-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JCx1IaiQPe1xHr7sRuT4+6UqYWYAY3V3wpFg99OWuZ6942vBB38TxJyFKglw4Iz0 fYYr2HUabLkz2Q+4eFmAVA== 0001047469-99-022751.txt : 19990625 0001047469-99-022751.hdr.sgml : 19990625 ACCESSION NUMBER: 0001047469-99-022751 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990417 FILED AS OF DATE: 19990601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PANERA BREAD CO CENTRAL INDEX KEY: 0000724606 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 042723701 STATE OF INCORPORATION: DE FISCAL YEAR END: 1226 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19253 FILM NUMBER: 99638577 BUSINESS ADDRESS: STREET 1: 19 FID KENNEDY AVE CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6174232100 MAIL ADDRESS: STREET 1: 19 FID KENNEDY AVE CITY: BOSTON STATE: MA ZIP: 02210 FORMER COMPANY: FORMER CONFORMED NAME: AU BON PAIN CO INC DATE OF NAME CHANGE: 19940201 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 - - - - - - - - - - - - - - FORM 10-Q (Mark one) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - ----- EXCHANGE ACT OF 1934 For the quarterly period ended April 17, 1999 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR l5(d) OF THE SECURITIES - ----- EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number 0-19253 ----------- PANERA BREAD COMPANY ------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 04-2723701 ------------------------------ ------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 7930 BIG BEND BLVD, WEBSTER GROVES, MO 63119 ---------------------------------------- -------- (Address of principal executive offices) (Zip code) (314) 918-7779 -------------------------------------------------- (Registrant's telephone number, including area code) Au Bon Pain Co., Inc. 19 Fid Kennedy Avenue, Boston, Ma 02210 --------------------------------------------------- (Former name, former address and former fiscal year, if changed from last report) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 and 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- -------- As of May 24, 1999, 10,584,065 shares and 1,557,658 shares of the registrant's Class A and Class B Common Stock, respectively, $.0001 par value, were outstanding. PANERA BREAD COMPANY INDEX
PART I. FINANCIAL INFORMATION PAGE - ------- --------------------- ---- ITEM 1. FINANCIAL STATEMENTS.................... 2 Consolidated Balance Sheets as of April 17, 1999 and December 26, 1998.... 2 Consolidated Statements of Operations for the sixteen weeks ended April 17, 1999 and April 18, 1998................. 3 Consolidated Statements of Cash Flows for the sixteen weeks ended April 17, 1999 and April 18, 1998................. 4 Notes to Consolidated Financial Statements.............................. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.............................. 9 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSUES ABOUT MARKET RISK....................... 17 PART II. OTHER INFORMATION - -------- ------------------- Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........................ 17 ITEM 5. OTHER INFORMATION....................... 17 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........ 27
1 Item 1. Financial Statements PANERA BREAD COMPANY CONSOLIDATED BALANCE SHEETS
April 17, December 26, 1999 1998 ------------ ------------ (unaudited) ASSETS Current assets: Cash and cash equivalents.................... $ 1,068,397 $ 1,860,445 Accounts receivable, net..................... 1,732,901 1,301,185 Inventories.................................. 1,628,507 1,662,573 Prepaid expenses............................. 486,745 1,780,922 Refundable income taxes...................... 98,483 115,297 Deferred income taxes........................ 1,500,000 1,500,000 ------------ ------------ Total current assets..................... 6,515,033 8,220,422 ------------ ------------ Property and equipment, less accumulated depreciation and amortization.... 40,941,358 38,855,569 ------------ ------------ Other assets: Assets held for sale, net, non-current (Note D)................................... 68,084,693 69,394,736 Notes receivable............................. -- 20,000 Intangible assets, net of accumulated amortization............................... 19,462,870 19,786,858 Deferred financing costs..................... 575,009 768,232 Deposits and other........................... 4,348,294 4,138,219 Deferred income taxes........................ 12,434,099 12,434,099 ------------ ------------ Total other assets....................... 104,904,965 106,542,144 ------------ ------------ Total assets............................. $152,361,356 $153,618,135 ------------ ------------ ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable............................. $ 3,542,400 $ 4,020,239 Liabilities held for sale, net (Note D)...... 3,503,322 6,469,618 Accrued expenses............................. 11,993,509 5,927,720 Current maturities of long term debt......... 64,642,220 40,800 ------------ ------------ Total current liabilities................ 83,681,451 16,458,377 Long term debt, less current maturities........ -- 34,089,587 Convertible Subordinated Notes................. -- 30,000,000 ------------ ------------ Total liabilities........................ 83,681,451 80,547,964 ------------ ------------ Minority interest.............................. (364,487) (256,761) Stockholders' equity: Common stock, $.0001 par value: Class A, shares authorized 50,000,000; issued and outstanding 10,543,073 and 10,269,628 in 1999 and 1998, respectively... 1,057 1,047 Class B, shares authorized 2,000,000; issued and outstanding 1,557,658 and 1,605,741 in 1999 and 1998, respectively.... 156 156 Additional paid-in capital.................... 70,374,704 70,031,945 Retained earnings............................. (1,331,525) 3,293,784 ------------ ------------ Total stockholders' equity.............. 69,044,392 73,326,932 ------------ ------------ Total liabilities and stockholders' equity................................ $152,361,356 $153,618,135 ------------ ------------ ------------ ------------
The accompanying notes are an integral part of the consolidated financial statements. 2 PANERA BREAD COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
For The Sixteen Weeks Ended ----------------------------- April 17, April 18, 1999 1998 ----------- ----------- Revenues: Restaurant sales....................... $73,411,116 $69,719,739 Franchise sales and other revenues..... 4,513,739 5,243,544 ----------- ----------- 77,924,855 74,963,283 Costs and expenses: Cost of food and paper products........ 26,000,706 28,066,774 Restaurant operating expenses: Labor............................ 21,978,028 19,437,842 Occupancy (Note E)............... 8,800,390 8,278,953 Other (Note E)................... 8,787,365 8,035,516 ----------- ----------- 39,565,783 35,752,311 Depreciation and amortization.......... 1,800,361 5,267,800 General and administrative expenses.... 6,888,261 5,474,491 Non-recurring charge (Note D).......... 5,545,000 1,210,000 ----------- ----------- 79,800,111 75,771,376 ----------- ----------- Operating loss............................... (1,875,256) (808,093) Interest expense, net........................ 1,883,750 2,126,741 Other expense, net........................... 403,596 137,565 Loss on sale of assets (Note F).............. -- 734,823 Minority interest............................ (11,293) 17,422 ------------ ----------- Loss before Provision (benefit) from income taxes.......................... (4,151,309) (3,824,644) Income tax expense (benefit)................. 474,000 (863,000) ------------ ----------- Net loss..................................... $(4,625,309) $(2,961,644) ------------ ----------- ------------ ----------- Net loss per common share - basic............ $ (0.38) $ (0.25) ------------ ----------- ------------ ----------- Net loss per common share - diluted.......... $ (0.38) $ (0.25) ------------ ----------- ------------ ----------- Weighted average number of common and common equivalent shares outstanding - basic...... 12,102,821 11,839,546 ------------ ----------- ------------ ----------- Weighted average number of common and common equivalent shares outstanding - diluted.... 12,102,821 11,839,546 ------------ ----------- ------------ -----------
