Panera Bread 2009 Annual Report Download - page 40

anticipate 80 to 90 system-wide bakery-cafe openings in fiscal 2010. We expect future bakery-cafes will require, on
average, an investment per bakery-cafe (excluding pre-opening expenses which are expensed as incurred) of
approximately $850,000, which is net of landlord allowances and excludes capitalized development overhead.
Business Combinations
We used $2.7 million and $71.0 million of cash flows for acquisitions, net of cash acquired as applicable, in
fiscal 2008 and fiscal 2007, respectively. In fiscal 2008, we made required payments of the remaining acquisition
purchase price of $2.5 million, including accrued interest, for certain acquisitions completed in the first half of fiscal
2007 and we paid additional purchase price of $0.2 million related to the settlement of certain purchase price
adjustments for the fiscal first quarter 2007 Paradise acquisition. As of December 30, 2008, we had no contingent or
accrued purchase price remaining from previously completed acquisitions. In fiscal 2007, we made required
payments of the remaining acquisition purchase price of $9.6 million, including accrued interest, for certain
acquisitions completed in late fiscal 2006 and the first half of fiscal 2007. Additionally, we paid $61.4 million for the
acquisitions of 51 percent of the outstanding stock of Paradise, then owner and operator of 22 bakery-cafes and one
commissary, and franchisor of 22 bakery-cafes and one commissary, and 36 bakery-cafes, as well as two bakery-
cafes then under construction, from franchisees. As of December 25, 2007, we had a total of $2.5 million of accrued
purchase price affiliated with acquisitions completed in fiscal 2007, which was paid in fiscal 2008. See Note 3 to the
consolidated financial statements for further information with respect to our acquisition activity in fiscal 2008 and
2007.
Investments
Historically, we invested a portion of our cash balances on hand in a private placement of units of beneficial
interest in the Columbia Strategic Cash Portfolio, or Columbia Portfolio, which was an enhanced cash fund
previously sold as an alternative to traditional money-market funds. The Columbia Portfolio included investments
in certain asset-backed securities and structured investment vehicles that were collateralized by sub-prime
mortgage securities or related to mortgage securities, among other assets. As a result of adverse market conditions
that unfavorably affected the fair value and liquidity of collateral underlying the Columbia Portfolio, it was
overwhelmed with withdrawal requests from investors and was closed, with a restriction placed upon the cash
redemption ability of its holders in the fourth quarter of fiscal 2007.
During fiscal 2009, we received $5.5 million of cash redemptions at an average net asset value of $0.861 per
unit, which fully redeemed our remaining units in the Columbia Portfolio, and we classified the redemptions as
investment maturity proceeds provided by investing activities. In total, we recognized a net realized and unrealized
gain on the Columbia Portfolio units of $1.3 million in fiscal 2009 related to the fair value measurements and
redemptions received and included the net gain in net cash provided by operating activities. As the Columbia
Portfolio units were no longer trading and, therefore, had little or no price transparency, we assessed the fair value of
the underlying collateral for the Columbia Portfolio through review of current investment ratings, as available,
coupled with the evaluation of the liquidation value of assets held by each investment and their subsequent
distribution of cash. We then utilized this assessment of the underlying collateral from multiple indicators of fair
value, which were then adjusted to reflect the expected timing of disposition and market risks to arrive at an
estimated fair value of the Columbia Portfolio units of $0.650 per unit, or $4.1 million, as of December 30, 2008,
and $0.960 per unit, or $23.2 million, as of December 25, 2007. During fiscal 2008, we received $17.2 million of
cash redemptions at an average net asset value of $0.963 per unit, which we classified as investment maturity
proceeds provided by investing activities. 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 net cash provided by operating activities. During fiscal 2007, we received $2.4 million of
cash redemptions at an average net asset value of $0.988 subsequent to the withdrawal restriction, which we
classified as investment maturity proceeds provided by investing activities. In total, we recognized a net realized
and unrealized loss on the Columbia Portfolio units of $1.0 million in fiscal 2007 related to the fair value
measurements and redemptions received and included the net loss in net cash provided by operating activities.
During fiscal 2009 and fiscal 2008, we had no investments in U.S. treasury notes and government agency
securities, and we made no additional purchases of investments. During fiscal 2007, the remaining $20.0 million of
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