Panera Bread 2010 Annual Report Download - page 66

4. Noncontrolling Interest
Effective December 31, 2008, the first day of fiscal 2009, the Company implemented the accounting standard
for the reporting of noncontrolling interests in the Company’s consolidated financial statements and accompanying
notes. This standard changed the accounting and reporting for noncontrolling interests, which are to be recorded
initially at fair market value and reported as noncontrolling interests as a component of equity, separate from the
parent company’s equity. Purchases or sales of noncontrolling interests that do not result in a change in control are to
be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest is to be
included in consolidated net income in the Consolidated Statements of Operations and upon a loss of control, the
interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in
earnings. The Company has applied these presentation and disclosure requirements retrospectively.
On September 10, 2008, the Company’s Canadian subsidiary, Panera Bread ULC, as lender, entered into a
Cdn.$3.5 million secured revolving credit facility agreement and franchise agreements with Millennium Bread Inc.
(“Millennium”) and certain of Millennium’s present and future subsidiaries (the “Franchise Guarantors”), pursuant
to which Millennium would operate three Panera Bread bakery-cafes in Ontario, Canada.
On March 30, 2010, PB Biscuit, ULC (“PB Biscuit”) was formed by Panera Bread ULC through the
contribution of its Cdn.$3.5 million note receivable from Millennium and cash. On March 31, 2010, PB Biscuit
acquired certain assets and liabilities and the operations of Millennium’s three Panera Bread bakery-cafes. The
transaction was accounted for as an acquisition under the business combination authoritative guidance. In exchange
for the bakery-cafe operations and certain assets and liabilities, PB Biscuit assigned the Cdn.$3.5 million note
receivable to and issued noncontrolling interest to Millennium at a fair value of $0.6 million (28.5 percent
ownership of PB Biscuit’s voting shares), for a total consideration of $4.1 million, subject to certain closing
adjustments. The Consolidated Statements of Operations include the results of operations from the operating
bakery-cafes from the date of the acquisition. This non-cash transaction is excluded from the Consolidated
Statements of Cash Flows for the year ended December 28, 2010. The pro forma impact of the acquisition on prior
periods is not presented, as the impact was not material to reported results. These acquired bakery-cafes are
included in the Company bakery-cafe operations segment. 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: $2.3 million to property and equipment, $0.5 million of net assumed current
liabilities, and $2.3 million to goodwill.
On December 28, 2010, the Company purchased the remaining noncontrolling interest of Millennium for
$0.7 million. The transaction was accounted for as an equity transaction, by adjusting the carrying amount of the
noncontrolling interest balance to reflect the change in the Company’s ownership interest in Millennium, with the
difference between fair value of the consideration paid and the amount by which the noncontrolling interest was
adjusted recognized in equity attributable to the Company.
The following table illustrates the effect on the Company’s equity of its purchase of the remaining 28.5 percent
of outstanding stock of Millennium on December 28, 2010 (in thousands):
December 28,
2010
For the Fiscal Year Ended
Net income attributable to the Company ........................... $111,866
Decrease in equity for purchase of noncontrolling interest .............. (367)
Change from net income attributable to the Company and the purchase of
noncontrolling interest....................................... $111,499
On February 1, 2007, the Company purchased 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, for a
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PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)