Applebee's International Reports Second Quarter 2007 Results.

OVERLAND PARK, Kan. -- Applebee's International, Inc. (Nasdaq:APPB) today reported net earnings of $24.2 million, or $0.32 per diluted share, for the second quarter ended July 1, 2007. Excluding discontinued operations, impairment and other restaurant closure costs, and strategic alternative and proxy contest expenses totaling $2.1 million after-tax or approximately $0.03 per share, net earnings were $26.2 million, or $0.35 per diluted share, for the second quarter of 2007. A reconciliation of non-GAAP measurements to GAAP results is attached to this release.

In March 2007, the company announced the decision to close 24 underperforming restaurants in 11 states. In the first quarter of 2007, 19 of these restaurants were closed, and four restaurants were closed in the second quarter of 2007. The company believes that four of the closed restaurants will have significant sales transfer to other existing restaurants, and in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the results of operations, impairment charges and lease obligations related to these four restaurants have been included in continuing operations. In addition, the write-down of the carrying value of the one restaurant which has not yet been closed is included in impairment charges and other restaurant closure costs in the accompanying consolidated statement of earnings. The results of operations, impairment charges and lease obligations for the remaining 19 closed restaurants are included in discontinued operations in the accompanying consolidated statements of earnings for both 2007 and 2006.

As previously reported, system-wide domestic comparable sales for the second quarter of 2007 decreased 0.9 percent. Company and domestic franchise restaurant comparable sales decreased 1.2 percent and 0.8 percent, respectively, for the quarter. System-wide domestic comparable sales for the year-to-date period through June decreased 2.5 percent, with domestic franchise restaurant comparable sales down 2.4 percent and company comparable sales down 2.9 percent.

The company also reported comparable sales for the July fiscal period, comprised of the four weeks ended July 29, 2007. System-wide domestic comparable sales decreased 0.8 percent for the July period. Comparable sales for company restaurants increased 0.1 percent, reflecting a decrease in guest traffic of between 3.0 and 3.5 percent, combined with a higher average check, while comparable sales for domestic franchise restaurants decreased 1.2 percent.

System-wide domestic comparable sales for the year-to-date period through July have decreased 2.3 percent, with domestic franchise restaurant comparable sales down 2.2 percent and company comparable restaurant sales down 2.5 percent.

On July 16, 2007, IHOP Corp. ("IHOP") and Applebee's International jointly announced a definitive agreement under which IHOP will acquire Applebee's for $25.50 per share in cash, representing a total transaction value of approximately $2.1 billion. The all-cash transaction, which is expected to close in the fourth quarter of 2007, is subject to the approval of Applebee's shareholders, customary closing conditions and regulatory approvals.

Dave Goebel, president and chief executive officer, said, "While the difficult macro environment for casual dining continues, we remain committed to improving sales and guest traffic through continued improvement in our food, evolution of our advertising, and a greater emphasis on communicating our value proposition to our guests. In addition, we are pleased with the early results of our new prototype and remodel designs, which represent the culmination of nearly two years of collaboration with our franchisees. At the same time, our management team has begun working with the IHOP management team to facilitate the integration of the two companies. I'd like to thank all of our associates and franchisees for their focus on delivering results during this transition period."

Other results for the second quarter ended July 1, 2007 included:

* Total system-wide sales for the quarter increased by 3.4 percent over the prior year. System-wide sales are a non-GAAP financial measure that includes sales at all company and franchise Applebee's restaurants, as reported by franchisees. The company believes that system-wide sales information is useful in analyzing Applebee's market share and growth, and because franchisees pay royalties and contribute to the national advertising pool based on a percentage of their sales.

* Applebee's ended the quarter with 1,943 restaurants open system-wide (508 company and 1,435 franchise restaurants). During the second quarter of 2007, there were 18 new Applebee's restaurants opened system-wide, including 3 company and 15 franchised restaurants.

* As of July 1, 2007, the company had total debt outstanding of $144.7 million, with $240.1 million available under its revolving credit facility.

A conference call to review the second quarter 2007 results will be held on Thursday morning, August 2, 2007, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). The conference call will be broadcast live over the Internet and a replay will be available shortly after the call on the Investors section of the company's website (www.applebees.com).

Applebee's International, Inc., headquartered in Overland Park, Kan., develops, franchises and operates restaurants under the Applebee's Neighborhood Grill & Bar brand, the largest casual dining concept in the world. As of July 29, 2007, there were 1,945 Applebee's restaurants operating system-wide in 49 states, one U.S. territory and 16 international countries. Additional information on Applebee's International can be found at the company's website (www.applebees.com).

Forward-Looking Statements 

Certain statements contained in this release are forward-looking and based on current expectations. There are several risks and uncertainties that could cause actual results to differ materially from those described. These risks include, but are not limited to, our pending merger with IHOP, our ability and the ability of our franchisees to open and operate additional restaurants profitably and generate positive operating cash flows and return on invested capital, the impact of economic and demographic factors on consumer spending, maintaining and growing the value of the Applebee's brand, the impact of intense competition in the casual dining segment of the restaurant industry, the impact of future leverage on our operations, the failure to open the restaurants anticipated, the impact of increases in capital expenditure costs on future development, our ability to attract and retain qualified franchisees, and the impact of further penetration of restaurants in existing markets. For a more detailed discussion of the principal factors that could cause actual results to be materially different, you should read our risk factors in Item 1A of our 2006 Annual Report on Form 10-K. We disclaim any obligation to update forward-looking statements.

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 website 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 website at www.sec.gov and from Investor Relations at IHOP and Applebee's as described above.

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APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS (Unaudited) (in thousands, except per share amounts)

In addition to the results provided in accordance with Generally Accepted Accounting Principles ("GAAP") throughout this document, the company has provided non-GAAP measurements which present operating results on a basis before discontinued operations, impairment and other restaurant closure costs and strategic alternative expenses.

The company is using earnings before discontinued operations, impairment and other restaurant closure costs, and strategic alternative and proxy contest expenses as a key performance measure of results of operations for purposes of evaluating performance internally. This non-GAAP measurement is not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the company believes that this presentation provides additional information to facilitate the comparison of past and present operations.

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The following table contains information derived from the company's consolidated statements of earnings expressed as a percentage of total operating revenues, except where otherwise noted. Percentages may not add due to rounding.

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The following table sets forth certain financial information and other restaurant data relating to company and franchise restaurants, as reported to us by franchisees:

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