Panera Bread 2010 Annual Report Download - page 65

September 29, 2010, with $2.8 million retained by the Company for certain holdbacks. The holdbacks are primarily
for certain indemnifications and expire on the first anniversary of the transaction closing date, September 29, 2011,
with any remaining holdback amounts reverting to the prior franchisee. As a result of the acquisition, the Company
gained control of the 37 bakery-cafes and expanded Company-owned operations into New Jersey. The Consolidated
Statements of Operations include the results of operations from the operating bakery-cafes from the date of the
acquisition.
The acquired business contributed revenues of $24.8 million and net income of $1.9 million for the period from
September 29, 2010 through December 28, 2010. The following supplemental pro forma information has been
prepared for comparative purposes and does not purport to be indicative of what would have occurred had the
acquisition been made on December 31, 2008 or December 30, 2009, nor are they indicative of any future results (in
thousands):
December 28,
2010
December 29,
2009
Pro Forma for the Fiscal Year
Ended
Bakery-cafe sales, net...................................... $1,606,455 $1,433,686
Net income ............................................. 119,621 90,710
These amounts have been calculated after applying the Company’s accounting policies and adjusting the
results of the New Jersey bakery-cafes to reflect the additional depreciation and amortization that would have been
charged assuming the fair value adjustments to property and equipment and intangible assets had been applied from
December 31, 2008, together with the consequential tax impacts.
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: $0.5 million to
inventories, $19.9 million to property and equipment, $31.2 million to intangible assets, which represents the fair
value of re-acquired territory rights and favorable lease agreements, $1.2 million to liabilities, and $4.6 million to
goodwill. The fair value measurement of tangible and intangible assets and liabilities as of the acquisition date is
based on significant inputs not observed in the market and thus represents a Level 3 measurement.
Goodwill recorded in connection with this acquisition is attributable to the workforce of the acquired bakery-
cafes and synergies expected to arise from cost savings opportunities. All of the recorded goodwill is anticipated to
be tax deductible and is included in the Company Bakery-Cafe Operations segment.
On April 27, 2010, the Company sold substantially all of the assets of three bakery-cafes and the area
development rights for Mobile, Alabama to an existing franchisee, for a sales price of approximately $2.2 million,
resulting in a gain of approximately $0.6 million, which is classified in other expense, net in the Consolidated
Statements of Operations.
There were no business combinations consummated during the fiscal years ended December 29, 2009 and
December 30, 2008. Subsequent to the original allocation of purchase price for the acquisitions which occurred in
2007 to the various tangible and intangible assets, the Company had approximately $0.1 million of adjustments
during fiscal 2009, which resulted in a $0.1 million increase to goodwill, and $0.2 million of adjustments during
fiscal 2008, which resulted in a net $0.2 million increase to goodwill in the Consolidated Balance Sheets as a result
of the settlement of certain purchase price adjustments.
During the fiscal years ended December 30, 2008, the Company paid approximately $2.5 million, including
accrued interest, of previously accrued acquisition purchase price in accordance with the asset purchase agree-
ments, respectively. There were no accrued purchase price payments made in the fiscal years ended December 28,
2010 or December 29, 2009. There was $5.0 million and $2.3 million, accrued for contingent or accrued purchase
price remaining as of December 28, 2010 and December 29, 2009, respectively.
58
PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)