Einstein Bros 2002 Annual Report Download - page 78

http://www.sec.gov/Archives/edgar/data/949373/000104746903027186/a2116520z10-ka.htm[9/11/2014 10:14:22 AM]
(amounts in thousands)
Deferred tax assets:
Operating loss carryforwards $ 30,794 $ 18,646 $ 15,941
Non-cash charges not yet realized for tax reporting purposes 7,223 7,793 386
Allowance for doubtful accounts 1,829 1,639 1,511
Property, plant and equipment—Depreciation and Amortization 1,969 — —
41,815 28,078 17,838
Deferred tax liability:
Property, plant and equipment—Depreciation and Amortization — (2,204) (5,006)
Net deferred tax asset 41,815 25,874 12,832
Valuation allowance (41,815) (25,874) (12,832)
$ — $ — $ —
At December 31, 2002, the Company had net operating loss carryforwards of approximately $88,394,000 available to offset future taxable
income. These net operating loss carryforwards expire on various dates through 2021. As a result of ownership changes, which resulted from the
issuance of warrants in connection with the sale of Series F preferred stock and the acquisition of Manhattan Bagel Company, the Company's
ability to utilize the loss carryforwards is subject to limitations as defined in Section 382 of the Internal Revenue Code, as amended.
At December 31, 2002, January 1, 2002 and December 31, 2000, the Company has recorded full valuation allowances against its deferred tax
assets. The valuation allowances are based upon management's current assessment of the Company's ability to realize the related tax benefits
considering the limitations imposed by Section 382 of the Internal Revenue Code, the status of the Company's integration of the operations of
Einstein, and its history of operating losses.
12. Assets Held for Resale
Assets held for resale include company-owned stores that the Company intends to sell to franchisees within the next fiscal year. The
Company continually evaluates the realization of the carrying amount of such assets based on the estimated fair value of such assets, which is
determined based on the stores' estimated selling prices, less costs to sell. During 2000, the Company acquired certain store assets in upstate New
York and in Oklahoma, Colorado and Kansas (see Note 4), which have been classified as assets held for resale based upon the Company's plan and
intent to dispose of such stores. In 2000, the Company also expensed approximately $570,000 (Note 3-B) in costs originally capitalized in the
purchase of these assets, and in evaluating the fair value of all assets held for resale, recorded an impairment of $966,001 and recorded an increase
in the loss on the sale of equipment of $109,706. In 2000, the Company closed two stores classified as assets held for resale.
In 2001, the Company recorded a further impairment charge of approximately $3.3 million in accordance with SFAS 121, as a result of the
Company's continued inability to sell the stores, and a shift in brand focus given the Einstein Acquisition (Note 4). During 2001, the Company sold
four stores in New York and closed ten locations classified as assets held for resale. During 2002, the Company
F-47
sold seven stores for an aggregate sales price of $1.4 million, and closed 15 stores classified as assets held for resale.
13. Other Long-Term Liabilities
Other long-term liabilities consist of the following:
As Restated
December 31,
2002
January 1,
2002
December 31,
2000
(amounts in thousands)