Einstein Bros 2004 Annual Report Download - page 40

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http://www.sec.gov/Archives/edgar/data/949373/000104746905006202/a2153240z10-k.htm[9/11/2014 10:13:29 AM]
Stock-Based Compensation
We apply the intrinsic value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations, in accounting for our fixed award stock options to our employees. As such, compensation
expense is recorded only if the current market price of the underlying common stock exceeded the exercise price
47
of the option on the date of grant. We apply the fair value-basis of accounting as prescribed by Statements of Financial Accounting Standards
(SFAS) No. 123, "Accounting for Stock-Based Compensation" in accounting for our fixed award stock options to our consultants. Under
SFAS No. 123, compensation expense is recognized based on the fair value of stock options granted. Had compensation cost for stock options
granted to employees been determined on the basis of fair value as computed using the assumptions herein, net loss and loss per share would have
been increased to the following pro forma amounts:
For the years ended:
December 28,
2004
December 30,
2003
December 31,
2002
(restated)
(restated)
Net loss available to common stockholders, as
reported $ (17,405) $ (87,944) $ (72,488)
Deduct: stock based compensation determined
under the fair value method, net of related tax
effects (544) (10) (196)
Pro forma net loss available to common
stockholders $ (17,949) $ (87,954) $ (72,684)
Basic and diluted loss per common share:
As reported $ (1.77) $ (22.71) $ (55.18)
Pro forma $ (1.82) $ (22.71) $ (55.33)
Compensation cost of options granted for the SFAS No. 123 pro forma amounts disclosed above was estimated using the Black-Scholes
option-pricing model with the following assumptions:
For the years ended:
December 28,
2004
December 30,
2003
December 31,
2002
Expected life of options from date of grant (in
years) 4.00 4.00 4.00
Risk-free interest rate 2.7 - 3.4% 3.0% 3.0%
Volatility 100.0% 100.0% 100.0%
Assumed dividend yield 0.0% 0.0% 0.0%
Weighted average fair value of options granted $ 2.21 $ 2.84 $ 6.47
Recent Accounting Pronouncements
In November 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 151,
"Inventory Costs—an amendment of ARB No. 43, Chapter 4." SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility