Impairments and Closure Charges

Impairment and closure charges for the years ended December 31, 2011, 2010 and 2009 were as follows:



	Year Ended December 31,
	2011		2010		2009
	(In millions)
Lenexa lease termination	$	23.0	$	—	$	—
Long-lived tangible asset impairment	4.9		1.5		10.4
Other closure charges	2.0		2.8		1.7
Tradename impairment	—		—		93.5
Total impairment and closure charges	$	29.9	$	4.3	$	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.

Tradename Impairment

In accordance with U.S. GAAP, indefinite-lived intangible assets must be evaluated for impairment, at a minimum, on an annual basis, and more frequently if we believe indicators of impairment exist. Such indicators include, but are not limited to, events or circumstances such as a significant adverse change in the business climate, unanticipated competition, a loss of key personnel, adverse legal or regulatory developments, or a significant decline in the market price of our common stock. In performing the impairment review of the tradename intangible asset, we primarily use the relief of royalty method under the income approach method of valuation. Significant assumptions used to determine fair value under the relief of royalty method include future trends in sales, a royalty rate and a discount rate to be applied to the forecast revenue stream. During the course of fiscal 2011, 2010 and 2009, the Company made periodic assessments as to whether there were indicators of impairment, particularly with respect to the significant assumptions noted above. As a result of these assessments, we determined an interim test of indefinite-lived intangibles was not necessary in either 2011, 2010 or 2009.

During the fourth quarter of 2011 and 2010, the Company performed the annual test of impairment for indefinite-lived intangibles, primarily the Applebee's tradename assigned in the purchase price allocation. The Company determined the estimated fair value of our indefinite-lived intangible assets exceeded the carrying values and in the absence of indicators of impairment we concluded no impairment was necessary. During the fourth quarter of 2009, the Company performed the annual test of impairment of indefinite-lived intangibles. The Company revised downwards the same-restaurant sales change assumption in its previous five-year forecast. The Company also revised downward the assumed discount rate. As the result of the revised assumptions, the estimated fair value of the tradename was less than the carrying value and an impairment of $93.5 million was recognized.