Panera Bread 2008 Annual Report Download - page 88

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18. Defined Contribution Benefit Plan
The Panera Bread Company 401(k) Savings Plan (the “Plan”) was formed under Section 401(k) of the Internal
Revenue Code (“the Code”). The Plan covers substantially all employees who meet certain service requirements.
Participating employees may elect to defer a percentage of his or her salary on a pre-tax basis, subject to the
limitations imposed by the Plan and the Code. The Plan provides for a matching contribution by the Company equal
to 50 percent of the first 3 percent of the participant’s eligible pay. All employee contributions vest immediately.
Company matching contributions vest beginning in the second year of employment at 25 percent per year, and are
fully vested after 5 years. The Company contributed $1.1 million, $0.9 million, and $0.7 million to the Plan in fiscal
2008, 2007, and 2006, respectively.
19. Business Segment Information
The Company operates three business segments. The Company Bakery-Cafe Operations segment is comprised
of the operating activities of the bakery-cafes owned directly and indirectly by the Company. The Company-owned
bakery-cafes conduct business under the Panera Bread», Saint Louis Bread Co.»or Paradise Bakery & Café»
names. These bakery-cafes offer some or all of the following: fresh baked goods, made-to-order sandwiches on
freshly baked breads, soups, salads, custom roasted coffees, and other complementary products through on-premise
sales, as well as catering.
The Franchise Operations segment is comprised of the operating activities of the franchise business unit which
licenses qualified operators to conduct business under the Panera Bread»or Paradise Bakery & Café»names and
also monitors the operations of these bakery-cafes. Under the terms of most of the agreements, the licensed
operators pay royalties and fees to the Company in return for the use of the Panera Bread»or Paradise Bakery &
Café»names.
The Fresh Dough Operations segment supplies fresh dough items and indirectly supplies proprietary sweet
goods items through a contract manufacturing arrangement to both Company-owned and franchise-operated
bakery-cafes. The fresh dough is sold to a number of both Company-owned and franchise-operated bakery-cafes at
a delivered cost generally not to exceed 27 percent of the retail value of the end product. The sales and related costs
to the franchise-operated bakery-cafes are separately stated line items in the Consolidated Statements of Oper-
ations. The operating profit related to the sales to Company-owned bakery-cafes is classified as a reduction of the
costs in the cost of food and paper products in the Consolidated Statements of Operations.
81
PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)