Einstein Bros 2005 Annual Report Download - page 38

http://www.sec.gov/Archives/edgar/data/949373/000110465906016136/a06-3178_110k.htm[9/11/2014 10:13:03 AM]
December 1, 1998 to enact a debt defeasance as allowed for in the agreement. The NJEDA funds are included in both current portion and
long-term portion of restricted cash as of the January 3, 2006 and December 28, 2004 balance sheet dates in accordance with payment terms
of the note. We anticipate this classification will continue until the NJEDA note is fully paid from the escrow amount proceeds. The NJEDA
note has a maturity date of December 1, 2008. See Note 10 for additional information.
(c) We had restricted cash held as collateral for a letter of credit supporting our worker’ s compensation insurance claims. The insurance company
could access this collateral in the event that we did not reimburse them for claims paid on our behalf. In 2005, our bank no longer required the
letter of credit to be cash collateralized.
(d) We have restricted cash held as collateral for a letter of credit issued to one of our distributors. Our distributor could access the letter of credit
in the event that we fail to pay them for products delivered to our company-owned restaurants.
(e) We also have various restricted cash accounts for the benefit of taxing and other government authorities.
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NEW WORLD RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
4. FRANCHISE AND OTHER RECEIVABLES
The majority of our receivables are due from our franchisees, distributors and trade customers. Credit is extended based on our evaluation of
the customer’ s financial condition and, generally, collateral is not required. Accounts receivable are due within 7-30 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. We determine our allowance by considering a number of factors, including the length of time trade accounts receivable are past due, our
previous loss and payment history, the customer’ s current ability to pay its obligation to us, and the condition of the general economy and the
industry as a whole. We write off accounts receivable when they become uncollectible, and payments subsequently received on such receivables
are credited to the allowance for doubtful accounts.
Franchise and other receivables consist of the following:
January 3, December 28,
2006 2004
(in thousands of dollars)
Trade receivables $ 2,296 $ 1,725
Franchisee and licensee receivables 984 3,367
Vendor rebates(a) 2,130 3,196
Other 576 1,310
5,986 9,598
Less allowance for doubtful accounts 480 2,475
Total receivables
$ 5,506 $ 7,123
(a) Vendor rebates represent a rebate earned at the time products are purchased and are not contingent upon any level of purchases or period of
time. Vendor rebates are recorded as a reduction to cost of sales when products are sold.
5. INVENTORIES
Inventories, which consist of food, beverage, paper supplies and bagel ingredients, are stated at the lower of cost or market, with cost being
determined by the first-in, first-out method. Inventories consist of the following:
January 3, December 28,
2006 2004
(in thousands of dollars)
Finished goods $ 4,558 $ 4,545
Raw materials 514 396
Total inventories
$ 5,072 $ 4,941
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