IHOP 2008 Annual Report Download - page 108
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DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
5. Assets Held for Sale (Continued)
In December 2007, the Company began to actively market approximately 40 company-operated
Applebee’s restaurants in California and Nevada. The marketing of these restaurants was part of the
Company’s plan to ultimately refranchise approximately 100 Applebee’s restaurants in 2008. The assets
for these restaurants, totaling $47.8 million, were presented as assets held for sale in the consolidated
balance sheet as of December 31, 2007. As the preliminary purchase price allocation was finalized
during 2008, certain purchase price fair values were revised downward. As a result, assets held for sale
were reduced by $11.0 million. Additionally, as the result of continuing deterioration in the credit
markets in general and a decline in operating results of Applebee’s company-operated restaurants
expected to be franchised in particular geographic areas, an impairment was recognized on assets held
for sale of $5.6 million.
During 2008, four parcels of land held for future restaurant development, three company-owned
restaurants in the Delaware market, forty-nine company-owned stores in the Texas market and seven
company-owned stores in the New Mexico market were reclassified as assets held for sale. Additionally,
one company-owned restaurant was reclassified out of assets held for sale after a determination was
made the Company had continuing involvement with the property.
The sales of the restaurants in California and Delaware were completed in the third fiscal quarter
of 2008 and the sales of the restaurants in Nevada and Texas along with a closed store site were
completed in the fourth fiscal quarter of 2008. The Company received proceeds of approximately
$49.4 million from these transactions.
At December 31, 2008, assets held for sale comprised primarily seven company-operated
restaurants in New Mexico expected to be sold in the first fiscal quarter of 2009 and four parcels of
land held for future restaurant development.
The following table summarizes the changes in the balance of assets held for sale during 2008:
(in millions)
Balance December 31, 2007 ................................. $66.1
Purchase price valuation adjustments .......................... (11.0)
Impairment charges ....................................... (5.6)
Assets sold ............................................. (62.7)
Assets reclassified to held for sale ............................ 24.0
Other ................................................. 1.1
Balance December 31, 2008 ................................. $11.9
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