Einstein Bros 2003 Annual Report Download - page 49

http://www.sec.gov/Archives/edgar/data/949373/000104746904009609/a2132006z10-k.htm[9/11/2014 10:13:55 AM]
September 24, 2003) in 2003, 2002 and 2001 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 1,832,679, 102,380 and 63,315 respectively.
Interest and Dividends
Interest expense and dividends on our $140 Million Facility and Series F, respectively, were determined, in part, by assumptions related to
expected maturity of such instruments. These assumptions were reviewed and adjusted as our circumstances changed. The terms of our debt
agreements place certain restrictions on the payment of cash dividends.
Income Taxes
We account for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes"
("SFAS 109"), 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.
F-16
Stock-Based Compensation
As of December 30, 2003, we have three stock-based employee and director compensation plans. As of December 31, 2002 and January 1,
2002 we had two stock-based employee and director compensation plans, which are described more fully in Note 9. Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), 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 Accounting Principle Bulletin
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), with the requirement that pro forma disclosures of net income and
earnings per share be included in the notes to financial statements. We have 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 the net loss and loss per share
would have been if we 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, our net loss and loss per share
would have been increased to the following pro forma amounts for each of the years then ended:
December 30,
2003
December 31,
2002
January 1,
2002
(amounts in thousands, except for per share amounts)
Net loss available to common stockholders:
As reported $ (82,131) $ (68,067) $ (77,220)
Add (deduct): total stock-based employee compensation expense
determined under fair value based method for all awards, net of related
tax effects (10) (196) (184)
Pro forma (82,141) $ (68,263) $ (77,404)
Basic and diluted net loss available to common stockholders per
common share:
As reported $ (21.20) $ (51.81) $ (128.36)
Pro forma $ (21.21) $ (51.96) $ (128.66)
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.