Einstein Bros 2005 Annual Report Download - page 26

http://www.sec.gov/Archives/edgar/data/949373/000110465906016136/a06-3178_110k.htm[9/11/2014 10:13:03 AM]
referred to herein as our loan agreements) represents earnings before interest, taxes, depreciation and amortization, and is further adjusted by
various items including: (1) integration and reorganization charges and credits, (2) cumulative change in fair value of derivatives, (3) gain/loss on
the investment, sale, disposal or exchange of assets, (4) impairment and other related charges and (5) other expense (income). Adjusted EBITDA
may also be further adjusted by certain legal, financing and advisory fees, acquisition and integration expenses, and other charges. Our loan
agreements required that Adjusted EBITDA be measured on a twelve month period ending on the last day of each fiscal quarter and be greater than
$33 million. We present Adjusted EBITDA because it related to a covenant contained in each of our loan agreements which was material to us, our
financial condition and liquidity. If we did not comply with the Adjusted EBITDA covenant, an Event of Default (as defined in our loan
agreements) would occur and, subject to the applicable notice and cure periods, the lenders could declare all amounts outstanding immediately due
and payable and pursue all available remedies for payment of such amounts. As of January 3, 2006, we were in compliance with the Adjusted
EBITDA covenants under our AmSouth Revolver and $160 Million Notes.
Data regarding Adjusted EBITDA is provided as additional information to help our bondholders understand our compliance with the Adjusted
EBITDA covenant. We also believe Adjusted EBITDA is useful to our bondholders as an indicator of earnings available to service debt. Adjusted
EBITDA is not a recognized term under GAAP and does not purport to be an alternative to income (loss) from operations, an indicator of cash
flow from operations or a measure of liquidity. Because not all companies calculate Adjusted EBITDA identically, this presentation may not be
comparable to similarly titled measures of other companies. We believe Adjusted EBITDA is a more meaningful indicator of earnings available to
service debt when certain charges (such as the gain or loss from the disposal of assets, impairment of assets and cumulative change in the fair value
of derivatives) are excluded from income (loss) from continuing operations. Adjusted EBITDA is not intended to be a measure of free cash flow
for management’ s discretionary use, as it does not consider certain cash requirements such as interest expense, income taxes, debt service payments
and cash costs arising from integration and reorganization activities.
On February 28, 2006, we completed the refinancing of the AmSouth Revolver and $160 Million Notes. Our new financing has the usual and
customary covenants including an Adjusted EBITDA covenant consistent with the aforementioned definition.
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The following tables reconcile Adjusted EBITDA to net loss and cash flows used in operating activities:
First quarter ended: Second quarter ended: Third quarter ended: Fourth quarter ended: Year ended:
Mar 29, Mar 30, Jun 28, Jun 29, Sept 27, Sept 28, Jan 3, Dec 28, Jan 3, Dec 28,
2005 2004 2005 2004 2005 2004 2006 2004 2006 2004
Reconciliation of Net Loss to Adjusted
EBITDA:
Net loss $ (4,198) $ (4,130) $ (4,283) $ (6,224) $ (4,814) $ (4,952) $ (723) $ (2,099) $ (14,018) $ (17,405)
Adjustments as defined in the loan agreements:
Interest expense, net 5,919 5,799 5,773 5,904 5,805 5,723 6,201 5,770 23,698 23,196
Taxes — 55 — 184 — (147) — (141) — (49)
Depreciation and amortization
6,708 6,819 7,077 7,058 5,798 7,005 6,733 6,966 26,316 27,848
Loss (gain) on sale, disposal or abandonment of
assets, net
4 (7) 161 1,472 104 (70) 45 162 314 1,557
Charges (adjustments) of integration and
reorganization cost
5 (760) — (39) 1 (44) (1) (26) 5 (869)
Impairment charges and other related costs
97 — 1,182 — 205 402 119 48 1,603 450
Other expense (income) (57) (63) (69) (36) (106) (98) (80) (87) (312) (284)
Certain legal, financing and advisory fees
— 75 526 688 99 494 6 338 631 1,595
Certain corporate expenses — 225 — — — 174 — 219 — 618
Certain other charges — 25 700 — 25 — 27 — 752 25
Adjusted EBITDA
$ 8,478 $ 8,038 $ 11,067 $ 9,007 $ 7,117 $ 8,487 $ 12,327 $ 11,150 $ 38,989 $ 36,682
First quarter ended: Second quarter ended: Third quarter ended: Fourth quarter ended: Year ended:
Mar 29, Mar 30, Jun 28, Jun 29, Sept 27, Sept 28, Jan 3, Dec 28, Jan 3, Dec 28,
2005 2004 2005 2004 2005 2004 2006 2004 2006 2004
Reconciliation of Net Cash Used in Operating
Activities to Adjusted EBITDA:
Net cash generated by (used in) operating
activities
$ (6,288) $ (4,175) $ 14,353 $ 9,610 $ (5,304) $ (5,853) $ (686) $ 11,528 $ 2,075 $ 11,110
Adjustments as defined in the loan agreements:
Changes in operating assets and liabilities 9,292 6,560 (9,784) (6,768) 7,138 8,860 7,258 (6,087) 13,904 2,565
Reduction in (provision for) losses on
accounts receivable
91 — 47 (94) (60) (172) 80 89 158 (177)
Amortization of debt issue costs
(462) (462) (462) (446) (462) (479) (462) (462) (1,848 ) (1,849)
Stock based compensation expense
(17) — (17) (35) (18) (16) (17) (17) (69) (68)
Interest expense, net
5,919 5,799 5,773 5,904 5,805 5,723 6,201 5,770 23,698 23,196
Other income (57) (64) (69) (36) (106) (97) (80) (87) (312) (284)
Provision (benefit) for state income taxes
— 55 — 184 — (147) — (141) — (49)
Certain legal, financing and advisory fees
— 75 526 688 99 494 6 338 631 1,595
Certain corporate expenses — 225 — — — 174 — 219 — 618
Certain other charges — 25 700 — 25 — 27 — 752 25
Adjusted EBITDA
$ 8,478 $ 8,038 $ 11,067 $ 9,007 $ 7,117 $ 8,487 $ 12,327 $ 11,150 $ 38,989 $ 36,682
Recent Accounting Pronouncements