Panera Bread 2013 Annual Report Download - page 46

Download and view the complete annual report

Please find page 46 of the 2013 Panera Bread annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 88

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88

38
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Commodity Risk
We manage our commodity risk in several ways. We purchase certain commodities, such as flour, coffee, and proteins, for use in
our business. These commodities are sometimes purchased under agreements with terms of one month to one year, usually at a
fixed price. As a result, we are subject to market risk that current market prices may be above or below our contractual price. In
fiscal 2013, 2012, and 2011, we did not utilize derivative instruments in managing commodity risk.
Interest Rate Sensitivity
We could be exposed to market risk primarily from fluctuations in interest rates on any borrowings we may make under our
revolving credit facility. Our revolving credit facility provides for a $250 million secured facility under which we may select
interest rates equal to (1) LIBOR plus the Applicable Rate for LIBOR loans (which is an amount ranging from 1.00 percent to
2.00 percent depending on our consolidated leverage ratio) or (2) the Base Rate (which is defined as the higher of the Bank of
America prime rate, the Federal funds rate plus 0.50 percent, or LIBOR plus 1.00 percent) plus the Applicable Rate for Base Rate
loans (which is an amount ranging from 0.00 percent to 1.00 percent depending on our consolidated leverage ratio). We did not
have an outstanding balance on our credit facility at December 31, 2013 or December 25, 2012. We may have future borrowings
under our credit facility, which could result in an interest rate change that may have an impact on our consolidated results of
operations.
Foreign Currency Exchange Risk
We currently have seven Canadian Company-owned bakery-cafes, one Canadian Company-owned fresh dough facility, and five
Canadian franchise-operated bakery-cafes. As a result, certain of our operating revenues, expenses, and capital purchasing activities
are subject to fluctuations in the exchange rate of the Canadian Dollar. To date, we have not entered into any hedging contracts,
although we may do so in the future. Fluctuations in currency exchange rates could affect our business in the future.