Einstein Bros 2010 Annual Report Download - page 24

Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312511067286/d10k.htm[9/11/2014 10:09:09 AM]
On May 7, 2008, we entered into an interest rate swap agreement, to fix our rate on $60 million of our debt to 3.52% plus an applicable margin for the next two years, effective August 2008. This
agreement expired in August 2010 and was not renewed.
Assuming no change in the size or composition of debt as of December 28, 2010, and presuming the utilization of our accumulated net operating losses would minimize the tax implications for the next
several years, a 100 basis point increase in short-term effective interest rates would increase our interest expense on our New Credit Facility by approximately $0.9 million annually. Currently, the interest rates
on our New Credit Facility are predominantly at LIBOR rates plus an applicable margin through short-term fixed rate financing. The estimated increase in interest expense incorporates the fixed interest
financing into its assumptions.
On an annual basis, we purchase a substantial amount of agricultural products that are subject to fluctuations in price based upon market conditions. Our purchase arrangements may contain contractual
features that limit the price paid by establishing certain price floors or caps. We do not use financial instruments to hedge commodity prices. We have utilized a third party advisor to manage our wheat
purchases for our company-owned production facility. In addition to wheat, we have established contracts and entered into commitments with our vendors for turkey, butter, cheese and coffee.
This market risk discussion contains forward-looking statements. Actual results may differ materially from this discussion based upon general market conditions and changes in domestic and global
financial markets, among other factors.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Audited Annual Financial Statements
Reports of Independent Registered Public Accounting Firm 49
Consolidated Balance Sheets as of December 29, 2009 (As Restated, See Note 3) and December 28, 2010 52
Consolidated Statements of Operations for the 52 Weeks Ended December 30, 2008 (As Restated, See Note 3), December 29, 2009 (As Restated, See Note 3) and December 28, 2010 53
Consolidated Statements of Changes in Stockholders’ (Deficit) Equity for the 52 Weeks Ended December 30, 2008 (As Restated, See Note 3), December 29, 2009 (As Restated, See Note 3)
and December 28, 2010 54
Consolidated Statements of Cash Flows for the 52 Weeks Ended December 30, 2008 (As Restated, See Note 3), December 29, 2009 (As Restated, See Note 3) and December 28, 2010 55
Notes to Consolidated Financial Statements 56
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Einstein Noah Restaurant Group, Inc.
We have audited the accompanying consolidated balance sheets of Einstein Noah Restaurant Group, Inc. and subsidiaries (collectively, “Einstein Noah”) (a Delaware corporation) as of December 28,
2010 and December 29, 2009, and the related consolidated statements of operations, stockholders’ (deficit) equity, and cash flows for each of the three years in the period ended December 28, 2010. Our audits of
the basic financial statements include the financial statement schedule listing in the index appearing under Item 15(2). These financial statements and financial statement schedule are the responsibility of Einstein
Noah’ s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Einstein Noah as of December 28, 2010 and December 29, 2009, and
the results of their operations and their cash flows for each of the three years in the period ended December 28, 2010 in conformity with accounting principles generally accepted in the United States of America.
Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information
set forth therein.
As discussed in Note 3 to the consolidated financial statements, the Company has restated its consolidated financial statements as of December 29, 2009 and for the years ended December 29, 2009 and
December 30, 2008 due to errors in its income taxes.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Einstein Noah’ s internal control over financial reporting as of December 28,
2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 15, 2011
expressed an adverse opinion.
/s/ GRANT THORNTON LLP
Denver, Colorado
March 15, 2011
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Einstein Noah Restaurant Group, Inc.
We have audited Einstein Noah Restaurant Group, Inc. and subsidiaries (collectively, “Einstein Noah”) (a Delaware Corporation) internal control over financial reporting as of December 28, 2010, based
on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Einstein Noah’ s management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on Einstein Noah’ s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as
we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.