Panera Bread 2006 Annual Report Download - page 36

and the remodeling and expansion of existing fresh dough facilities, and $10 million to $11 million on our concept,
information technology, and infrastructure. We expect future bakery-cafes will require, on average, an investment
per bakery-cafe (excluding pre-opening expenses which are expensed as incurred) of approximately $0.9 million,
which is net of landlord allowances. We expect to fund these expenditures principally through internally generated
cash flow and cash from the exercise of employee stock options.
In addition to our capital expenditure requirements, we have certain other contractual and committed cash
obligations. Our contractual cash obligations consist of certain purchase obligations and noncancelable operating
leases for our bakery-cafes, fresh dough facilities and trucks, and administrative offices. Lease terms for our trucks
are generally for five to seven years. Lease terms for our bakery-cafes, fresh dough facilities, and administrative
offices are generally for ten years with renewal options at most locations and generally require us to pay a
proportionate share of real estate taxes, insurance, common area, and other operating costs. Many bakery-cafe
leases provide for contingent rental (i.e., percentage rent) payments based on sales in excess of specified amounts.
Certain of our lease agreements provide for scheduled rent increases during the lease terms or for rental payments
commencing at a date other than the date of initial occupancy. See Note 2 to the Consolidated Financial Statements
for further information on our accounting for leases. We expect cash expenditures under these lease obligations and
cash expenditures under our purchase obligations to be as follows:
Total In 2007 2008-2009 2010-2011 After 2011
Payments Due by Period as of December 26, 2006 (in thousands)
Operating Leases(1) ..................... $661,156 $ 52,853 $105,378 $104,123 $398,802
Purchase Obligations(2) .................. 51,200 51,200 — — —
Total .............................. $712,356 $104,053 $105,378 $104,123 $398,802
(1) See Note 10 to the Consolidated Financial Statements for further information.
(2) Relates to certain commodity agreements where we are committed at December 26, 2006 to purchase a fixed
quantity at a fixed price over a time period ranging from three months to one year, the majority of which are for
a time period up to six months.
Off-Balance Sheet Arrangement — We are the prime tenant for operating leases of 16 franchisee locations and
a guarantor for operating leases of 23 locations of our former Au Bon Pain Division, or its franchisees. The leases
have terms expiring on various dates from March 2007 to December 2018 and have a potential amount of future
rental payments of approximately $25.8 million. The obligation from these leases will continue to decrease over
time as these operating leases expire. As the guarantees were initiated prior to December 31, 2002, we have not
recorded a liability for these guarantees pursuant to the provisions of FASB Interpretation Number (FIN) 45,
“Guarantor’s Accounting and Disclosure Requirements For Guarantees, Including Indirect Guarantees of Indebt-
edness of Others, an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation
No. 34.” Also, we have not had to make any payments related to the leases and currently do not anticipate making
payments in the future. Au Bon Pain or the applicable franchisee continues to have primary liability for these
operating leases. Potential future commitments consist of:
Total In 2007 2008-2009 2010-2011 After 2011
Potential Commitments as of December 26, 2006 (in thousands)
Subleases and Lease Guarantees(1) .............. $25,782 $5,586 $8,375 $4,454 $7,367
(1) Represents aggregate minimum requirement — see Note 10 to the Consolidated Financial Statements for
further information.
In November 2002, we signed an agreement with Dawn Food Products, Inc. to provide sweet goods for the
period 2003-2007. This agreement was subsequently extended to May 2008. The agreement with Dawn is
structured as a cost plus agreement.
We have Confidential and Proprietary Information and Non-Competition Agreements (Agreements) with
certain employees. These Agreements contain a provision whereby employees would be due a certain number of
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