Panera Bread 2008 Annual Report Download - page 59

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PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Business
Panera Bread Company and its subsidiaries operate a retail bakery-cafe business and franchising business
under the concept names Panera Bread», Saint Louis Bread Co.», and Paradise Bakery & Café». As of December 30,
2008, the Company’s retail operations consisted of 562 Company-owned bakery-cafes and 763 franchise-operated
bakery-cafes. The Company specializes in meeting consumer dining needs by providing high quality food,
including the following: fresh baked goods, made-to-order sandwiches on freshly baked breads, soups, salads,
and cafe beverages, and targets suburban dwellers and workers by offering a premium specialty bakery and cafe
experience with a neighborhood emphasis. Bakery-cafes are principally located in suburban, strip mall, and
regional mall locations and currently operate in the United States and Canada. Bakery-cafes use fresh dough for
their artisan and sourdough breads and bagels. As of December 30, 2008, the Company’s fresh dough operations,
which supply fresh dough items daily to most Company-owned and franchise-operated bakery-cafes, consisted of
20 Company-owned fresh dough facilities.
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The consolidated financial statements of Panera Bread Company and its subsidiaries (“the Company”) consist
of the accounts of Panera Bread Company and its wholly owned direct and indirect consolidated subsidiaries. In
addition, from and after February 1, 2007, the consolidated financial statements of Panera Bread Company include
its majority-owned consolidated subsidiary, Paradise Bakery & Café, Inc. (“Paradise”). All intercompany balances
and transactions have been eliminated in consolidation.
Fiscal Year
The Company’s fiscal year ends on the last Tuesday in December. As a result, the fiscal year ended
December 30, 2008 had 53 weeks with the fourth quarter ended December 30, 2008 comprising 14 weeks.
The fiscal years ended December 25, 2007 and December 26, 2006 each had 52 weeks.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Reclassifications
We have reclassified certain items in the consolidated financial statements and notes thereto for prior periods to
be comparable with the classification for the fiscal year ended December 30, 2008. These reclassifications had no
effect on previously reported operating profit. For example, beginning in the first quarter of fiscal 2008, the
Company changed the classification of certain amounts in costs and expenses between fresh dough cost of sales to
franchisees and cost of food and paper products in the Consolidated Statements of Operations. The Company has
reclassified prior period financial statements in order to conform to the current presentation.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity at the time of purchase of three
months or less to be cash equivalents.
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