Einstein Bros 2013 Annual Report Download - page 50

10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312514073832/d629623d10k.htm[9/11/2014 10:05:27 AM]
Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Deferred franchise and license revenue, which is included in other liabilities on the consolidated balance sheets, are summarized as follows:
January 1,
2013
December 31,
2013
(in thousands)
Deferred franchise and license revenue—current 495 719
Deferred franchise and license revenue—long-term 563 740
Deferred franchise and license revenue $ 1,058 $ 1,459
Gift Cards – Proceeds from the sale of gift cards are recorded as deferred revenue within accrued expenses, and recognized as revenue when
redeemed by the holder. There are no expiration dates on the Company’ s gift cards and the Company does not charge any service fees that would
result in a decrease to a customer’ s available balance.
While the Company will continue to honor all gift cards presented for payment, it may determine the likelihood of redemption to be remote
for certain gift card balances due to, among other things, long periods of inactivity. In these circumstances, to the extent the Company determines
there is no requirement for remitting balances to government agencies under unclaimed property laws, outstanding gift card balances may then be
recognized as breakage in the consolidated statements of income and comprehensive income as a component of company-owned restaurant sales.
Income from gift card breakage was $0.2 million, $0.9 million and $0.8 million for fiscal years 2011, 2012 and 2013, respectively.
Pre-opening Costs
Pre-opening costs, including rent, wages, food, marketing and other restaurant operating costs, are expensed as incurred prior to a restaurant
opening for business.
Advertising Costs
The Company expenses advertising costs as incurred except for expenses related to the development and production of a major commercial or
media campaign which are expensed during the period in which the advertisement is first presented by the media. Advertising costs were $9.8
million, $11.4 million and $10.9 million for fiscal years 2011, 2012 and 2013, respectively, and are included in company-owned restaurant costs in
the consolidated statements of income and comprehensive income. The Company had $0.8 million and $0.5 million of prepaid advertising expenses
as of January 1, 2013 and December 31, 2013, respectively, which are included as a component of prepaid expenses on the consolidated balance
sheets.
Leases and Deferred Rent
The Company leases all of its restaurant properties under operating leases. The Company also has equipment leases that qualify as either an
operating lease or capital lease.
For a lease that contains rent escalations, the Company records the total rent payable during the lease term on a straight-line basis over the
term of the lease and records the difference between rent paid and the straight-line rent expense as deferred rent payable. Incentive payments
received from landlords are recorded as an increase to deferred rent payable and are amortized on a straight-line basis over the lease term as a
reduction of
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Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
rent. As of January 1, 2013 and December 31, 2013, the Company had $6.2 million and $8.0 million, respectively, of deferred rent payable, net of
landlord incentives, recorded as a component of other liabilities on the consolidated balance sheets.
Net Income per Common Share