Einstein Bros 2003 Annual Report Download - page 44

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http://www.sec.gov/Archives/edgar/data/949373/000104746904009609/a2132006z10-k.htm[9/11/2014 10:13:55 AM]
(b) On July 3, 2003, we placed in escrow an advanced refunding of the NJEDA note dated December 1, 1998 to enact a debt defeasance as
allowed for in the agreement. The NJEDA funds are included in both current portion and long-term portion of restricted cash in the
December 30, 2003 balance sheet in accordance with payment terms of the note. We anticipate this classification will continue until the
NJEDA note is fully paid from the escrow amount proceeds, which has the maturity date of December 1, 2008.
(c) We also have restricted cash held as collateral for a letter of credit supporting our worker's compensation insurance claims of $2,500,000 as
of December 30, 2003. This collateral could be accessed by the insurance company if we did not reimburse them for claims paid on our
behalf.
Accounts Receivable
The majority of our accounts receivable are due from our franchisees and distributors. Credit is extended based on our evaluation of the
customer's financial condition and, generally, collateral is not
F-10
required. Accounts receivable are due within 7-30 days and are stated at amounts due from customers net of an allowance for doubtful accounts.
Accounts outstanding longer than the contractual payment terms are considered past due. We determine our allowance by considering a number of
factors, including the length of time trade accounts receivable are past due, our previous loss and payment history, the customer's current ability to
pay its obligation to us, and the condition of the general economy and the industry as a whole. We write off accounts receivable when they become
uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts.
Receivables consist of the following:
December 30,
2003
December 31,
2002
(amounts in thousands)
Franchisee and licensee receivables $ 4,970 $ 5,188
Manufacturing receivables 912 1,029
Customer receivables 426 328
Vendor receivables 2,126 852
Other receivables 718 3,183
9,152 10,580
Less allowance for doubtful accounts (3,310) (4,611)
$ 5,842 $ 5,969
Changes in the allowance for doubtful accounts are as follows:
December 30,
2003
December 31,
2002
(amounts in thousands)
Beginning balance $ (4,611) $ (4,097)
Bad debt expense (1,787) (639)
Accounts written off 3,116 125
Recoveries (28) —
Ending balance $ (3,310) $ (4,611)
Inventories