Einstein Bros 2010 Annual Report Download - page 38

Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312511067286/d10k.htm[9/11/2014 10:09:09 AM]
for both the outstanding SARs, and exercisable and vested SARs was negligible.
As of December 28, 2010, the weighted-average remaining life of total outstanding SARs, and exercisable and vested SARs was 3.1 years and 2.0 years, respectively, and the aggregate intrinsic value
for both the outstanding SARs, and exercisable and vested SARs was $0.3 million and $0.2 million, respectively.
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Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table summarizes information about stock SARs outstanding at December 28, 2010:
SARs Outstanding SARs Exercisable
Range of Exercise Prices
Number
of SARs
Wt.Avg.
Exercise
Price
Wt.Avg.
Remaining
Life
(Years)
Number
of SARs
Wt.Avg.
Exercise
Price
$0.00 - $10.00 27,901 $ 8.02 1.89 23,401 $ 8.00
$10.01 - $20.00 55,727 12.96 3.65 20,477 14.82
$20.01 - $30.00 525 23.70 1.86 525 23.70
84,153 $ 11.39 3.05 44,403 $ 11.33
13. SAVINGS PLAN
The Company sponsors a qualified defined contribution retirement plan covering eligible employees of Einstein Noah Restaurant Group (the “401(k) Plan”). Employees, excluding officers, are eligible
to participate in the 401(k) Plan if they meet certain eligibility requirements. The 401(k) Plan allows participating employees to defer the receipt of a portion of their compensation and contribute such amount to
one or more investment options. The Company did not accrue a discretionary match for fiscal years ended 2008, 2009 or 2010. Employer contributions vest at the rate of 100% after three years of service.
The Company established the Einstein Noah Restaurant Group, Inc. Nonqualified Deferred Compensation Plan (the “DC Plan”) in June of 2007 for key employees, generally officers of the Company.
The DC Plan allows an eligible employee to defer up to 80% of the participant’ s base salary and bonus. In lieu of payments of the deferred amounts to the participant, the payments are to be invested with The
Charles Schwab Trust Company under investment criteria directed by the participant.
14. INCOME TAXES
Utilization of the Company’ s net operating loss (“NOL”) carryforwards reduced the federal and state income tax liability incurred. As of December 29, 2009 and December 28, 2010, the Company had
$1.0 million of federal and state income tax overpayments, respectively, within prepaid expenses on the balance sheet. The provision for income taxes consists of the following:
December 30,
2008
December 29,
2009
December 28,
2010
(As Restated,
see Note 3)
(As Restated,
see Note 3)
(in thousands)
Current
Federal $ 359 $— $ (491)
State 741 198 685
Total current income tax provision 1,100 198 194
Deferred
Federal 7,587 6,755 8,162
State 801 808 1,700
Total deferred income tax provision 8,388 7,563 9,862
Change in valuation allowance (7,020) (79,321) (138)
Total deferred income tax provision (benefit) 1,368 (71,758) 9,724
Total income tax provision (benefit) $ 2,468 $ (71,560) $ 9,918
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Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The Company continuously assesses the likelihood of realization of the benefits of its deferred tax assets. The Company considers many qualitative and quantitative factors, including:
• the level of historical taxable income and projections of future taxable income over periods in which the deferred tax assets would be deductible;
• accumulation of income (loss) before taxes utilizing a look-back period of at least three fiscal years;
• events within the restaurant industry;
• the cyclical nature of our business;
• the health of the economy; and
• historical trending.
In the third quarter of 2009, after again assessing the existing qualitative and quantitative data, including the wide-spread consensus that the economic climate was beginning to improve, the Company
reduced its $84.3 million valuation allowance by $79.3 million, as restated, to $4.9 million after consideration the following factors:
• the Company’ s continued profitability through September 29, 2009 resulting in nine consecutive quarters of pretax profitability;
• the Company’ s cumulative income before taxes of $41.5 million over the last fifteen quarters through September 29, 2009;
• the Company’ s cumulative income from operations of $94.7 million over the last fifteen quarters through September 29, 2009; and
• the favorable ruling received from the Internal Revenue Service (“IRS”) on September 24, 2009 regarding the Company’ s methodology for determining ownership changes in accordance with
Internal Revenue Code Section 382.
As of December 28, 2010, NOL carryforwards of $115.7 million were available to be utilized against future taxable income for years through fiscal 2029, subject in part to annual limitations and
excluding approximately $12.2 million of NOL carryforwards that will expire prior to utilization. Accordingly, we have provided a full valuation allowance of $4.8 million related to this portion of our deferred
tax assets. Our ability to utilize our NOLs could be further limited if we experience an “ownership change” as defined by Section 382 of the Internal Revenue Code. The occurrence of an additional ownership