Einstein Bros 2005 Annual Report Download - page 53

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http://www.sec.gov/Archives/edgar/data/949373/000110465906016136/a06-3178_110k.htm[9/11/2014 10:13:03 AM]
purchase commitments to our business plan, general market trends and our assumptions in our operating plans. If these commitments are deemed
to be in excess of the market, we will expense the excess purchase commitment to cost of sales, in the period in which the shortfall is determined.
The total of our future purchase obligations at January 3, 2006 was approximately $9.1 million.
25. LITIGATION
We are subject to claims and legal actions in the ordinary course of our business, including claims by or against our franchisees, licensees and
employees or former employees and/or contract disputes. We do not believe that an adverse outcome in any currently pending or threatened matter
would have a material adverse effect on our business, results of operations or financial condition.
On July 31, 2002, Tristan Goldstein and Valerie Bankhordar, former restaurant managers, filed a putative class action against Einstein and
Noah Corp. (“ENC”) in the Superior Court for the State of California, County of San Francisco for failure to pay overtime wages to managers and
assistant managers of the California Noah’ s restaurants. In April 2004, we agreed to settle the litigation, which agreement was subsequently
approved by the court in January 2006. Amounts representing our estimate to settle this litigation were previously recorded in general and
administrative expenses during fiscal 2003, were paid subsequent to fiscal year-end 2005 and did not have a material adverse effect on our
consolidated financial condition or results of operations.
On September 14, 2004, Atlantic Mutual Insurance Company brought an action in the Superior Court of New Jersey Law Division: Morris
County, against the Company, certain of its former officers and
68
NEW WORLD RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
directors and insurers seeking declaratory judgment on insurance coverage issues in previously resolved litigation against Jerold Novack and
Ramin Kamfar, former officers. Mr. Kamfar cross-claimed against us, claiming a right to be indemnified for expenses. The Company, Mr. Kamfar,
Atlantic Mutual Insurance Company and Lexington Insurance Company settled the lawsuit in February 2006. The resolution of this lawsuit did not
have a material effect on our consolidated financial condition or results of operations. Because the Company asserts that the advancement and
indemnity claims are an insured loss under the Company’ s policy with National Union, the Company has filed an arbitration proceeding against
National Union, the Company’ s officers and directors liability insurer for the applicable time period.
26. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table summarizes the unaudited consolidated quarterly results of operations for fiscal 2005 and 2004:
Fiscal year 2005:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
(13 wks) (13 wks) (13 wks) (14 wks)
(in thousands of dollars, except per share amounts)
Revenue
$ 93,295
$ 97,113
$ 94,782
$ 103,903
Income from operations
$ 1,664
$ 1,421
$ 885
$ 5,398
Net loss
$ (4,198)
$ (4,283)
$ (4,814)
$ (723)
Net loss available to common shareholders
$ (4,198)
$ (4,283)
$ (4,814)
$ (723)
Basic and diluted loss per share
$ (0.43)
$ (0.43)
$ (0.49)
$ (0.07)
Fiscal year 2004:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
(13 wks) (13 wks) (13 wks) (14 wks)
(in thousands of dollars, except per share amounts)
Revenue
$ 91,196
$ 94,164
$ 91,179
$ 97,321
Income (loss) from operations
$ 1,661
$ (172)
$ 526
$ 3,443
Net loss
$ (4,130)
$ (6,224)
$ (4,952)
$ (2,099)
Net loss available to common shareholders
$ (4,130)
$ (6,224)
$ (4,952)
$ (2,099)
Basic and diluted loss per share
$ (0.42)
$ (0.63)
$ (0.50)
$ (0.21)
27. SUBSEQUENT EVENT—DEBT REDEMPTION AND REFINANCING
Debt Redemption and Refinancing—On February 28, 2006, we completed a debt refinancing that redeemed our $160 Million Notes and
retired our $15 million AmSouth Revolver. Our new debt obligations consist of the following: