IHOP 2013 Annual Report Download - page 103

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
7. Long-Term Debt (Continued)
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Cash Flow for each fiscal quarter if the consolidated leverage ratio is less than 5.75:1 and greater than or equal to 5.25:1; (iv)
100% of Excess Cash Flow for each fiscal quarter in which the consolidated leverage ratio is less than 5.25:1; and (v) proceeds
from the exercise of options to purchase our common stock, less any amounts paid as dividends or to repurchase our common
stock. As of December 31, 2013 our permitted amount of future restricted payments under the Credit Agreement was
approximately $89 million.
The Indenture under which our Senior Notes were issued also contains a limitation on restricted payments that is calculated
on an annual basis. Such restricted payments are limited to a cumulative amount comprised of (i) 50% of consolidated net
income (as defined in the Indenture), plus (ii) proceeds from exercise of stock options, less (iii) restricted payments made. The
permitted amount of future restricted payments under the Indenture, calculated as of December 31, 2013, was approximately
$112 million.
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, 2013, 2012 and
2011 was $2.7 million, $2.6 million and $2.7 million, respectively. Additionally, $2.3 million and $3.1 million, respectively, of
deferred issuance costs were written off in connection with debt retirement for the years ended December 31, 2012 and 2011
and is reflected in the loss on extinguishment of debt in the Consolidated Statements of Comprehensive Income, with a nominal
amount written off for the year ended December 31, 2013.
As of December 31, 2013 and 2012, $14.0 million and $16.8 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, 2013, 2012, and 2011, $3.5 million, $3.4 million and $3.4 million,
respectively, of the discount was amortized as additional interest expense under the effective interest method. Additionally,
$2.7 million and $3.1 million, respectively, was written off in connection with debt retirement for the years ended
December 31, 2012 and 2011 and is reflected in the loss on extinguishment of debt in the Consolidated Statements of
Comprehensive Income, with a nominal amount written off for the year ended December 31, 2013.
Maturities of Long-term Debt
At December 31, 2013, the aggregate principal amounts of existing long-term debt maturing in each of the next five years
and thereafter are as follows:
(In millions)
2014........................................................................................................................................................................ $ 4.7
2015........................................................................................................................................................................ 4.7
2016........................................................................................................................................................................ 4.7
2017........................................................................................................................................................................ 453.0
2018........................................................................................................................................................................ 760.8
Thereafter ............................................................................................................................................................... —
$ 1,227.9
8. 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