IHOP 2015 Annual Report Download - page 88

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
6. Other Intangible Assets (Continued)
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Annual amortization expense for the next five fiscal years is estimated to be approximately $10.0 million per year. The
weighted average life of the intangible assets subject to amortization was 20 years at December 31, 2015 and 2014.
Gross and net carrying amounts of intangible assets subject to amortization at December 31, 2015 and 2014 are as follows:
December 31, 2015 December 31, 2014
Gross Accumulated Amortization Net Gross Accumulated Amortization Net
(In millions)
Franchising rights........................................ $ 200.0 $ (81.0) $ 119.0 $ 200.0 $ (71.0) $ 129.0
Recipes and menus...................................... 15.7 (15.7) — 15.7 (15.7) —
Total.......................................................... $ 215.7 $ (96.7) $ 119.0 $ 215.7 $ (86.7) $ 129.0
The Company assessed the Applebee's tradename for impairment in accordance with its policy described in Note 2. In the
fourth quarter of fiscal 2015, the Company performed a qualitative assessment of the Applebee's tradename and concluded it
was more-likely-than-not that the fair value exceeded the carrying amount and therefore bypassed any quantitative testing. In
the fourth quarter of fiscal 2014 and 2013, the Company performed a quantitative test of the Applebee's tradename.
There were no impairments recorded resulting from these assessments in 2015, 2014 or 2013.
7. Long-Term Debt
Long-term debt consists of the following components:
2015 2014
(In millions)
Series 2014-1 Class A-2, 4.227% Fixed Rate Senior Secured Notes......................................... $ 1,300.0 $ 1,300.0
Debt issuance costs..................................................................................................................... (20.5)(23.5)
Long-term debt, net .................................................................................................................... $ 1,279.5 $ 1,276.5
On September 30, 2014, Applebee’s Funding LLC and IHOP Funding LLC (each a “Co-Issuer”), each a special purpose,
wholly-owned indirect subsidiary of the Company issued $1.3 billion of Series 2014-1 4.277% Fixed Rate Senior Notes, Class
A-2 (the “Class A-2 Notes”) in an offering exempt from registration under the Securities Act of 1933, as amended. The Co-
Issuers also entered into a revolving financing facility of Series 2014-1 Variable Funding Senior Notes Class A-1 (the “Variable
Funding Notes”), which allows for drawings of up to $100 million of Variable Funding Notes and the issuance of letters of
credit. The Class A-2 Notes and the Variable Funding Notes are referred to collectively as the “Notes.” The Notes were issued
in a securitization transaction pursuant to which substantially all of our domestic revenue-generating assets and our domestic
intellectual property, are held by the Co-Issuers and certain other special-purpose, wholly-owned indirect subsidiaries of the
Company (the “Guarantors”) that act as guarantors of the Notes and that have pledged substantially all of their assets to secure
the Notes.
Class A-2 Notes
The Notes were issued under a Base Indenture, dated September 30, 2014 (the “Base Indenture”) and the related Series
2014-1 Supplement to the Base Indenture, dated September 30, 2014 (the “Series 2014-1 Supplement”), among the Co-Issuers
and Citibank, N.A., as the trustee (in such capacity, the “Trustee”) and securities intermediary. The Base Indenture and the
Series 2014-1 Supplement (collectively, the “Indenture”) will allow the Co-Issuers to issue additional series of notes in the
future subject to certain conditions set forth therein.
While the Notes are outstanding, payment of principal and interest is required to be made on the Class A-2 Notes on a
quarterly basis. The quarterly principal payment of $3.25 million on the Class A-2 Notes may be suspended when the leverage
ratio for the Company and its subsidiaries is less than or equal to 5.25x. In general, the leverage ratio is our indebtedness
divided by adjusted EBITDA for the four preceding quarterly periods. As of December 31, 2015, the Company's leverage ratio
was 4.43x; accordingly, no principal payment on the Class A-2 Notes was required.
The legal final maturity of the Class A-2 Notes is in September 2044, but it is anticipated that, unless earlier prepaid to the