IHOP 2012 Annual Report Download - page 100

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
8. Long-Term Debt (Continued)
82
270 days after October 19, 2010. The Company complied with this requirement by filing a Registration Statement on Form S-4
that was declared effective by the SEC on June 14, 2011.
Deferred Financing Costs
In connection with the Credit Agreement and the issuance of the Notes, the Company recorded approximately $28.2 million
of deferred financing costs. In connection with the increase to the Revolving Credit Facility the Company recorded an additional
$0.8 million of deferred financing costs. These deferred financing costs are being amortized using the effective interest method
over the estimated life of the related debt. Amortization of the deferred financing costs associated with the Credit Agreement and
the issuance of the Notes included in interest expense for the years ended December 31, 2012, 2011 and 2010 was $2.6 million,
$2.7 million and $0.6 million, respectively and an additional $2.3 million, $3.1 million and $0.8 million, respectively, of deferred
issuance costs was written off in connection with debt retirement and is reflected in the loss on extinguishment of debt in the
consolidated statement of operations.
As of December 31, 2012 and 2011, $16.8 million and $21.7 million, respectively, of deferred financing costs was reported
as Other Assets in the consolidated balance sheets.
Discount on Debt
The Company recorded a discount on debt from the October 2010 Refinancing of $29.6 million. In connection with Amendment
No. 1, the Company recorded an additional discount of $7.4 million. The discount on debt reflects the difference between the
proceeds received from the issuance of the debt and the face amount to be repaid over the life of the debt. The discount will be
amortized as additional interest expense over the weighted average estimated life of the debt under the effective interest method.
For the years ended December 31, 2012, 2011, and 2010, $3.4 million, $3.4 million and $0.6 million, respectively, of the discount
was amortized as additional interest expense under the effective interest method and an additional $2.7 million, $3.1 million and
$0.5 million, respectively, was written off in connection with debt retirement and is reflected in the loss on extinguishment of debt
in the consolidated statement of operations.
Maturities of Long-term Debt
At December 31, 2012, the aggregate principal amounts of existing long-term debt maturing in each of the next five years
and thereafter are as follows:
(In millions)
2013........................................................................................................................................................................ $ 7.4
2014........................................................................................................................................................................ 7.4
2015........................................................................................................................................................................ 7.4
2016........................................................................................................................................................................ 7.4
2017........................................................................................................................................................................ 442.4
Thereafter ............................................................................................................................................................... 760.8
$ 1,232.8
9. Financing Obligations
On May 19, 2008, the Company entered into a Purchase and Sale Agreement relating to the sale and leaseback of 181 parcels
of real property (the "Sale-Leaseback Transaction"), each of which is improved with a restaurant operating as an Applebee's
Neighborhood Grill and Bar (the "Properties"). On June 13, 2008, the closing date of the Sale-Leaseback Transaction, the Company
entered into a Master Land and Building Lease ("Master Lease") for the Properties. The proceeds received from the transaction
were $337.2 million. The Master Lease calls for an initial term of twenty years and four, five-year options to extend the term.
The Company has an ongoing obligation related to the Properties until such time as the lease related to each of the Properties
is assigned to a qualified franchisee in a transaction meeting certain parameters set forth in the Master Lease. Due to this continuing
involvement, the transaction was recorded under the financing method in accordance with U.S. GAAP. Accordingly, the value of
the land and leasehold improvements will remain on the Company's books and the leasehold improvements will continue to be
depreciated over their remaining useful lives. The net proceeds received have been recorded as a financing obligation. A portion
of the lease payments is recorded as a decrease to the financing obligation and a portion is recognized as interest expense. In the
event the lease obligation of any individual property or group of properties is assumed by a qualified franchisee the Company's
continuing involvement will cease. At that time, that portion of the transaction related to that property or group of properties is