Einstein Bros 2013 Annual Report Download - page 3

10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312514073832/d629623d10k.htm[9/11/2014 10:05:27 AM]
the date thereof, involve risks and uncertainties that may cause our actual results, performance or achievements to be materially different from
any future performance or achievements expressed or implied by these forward-looking statements. Factors that might cause actual events or
results to differ materially from those indicated by these forward-looking statements may include matters such as future economic performance,
general economic conditions, consumer preferences and spending, costs, competition, new product execution, restaurant openings or closings,
operating margins, the availability of acceptable real estate locations, the sufficiency of our cash balances and cash generated from operating and
financing activities for our future liquidity and capital resource needs, growth of franchise and licensing, the impact on our business as a result of
Federal and/or State legislation including, but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-
Frank Act”) and the rules promulgated thereunder, future litigation and other matters, and are generally accompanied by words such as:
“believes,” “anticipates,” “plans,” “intends,” “estimates,” “predicts,” “targets,” “expects,” “contemplates” and similar expressions that convey
the uncertainty of future events or outcomes. These risks and uncertainties include, but are not limited to, the risk factors discussed under
Item 1A.“Risk Factors” of this Annual Report on Form 10-K. We do not undertake any obligation to update or revise any forward-looking
statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as may be
required under applicable law.
PART I
As used in this report, the terms “Company,” “ENRG,” “we,” “our,” or “us” refer to Einstein Noah Restaurant Group, Inc. and its
consolidated subsidiaries, taken as a whole, unless the context otherwise indicates. The terms “fiscal year ended,” “fiscal year,” “year ended,” or
“fiscal” refer to the entire fiscal year, unless the context otherwise indicates.
ITEM 1. BUSINESS
General development of our Company:
Einstein Noah Restaurant Group, Inc. is a Delaware corporation operating primarily under the Einstein Bros. Bagels (“Einstein Bros.”),
Noah’ s New York Bagels (“Noah’ s”) and Manhattan Bagel Company (“Manhattan Bagel”) brands. We commenced operations as an operator and
franchisor of coffee cafes in 1993. Substantial growth in our restaurant counts have occurred through a series of acquisitions, including Manhattan
Bagel in 1998 and Einstein Bros. and Noah’ s in 2001. We have also grown organically by opening company-owned restaurants, working with
franchisees on development agreements and promoting the licensing of our brand.
Since 2003, Greenlight Capital, Inc. and its affiliates (“Greenlight”) have had a controlling interest in ENRG. During fiscal 2013, in a series
of secondary offerings, Greenlight’ s percentage ownership has declined to less than 50% of our common stock. As a result, the Company is no
longer considered a controlled company under NASDAQ rules and is now subject to and required to implement the heightened corporate
governance rules of the exchange.
We operate on the basis of a 52/53-week fiscal year ending on the Tuesday closest to December 31. Fiscal years 2012 and 2013 contained 52
weeks. Fiscal year 2011 contained 53 weeks. Comparable store sales percentages for fiscal 2011 presented elsewhere in this report are calculated
excluding the 53 week.
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Table of Contents
Financial information about segments:
We operate in three key business segments, which are supported by a centralized corporate operation:
• The “company-owned restaurants” segment includes the restaurants that we own. These restaurants have similar investment criteria,
economic characteristics and operating characteristics.
• The “manufacturing” segment produces and distributes bagel dough and other products to our company-owned restaurants, licensees
and franchisees and other third parties.
• The “franchise and license” segment earns royalties and other fees from the use of trademarks and operating systems developed for the
Einstein Bros. and Manhattan Bagel brands.
• The “corporate support” unit provides finance, administrative and other overhead support to the three key business segments. Interest on
our debt and depreciation on our assets are recorded within this unit.
See Note 19 to the consolidated financial statements included in Item 8 of this 10-K for the financial results by segment for fiscal years 2011,
2012 and 2013.
Narrative description of business:
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