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PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
45
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 30, 2014, retail
operations consisted of 925 Company-owned bakery-cafes and 955 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, pasta dishes, 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. In addition to the in-bakery-cafe dining experience, the Company
offers Panera Catering, a nation-wide catering service that provides breakfast assortments, sandwiches, salads, soups, pasta dishes,
drinks, and bakery items using the same high-quality, fresh ingredients enjoyed in bakery-cafes. As of December 30, 2014, 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.
Fiscal Year
The Company's fiscal year ends on the last Tuesday in December. The fiscal years ended December 30, 2014 (“fiscal 2014”) and
December 25, 2012 (“fiscal 2012”) each had 52 weeks. The fiscal year ended December 31, 2013 (“fiscal 2013”) had 53 weeks
with the fourth quarter comprising 14 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. The Company maintains cash balances with financial institutions that exceed federally insured limits. The
Company has not experienced any losses related to these balances and believes credit risk to be minimal.
Investments
Management designates the classification of its investments at the time of purchase based upon its intended holding period. See
Note 4 and 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 30, 2014, other accounts receivable consisted primarily of $33.4 million due from income tax refunds, $24.5
million due from wholesalers of the Company’s gift cards, and tenant allowances due from landlords of $7.0 million. As of
December 31, 2013, other accounts receivable consisted primarily of $22.8 million due from income tax refunds, $16.9 million
due from wholesalers of the Company’s gift cards, and tenant allowances due from landlords of $7.1 million.