IHOP 2015 Annual Report Download - page 83

Download and view the complete annual report

Please find page 83 of the 2015 IHOP annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 120

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
2. Basis of Presentation and Summary of Significant Accounting Policies (Continued)
63
The fair values of non-current financial instruments, determined based on Level 2 inputs, are shown in the following table:
December 31, 2015 December 31, 2014
Carrying
Amount Fair Value Carrying
Amount Fair Value
(In millions)
Long-term debt, net ............................................................. $ 1,279.5 $ 1,306.1 $ 1,276.5 $ 1,302.0
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred taxes are
determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using
enacted tax rates. A valuation allowance is recorded when it is more likely than not that some or all of the deferred tax assets
will not be realized. The Company also determines its tax contingencies in accordance with U.S. GAAP governing the
accounting for contingencies. The Company records estimated tax liabilities to the extent the contingencies are probable and
can be reasonably estimated. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as a
component of the income tax provision recognized in the Consolidated Statements of Comprehensive Income.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax
position will be sustained upon examination by taxing authorities including all appeals or litigation processes, based on its
technical merits. The tax benefits recognized in the financial statements from such a position are measured based on the largest
benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. For each reporting period,
management applies a consistent methodology to measure and adjust all uncertain tax positions based on the available
information.
Stock-Based Compensation
Members of the Board of Directors and certain employees are eligible to receive stock options, restricted stock, restricted
stock units and performance units pursuant to the DineEquity, Inc. 2011 Stock Incentive Plan. The Company accounts for all
stock-based payments to employees and non-employee directors, including grants of stock options, restricted stock and
restricted stock units to be recognized in the financial statements, based on their respective grant date fair values. The value of
the portion of the award that is ultimately expected to vest is recognized as expense ratably over the requisite service periods.
The Company reports the benefits of tax deductions in excess of recognized compensation cost as a financing cash flow.
The grant date fair value of restricted stock and stock-settled restricted stock units is determined based on the Company's
stock price on the grant date. The Company estimates the grant date fair value of stock option awards using the Black-Scholes
option pricing model, which considers, among other factors, a risk-free interest rate, the expected life of the award and the
historical volatility of the Company's stock price. Cash-settled awards are classified as liabilities with the liability and
compensation expense related to cash-settled awards adjusted to fair value at each balance sheet date.
Net Income Per Share
Net income per share is calculated using the two-step method prescribed in U.S. GAAP. Basic net income per share is
computed by dividing the net income available to common stockholders for the period by the weighted average number of
common shares outstanding during the period. Diluted net income per share is computed by dividing the net income available
to common stockholders for the period by the weighted average number of common shares and potential shares of common
stock outstanding during the period if their effect is dilutive. The Company uses the treasury stock method to calculate the
weighted average shares used in the diluted earnings per share calculation. Potentially dilutive common shares include the
assumed exercise of stock options and assumed vesting of restricted stock.
Other Comprehensive Income (Loss)
For the years ended December 31, 2015, 2014 and 2013, the income tax benefit or provision allocated to items of other
comprehensive income (loss) was not significant.