IHOP 2012 Annual Report Download - page 69

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51
Loss/Gain on Extinguishment of Debt and Temporary Equity
Instrument Face Amount
Retired/Repaid Cash Paid Loss (Gain)(3)
(In millions)
Term Loans(1) .................................................................................................... $ 161.5 $ 161.5 $ 3.2
Senior Notes(1) .................................................................................................. 59.3 64.2 8.0
Total 2011 loss on extinguishment of debt .................................. $ 220.8 $ 225.7 $ 11.2
Class A-2-II-X Notes(2) ................................................................................. $ 68.2 $ 61.8 $ (4.6)
Term Loans(1) .................................................................................................... 56.0 56.0 1.4
October 2010 Refinancing and redemption of Series A Stock.... — — 110.2
Total 2010 loss on extinguishment of debt and Series A
Preferred Stock............................................................................. $ 124.2 $ 117.8 $ 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 an 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.
Income Tax Provision (Benefit)
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.