Panera Bread 2008 Annual Report Download - page 21

insurance coverage for any claims could materially and adversely affect our financial condition or results of
operations. Additionally, publicity about these claims may harm our reputation or prospects and adversely affect our
results.
If we are unable to protect our customers’ credit card data, we could be exposed to data loss, litigation
and liability, and our reputation could be significantly harmed.
In connection with credit card sales, we transmit confidential credit card information by way of secure private
retail networks. Although we use private networks, third parties may have the technology or know-how to breach
the security of the customer information transmitted in connection with credit card sales, and our security measures
and those of our technology vendors may not effectively prohibit others from obtaining improper access to this
information. If a person is able to circumvent these security measures, he or she could destroy or steal valuable
information or disrupt our operations. Any security breach could expose us to risks of data loss, litigation and
liability and could seriously disrupt our operations and any resulting negative publicity could significantly harm our
reputation.
We are subject to periodic new accounting pronouncements that could have a material adverse impact
on our profitability or results of operations.
New accounting pronouncements are periodically issued which could change our current accounting practices.
We assess each new pronouncement for applicability and potential impact. Depending on whether the applicable
pronouncement is to be retroactively implemented or prospectively implemented, and depending on the magnitude
of the change, implementation could have a significant adverse impact on historical or future profitability or results
of operations.
We periodically acquire existing bakery-cafes from our franchisees or ownership interests in other res-
taurant or bakery-cafe concepts, which could adversely affect our results of operations.
We have historically acquired existing bakery-cafes and development rights from our franchisees either by
negotiated agreement or exercise of our rights of first refusal under the franchise and area development agreements.
However, on February 1, 2007, we purchased 51 percent of the outstanding stock of Paradise Bakery & Café, Inc.,
which we refer to as Paradise, then owner and operator of 22 bakery-cafes and one commissary, and franchisor of
22 bakery-cafes and one commissary. Any acquisition that we undertake involves risk, including:
• our ability to successfully achieve anticipated synergies, accurately assess contingent and other liabilities as
well as potential profitability;
• failure to successfully integrate the acquired entity’s operational and support activities;
• unanticipated changes in business and economic conditions;
• limited or no operational experience in the acquired bakery-cafe market or other restaurant concept;
• future impairment charges related to goodwill and other acquired intangible assets; and
• risks of dispute and litigation with the seller, the seller’s landlords, and vendors and other parties.
Any of these factors could strain our financial and management resources as well as negatively impact our
results of operations.
Our operating results fluctuate due to a number of factors, some of which may be beyond our control,
and any of which may adversely affect our financial condition.
Our operating results may fluctuate significantly from our forecasts, targets or projections because of a number
of factors, including the following:
• lower customer traffic or average value per transaction due to:
• changes in average weekly sales and comparable bakery-cafe sales, including as a result of the intro-
duction of new menu items;
• changes in demographics, consumer preferences and discretionary spending;
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