Panera Bread 2008 Annual Report Download - page 22

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• negative publicity about the ingredients we use or the occurrence of food-borne illnesses or other
problems at our bakery-cafes; or
• unfavorable general economic conditions in the markets in which we operate, including, but not limited
to, downturns in the housing market, higher interest rates, higher unemployment, lower disposable income
due to higher energy or other consumer costs, lower consumer confidence and other events or factors that
adversely affect consumer spending.
• cost increases due to:
• changes in our operating costs;
• labor availability and increased labor costs, including wages of management and associates, compen-
sation insurance and health care; and
• changes in business strategy including concept evolution and new designs.
• profitability of new bakery-cafes, especially in new markets;
• delays in new bakery-cafe openings;
• fluctuations in supply costs, shortages or interruptions; and
• natural disasters and other calamities.
Seasonality, inclement weather and other variable factors may adversely affect our sales and results of
operations and could cause our quarterly results to fluctuate, which may adversely affect our financial
condition.
Our sales have fluctuated by season due to the number and timing of bakery-cafe openings and related expense,
consumer spending patterns and weather. Historically, sales have been higher during the winter holiday season as a
result of increased traffic, higher baked goods sales and family and community gatherings. In fiscal 2008,
Company-owned bakery-cafes had an aggregate of approximately $260.4 million, or 23.5 percent, in sales in the
first quarter, which was our lowest recorded relative quarterly sales in fiscal 2008. Comparatively, in our fourth
quarter we had an aggregate of approximately $303.0 million, or 27.4 percent, in sales in that quarter, recording the
highest relative quarterly sales for fiscal 2008. Accordingly, results for any one quarter or year are not necessarily
indicative of results to be expected for any other quarter or year.
Our investments of certain cash balances in short-term investments are subject to risks which may cause
losses and affect the liquidity of these investments.
At December 30, 2008, our short-term investments consisted of units of beneficial interest in the Columbia
Strategic Cash Portfolio, or the Columbia Portfolio, which is an enhanced cash fund previously sold as an
alternative to traditional money-market funds. We have historically invested a portion of our on hand cash balances
in this fund. 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 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.
These Columbia Portfolio units are no longer trading and have no readily determinable market value. Based on
the information available to us, we have estimated the fair value of the Columbia Portfolio units at $0.650 per unit,
or $4.1 million, as of December 30, 2008. During fiscal 2008, we received $17.2 million of cash redemptions at an
average net asset value of $0.963 per unit. In total, we recognized a net realized and unrealized loss on the Columbia
Portfolio units of $1.9 million in fiscal 2008 related to the fair value measurements and redemptions received and
included the net loss in other (income) expense, net in the Consolidated Statements of Operations. 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 our investments. To the extent we
determine that there is a further decline in fair value, we may recognize additional losses in future periods up to the
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