IHOP 2010 Annual Report Download - page 137

DineEquity, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Continued)
15. Preferred Stock and Stockholders’ Equity (Continued)
in a liquidation, dissolution or winding up, and upon any other distribution of the Company’s assets;
and (ii) on a parity with all other series of preferred stock, including the Series B Convertible Preferred
Stock, described below, with respect to the payment of dividends and distributions, in a liquidation,
dissolution or winding up, and upon any other distribution of the Company’s assets.
The holders of the Series A Perpetual Preferred Stock were entitled to receive dividends, at the
rates and on the dates set forth in the Certificate of Designations for the Series A Perpetual Preferred
Stock (the ‘‘Series A Certificate of Designations’’), if, as, and when such dividends were declared by the
Company’s Board of Directors, but out of funds legally available for the payment of dividends, which
dividends are payable in cash, subject to the Company’s right to elect to accumulate any dividends
payable after the first anniversary of the issue date. If, on any scheduled dividend payment date, the
holder of record of a share of Series A Perpetual Preferred Stock did not receive in cash the full
amount of any dividend required to be paid on such share on such date pursuant to the Series A
Certificate of Designations (such unpaid dividends that have accrued and were required to be paid, but
remained unpaid, on a scheduled dividend payment date, together with any accrued and unpaid
accumulated dividends, the ‘‘Passed Dividends’’), then such Passed Dividends accumulated on such
outstanding share of Series A Perpetual Preferred Stock, whether or not there are funds legally
available for the payment thereof or such Passed Dividends were declared by the Company’s Board of
Directors, and until such Passed Dividends were paid, the applicable dividend rate under the Series A
Certificate of Designations was computed on the sum of the stated value of the share plus such unpaid
Passed Dividend. In the event that Passed Dividends had accrued but remained unpaid for two
consecutive quarterly dividend periods (each such quarterly dividend period, a ‘‘Passed Quarter’’), the
applicable dividend rate under the Series A Certificate of Designations was, as of the end of such
two-Passed Quarters period, prospectively increased by two percent (2.0%) per annum, and the
applicable dividend rate under the Series A Certificate of Designations further increased prospectively
by two percent (2.0%) per annum as of the end of each subsequent two-Passed Quarters period with
respect to which Passed Dividends had accrued but remained unpaid. The Series A Certificate of
Designations further provided that (i) under no circumstances shall the dividend rate applicable at any
time prior to the tenth (10th) anniversary of the issue date of the Series A Perpetual Preferred Stock
exceed sixteen percent (16%) per annum, and (ii) upon payment by the Company of all accrued and
unpaid Passed Dividends, the dividend rate is thereupon automatically reduced prospectively to the
applicable per annum dividend rate under the Series A Certificate of Designations. As of the time of
redemption, all required dividends had been paid in cash on the scheduled dividend payment dates.
The Certificate of Designations for Series A Perpetual Preferred Stock required that, upon the
occurrence of a Change of Control, unless prohibited by applicable law, the Company would redeem all
then outstanding shares of the Series A Perpetual Preferred Stock for cash at a redemption price per
share corresponding to the timing of such Change of Control, as specified in the Certificate of
Designations. U.S. GAAP requires preferred securities that are redeemable for cash or other assets to
be classified outside of permanent equity if they are redeemable upon the occurrence of an event that
is not solely within the control of the issuer. Accordingly, the Series A Perpetual Preferred Stock was
not included as a component of Stockholders’ Equity in the accompanying Consolidated Balance
Sheets.
In the fourth quarter of 2010, the Company redeemed all 190,000 shares of the Series A Perpetual
Preferred Stock for $199.0 million, including a redemption premium of $7.6 million and $1.4 million of
dividends accrued through the date of redemption. In accordance with U.S. GAAP, the redemption
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