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Mod 10 Incorporating additional information--Panera

Mod 10 Incorporating additional information--Panera. Yiwen Lin. AGENDA. Expanded Balance Sheet Expanded Income Statement Reconciliation of Equity. Expanded Balance sheet. Inventories.

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Mod 10 Incorporating additional information--Panera

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  1. Mod 10 Incorporating additional information--Panera Yiwen Lin

  2. AGENDA • Expanded Balance Sheet • Expanded Income Statement • Reconciliation of Equity

  3. Expanded Balance sheet

  4. Inventories • Inventories, which consist of food products, paper goods, and supplies, are valued at the lower of cost or market, with cost determined under the first-in, first-out method.

  5. Deferred income taxes • Excerpt from tax footnote

  6. Deferred income taxes • Note that including this additional information leads to an increase in both assets and liabilities of Panera in the amount of $47,849 ($75,738-$27,889) and $113,247-$65,398, respectively.

  7. PPE

  8. Leasehold improvements • Note 13: During the fiscal year ended December 31, 2013, the Company completed sale-leaseback transactions of the leasehold improvements and land for three Company-owned bakery-cafes for cash proceeds of $6.1 million. The leases have been classified as operating leases and have initial terms of 15 years, with renewal options of up to 20 years. • Rental expense under operating leases was $130 million and 114.8 million in 2013 and 2012, respectively. Aggregate minimum requirements under non-cancelable operating leases: • The future growth rate of leasehold improvements should be tied with the aggregate minimum payment projection.

  9. Goodwill • The Company has not recorded a goodwill impairment charge in the fiscal years 2013, 2012, and 2011, respectively. • Forecasting of goodwill will stay the same in the next few years.

  10. Other intangible assets, net • As of December 31, 2013, December 25, 2012, and December 27, 2011, no impairment of intangible assets with finite lives had been recognized. There can be no assurance that future intangible asset impairment tests will not result in a charge to earnings.

  11. Accrued expenses • The increase in accrued expenses was primarily due to an increase in the balance of outstanding gift cards.

  12. Other Long-term liabilities • As of December 31, 2013 and December 25, 2012, the Company's net ARO (Asset retirement obligation) asset included in property and equipment, net was $4.6 million and $4.6 million, respectively, and its net ARO liability included in other long-term liabilities was $10.2 million and $9.2 million, respectively.

  13. AOCI

  14. Defined contribution benefit Plan • The Panera Bread Company 401(k) Savings Plan (the “Plan”) was formed under Section 401(k) of the Internal Revenue Code (“the Code”). The Plan covers substantially all employees who meet certain service requirements. Participating employees may elect to defer a percentage of his or her salary on a pre-tax basis, subject to the limitations imposed by the Plan and the Code. The Plan provides for a matching contribution by the Company equal to 50 percent of the first three percent of the participant’s eligible pay. All employee contributions vest immediately. Company matching contributions vest beginning in the second year of employment at 25 percent per year, and are fully vested after five years. The Company contributed $2.0 million, $1.8 million, and $1.6 million to the Plan in fiscal 2013, fiscal 2012, and fiscal 2011, respectively. • However, no breakdown information available in 10k.

  15. Expanded income statements

  16. Revenue by segments

  17. Bakery-café expenses • The increase in the cost of food and paper products in fiscal 2013 as a percentage of net bakery-cafe sales was primarily due to a shift in product mix towards higher ingredient cost products, partially offset by improved leverage of our fresh dough manufacturing costs due to additional bakery-cafe openings. • The decrease in labor expense in fiscal 2013 as a percentage of net bakery-cafe sales was primarily a result of lower incentive compensation. • The increase in occupancy cost in fiscal 2013 as a percentage of net bakery-cafe sales was primarily a result of modestly higher average occupancy costs in new bakery-cafes and higher real estate taxes. • The increase in other operating expenses in fiscal 2013 as a percentage of net bakery-cafe sales was primarily a result of increased marketing expense and certain other controllable expenses, including increased repair and maintenance expenses related to operational initiatives.

  18. Fresh Dough and other product costs • The decrease in the fresh dough and other product cost of sales to franchisees in fiscal 2013 as a percentage of fresh dough and other product sales to franchisees was primarily the result of the year-over-year decrease in ingredient costs and improved leverage from new bakery-cafes and higher comparable net bakery-cafe sales.

  19. Depreciation and amortization by segments • Depreciation is provided using the straight-line method over the estimated useful lives of the assets.

  20. General and administrative expenses • The decrease in general and administrative expenses in fiscal 2013 as a percent of total revenues was primarily due to lower incentive compensation and improved leverage from higher comparable net bakery-cafe sales. • Panera recognized gift card breakage as a reduction of general and administrative expenses of $2.8 million for the fiscal year ended December 31, 2013, $1.8 million for the fiscal year ended December 25, 2012. • Stock-based compensation expense is included in general and administrative expenses in the Consolidated Statements of Comprehensive Income. • For fiscal 2013 and 2012, compensation expense related to deferred annual bonus match awards was $2.1 million and $2.3 million, net of capitalized compensation expense of $0.1 millionand $0.2 million, respectively, and was included in general and administrative expenses in the Consolidated Statements of Comprehensive Income. • For fiscal 2013 and 2012 stock-based compensation expense related to SSARs was $0.2 millionand $0.1 million, respectively, and was charged to general and administrative expenses in the Consolidated Statements of Comprehensive Income.

  21. PRE-OPENING EXPENSES • All pre-opening expenses directly associated with the opening of new bakery-cafe locations, which consists primarily of pre- opening rent expense, labor, and food costs incurred during in-store training and preparation for opening, but exclude manager training costs which are included in labor expense in the Consolidated Statements of Comprehensive Income, are expensed when incurred.

  22. Interest expense • As of December 31, 2013 and December 25, 2012 the Company had no loans outstanding under the Credit Agreement. • Debt issuance costs incurred in connection with the issuance of long-term debt are capitalized and amortized to interest expense based on the related debt agreement using the straight-line method, which approximates the effective interest method.

  23. Appropriate tax rate • Panera’s effective tax rates have differed from the statutory tax rate primarily due to the impact of state taxes, partially offset by favorable U.S. rules related to donations of inventory to charitable organizations and domestic manufacturing. Our future effective tax rates could be adversely affected by changes in the valuation of our deferred tax assets, or changes in tax laws, regulations, accounting principles, or interpretations thereof.

  24. Reconciliation of equity

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