Fair Value Measurements

6 Months Ended

Jun. 30, 2011

Fair Value Measurements

Fair Value Measurements

13. Fair Value Measurements

The Company has two types of financial instruments which are required under U.S. GAAP to be measured on a recurring basis at fair value—restricted assets related to Applebee’s captive insurance subsidiary and certain loan guarantees. None of the Company’s non-financial assets or non-financial liabilities is required to be measured at fair value on a recurring basis. The Company has not elected to use fair value measurement, as provided under U.S. GAAP, for any assets or liabilities for which fair value measurement is not presently required.

Financial instruments measured at fair value on a recurring basis at June 30, 2011 and December 31, 2010 are as follows:

			Fair Value Measured Using
	Fair Value		Level 1		Level 2		Level 3
	(In millions)
At June 30, 2011:
Restricted assets of captive insurance company	$	3.8	$	1.2	$	—	$	2.6
Loan guarantees	$	0.2	$	—	$	—	$	0.2
At December 31, 2010:
Restricted assets of captive insurance company	$	3.6	$	1.0	$	—	$	2.6
Loan guarantees	$	0.2	$	—	$	—	$	0.2

The level 3 inputs used for the restricted assets consist of a discounted cash flow under the income approach using primarily assumptions as to future interest payments and a discount rate. The fair value of the guarantees was determined by assessing the financial health of each of the four franchisees that have open notes and assessing the likelihood of default. There was no change in the valuation methodologies between the periods presented.

The Company believes the fair values of cash equivalents, accounts receivable, accounts payable and the current portion of long-term debt approximate their carrying amounts due to their short duration.

At June 30, 2011 and December 31, 2010, the cost and market value of our financial instruments measured at fair value (restricted assets related to Applebee’s captive insurance subsidiary) are as follows:

June 30, 2011	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Cash equivalents and money market funds	$	1.2	$	—	$	—		$	1.2
Auction-rate securities	$	2.9	$	—	$	(0.3	)	$	2.6

December 31, 2010	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)
Cash equivalents and money market funds	$	1.0	$	—	$	—		$	1.0
Auction-rate securities	$	2.9	$	—	$	(0.3	)	$	2.6

The scheduled maturity of one auction-rate security valued at $0.6 million is December 2030. The remaining balance of auction-rate securities is in mutual funds invested in auction rate securities with no scheduled maturity for the funds.

The fair values of non-current financial liabilities at June 30, 2011 and December 31, 2010 were as follows:

	June 30, 2011				December 31, 2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in millions)
Long-term debt, less current maturities	$	1,479.5	$	1,578.6	$	1,631.5	$	1,721.0

At June 30, 2011 and December 31, 2010, the fair value of the non-current financial liabilities was determined based on Level 2 inputs.