Einstein Bros 2011 Annual Report Download - page 65

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Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312512092597/d260635d10k.htm[9/11/2014 10:08:30 AM]
The short-term and long-term portions of the Company’ s capital leases are recorded as a component of accrued expenses and other current
liabilities and other liabilities, respectively.
The Company subleases out a portion of its restaurant space on leases where it does not need the entire space for its operations. As of
January 3, 2012, minimum sublease rentals to be received in the future under non-cancelable subleases were $1.9 million. The Company’ s
sublease income was $0.4 million, $0.4 million and $0.5 million for fiscal years 2009, 2010 and 2011, respectively.
80
Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Purchase Commitments
The Company has obligations with certain of its major suppliers of raw materials (primarily frozen bagel dough) for minimum purchases
both in terms of quantity and pricing on an annual basis. Furthermore, from time to time, the Company will commit to the purchase price of certain
commodities that are related to the ingredients used for the production of its bagels, cream cheese and coffee. On a periodic basis, the Company
reviews the relationship of these purchase commitments to its business plan, general market trends and its assumptions in its operating plans. If
these commitments are deemed to be in excess of the market, the Company will expense the excess purchase commitment to cost of sales in the
period in which the shortfall is determined. The total of the Company’ s future purchase obligations as of January 3, 2012 was approximately $35.4
million.
Litigation
The Company is subject to claims and legal actions in the ordinary course of business, including claims by or against franchisees, licensees
and employees or former employees and/or contract disputes. The Company does not believe any currently pending or threatened matter would
have a material adverse effect on its business, results of operations or financial condition.
18. RESTRUCTURINGS
In fiscal 2010, the Company’ s management approved a plan to restructure the organization to align with its franchise growth model. This
restructuring included eliminating certain redundant positions and reducing headcount. The Company incurred $0.5 million and $0.2 million related
to this restructuring for fiscal 2010 and fiscal 2011, respectively.
In fiscal 2011, the Company committed to a plan to close all five of its commissaries. The Grove City, Ohio commissary closed during the
fourth quarter of 2011. The remaining four commissaries are expected to close by the end of the first quarter of 2012. The Company recorded
restructuring charges of $0.7 million during fiscal 2011 related to this restructuring.
The Company estimates it will incur an additional $0.5 million to $0.8 million in restructuring expenses related to the closing of the
commissaries during the first quarter of 2012.
Also in fiscal 2011, the Company eliminated other redundant positions resulting in an additional $0.2 million of restructuring charges for
fiscal 2011.
All restructuring costs are included in restructuring expenses on the consolidated statements of operations. It is the Company’ s policy to
record all restructuring costs within the corporate support segment.
The following table summarizes the Company’ s restructuring activities for fiscal 2010 and fiscal 2011:
Employee
Termination
Benefits
Contract
Termination
Costs Other Total
(in thousands)
Balance, December 29, 2009 $— $— $ — $—
Expenses incurred 477 — — 477
Amounts paid (366) — — (366)
Balance, December 28, 2010 $ 111 $— $— $ 111
Expenses incurred 552 130 417 1,099
Amounts paid (216) — (230) (446)
Balance, January 3, 2012 $ 447 $ 130 $ 187 $ 764