Panera Bread 2009 Annual Report Download - page 56

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Reclassifications
The Company reclassified deposits and other from cash flows from investing activities to cash flows from
operations in the Consolidated Statements of Cash Flows to more appropriately reflect the nature of the activities in
the account. The Company has reclassified prior periods 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.
Short-term Investments
The Company’s investments consist of trading securities that are stated at fair value, with gains or losses
resulting from changes in fair value recognized currently in earnings as other (income) expense, net. Management
designates the appropriate classification of its investments at the time of purchase based upon its intended holding
period. See Note 5 for further information with respect to the Company’s short-term investments.
Trade and Other Accounts Receivable
Trade accounts receivable consists primarily of amounts due to the Company from its franchisees for
purchases of fresh dough from the Company’s fresh dough facilities, royalties due to the Company from franchisee
sales, and receivables from credit card sales. The Company does not require collateral and maintains reserves for
potential uncollectible accounts based on historical losses and existing economic conditions, when relevant. The
allowance for doubtful accounts at December 29, 2009 and December 30, 2008 was $0.1 million and $0.2 million,
respectively.
As of December 29, 2009, other accounts receivable consisted primarily of tenant allowances due from
landlords of $3.0 million, $2.8 million due from wholesalers of the Company’s gift cards, and a $3.3 million
receivable from the Company’s Canadian franchisee representing the cost of the three bakery-cafes Panera
developed on behalf of the franchisee (see Note 13 for further explanation). As of December 30, 2008, other
accounts receivable consisted primarily of tenant allowances due from landlords of $2.4 million and a $3.9 million
receivable from the Company’s Canadian franchisee representing the cost of the three bakery-cafes Panera
developed on behalf of the franchisee.
Inventories
Inventories, which consist of food products, paper goods and supplies, and promotional items, are valued at the
lower of cost or market, with cost determined under the first-in, first-out method.
Property and Equipment
Property, equipment, and leasehold improvements are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the
straight-line method over the shorter of their estimated useful lives or the related reasonably assured lease term.
Costs incurred in connection with the development of internal-use software are capitalized in accordance with the
accounting standard for internal-use software in the Company’s consolidated financial statements and
50
PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)