Panera Bread Company Reports Q4 2014 Diluted EPS of $1.82 and Fiscal Year 2014 Diluted EPS of $6.64

ST. LOUIS, MO--(Marketwired - February 11, 2015) - Panera Bread Company (NASDAQ: PNRA)

Highlights

- Q4 2014 Company-owned comparable net bakery-cafe sales up 3.3%
- Q4 2014 Company-owned comparable net bakery-cafe transactions up 1.3%
- During FY 2014, 114 new bakery-cafes opened system-wide

Panera Bread Company (NASDAQ: PNRA) today reported net income of $48 million, or $1.82 per diluted share, for the thirteen weeks ended December 30, 2014. Diluted EPS for fiscal Q4 2014 was up 2% versus fiscal Q4 2013, excluding a goodwill impairment charge recorded in fiscal Q4 2014 of $2.1 million, or $0.05 per diluted share, and excluding the estimated $0.13 per diluted share benefit in fiscal Q4 2013 from the additional operating week. For the fourteen weeks ended December 31, 2013, the Company reported net income of $54 million, or $1.96 per diluted share. A reconciliation of GAAP and non-GAAP information is attached to this release as Schedule V.

For the fifty-two weeks ended December 30, 2014, net income was $179 million, or $6.64 per diluted share. Diluted EPS for full year fiscal 2014 was up $0.03 per diluted share, compared to full year fiscal 2013, when excluding certain items for both full year fiscal 2014 and fiscal 2013, as outlined on Schedule V. For the fifty-three weeks ended December 31, 2013, the Company reported net income of $196 million, or $6.81 per diluted share. A reconciliation of GAAP and non-GAAP information is attached to this release as Schedule V.

The Company's fiscal Q4 2014 and full year fiscal 2014 consolidated statements of comprehensive income and margin analyses are attached to this release as Schedule I. The following tables set forth, for the periods indicated, certain items included in the Company's consolidated statements of comprehensive income (in thousands, except per share data and percentages):

  For the 13 Weeks Ended   For the 14 Weeks Ended    
  December 30, 2014   December 31, 2013   Percentage Change
             
Total revenue $672,497   $661,732   2 %
Net income $48,492   $54,248   -11 %
Diluted earnings per share $1.82   $1.96   -7 %
Shares used in diluted EPS 26,662   27,725      
             

 

  For the 52 Weeks Ended   For the 53 Weeks Ended      
  December 30, 2014   December 31, 2013   Percentage Change  
             
Total revenue $2,529,195   $2,385,002   6 %
Net income $179,293   $196,169   -9 %
Diluted earnings per share $6.64   $6.81   -2 %
Shares used in diluted EPS 26,999   28,794      

Fiscal Q4 2014 and Full Year Fiscal 2014 Results and Business Review

Comparable Net Bakery-Cafe Sales Growth

In fiscal Q4 2014, on a calendar basis, Company-owned comparable net bakery-cafe sales increased 3.3%, franchise-operated comparable net bakery-cafe sales increased 2.7%, and system-wide comparable net bakery-cafe sales increased 3.0% compared to the same period in fiscal 2013.

The Company-owned comparable net bakery-cafe sales increase of 3.3% on a calendar basis in fiscal Q4 2014 was comprised of year-over-year transaction growth of 1.3% and average check growth of 2.0%.

For the full year fiscal 2014, on a calendar basis, Company-owned comparable net bakery-cafe sales increased 1.4%, franchise-operated comparable net bakery-cafe sales increased 0.9%, and system-wide comparable net bakery-cafe sales increased 1.1% compared to fiscal 2013.

The Company believes that the calendar basis comparison better reflects the performance of the business as it eliminates the impact of the extra week in fiscal 2013 and compares consistent calendar weeks. Note that on a fiscal basis, Company-owned comparable net bakery-cafes sales for fiscal Q4 2014 decreased 4.0% and for full year fiscal 2014 decreased 0.3%. A schedule of comparable net bakery-cafe sales information is attached to this release as Schedule III.

Operating Margin

In fiscal Q4 2014, the Company experienced a decline in operating margin of approximately 140 basis points compared to fiscal Q4 2013. This decline was primarily the result of food cost inflation, as well as the cost of initiatives designed to make Panera a better competitive alternative and to enable expanded growth through Panera 2.0; innovation in operations, food and marketing; delivery hubs; and our investments in technology to create the capabilities needed to support these initiatives.

