Panera Bread 2013 Annual Report Download - page 12

4
Capital Resources and Deployment of Capital
Our primary capital resource is cash generated by operations. We also have access to a $250 million credit facility. During fiscal
2013 we had no borrowings outstanding under the credit facility.
Our capital requirements, including development costs related to the opening or acquisition of additional Company-owned bakery-
cafes and fresh dough facilities, maintenance and remodel expenditures, and investments in technology infrastructure to support
ongoing strategic initiatives have been and will continue to be significant. However, we believe our cash flow from operations
and available borrowings under our credit facility will be sufficient to fund our capital requirements for the foreseeable future.
We believe the best use of our capital is to invest in our core business, either through the development of new bakery-cafes or
through the acquisition of existing bakery-cafes from our franchisees or other similar restaurant or bakery-cafe concepts, such as
our acquisition of Paradise Bakery & Café, Inc.
In evaluating potential new bakery-cafe locations, we study the surrounding trade area and demographics, and publicly available
information on competitors. Based on this review and the use of proprietary, predictive modeling, we estimate projected sales
and a targeted return on investment. We also employ a disciplined capital expenditure process in which we focus on occupancy
and development costs in relation to the market. This process is designed to ensure we have an appropriate size bakery-cafe and
deploy capital in the right market to generate desired returns.
Our concept has proved successful in different types of locations, such as in-line or end-cap locations in strip or power centers,
regional malls, and free-standing units. The average Company-owned bakery-cafe size was approximately 4,500 square feet as
of December 31, 2013. We lease nearly all of our bakery-cafe locations and all of our fresh dough facilities. The reasonably
assured lease term for most bakery-cafe and support center leases is the initial non-cancelable lease term plus one renewal option
period, which generally equates to an aggregate of 15 years. The reasonably assured lease term for most fresh dough facility leases
is the initial non-cancelable lease term plus one to two renewal periods, which generally equates to an aggregate of 20 years. Lease
terms generally require us to pay a proportionate share of real estate taxes, insurance, common area maintenance, and other
operating costs. Many bakery-cafe leases provide for contingent rental (i.e., percentage rent) payments based on sales in excess
of specified amounts. Certain of our lease agreements provide for scheduled rent increases during the lease term or for rental
payments commencing at a date other than the date of initial occupancy.
The average construction, equipment, furniture and fixtures, and signage cost excluding capitalized development overhead for the
63 Company-owned bakery-cafes that opened in fiscal 2013 was approximately $1,050,000 per bakery-cafe.
On November 17, 2009, our Board of Directors approved a three year share repurchase authorization of up to $600 million of our
Class A common stock, pursuant to which we repurchased shares on the open market under a Rule 10b5-1 plan, which we refer
to as the 2009 repurchase authorization. During fiscal 2012, we repurchased 34,600 shares under the 2009 repurchase authorization,
at an average price of $144.24 per share, for an aggregate purchase price of $5.0 million. During fiscal 2011, we repurchased
877,100 shares under the 2009 repurchase authorization, at an average price of $103.55 per share, for an aggregate purchase price
of $90.8 million. On August 23, 2012, our Board of Directors terminated the 2009 repurchase authorization. Prior to its termination,
we had repurchased an aggregate of 2,844,669 shares of our Class A common stock under the 2009 repurchase authorization, at
a weighted-average price of $87.03 per share, for an aggregate purchase price of approximately $247.6 million.
On August 23, 2012, our Board of Directors approved a new three year share repurchase authorization of up to $600 million of
our Class A common stock, which we refer to as the 2012 repurchase authorization, pursuant to which we may repurchase shares
from time to time on the open market or in privately negotiated transactions and which may be made under a Rule 10b5-1 plan.
Repurchased shares may be retired immediately and resume the status of authorized but unissued shares or may be held by us as
treasury stock. The 2012 repurchase authorization is reviewed quarterly by our Board of Directors and may be modified, suspended,
or discontinued at any time. During fiscal 2013, we repurchased 1,992,250 shares under the 2012 repurchase authorization, at an
average price of $166.73 per share, for an aggregate purchase price of $332.1 million. During fiscal 2012, we repurchased 124,100
shares under the 2012 repurchase authorization, at an average price of $161.00 per share, for an aggregate purchase price of
approximately $20.0 million. As of December 31, 2013, under the 2012 repurchase authorization, we have repurchased an aggregate
of 2,116,350 shares, at a weighted-average price of $166.39 per share, for an aggregate purchase price of approximately $352.1
million. We have approximately $247.9 million available under the 2012 repurchase authorization.
In the past three fiscal years, we have acquired bakery-cafes from certain franchisees. In April 2013, we acquired one bakery-
cafe from a Florida franchisee for a purchase price of approximately $2.7 million. In March 2012, we acquired 16 bakery-cafes
from a North Carolina franchisee for a purchase price of approximately $48.0 million. In July 2011, we acquired five bakery-
cafes from an Indiana franchisee for a purchase price of approximately $5.1 million. In April 2011, we acquired 25 bakery-cafes
from our Milwaukee franchisee for a purchase price of approximately $41.9 million.