Panera Bread 2007 Annual Report Download - page 74

for scheduled rent increases during the lease terms or for rental payments commencing at a date other than the date
of initial occupancy.
Aggregate minimum requirements under non-cancelable operating leases, excluding contingent liabilities, as
of December 25, 2007, were as follows (in thousands):
2008 ............................................................... $ 73,438
2009 ............................................................... 73,653
2010 ............................................................... 73,479
2011 ............................................................... 72,863
2012 ............................................................... 73,192
Thereafter ........................................................... 550,968
$917,593
Rental expense under operating leases was approximately $64.4 million, $45.6 million, and $33.0 million in
fiscal 2007, 2006, and 2005, respectively, which included contingent (i.e. percentage rent) payments of $1.0 million,
$0.8 million, and $0.8 million, respectively.
In accordance with SFAS No. 143, as interpreted by FIN No. 47, the Company has recognized asset retirement
obligations for the future cost to comply with lease obligations at the end of a lease as it relates to tangible long-lived
assets. The liability as of December 25, 2007 and December 26, 2006 was $2.9 million and $2.2 million,
respectively, and is included in other long-term liabilities in the accompanying Consolidated Balance Sheets.
Lease Guarantees
The Company is the prime tenant for operating leases of 15 franchisee locations and a guarantor for operating
leases of 15 locations of its former Au Bon Pain division, or its franchisees. These leases have terms expiring on
various dates from January 2008 to December 2022 and have a potential amount of future rental payments of
approximately $20.0 million as of December 25, 2007. The obligation from these leases will generally continue to
decrease over time as these operating leases expire. The Company has not recorded a liability for these guarantees
pursuant to the provisions of FIN No. 45, Guarantor’s Accounting and Disclosure Requirements For Guarantees,
Including Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No. 5, 57, and 107
and Rescission of FASB Interpretation No. 34, as of December 25, 2007, as the Company does not believe it is
probable it would be required to perform under any guarantees at that date. Also, the Company has not had to make
any payments related to the leases. Au Bon Pain or the applicable franchisees continue to have primary liability for
these operating leases. Future commitments as of December 25, 2007 under these leases were as follows (in
thousands):
2008 ................................................................ $ 4,594
2009 ................................................................ 3,697
2010 ................................................................ 2,208
2011 ................................................................ 1,787
2012 ................................................................ 1,734
Thereafter ............................................................ 5,941
$19,961
The Company’s 51 percent owned Paradise subsidiary has guaranteed 10 operating leases on behalf of its
franchisees. The leases have terms expiring on various dates from October 2009 to January 2014 and have a
potential amount of future rental payments of approximately $3.2 million as of December 25, 2007. The obligation
from these leases will generally continue to decrease over time as these operating leases expire. There is no liability
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PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)