Panera Bread 2007 Annual Report Download - page 67

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 tangible and intangible assets acquired in the
acquisition at their estimated fair values with the remainder allocated to tax deductible goodwill as follows:
$0.2 million to inventories, $5.1 million to property and equipment, $7.1 million to intangible assets, which
represents the fair value of re-acquired territory rights and favorable lease agreements, $0.6 million to liabilities,
and $4.9 million to goodwill. As a result of the acquisition, the Company incurred a contractual settlement charge of
$0.4 million pursuant to EITF Issue 04-1, reflecting the termination of franchise agreements for certain bakery-
cafes that operated at a royalty rate lower than the Company’s current market royalty rates. The charge is reported as
other (income) expense, net in the accompanying Consolidated Statements of Operations.
On June 21, 2007, the Company also purchased substantially all of the assets of 22 bakery-cafes and the area
development rights for certain markets in Minnesota from its area developer, SLB of Minnesota, L.L.C., for a
purchase price of approximately $18.3 million, net of the $0.7 million contractual settlement charge determined in
accordance with EITF Issue 04-1, plus approximately $0.1 million in acquisition costs. Approximately $18.1 mil-
lion of the acquisition price was paid with cash on hand at the time of closing with the remaining approximately
$0.9 million to be paid with interest within 12 months of the closing date. 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 tangible and intangible assets acquired in the acquisition at their
estimated fair values with the remainder allocated to tax deductible goodwill as follows: $0.3 million to inventories,
$8.7 million to property and equipment, $2.2 million to intangible assets, which represents the fair value of re-
acquired territory rights and favorable lease agreements, $0.3 million to liabilities, and $7.5 million to goodwill. As
a result of the acquisition, the Company incurred a contractual settlement charge of $0.7 million pursuant to EITF
Issue 04-1, reflecting the termination of franchise agreements for certain bakery-cafes that operated at a royalty rate
lower than the Company’s current market royalty rates. The charge is reported as other (income) expense, net in the
accompanying Consolidated Statements of Operations.
On June 6, 2007, the Company sold substantially all of the assets of one bakery-cafe and the area development
rights for certain markets in Southern California to a new area developer, Pride Bakeries, LLC, for a sales price of
approximately $1.8 million, resulting in a gain of approximately $0.5 million, which is classified in other (income)
expense, net in the accompanying Consolidated Statements of Operations. Pride Bakeries, LLC, has also agreed to
develop 12 additional bakery-cafes in certain previously undeveloped Southern California markets.
On February 28, 2007, the Company purchased substantially all of the assets of four bakery-cafes, as well as
two bakery-cafes still under construction, and the area development rights for certain markets in California from its
area developer, R&S Bread Group, Inc., for a purchase price of approximately $5.1 million plus approximately
$0.02 million in acquisition costs. Approximately $4.6 million of the acquisition price was paid with cash on hand at
the time of closing, approximately $0.3 million plus accrued interest was paid in cash during the third quarter of
2007 with the remaining approximately $0.2 million to be paid with interest within twelve months of the closing
date. 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 tangible and intangible
assets acquired in the acquisition at their estimated fair values with the remainder allocated to tax deductible
goodwill as follows: $0.1 million to inventories, $2.7 million to property and equipment, $1.2 million to intangible
assets, which represents the fair value of re-acquired territory rights and favorable and unfavorable lease
agreements, and $1.1 million to goodwill.
On February 1, 2007, the Company purchased 51 percent of the outstanding stock of Paradise Bakery & Café,
Inc. (“Paradise”), then 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, for a
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PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)