Einstein Bros 2013 Annual Report Download - page 32

10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312514073832/d629623d10k.htm[9/11/2014 10:05:27 AM]
Restructuring expenses 1,099 480 (56.3%) 0.3% 0.1%
Strategic alternatives expense — 3,677 ** 0.0% 0.9%
Other operating (income) expenses, net (395) 1,592 ** (0.1%) 0.4%
Total operating expenses $ 57,002 $ 66,140 16.0% 13.4% 15.6%
Interest expense, net 3,357 3,384 0.8% 0.8% 0.8%
Provision for income taxes 7,958 8,103 1.8% 1.9% 1.9%
** Not meaningful
Our total general and administrative expenses increased $2.8 million, or 7.6%, primarily due to an increase of $3.0 million in variable
incentive compensation. Our performance incentive compensation increased from fiscal 2011 as we reached a higher bonus threshold in fiscal
2012 than we did in fiscal 2011.
Depreciation and amortization expenses increased $0.4 million, or 2.3%. The increase is due to approximately $24.0 million in capital asset
expenditures since fiscal 2011. These additions included the construction and outfitting of 15 new company-owned stores, the relocation of 6
stores, the implementation of new POS systems and the replacement of older equipment.
Pre-opening expenses, which include rent, wages, marketing, food and other restaurant operating costs, increased $0.9 million due to eleven
more store openings in fiscal 2012. We opened fifteen company-owned stores in fiscal 2012 compared to four company-owned stores in fiscal
2011.
We incurred an additional $0.5 million of restructuring expenses in fiscal 2012 related to our plan to close our five commissaries. All of our
commissaries were closed by the end of the first quarter 2012. Restructuring expenses in fiscal 2011 included charges related to the initiation of our
plan to close our commissaries and the completion of our plan to restructure the organization to align with our franchise and license growth model.
On May 3, 2012, we announced that our Board authorized a review of strategic alternatives, including a possible business combination or
sale of the Company, to maximize value for all stockholders. On December 6, 2012, we announced that our Board had completed its review and
elected to recapitalize the Company by amending our existing credit facility and declared a one-time special cash dividend of $4.00 per share
payable to holders of record of the Company’ s common stock as of the close of business on December 17, 2012. The payment date of the dividend
was December 27, 2012. We expensed $3.7 million towards this review.
Other operating (income) expenses, net changed by $2.0 million from income of $0.4 million in fiscal 2011 to expense of $1.6 million in
fiscal 2012. In fiscal 2011, we recognized gains on the sale of three restaurants, a
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gain on the insurance proceeds from a restaurant fire and we incurred acquisition costs related to the purchase of nine stores. In fiscal 2012, we
expensed approximately $1.2 million for an employee benefit settlement. We also incurred $0.1 million in acquisition costs in fiscal 2012 towards
the purchase of seven restaurants from our franchisees.
Interest expense, net remained flat in fiscal 2012, primarily due to scheduled term loan repayments totaling $5.6 million offset by incremental
interest on borrowings of $68.1 million in December 2012. As of January 1, 2013, we had an outstanding debt balance of $136.7 million. Our
weighted average interest rate for fiscal 2012 was 3.4% compared to a weighted average rate of 3.1% for fiscal 2011. As of January 1, 2013, our
weighted average interest rate was 4.3%.
The components of our provision for income taxes were as follows:
Fiscal Year Ended
January 3,
2012
January 1,
2013
(in thousands)
Current
Total current income tax provision $ 1,040 $ 235
Deferred
Total deferred income tax provision 6,900 12,658
Change in valuation allowance 18 (4,790)
Total deferred income tax provision 6,918 7,868
Total income tax provision $ 7,958 $ 8,103