Jamba Juice 2009 Annual Report Download - page 79

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Table of Contents


Advertising Costs—Advertising costs are expensed as incurred and were $8.6 million, $9.6 million and $1.6 million in fiscal 2008, fiscal 2007 and
fiscal 2006, respectively, and are classified as store operating expenses. The Company also receives advertising contributions from its franchisees. These
contributions are a contractual obligation of the franchisee and are recorded as an offset to advertising expense and were $1.6 million, $2.1 million and $1.5
million for fiscal 2008, fiscal 2007 and fiscal 2006, respectively.
Store Pre-opening Costs—Costs incurred in connection with start-up and promotion of new store openings as well as rent from possession date to
store opening date are expensed as incurred.
Comprehensive Income—Comprehensive income is defined as the change in equity during a period from transactions and other events, excluding
changes resulting from investments from owners and distributions to owners. Comprehensive income (loss) equals net income (loss) for all periods presented.
Income Taxes—The provision for income taxes is determined in accordance with the provisions of SFAS No. 109, Accounting for Income Taxes.
Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets
and liabilities due to a change in tax rates is recognized in income in the period that includes the enactment date. In establishing deferred income tax assets and
liabilities, management of the Company makes judgments and interpretations based on enacted tax laws and published tax guidance applicable to the
Company’s operations. The Company records deferred tax assets and liabilities and evaluates the need for valuation allowances to reduce deferred tax assets to
estimated realizable amounts. Changes in the Company’s valuation of the deferred tax assets or changes in the income tax provision may affect its annual
effective income tax rate.
In July 2006, the FASB issued FIN No. 48, Accounting for Uncertainty in Income Taxes. FIN No. 48 clarifies the accounting for uncertainty in
income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109 . FIN No. 48 prescribes a recognition threshold
and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This
pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
Effective January 10, 2007, the Company adopted the provisions of FIN No. 48 and the provisions of FIN No. 48 have been applied to all income tax
positions commencing on that date. There was no effect on beginning retained earnings of applying the provisions of FIN No. 48 in the consolidated balance
sheets as of January 10, 2007. The Company classifies estimated interest and penalties related to the underpayment of income taxes as a component of income
tax expense in the accompanying consolidated statements of operations.
Prior to fiscal 2007, the Company determined its tax contingencies in accordance with FASB Statement No. 5, Accounting for Contingencies. The
Company recorded estimated tax liabilities to the extent the contingencies were probable and could be reasonably estimated.
Common Stock Subject to Possible Redemption —With respect to the first business combination, which was approved and consummated, any
Public Stockholder who voted against the business combination could demand that the Company redeem his or her shares. The per share redemption price
equaled the amount in the Trust Fund as of the record date for determination of stockholders entitled to vote on the business combination divided by the
number of shares of common stock held by Public Stockholders at the consummation of the Offering. Accordingly, Public Stockholders holding 19.99% of
the aggregate number of shares owned by all
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