Panera Bread 2007 Annual Report Download - page 75

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reflected for these guarantees pursuant to the provisions of FIN No. 45 as of December 25, 2007, as the Company
does not believe it is probable Paradise would be required to perform under any guarantees at that date. The
Company has not had to make any payments related to the leases. The applicable franchisee continues to have
primary liability for these operating leases. Future commitments as of December 25, 2007 under these leases were
as follows (in thousands):
2008 ................................................................. $ 876
2009 ................................................................. 884
2010 ................................................................. 712
2011 ................................................................. 365
2012 ................................................................. 187
Thereafter ............................................................. 146
$3,170
Beginning in fiscal 2003, the Company executed Confidential and Proprietary Information and Non-Com-
petition Agreements (“Agreements”) with certain employees. These Agreements contain a provision whereby
employees would be due a certain number of weeks of their salary if their employment was terminated by the
Company as specified in the Agreement. The Company has not recorded a liability for these amounts potentially
due employees. Rather, the Company will record a liability for these amounts when an amount becomes due to an
employee in accordance with the appropriate authoritative literature. As of December 25, 2007, the total amount
potentially owed employees under these Agreements was approximately $9.1 million.
Legal Proceedings
On January 25, 2008, a purported class action lawsuit was filed against the Company and three of its current or
former executive officers by the Western Washington Laborers-Employers Pension Trust on behalf of investors who
purchased the Company’s common stock during the period between November 1, 2005 and July 26, 2006. The
lawsuit was filed in the United States District Court for the Eastern District of Missouri, St. Louis Division. The
complaint alleges that the Company and the other defendants violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 under the Securities Exchange Act in connection with its disclosure of
system-wide sales and earnings guidance during the period from November 1, 2005 through July 26, 2006. The
complaint seeks, among other relief, class certification of the lawsuit, unspecified damages, costs and expenses,
including attorneys’ and experts’ fees, and such other relief as the court might find just and proper. The Company
believes it and the other defendants have meritorious defenses to each of the claims in this lawsuit and it is prepared
to vigorously defend the lawsuit. There can be no assurance, however, that the Company will be successful, and an
adverse resolution of the lawsuit could have a material adverse effect on its consolidated financial position and
results of operations in the period in which the lawsuit is resolved. The Company is not presently able to reasonably
estimate potential losses, if any, related to the lawsuit and as such, has not recorded a liability in its Consolidated
Balance Sheets.
In addition, the Company is subject to other routine legal proceedings, claims and litigation in the ordinary
course of its business. Defending lawsuits requires significant management attention and financial resources and the
outcome of any litigation, including the matter described above, is inherently uncertain. The Company does not,
however, currently expect that the costs to resolve these routine matters will have a material adverse effect on its
consolidated financial position, results of operations or cash flows.
65
PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)