Page 312 - Onboarding May 2017

CENTRALIZED SUPPLY CHAIN SERVICES, LLC
NOTES TO FINANCIAL STATEMENTS
December 31, 2015 and 2014

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization: Centralized Supply Chain Services, LLC. (“CSCS” or the “Company”) is a Delaware limited
liability company that was formed on September 19, 2008 and has a perpetual term. CSCS has two
members: Apple Supply Chain Co-op, Inc. and Pancake Supply Chain Co-op, Inc. (collectively, the
“Concept Co-ops”). Applebee’s and IHOP restaurant owners purchase stock in, and become members
of, the applicable Concept Co-op. CSCS was formed for the purposes of combining the purchasing
volumes for goods and services used by both Applebee’s and IHOP restaurants owned by Concept Co-
op members. The Company’s mission is to: (i) assure that Concept Co-op members receive the benefit
of continuously available Goods, Equipment and Distribution Services in adequate quantities at the lowest
possible sustainable delivered prices; and (ii) coordinate with DineEquity and its franchisor entities in
DineEquity’s ongoing development and innovation of Goods and Equipment in support and promotion of
the Applebee’s and IHOP concepts.

Use of Estimates: The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities as of the date of financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents: The Company considers short-term, highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents. The Company maintains its
cash in various bank accounts, which at times, may exceed federally insured limits.

Revenue Recognition: The Company recognizes revenue when earned. Revenue is earned in the form
of a sourcing fee upon shipment of selected products of each Concept Co-op from suppliers to
distribution centers. Sourcing fees are collected from distributors and suppliers on selected items as
directed and designated by each Concept Co-op to fund the Concept Co-ops’ purchasing programs and
the purchasing and administrative operation of CSCS.

Accounts Receivable: At December 31, 2015 and 2014, accounts receivable consists of sourcing fees
due from suppliers and distributors, rebate receivables, and purchase variance receivables due from
distributors. The Company does not charge interest on past due receivables.

Allowance for Doubtful Accounts: The allowance for doubtful accounts is determined by management
based on the Company’s historical losses, specific customer circumstances and general economic
conditions. Periodically, management reviews accounts receivable and records an allowance for specific
customers based on current circumstances and charges off the receivable against the allowances when
all attempts to collect the receivable have failed.

Property and Equipment: Property and equipment are stated at cost. Depreciation is provided by the
straight-line method over the estimated useful lives of assets. Leasehold improvements are depreciated
over the shorter of the lease term or the estimated useful life of the improvements. Estimated useful lives
used in calculating depreciation are as follows:

Computer and office equipment 3 – 5 years
Equipment and furniture 7 years
Leasehold improvements 7 years

Repairs and maintenance are expensed as incurred. Major renewals and betterments are capitalized.

6.