IHOP 2009 Annual Report Download - page 130

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DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
10. Leases (Continued)
are generally for the full term of the lease obligation at rents that include the Company’s obligations
for property taxes, insurance, contingent rents and other charges. Generally, the noncancelable leases
include renewal options. Contingent rent expense for all noncancelable leases for the years ended
December 31, 2009, 2008 and 2007 was $3.9 million, $4.5 million and $3.4 million, respectively.
Minimum rent expense for all noncancelable operating leases for the years ended December 31, 2009,
2008 and 2007 was $86.6 million, $91.2 million and $67.6 million, respectively.
11. Fair Value Measurements
U.S GAAP pertaining to fair value measurements defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date (an exit price). U.S. GAAP establishes a three-tier fair value
hierarchy that prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined
as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than
quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as
unobservable inputs in which little or no market data exists; therefore requiring an entity to develop its
own assumptions.
The Company has one group of financial instruments, restricted assets related to Applebee’s
captive insurance subsidiary, which are required under U.S. GAAP to be measured on a recurring basis
at fair value. None of the Company’s non-financial assets or non-financial liabilities is required to be
measured at fair value on a recurring basis. The Company has not elected to use fair value
measurement, as provided under U.S. GAAP, for any assets or liabilities for which fair value
measurement is not presently required.
Restricted assets related to a captive insurance subsidiary are carried at fair value and consisted of
the following at December 31, 2009: $0.8 million of cash and certificates of deposit held in escrow,
$0.9 million in money market funds invested in U.S. government securities, $2.0 million in mutual funds
invested in auction-rate securities and one auction-rate security of $0.6 million. At December 31, 2008
restricted assets related to a captive insurance subsidiary consisted of the following: $1.1 million of cash
and certificates of deposit held in escrow, $1.4 million in money market funds invested in
U.S. government securities, $2.1 million in mutual funds invested in auction-rate securities and two
auction-rate securities of $1.2 million. The money market funds, the auction rate securities and the
mutual funds invested in auction-rate securities are considered available for sale.
Financial instruments measured at fair value on a recurring basis at December 31, 2009 and 2008
are as follows:
Fair Value Measured Using
Fair Value Level 1 Level 2 Level 3
(In millions)
At December 31, 2009:
Restricted assets of captive insurance company .............. $4.3 $1.7 $ — $2.6
At December 31, 2008:
Restricted assets of captive insurance company .............. $5.8 $2.5 $ — $3.3
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