IHOP 2009 Annual Report Download - page 85

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Contractual Obligations and Commitments
The following are our significant contractual obligations and commitments as of December 31,
2009:
Payments Due By Period
More than
Contractual Obligations 1 Year 2-3 Years 4-5 Years 5 Years Total
(in millions)
Debt .................................. $ 25.2 $1,637.2 $ — $ — $1,662.4
Financing obligation ....................... 31.6 61.2 64.0 415.1 571.9
Operating leases .......................... 88.7 174.8 176.4 1,096.6 1,536.5
Capital leases ............................ 25.0 49.6 49.8 165.8 290.2
Purchase commitments ..................... 62.8 — — — 62.8
Other obligations ......................... 6.6 — — — 6.6
Total minimum payments .................... 239.9 1,922.8 290.2 1,677.5 4,130.4
Less interest ............................. (30.9) (72.5) (66.6) (204.1) (374.1)
$209.0 $1,850.3 $223.6 $1,473.4 $3,756.3
At December 31, 2009, we had a reserve for unrecognized tax benefit including potential interest
and penalties, net of related tax benefit, totaling $15.9 million, of which approximately $3.0 million is
expected to be paid within one year. For the remaining liability, due to the uncertainties related to
these tax matters, we are unable to make a reasonably reliable estimate when cash settlement with a
taxing authority will occur.
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with U.S. generally accepted accounting
principles requires us to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported amounts of net revenues and
expenses in the reporting period. We base our estimates and assumptions on current facts, historical
experience and various other factors that we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values of assets and liabilities
and the accrual of costs and expenses that are not readily apparent from other sources. Accounting
assumptions and estimates are inherently uncertain and actual results may differ materially from our
estimates.
We believe the following critical accounting policies require us to make significant judgments and
estimates in the preparation of our consolidated financial statements:
Goodwill and Intangibles
Goodwill is recorded when the aggregate purchase price of an acquisition exceeds the estimated
fair value of the net identified tangible and intangible assets acquired. Intangible assets resulting from
the acquisition are accounted for using the purchase method of accounting and are estimated by
management based on the fair value of the assets received. Identifiable intangible assets are comprised
primarily of trademarks, tradenames, liquor licenses, which are considered to have an indefinite life,
and franchise agreements, recipes and menus, favorable lease agreements, which are considered to have
a finite life. Intangible assets with finite lives are being amortized over the period of estimated benefit
using the straight-line method and estimated useful lives. Goodwill and indefinite life intangible assets
are not subject to amortization.
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