Einstein Bros 2002 Annual Report Download - page 49

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http://www.sec.gov/Archives/edgar/data/949373/000104746903027186/a2116520z10-ka.htm[9/11/2014 10:14:22 AM]
The accompanying notes are an integral part of these consolidated financial statements.
F-8
NEW WORLD RESTAURANT GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Business, Organization and Significant Accounting Policies
Nature of Business and Organization
New World Restaurant Group, Inc. (the Company) is a leader in the quick casual segment of the restaurant industry. With 747 locations in 32
states as of December 31, 2002, the Company operates and licenses locations primarily under the Einstein Bros. and Noah's brand names and
franchises locations primarily under the Manhattan and Chesapeake brand names. The Company's locations specialize in high-quality foods for
breakfast and lunch, including fresh baked goods, made-to-order sandwiches on a variety of breads and bagels, soups, salads, desserts, premium
coffees and other café beverages, and offer a café experience with a neighborhood emphasis. As of December 31, 2002, the Company's retail
system consisted of 460 company-operated locations and 287 franchised and licensed locations. The Company also operates one dough production
facility in California and one coffee roasting facility in Connecticut. The Company's manufactured products are sold to franchised, licensed and
company-operated stores as well as to wholesale, supermarket and non-traditional outlets. In the last week of December 2002, the Company
vacated its eastern headquarters in Eatontown, NJ and relocated to a new facility at 100 Horizon Center Boulevard in Hamilton, NJ, which serves
as the eastern executive headquarters and franchise support center.
During 2001, the Company changed its name from New World Coffee—Manhattan Bagel, Inc. to New World Restaurant Group, Inc.
Principles of Consolidation
The consolidated financial statements herein include the accounts of the Company and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated.
Fiscal Year
Effective for the quarter ended July 3, 2001 and as a result of the Einstein Acquisition (see Note 4), the Company elected to change its fiscal
year end to the Tuesday closest to December 31. The Company's annual accounting period had previously ended on the Sunday closest to
December 31. The fiscal year-end dates for 2002, 2001 and 2000 are December 31, 2002, January 1, 2002 and December 31, 2000, respectively,
resulting in years containing 52, 52 and 53 weeks, respectively.
Cash and Cash Equivalents
The Company considers cash on hand and on deposit and short-term, highly liquid instruments purchased with maturities of three months or
less to be cash equivalents.
The Company acts as custodian for certain funds paid by its franchisees that are earmarked as advertising fund contributions. Cash and cash
equivalents includes $769,619, $478,131 and $1,032,593 as of December 31, 2002, January 1, 2002 and December 31, 2000, respectively, which
the Company holds in such advertising fund.
Accounts Receivable
The majority of the Company's accounts receivable are due from the Company's franchisees. Credit is extended based on evaluation of a
potential customer's financial condition and, generally, collateral is not required. Accounts receivable are due within 15-30 days and are stated at
amounts due from customers net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are
considered past due. The Company determines its allowance by considering a number of factors, including the length of time trade accounts
receivable are past due, the Company's previous loss history, the customer's current ability to pay its obligation to the Company, and the condition
of the general economy and the industry as a whole. The Company writes off accounts receivable when they become uncollectible, and payments
subsequently received on such receivables are credited to the allowance for doubtful accounts.
F-9