New Bakery-Cafe Development and AWS

During fiscal Q4 2014, the Company opened 26 new bakery-cafes and its franchisees opened 14 new bakery-cafes. For the full year fiscal 2014, the Company and its franchisees opened 114 new bakery-cafes (65 Company-owned and 49 franchise-operated). As a result, there were 1,880 bakery-cafes open system-wide as of December 30, 2014.

    Company-owned        Franchise-operated        Total System  
Bakery-cafes as of September 30, 2014   903     942     1,845  
Bakery-cafes opened   26     14     40  
Bakery-cafes closed   (4 )   (1 )   (5 )
Bakery-cafes as of December 30, 2014   925     955     1,880  

Average weekly sales ("AWS") for Company-owned "Class of 2014" bakery-cafes for full year fiscal 2014 was $44,986 compared to $44,084 in full year fiscal 2013. AWS for franchise-operated "Class of 2014" bakery-cafes for full year fiscal 2014 was $48,881 compared to $46,948 for full year fiscal 2013.
A schedule of fiscal Q4 2014 and full year fiscal 2014 AWS, including AWS information for bakery-cafes based on their designation as either a traditional or non-traditional bakery-cafe, is attached to this release as Schedule II. Non-traditional bakery-cafes refers to a range of alternate formats that the Company believes will allow it to more deeply penetrate existing and new territories with a range of different formats.

Use of Capital

During fiscal Q4 2014, the Company repurchased 149,877 shares at an average price of $166.77 per share for an aggregate purchase price of approximately $25.0 million. During full year fiscal 2014, the Company repurchased a total of 941,878 shares at an average price of $163.62 per share for an aggregate purchase price of approximately $154.1 million. The Company has approximately $533.4 million available under the current $600 million repurchase authorization as of the date of this release.

Panera 2.0 Supplemental Information

The Company is releasing supplemental information, attached to this release as Schedule IV, detailing the performance of Company-owned bakery-cafes converted to Panera 2.0, a strategic initiative designed to enhance the customer experience that is enabled by technology and operational improvements.

Full Year Fiscal 2015 Outlook

Diluted EPS

The number of moving pieces in fiscal 2015 makes it difficult to provide precise guidance. The Company is targeting full year fiscal 2015 diluted earnings per share growth of flat to down mid- to high-single digits when compared to full year fiscal 2014 (comparative diluted earnings per share for full year fiscal 2014 excludes certain items as outlined on Schedule V).

The full year fiscal 2015 diluted earnings per share target range is based on the following key assumptions:

Comparable Net Bakery-Cafe Sales Growth

The Company is targeting Company-owned comparable net bakery-cafe sales growth for fiscal 2015 of 2.0% to 3.5%.

The Company announced today that Company-owned comparable net bakery-cafe sales in the first 42 days of fiscal Q1 2015 were up approximately 2.8%.

Operating Margin

The Company's fiscal 2015 diluted earnings per share target range assumes operating margin will be down 100 to 175 basis points when compared to fiscal 2014. The anticipated decline in year-over-year margin reflects the cost of previously mentioned initiatives designed to make Panera a better competitive alternative and to enable expanded growth, along with higher medical costs due to the Affordable Care Act (ACA) and higher labor costs due to the impact of increases in minimum wage rates.

New Bakery-Cafe Development and AWS

The Company's fiscal 2015 new bakery-cafe target is 105 to 115 system-wide bakery-cafe openings and the average weekly net sales performance target for new Company-owned bakery-cafes is $43,000 to $45,000.

Concluding Comment

Ron Shaich, Chairman and CEO, commented, "Our transaction growth of 1.3% in Q4 -- our third straight quarter of transaction growth and second straight quarter of growth above 1% -- speaks to the progress we continue to make in our efforts to bend the arc of transaction and comp growth in our core business. Our sharpened focus on operations, food innovation and marketing innovation continues to drive that momentum."

Shaich continued, "We also are beginning to see initial results from the structural enhancements we have been rolling out throughout 2014. These enhancements, including Panera 2.0, operational integrity, and delivery hubs, are intended to upgrade our guest experience, improve throughput and accuracy, and allow us to grow, especially in the large order delivery business. We continue to expect the rollout of these enhancements to adversely impact our 2015 results, but we believe they offer the potential to elevate Panera's competitive position and broaden our growth opportunities, which we believe, in turn, will lead to expanded medium- and long-term earnings growth."

Notes:

The Company will host a conference call that will be broadcast on the Internet at 8:30 A.M. Eastern Time on Thursday, February 12, 2015, to discuss the fiscal Q4 2014 results, preliminary comparable net bakery-cafe sales results for the first 42 days of fiscal Q1 2015, full year targets and business outlook for fiscal 2015, and an update on the Panera 2.0 initiative. Given an expanded focus on the Panera 2.0 initiative during the conference call, time available for questions may be limited. To access the call or view a copy of this release, go to http://www.panerabread.com/investor. Access to the call will be made available for 14 days, and the release will be archived for one year.

The Company includes in this release information on Company-owned, franchise-operated, and system-wide comparable net bakery-cafe sales percentages. Company-owned comparable net bakery-cafe sales percentages are based on net sales from Company-owned bakery-cafes included in base store bakery-cafes. Franchise-operated comparable net bakery-cafe sales percentages are based on net sales from franchised bakery-cafes, as reported by franchisees, that are included in base store bakery-cafes. Acquired Company-owned and franchise-operated bakery-cafes and other restaurant or bakery-cafe concepts are included in the Company's comparable net bakery-cafe sales percentages after it has acquired a 100 percent ownership interest and if such acquisition occurred prior to the first day of the Company's prior fiscal year. Comparable net bakery-cafe sales exclude closed locations.

The Company does not record franchise-operated net bakery-cafe sales as revenues. However, royalty revenues are calculated based on a percentage of franchise-operated net bakery-cafe sales, as reported by franchisees. The Company uses franchise-operated and net system-wide sales information internally in connection with store development decisions, planning, and budgeting analyses. The Company believes franchise-operated and net system-wide sales information is useful in assessing consumer acceptance of its brand; facilitates an understanding of its financial performance and the overall direction and trends of sales and operating income; helps the Company appreciate the effectiveness of its advertising and marketing initiatives which its franchisees also contribute based on a percentage of their net sales; and provides information that is relevant for comparison within the industry.

About Panera Bread Company

As of December 30, 2014, there were 1,880 bakery-cafes in 45 states, the District of Columbia, and in Ontario, Canada operating under the Panera Bread®, Saint Louis Bread Co.® or Paradise Bakery & Café® names. We feature high quality, reasonably priced food in a warm, inviting, and comfortable environment. With our identity rooted in handcrafted, fresh-baked, artisan bread, we are committed to providing great tasting, quality food that people can trust. Nearly all of our bakery-cafes have a menu highlighted by chicken raised without antibiotics, whole grain bread, and select organic and all-natural ingredients, with zero grams of artificial trans-fat per serving, which provide flavorful, wholesome offerings. Our menu includes a wide variety of year-round favorites complemented by new items introduced seasonally with the goal of creating new standards in everyday food choices. In neighborhoods across the United States and in Ontario, Canada, our customers enjoy our warm and welcoming environment featuring comfortable gathering areas, relaxing decor, and free Internet access. Our bakery-cafes routinely donate bread and baked goods to community organizations in need. Additional information is available on our website, http://www.panerabread.com.

Matters discussed in this news release and in our public disclosures, whether written or oral, relating to future events or our future performance, including any discussion, express or implied, on our anticipated growth, operating results, plans, objectives, future earnings per share, and the impact of our investments in sales-building initiatives and operational capabilities on future sales and earnings, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are often identified by the words "believe," "positioned," "estimate," "project," "target," "plan," "goal," "assumption," "continue," "intend," "expect," "future," "anticipate," and other similar expressions, whether in the negative or the affirmative, that are not statements of historical fact. These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict, and you should not place undue reliance on our forward-looking statements. Our actual results and timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those discussed from time to time in our reports filed with the Securities and Exchange Commission, including our Form 10-K for the fiscal year ended December 31, 2013 and our quarterly reports on Form 10-Q. All forward-looking statements and the internal projections and beliefs upon which we base our expectations included in this release are made only as of the date of this release and may change. While we may elect to update forward-looking statements at some point in the future, we expressly disclaim any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

 
Schedule I
 
PANERA BREAD COMPANY  
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  
(unaudited)  
(In thousands, except per share amounts)  
   
    For the 13 Weeks Ended     For the 14 Weeks Ended  
    December 30, 2014         December 31, 2013  
Revenues:                
  Bakery-cafe sales, net   $ 593,783     $ 584,923  
  Franchise royalties and fees     33,736       31,422  
  Fresh dough and other product sales to franchisees     44,978       45,387  
    Total revenues   $ 672,497     $ 661,732  
Costs and expenses:                
  Bakery-cafe expenses:                
    Cost of food and paper products   $ 177,336     $ 170,832  
    Labor     184,696       175,204  
    Occupancy     40,949       40,102  
    Other operating expenses     81,254       81,603  
      Total bakery-cafe expenses     484,235       467,741  
  Fresh dough and other product cost of sales to franchisees     38,425       39,077  
  Depreciation and amortization     33,428       30,562  
  General and administrative expenses     35,948       36,448  
  Pre-opening expenses     3,424       2,457  
    Total costs and expenses     595,460       576,285  
Operating profit     77,037       85,447  
Interest expense     438       498  
Other (income) expense, net     2,759       (1,125 )
Income before income taxes     73,840       86,074  
Income taxes     25,348       31,826  
    Net income   $ 48,492     $ 54,248  
                 
Earnings per common share:                
  Basic   $ 1.82     $ 1.97  
  Diluted   $ 1.82     $ 1.96  
Weighted average shares of common and common equivalent shares outstanding:                
  Basic     26,581       27,606  
  Diluted     26,662       27,725  
                 
Other comprehensive income (loss), net of tax:                
  Foreign currency translation adjustment   $ (513 )   $ (483 )
    Other comprehensive loss   $ (513 )   $ (483 )
Comprehensive income   $ 47,979     $ 53,765  
                 

The Company's fiscal year ended December 30, 2014 consisted of 52 weeks, while the Company's fiscal year ended December 31, 2013 consisted of 53 weeks. As a result, the Company's results for the fiscal fourth quarter ended December 31, 2013 include an additional week as compared to the fiscal fourth quarter ended December 30, 2014.

   
   
   
Schedule I (continued)  
   
PANERA BREAD COMPANY  
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  
(unaudited)  
(In thousands, except per share amounts)  
   
    For the 52 Weeks Ended     For the 53 Weeks Ended  
    December 30, 2014     December 31, 2013  
Revenues:                
  Bakery-cafe sales, net   $ 2,230,370     $ 2,108,908  
  Franchise royalties and fees     123,686       112,641  
  Fresh dough and other product sales to franchisees     175,139       163,453  
    Total revenues   $ 2,529,195     $ 2,385,002  
Costs and expenses:                
  Bakery-cafe expenses:                
    Cost of food and paper products   $ 669,860     $ 625,622  
    Labor     685,576       625,457  
    Occupancy     159,794       148,816  
    Other operating expenses     314,879       295,539  
      Total bakery-cafe expenses     1,830,109       1,695,434  
  Fresh dough and other product cost of sales to franchisees     152,267       142,160  
  Depreciation and amortization     124,109       106,523  
  General and administrative expenses     138,060       123,335  
  Pre-opening expenses     8,707       7,794  
    Total costs and expenses     2,253,252       2,075,246  
Operating profit     275,943       309,756  
Interest expense     1,824       1,053  
Other (income) expense, net     (3,175 )     (4,017 )
Income before income taxes     277,294       312,720  
Income taxes     98,001       116,551  
    Net income   $ 179,293     $ 196,169  
                 
Earnings per common share:                
  Basic   $ 6.67     $ 6.85  
  Diluted   $ 6.64     $ 6.81  
Weighted average shares of common and common equivalent shares outstanding:                
  Basic     26,881       28,629  
  Diluted     26,999       28,794  
                 
Other comprehensive income (loss), net of tax:                
  Foreign currency translation adjustment   $ (1,027 )   $ (1,005 )
    Other comprehensive loss   $ (1,027 )   $ (1,005 )
Comprehensive income   $ 178,266     $ 195,164  

The Company's fiscal year ended December 30, 2014 consisted of 52 weeks, while the Company's fiscal year ended December 31, 2013 consisted of 53 weeks. As a result, the Company's results for the fiscal year ended December 31, 2013 include an additional week as compared to the fiscal year ended December 30, 2014.

