Einstein Bros 2003 Annual Report Download - page 62

http://www.sec.gov/Archives/edgar/data/949373/000104746904009609/a2132006z10-k.htm[9/11/2014 10:13:55 AM]
Each issuance of Series F was evaluated as to the classification of, and accounting for, associated freestanding warrants and additional
warrants to purchase common stock as permanent equity or liabilities as previously described in Note 1—Derivative Instruments. Proceeds from
the issuance of Series F were then allocated using the appropriate allocation method, also as previously described. In its effective dividend rate
calculations, we included the impact of increasing rate dividends, issuance costs, the estimated fair value of additional warrants (if not classified as
derivative liabilities), the amortization of any related discount, and the estimated outstanding term of the instrument based on management's intent
to refinance a portion of the original Series F. The obligation to issue additional warrants, if classified as a liability, was marked to fair value to
reflect changes in the underlying common stock prices, management's estimates of the probability of issuance and other factors at each balance
sheet date.
As a result of the Equity Recap, the Series F has been replaced. Greenlight's interests in Series F have been exchanged for common stock and
the Halpern Denny Interests in Series F, along with certain other former Halpern Denny Interests, were converted into Series Z. Since the price of
our common stock as of September 24, 2003 exceeded the negotiated conversion price of the Greenlight conversion of Series F into our common
stock, we recorded a loss on the exchange of approximately $23.0 million.
The components of Series F were zero at December 30, 2003 and were included in the accompanying 2002 balance sheet as follows:
December 31, 2002
(amounts in thousands)
Proceeds from issuance of Series F preferred stock, $16,398 of
which was the value of the Series D conversion $ 66,398
Discount attributable to fees and commissions (3,254)
Discount attributable to initial and future warrants (33,027)
Accreted PIK Preferred Stock 23,330
Extinguishment of discount 8,271
Effective dividend amortization of discount 23,214
$ 84,932
Common Stock
At a special meeting of our stockholders held on September 20, 2001, our stockholders approved an increase in the number of authorized
shares of our common stock to 150,000,000 shares. Additionally, the stockholders approved the following changes at the September 24, 2003
annual meeting:
•an amendment to increase the number of shares of common stock authorized for issuance from 150,000,000 to 1,500,000,000;
•an amendment to effect a 1.6610444-for-one forward stock split in order to effect the transactions contemplated by the Equity
Recap; and,
F-33
•an amendment to decrease the number of shares of common stock authorized for issuance from 1,500,000,000 to 15,000,000
following the effectiveness of the reverse stock split.
All previously reported stock amounts have been adjusted to reflect these changes.
Warrants
As of December 30, 2003, we have 968,337 warrants outstanding all of which are exercisable. These warrants have exercise prices ranging
from $0.60 to $663.00 per share, of which 957,872 are exercisable at $1.00 or less per share, and have terms ranging from three to ten years. Such
warrants were issued in connection with financings and certain other services.
December 30, 2003
Warrants
December 31, 2002
Warrants
January 1, 2002
Warrants
Outstanding, beginning of year 659,328 858,336 54,498