IHOP 2009 Annual Report Download - page 136

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
15. Preferred Stock and Stockholders’ Equity (Continued)
Convertible Preferred Stock (‘‘the ‘‘Series B Certificate of Designations’’). The Series B Convertible
Preferred Stock entitles the holders thereof to receive certain dividends and distributions to the extent
that any dividends or distributions paid on the Company’s common stock exceed the annual accretion
on the Series B Convertible Preferred Stock. Holders of Series B Convertible Preferred Stock are
entitled to vote on all matters (including the election of directors) submitted to the holders of the
Company’s common stock, as a single class with the holders of the Company’s common stock, with
each share of Series B Convertible Preferred Stock having one vote per share of the Company’s
common stock then issuable upon conversion of such share of Series B Convertible Preferred Stock. As
of December 31, 2009 and 2008, the aggregate accretion for the Series B Convertible Preferred Stock
was $4.6 million and $2.3 million, respectively.
At any time and from time to time, any holder of Series of B Convertible Preferred Stock may
convert all or any portion of the Series B Convertible Stock held by such holder into a number of
shares of the Company’s common stock computed by multiplying (i) each $1,000 of aggregate accreted
value of the shares to be converted by (ii) the conversion rate then in effect (which initially is 14.44878
shares of common stock per $1,000 of accreted value, but subject to customary anti-dilution
adjustments). All outstanding shares of Series B Convertible Preferred Stock will automatically convert
into shares of the Company’s common stock on the fifth anniversary of the issue date, at the
conversion rate then in effect, without any action on the part of the holder thereof.
The Company also entered into a registration rights agreement, dated as of November 29, 2007,
with Chilton pursuant to which the Company granted Chilton certain registration rights with respect to
the shares of Series B Convertible Preferred Stock issued to Chilton and the shares of common stock
issuable upon conversion of the Series B Convertible Preferred Stock.
Share Repurchase Program
In January 2003, our Board of Directors authorized a program to repurchase shares of the
Company’s common stock. As of December 31, 2008, the Board had approved the repurchase of up to
7.2 million shares of common stock. The Company has repurchased 6.3 million shares of its common
stock since the inception of the program at a total cost of $280.0 million. The Company did not
repurchase shares in 2009 or 2008. In February 2009, the Board of Directors cancelled the
authorization to repurchase any additional shares under this program.
Dividends
The Company had accrued $0.2 million as dividends on Series A Perpetual Preferred Stock as of
December 31, 2009.
The Company paid regular quarterly dividends of $0.25 per common share beginning in May 2003
through November 2008. In December 2008, the Board of Directors suspended the payment of the
quarterly cash dividend to common stockholders for the foreseeable future as part of actions the
Company is taking to maximize its financial flexibility. Future dividend declarations on the common
shares may be made at the discretion of the Board of Directors after consideration of the Company’s
earnings, financial condition, cash requirements, future prospects and other factors. There were no
dividends declared or paid on common shares in 2009.
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