Panera Bread 2003 Annual Report Download - page 50

PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
December 27, 2003 and December 28, 2002, the Company had federal jobs tax credit carryforwards of
approximately $0.1 million and $1.2 million, respectively, which expire in the years 2014-2015, and charitable
contribution carryforwards of approximately $8.6 million and $6.5 million, respectively, which expire in the
years 2005-2008. In addition, the Company had federal alternative minimum tax credit carryforwards of
approximately $3.5 million at December 27, 2003 and December 28, 2002 which are available to reduce future
regular federal income taxes over an indeÑnite period. The Company reevaluates the positive and negative
evidence impacting the realizability of its deferred income tax assets periodically based on annual estimates of
taxable income.
11. Deposits and Other
During Ñscal 1997, the Company established a deposit program with its food products and supplies
distributor, which allows the Company to receive lower distribution costs. The savings exceed the carrying
value of the deposit. The deposit is Öexible and the Company may at times decrease the amount on deposit, at
its discretion. The deposit outstanding was $3.0 million and $2.4 million at December 27, 2003 and
December 28, 2002, respectively.
During Ñscal 1994, the Company established a company-owned life insurance (""COLI'') program
covering a substantial portion of its employees to help manage long-term employee beneÑt cost and to obtain
tax deductions on interest payments on insurance policy loans. However, in 1996, tax law changes adopted as
part of the Health Insurance Portability and Accountability Act signiÑcantly reduced the level of tax beneÑts
recognized under the Company's COLI program. As a result, the Company froze this program in 1998. It
appears the program will end in 2016 based on actuarial estimates.
At December 27, 2003 and December 28, 2002, the cash surrender value of $9.5 million and
$11.2 million, respectively, the mortality income receivable of $1.3 million and $2.8 million, respectively, and
the insurance policy loans of $9.5 million and $11.1 million, respectively, related to the COLI program were
netted and included in other assets in the consolidated balance sheets. Mortality income receivable represents
the dividend or death beneÑts we are due from our insurance carrier at the respective dates. The insurance
policy loans are collateralized by the cash values of the underlying life insurance policies and require interest
payments at a rate of 9.9% for the year ended December 27, 2003. Interest accrued on insurance policy loans is
netted with other COLI related income statement transactions in other income (expense) in the consolidated
statements of operations, which netted $0.1 million and ($0.3) million in 2003 and 2002, respectively, the
components of which are as follows (in thousands):
2003 2002
Cash value lossÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(1,635) $ (988)
Mortality income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,318 1,728
Interest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (626) (1,017)
$ 57 $ (277)
The cash value loss is the cumulative change in cash surrender value for the year and is adjusted
quarterly. Mortality income is recorded periodically as charges are deducted from cash value. These amounts
are recovered by the Company through payment of death beneÑts and mortality dividends received. Interest
expense is recorded on the accrual basis.
12. Joint Venture Minority Interest Owner
In October 2001, the Company, through Artisan Bread, LLC, an indirect subsidiary (LLC), entered into
a limited liability company operating agreement with its former president as a minority interest owner. The
new LLC will develop and manage up to Ñfty bakery-cafes in the Northern Virginia and Central Pennsylvania
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