Einstein Bros 2002 Annual Report Download - page 54

http://www.sec.gov/Archives/edgar/data/949373/000104746903027186/a2116520z10-ka.htm[9/11/2014 10:14:22 AM]
In accordance with SFAS No. 128, Earnings Per Share, basic earnings per common share amounts ("basic EPS") are computed by dividing net
earnings by the weighted average number of common shares outstanding (which include warrants exercisable for a nominal price of $0.01 per
share—Note 3) and exclude any potential dilution. The company has included both issued and obligations to issue $0.01 warrants in the calculation
described above. Diluted earnings per common share amounts assuming dilution ("diluted EPS") are computed by reflecting potential dilution of
the Company's common stock equivalents. Common stock equivalents are not reflected in diluted EPS if their effect would be anti-dilutive. The
following table summarizes the weighted average shares used in the basic and diluted EPS computations:
As Restated
For the Years Ended
December 31,
2002
January 1,
2002
December 31,
2000
(amounts in thousands)
Weighted average shares outstanding 22,360,221 16,327,988 12,074,356
Weighted average warrants exercisable for $0.01 63,223,162 20,562,059 490,378
85,583,383 36,890,047 12,564,734
All stock options and warrants outstanding (excluding those exercisable for $0.01) in 2002, 2001 and 2000 were excluded from the
computation because of their anti-dilutive effect. The total number of stock options and warrants that were excluded from the calculation was
2,718,434, 2,558,082 and 2,435,882, respectively.
Segment Disclosure
The Company follows the provisions of SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information. SFAS 131
requires the reporting of certain information about operating segments in annual financial statements. The Company operates and manages its
business as one segment.
F-14
Income Taxes
The Company accounts for income taxes in accordance with SFAS 109, Accounting for Income Taxes, using the asset and liability method.
Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the
financial statement carrying amount of existing assets and liabilities and their tax bases, as well as net operating losses. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets or liabilities of a change in tax rates is recognized in the period in which the tax change
occurs. A valuation allowance is provided to reduce the deferred tax assets to a level, that more likely than not, will be realized.
Stock-Based Compensation
As of December 31, 2002, January 1, 2002, and December 31, 2000 the Company has two stock-based employee compensation plans, which
are described more fully in Note 10. SFAS No. 123, Accounting for Stock-Based Compensation, establishes financial accounting and reporting
standards for stock-based employee compensation plans. SFAS 123 encourages entities to adopt a fair-value-based method of accounting for stock
compensation plans. However, SFAS 123 also permits entities to continue to measure compensation costs under APB Opinion No. 25, Accounting
for Stock Issued to Employees, with the requirement that pro forma disclosures of net income and earnings per share be included in the notes to
financial statements. The Company has elected to continue accounting for stock-based compensation arrangements using the intrinsic value
method specified in APB 25 and to provide pro forma disclosures of what its net loss and loss per share would have been if the Company had
elected to recognize compensation expense under the fair value method specified in SFAS 123.
Had compensation cost for these plans been recognized under the fair value method specified in SFAS 123, the Company's net loss and loss
per share would have been increased to the following pro forma amounts:
As Restated
December 31, January 1, December 31,