Panera Bread 2003 Annual Report Download - page 22

primarily due to the impact of a full year's depreciation of prior year's capital expenditures and increased
capital expenditures in the current year.
General and administrative expenses were $28.1 million, or 7.9% of total revenue, and $25.0 million, or
9.0% of total revenue, for the Ñfty-two weeks ended December 27, 2003 and December 28, 2002, respectively.
The decrease in the general and administrative expense rate between 2003 and 2002 results primarily from
higher revenues, which help leverage general and administrative expenses, and from decreased bonus costs.
Pre-opening expenses, which consist primarily of labor and food costs incurred during in-store training
and preparation for opening, exclusive of manager training costs which are included in other operating
expenses, of $1.5 million, or 0.4% of total revenue, for the Ñfty-two weeks ended December 27, 2003 were
consistent with the $1.1 million, or 0.4% of total revenue, of pre-opening expenses for the Ñfty-two weeks
ended December 28, 2002.
Operating ProÑt
Operating proÑt for the Ñfty-two weeks ended December 27, 2003 increased to $49.9 million, or 14.0% of
total revenue, from $34.8 million, or 12.5% of total revenue, for the Ñfty-two weeks ended December 28, 2002.
Operating proÑt for the Ñfty-two weeks ended December 27, 2003 rose as a result of operating leverage that
results from opening 29 Company bakery-cafes in 2003 as well as the factors described above.
Other Expense
Other expense for the Ñfty-two weeks ended December 27, 2003 increased to $1.2 million, or 0.3% of
total revenue, from $0.3 million, or 0.1% of total revenue, for the Ñfty-two weeks ended December 28, 2002.
The increase in other expense results primarily from increased operating fee payments to the minority interest
owner. See Note 12 for additional information.
Minority Interest
Minority interest represents the portion of the Company's operating proÑt that is attributable to the
ownership interest of our minority interest owner.
Income Taxes
The provision for income taxes increased to $17.6 million for the Ñfty-two weeks ended December 27,
2003 compared to $12.5 million for the Ñfty-two weeks ended December 28, 2002. The tax provisions for the
Ñfty-two weeks ended December 27, 2003 and December 28, 2002 reÖects a consistent combined federal,
state, and local eÅective tax rate of 36.5%.
Income Before Cumulative EÅect of Accounting Change
Income before cumulative eÅect of accounting change for the Ñfty-two weeks ended December 27, 2003
increased $8.9 million, or 40.8%, to $30.6 million, or $1.01 per diluted share, compared to income before
cumulative eÅect of accounting change of $21.8 million, or $0.73 per diluted share, for the Ñfty-two weeks
ended December 28, 2002. The increase in income before cumulative eÅect of accounting change in 2003 was
primarily due to the operating leverage from the opening of 23 bakery-cafes in 2002 that were open for a full
year in 2003 and leverage from opening 29 bakery-cafes in 2003.
Cumulative EÅect of Accounting Change
EÅective December 29, 2002, the Company adopted the provisions of SFAS 143, ""Accounting for Asset
Retirement Obligations.'' SFAS 143 addresses Ñnancial accounting and reporting for obligations associated
with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement
requires the Company to record an estimate for costs of retirement obligations that may be incurred at the end
of lease terms of existing bakery-cafes or other facilities. Upon adoption of SFAS 143, the Company
recognized a one-time cumulative eÅect charge of approximately $0.2 million (net of deferred tax beneÑt of
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