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APPLEBEE'S INTERNATIONAL, INC.
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July 16, 2007
Dear Associates:
Last night, our board of directors reached a decision regarding strategic
alternatives that it believes is in the best interests of our shareholders, but
is likely to create a level of uncertainty for many of us who have been on this
journey we call the BIG Fun TRIP.
As a result of this decision, at 5 a.m. today, IHOP announced it intends to
acquire Applebee's International. Our board made this decision based on what it
believes is in the best interests of our shareholders and only after a thorough
evaluation of several strategic alternatives, including a sale to a
private-equity firm or a recapitalization of the company.
IHOP plans to restructure Applebee's by re-franchising (selling to new or
existing franchisees) the majority of our 508 company-owned restaurants and
significantly reducing general and administrative costs.
What does this mean for our associates? Well, typically, when costs are
significantly reduced, there are headcount reductions, too. It's expected that,
over time, as company-owned restaurants are re-franchised, there will be
reductions in positions directly associated with support for those re-franchised
stores. That won't happen overnight - in fact, we expect the re-franchising
process could extend to 2010.
For the near term, both brands will continue to be supported from their
respective Support Centers in Glendale, Calif., and Overland Park, Kan. However,
longer-term, the transition team is working to determine the ultimate plans for
the location of Applebee's Support Center. This is a priority for the transition
team of IHOP and Applebee's management, and we will communicate updates in a
timely manner. Until the close of the sale (which is expected to happen in the
fourth quarter this year), the officers and senior management teams are expected
to remain in place.
I apologize for not being able to deliver the news to you in-person before the
announcement this morning. We pledged from the start to share info with you just
as soon as we were allowed, and we remain committed to that promise. Our board
made the decision late last night (Sunday). Because the Securities and Exchange
Commission's laws require news of this magnitude to be released promptly, IHOP
decided to announce it at 5 a.m. Central this morning.
Without a doubt, you will have many questions about what this news means to you,
your job and your future. While we don't have all those answers today, the
transition team will be working closely together to provide you with more
information in the days and weeks ahead. Additionally, we will be holding a
series of "Senior Moments," conference calls and Applebee's Town Hall Forums to
discuss today's announcement. We also intend to keep you informed of
developments as they occur through my.applebees.com.
Going forward, there are dual responsibilities that you now face. First and
foremost, you will be focused on making the best decision for continuing to
support yourself and your loved ones over the long-term. I encourage you to
spend the time and energy necessary on this. While doing that, I ask that you
also focus on supporting the more than 30,000 Applebee's associates who continue
the mission of making connections with guests and bringing families and friends
together in our restaurants each and every day. Without your help, we cannot
keep the restaurants open and running through the transition. Without our
restaurants, those associates would not be able support themselves or their
families. They are counting on you.
The legacy you have built through your work here continues to matter to millions
of guests and thousands of associates. Thank you for all that you have done and
continue to do to make Applebee's Neighborhood Grill & Bars unique and special
places.
Sincerely,
Dave
Additional Information and Where to Find It
In connection with the proposed transaction, IHOP Corp. and Applebee's
International will be filing documents with the Securities and Exchange
Commission (the "SEC"), and Applebee's intends to file a related preliminary and
definitive proxy statement. Investors and security holders are urged to read the
related preliminary and definitive proxy when it becomes available because it
will contain important information about the proposed transaction. Investors and
security holders may obtain free copies of these documents (when they are
available) and other documents filed with the SEC at the SEC's web site at
www.sec.gov. In addition, investors and security holders may obtain free copies
of the documents filed with the SEC by IHOP Corp. by contacting IHOP Investor
Relations at 818-240-6055. Investors and security holders may obtain free copies
of the documents filed with the SEC by Applebee's by contacting Applebee's
Investor Relations at 913-967-4000. In addition, you may also find information
about the merger transaction at www.ihopapplebeesacquisition.com.
