On Oct. 25, IHOP (NYSE:IHP) released third-quarter earnings for the period ending Sept. 30.

  • Sales declined 3.6%, mainly due to a decrease in financing revenues.
  • Same-store sales grew by 1.3%, primarily driven by an increase in guest traffic, which was partially offset by a decrease in the average guest check amount.
  • Increase in capital expenditures primarily reflects the cost of restaurant development in Cincinnati, Ohio.

(Figures in millions, except per-share data)

Income Statement Highlights

Avg. Est.

Q3 2006

Q3 2005

Change

Sales

$91

$88

$91

(3.6%)

Net Profit

--

$11

$12

(5.4%)

EPS

$0.58

$0.62

$0.62

0.0%

Diluted Shares

--

18

19

(6.6%)



Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

40.89%

38.18%

2.71

Operating Margin

20.68%

20.96%

(0.28)

Net Margin

12.86%

13.11%

(0.25)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$26

$41

(34.9%)

Accounts Rec.

$41

$42

(1.9%)



Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

$8

$14

(40.2%)

Long-Term Debt*

$283

$304

(6.9%)

*Includes capital leases.

Learn the ways of the balance sheet.

Cash Flow Highlights

YTD 2006

YTD 2005

Change

Cash From Ops.

$54

$45

18.6%

Capital Expenditures

$7

$3

112.1%

Free Cash Flow

$47

$42

10.8%



Find out why Fools always follow the money.

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