XML 38 R15.htm IDEA: XBRL DOCUMENT v2.4.0.8
Organization and Other Matters (Policies)
 9 Months Ended
Sep. 29, 2013
Accounting Policies [Abstract]  
Business

Business

Potbelly Corporation (the “Company” or “Potbelly”), through its wholly owned subsidiary, Potbelly Sandwich Works LLC, operates Potbelly Sandwich Works sandwich shops in 18 states and the District of Columbia. As of December 30, 2012 and September 29, 2013, the Company had 264 and 288 company-operated shops, respectively. During fiscal year 2012, the Company opened 31 new shops and closed one shop. During the 39 weeks ended September 29, 2013, the Company opened 25 new shops and closed one shop.

The Company also sells and administers franchises of new Potbelly Sandwich Works sandwich shops. The first domestic and international franchise locations administered by the Company opened during February 2011. As of the fiscal year ended 2012, five franchised shops were in operation domestically and ten franchised shops were in operation internationally. As of September 29, 2013, seven franchised shops were in operation in domestic locations and twelve franchised shops were in operation internationally.

The unaudited condensed consolidated financial statements and notes herein should be read in conjunction with the audited consolidated financial statements of Potbelly Corporation and its subsidiaries and the notes thereto included in the Company’s prospectus dated October 3, 2013, filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”), with the Securities and Exchange Commission (“SEC”) on October 4, 2013. The unaudited condensed consolidated financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the SEC regarding interim financial reporting. The December 30, 2012 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the SEC’s rules and regulations, although management believes that the disclosures are adequate and make the information presented not misleading. In the opinion of management, all adjustments, which are of a normal and recurring nature (except as otherwise noted), that are necessary to present fairly the Company’s financial position as of December 30, 2012 and September 29, 2013, its statement of operations for the 13 weeks and 39 weeks ended September 23, 2012 and September 29, 2013 and its statement of cash flows for the 39 weeks ended September 23, 2012 and September 29, 2013 have been included. The consolidated statements of operations for the interim periods presented herein are not necessarily indicative of the results to be expected for the full year.

The Company does not have any components of other comprehensive income (loss) recorded within its consolidated financial statements, and, therefore, does not separately present a statement of comprehensive income (loss) in its consolidated financial statements.
Principles of Consolidation

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of Potbelly Corporation; its wholly owned subsidiary, Potbelly Illinois, Inc. (“PII”); PII’s wholly owned subsidiaries, Potbelly Franchising, LLC, Potbelly Sandwich Works, LLC (“LLC”) and 17 of LLC’s wholly owned subsidiaries, collectively, the “Company.” All significant intercompany balances and transactions have been eliminated in consolidation. For the Company’s consolidated joint venture, non-controlling interest represents the non-controlling partner’s share of the assets, liabilities and operations related to the joint venture investment in Potbelly Airport II Boston, LLC, related to one shop located in the Boston Logan International Airport. The Company owns a seventy-five percent interest in this consolidated joint venture.
Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, primarily related to long-lived assets, income taxes, stock-based compensation and common stock equity valuations, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fiscal Year

Fiscal Year

The Company uses a 52/53-week fiscal year that ends on the last Sunday of the calendar year. Approximately every six or seven years a 53rd week is added. Fiscal 2012 consisted of 53 weeks. The fiscal quarters ended September 23, 2012 and September 29, 2013 each consisted of 13 weeks and the fiscal year-to-date periods ended September 23, 2012 and September 29, 2013 each consisted of 39 weeks.
Stock based Compensation

In accordance with ASC Topic 718, Compensation—Stock Compensation, stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite employee service period (generally the vesting period of the grant). For those options that are exercisable without restriction, the Company recognized $2.4 million and $2.3 million for the 39 weeks ended September 29, 2013 and for the 39 weeks ended September 23, 2012, respectively, with a corresponding increase to additional paid-in-capital. As of September 29, 2013, and September 23, 2012, the unrecognized stock compensation expense was $1.2 million and $2.1 million, respectively, which will be recognized through fiscal year 2018. The Company records stock based compensation expense within general and administrative expenses in the consolidated statements of operations.