Applebee's and their directors and executive officers may be deemed participants
in the solicitation of proxies from the stockholders of Applebee's in connection
with the proposed transaction. Information regarding the special interests of
these directors and executive officers in the proposed transaction will be
included in the proxy statement of Applebee's described above. Additional
information regarding the directors and executive officers of Applebee's is also
included in Applebee's proxy statement for its 2007 Annual Meeting of
Stockholders, which was filed with the SEC on April 9, 2007, and the
supplemental proxy statement filed on May 1, 2007. These documents are available
free of charge at the SEC's web site at www.sec.gov and from Investor Relations
at IHOP and Applebee's as described above.
Applebee's Key Messages / FINAL / July 16, 2007
o Today, we announced that IHOP is acquiring Applebee's International.
o Our board made this decision based on what it believes is in the best
interests of our shareholders. While we support this decision for our
shareholders, we understand that this is difficult news for some of
our associates.
o You will have many questions about what this means to you, your job
and your future. While we don't have all those answers today, a
transition team of IHOP and Applebee's management will be working
closely together to provide you with more information in the days and
weeks ahead.
o IHOP's expertise is in franchising and they plan to restructure
Applebee's into a highly franchised model by re-franchising (selling
to new or existing franchisees) the majority of our 508 company-owned
restaurants. This strategy, along with other initiatives to
re-energize their brand, have proven very successful for IHOP.
o The new business model is expected to reduce the company's capital
expenditure needs, as well as its general and administrative (G&A)
costs.
o Typically, when G&A costs are significantly reduced as noted above,
there are headcount reductions, too. In this case, it's expected that,
over time, as company-owned restaurants are re-franchised, there will
be reductions in positions directly associated with support for the
re-franchised stores. However, it's important to note that the sale
will not close until fourth quarter and the re-franchising process
could extend to 2010.
o For the near term, both brands will continue to be supported from
their respective Support Centers in Glendale, Calif., and Overland
Park, Kan. However, longer-term, the transition team, which consists
of members of the IHOP and Applebee's management teams, is working to
determine our ultimate plans for the location of Applebee's Support
Center. This is a priority for the transition team and we will
communicate updates in a timely manner.
o IHOP said today, "We are preserving both brands and will continue to
operate them independently of each other with dedicated marketing and
operations leadership."
o The officers and senior management team are expected to remain in
place through the sale of the company. Their roles after the sale
closes will be determined over the next several months of integration
planning.
o Associates have two responsibilities:
o First and foremost, you will want to be focused on making the
best decision for how you continue to support yourselves and your
loved ones.
o While doing this, we ask that you also focus on supporting the
more than 30,000 Applebee's associates who continue to operate
our restaurants. Without our continued support, those associates
will not be able to keep their restaurants running smoothly -
none of us want those associates to lose their ability to support
themselves and their families. The restaurants are counting on
us.
o Applebee's associates with questions or concerns about life
planning or financial planning are encouraged to contact the
company's LifeMatters, a free associate assistance program
designed for you. To access LifeMatters resources, call the
NeighborLine at 1-866-439-6344, or go to http://www.neas.com. You
may also contact the NeighborLine with questions about your
benefits.
o Our Support Center associates have built a proud legacy here and
your work will continue to matter to millions of guests and
thousands of associates.
Additional Information and Where to Find It
In connection with the proposed transaction, IHOP Corp. and Applebee's
International will be filing documents with the Securities and Exchange
Commission (the "SEC"), and Applebee's intends to file a related preliminary and
definitive proxy statement. Investors and security holders are urged to read the
related preliminary and definitive proxy when it becomes available because it
will contain important information about the proposed transaction. Investors and
security holders may obtain free copies of these documents (when they are
available) and other documents filed with the SEC at the SEC's web site at
www.sec.gov. In addition, investors and security holders may obtain free copies
of the documents filed with the SEC by IHOP Corp. by contacting IHOP Investor
Relations at 818-240-6055. Investors and security holders may obtain free copies
of the documents filed with the SEC by Applebee's by contacting Applebee's
Investor Relations at 913-967-4000. In addition, you may also find information
about the merger transaction at www.ihopapplebeesacquisition.com.
Applebee's and their directors and executive officers may be deemed participants
in the solicitation of proxies from the stockholders of Applebee's in connection
with the proposed transaction. Information regarding the special interests of
these directors and executive officers in the proposed transaction will be
included in the proxy statement of Applebee's described above. Additional
information regarding the directors and executive officers of Applebee's is also
included in Applebee's proxy statement for its 2007 Annual Meeting of
Stockholders, which was filed with the SEC on April 9, 2007, and the
supplemental proxy statement filed on May 1, 2007. These documents are available
free of charge at the SEC's web site at www.sec.gov and from Investor Relations
at IHOP and Applebee's as described above.
Applebee's Frequently Asked Questions
Monday, July 16, 2007
1. What was announced today?
We announced today that IHOP intends to acquire Applebee's for $25.50 per
share. IHOP plans to re-franchise (sell to new or existing franchisees) the
majority of our 508 company-owned restaurants.
2. Why did the board decide to sell the company to IHOP?
After thoroughly considering a possible recapitalization and proposals made
by potential buyers, the Applebee's Board of Directors determined this was
the path that would deliver the most value to our shareholders.
3. What are IHOP's plans for Applebee's?
IHOP plans to restructure Applebee's into a highly franchised model by
re-franchising (selling to new or existing franchisees) the majority of our
508 company-owned restaurants. The new business model is expected to reduce
the company's capital expenditures, as well as reduce overall general and
administrative (G&A) costs.
4. Will there be layoffs?
Typically, when G&A costs are significantly reduced as noted above, there
are headcount reductions, too. In this case, it's expected that, over time,
as company-owned restaurants are re-franchised, there will be reductions in
positions directly associated with support for the re-franchised stores.
However, it's important to note that we expect the re-franchising process
could extend to 2010. IHOP said today, "We are preserving both brands and
will continue to operate them independently of each other with dedicated
marketing and operations leadership."
5. Why didn't I hear about this from our Applebee's team before I heard it on
the news?
The Applebee's Board of Directors made this decision late on Sunday, July
15. Because Securities and Exchange Commission's laws require news of this
magnitude to be announced promptly, IHOP needed to announce the news at 5
a.m. Central this morning. We realize that some of you learned this news
first from an outside source, rather than from us. We are very sorry for
this unavoidable timing issue. Beginning today, we will be holding a series
of "Senior Moments," conference calls and Applebee's Town Hall Forums to
talk with you about today's announcement. Also, we will keep you informed
of developments as they occur through my.applebees.com.
6. When will the sale close? Is this a done deal?
The board's decision to sell is subject to the approval of Applebee's
shareholders, customary closing conditions and regulatory approvals. (IHOP
shareholders do not need to vote on the sale.) The date of our shareholders
meeting will be announced in the coming weeks. Prior to the meeting, you
will receive a proxy statement that will allow you to vote your shares
regarding the sale of the company. The Applebee's Board has recommended
that shareholders vote for the sale, and assuming shareholder approval, the
deal likely will close in the fourth quarter of this year.
7. What if shareholders don't approve the deal?
That could result in changes to the terms of the deal. Those changes would
then have to be presented back to shareholders for their approval.
8. Will we still move into the new Support Center in December?
For the near term, both brands will continue to be supported from their
respective Support Centers in Glendale, Calif., and Overland Park. However,
longer-term, the transition team, which consists of members of IHOP and
Applebee's management, is working to determine the ultimate plans for the
location of Applebee's Support Center. This is a priority for the
transition team and we will communicate updates in a timely manner.
9. Will there be changes in our management team?
The senior management and officer teams are expected to remain in place
through the close of the sale. Their roles after the close will be
determined by the transition team over the next few months.
10. Who will run the new, combined company?
Julia Stewart, current chairman and CEO of IHOP, will run the new, combined
company.
11. Who is Julia Stewart?
Julia is a 35-year veteran of the foodservice industry. Currently, she is
chairman and chief executive officer of IHOP Corp. Prior to joining IHOP,
Julia served as president of the domestic division of Applebee's
International (1998-2001). Before joining Applebee's, Julia held several
key executive positions with Taco Bell Corporation, including national vice
president of franchise and license and Western region vice president of
operations. Over a 15-year period prior to Taco Bell, she held various key
marketing positions with Stuart Anderson's Black Angus/Cattle Company
Restaurants, Spoons Grill & Bar, Burger King Corp. and Carl's Jr.
Restaurants.
12. What will happen to my pay, benefits and bonus?
Until the deal closes, Applebee's will continue to execute our compensation
and benefits programs as we have, as an independent company. After that,
IHOP will make all future compensation and benefits decisions.
13. What will happen to my bonus for 2007? Will I still receive it in March
2008?
This is one of the many compensation issues that the transition team will
be studying and will answer as soon as possible.
14. When the sale closes, what happens to the Applebee's stock I own now?
IHOP will buy out all of your shares at the negotiated price of $25.50 per
share. You would report any gain or loss as result of the transaction when
you file your income taxes.
15. When the sale closes, will I receive stock in the new company to replace my
stock in Applebee's?
No, you will receive cash for your existing stock in Applebee's
International. You will not receive IHOP stock.
16. When the sale closes, what happens to my stock options and/or stock
appreciation rights (SARs)?
Under our current plan, when the sale closes, all of your outstanding
unvested stock options and SARs will vest in full and be converted into
cash. The cash value will be equal to the number of units you have times
the excess, if any, of $25.50 per share over the exercise price per share.
Sounds confusing, right? Here's an example: If you have 100 options/SARs
with an exercise price of $20 per share, then you will receive a cash
payment of $550 [100 shares x ($25.50-$20)]. Please note, of course, that
Uncle Sam will have something to say about all of this, so the amount of
cash you receive will be reduced by all applicable tax withholding. If the
exercise price of your options is $25.50 or above, you will not receive any
cash at closing for those options.
17. When the sale closes, what happens to my restricted stock grants I have
already received?
Under our current plan, all of your restricted and unrestricted stock -
both vested and unvested - will be purchased from you by IHOP for $25.50
per share. The amount of cash you receive for your restricted stock will be
reduced by all applicable tax withholding. You would report any gain or
loss for your unrestricted stock when you file your income taxes.
18. Will Applebee's still make the Q3 and Q4 equity grants in 2007?
The equity grants will continue as scheduled until the deal closes. For
example, if the deal closes Nov. 1, the Sept. 1 Q3 grant will be made as
scheduled but the Dec. 1 Q4 grant will not be made. If the deal closes
after Dec. 2, both grants will be made.
19. What will happen to the company's ESPP plan?
The sale is expected to close after Sept. 30, which is the end of the next
quarterly ESPP purchase period. Therefore, plan participation for those
associates that have already enrolled would continue through that date, and
they will receive the shares they purchased under the plan for Q3. The
transition team will determine if the program continues after Q3, depending
on the closing date.
20. What will happen to the 15 percent cash match that was available for shares
purchased and held under the 2007 ESPP?
This will be one of the compensation and benefits issues that the
transition team will determine.
21. After the sale, what happens to the 401(k) plan?
IHOP may decide to continue, amend or terminate the plan. If the plan is
terminated, vesting of any unvested company matching is required. This is
one of the many compensation issues that the transition team is currently
studying and will answer as soon as possible.
22. If I lose my job, what severance will I be eligible for?
The transition team will develop a severance program that will take effect
after the sale closes based on the plans currently in place at Applebee's
and IHOP. All Applebee's salaried associates are currently covered by our
company's severance plan. Under our current plan, severance would depend on
your position and length of service. Generally, it provides one week of
base salary for every six months of service, with a minimum of four weeks,
and it covers a portion of COBRA benefits costs. By law, IHOP would be
required to provide you access to insurance benefits for up to 18 months
after separation from the company.
23. Who should I contact with questions?
If your questions are about your benefits, please call the NeighborLine at
1-866-439-6344 and hit "3" to talk with an Associate Services
representative. If your questions are about the sale process, please ask
your supervisor.
24. What if I need help with life planning or financial planning?
Please contact LifeMatters, a free associate assistance program designed
for you. To access LifeMatters resources, call the NeighborLine at
1-866-439-6344, or go to http://www.neas.com.
