Panera Bread 2007 Annual Report Download - page 69

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which represents the fair value of re-acquired territory rights, which was in accordance with EITF Issue 04-1
effective for acquisitions in reporting periods beginning after October 13, 2004, and favorable and unfavorable lease
agreements, and $13.0 million to goodwill.
Subsequent to the original allocation of purchase price for the aforementioned acquisitions to the various
tangible and intangible assets, the Company had approximately $0.2 million of adjustments during fiscal year 2007,
which resulted in a net $0.2 million decrease to goodwill in the accompanying Consolidated Balance Sheets.
Further, the pro forma impact of the acquisitions on prior periods is not presented, as the impact of the series of
individually immaterial business combinations completed during fiscal year 2007 are not material in the aggregate
to reported results.
In total, the Company has approximately $2.5 million of accrued purchase price as of December 25, 2007
affiliated with the acquisitions completed in fiscal 2006 and 2007, which is anticipated to be paid within the next
twelve months. During the fiscal year ended December 25, 2007, the Company paid approximately $9.6 million,
including accrued interest, of previously accrued acquisition purchase price in accordance with the asset purchase
agreements. There were no accrued purchase price payments made in the fiscal years ended December 26, 2006 or
December 27, 2005.
4. Short-term Investments
At December 25, 2007, the Company’s short-term investments consist of a private placement of units of
beneficial interest in the Columbia Strategic Cash Portfolio (the “Columbia Portfolio”), which is an enhanced cash
fund sold as an alternative to money-market funds. The Company has historically invested a portion of its cash
balances on hand in this fund; however, in prior periods, the amounts were appropriately classified as trading
securities in Cash and Cash Equivalents in the Consolidated Balance Sheets as the fund was considered both short-
term and highly liquid in nature. These investments are subject to credit, liquidity, market and interest rate risk. For
example, the Columbia Portfolio includes investments in certain asset backed securities and structured investment
vehicles that are collateralized by sub-prime mortgage securities or related to mortgage securities, among other
assets. As a result of adverse market conditions that have unfavorably affected the fair value and liquidity
availability of collateral underlying the Columbia Portfolio, the Columbia Portfolio was overwhelmed with
withdrawal requests from investors and it was closed with a restriction placed upon the cash redemption ability
of its holders in the fourth quarter of 2007. As such, the Company classified the Columbia Portfolio units in short-
term investments rather than cash and cash equivalents in the accompanying Consolidated Balance Sheets as of
December 25, 2007.
These Columbia Portfolio units are no longer trading and have no readily determinable market value. As a
result, the Company assessed the fair value of the underlying collateral for the Columbia Portfolio through review of
current investment ratings, as available, coupled with the evaluation of the liquidation value of assets held by each
investment and their subsequent distribution of cash. The Company then utilized this assessment of the underlying
collateral from multiple indicators of fair value, which were then discounted to reflect the expected timing of
disposition and market risks to arrive at an estimated fair value of the Columbia Portfolio units of $0.960 per unit as
of December 25, 2007. Accordingly, the Company recognized an unrealized loss on the Columbia Portfolio units of
$1.0 million in the fiscal year ended December 25, 2007. Giving effect to these losses, the Company’s investment in
the Columbia Portfolio at December 25, 2007 includes an estimated fair value of approximately $23.2 million.
Information and the markets relating to these investments remain dynamic, and there may be further declines in the
value of these investments, the value of the collateral held by these entities, and the liquidity of the Company’s
investments. To the extent the Company determines there is a further decline in fair value, the Company may
recognize additional unrecognized losses in future periods up to the aggregate amount of these investments. As of
December 25, 2007, the Company has received $2.4 million of cash redemptions subsequent to the withdrawal
restriction, and recognized $0.03 million of realized losses. Subsequent to the Company’s December 25, 2007 fiscal
year end and through February 22, 2008, the date of the Company’s 2007 fiscal year Form 10-K filing, the Company
59
PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)