Panera Bread 2008 Annual Report Download - page 70

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assets, $3.5 million to intangible assets, which represents the fair value of re-acquired territory rights and favorable
and unfavorable lease agreements, and $6.9 million to goodwill.
On September 27, 2006, the Company purchased from a franchisee substantially all of the assets of one
bakery-cafe for a cash purchase price of $2.4 million. Approximately $2.1 million of the acquisition price was paid
with cash on hand at the time of closing, while the remaining approximately $0.3 million plus accrued interest was
paid in fiscal 2007. The Consolidated Statements of Operations include the results of operations of the one
bakery-cafe from the date of acquisition. The pro forma impact of the acquisition on prior periods is not presented,
as the impact is not material to reported results. The Company allocated the purchase price to the tangible and
intangible assets acquired in the acquisition at their estimated fair values with the remainder allocated to tax
deductible goodwill as follows: $0.6 million to fixed assets, $0.1 million to intangible assets, which represents the
fair value of a re-acquired territory right and a favorable lease agreement, and $1.7 million to goodwill.
There were no business combinations consummated during the fiscal year ended December 30, 2008.
Subsequent to the original allocation of purchase price for the aforementioned acquisitions to the various tangible
and intangible assets, the Company had approximately $0.2 million of adjustments during fiscal 2008, which
resulted in a net $0.2 million increase to goodwill, and approximately $0.2 million of adjustments during fiscal
2007, which resulted in a net $0.2 million decrease to goodwill in the Consolidated Balance Sheets as a result of the
settlement of certain purchase price adjustments. Further, the pro forma impact of the acquisitions on prior periods
is not presented, as the impact of the series of individually immaterial business combinations completed during
fiscal 2007 are not material in the aggregate to reported results.
During the fiscal years ended December 30, 2008 and December 25, 2007, the Company paid approximately
$2.5 million and $9.6 million, including accrued interest, of previously accrued acquisition purchase price in
accordance with the asset purchase agreements, respectively. There was no accrued purchase price payments made
in the fiscal year ended December 26, 2006. There was no contingent or accrued purchase price remaining as of
December 30, 2008 while $2.5 million was outstanding as of December 25, 2007.
4. Fair Value Measurements
Effective December 26, 2007, the Company adopted SFAS No. 157, Fair Value Measures, for all financial
assets and liabilities and for nonfinancial assets and liabilities recognized or disclosed at fair value in the
consolidated financial statements on a recurring basis (at least annually). SFAS No. 157 defines fair value as
the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or
most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date. The standard also establishes a fair value hierarchy which requires an entity to maximize the use
of observable inputs and minimize the use of unobservable inputs when measuring fair value. SFAS No. 157
describes three levels of inputs that may be used to measure fair value:
Level 1 Quoted market prices in active markets for identical assets or liabilities.
Level 2 Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3 Unobservable inputs that are not corroborated by market data.
The Company’s $76.6 million and $70.7 million in cash equivalents at December 30, 2008 and December 26,
2007, respectively, were carried at fair value in the Consolidated Balance Sheets based on quoted market prices for
identical securities (Level 1 inputs).
At December 30, 2008, the Company’s short-term and long-term investments were carried at fair value in the
Consolidated Balance Sheets and consisted of units of beneficial interest in the Columbia Strategic Cash Portfolio
(the “Columbia Portfolio”), which is an enhanced cash fund sold as an alternative to money-market funds. The
Company has historically invested a portion of its cash balances on hand in this fund; however, prior to the fourth
quarter of fiscal 2007, the amounts were approximately classified as trading securities in cash and cash equivalents
in the Consolidated Balance Sheets as the fund was considered both short-term and highly liquid in nature. The
63
PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)