Einstein Bros 2005 Annual Report Download - page 37

http://www.sec.gov/Archives/edgar/data/949373/000110465906016136/a06-3178_110k.htm[9/11/2014 10:13:03 AM]
Basic and diluted loss per common share:
As reported $ (1.42) $ (1.77) $ (22.71)
Pro forma
$ (1.54) $ (1.82) $ (22.71)
Assumptions:
Expected life of options from date of grant 4 years 4 years 4 years
Risk-free interest rate 3.55 - 4.44% 2.7 - 3.4% 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 $ 1.85 $ 2.21 $ 2.84
Recent Accounting Pronouncements
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 No. 25 and generally would require instead
that such transactions be accounted for using a fair-value-based method. This Statement is to be implemented at the beginning of the next fiscal
year that begins after June 15, 2005. Based on options granted and various assumptions used to calculate stock based compensation expense as of
January 3, 2006, we believe that the adoption will result in an increase in expense of approximately $0.6 million and $0.1 million during fiscal
2006 and 2007, respectively. If actual events differ from our assumptions used to calculate the expense or if we grant additional options, our
financial results could be impacted.
In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20,
Accounting Changes, and SFAS No. 3, Reporting Accounting
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NEW WORLD RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Changes in Interim Financial Statements. SFAS No. 154 changes the requirements for the accounting for and reporting of a change in accounting
principle. Previously, most voluntary changes in accounting principles were required recognition via a cumulative effect adjustment within net
income of the period of the change. SFAS No. 154 requires retrospective application to prior periods’ financial statements, unless it is
impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS No. 154 is effective for accounting
changes made in fiscal years beginning after December 15, 2005; however, the Statement does not change the transition provisions of any existing
accounting pronouncements.
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 consolidated financial statements.
3. RESTRICTED CASH
Restricted cash consisted of the following:
January 3, December 28,
2006 2004
(in thousands of dollars:)
Advertising Funds(a) $ 533 $ 851
New Jersey Economic Development Authority(b) 950 1,307
Worker’ s Compensation Insurance Collateral(c) — 1,600
Distributor Collateral(d) 1,500 —
Other(e) 166 37
3,149 3,795
Less current portion of long-term restricted cash 2,554 1,269
Long-term restricted cash
$ 595 $ 2,526
(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