IHOP swings to a loss on acquisition

Breakfast chain IHOP Corp. said it swung to a third-quarter loss on expenses for its pending acquisition of Applebee’s.

The news drove shares down $1.35, or 2.1%, to $62.18.

For the three months ended Sept. 30, the Glendale-based chain reported losing $11.6 million, or 69 cents a share, compared with a profit of $11.3 million, or 62 cents, a year earlier.

The results included $35.6 million in one-time expenses from an interest-rate swap transaction related to IHOP’s pending acquisition of Applebee’s International Inc. Excluding the expense, net income fell 3.2% to 60 cents a share.

Analysts polled by Thomson Financial, who typically exclude nonrecurring expenses, expected a profit of 68 cents a share.

Revenue rose 4% to $91.4 million, missing analysts’ predictions of $93.2 million.

Sales for stores open at least a year, a key measure of retail health, increased 2% on higher menu prices.

“We believe this is especially positive considering the difficult economic environment and increased competition,” Chief Executive Julia Stewart said.

Shareholders for Overland Park, Kan.-based Applebee’s are scheduled to vote Tuesday on whether to sell the company for $1.9 billion in cash, or about $25.50 a share. IHOP would also assume $155 million in Applebee’s debt.

Although the company hasn’t issued financial guidance because of the pending acquisition, IHOP said it still expected same-store sales to increase 2% to 4% this year and to add 61 to 66 franchised restaurants.