Additional Information and Where to Find It
In connection with the proposed transaction, IHOP Corp. and Applebee's
International will be filing documents with the Securities and Exchange
Commission (the "SEC"), and Applebee's intends to file a related preliminary and
definitive proxy statement. Investors and security holders are urged to read the
related preliminary and definitive proxy when it becomes available because it
will contain important information about the proposed transaction. Investors and
security holders may obtain free copies of these documents (when they are
available) and other documents filed with the SEC at the SEC's web site at
www.sec.gov. In addition, investors and security holders may obtain free copies
of the documents filed with the SEC by IHOP Corp. by contacting IHOP Investor
Relations at 818-240-6055. Investors and security holders may obtain free copies
of the documents filed with the SEC by Applebee's by contacting Applebee's
Investor Relations at 913-967-4000. In addition, you may also find information
about the merger transaction at www.ihopapplebeesacquisition.com.
Applebee's and their directors and executive officers may be deemed participants
in the solicitation of proxies from the stockholders of Applebee's in connection
with the proposed transaction. Information regarding the special interests of
these directors and executive officers in the proposed transaction will be
included in the proxy statement of Applebee's described above. Additional
information regarding the directors and executive officers of Applebee's is also
included in Applebee's proxy statement for its 2007 Annual Meeting of
Stockholders, which was filed with the SEC on April 9, 2007, and the
supplemental proxy statement filed on May 1, 2007. These documents are available
free of charge at the SEC's web site at www.sec.gov and from Investor Relations
at IHOP and Applebee's as described above.
July 16, 2007
Dear Managers:
As restaurant operators, you are among the best-equipped people in the world to
handle changing circumstances - it simply is part of your DNA. This morning's
news represents some significant changes ahead for all of us.
Last night, our board of directors reached a decision regarding strategic
alternatives. As a result of this decision, IHOP announced this morning that it
intends to acquire Applebee's International. IHOP said it plans to revitalize
Applebee's using similar strategies and tactics that have successfully
re-energized IHOP. Part of this plans calls for the restructure of Applebee's
into a highly franchised model by re-franchising (selling to new or existing
franchisees) the majority of our 508 company-owned restaurants. We expect this
deal to be complete in the fourth quarter of this year. The board determined
this was the path that would deliver the greatest value to our shareholders.
What does this mean for you? First of all, the majority of our restaurants will
be transitioning to a franchise owner - a process that could extend to 2010. I
would expect that those franchisees will greatly value having experienced and
dedicated associates like you to run their restaurants.
There also will be changes at the Applebee's Support Center. Over time, as
company-owned restaurants are re-franchised, there will be reductions in
positions directly associated with support for those re-franchised stores. For
the near term, both brands will continue to be supported from their respective
Support Centers in Glendale, Calif., and Overland Park, Kan. However,
longer-term, the transition team, which consists of members of the IHOP and
Applebee's management teams, is working to determine the ultimate plans for the
location of Applebee's Support Center. This is a priority for the transition
team, and we will communicate updates in a timely manner.
How will all of this affect your pay, benefits and bonus? Obviously, we won't
know how and if it will until the transaction closes and IHOP takes over and/or
your restaurant is acquired by a franchisee. Until that time your compensation
plan will not change. We'll keep you updated at every step of the way as the
process moves forward.
In the meantime, I have attached an FAQ document to help answer some of your
initial questions. If you have more questions, please forward those or talk with
your ADs and I'll work with them to get you answers.
I encourage you to stay focused on operating your restaurants. Assure your
associates that your restaurant may change ownership, but it won't change its
primary focus of providing guests with a great Applebee's experience. Keep the
focus on continuing to be America's Favorite Neighbor.
Sincerely,
Carin
Additional Information and Where to Find It
In connection with the proposed transaction, IHOP Corp. and Applebee's
International will be filing documents with the Securities and Exchange
Commission (the "SEC"), and Applebee's intends to file a related preliminary and
definitive proxy statement. Investors and security holders are urged to read the
related preliminary and definitive proxy when it becomes available because it
will contain important information about the proposed transaction. Investors and
security holders may obtain free copies of these documents (when they are
available) and other documents filed with the SEC at the SEC's web site at
www.sec.gov. In addition, investors and security holders may obtain free copies
of the documents filed with the SEC by IHOP Corp. by contacting IHOP Investor
Relations at 818-240-6055. Investors and security holders may obtain free copies
of the documents filed with the SEC by Applebee's by contacting Applebee's
Investor Relations at 913-967-4000. In addition, you may also find information
about the merger transaction at www.ihopapplebeesacquisition.com.
