Panera Bread 2012 Annual Report Download - page 52

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PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
44
1. Nature of Business
Panera Bread Company and its subsidiaries (the "Company") operate a retail bakery-cafe business and franchising business under
the concept names Panera Bread®, Saint Louis Bread Co.®, and Paradise Bakery & Café®. As of December 25, 2012, the Company’s
retail operations consisted of 809 Company-owned bakery-cafes and 843 franchise-operated bakery-cafes. The Company
specializes in meeting consumer dining needs by providing high quality food, including the following: fresh baked goods, made-
to-order sandwiches on freshly baked breads, soups, salads, and cafe beverages, and targets urban and suburban dwellers and
workers by offering a premium specialty bakery-cafe experience with a neighborhood emphasis. Bakery-cafes are located in urban,
suburban, strip mall, and regional mall locations and currently operate in the United States and Canada. Bakery-cafes use fresh
dough for their artisan and sourdough breads and bagels. As of December 25, 2012, the Company’s fresh dough and other product
operations, which supply fresh dough, produce, tuna, and cream cheese items daily to most Company-owned and franchise-
operated bakery-cafes, consisted of 22 Company-owned and two franchise-operated fresh dough facilities.
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting
principles in the United States (“GAAP”) and under the rules and regulations of the Securities and Exchange Commission (the
“SEC”). The consolidated financial statements consist of the accounts of Panera Bread Company and its wholly owned direct and
indirect subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications
were made to prior year amounts to conform to the fiscal 2012 presentation.
Fiscal Year
The Company’s fiscal year ends on the last Tuesday in December. Each of the Company’s fiscal years ended December 25, 2012,
December 27, 2011, and December 28, 2010 had 52 weeks. The Company's fiscal year ending December 31, 2013 will have 53
weeks.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
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.
Investments
In fiscal 2012, 2011, and 2010, the Company’s investments consisted of municipal industrial revenue bonds that it intends to hold
until maturity. 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 investments.
Trade Accounts Receivable, net and Other Accounts Receivable
Trade accounts receivable, net consists primarily of amounts due to the Company from its franchisees for purchases of fresh dough
and other products from the Company’s fresh dough facilities, royalties due to the Company from franchisee sales, and receivables
from credit card and catering on-account sales.
As of December 25, 2012, other accounts receivable consisted primarily of $17.4 million due from income tax refunds, $14.9
million due from wholesalers of the Company’s gift cards, and tenant allowances due from landlords of $5.7 million. As of
December 27, 2011, other accounts receivable consisted primarily of $8.9 million due from income tax refunds, $6.9 million due
from wholesalers of the Company’s gift cards, and tenant allowances due from landlords of $3.9 million.