Panera Bread 2003 Annual Report Download - page 54

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PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
15. DeÑned Contribution BeneÑt Plan
The Panera Bread Company Savings Plan (the ""Plan'') was formed under Section 401(k) of the Code.
The Plan covers substantially all employees who meet certain service requirements. Participating employees
may elect to defer on a pre-tax basis up to 15% of his or her salary, subject to the limitations imposed by the
Code. The Plan provides for a matching contribution by the Company equal to 50% of the Ñrst 3% of the
participant's eligible pay. All employee contributions vest immediately. Company matching contributions vest
beginning in the second year of employment at 25% per year, and are fully vested after 5 years. The Company
contributed $0.3 million, $0.2 million and $0.2 million to the Plan in 2003, 2002 and 2001, respectively.
16. Business Segment Information
The Company operates three business segments. The Company Bakery-Cafe Operations segment is
comprised of the operating activities of the bakery-cafes owned by the Company, which includes the majority-
owned bakery-cafes. The Company-owned bakery-cafes conduct business under the Panera Bread or Saint
Louis Bread Company names. These bakery-cafes sell fresh baked goods, made-to-order sandwiches on
freshly baked breads, soups, salads, custom roasted coÅees, and other complementary products through on-
premise sales.
The Franchise Operations segment is comprised of the operating activities of the franchise business unit
which licenses qualiÑed operators to conduct business under the Panera Bread Company name and also of the
costs to monitor the operations of these bakery-cafes. Under the terms of the agreements, the licensed
operators pay royalties and fees to the Company in return for the use of the Panera Bread Company name.
The Fresh Dough Operations segment supplies fresh dough items and indirectly supplies proprietary
sweet good items through a contract manufacturing arrangement to both Company-owned and franchise-
owned bakery-cafes. The fresh dough is sold to both Company-owned and franchised bakery-cafes at a cost
equal to 27% of the retail value of the product. The sales and related costs to the franchise bakery-cafes are
separately stated line items in the Consolidated Statements of Operations. The operating proÑt related to the
sales to Company-owned bakery-cafes is classiÑed as a reduction of the costs in the food and paper products
line item on the Consolidated Statements of Operations.
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