Panera Bread 2007 Annual Report Download - page 52

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Minority interests will be recharacterized as noncontrolling interests and will be reported as a component of equity
separate from the parent’s equity, and purchases or sales of equity interests that do not result in a change in control
will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will
be included in consolidated net income on the face of the income statement and upon a loss of control, the interest
sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings.
SFAS No. 160 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years, except for the presentation and disclosure requirements, which will apply
retrospectively. We are currently evaluating the potential impact that the adoption of this statement will have on our
future consolidated financial statements. Currently, only our 51 percent interest in Paradise would be impacted.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We manage our commodity risk in several ways. On occasion, we have entered into swap agreements to
manage our fluctuating butter prices. All derivative instruments are entered into for other than trading purposes. As
of December 25, 2007, we did not have any derivative instruments. In addition, we purchase certain commodities,
such as flour and coffee, for use in our business. These commodities are sometimes purchased under agreements of
one month to one year time frames usually at a fixed price. As a result, we are subject to market risk that current
market prices may be above or below our contractual price.
We are also exposed to market risk primarily from fluctuations in interest rates on our revolving credit facility.
Our revolving credit facility provides for a $75.0 million secured facility under which we may select interest rates
equal to (1) the Base Rate (which is defined as the higher of the Bank of America prime rate and the Federal funds
rate plus 0.50%) or (2) LIBOR. Our borrowings were from a $75.0 million LIBOR rate loan outstanding under our
credit facility at December 25, 2007. A hypothetical one-point interest rate change on the outstanding balance of our
borrowings at December 25, 2007 would have approximately $0.08 million pre-tax impact on our results of
operations.
We intend to expand our operations into Canadian markets in 2008, primarily through franchise agreements.
As of December 25, 2007, we had no foreign exchange rate fluctuation risk.
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