IHOP 2011 Annual Report Download - page 106

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DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
88
17. Impairments and Closure Charges
Impairment and closure charges for the years ended December 31, 2011, 2010 and 2009 were as follows:
Lenexa lease termination
Long-lived tangible asset impairment
Other closure charges
Tradename impairment
Total impairment and closure charges
Year Ended December 31,
2011
(In millions)
$ 23.0
4.9
2.0
—
$ 29.9
2010
$ —
1.5
2.8
—
$ 4.3
2009
$ —
10.4
1.7
93.5
$ 105.6
Lenexa Lease Termination
In April 2011, the Company entered into a sublease termination agreement related to the Company’ s sublease of the
commercial space occupied by the Applebee’s Restaurant Support Center in Lenexa, Kansas. The Company recognized a charge
of $23.0 million for the termination fee and other closing costs, of which $21.3 million was paid as of December 31, 2011.
Long-lived Tangible Asset Impairment
Long-lived tangible asset impairment charges for the year ended December 31, 2011 were primarily related to termination
of the Company's sublease of the commercial space occupied by the Applebee’ s Restaurant Support Center. The Company
recognized a $4.5 million impairment charge related to the furniture, fixtures and leasehold improvements at that facility. The
Company evaluated the causal factors of all impairments of long-lived assets as they were recorded during 2011 and concluded
they were based on factors specific to each asset and not potential indicators of an impairment of other long-lived assets.
For the year ended December 31, 2010, the Company recognized impairments of long-lived tangible assets of $1.5 million.
In 2010, the Company sold 63 company-operated Applebee's restaurants located in Minnesota and Wisconsin. The Company had
fee ownership of the properties on which three of the restaurants were located. The Company's strategy does not contemplate
retaining such properties as a lessor on a long-term basis. The properties were transferred to assets held for sale and an impairment
of $0.7 million was recorded based on the estimated sales price. The Company also placed a single restaurant and the land on
which it is situated up for sale. In accordance with criteria in U.S. GAAP, the Company transferred the fair value of the assets
related to this restaurant, as determined by the estimated sales price, to assets held for sale and an impairment of $0.5 million was
recognized. The Company evaluated the causal factors of all impairments of long-lived assets as they were recorded during 2010
and concluded they were based on factors specific to each asset and not potential indicators of an impairment of other long-lived
assets.
For the year ended December 31, 2009, the Company recognized impairments of long-lived tangible assets of $10.4 million.
The impaired assets comprised three IHOP company-operated restaurants, various assets related to one IHOP franchise restaurant
taken back by the Company, one Applebee's company-operated restaurant, a write-down to the estimated sales value, based on a
current letter of intent, of one Applebee's restaurant that had been closed in a prior period and was included in assets held for sale
and four parcels of Applebee's real estate. The Company had fee ownership of the properties on which four Applebee's company-
operated restaurants were located. These restaurants were franchised in the fourth quarter of 2008 but the Company retained
ownership of the land and continued to lease the property to the franchisee. The Company's strategy does not contemplate retaining
such properties as a lessor on a long-term basis. The properties were written down to the estimated fair value that will be received
upon sale. The Company evaluated the causal factors of all impairments of long-lived assets as they were recorded during 2009
and concluded they were based on factors specific to each asset and not potential indicators of an impairment of other long-lived
assets.
Other Closure Charges
Other closure charges for the year ended December 31, 2011 primarily related to adjustments to the estimated reserve for
previously closed surplus IHOP properties. Other closure charges for the year ended December 31, 2010 related primarily to two
"IHOP Cafe" company-operated restaurants (a non-traditional restaurant test format that was evaluated but will no longer be
utilized) and to the closure of an Applebee's company-operated restaurant in China. Other closure charges for the year ended
December 31, 2009 related to two IHOP franchise restaurants that were taken back by the Company.