Einstein Bros 2004 Annual Report Download - page 39

http://www.sec.gov/Archives/edgar/data/949373/000104746905006202/a2153240z10-k.htm[9/11/2014 10:13:29 AM]
diminished control over quality and a potential lack of adequate raw material capacity. Any disruption in the supply or degradation in the quality of
the materials provided by our suppliers could have a material adverse effect on our business, operating results and financial condition. In addition,
such disruptions in supply or degradations in quality could have a long-term detrimental impact on our efforts to develop a strong brand identity
and a loyal consumer base.
Advertising Costs
We expense advertising costs as incurred. Advertising costs were $4,500, $12,900 and $14,000 for the fiscal years ended 2004, 2003 and
2002, respectively, and are included in retail costs of sales in the consolidated statements of operations.
Income Taxes
We record deferred tax assets and liabilities based on the difference between the financial statement and income tax basis of assets and
liabilities using the enacted statutory tax rate. Deferred income tax expenses or credits are based on the changes in the asset or liability from period
to period. The recorded deferred tax assets are reviewed for impairment on a quarterly basis by reviewing our internal estimates for future net
income. If we determine it to be more likely than not that the recovery of the asset is in question in the immediate, foreseeable future, we record a
valuation allowance. On
46
December 28, 2004 and December 30, 2003, we recorded a full valuation allowance against our net deferred tax asset. We will continue to record
valuation allowances against additional deferred tax assets until such time that recoverability of such assets is demonstrated.
The provision (benefit) for income taxes reflected in our consolidated statements of operations represents minimum state taxes payable.
Net Loss per Common Share
We compute basic net loss per common share by dividing the net loss for the period by the weighted average number of shares of common
stock outstanding (which includes shares contingently issuable for little or no consideration) during the period.
Diluted net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock and
potential common stock equivalents outstanding during the period, if dilutive. Potential common stock equivalents include incremental shares of
common stock issuable upon the exercise of stock options and warrants. The effects of potential common stock equivalents have not been included
in the computation of diluted net loss per share as their effect is anti-dilutive.
The following table summarizes the weighted average number of common shares outstanding, as well as sets forth the computation of basic
and diluted net loss per common share for the periods indicated:
For the years ended:
December 28,
2004
December 30,
2003
December 31,
2002
(restated) (restated)
Weighted average shares outstanding 9,842,414 3,873,284 1,313,760
Net loss available to common stockholders (in thousands of dollars) $ (17,405) $ (87,944) $ (72,488)
Basic and diluted net loss per share $ (1.77) $ (22.71) $ (55.18)
Shares contingently issuable included in the weighted average number
of shares of common stock — 604,298 942,347
Outstanding options and warrants that were not included in the
diluted calculation because their effect would be anti-dilutive 1,764,372 1,832,679 102,380