Einstein Bros 2007 Annual Report Download - page 40

http://www.sec.gov/Archives/edgar/data/949373/000104746908002111/a2183061z10-k.htm[9/11/2014 10:12:02 AM]
subject to an annual usage limitation of $4.7 million, and were subject to the following expiration schedule (in thousands of dollars):
Net Operating Loss
CarryForwards Expiration Date
$ 865 12/31/2009
2,148 12/31/2010
4,862 12/31/2011
9,589 12/31/2012
14,553 12/31/2018
6,862 12/31/2019
10,424 12/31/2020
10,515 12/31/2021
35,688 12/31/2022
42,362 12/31/2023
12,003 12/31/2024
5,413 12/31/2025
1,552 12/31/2026
$ 156,836
Our net operating losses are one of our deferred income tax assets; however, the ultimate realization of these deferred income tax assets is
dependent upon generation of future taxable income. Due to the uncertainty of future taxable income, deferred tax assets resulting from these net
operating losses have been fully reserved. In accordance with SFAS No. 109 we will assess the continuing need for a valuation allowance that
results from uncertainty regarding our ability to realize the benefits of our deferred tax assets.
Financial Condition, Liquidity and Capital Resources
The restaurant industry is predominantly a cash business where cash is received at the time of the transaction. We believe we will generate
sufficient cash flow and have sufficient availability under our Revolving Facility to fund operations, capital expenditures and required debt and
interest payments. Our inventory turns frequently since our products are perishable. Accordingly, our investment in inventory is minimal. Our
accounts payable are on terms that we believe are consistent with those of other companies within the industry.
The primary driver of our operating cash flow is our restaurant operations, specifically the gross margin from our company-owned restaurants.
Therefore, we focus on the elements of those operations including comparable store sales and cash flows to ensure a steady stream of operating
profits that enable us to meet our cash obligations. On a weekly basis, we review our company-owned restaurant performance compared with the
same period in the prior year and our operating plan.
Based upon our projections for 2008 and 2009, we believe our various sources of capital, including availability under existing debt facilities,
and cash flow from operating activities of continuing operations, are adequate to finance operations as well as the repayment of current debt
obligations.
2003 Debt Refinancing
We completed a debt refinancing on July 8, 2003, when we issued $160.0 million of 13% senior secured notes due 2008, or the $160 million
notes. We used the net proceeds of the offering, among other things, to refinance the increasing rate notes which were issued in connection with
the Einstein Bros./Noah's acquisition that occurred in 2001. Also on July 8, 2003, we entered into a three-year, $15.0 million senior secured
revolving credit facility with AmSouth Bank, or the AmSouth Revolver.
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2006 Debt Redemption and Refinancing
On February 28, 2006, we completed the refinancing of our AmSouth Revolver and $160 million notes. Our new financing consisted of a:
•$15.0 million revolving credit facility maturing on March 31, 2011;