Panera Bread 2003 Annual Report Download - page 43

PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
entities commonly referred to as special-purpose entities for periods ending after December 15, 2003.
Application by public entities for all other types of entities is required in Ñnancial statements for periods
ending after March 15, 2004. Adoption of the required sections of FIN 46, as modiÑed and interpreted,
including the provisions of FIN 46R, did not have a material eÅect on the Company's consolidated Ñnancial
statements or disclosures. The Company intends to adopt the remaining sections of this guidance when
required in Ñscal 2004. The Company does not expect adoption of FIN 46, as modiÑed and interpreted,
including the provisions of FIN 46R, to have a signiÑcant impact on the Company's Ñnancial statements or
disclosures.
In May 2003, the FASB issued SFAS 150, ""Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity.'' This Statement establishes standards for how an issuer
classiÑes and measures certain Ñnancial instruments with characteristics of both liabilities and equity. It
requires an issuer classify a Ñnancial instrument within its scope as a liability, or an asset in some
circumstances. SFAS 150 is eÅective for Ñnancial instruments entered into or modiÑed after May 31, 2003,
and otherwise is eÅective at the beginning of the Ñrst interim period beginning after June 15, 2003, except that
certain provisions have been deferred indeÑnitely pursuant to FSP No. FAS 150-3. There was no impact on
the Company's Ñnancial statements upon adoption in Ñscal 2003.
3. Acquisitions
On January 9, 2003, the Company purchased from a franchisee substantially all of the assets of four
operating bakery-cafes, as well as the area development rights for the Louisville and Lexington, Kentucky
markets for a purchase price of $5.5 million. Of the purchase price, $5.0 million was paid in cash at the
acquisition date and $0.5 million was paid, with interest, in cash six months from the acquisition date. The
acquisition price was paid with cash on hand. The Consolidated Statements of Operations include the results
of operations of the four operating bakery-cafes from the date of acquisition. The pro forma impact of the
acquisition on prior periods is not presented, as the impact is not material to reported results. The Company
allocated the purchase price to the assets acquired in the acquisition at their estimated fair values with the
remainder allocated to tax deductible goodwill as follows: $1.7 million to Ñxed assets, $0.1 million to
inventories, and $3.7 million to goodwill.
On February 1, 2003, the Company purchased from a franchisee substantially all of the assets of one
operating bakery-cafe, the furniture, Ñxtures, and equipment of two closed locations, and the area development
rights for the Dallas market for a cash purchase price of $1.3 million with a commitment to purchase the
furniture, Ñxtures, and equipment of an additional bakery-cafe when it is closed for approximately $0.2 mil-
lion. The acquisition price was paid with cash on hand. The Consolidated Statements of Operations include
the results of operations of the one operating bakery-cafe from the date of acquisition. The pro forma impact
of the acquisition on prior periods is not presented, as the impact is not material to reported results. The
Company allocated the purchase price to the assets acquired in the acquisition at their estimated fair values
with the remainder allocated to tax deductible goodwill as follows: $0.9 million to Ñxed assets and $0.4 million
to goodwill.
On November 2, 2003, the Company purchased from a franchisee substantially all of the assets of twelve
bakery-cafes, two of which were under construction, as well as the area development rights for the Toledo,
Ohio and Ann Arbor, Michigan markets for a purchase price of approximately $14.1 million plus the
assumption of certain liabilities, including those associated with bakery-cafe construction. Of the purchase
price, $13.4 million was paid in cash at the acquisition date and $0.7 million will be paid, with interest, four
months from the acquisition date. The acquisition price was paid with cash on hand. The Consolidated
Statements of Operations will include the results of operations from the operating bakery-cafes from the date
of the acquisition. The pro forma impact of the acquisition on prior periods is not presented, as the impact is
not material to reported results. The Company allocated the purchase price to the assets acquired and
39