Applebee's and their directors and executive officers may be deemed participants
in the solicitation of proxies from the stockholders of Applebee's in connection
with the proposed transaction. Information regarding the special interests of
these directors and executive officers in the proposed transaction will be
included in the proxy statement of Applebee's described above. Additional
information regarding the directors and executive officers of Applebee's is also
included in Applebee's proxy statement for its 2007 Annual Meeting of
Stockholders, which was filed with the SEC on April 9, 2007, and the
supplemental proxy statement filed on May 1, 2007. These documents are available
free of charge at the SEC's web site at www.sec.gov and from Investor Relations
at IHOP and Applebee's as described above.
Applebee's Managers / Frequently Asked Questions / Monday, July 16, 2007
1. What was announced today?
We announced today that IHOP intends to acquire Applebee's for $25.50 per
share. IHOP plans to re-franchise (sell to new or existing franchisees) the
majority of our 508 company-owned restaurants.
2. Why did the board decide to sell the company to IHOP?
After thoroughly considering a possible recapitalization and proposals made
by potential buyers, the Applebee's Board of Directors determined this was
the path that would deliver the most value to our shareholders.
3. What are IHOP's plans for Applebee's?
IHOP plans to restructure Applebee's into a highly franchised model by
re-franchising (selling to new or existing franchisees) the majority of our
508 company-owned restaurants. The new business model is expected to reduce
the company's capital expenditures, as well as reduce overall general and
administrative (G&A) costs.
4. Will there be lay-offs at the Support Center and in the positions that
support my restaurant?
Typically, when G&A costs are significantly reduced as noted above, there
are headcount reductions, too. In this case, it's expected that, over time,
as company-owned restaurants are re-franchised, there will be reductions in
positions directly associated with support for the re-franchised stores.
However, it's important to note that we expect the re-franchising process
could extend to 2010.
5. When will the sale close? Is this a done deal?
The board's decision to sell is subject to the approval of Applebee's
shareholders, customary closing conditions and regulatory approvals. (IHOP
shareholders do not need to vote on the sale.) The date of our shareholders
meeting will be announced in the coming weeks. Prior to the meeting, you
will receive a proxy statement that will allow you to vote your shares
regarding the sale of the company. The Applebee's Board has recommended
that shareholders vote for the sale, and assuming shareholder approval, the
deal likely will close in the fourth quarter of this year.
6. What if shareholders don't approve the deal?
That could result in changes to the terms of the deal. Those changes would
then have to be presented back to shareholders for their approval.
7. Will there be changes in our management team?
The senior management and officer teams are expected to remain in place
through the close of the sale. Their roles after the close will be
determined by the transition team over the next few months.
8. Who will run the new, combined company?
Julia Stewart, current chairman and CEO of IHOP, will run the new, combined
company.
9. Who is Julia Stewart?
Julia is a 35-year veteran of the foodservice industry. Currently, she is
chairman and chief executive officer of IHOP Corp. Prior to joining IHOP,
Julia served as president of the domestic division of Applebee's
International (1998-2001). Before joining Applebee's, Julia held several
key executive positions with Taco Bell Corporation, including national vice
president of franchise and license and Western region Vice President of
Operations. Over a 15-year period prior to Taco Bell, she held various key
marketing positions with Stuart Anderson's Black Angus/Cattle Company
Restaurants, Spoons Grill & Bar, Burger King Corp. and Carl's Jr.
Restaurants.
10. What will happen to my pay, benefits and bonus?
Until the deal closes, Applebee's will continue to execute our compensation
and benefits programs as we have, as an independent company. After that,
IHOP will make all future compensation and benefits decisions.