The accompanying notes are an integral part of the consolidated financial statements. 3 PANERA BREAD COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
For The Sixteen Weeks Ended -------------------------------- April 17, April 18, 1999 1998 ------------ ----------- Cash flows from operations: Net loss..................................... $(4,625,309) $(2,961,644) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization............... 1,800,361 5,267,800 Amortization of deferred financing costs.... 199,342 242,408 Provision for losses on accounts receivable. 16,820 17,935 Minority interest........................... (11,293) 17,422 Loss on disposal of assets.................. -- 734,823 Non-recurring charge........................ 5,545,000 1,210,000 Changes in operating assets and liabilities: Accounts receivable.......................... (4,761) 1,157,805 Inventories.................................. 69,803 723,344 Prepaid expenses............................. (1,850,209) (926,077) Accounts payable............................. (1,744,973) (35,409) Refundable income taxes...................... 16,814 -- Accrued expenses............................. 1,667,018 (2,302,454) ----------- ----------- Net cash provided by operating activities.. 1,078,613 3,145,953 ----------- ----------- Cash flows from investing activities: Additions to property and equipment.......... (5,196,005) (4,351,295) Proceeds from sale of assets................. -- 12,693,917 Change in cash included in net current Liabilities held for sale.................. (224,213) -- Payments received on notes receivable........ 100,540 78,767 Increase in intangible assets................ (44,750) (59,197) Decrease (increase) in deposits and other.... 2,651,159 (2,240,253) ----------- ----------- Net cash provided by (used in) investing Investing activities...................... (2,713,269) 6,121,939 ----------- ----------- Cash flows from financing activities: Exercise of employee stock options........... -- 388,208 Proceeds from long term debt issuance........ 32,101,195 29,536,195 Principal payments on long term debt......... (31,498,800) (38,888,100) Proceeds from issuance of common stock....... 342,765 134,343 Deferred financing costs..................... (6,119) (421,110) Decrease in minority interest................ (96,433) (84,036) ----------- ----------- Net cash provided by (used in)financing Financing activities..................... 842,608 (9,334,500) ----------- ----------- Net decrease in cash and cash equivalents...... (792,048) (66,608) ----------- ----------- Cash and cash equivalents, at beginning of period....................................... 1,860,445 853,025 ----------- ----------- Cash and cash equivalents, at end of period.... $ 1,068,397 $ 786,417 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of the consolidated financial statements. 4 Notes to Consolidated Financial Statements Note A - Basis of Presentation The accompanying unaudited, consolidated financial statements of Panera Bread Company and Subsidiaries (the "Company") have been prepared in accordance with instructions to Form 10-Q and, therefore, do not include all information and footnotes normally included in financial statements prepared in conformity with generally accepted accounting principles. They should be read in conjunction with the financial statements of the Company for the fiscal year ended December 26, 1998. The accompanying financial statements are unaudited and include all adjustments (consisting of normal recurring adjustments and accruals) that management considers necessary for a fair presentation of its financial position and results of operations for the interim periods, and are not necessarily indicative of the results that may be expected for the entire year. Note B - Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share.
For The Sixteen Weeks Ended ------------------------------- April 17, April 18, 1999 1998 Net loss used in net loss per common share - basic.............. $(4,625,309) $(2,961,644) Net loss used in net loss per common share - diluted............. $(4,625,309) $(2,961,644) Weighted average number of shares outstanding - basic................ 12,102,821 11,839,546 Effect of dilutive securities: Employee stock options......... -- -- Stock warrants................. -- -- ----------- ----------- Weighted average number of shares outstanding - diluted.............. 12,102,821 11,839,546 Net loss per common share - basic.... $ (0.38) $ (0.25) Net loss per common share - diluted.. $ (0.38) $ (0.25)
During the first quarter of 1998 and 1999, options to purchase 1,176,000 shares of common stock at $25.50 per share were outstanding in conjunction with the issuance of $30 million of convertible subordinated notes. These shares were not included in the computation of diluted earnings per share for the sixteen weeks ended April 17, 1999 and the sixteen weeks ended April 18, 1998 because the addition of interest expense, after the effect of income taxes, of $855,000 to net income (loss) would have been antidilutive. 5 During the first quarter of 1998 and the first quarter of 1999, options to purchase 422,080 and 248,450 shares of common stock at an average price of $8.06 and $6.06 per share, respectively, and warrants to purchase 96,000 shares of common stock at $5.62 per share were outstanding but were not included in the computation of diluted earnings per share for the sixteen weeks ended April 17, 1999 or the sixteen weeks ended April 18, 1998, because the effect would have been antidilutive. Note C - Recent Accounting Pronouncements None Note D - Sale of Au Bon Pain Division and Non-recurring charges The Company, together with its wholly-owned subsidiary ABP Holdings, Inc. ("ABPH") entered into a Stock Purchase Agreement dated August 12, 1998 and amended on October 28, 1998 with ABP Corporation (the "Buyer"), an affiliate of Bruckmann, Rosser, Sherrill & Co., L.P., relative to the transfer of substantially all of the assets and liabilities of the Au Bon Pain Division business (the "Au Bon Pain Division") and sale of all of the outstanding capital stock of ABPH to the Buyer, whereby the Buyer would become the owner of the Au Bon Pain Division (the "Sale"). The Sale was effective May 16, 1999 for $73 million in cash before contractual purchase price adjustments estimated to be $1 million. The Company, which now consists of the Panera Bread/Saint Louis Bread Co. Business Unit only, has been renamed Panera Bread Company. The proceeds from the sale are being used to pay off all outstanding debt and provide cash for growth. In conjunction with the sale, the Company recorded a non-cash, after-tax loss in the first quarter of approximately $5.5 million. Operating income in the first quarter of 1999 was favorably impacted by $3.8 million due to the suspension of depreciation and amortization associated with the Au Bon Pain Division assets held for sale after August 12, 1998. The Company intends to repay all of its outstanding debt with the proceeds from the Sale. As a result of the completion of the Sale, all outstanding debt as of April 17, 1999 has been included in current liabilities. The Company expects to record an extraordinary charge of approximately $0.6 million associated with the early retirement of outstanding debt in the second quarter of 1999. 6 The assets and liabilities of the Au Bon Pain Division are depicted in the balance sheet as of April 17, 1999 and December 26, 1998 as assets held for re-sale, non-current, net, and as current liabilities, net, and include the following.
April 17, 1999 December 26, 1998 -------------- ----------------- Current assets: Cash and cash equivalents $ 1,528,885 $ 1,304,672 Accounts Receivable 5,140,314 5,584,089 Inventories 4,975,107 5,010,844 Other current assets 846,425 (97,731) ------------ ----------- Total current assets 12,490,731 11,801,874 Current liabilities: Accounts payable 5,852,878 7,120,012 Accrued expenses 10,097,475 11,151,480 Current Portion - Long term debt 43,700 -- ------------- ----------- Total liabilities 15,994,053 18,271,492 Net current liabilities $ 3,503,322 $ 6,469,618 ------------- ----------- ------------- ----------- Non-current assets: Property and equipment Leasehold improvements $ 71,690,246 $71,679,045 Machinery and equipment 54,416,223 53,920,124 Furniture and fixtures 13,649,858 13,716,387 Other 4,079,123 3,505,945 Accumulated depreciation and Amortization (82,680,694) (83,280,735) ------------ ------------ Property and equipment, net 61,154,756 59,540,766 Other assets: Goodwill (Franchise) 64,603 -- Notes receivable 4,016,645 4,097,185 Deposits and other 2,895,551 5,756,785 ----------- ----------- Total other assets 6,976,799 9,853,970 Non-current liabilities: Long term debt 46,862 -- ----------- ----------- Net non-current assets $68,084,693 $69,394,736 ------------- ----------- ------------- -----------
Revenues and net operating income (before the suspension of depreciation and amortization) in the Au Bon Pain Division held for sale as of April 17, 1999 were $48.6 million and $1.3 million, respectively. Note E - Restatement of prior periods Results of operations for the sixteen weeks ended April 18, 1998 have been restated with respect to certain restaurant operating expenses, principally rent, between interim periods. These expenses will now be recognized on a weekly basis during interim reporting periods. Previously three months of these expenses were recorded in each of the Company's quarterly external reporting periods. Since the first quarterly reporting period consists of sixteen weeks, this change resulted in the recognition of an additional $1,533,000 of restaurant operating expense for the period ended April 18, 1998. The second, third and fourth quarters of 1998 will also be restated to reflect a reduction of restaurant operating expense of $605,000, $665,000 and $263,000, respectively. Results for the full fiscal 1998 year 7 remain unchanged. Depicted in the table below are the reported and restated quarterly results.
Quarter Ending --------------------------------------- Ficsal Year 04/18/98 07/11/98 10/03/98 12/26/98 1998 ---- AS REPORTED Net Income $(1,950) $(779) $(18,198) $433 $(20,494) Basic earnings per share (0.16) (0.07) (1.52) 0.03 (1.72) Diluted earnings per share (0.16) (0.07) (1.52) 0.03 (1.72) RESTATED Net Income $(2,962) $(380) $(17,759) $607 $(20,494) Basic earnings per share (0.25) (0.03) (1.49) 0.05 (1.72) Diluted earnings per share (0.25) (0.03) (1.49) 0.05 (1.72)
Note F - Loss on sale of assets On March 23, 1998 the Company sold the Mexico, MO production facility and its wholesale frozen dough business to Bunge Foods Corporation ("Bunge") for approximately $13 million in cash, and recognized a pre-tax loss of $734,023. 8 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table sets forth the percentage relationship to total revenues of certain items included in the Company's consolidated statements of operations for the periods indicated:
For The Sixteen Weeks Ended ------------------------------------ April 17, April 18, 1999 1998 ---------- ---------- Revenues: Restaurant sales.................... 94.2% 93.0% Franchise sales and other revenues.. 5.8 7.0 ------ ----- 100.0% 100.0% Costs and expenses: Cost of food and paper products..... 33.3% 37.4% Restaurant operating expenses....... 50.8 47.8 Depreciation and amortization....... 2.3 7.0 General and administrative.......... 8.8 7.3 Non-recurring charge................ 7.1 1.6 ----- ----- 102.3 101.1 ----- Operating margin...................... (2.3) (1.1) Interest expense, net................. 2.5 2.8 Other expense, net.................... 0.5 0.2 Loss on sale of assets................ -- 1.0 Minority interest..................... -- 0.0 ----- ----- Income (loss) before provision for income taxes........................ (5.3) (5.1) Provision (benefit) for income taxes.. 0.6 (1.1) ----- ------ Net income (loss)..................... (5.9)% (4.0)% ----- ------ ----- ------
General The Company's revenues are derived from restaurant sales and franchise sales and other revenues. Franchise sales and other revenues include sales of frozen dough products to franchisees and others, royalty income and franchise fees. Certain expenses (cost of food and paper products, restaurant operating expenses, and depreciation and amortization) relate primarily to restaurant sales, while general and administrative expenses relate to all areas of revenue generation. The Company's fiscal year ends on the last Saturday in December. The Company's fiscal year normally consists of 13 four-week periods, with the first, second and third quarters ending 16 weeks, 28 weeks and 40 weeks, respectively, into the fiscal year. 9 Results of Operations Effective May 16, 1999, the Company completed its transaction to sell the Au Bon Pain Division. For the sixteen weeks ended April 17, 1999 the Company has recorded a loss on sale of $5.5 million related to the transaction. Results of operations in the first quarter of 1999 include the results of the subsequently divested Au Bon Pain business unit. Total revenues in the first quarter of 1999 totaled $77.9 million, versus $75.0 million in the comparable quarter of 1998. Revenues in the Panera Bread business unit increased 27% to $29.4 million in the first quarter of 1999. Restaurant sales in the Panera Bread business unit increased 20% to $26.3 million in the first quarter of 1999 from $21.9 million in the first quarter of 1998, principally due to the opening of 13 new Company-operated bakery cafes since the first quarter of 1998. Panera Bread's comparable restaurant sales in the first quarter of 1999 were essentially flat at 0.1% versus the comparable quarter of 1998, which was 6.5%. Franchise sales and other revenues for the Panera Bread business unit increased 174% to $3.0 million in the first quarter of 1999 from $1.1 million in the first quarter of 1998, primarily driven by increased franchise royalties, which grew 185% to 1.0 million in the first quarter of 1999, increased franchise fees and an increase in product sales to franchisees. Total operating income for the Company in the first quarter of 1999 versus the comparable quarter of the previous year (excluding the non-recurring charges taken in both the 1998 and 1999 quarters) increased to $3.7 million in 1999 from $0.4 million in 1998, including $3.8 million in reduced depreciation and amortization expense associated with the Au Bon Pain business unit assets held for sale. Operating income in the Panera Bread Division in the first quarter of 1999 was $0.7 million, on a "stand-alone" pro-forma basis which includes an additional allocation for overhead services provided by Au Bon Pain Co., Inc. During the first quarter of 1999, 1 Panera Bread franchise area development agreement was signed, representing commitments for the development of 15 bakery cafes and increasing the number of franchise commitments to a total of 546 remaining bakery cafes to be developed. In the first quarter of 1999, 20 Panera Bread bakery cafes were opened, including 4 company-owned cafes and 16 franchise-operated cafes. Net Income A one-time $5,545,000 after-tax charge related to the previously announced sale of the Au Bon Pain Division contributed to a net loss in the first quarter of 1999 of $4,625,000 versus a net loss of $2,962,000 in the comparable 1998 period. Interest expense was down at $1,884,000 compared to $2,127,000 in the first quarter of 1998, 10 with other expense of $404,000 at April 17, 1999 compared to $138,000 at April 16, 1998. Liquidity and Capital Resources Subsequent to the end of the first quarter of 1999, the Company divested itself of the Au Bon Pain business unit. The Company is in the process of repaying all of its outstanding debt with the proceeds from the Sale (see Note D). In connection with the early retirement of debt, in the second quarter of 1999 the Company will record an extraordinary non-cash charge of approximately $579,000. The Company's principal requirements for cash are capital expenditures for constructing and equipping new bakery cafes and maintaining or remodeling existing bakery cafes and working capital. To date, the Company has met its requirements for capital with cash from operations, proceeds from the sale of equity and debt securities and bank borrowings. Cash and cash equivalents were $1,068,000 at April 17, 1999 after a reduction of $1,529,000 for the assets held for sale, versus $786,000 at April 18, 1998. Funds provided by operating activities were primarily the result of an increase in accrued expenses and a decrease in deposits offset by a decrease in accounts payable. In the first quarter of 1998 cash was generated by a sale of assets. Total capital expenditures for the sixteen weeks ended April 17, 1999 of $5.2 million were related primarily to the opening of 4 new Company-operated Panera Bread bakery cafes, and to maintaining or remodeling existing bakery cafes. Total capital expenditures in the quarter included $1.5 million associated with the recently divested Au Bon Pain business unit. The expenditures were mainly funded by net cash from operating activities and the use of the Company's revolving line of credit. Total capital expenditures for the sixteen weeks ended April 18, 1998 were $4.4 million. On March 23, 1998 the Company sold its Mexico, MO production facility and its wholesale frozen dough business to Bunge Foods Corporation ("Bunge") for approximately $13 million in cash. The net proceeds of the sale were used to repay the $7.9 million outstanding for the Industrial Revenue Bond and to reduce amounts outstanding under the revolving credit line. There were no gains or losses associated with the early retirement of the Industrial Revenue Bond or the partial repayment of the revolving credit line. As of April 17, 1999 the Company had a $22.0 million unsecured revolving line of credit, bearing interest at either the commercial bank's prime rate plus .25% or LIBOR plus 2.75%, at the Company's option. As of April 17, 1999, $17.9 million was outstanding under the line of credit and an additional $1.1 million of the remaining availability was utilized by outstanding letters of credit issued by the bank on behalf of the Company. Concurrently with the sale of 11 the Au Bon Pain business unit effective May 16,1999, the Company amended its existing credit facility to reduce the unsecured revolving line of credit to $10.0 million, reflecting reduced needs for debt financing. Amounts outstanding under the amended facility bear interest at either LIBOR plus 2.25% or the commercial bank's prime rate plus .75%, at the Company's option. Excluding the expenditures related to the divested Au Bon Pain business unit, the Company currently anticipates spending approximately $14 million in 1999, principally for the opening of new Panera Bread Company bakery cafes and maintaining or remodeling existing cafes. The Company expects to fund these expenditures principally through internally generated cash flow and cash remaining from the sale of the Au Bon Pain business unit after repayment of all outstanding debt. CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS Matters discussed in this report which relate to events or developments that are expected to occur in the future, including any discussion of growth or anticipated operating results are forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933 and Section 21E of the Securities Exchange Act of 1934. (identified by the words "estimate," "project," "anticipates," "expects," "intends," "future," and similar expressions). These are statements which express management's belief, expectations or intentions regarding the Company's future performance. Moreover, a number of factors could cause the Company's actual results to differ materially from those set forth in the forward-looking statements due to known and unknown risks and uncertainties. The following are some of the factors: The ability of the Company to aggressively expand its business going forward is subject to the availability of sufficient capital to it and the developers party to franchise development agreements with the Company. Additionally, the Company's operating results may be affected by many factors, including but not limited to variations in the number and timing of bakery cafe openings and public acceptance of new bakery cafes, competition, commodity costs and other factors that may affect retailers in general. The foregoing list of important factors in not exclusive. Year 2000 Issue The "Year 2000 Issue" is the result of manufactured equipment and computer programs using two digits rather than four to define the applicable year. If the Company's equipment and computer programs with date-sensitive functions are not Year 2000 compliant, they may recognize a date using "00" as the Year 1900 rather than the Year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, but not limited to, a temporary inability to process transactions, generate invoices or engage in similar normal business practices. 12 During 1997, the Company formed an ongoing internal review team to address the Year 2000 Issue that encompasses operating and administrative areas of the Company. Internal information technology professionals are working to identify and resolve all significant Year 2000 issues in a timely and effective manner. The Company's executive management monitors the status of the Year 2000 remediation plans, including an assessment of issues and development of said remediation plans, where necessary, as they relate to internally used software, computer hardware and use of computer applications. The Company has completed a comprehensive inventory of all systems in the cafes, commissaries and corporate offices and has notified critical vendors of the Company's requirements pertaining to the Year 2000 Issue. The Company has completed its assessment of the Year 2000 impact for both information technology ("IT") and Non-IT systems. In regard to IT systems, the Company has identified the following as the main areas of Year 2000 focus: payroll systems, financial systems, network/integration systems, register and store management systems and commissary systems. Network/integration systems are corporate office electronic systems and tools which link various information subsystems and databases, encompassing e-mail and all major financial systems, such as general ledger database systems, and all major operational systems, such as store operating performance database systems. Register systems are the point-of-sale systems used within each retail bakery cafe. These are electronically linked with the personal computer-based store back office management systems also located within each retail bakery cafe, providing tools for the cafe management. Commissary systems allow commissaries to accept electronic orders from cafe's and deliver the ordered product back to the cafes. The cost of addressing the year 2000 issues are included in the overall costs of establishing an independent computer network for Panera Bread. The total cost of establishing the new system is estimated to be approximately $1.7 million of which approximately $350,000 is specifically related to the year 2000 issue. In addition to the above IT systems, the Company has identified the following as the primary Non-IT systems subject to the Year 2000 Issue: ovens, alarms, proofers, HVAC-freezers, and safes. The Company is currently in contact with vendors and/or landlords in order to assess the potential impact. Based on initial review the Company believes the potential impact of the Year 2000 Issue pertaining to Non-IT systems to be minor. Upon full assessment of the impact of the Year 2000 Issue, the Company will address, in order of criticality, the potential issues, and will develop remediation and contingency plans. While the Company believes it is taking all appropriate steps to assure Year 2000 compliance, it is dependent on key business partner and/or vendor compliance to some extent. The Year 2000 Issue is pervasive and complex as virtually every computer operation will be affected in some way. If, due to unforeseen circumstances, the implementation is not completed on a timely basis, or key business partners and/or vendors fail to resolve all significant 13 Year 2000 issues in a timely and effective manner, the Year 2000 Issue could have a material adverse impact on the Company. In addition to the estimated costs outlined above, the Company has estimated the costs for adopting all "worst case" contingency plans to be an additional $320,000. The following chart depicts the phases, status, timetable, estimated cost of completion, contingency plans and risks, and estimated cost of implementing contingency plans pertaining to Year 2000 issues associated with IT systems. The most reasonably likely worst case scenarios are outlined under the columns "Contingency Plan/Risks" and "Estimated Contingency Cost". All information pertaining directly to the Au Bon Pain Division has been removed from this chart, leaving a Panera Bread Company only, year 2000 summary. 14 PANERA BREAD YEAR 2000 SUMMARY FOR IT SYSTEMS
- ------------------- ------------------------- ----------------- ------------- ------------- ------------------------- -------------- AREA/SYSTEM PHASES STATUS TIMETABLE ESTIMATED CONTINGENCY PLAN/RISKS ESTIMATED COST CONTINGENCY COST - ------------------- ------------------------- ----------------- ------------- ------------- ------------------------- -------------- New Financial -Purchase of Integrated Complete 4/99 $800,000 Additional consulting $100,000 Systems - GL, AP, AR, Assets, HR, effort needed. Cash, Property Application certified Management and to be Y2K. Purchasing In Process 6/99 -Implementation Planning Dependent upon ABP making minor -Conversion & Scheduled 7/99 modifications to Interface Programming Secvices Production processes to allow capture of data 8/99 through 11/99 -Testing/Parallel After conversion 9/99 -Production After Parallel - ------------------- ------------------------- ----------------- ------------- ------------- ------------------------- -------------- Payroll- -Contract Negotiations Complete 5/99 $100,000 Outsource -Conversion of Panera In Process 8/99 $20,000 active employees -Production In conjunction 9/99 $5,000 with new financial system -Copy ABP & Panera No plans to 10/99 May have to provide a $20,000 inactive personnel from convert, but way to maintain ABP system for direct will create addresses input to W2 processing 1999 W2s - ------------------- ------------------------- ----------------- ------------- ------------- ------------------------- -------------- Network Systems & -Network Infrastructure Complete 4/99 $350,000 No contingency needed Computer Facility Design as all hardware & software is new & Y2K -Network In Process 6/99 compliant Implementation out for bid In Process 6/99 -Computer Room constructed Bids received 6/99 -Network Bid Assigned Bid assigned 6/99 -Network Install -Voice Mail Replacement In Process 7/99 - ------------------- ------------------------- ----------------- ------------- ------------- ------------------------- -------------- Register Systems -Micros 2400 registers Complete 3/99 $0 No contingency needed and software tested as application for compliancy certified by Micros & tested to be compliant - ------------------- ------------------------- ----------------- ------------- ------------- ------------------------- --------------
15
- ------------------- ------------------------- ----------------- ------------- ------------- ------------------------- -------------- AREA/SYSTEM PHASES STATUS TIMETABLE ESTIMATED CONTINGENCY PLAN/RISKS ESTIMATED COST CONTINGENCY COST - ------------------- ------------------------- ----------------- ------------- ------------- ------------------------- -------------- Register Systems Processes being In process 8/99 $50,000 Contingency not Central Support modified for ease of required - application support for is compliant, if multimarket pricing & modifications are not new product rollout complete is more manual effort. - ------------------- ------------------------- ----------------- ------------- ------------- ------------------------- -------------- Bakery Back -Inventory of Complete 5/99 $300,000 -Development Costs $150,000 Office Systems Applications & Hardware exceed estimates or not completed on schedule. -Design New BOH Would need to hire register applications In Process 6/99 rollout experts to compress rollout time -Development - 7/99 -Lab Test 8/99 -Pilot 9/99 - Rollout 10/99 - ------------------- ------------------------- ----------------- ------------- ------------- ------------------------- -------------- Commissary Systems New Application & In Process 6/99 $40,000 Implementation $50,000 hardware to replace DOS postponed requiring based solution with addition rollout help customization. Testing In Process 7/99 Pilot After Testing 8/99 Rollout - in phase with Upon Production 10/99 BOH for integration of Application - ------------------- ------------------------- ----------------- ------------- ------------- ------------------------- --------------
16 Item 3. Quantitative and Qualitative Disclosures about Market Risk The Company's unsecured revolving line of credit bears an interest rate using the commercial bank's prime rate or LIBOR as the basis, and is therefore subject to additional expense should there be an increase in interest rates. Item 4. Submission of Matters to a Vote of Security Holders The Company held a Special Meeting of Stockholders on March 4, 1999 to consider and vote upon the following matter (the "Proposal"): To consider the approval of: (1) the terms and conditions of the Stock Purchase Agreement, as amended and supplemented, by and among the Company, ABP Holdings, Inc., a Delaware corporation and wholly owned subsidiary of the Company and ABP Corporation, a Delaware Corporation and an affiliate of Bruckmann, Rosser, Sherrill and Co., L.P.; and (2) the amendment to the Company's Certificate of Incorporation to change the name of the Company to Panera Bread Company. With respect to the Proposal, 11,251,364 votes were cast for the Proposal, 39,163 votes were cast against the Proposal, and there were 18,256 abstentions on the Proposal. Accordingly, the Proposal was approved. Item 5. Other Information Pursuant to the terms of the Stock Purchase Agreement dated August 12, 1998 between Panera Bread Company (f/k/a/ Au bon Pain Co., Inc.) the "Company", ABP Holdings, Inc., a Delaware corporation and wholly owned subsidiary of the Company ("ABPH"), and ABP Corporation, a Delaware corporation controlled by Bruckmann, Rosser, Sherrill & Co., Inc., a private equity investment firm based in New York (the "Buyer"), as amended by Amendment dated October 28, 1998 (the "Agreement"), effective May 16, 1999 the Company (a) transferred to ABPH and its wholly owned subsidiary ABP Equipment Company substantially all of the operating assets, store leases, contracts and liabilities associated with the Company's bakery cafe food service and franchise business concept generally known as Au Bon Pain (the "Au Bon Pain Division"), (b) caused the merger of ABP Equipment Company with and into ABPH, with ABPH being the surviving corporation and (c) sold all of the capital stock of ABPH to the Buyer, whereby the Buyer became the owner of the Au Bon Pain Division (the "Sale"). The Company received cash payment equal to $73,000,000 subject to certain price adjustments estimated to be $1,000,000 in connection with the Sale. The description of the Agreement contained herein is qualified in its entirety by reference to (a) the Agreement and certain letter agreements with respect to the Sale, attached as Exhibits 2, 10.1 and 10.2, respectively, to the Company's Form 8-K filed August 21, 1998 and incorporated herein by reference and (b) the October 28, 1998 Amendment, attached as Exhibit 2 to the Company's Form 8-K filed November 6, 1998 and incorporated by reference herein. 17 UNAUDITED PRO FORMA FINANCIAL STATEMENTS YEAR ENDED DECEMBER 26, 1998 SIXTEEN WEEKS ENDED APRIL 17, 1999 The Company, together with its wholly-owned subsidiary ABP Holdings, Inc. ("ABPH") entered into a Stock Purchase Agreement dated August 12, 1998 and amended on October 28, 1998 with ABP Corporation (the "Buyer"), an affiliate of Bruckmann, Rosser, Sherrill & Co., L.P., relative to the transfer of substantially all of the assets and liabilities of the Au Bon Pain Division business (the "Au Bon Pain Division") and sale of all of the outstanding capital stock of ABPH to the Buyer, whereby the Buyer would become the owner of the Au Bon Pain Division (the "Sale"). The Sale was completed on May 16, 1999 for $73 million in cash before contractual purchase price adjustments estimated to be $1 million. The Company, which now consists of the Panera Bread/Saint Louis Bread Co. Business Unit only, has been renamed Panera Bread Company. The unaudited pro forma balance sheet presents the pro forma financial position of the Company and is derived from the balance sheet of the Company as of April 17, 1999. The unaudited pro forma consolidated statements of operations are derived from the consolidated statements of operations of the Company for the fiscal year ended December 26, 1998 and for the 16 weeks ended April 17, 1999 and exclude a one-time charge for the sale of the Company's Mexico, Missouri manufacturing facility and charges recorded on the sale of the ABP Division and should be read in conjunction with the Company's audited historical financial statements and notes thereto as of December 26, 1998 and its unaudited historical financial statements and notes thereto as of April 17, 1999 as filed with the Securities and Exchange Commission in its Form 10-K and in this Form 10-Q, respectively. In the opinion of the Company's management, all adjustments necessary to present fairly such unaudited pro forma financial statements have been made based on the terms and structure of the sale of the ABP Division and the sale of the Mexico, Missouri manufacturing facility. The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the actual results that would have occurred had the transaction taken place at the earliest period presented, nor do they purport to indicate the results of future operations or financial position of the company. Matters discussed in this unaudited consolidated financial information, including any discussion of or impact, expressed or implied, on the Company's anticipated operating results and future earnings per share contain forward-looking statements that involve risks and uncertainties. The Company's results may differ significantly from the results indicated by such forward-looking statements. 18 PANERA BREAD COMPANY UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET (a) (IN THOUSANDS) APRIL 17, 1999
Pro Forma ASSETS Historical Adjustments Pro Forma ---------- ----------- --------- Current assets: Cash and cash equivalents $ 1,069 $ 2,198 (b) $ 3,267 Accounts receivable 1,733 -- 1,733 Inventories 1,628 -- 1,628 Prepaid expenses 487 -- 487 Refundable income taxes 98 -- 98 Deferred income taxes 1,500 -- 1,500 -------- -------- -------- Total current assets 6,515 2,198 8,713 Property and equipment, less accumulated depreciation and amortization 40,941 -- 40,941 Other assets: Assets held for sale, net, non-current 68,085 (68,085) -- Intangible assets, net of accumulated amortization 19,463 -- 19,463 Deferred financing costs 575 (575)(c) - Deposits and other 4,349 -- 4,349 Deferred income taxes 12,434 -- 12,434 -------- -------- -------- Total other assets 104,906 (68,660) 36,246 -------- -------- -------- Total assets $152,362 $(66,462) $ 85,900 -------- -------- -------- -------- -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,542 $ -- $ 3,542 Liabilities held for sale, net 3,503 (3,503) -- Accrued expenses 11,995 1,318 (d) 13,313 Current maturities of long term debt 64,642 (64,642)(e) -- -------- --------- -------- Total current liabilities 83,682 (66,827) 16,855 Long term debt, less current maturities -- -- -- Convertible Subordinated Notes -- -- -- -------- -------- -------- Total liabilities 83,682 (66,827) 16,855 Minority interest (365) 365 (c) -- Stockholders' equity: Preferred stock, $.0001 par value: Class B, shares authorized 2,000,000; issued and outstanding none in 1998 and 1997, respectively -- -- -- Common stock, $.0001 par value: Class A, shares authorized 50,000,000; issued and outstanding 10,410,421 and 10,144,840 in 1998 and 1997, respectively 1 -- 1 Class B, shares authorized 2,000,000; issued and outstanding 1,557,658 and 1,572,907 in 1998 and 1997, respectively -- -- -- Additional paid-in capital 70,375 -- 70,375 Retained earnings (1,331) -- (1,331) -------- -------- ------- Total stockholders' equity 69,045 -- 69,045 -------- -------- ------- Total liabilities and stockholders' equity $153,362 $(66,462) $85,900 -------- -------- ------- -------- -------- -------
19 NOTES TO UNAUDITED PRO FORMA BALANCE SHEET (a) See the introductory paragraphs under "Unaudited Pro Forma Financial Information": The unaudited pro forma balance sheet includes the balance sheet of the Company as of April 17, 1999 and was prepared as if the transaction had occurred at the end of the respective date. (b) To record the net cash proceeds from the sale of the Au Bon Pain Division. The pro-forma cash and cash equivalents as of April 17, 1999 is based on the net proceeds of the sale transaction and the debt outstanding at April 17, 1999. The Company has repaid its outstanding debt (other than the Convertible Subordinated Notes) with the proceeds from the Sale and intends to repay the Convertible Subordinated Notes within approximately 30 days of the Sale, which was effective May 16, 1999. (c) To eliminate deferred financing costs pertaining to the debt extinquished and to eliminate minority interest related to the Au Bon Pain Division.. (d) To eliminate Au Bon Pain Division Assets and Liabilities and to accrue for expenses related to the sale of the Au Bon Pain Division. (e) To record the retirement of debt from proceeds on the sale of the Au Bon Pain Division. The Company has repaid its outstanding debt (other than the Convertible Subordinated Notes) with the proceeds from the Sale and intends to repay the Convertible Subordinated Notes within approximately 30 days of the Sale, which was effective May 16, 1999. 20 PANERA BREAD COMPANY UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS) SIXTEEN WEEKS ENDED APRIL 17, 1999
Pro Forma Pro Forma Historical (1) Adjustments (1) April 17, 1999 -------------- --------------- -------------- Revenues: Restaurant sales $ 73,411 $(47,096)(a) $ 26,315 Franchise sales & other revenues 4,514 (1,466)(b) 3,048 -------- -------- -------- 77,925 (48,562) 29,363 Costs & expenses: Cost of food & paper products 26,001 (15,480)(c) 10,521 Restaurant operating expenses: Labor 21,978 (14,246)(d) 7,732 Occupancy 8,800 (6,677)(d) 2,123 Other 8,788 (5,495)(d) 3,293 -------- -------- -------- 39,566 (26,418) 13,148 Depreciation & amortization 1,800 -- 1,800 General & administrative 6,888 (3,879)(f) 3,009 Non-recurring charges 5,545 (5,545)(g) -- -------- -------- -------- 79,800 (51,322) 28,478 Operating income (1,875) 2,760 885 Interest (income) expense, net 1,884 (1,884)(h) -- Other (income) expense, net 403 (403)(i) -- Minority interest (11) 11 (j) -- -------- -------- -------- Net income (loss) before provision (benefit) for income taxes (4,151) 5,036 885 Provision (benefit) for income taxes 474 (224)(k) 250 -------- ------- -------- Net income (loss) $ (4,625) $ 5,260 $ 635 -------- ------- -------- -------- ------- -------- Net income (loss)per common share - basic $ (0.38) $ -- $ 0.05 -------- ------- -------- -------- ------- -------- Net income (loss)per common share - diluted $ (0.38) $ -- $ 0.05 -------- ------- -------- -------- ------- -------- Weighted average number of shares outstanding - basic 12,103 -- 12,103 -------- ------- -------- -------- ------- -------- Weighted average number of shares outstanding - diluted 12,103 -- 12,119 -------- ------- -------- -------- ------- -------- EBITDA $ 5,171 $ (2,486) $ 2,685 -------- ------- -------- -------- ------- --------
(1) Results of operations for the sixteen weeks ended April 17, 1999 include a one time non-cash, non-recurring charge of $5.5 million related to the Sale of the Au Bon Pain Division. 21 PANERA BREAD COMPANY UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS) FISCAL YEAR ENDED DECEMBER 26, 1998
Pro Forma Pro Forma Historical (1) Adjustments (2) December 26, 1998 (2) -------------- --------------- --------------------- Revenues: Restaurant sales $ 237,102 $ (159,637) (a) $ 77,465 Franchise sales & other -- -- -- revenues 12,558 (7,089) (b) 5,469 ----------- ------------ -------------- 249,660 (166,726) 82,934 Costs & expenses: Cost of food & paper products 87,240 (58,095) (c) 29,145 Restaurant operating expenses: Labor 67,218 (45,790) (d) 21,428 Occupancy 28,016 (22,317) (d) 5,699 Other 27,826 (18,768) (d) 9,058 ----------- ------------ -------------- 123,060 (86,875) 36,185 Depreciation & amortization 12,667 (7,670) (e) 4,997 General & administrative 18,769 (10,115) (f) 8,654 Non-recurring charges 26,236 (26,236) (g) -- ----------- ------------ -------------- 267,972 (188,991) 78,981 Operating income (loss) (18,312) 22,265 3,953 Interest (income) expense, net 6,396 (6,396) (h) -- Other (income) expense, net 1,445 (1,445) (i) -- Minority interest (127) 127 (j) -- ------------ --------------- -------------- Net income (loss) before provision (benefit) for income taxes (26,026) 29,979 3,953 Provision (benefit) for income taxes (5,532) 6,775 (k) 1,243 ------------ ----------- -------------- Net income (loss) $ (20,494) $ 23,204 $ 2,710 ------------ ----------- -------------- ------------ ----------- -------------- Net income (loss) per common share - basic $ (1.72) $ -- $ 0.23 ------------ ----------- -------------- ------------ ----------- -------------- Net income (loss) per common share - diluted $ (1.72) $ -- $ 0.22 ------------ ----------- -------------- ------------ ----------- -------------- Weighted average number of shares outstanding - basic 11,943 -- 11,943 ------------ ----------- -------------- ------------ ----------- -------------- Weighted average number of shares outstanding - diluted 11,943 -- 12,240 ------------ ----------- -------------- ------------ ----------- -------------- EBITDA (l) $ 21,053 $ (12,103) $ 8,950 ------------ ----------- -------------- ------------ ----------- --------------
(1) During fiscal year 1998, results of operations include non-recurring pre-tax charges $27.0. These charges were principally related to the closing of certain under-performing Au Bon Pain Division restaurants and to account for the impairment of long-lived assets to be disposed of. In addition, during the fiscal year ended 1998, results of operations include a non-cash pre-tax loss of $734,000 related to the sale of the Company's 22 production facility in Mexico, MO, and a $24.2 million charge recorded in connection with the Sale, principally to reflect a write-down under Statement of Financial Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for the Long-Lived Assets to be Disposed of" ("SFAS 121"). (2) The pro forma Consolidated Statement of Operations does not present pro forma results of operations based on the manufacturing supply agreement with Bunge Foods Corp. prior to the execution of the agreement on March 23, 1998. 23 NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS (IN THOUSANDS)
Fiscal Year Ended 16 Weeks Ended 12/26/98 4/17/99 -------- ------- (a) To eliminate Au Bon Pain Division restaurant sales $ (159,637) $ (47,096) (b) To eliminate wholesale and Au Bon Pan Division manufacturing sales, and to Eliminate Au Bon Pain Division franchise royalties, store opening fees, area development fees and other revenues Au Bon Pain Division royalties, store Opening fees, area development fees and other revenues (4,207) (1,069) Wholesale and Au Bon Pain Division manufacturing sales (2,882) (397) ---------- --------- (7,089) (1,466) (c) To eliminate cost of goods sold related to the Au Bon Division and wholesale sales (58,095) (15,480) (d) To eliminate Au Bon Pain Division restaurant operating expenses Labor (45,790) (14,246) Occupancy (22,317) (6,677) Other (18,768) (5,495) ----------- --------- (86,875) (26,418) (e) To eliminate depreciation and amortization Associated with the Au Bon Pain Division and wholesale (7,670) -- (f) To eliminate Au Bon Pain Division general and administrative expenses leaving pro forma Saint Louis Bread Co. Division corporate Overhead expenses on a stand alone basis (10,115) (3,879) (g) To eliminate the non-recurring charges (26,236) (5,545) (h) To eliminate interest expense associated with debt existing prior to the transaction (6,396) (1,884) (i) To eliminate Au Bon Pain Division other (income) expense, and to eliminate the loss on the sale of the Mexico, Missouri facility in 1998 Au Bon Pain Division other expense, net (711) (403) Loss on sale of Mexico, Missouri facility (734) -- --------- -------- (1,445) (403)
24 NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS (IN THOUSANDS)
Fiscal Year Ended 16 Weeks Ended 12/26/98 4/17/99 -------- ------- (j) To eliminate minority interest associated with the Au Bon Pain Division $ 127 $ 11 (k) To eliminate federal and state income tax associated with the Au Bon Pain Division and the loss on the sale of the Mexico, Missouri manufacturing facility in 1998. 6,775 (224)
(l) Calculation for EBITDA consists of net income plus interest, income taxes, depreciation and amortization, non-cash non-recurring charges and expense associated with the Company-owned life insurance. The Company recognizes that there are alternative methods of measuring cash flow from operations. 25 PART II. OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K. (a) Exhibit 27 Financial Data Schedule. (b) Panera Bread Company did not file any reports on Form 8-K during the quarter ended April 17, 1999. 26 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, thereunto duly authorized. PANERA BREAD COMPANY -------------------------------- (Registrant) Dated: , 1999 By: /s/ RONALD M. SHAICH --------------------------------- Ronald M. Shaich Chairman and Chief Executive Officer Dated: , 1999 By: /s/ WILLIAM W. MORETON --------------------------------- William W. Moreton Chief Financial Officer 27 EX-27 2 EXHIBIT 27 - FINANCIAL DATA SCHEDULE
5 4-MOS DEC-25-1999 APR-17-1999 1,068,397 0 1,952,657 219,756 1,628,507 6,515,033 54,521,063 13,579,705 152,361,656 83,681,451 0 0 0 1,213 0 152,361,656 73,411,116 77,924,855 26,000,706 79,800,111 392,303 0 1,883,750 (4,151,309) 474,000 (4,625,309) 0 0 0 (4,625,309) (0.38) (0.38)
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