Panera Bread 2007 Annual Report Download - page 78

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At December 25, 2007 and December 26, 2006, the cash surrender values of $2.7 million and $4.2 million,
respectively, the mortality income receivables of $2.2 million and $1.9 million, respectively, and the insurance
policy loans of $2.7 million and $4.2 million, respectively, related to the COLI program were netted and included in
deposits and other assets in the Company’s Consolidated Balance Sheets. Mortality income receivable represents
the dividend or death benefits the Company is due from its insurance carrier at the respective dates. The insurance
policy loans are collateralized by the cash values of the underlying life insurance policies and require interest
payments at a rate of 8.4 percent for the year ended December 25, 2007. Interest accrued on insurance policy loans is
netted with other COLI related income statement transactions in other (income) expense, net in the Consolidated
Statements of Operations, which netted $0.5 million, $0.1 million, and $0.2 million in fiscal years 2007, 2006, and
2005, respectively, the components of which are as follows (in thousands):
December 25,
2007
December 26,
2006
December 27,
2005
Cash value loss ............................... $1,485 $ 1,103 $ 2,049
Mortality income .............................. (1,283) (1,323) (2,332)
Interest expense............................... 292 368 479
Expense .................................... $ 494 $ 148 $ 196
The cash value loss is the cumulative change in cash surrender value for the year and is adjusted quarterly.
Mortality income is recorded periodically as charges are deducted from cash value. These amounts are recovered by
the Company through payment of death benefits and mortality dividends received. Interest expense is recorded on
the accrual basis.
15. Stockholders’ Equity
Common Stock
The holders of Class A common stock are entitled to one vote for each share owned. The holders of Class B
common stock are entitled to three votes for each share owned. Each share of Class B common stock has the same
dividend and liquidation rights as each share of Class A common stock. Each share of Class B common stock is
convertible, at the stockholder’s option, into Class A common stock on a one-for-one basis. At December 25, 2007,
the Company had reserved 4,401,703 shares of its Class A common stock for issuance upon exercise of awards
granted under the Company’s 1992 Equity Incentive Plan, Formula Stock Option Plan for Independent Directors,
2001 Employee, Director, and Consultant Stock Option Plan, and the 2006 Stock Incentive Plan, and upon
conversion of Class B common stock.
Registration Rights
At December 25, 2007, over 93 percent of the Class B common stock is owned by the Company’s Chairman
and Chief Executive Officer (“CEO”). Certain holders of Class B common stock, including the Company’s CEO,
pursuant to stock subscription agreements, can require the Company under certain circumstances to register their
shares under the Securities Exchange Act of 1933, or have included in certain registrations all or part of such shares
at the Company’s expense.
Preferred Stock
The Company is authorized to issue 2,000,000 shares of Class B preferred stock with a par value of $.0001. The
voting, redemption, dividend, liquidation rights, and other terms and conditions are determined by the Board of
Directors upon approval of issuance. There were no shares issued or outstanding in fiscal years 2007 and 2006.
68
PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)