DDRX » Topics » Company-Operated Locations

These excerpts taken from the DDRX 10-K filed Oct 8, 2008.

Company-Operated Locations

During the year ended June 27, 2007, the Company sold leaseholds and related assets of 32 stores to Starbucks Corporation and seven stores to other third parties. Our strategic direction is currently focused on growing the wholesale business segment and the related distribution channels, including franchise stores. As a result, we have narrowed our focus of the retail business segment primarily to franchise operations. As of June 25, 2008, we were a party to leases for 5 company-operated retail locations.

Company-Operated
Locations

During the year ended June 27, 2007, the Company sold leaseholds and related assets of 32 stores to Starbucks
Corporation and seven stores to other third parties. Our strategic direction is currently focused on growing the wholesale business segment and the related distribution channels, including franchise stores. As a result, we have narrowed our
focus of the retail business segment primarily to franchise operations. As of June 25, 2008, we were a party to leases for 5 company-operated retail locations.

FACE="Times New Roman" SIZE="2">Franchised Stores

All of our Gloria Jean’s locations are operated on leased premises, 111 of
which are franchised. Approximately 40% of the leased premises presently occupied by Gloria Jean’s franchised outlets are leased by us, and we have entered into sublease agreements with the franchisees on a cost pass-through basis. We, however,
remain obligated under the lease in all such cases. As further discussed below under the heading “Financial Condition and Liquidity and Capital Resources—Commitments and Contractual Obligations,” our maximum theoretical future
exposure under these leases at June 25, 2008, computed as the sum of all remaining lease payments through the expiration dates of the respective leases, was $13,360,000. In the future, new franchisees will generally be required to enter into
master leases directly with the landlord. This will also be the case when current leases are up for renewal. Gloria Jean’s stores are designed to accommodate locations in various sizes, ranging from 170 square foot kiosk outlets (which sell
principally coffee drinks and other beverages) to 2,000 square foot full service stores.

 


12







Table of Contents






Item 3.Legal Proceedings.

FACE="Times New Roman" SIZE="2">In the ordinary course of our business, we may become involved in legal proceedings from time to time. Material pending legal proceedings to the business, to which we became or were a party during the current fiscal
year or subsequent thereto, but before the filing of this report, are summarized below:

On September 21, 2006, a purported class
action complaint entitled Jason Reid; Kimberly Cornia, et al. v. Diedrich Coffee., et al. was filed against the Company in United States District Court Central District of California by two former employees, who worked in the positions of
team member and shift manager. A second similar purported class action complaint entitled Deborah Willems, et al. v. Diedrich Coffee., et al. was filed in Orange County, California Superior Court on February 2, 2007, on behalf of
another former employee who worked in the position of general manager. These cases currently involve the issue of whether employees and former employees who worked in California stores during specified time periods were deprived of overtime pay,
missed meal and rest breaks. In addition to unpaid overtime, these cases seek to recover waiting time penalties, interest, attorneys’ fees and other types of relief on behalf of the current and former employees in the purported class.

We have entered into a settlement with the plaintiffs in the Reid v. Diedrich lawsuit. This settlement is subject to court
approval. As of June 25, 2008, we have estimated that the required amount to settle this claim is $693,000 and have recorded an accrual for this amount included in general and administrative expenses in the accompanying consolidated statement
of operations.

We have entered into a settlement with the plaintiffs in the Willems v. Diedrich lawsuit. This settlement is subject
to court approval. As of June 25, 2008, we have estimated that the required amount to settle this claim is $251,000 and have recorded an accrual for this amount included in general and administrative expenses in the accompanying consolidated
statement of operations.

Based on our examination of these matters and our experience to date, we have recorded our best estimate of
liability with respect to these matters. However, the ultimate liability cannot be determined with certainty.

 





Item 4.Submission of Matters to a Vote of Security Holders.
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">None.

 


13







Table of Contents


EXCERPTS ON THIS PAGE:

10-K (2 sections)
Oct 8, 2008
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki