8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 9, 2006

PANERA BREAD COMPANY

(Exact name of registrant as specified in its charter)

Delaware	000-19253	04-2723701
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6710 Clayton Road Richmond Heights, MO	63117
(Address of principal executive offices)	(Zip Code)

314-633-7100

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02. Results of Operations and Financial Condition
	Item 9.01. Financial Statements and Exhibits
SIGNATURES
	Exhibit Index
Press Release

Item 2.02. Results of Operations and Financial Condition

     On February 9, 2006, Panera Bread Company announced its financial results for the quarter and fiscal year ended December 27, 2005 and discussed earnings targets for the first quarter and fiscal year 2006. A copy of the earnings press release, dated February 9, 2006, issued in connection with the announcement is furnished as Exhibit 99.1 to this report.

     The earnings press release contains non-GAAP financial measures that adjust actual 2005 earnings results to reflect the effect of new stock option expensing rules. Panera Bread Company’s anticipated adoption of SFAS 123R on a prospective basis for fiscal 2006 means that fiscal 2006 GAAP results for each quarter and for the year as a whole will not be comparable to the GAAP results for fiscal year 2005, because the GAAP results for fiscal year 2006 will include stock option expense on a fair value basis, but the results for fiscal year 2005 do not. The Company uses information for fiscal year 2005 adjusted to reflect the effect of the new stock option expense rule as if it were in effect for 2005 to provide a comparable basis for evaluating changes in the operations of the Company between fiscal years 2005 and 2006. The Company believes that providing a comparable basis assists it in assessing the Company’s performance and in planning, forecasting, and analyzing future periods. The Company believes this measure is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making.

Item 9.01. Financial Statements and Exhibits

     (c) Exhibits

Exhibit No.		Exhibit
	99.1	Press Release, dated February 9, 2006 (furnished pursuant to Item 2.02)

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PANERA BREAD COMPANY
By:	/s/ Mark E. Hood
	Name:	Mark E. Hood
	Title:	Senior Vice President, Chief Financial Officer

Date: February 9, 2006

Exhibit Index

Exhibit No.	Exhibit
99.1	Press Release, dated February 9, 2006 (furnished pursuant to Item 2.02)

EX-99.1

Exhibit 99.1

PRESS RELEASE

Contact: Mark E. Hood
Senior Vice President, Chief Financial Officer

Phone:   (314) 633-7255

Panera Bread Reports Financial Results for the Fiscal Year and Fourth Quarter Ended December 27,
2005 and Raises 2006 Earnings Per Share Target

HIGHLIGHTS

• Fiscal 2005 and fourth quarter net income increased 35% and 15%, respectively

• Fiscal 2005 and fourth quarter earnings per diluted share increased 32% and 13%, respectively

• Fiscal 2005 and fourth quarter system-wide comparable bakery-cafe sales increased 7.8% and 7.7%, respectively

• 53 bakery-cafes opened in fourth quarter bringing 2005 openings to 139

• System-wide bakery-cafes reached 877 units as of December 27, 2005

• Fiscal 2006 EPS target raised to $1.91 to $1.95 (including $0.13 for option expense)

• First quarter 2006 EPS target set at $0.45 to $0.46 (including $0.03 for option expense)

St. Louis, MO, February 9, 2006 — Panera Bread Company (Nasdaq:PNRA) today reported that earnings per diluted share for the fiscal year ended December 27, 2005 increased 32% to $1.65 compared to $1.25 per diluted share for the fiscal year ended December 25, 2004. Net income for the fiscal year ended December 27, 2005 increased 35% to $52.2 million compared to $38.6 million for the fiscal year ended December 25, 2004.

For the twelve weeks ended December 27, 2005, earnings per diluted share increased 13% to $0.51 compared to $0.45 for the twelve weeks ended December 25, 2004. Net income for the twelve weeks ended December 27, 2005 increased 15% to $16.2 million compared to $14.0 million for the twelve weeks ended December 25, 2004.

The Company’s fourth quarter and fiscal 2005 consolidated statements of operations and margin analysis are attached as Schedule I. The following table sets forth, for the periods indicated, certain items included in the Company’s consolidated statements of operations (in thousands, except per share data and percentages):

	Fiscal Year Ended				Percentage
	December 27, 2005		December 25, 2004		Increase
Total revenue	$	640,275	$	479,139		34	%
Net income	$	52,183	$	38,580		35	%
Diluted earnings per share	$	1.65	$	1.25		32	%
Shares used in diluted EPS calculation		31,651		30,768

	Twelve Weeks Ended				Percentage
	December 27, 2005		December 25, 2004		Increase
Total revenue	$	173,329	$	130,146		33	%
Net income	$	16,162	$	14,043		15	%
Diluted earnings per share	$	0.51	$	0.45		13	%
Shares used in diluted EPS calculation		31,880		30,977

1

As of December 27, 2005, there were 877 Panera Bread bakery-cafes open. During the twelve weeks ended December 27, 2005, 53 bakery-cafes were opened, 1 bakery-cafe was closed, and 21 bakery- cafes were acquired by the Company from a franchisee. The breakdown of bakery-cafes by Company-owned and franchised is as follows:

	Company-owned			Franchised			Total System
Bakery-cafes as of October 4, 2005		265			560			825
Bakery-cafes opened		26			27			53
Bakery-cafes closed		(1	)		—			(1	)
Bakery-cafes acquired (sold)		21			(21	)		—
Bakery-cafes as of December 27, 2005		311			566			877

Fourth Quarter 2005 Business Review

The Company’s key metrics showed continued strength in the fourth quarter. Revenues increased 33% from the same period in the prior year. The increased revenues resulted from the 139 new bakery-cafes opened system-wide since the end of 2004 combined with the system-wide increase in comparable bakery-cafe sales of 7.7% (7.4% company and 7.8% franchise). Fourth quarter system-wide average weekly sales increased 6.4% to $40,594, and system-wide operating weeks totaled 10,201. During the quarter, the Company opened 53 bakery-cafes (26 company and 27 franchise). The 26 company bakery-cafe openings compares to 15 opened in the same period in the prior year.

As indicated in the Company’s prior releases, the pre-opening costs and inefficiencies associated with the increased openings combined with higher market research costs were expected to result in slower growth in earnings in the fourth quarter. Fourth quarter net income and earnings per diluted share of $16.2 million and $0.51, respectively, exceeded the Company’s expectations at the start of the quarter ($0.48 to $0.49) as a result of the strength of comparable bakery-cafe sales. However, the higher than expected sales and earnings in the fourth quarter also led to increased incentive compensation costs during the quarter.

2006 Business Outlook

The Company today raised its full year fiscal 2006 earnings per diluted share target to $1.91 to $1.95 (including $0.13 for option expense), an increase of 26% to 28% from comparable pro forma 2005 results (including footnote option expense of $0.13). This increase in targeted EPS is based on upward adjustments in targeted ranges on the company’s key metrics. The Company today has raised its 2006 system-wide comparable sales growth target to 4.0% to 6.0% (equivalent to 2 year comps of approximately 12% to 14%). Additional assumptions on 2006 key metrics include new bakery-cafe development of 150 to 160 bakery-cafes (70 to 75 company and 80 to 85 franchise), average weekly sales of $39,200 to $40,200, and operating weeks of 48,500 to 49,000.

The 2006 EPS target is stated consistent with the implementation of SFAS No.123R, “Share Based Payment,” which requires the Company to begin expensing stock options in fiscal 2006. The Company anticipates the impact of expensing options in 2006 will lower EPS by $0.13 in 2006 (reflected in target). The Company anticipates it will adopt SFAS 123R prospectively effective December 28, 2005. The impact of option expense in prior years, as reported under SFAS 123 in the footnotes to the Company’s financial statements, was $0.13, $0.10, $0.06, and $0.05 per share in 2005, 2004, 2003, and 2002, respectively.

As previously disclosed, the Company will adopt a new quarterly calendar (4-5-4) in 2006 whereby each of its quarters will include 13 weeks, rather than its current calendar which has 16 weeks in the first quarter and 12 weeks in the second, third, and fourth quarters. Supplemental information presenting the Company’s unaudited pro forma consolidated statements of operations and margin analysis for each of the quarters of fiscal 2005 conformed to the 2006 quarterly presentation is attached as Schedule II. The Company intends to show pro forma results for 2005, in addition to historical results, for quarterly comparisons in 2006.

2

The Company is today setting an earnings per diluted share target for the first quarter of 2006 (which include the 13 weeks ending March 28, 2006) of $0.45 to $0.46 (including $0.03 for option expense), an increase of 25% to 28% from pro forma comparable results for the 13 weeks ended March 29, 2005. Pro forma results for the 13 weeks ended March 29, 2005 were $0.36 per diluted share (including footnote option expense of $0.03). Actual first quarter results for 2005 (which included 16 weeks and three days) were $0.44 per diluted share.

The first quarter target assumes system-wide comparable sales growth of 8.0% to 9.0%, system-wide average weekly sales of $38,800 to $39,300, and system-wide operating weeks of 11,475 to 11,525. Bakery-cafe openings are expected to be 23 (9 company and 14 franchise) compared to 24 (11 company and 13 franchised) in the comparable 13 week period in 2005.

Ron Shaich, chairman and chief executive officer commented, “In 2005 our EPS increased 32% over 2004. Since 2001 our earnings per share has grown at a compounded rate of 39%. This half decade long record of performance is reflective of the strength of our concept and demonstrates the vitality of our growing national brand. We are excited by the quick start to 2006, and are more confident than ever of our ability to deliver a year of 26% to 28% EPS growth as we continue to develop, execute and further innovate the Panera Bread brand.”

The Company will discuss 2005 results in a conference call that will be broadcast on the internet at 8:30 A.M. Eastern Time on February 10, 2006. To access the call or view a copy of this release (when issued), go to http://www.panerabread.com/about_investor.aspx. Access to the call and the release will be archived for one year.

Included above are franchised and system-wide comparable bakery-cafe sales increases. System-wide sales are a non-GAAP financial measure that includes sales at all Company bakery-cafes and franchise bakery-cafes, as reported by franchisees. Management uses system-wide sales information internally in connection with store development decisions, planning, and budgeting analyses. Management believes system-wide sales information is useful in assessing consumer acceptance of the Company’s brand and facilitates an understanding of the Company’s financial performance as the Company’s franchisees pay royalties and contribute to advertising pools based on a percentage of their sales.

Panera Bread Company owns and franchises bakery-cafes under the Panera Bread^® and Saint Louis Bread Co.^® names. The Company is a leader in the emerging specialty bread/cafe category due to its unique bread combined with a quick, casual dining experience. Additional information is available on the Company’s website, www.panera.com.

Matters discussed in this news release, including any discussion or impact, express or implied, on the Company’s anticipated growth, operating results and future earnings per share contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are often identified by the words “believe”, “positioned”, “estimate”, “project”, “target”, “continue”, “intend”, “expect”, “future”, “anticipates”, and similar expressions. All forward-looking statements included in this release are made only as of the date of this release, and we do not undertake any obligation to publicly update or correct any forward-looking statements to reflect events or circumstances that occur or which we hereafter become aware, after that date. Forward-looking information expresses management’s present belief, expectations, or intentions regarding the Company’s future performance. The Company’s actual results could differ materially from those set forth in the forward-looking statements due to known and unknown risks and uncertainties and could be negatively impacted by a number of factors. These factors include but are not limited to the following: variations in the number and timing of bakery-cafe openings; the ability by the Company and franchisees to operate additional bakery-cafes profitably; public acceptance of new bakery-cafes; competition; national and regional weather conditions; changes in restaurant operating costs, particularly market changes, food and labor costs, and inflation; and other factors that may affect retailers in general. These and other risks are discussed from time to time in the Company’s SEC reports, including its Form 10-K for the year ended December 25, 2004 and its quarterly reports on Form 10-Q.

3

Schedule I

PANERA BREAD COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share amounts)

	For the twelve weeks ended						For the fiscal year ended
	December 27, 2005			December 25, 2004			December 27, 2005			December 25, 2004
Revenues:
Bakery-cafe sales	$	136,994		$	99,243		$	499,422		$	362,121
Franchise royalties and fees		14,154			11,915			54,309			44,449
Fresh dough sales to franchisees		22,181			18,988			86,544			72,569
Total revenue		173,329			130,146			640,275			479,139
Costs and expenses:
Bakery-cafe expenses:
Cost of food and paper products		38,914			27,535			142,675			101,832
Labor		40,693			29,859			151,524			110,790
Occupancy		9,720			7,129			37,389			26,730
Other operating expenses		18,144			11,570			70,003			51,044
Total bakery-cafe expenses		107,471			76,093			401,591			290,396
Fresh dough cost of sales to franchisees		19,143			16,819			75,036			65,627
Depreciation and amortization		8,530			6,598			33,011			25,298
General and administrative expenses		12,136			8,002			46,301			33,338
Pre-opening expenses		1,295			544			3,241			2,642
Total costs and expenses		148,575			108,056			559,180			417,301
Operating profit		24,754			22,090			81,095			61,838
Interest expense		13			(2	)		50			18
Other (income) expense, net		(711	)		(21	)		(1,133	)		1,065
Income before income taxes		25,452			22,113			82,178			60,755
Income taxes		9,290			8,070			29,995			22,175
Net income	$	16,162		$	14,043		$	52,183		$	38,580
Net income per share:
Basic	$	0.52		$	0.46		$	1.69		$	1.28
Diluted	$	0.51		$	0.45		$	1.65		$	1.25
Weighted average shares used in computation:
Basic		31,090			30,390			30,871			30,154
Diluted		31,880			30,977			31,651			30,768

4

Schedule I (continued)

PANERA BREAD COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
MARGIN ANALYSIS
(unaudited)

The following table sets forth the percentage relationship to total revenues, except where otherwise indicated, of certain items included in the Company’s consolidated statements of operations for the period indicated. Percentages may not add due to rounding:

	For the twelve weeks ended						For the fiscal year ended
	December 27, 2005			December 25, 2004			December 27, 2005			December 25, 2004
Revenues:
Bakery-cafe sales		79.0	%		76.2	%		78.0	%		75.6	%
Franchise royalties and fees		8.2			9.2			8.5			9.3
Fresh dough sales to franchisees		12.8			14.6			13.5			15.1
Total revenue		100.0	%		100.0	%		100.0	%		100.0	%
Costs and expenses:
Bakery-cafe expenses (1):
Cost of food and paper products		28.4	%		27.7	%		28.6	%		28.1	%
Labor		29.7			30.1			30.3			30.6
Occupancy		7.1			7.2			7.5			7.4
Other operating expenses		13.2			11.7			14.0			14.1
Total bakery-cafe expenses		78.4			76.7			80.4			80.2
Fresh dough cost of sales to franchisees (2)		86.3			88.6			86.7			90.4
Depreciation and amortization		4.9			5.1			5.2			5.3
General and administrative expenses		7.0			6.1			7.2			7.0
Pre-opening expenses		0.7			0.4			0.5			0.6
Total costs and expenses		85.7			83.0			87.3			87.1
Operating profit		14.3			17.0			12.7			12.9
Interest expense		—			—			—			—
Other (income) expense, net		(0.4	)		—			(0.2	)		0.2
Income before income taxes		14.7			17.0			12.8			12.7
Income taxes		5.4			6.2			4.7			4.6
Net income		9.3	%		10.8	%		8.2	%		8.1	%

(1)	As a percentage of Company bakery-cafe sales.
(2)	As a percentage of fresh dough sales to franchisees.

5

Schedule II

As previously reported, the Company has adopted a new quarterly calendar beginning fiscal 2006 whereby each of its quarters will include 13 weeks (4 week, 5 week, and 4 week period progressions in each quarter), rather than its previous quarterly calendar which had 16 weeks in the first quarter and 12 weeks in the second, third and fourth quarters (4 week period progressions in each quarter). The Company’s fiscal week will continue to end on a Tuesday, with fiscal 2006 ending on December 26, 2006. The following presents supplemental unaudited pro forma consolidated statements of operations of the Company as if the new quarterly calendar with 13 weeks in each quarter had been adopted for the first, second, and third quarters of fiscal 2005. The first quarter of fiscal 2005 below includes an additional three days as the Company changed its fiscal week in 2005 to end on a Tuesday rather than a Saturday. These additional three days did not have a material impact on the Company’s financial statements.

