Pandora 2012 Annual Report Download - page 105

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Table of Contents
Pandora Media, Inc.
Notes to Consolidated Financial Statements - Continued
The dividends on redeemable convertible preferred stock reflected in the statements of redeemable convertible preferred stock and stockholders' deficit
for the fiscal years ended January 31, 2010 and 2011 represent accretion of the redemption value of the redeemable convertible preferred stock using the
interest method. The holders of the Series B, C, D, E, F and G were entitled to receive a per share redemption amount plus interest calculated from the
issuance date of the latest round of redeemable convertible preferred stock financing. Accordingly, to the extent there were new issuances of redeemable
convertible preferred stock, previously accrued dividends were reversed and a new dividend was calculated starting with the issuance date of the new series.
As of January 31, 2010 the accrued dividends on Series B, C, D, E and F represent interest earned from the issuance of Series F shares in July 2009. Upon
issuance of Series G in May 2010, the previously accrued dividends through that date were no longer payable. As of January 31, 2011 the accrued dividends
on Series B, C, D, E, F and G represent interest earned from the date of issuance of Series G shares in May 2010. The decrease in accrued dividends from
January 31, 2010 to January 31, 2011 was reflected as "Reversals of dividends on redeemable convertible preferred stock, net of accruals."
The holders of Series B, C, D, E, F and G were entitled to receive cumulative dividends in the event of conversion into common stock or liquidation of
the Company. The dividends were payable in cash or shares of common stock, at the option of the Company. As of January 31, 2010, the Company did not
have a sufficient number of authorized but unissued common shares to pay the cumulative dividends in common stock. The Company recorded additional
preferred stock dividends incremental to the dividends recorded for accretion of the redemption value of the redeemable convertible preferred stock described
above for the portion of the cumulative dividends for which a sufficient number of authorized and unissued common shares did not exist. The Company
recorded incremental preferred stock dividends of $2.9 million during the year ended January 31, 2010, which represented the portion of the cumulative
dividends accrued during the year that the Company would have been required to pay in cash if all of the redeemable convertible preferred stock was
converted on January 31, 2010.
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