Einstein Bros 2004 Annual Report Download - page 41

http://www.sec.gov/Archives/edgar/data/949373/000104746905006202/a2153240z10-k.htm[9/11/2014 10:13:29 AM]
expense, freight, handling costs, and wasted material (spoilage) and amends Paragraph 5 of ARB 43, Chapter 4, by requiring that those items be
recognized as current-period charges regardless of whether they meet
48
the criterion of "so abnormal." In addition, this Statement requires that allocation of fixed-production overhead be based on the normal capacity of
the production facilities. This Statement is effective during fiscal years beginning after June 15, 2005. We do not believe the adoption of this
Statement will have a material impact on our financial position and results of operations.
In December 2004, the FASB issued SFAS No. 123 (revised 2004) entitled "Share-Based Payment" that addresses the accounting for share-
based payment transactions in which an enterprise receives employee services in exchange for a) equity instruments of the enterprise or
b) liabilities that are based on the fair value of the enterprise's equity instruments or that may be settled by the issuance of such equity instruments.
The Statement eliminates the ability to account for share-based compensation transactions using APB Opinion No. 25, "Accounting for Stock
Issued to Employees," and generally would require instead that such transactions be accounted for using a fair-value-based method. This
Statement is effective as of the first interim or annual reporting period that begins after June 15, 2005. We have not fully completed our evaluation
of the impact this Statement will have on our financial position and results of operations. Based on options granted and various assumptions used to
calculate stock based compensation expense as of December 28, 2004, we anticipate that the impact of adoption would result in an increase in
expenses of approximately $471,000 for fiscal 2005. If actual events differ from our assumptions used to calculate the expense, our financial
results could be impacted.
We have considered all other recently issued accounting pronouncements and do not believe that the adoption of such pronouncements will
have a material impact on our financial statements.
3. RESTRICTED CASH AND CASH EQUIVALENTS
Restricted cash and cash equivalents consist of the following:
December 28,
2004
December 30,
2003
Advertising Funds(a) $ 851 $ 667
New Jersey Economic Development Authority(b) 1,307 1,684
Worker's Compensation Insurance Collateral(c) 1,600 2,500
Other 37 —
3,795 4,851
Less current portion of long-term restricted cash 1,269 1,815
Long-term restricted cash and cash equivalents $ 2,526 $ 3,036
(a) We act as custodian for certain funds paid by our franchisees that are earmarked as advertising fund contributions.
(b) On July 3, 2003, we placed in escrow an advanced refunding of the New Jersey Economic Development Authority (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 as of the December 28, 2004 and December 30, 2003 balance sheet dates in accordance with payment
terms of the note. We anticipate this classification will
49
continue until the NJEDA note is fully paid from the escrow amount proceeds. The NJEDA note has a maturity date of December 1, 2008.
See Note 10 for additional information.
(c) We also have restricted cash held as collateral for a letter of credit supporting our worker's compensation insurance claims. The insurance
company could access this collateral in the event that we do not reimburse them for claims paid on our behalf.