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PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
52
date is based on significant inputs not observable in the market and thus represents a Level 3 measurement. In addition, the
Company recorded a $0.2 million measurement period adjustment increasing goodwill for the fiscal year ended December 25,
2012.
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 tax deductible and is included in the Company
Bakery-Cafe Operations segment.
New Jersey Franchisee Acquisition
On September 29, 2010 the Company acquired substantially all the assets and certain liabilities of 37 bakery-cafes and the area
development rights from its New Jersey franchisee for a purchase price of approximately $55.0 million. Approximately $52.2
million of the purchase price, as well as related transaction costs, were paid on September 29, 2010, and the remaining approximately
$2.8 million was paid with interest in fiscal 2011. As a result of this acquisition, the Company gained control of the 37 bakery-
cafes and expanded Company-owned operations into New Jersey. The Consolidated Statements of Comprehensive Income 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 approximately $2.0 million for the period from
September 29, 2010 through December 28, 2010. The supplemental pro forma information set forth in the table below 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 30, 2009, nor is it indicative of any future results (in thousands):
Pro Forma for the
Fiscal Year End
December 28, 2010
Bakery-cafe sales, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,606,455
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119,621
The pro forma amounts included in the table above reflect the application of the Company’s accounting policies and adjustment
of 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 30, 2009,
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 that the Company estimated to have an average useful life of approximately 13 years; $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 observable 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 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 Comprehensive Income.
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 Comprehensive Income.