Einstein Bros 2008 Annual Report Download - page 33

Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312509042707/d10k.htm[9/11/2014 10:10:56 AM]
Primarily due to increased profitability at our company-owned restaurants and the reduction of interest expense related to our debt
redemption, net cash generated by operating activities was $43.1 million for 2008 compared to $24.9 million for 2007.
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Cash Used in Investing Activities
During the year to date period ended December 30, 2008, we used approximately $26.7 million of cash to purchase additional property and
equipment that included the following:
• $18.9 million to open new restaurants and upgrade existing restaurants in 2007 and 2008;
• $5.4 million for replacement of equipment at our existing company-owned restaurants and at our manufacturing operations; and
• $2.4 million for general corporate purposes.
The majority of our capital expenditures for fiscal 2008 were for the addition of 17 new company-owned restaurants during 2008 at an
average capital investment of approximately $560,000 per restaurant, which varies depending upon square footage, layout and location.
During the year to date period ended January 1, 2008, we used approximately $25.9 million of cash to purchase additional property and
equipment that included the following:
• $11.4 million to open new restaurants and upgrade existing restaurants in 2006 and 2007;
• $10.2 million for replacement of equipment at our existing company-owned restaurants and at our manufacturing operations;
• $1.8 million for general corporate purposes; and
• $2.5 million for leasehold improvements and build-out related to our new corporate headquarters.
On January 1, 2008, we purchased a restaurant from a Manhattan Bagel franchisee for $382,000. We made a $375,000 cash payment in
2007, and the remaining $7,000 was paid in 2008.
Cash Used in Financing Activities
For the year ended December 30, 2008, we made payments on our debt totaling $2.0 million and received $0.4 million in proceeds from
stock option exercises.
As a result of our June 13, 2007 secondary public offering of common stock, we received $90.0 million in cash, and incurred $6.7 million in
stock issuance costs. Concurrent with our June 28, 2007 amendment to our First Lien Term Loan, we drew down an additional $11.9 million in
debt and incurred an additional $0.9 million in debt issuance costs. The funds from these two transactions were used to pay off the $65.0 million
Second Lien Term Loan and the $25.0 Million Subordinated Note and $2.5 million of related paid-in-kind interest on the Subordinated Note.
Off-Balance Sheet Arrangements
Guarantees
Prior to 2001, we would occasionally guarantee leases for the benefit of certain of our franchisees. None of the guarantees have been
modified since their inception and we have since discontinued this practice. Current franchisees are the primary lessees under the vast majority of
these leases. Under the lease guarantees, we may be required by the lessor to make all of the remaining monthly rental payments or property tax
and common area maintenance payments if the franchisee does not make the required payments in a timely manner. However, we believe that
most, if not all, of the franchised restaurants could be subleased to third parties, minimizing our potential exposure. Additionally, we have
indemnification agreements with our franchisees under which the franchisees would be obligated to reimburse us for any amounts paid under such
guarantees. Historically, we
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have not been required to make such payments in significant amounts. As of December 30, 2008, we do not have a liability recorded for our
exposure under the guarantees in accordance with Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No. 45, Guarantor’s
Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, following a probability related