL Label Linkbase Document.***
101.PRE						Inline XBRL Presentation Linkbase Document.***
104						Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** The certifications attached as Exhibits 32.1 and 32.2 accompany this Quarterly Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

*** Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 and 104 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

† A contract, compensatory plan or arrangement in which directors or executive officers are eligible to participate.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Dine Brands Global, Inc. (Registrant)


Dated:	~~5th~~4th day of May, ~~2021~~2022	By:	/s/ John W. Peyton
			John W. Peyton Chief Executive Officer (Principal Executive Officer)

Dated:	4th day of May, 2022	By:	/s/ Vance Y. Chang
			Vance Y. Chang Chief Financial Officer (Principal Financial Officer)

Dated:	~~5th~~4th day of May, ~~2021~~2022	By:	/s/ Allison Hall
			Allison Hall ~~Interim~~ Chief ~~Financial~~Accounting Officer (~~Principal Financial Officer and~~ Principal Accounting Officer)

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	Status as of March 31, 2021
	Domestic
Dining room capacity %/other status	Applebee's	IHOP	International
100% capacity	374	183	—
> 50% capacity	142	135	31
26%-50% capacity	959	1,086	112
Up to 25% capacity	106	209	28
Off-premise/outdoors only and other	9	21	22
Restaurants temporarily closed	6	26	9
Total	1,596	1,660	202


	Status as of March 31, 2020
	Domestic
Restaurant status	Applebee's	IHOP	International
Dining rooms open*	4	204	63
Off-premise/outdoors only and other	1,402	1,158	55
Restaurants temporarily closed	251	347	131
Total	1,657	1,709	249


Average Weekly Unit Sales	Three months ended March 31, 2021
		Applebee's		IHOP
Sales percentage increase (decrease) in reported retail sales		1.2	%	(12.1)	%
% increase (decrease) in domestic system-wide same-restaurant sales		11.9	%	(0.9)	%
Net franchise restaurant reduction (1)		(4)		(19)
Net decrease in total effective restaurants (2)		(69)		(101)


Purchases of Equity Securities by the Company
Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs (b)	Approximate dollar value of shares that may yet be purchased under the plans or programs (b)
January 4, 2021 - January 31, 2021(a)	902	$	70.48	—	$	70,200,000
February 1, 2021 - February 28, 2021(a)	11,733	80.74		—	$	70,200,000
March 1, 2021 - April 4, 2021(a)	2,366	88.55		—	$	70,200,000
	15,001	$	81.35	—	$	70,200,000