IHOP 2011 Annual Report Download - page 68

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the October 2010 Refinancing, partially offset by gains on extinguishment of debt of $4.6 million. The charges 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.
During 2010 (prior to the October 2010 Refinancing) and 2009, we recognized the following gains on the early retirement
of debt:
Transaction Date
March 2010
June 2010
March, 2009
May, 2009
June, 2009
November, 2009
December, 2009
Instrument
Class A-2-II-X
Class A-2-II-X
Total 2010
Class A-2-II-X
Class A-2-II-A
Class A-2-II-X
Class A-2-II-X
Class A-2-II-X
Total 2009
Face Amount
Retired
(In millions)
$ 48.7
19.5
$ 68.2
$ 78.4
35.2
15.6
53.4
17.0
$ 199.6
Cash Paid
$ 43.8
18.0
$ 61.8
$ 49.0
24.3
12.1
46.5
15.0
$ 146.9
Gain(1)
$ 3.5
1.1
$ 4.6
$ 26.4
9.6
2.8
5.3
1.6
$ 45.7
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(1) After write-off of the discount and deferred financing costs related to the debt retired.
We may continue to dedicate a portion of excess cash flow towards opportunistic debt retirement. However, our debt no
longer trades at a discount to face value, therefore future retirements will most likely result in a loss on retirement due to the write-
off of the discount and deferred financing costs related to the debt retired.
Gain on Disposition of Assets
We recognized a gain on disposition of assets of $13.6 million in 2010, primarily related to the refranchising of 63 Applebee's
restaurants in the Minnesota market and 20 restaurants in the Roanoke and Lynchburg markets in Virginia. We recognized a gain
on disposition of assets of $6.9 million in 2009, primarily related to the refranchising of seven Applebee's restaurants in the New
Mexico market and sale of a parcel of land held by IHOP.
Other Expense (Income)
In 2010, other items of income and expense netted to an expense of $3.6 million compared to an expense of $1.3 million in
2009. The primary reason for the change was several individually insignificant gains in 2009 did not recur in 2010.
(Provision) Benefit for Income Taxes
We recognized a tax benefit of $9.3 million in 2010 as compared to a tax provision of $5.2 million in 2009. The change was
primarily due to the decrease in pre-tax income resulting from the one-time expenses related to the debt refinancing. The 2010
effective tax rate benefit of 76.9% applied to pretax book income was significantly different from the statutory federal tax rate of
35% primarily due to the decrease in pre-tax income resulting from the one-time expenses related to the debt refinancing, changes
in unrecognized tax benefits and tax credits. The tax credits are primarily FICA tip and other compensation-related tax credits
associated with Applebee's company-owned restaurant operations and credits associated with the Applebee's Restaurant Support
Center in Lenexa, Kansas.