IHOP 2008 Annual Report Download - page 97

Download and view the complete annual report

Please find page 97 of the 2008 IHOP annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 162

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
2. Basis of Presentation and Summary of Significant Accounting Policies (Continued)
Advertising
Franchise fees designated for IHOP’s national advertising fund and local marketing and advertising
cooperatives are recognized as revenue as the fees are earned and become receivables from the
franchisee in accordance with SFAS No. 45, Accounting for Franchise Fee Revenue (‘‘SFAS 45’’). In
accordance with Statement of Position No. 93-7, Reporting on Advertising Costs (‘‘SOP 93-7), related
advertising obligations are accrued and the costs expensed at the same time the related revenue is
recognized. Franchise fees designated for Applebee’s national advertising fund and local advertising
cooperatives constitute agency transactions and are not recognized as revenues and expenses. In both
cases, the advertising fees are recorded as a liability against which specific costs are charged.
Advertising expense reflected in the consolidated statements of operations includes local marketing
advertising costs incurred by company-operated restaurants, contributions to the national advertising
fund made by Applebee’s company-operated restaurants and certain advertising costs incurred by the
Company to benefit future franchise operations. Costs of advertising is expensed either as incurred or
the first time the advertising takes place in accordance with SOP 93-7. Advertising expense included in
company restaurant operations and franchise operations for the years ended December 31, 2008, 2007
and 2006 was $45.3 million, $5.0 million and $1.0 million, respectively. In addition, significant
advertising expenses also are incurred by franchisees through the national advertising funds and local
marketing and advertising cooperatives.
83