Panera Bread 2011 Annual Report Download - page 61

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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 was 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.
Texas Divestiture
On February 9, 2011, the Company sold substantially all of the assets of two Paradise bakery-cafes to an existing Texas franchisee
for a sale price of approximately $0.1 million, resulting in a nominal gain, which was classified in other (income) expense, net in
the Consolidated Statements of Operations.
Alabama Divestiture
On April 27, 2010, the Company sold substantially all of the assets of three bakery-cafes and the area development rights for the
Mobile, Alabama market to an existing franchisee for a sale price of approximately $2.2 million, resulting in a gain of approximately
$0.6 million, which is classified in other (income) expense, net in the Consolidated Statements of Operations.
There were no business combinations consummated during the fiscal year ended December 29, 2009. The Company had
approximately $0.1 million of adjustments during fiscal 2009, which resulted in a $0.1 million increase to goodwill in the
Consolidated Balance Sheets as a result of the settlement of certain purchase price adjustments.
Accrued Purchase Price Payments
During the fiscal year ended December 27, 2011, the Company paid approximately $5.0 million, including accrued interest, of
previously accrued acquisition purchase price in accordance with the asset purchase agreements. There were no accrued purchase
price payments made in the fiscal year ended December 28, 2010. There was $2.6 million and $5.0 million of accrued purchase
price remaining as of December 27, 2011 and December 28, 2010, respectively.
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.
Canadian Noncontrolling Interest
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. 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 non-controlling 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 was 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. 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. The fair value measurement