Einstein Bros 2012 Annual Report Download - page 27

Download and view the complete annual report

Please find page 27 of the 2012 Einstein Bros annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 73

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73

10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312513085036/d445565d10k.htm[9/11/2014 10:07:50 AM]
Franchise and License Operations
Fiscal year ended
Increase/
(in thousands) (Decrease)
January 3, January 1, 2012
2012 2013 vs. 2011
Franchise and license related revenues $ 10,330 $ 11,186 8.3%
Percent of total revenues 2.4% 2.6%
Number of franchise and license restaurants 333 355
Overall, franchise and license revenue improvement was driven by continued unit development as we opened 27 licensed locations and 13
franchised locations since January 3, 2012. Franchise and license comparable store sales were +1.3% for the fiscal year ended January 1, 2013.
Franchise and license revenue improved by $0.9 million, or 8.3% from fiscal 2011, primarily the result of continued unit development and
increases in comparable store sales, partially offset by a decline in initial license fee revenue recorded on unit openings. As of February 25, 2013,
we have 28 development agreements in place for 136 total restaurants, 34 of which have already opened. Based upon the development agreements,
we expect the remaining 102 new restaurants will open on various dates through 2021. Thus far in fiscal 2013, we have opened three licensed units
and two franchised units, including the entry into Montana, our 40 state where we have operations.
Corporate Support
Fiscal year ended
Increase/ Percentage of
(in thousands) (Decrease) total revenues
January 3, January 1, 2012 January 3, January 1,
2012 2013 vs. 2011 2012 2013
General and administrative expenses $ 36,774 $ 39,569 7.6% 8.7% 9.3%
Depreciation and amortization 19,259 19,707 2.3% 4.5% 4.6%
Pre-opening expenses 265 1,115 ** 0.0% 0.3%
Restructuring expenses 1,099 480 (56.3%) 0.3% 0.1%
Strategic alternatives expense — 3,677 ** 0.0% 0.9%
Other operating (income) expenses, net (395) 1,592 ** (0.1%) 0.4%
Total operating expenses $ 57,002 $ 66,140 16.0% 13.4% 15.6%
Interest expense, net 3,357 3,384 0.8% 0.8% 0.8%
Provision for income taxes 7,958 8,103 1.8% 1.9% 1.9%
** Not meaningful
Our total general and administrative expenses increased $2.8 million, or 7.6%, primarily due to an increase of $3.0 million in variable
incentive compensation. Our performance incentive compensation increased from fiscal 2011 as we reached a higher bonus threshold in fiscal
2012 than we did in fiscal 2011. We expect general and administrative expenses for fiscal 2013 to be approximately $11.0 million per quarter.
Depreciation and amortization expenses increased $0.4 million, or 2.3%. The increase is due to approximately $24.0 million in capital asset
expenditures since fiscal 2011. These additions included the construction and outfitting of 15 new company-owned stores, the relocation of 6
stores, the implementation of new POS systems and the replacement of older equipment. Based on our current planned purchases of capital assets,
our existing base of assets and our projections for new purchases of fixed assets, we believe depreciation expense for fiscal 2013 will be in the
range of $20.0 million to $22.0 million.
33
Table of Contents
Pre-opening expenses, which include rent, wages, marketing, food and other restaurant operating costs, increased $0.9 million due to eleven
more store openings in fiscal 2012. We opened fifteen company-owned stores in fiscal 2012 compared to four company-owned stores in fiscal
2011.
We incurred an additional $0.5 million of restructuring expenses in fiscal 2012 related to our plan to close our five commissaries. All of our
commissaries were closed by the end of the first quarter 2012. Restructuring expenses in fiscal 2011 included charges related to the initiation of our
plan to close our commissaries and the completion of our plan to restructure the organization to align with our franchise and license growth model.
On May 3, 2012, we announced that our Board authorized a review of strategic alternatives, including a possible business combination or
sale of the Company, to maximize value for all stockholders. On December 6, 2012, we announced that our Board had completed its review and
elected to recapitalize the Company by amending our existing credit facility and declared a one-time special cash dividend of $4.00 per share
th