Panera Bread 2006 Annual Report Download - page 68

March 29 June 28 September 27 December 27
Fiscal 2005 — Quarters Ended (pro forma)(1)
Revenues ............................ 144,137 151,908 158,072 186,158
Operating profit ....................... 19,288 16,741 18,106 26,960
Net income .......................... 12,222 10,703 11,778 17,480
Basic earnings per share:
Net income ......................... $ 0.40 $ 0.35 $ 0.38 $ 0.56
Diluted earnings per share:
Net income ......................... $ 0.39 $ 0.34 $ 0.37 $ 0.55
(1) In fiscal 2006, the Company adopted a new quarterly fiscal calendar whereby each of its quarters included
13 weeks (4 week, 5 week, and 4 week period progressions in each quarter), rather than its prior quarterly fiscal
calendar which had 16 weeks in the first quarter and 12 weeks in the second, third, and fourth quarters (4 week
period progressions in each quarter). Pro forma information above presents the fiscal 2005 quarterly financial
results as if the new quarterly calendar had been adopted for fiscal 2005. In addition, effective December 28,
2005, the beginning of the Company’s first quarter of 2006, the Company adopted the fair value recognition
provisions of SFAS 123R, which requires all stock-based compensation, including grants of employee stock
options, to be recognized in the statement of operations based on their fair values. The Company adopted this
accounting treatment using the modified prospective transition method, as permitted under SFAS 123R;
therefore results for prior periods have not been restated. Prior to the adoption of SFAS 123R, the Company
accounted for stock-based compensation using the intrinsic value method prescribed in Accounting Principles
Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Accordingly,
stock-based compensation was included as pro forma disclosure in the financial statement footnotes. Footnote
option expense would have decreased pro forma diluted earnings per share above for the first, second, third, and
fourth quarters by $0.03, $0.04, $0.03, and $0.03, respectively.
(2) The fourth quarter of 2006 diluted earnings per share of $0.59 includes a charge of $0.03 per diluted share
related to the Paradise acquisition.
20. Subsequent Event
On February 1, 2007, the Company purchased 51 percent of the outstanding stock of Paradise, owner and
operator of 23 locations including 22 bakery-cafes, 17 of which are in the Phoenix market, and one commissary, and
franchisor of 23 locations including 22 bakery-cafes and one commissary, at a transaction value of $21.1 million.
Approximately $20.1 million of the acquisition price was paid with cash on hand at the time of closing with the
remaining approximately $1.0 million to be paid with interest in 2007. In addition, Panera Bread has the right to
purchase the remaining 49 percent of the outstanding stock of Paradise after January 1, 2009 at a contractually
determined value, which approximates fair value. Also, if Panera Bread has not exercised its right to purchase the
remaining 49 percent of the outstanding stock of Paradise, the remaining Paradise owners have the right to purchase
Panera Bread’s 51 percent ownership interest in Paradise after June 30, 2009 for $21.1 million. The Consolidated
Statements of Operations will include the Paradise results of operations from the date of the acquisition. The
Company will allocate the purchase price to the tangible and intangible assets acquired and liabilities assumed in
the acquisition at their estimated fair values with any remainder allocated to tax deductible goodwill.
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PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)