Einstein Bros 2008 Annual Report Download - page 51

Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312509042707/d10k.htm[9/11/2014 10:10:56 AM]
an asset or liability, as necessary, with a corresponding adjustment to accumulated other comprehensive loss within stockholders’ deficit.
There was no impact for adoption of SFAS No. 157, Fair Value Measurements (“SFAS No. 157”) to the consolidated financial statements as of
December 30, 2008. SFAS No. 157 requires fair value measurement to be classified and disclosed in one of the following three categories:
• Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or
liabilities.
• Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the
full term of the asset or liability.
• Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable
(i.e., supported by little or no market activity).
The interest rate swap discussed above falls into the Level 2 category under the guidance of SFAS 157. The fair market value of the interest rate
swap as of December 30, 2008 was a liability of $2.5 million, which is recorded in other liabilities on the consolidated balance sheet. As of
December 30, 2008, the unrealized loss associated with this cash flow hedging instrument is recorded in accumulated other comprehensive loss
within stockholders’ deficit.
Comprehensive income consisted of the following as of:
52 weeks ended
December 30,
2008
(in thousands)
Net income $ 21,077
Unrealized loss on cash flow hedge (2,470)
Total comprehensive income $ 18,607
We will reclassify any gain or loss from accumulated other comprehensive loss, net of tax, on the consolidated balance sheet to other
expense/income on the consolidated statements of operations when the interest rate swap expires or at the time the we choose to terminate the
swap.
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Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
11. OTHER LIABILITIES
Other long-term liabilities consist of the following as of:
January 1,
2008
December 30,
2008
(In thousands of dollars)
Vendor contractual agreements (a) $ 6,881 $ 6,659
Deferred rent 3,960 4,944
Unrealized loss—interest rate swap — 2,470
Other liabilities $ 10,841 $ 14,073
(a) A strategic supplier of ours provided advance funding in the amount of $10.0 million to us in 1996 as part of a contract to continue buying
products from the supplier. The contract terminates upon fulfillment of contractual purchase volumes. We account for this contract by
recognizing a reduction of cost of goods sold based on the volume of purchases of the vendor’ s product.
12. MANDATORILY REDEEMABLE SERIES Z PREFERRED STOCK
In September 2003, we completed an equity recapitalization with our preferred stockholders, who held a substantial portion of our common stock.
Among other things, the Halpern Denny Fund III, L.P. (“Halpern Denny”) interest in our Mandatorily Redeemable Series F Preferred Stock
(“Series F”) was converted into 57,000 shares of Series Z Mandatorily Redeemable Preferred Stock (“Series Z”). The major provisions of our
Series Z are as follows:
• 2,000,000 shares authorized;