Einstein Bros 2011 Annual Report Download - page 29

Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312512092597/d260635d10k.htm[9/11/2014 10:08:30 AM]
Write-off of debt issuance costs
—
966
**
Series Z modification — 929 **
Restructuring expense — 477 **
Other operating expenses (income) 725 (531) **
Adjusted EBITDA $ 42,269 $ 45,286 7.1% 10.3% 11.0%
*As a result of the March 17, 2010 agreement modifying our Series Z, we recognized a non-cash loss of $0.9 million on the extinguishment of
debt, recorded additional redemption within stockholders' equity and recorded a discount within interest expense.
** Not meaningful
Our income from operations improved by $2.6 million in 2010 to $27.6 million as a result of higher revenues and lower cost of sales offset
by an increase in operating expenses.
Total revenues increased by $3.1 million to $411.7 million as a result of increases in company-owned restaurant sales and franchise and
license related revenues. Our catering business saw an increase of 9.2% over 2009. System-wide comparable store sales increased +0.3% due to a
turnaround in our transactions trend from -2.3% in fiscal 2009 to flat in fiscal 2010 and an increase in average check of +0.3%. We achieved this
by growing our base bagel sales and by turning around breakfast sales. Total costs in our company-owned
34
Table of Contents
restaurants and manufacturing and commissaries segments decreased $2.9 million. The combination of this increase in revenues and decrease in
total cost of sales resulted in an increase of $6.0 million in contribution margin.
Our operating expenses increased by $3.4 million as a result of a $3.0 million increase in general and administrative expenses, a $1.1 million
increase in depreciation and amortization expense and $0.5 million in severance expense offset by a net improvement in other operating items of
$1.2 million.
Income before income taxes improved $1.7 million in fiscal 2010 to $20.5 million. This comparative of fiscal 2010 to fiscal 2009 is $0.9
million lower than the improvement in our income from operations as a result of the non-cash charges of $1.9 million for an adjustment for our
Series Z modification and the write-off of debt issuance costs offset by a $1.0 million decrease in interest expense. Our interest expense declined
primarily due to lower additional redemption on our Series Z as a result of the impact of the significant Series Z redemptions we have made since
2009 as well as the expiration of our interest rate swap in August of 2010.
Company-Owned Restaurant Operations
Our company-owned restaurants vary in their unit volume, profitability and recent comparable store sales performance. As of December 28,
2010, we had 107 restaurants that generated an average unit volume in excess of $1.0 million. These 107 restaurants had an average unit volume of
approximately $1.2 million. In the aggregate, these restaurants contribute approximately 35% of total restaurant sales and 48% of total restaurant
operating profit.
Company-owned restaurant sales for fiscal 2010 increased $1.8 million, which was primarily due to three net new company-owned
restaurants. Additionally, restaurant sales for fiscal 2010 benefited from $0.4 million in gift certificate breakage from a program that no longer
exists.
Fiscal Year Ended
Increase/
(Decrease)
Percentage of company-owned
restaurant sales (in thousands)
December 29,
2009
December 28,
2010
2010
vs. 2009
December 29,
2009
December 28,
2010
Company-owned restaurant sales $ 370,412 $ 372,191 0.5%
Percent of total revenues 90.7% 90.4%
Cost of sales:
Cost of goods sold $ 108,052 $ 106,035 (1.9%) 29.2% 28.5%
Labor costs 113,665 109,005 (4.1%) 30.7% 29.3%
Rent and related expenses 40,517 39,731 (1.9%) 10.9% 10.7%
Other operating costs 37,426 37,732 0.8% 10.1% 10.1%
Marketing costs 4,597 9,854 114.4% 1.2% 2.6%
Total company-owned restaurant costs $ 304,257 $ 302,357 (0.6%) 82.1% 81.2%
Total company-owned restaurant gross
margin $ 66,155 $ 69,834 5.6% 17.9% 18.8%