IHOP 2011 Annual Report Download - page 61

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Loss on Extinguishment of Debt and Temporary Equity
Instrument (1)
Term Loans (1)
Senior Notes (1)
Loss on extinguishment of debt, 2011
Class A-2-II-X Notes (2)
Term Loans (1)
October 2010 Refinancing and
redemption of Series A Stock
Loss on extinguishment of debt and
Series A Preferred Stock, 2010
Face Amount
Retired/Repaid
(In millions)
$ 161.5
59.3
$ 220.8
$ 68.2
56.0
—
$ 124.2
Cash Paid
$ 161.5
64.2
$ 225.7
$ 61.8
56.0
—
$ 117.8
Loss (Gain)(3)
$ 3.2
8.0
$ 11.2
$(4.6)
1.4
110.2
$ 107.0
(1) For a description of the respective instruments, refer to Note 8 of the Notes to Consolidated Financial Statements.
(2) For a description of the instrument, refer to Note 8 of the Notes to Consolidated Financial Statements included in the Company’ s
Annual Report on Form 10-K for the year ended December 31, 2010.
(3) Including write-off of the discount and deferred financing costs related to the debt retired.
In 2011, at the dates of repurchase, our Senior Notes were selling at a premium to face value. For the year ended December 31,
2011, we paid a total premium of $4.9 million to repurchase Senior Notes.
In 2010, we recognized a loss on extinguishment of debt and the redemption of Series A Preferred stock of $107.0 million.
The loss in 2010 was comprised of charges of $110.2 million resulting from the October 2010 Refinancing and the redemption of
Series A Stock and a $1.4 million loss on extinguishment of debt subsequent to the October 2010 Refinancing, partially offset by
gains on extinguishment of debt of $4.6 million that arose prior to the October 2010 Refinancing. The charges resulting from the
October 2010 Refinancing consisted of approximately $64 million of deferred financing costs associated with our previous
securitized debt structure, including the remaining balance in Accumulated Other Comprehensive Income of a loss related to an
interest rate swap designated as a cash flow hedge, and approximately $46 million of prepayment costs and tender premiums
associated with the retirement of the securitized debt. Tender premiums associated with the Series A Stock were included as
dividends paid and not part of the loss on extinguishment.
We may continue to dedicate a portion of excess cash flow towards opportunistic debt retirement.
Gain on Disposition of Assets
We recognized a gain on disposition of assets of $43.3 million in 2011, primarily related to the refranchising and sale of
related restaurant assets of 132 Applebee's company-operated restaurants, of which 66 were located in Massachusetts, New
Hampshire, Maine, Rhode Island, Vermont and parts of New York state (collectively, the New England market area), 36 were
located in the St. Louis market area and 30 were located in the Washington, D.C. market area. In 2010, we recognized a gain on
disposition of assets of $13.6 million primarily related to the refranchising and sale of related restaurant assets of 63 Applebee's
company-operated restaurants in the Minnesota market area and 20 restaurants in the Roanoke/Lynchburg market area in Virginia.
Debt Modification Costs
Pursuant to the Amendment to our Credit Agreement, we incurred costs paid to third parties of $4.0 million in connection
with this transaction that were expensed in accordance with U.S. GAAP guidance for debt modifications.
(Provision) Benefit for Income Taxes
We recorded a tax provision of $29.8 million in 2011 as compared to a recognized tax benefit of $9.3 million in 2010. The
change was primarily due to the increase in our pretax book income. The 2011 effective tax rate of 28.4% applied to pretax book
income was lower than the statutory Federal tax rate of 35% primarily due to tax credits and changes in tax rates and the release
of liabilities for unrecognized tax benefits. The tax credits are primarily FICA tip and other compensation-related credits associated
with Applebee's company-owned restaurant operations.