Panera Bread 2004 Annual Report Download - page 29

remodeling existing bakery-cafes, for developing, remodeling, and maintaining fresh dough facilities, and for enhancements of
information systems. For the fifty-two weeks ended December 25, 2004, the Company met its requirements for capital with cash from
operations and proceeds from the exercise of stock options.
As of December 25, 2004 and December 27, 2003, the Company had investments of $28.4 million and $9.0 million, respectively,
in United States Treasury Notes and Mortgage Backed Government Notes. Investments are classified as short or long-term in the
accompanying consolidated balance sheet based upon their stated maturity dates. As of December 25, 2004, all investments were
classified as held-to-maturity as the Company has the intent and ability to hold the securities to maturity. Held-to-maturity securities
are stated at amortized cost, adjusted for amortization of premiums to maturity, which approximates fair value at December 25, 2004.
Funds provided by operating activities for the fifty-two weeks ended December 25, 2004 were $84.3 million compared to $73.1
million (as restated) for the fifty-two weeks ended December 27, 2003. For 2004, funds provided consisted primarily of $38.6 million
from net income, $25.3 million from depreciation and amortization, $4.3 million from the tax benefit from stock option exercises, $6.0
million from decreased deferred taxes due principally to utilization of net operating loss carryforwards, $10.6 million from increased
accrued expenses, and $7.7 million from increased deferred rent, partially offset by $4.9 million from increased trade and other
accounts receivable. For 2003, funds provided consisted primarily of $30.4 million from net income, $18.3 million (as restated) from
depreciation, $6.8 million from the tax benefit from stock option exercises, $8.8 million from decreased deferred taxes due principally
to utilization of net operating loss carryforwards, and $5.6 million (as restated) from increased accrued expenses.
At December 25, 2004 and December 27, 2003, the Company had charitable contribution carryforwards of $3.6 million and $8.6
million, respectively, which expire in the years 2005-2008. At December 27, 2003, the Company had federal jobs tax credit
carryforwards of $0.1 million and federal alternative minimum tax credit carryforwards of $3.5, million which were both fully utilized
during the fiscal year ended December 25, 2004. The Company reevaluates the positive and negative evidence impacting the
realizability of its deferred income tax assets on an annual basis. A valuation allowance of $0.5 million and $3.6 million at December
25, 2004 and December 27, 2003, respectively, is provided to reduce the deferred tax assets to a level which, more likely than not, will
be realized.
Total capital expenditures for the fifty-two weeks ended December 25, 2004 were $80.4 million and were primarily related to the
opening of 54 Company-owned bakery-cafes in 2004, costs incurred on Company-owned bakery-cafes to be opened in the first and
second quarter of 2005, and the maintaining or remodeling of existing bakery-cafes and fresh dough facilities. Additionally, the
Company acquired one operating bakery-cafe from a franchisee for $0.2 million and acquired the membership interest of the former
minority interest owner for $4.9 million plus the transfer of two operating bakery-cafes and one bakery-cafe under construction. See
Note 4 to the Consolidated Financial Statements for further information on this transaction. Total capital expenditures were $45.8
million for the fifty-two weeks ended December 27, 2003 and were primarily related to the opening of 29 Company-owned bakery-
cafes in 2003, costs incurred on Company-owned bakery-cafes to be opened in the first and second quarter of 2004, the opening of
three fresh dough facilities, and the maintaining or remodeling of existing bakery-cafes and fresh dough facilities. Additionally, the
Company acquired 15 operating bakery-cafes, two closed bakery-cafes, and two bakery-cafes under construction from franchisees for
$21.0 million in 2003. These expenditures were funded by cash from operating activities and the proceeds from the exercise of stock
options.
On December 19, 2003, the Company entered into a $10.0 million unsecured revolving line of credit (revolver). The revolver
matures December 19, 2006 and has an interest rate of LIBOR plus 0.75% to 1.5% depending on the Company’s leverage ratio and
type of loan (resulting in interest rates of approximately 3.1% to 3.8% at December 25, 2004). The revolver contains restrictions
relating to future indebtedness, liens, investments, distributions, mergers, acquisition, or sale of assets and certain leasing transactions.
The revolver also requires the maintenance of certain financial ratios and covenants. As of December 25, 2004, the Company was in
compliance with all debt covenants. At December 25, 2004, the Company had $9.8 million available under the revolver with $0.2
million utilized by an outstanding letter of credit. The Company has not borrowed under its revolver in any of the last three fiscal
years.
Financing activities provided $5.2 million for the fifty-two weeks ended December 25, 2004 and $6.2 million for the fifty-two
weeks ended December 27, 2003. The financing activities in the fifty-two weeks ended December 25, 2004 included $3.6 million
from the exercise of stock options, $1.1 million from the issuance of common stock under employee benefit plans, and $0.6 million
from capital investments by our former minority interest owner. The financing activities for the fifty-two weeks ended December 27,
2003 included $4.2 million from the exercise of stock options, $0.8 million from the issuance of common stock under employee
benefit plans, and $1.2 million from capital investments by our minority interest owner.
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