PANERA BREAD COMPANY
SUPPLEMENTAL UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

	For the thirteen weeks ended
	March 29, 2005		June 28, 2005			September 27, 2005			December 27, 2005
Revenues:
Bakery-cafe sales	$	110,559	$	117,836		$	123,965		$	147,062
Franchise royalties and fees		12,448		13,214			13,426			15,221
Fresh dough sales to franchisees		21,130		20,858			20,681			23,875
Total revenue		144,137		151,908			158,072			186,158
Costs and expenses:
Bakery-cafe expenses:
Cost of food and paper products		29,478		34,925			36,914			41,358
Labor		34,038		36,250			37,945			43,291
Occupancy		8,626		8,751			9,390			10,622
Other operating expenses		15,509		17,209			17,588			19,697
Total bakery-cafe expenses		87,651		97,135			101,837			114,968
Fresh dough cost of sales to franchisees		19,004		17,817			17,585			20,630
Depreciation and amortization		7,313		7,868			8,662			9,168
General and administrative expenses		10,304		11,795			11,083			13,119
Pre-opening expenses		577		552			799			1,313
Total costs and expenses		124,849		135,167			139,966			159,198
Operating profit		19,288		16,741			18,106			26,960
Interest expense		10		17			9			14
Other (income) expense, net		31		(131	)		(451	)		(582	)
Income before income taxes		19,247		16,855			18,548			27,528
Income taxes		7,025		6,152			6,770			10,048
Net income	$	12,222	$	10,703		$	11,778		$	17,480
Net income per share:
Basic	$	0.40	$	0.35		$	0.38		$	0.56
Diluted	$	0.39	$	0.34		$	0.37		$	0.55
Weighted average shares used in computation:
Basic		30,583		30,836			30,990			31,098
Diluted		31,366		31,653			31,697			31,873

In accordance with Statement of Financial Accounting Standards No. 123 (SFAS 123), “Accounting for Stock-Based Compensation,” as amended by SFAS 148, “Accounting for Stock-Based Compensation — Transition and Disclosure — an Amendment of SFAS 123,” the Company elected to follow the provisions of Accounting Principles Board Opinion No. 25 (APB 25), “Accounting for Stock Issued to Employees,” and provide the required pro forma disclosure in the footnotes to the financial statements as if the measurement provisions of SFAS 123 had been adopted. Accordingly, no compensation costs have been recognized in the Consolidated Statements of Operations for the stock option plans, as the exercise price of stock options equals the market price of the underlying stock on the grant date. Under the new quarterly calendar, stock-based compensation costs would have decreased the unaudited pro forma earnings per diluted share by $0.03, $0.04, $0.03, and $0.03 for the first, second, third, and fourth quarters of fiscal 2005, respectively.

6

Schedule II (continued)

The following table sets forth the percentage relationship to total revenues, except where otherwise indicated, of certain items included in the Company’s supplemental unaudited pro forma consolidated statements of operations for the period indicated. Percentages may not add due to rounding:

PANERA BREAD COMPANY
SUPPLEMENTAL UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
MARGIN ANALYSIS

	For the thirteen weeks ended
	March 29, 2005			June 28, 2005			September 27, 2005			December 27, 2005
Revenues:
Bakery-cafe sales		76.7	%		77.6	%		78.4	%		79.0	%
Franchise royalties and fees		8.6			8.7			8.5			8.2
Fresh dough sales to franchisees		14.7			13.7			13.1			12.8
Total revenue		100.0	%		100.0	%		100.0	%		100.0	%
Costs and expenses:
Bakery-cafe expenses (1):
Cost of food and paper products		26.7	%		29.6	%		29.8	%		28.1	%
Labor		30.8			30.8			30.6			29.4
Occupancy		7.8			7.4			7.6			7.2
Other operating expenses		14.0			14.6			14.2			13.4
Total bakery-cafe expenses		79.3			82.4			82.1			78.2
Fresh dough cost of sales to franchisees (2)		89.9			85.4			85.0			86.4
Depreciation and amortization		5.1			5.2			5.5			4.9
General and administrative expenses		7.1			7.8			7.0			7.0
Pre-opening expenses		0.4			0.4			0.5			0.7
Total costs and expenses		86.6			89.0			88.5			85.5
Operating profit		13.4			11.0			11.5			14.5
Interest expense		—			—			—			—
Other (income) expense, net		—			(0.1	)		(0.3	)		(0.3	)
Income before income taxes		13.4			11.1			11.7			14.8
Income taxes		4.9			4.0			4.3			5.4
Net income		8.5	%		7.0	%		7.5	%		9.4	%

(1)	As a percentage of Company bakery-cafe sales.
(2)	As a percentage of fresh dough sales to franchisees.

7