Panera Bread 2004 Annual Report Download - page 46

Fiscal Year 2002
As Previously
Reported Adjustments As Restated
Consolidated Statement of Operations
Cost of food and paper products............................................................................................. $ 63,255 $ 115 $ 63,370
Occupancy .............................................................................................................................. 14,619 789 15,408
Total bakery-cafe expenses..................................................................................................... 169,017 904 169,921
Depreciation and amortization................................................................................................ 13,965 (171) 13,794
Total costs and expenses......................................................................................................... 247,451 733 248,184
Operating profit ...................................................................................................................... 34,774 (733) 34,041
Income before income taxes ................................................................................................... 34,275 (733) 33,542
Income taxes........................................................................................................................... 12,510 (268) 12,242
Net income.............................................................................................................................. $ 21,765 $ (465) $ 21,300
Basic earnings per common share .......................................................................................... $ 0.75 $ (0.01) $ 0.74
Diluted earnings per common share ....................................................................................... $ 0.73 $ (0.02) $ 0.71
4. Acquisitions
On October 30, 2004, the Company’s wholly-owned subsidiary, Artisan Bread, LLC (“Artisan”), became the owner of 100% of
the membership interests in Cap City Bread, LLC (“LLC”). Prior to the completion of this transaction, Artisan had owned
approximately 78.5% of the membership interests in LLC and the remaining membership interests had been owned by Capitol Dough,
Inc. (“Capitol Dough”), a Missouri corporation owned by Richard Postle, the Company’s former president (“Postle”), as a minority
interest owner. See Note 13 to the Consolidated Financial Statements for further information on this minority interest ownership
arrangement. As part of the transaction, LLC redeemed certain of the membership interests held by Capitol Dough in exchange for the
transfer to Capitol Dough of LLC’s interest in 3 bakery-cafes at cost, one of which was under construction at the acquisition date
(“redemption transaction”). In addition to the redemption transaction, Artisan acquired the remaining membership interests held by
Capitol Dough in exchange for a cash purchase price of approximately $4.8 million, which approximates fair value. Of this purchase
price, approximately $4.3 million was paid in cash at the acquisition date and, subject to certain offset rights, the remaining purchase
price will be paid, with interest, one year from the acquisition date. At the time of the acquisition, LLC operated 36 bakery-cafes in the
northern Virginia and central Pennsylvania markets. The results of operations of these bakery-cafes have been included in the
Company’s Consolidated Financial Statements since the date of formation of LLC. Following the completion of the transaction,
Artisan became the sole owner of LLC, which then owned 34 operating bakery-cafes in the northern Virginia and central Pennsylvania
markets. The 3 remaining bakery-cafes transferred to Postle, one of which was under construction at the acquisition date, will be
owned and operated by Postle and/or his affiliates as a franchisee. Postle and/or his affiliates have agreed to develop up to 9 additional
bakery-cafes in the previously undeveloped western Virginia and West Virginia territories. The pro forma impact of the acquisition on
prior periods is not presented as the impact is not material to reported results. The Company preliminarily allocated the purchase price,
including legal costs, to the membership interest and related intangibles acquired in the acquisition at their estimated fair values with
any remainder allocated to tax deductible goodwill as follows: $2.0 million to eliminate the minority interest balance, $0.3 million to
fixed assets, $0.2 million to intangible assets, which represents favorable lease agreements, and $2.4 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
net purchase price of approximately $14.2 million (includes $0.1 million paid in fiscal 2004). The acquisition price was paid with cash
on hand. The Consolidated Statements of Operations 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 liabilities assumed in the acquisition at their estimated
fair values with the remainder allocated to tax deductible goodwill as follows: $0.3 million to inventories, $5.6 million to fixed assets,
$1.4 million to liabilities, and $9.7 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, fixtures, 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, fixtures, and equipment of an additional bakery-cafe for
approximately $0.2 million. 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
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