Einstein Bros 2002 Annual Report Download - page 58

http://www.sec.gov/Archives/edgar/data/949373/000104746903027186/a2116520z10-ka.htm[9/11/2014 10:14:22 AM]
meet the criteria to be recorded as reorganization and integration liabilities in purchase accounting. Accordingly, the Company's opening balance
sheet adjustments include the reduction of both trademarks and other long-term liabilities each by $2,349,915 in connection with Chesapeake
Bagel Bakery reorganization and integration accruals and the reduction of goodwill by $2,843,710 and accrued liabilities and other long-term
liabilities by $1,416,245 and $1,427,465, respectively, in connection with the Manhattan Bagel Company reorganization and integration accruals.
F-19
B. Restatement of Fiscal 2000 Financial Statements
The primary effects of the restatement of the fiscal 2000 financial statements are summarized below:
Fiscal 2000 Revenue
Income/(Loss)
From
Operations
Net Income/
(Loss)
Available to
Common
Stockholders'
Equity
(amounts in thousands)
As previously reported $ 45,723 $ 5,210 $ 3,883 $ 26,733
Adjustments:
Beginning balance — — — 215
Reorganization accruals (484) (3,131) (3,131) (3,131)
Manufacturing revenue and COGS (1,236) — — —
Assets held for resale — (1,691) (1,691) (1,691)
Deferred tax asset — (260) (3,360) (3,360)
Purchase accounting — (1,086) (1,086) (1,086)
Other (925) (2,165) (2,281) (6,006)
Equity — — (245) (707)
Total adjustments (2,645) (8,333) (11,794) (15,766)
As restated $ 43,078 $ (3,123) $ (7,911) $ 10,967
Restated amounts were derived from changes in the accounting treatment applied primarily in the following categories:
Reorganization and Integration Accruals Established in Purchase Accounting. As discussed previously, certain restructuring and integration
liabilities incorrectly established in prior years related to the Manhattan Bagel Company and Chesapeake Bagel Bakery acquisitions were
inappropriately reversed into income in 2000 and ongoing period costs were charged against such liabilities in error. In 2000, $1,277,282 of costs
originally recorded as a reduction to the Chesapeake Bagel Bakery reorganization and integration liability were restated as general and
administrative expenses. In addition, $484,500 of deferred franchise income erroneously recorded in purchase accounting related to the acquisition
of Chesapeake Bagel Bakery and recorded as franchise revenue in 2000 has been reversed. Similarly, in 2000, $1,463,684 of costs initially
recorded as a reduction to accrued liabilities related to the Manhattan Bagel Company reorganization and integration accrual were restated as
general and administrative expenses. These reductions to income from operations were partially offset by a reduction in amortization expense of
$93,996 related to the decrease in intangibles associated with the restatement of intangibles established in purchase accounting relating to the
Manhattan Bagel Company and Chesapeake Bagel Bakery acquisitions.
Manufacturing Revenue and Cost of Goods Sold. Manufacturing revenue and cost of goods sold have each been reduced by $1,235,871 to
correct an erroneous gross-up on sales recorded to franchisees through a third-party distributor. This restatement has no impact on income from
operations.
F-20
Assets Held For Resale. The Company identified and expensed $569,794 of general and administrative costs originally capitalized in assets
held for resale relating to the acquisition of Lots 'A Bagels, Inc. (LAB), New York Bagel Enterprises (NYBE), and the Western New York stores