11. When the sale closes, what happens to the Applebee's stock I own now?
IHOP will buy out all of your shares at the negotiated price of $25.50 per
share. You would report any gain or loss as result of the transaction when
you file your income taxes.
12. When the sale closes, will I receive stock in the new company to replace my
stock in Applebee's?
No, you will receive cash for your existing stock in Applebee's
International. You will not receive IHOP stock.
13. When the sale closes, what happens to my stock options and/or stock
appreciation rights (SARs)?
Under our current plan, when the sale closes, all of your outstanding
unvested stock options and SARs will vest in full and be converted into
cash. The cash value will be equal to the number of units you have times
the excess, if any, of $25.50 per share over the exercise price per share.
Sounds confusing, right? Here's an example: If you have 100 options/SARs
with an exercise price of $20 per share, then you will receive a cash
payment of $550 [100 shares x ($25.50-$20)]. Please note, of course, that
Uncle Sam will have something to say about all of this, so the amount of
cash you receive will be reduced by all applicable tax withholding. If the
exercise price of your options is $25.50 or above, you will not receive any
cash at closing for those options.
14. When the sale closes, what happens to my restricted stock grants I have
already received?
Under our current plan, all of your restricted and unrestricted stock -
both vested and unvested - will be purchased from you by IHOP for $25.50
per share. The amount of cash you receive for your restricted stock will be
reduced by all applicable tax withholding. You would report any gain or
loss for your unrestricted stock when you file your income taxes.
15. Will Applebee's still make the Q3 and Q4 equity grants in 2007?
The equity grants will continue as scheduled until the deal closes. For
example, if the deal closes Nov. 1, the Sept. 1 Q3 grant will be made as
scheduled but the Dec. 1 Q4 grant will not be made. If the deal closes
after Dec. 2, both grants will be made.
16. What will happen to the company's ESPP plan?
The sale is expected to close after Sept. 30, which is the end of the next
quarterly ESPP purchase period. Therefore, plan participation for those
associates that have already enrolled would continue through that date, and
they will receive the shares they purchased under the plan for Q3. A
transition team, which consists of members of IHOP and Applebee's
management, will determine if the program continues after Q3, depending on
the closing date.
17. What will happen to the 15 percent cash match that was available for shares
purchased and held under the 2007 ESPP?
This will be one of the compensation and benefits issues that the
transition team will determine.
18. After the sale, what happens to the 401(k) plan?
IHOP may decide to continue, amend or terminate the plan. If the plan is
terminated, vesting of any unvested company matching is required. This is
one of the many compensation issues that the transition team, headed by
IHOP, is currently studying and will answer as soon as possible.
Additional Information and Where to Find It
In connection with the proposed transaction, IHOP Corp. and Applebee's
International will be filing documents with the Securities and Exchange
Commission (the "SEC"), and Applebee's intends to file a related preliminary and
definitive proxy statement. Investors and security holders are urged to read the
related preliminary and definitive proxy when it becomes available because it
will contain important information about the proposed transaction. Investors and
security holders may obtain free copies of these documents (when they are
available) and other documents filed with the SEC at the SEC's web site at
www.sec.gov. In addition, investors and security holders may obtain free copies
of the documents filed with the SEC by IHOP Corp. by contacting IHOP Investor
Relations at 818-240-6055. Investors and security holders may obtain free copies
of the documents filed with the SEC by Applebee's by contacting Applebee's
Investor Relations at 913-967-4000. In addition, you may also find information
about the merger transaction at www.ihopapplebeesacquisition.com.
Applebee's and their directors and executive officers may be deemed participants
in the solicitation of proxies from the stockholders of Applebee's in connection
with the proposed transaction. Information regarding the special interests of
these directors and executive officers in the proposed transaction will be
included in the proxy statement of Applebee's described above. Additional
information regarding the directors and executive officers of Applebee's is also
included in Applebee's proxy statement for its 2007 Annual Meeting of
Stockholders, which was filed with the SEC on April 9, 2007, and the
supplemental proxy statement filed on May 1, 2007. These documents are available
free of charge at the SEC's web site at www.sec.gov and from Investor Relations
at IHOP and Applebee's as described above.