Schedule I (continued)
 
PANERA BREAD COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
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 comprehensive income for the period indicated. Percentages may not add due to rounding:

    For the 13 Weeks Ended         For the 14 Weeks Ended  
    December 30, 2014     December 31, 2013  
Revenues:            
  Bakery-cafe sales, net   88.3 %   88.4 %
  Franchise royalties and fees   5.0     4.7  
  Fresh dough and other product sales to franchisees   6.7     6.9  
      Total revenues   100.0 %   100.0 %
Costs and expenses:            
  Bakery-cafe expenses (1):            
    Cost of food and paper products   29.9 %   29.2 %
    Labor   31.1     30.0  
    Occupancy   6.9     6.9  
    Other operating expenses   13.7     14.0  
      Total bakery-cafe expenses   81.6     80.0  
  Fresh dough and other product cost of sales to franchisees (2)   85.4     86.1  
  Depreciation and amortization   5.0     4.6  
  General and administrative expenses   5.3     5.5  
  Pre-opening expenses   0.5     0.4  
    Total costs and expenses   88.5     87.1  
Operating profit   11.5     12.9  
Interest expense   0.1     0.1  
Other (income) expense, net   0.4     (0.2 )
Income before income taxes   11.0     13.0  
Income taxes   3.8     4.8  
    Net income   7.2 %   8.2 %
             
Other comprehensive loss   (0.1 )   (0.1 )
    Comprehensive income   7.1 %   8.1 %
                 

 

(1) As a percentage of net bakery-cafe sales.
   
(2) As a percentage of fresh dough and other product sales to franchisees.
   

The Company's fiscal year ended December 30, 2014 consisted of 52 weeks, while the Company's fiscal year ended December 31, 2013 consisted of 53 weeks. As a result, the Company's results for the fiscal fourth quarter ended December 31, 2013 include an additional week as compared to the fiscal fourth quarter ended December 30, 2014.

Schedule I (continued)
 
PANERA BREAD COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
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 comprehensive income for the period indicated. Percentages may not add due to rounding:

    For the 52 Weeks Ended         For the 53 Weeks Ended  
    December 30, 2014     December 31, 2013  
Revenues:            
  Bakery-cafe sales, net   88.2 %   88.4 %
  Franchise royalties and fees   4.9     4.7  
  Fresh dough and other product sales to franchisees   6.9     6.9  
      Total revenues   100.0 %   100.0 %
Costs and expenses:            
  Bakery-cafe expenses (1):            
    Cost of food and paper products   30.0 %   29.7 %
    Labor   30.7     29.7  
    Occupancy   7.2     7.1  
    Other operating expenses   14.1     14.0  
      Total bakery-cafe expenses   82.1     80.4  
  Fresh dough and other product cost of sales to franchisees (2)   86.9     87.0  
  Depreciation and amortization   4.9     4.5  
  General and administrative expenses   5.5     5.2  
  Pre-opening expenses   0.3     0.3  
    Total costs and expenses   89.1     87.0  
Operating profit   10.9     13.0  
Interest expense   0.1     -  
Other (income) expense, net   (0.1 )   (0.2 )
Income before income taxes   11.0     13.1  
Income taxes   3.9     4.9  
    Net income   7.1 %   8.2 %
             
Other comprehensive loss   -     -  
    Comprehensive income   7.0 %   8.2 %

(1) As a percentage of net bakery-cafe sales.

(2) As a percentage of fresh dough and other product sales to franchisees.

The Company's fiscal year ended December 30, 2014 consisted of 52 weeks, while the Company's fiscal year ended December 31, 2013 consisted of 53 weeks. As a result, the Company's results for the fiscal year ended December 31, 2013 include an additional week as compared to the fiscal year ended December 30, 2014.

Schedule II
 
PANERA BREAD COMPANY
Supplemental Sales and Bakery-Cafe Information
 
System-Wide Average Weekly Sales ("AWS")
  2014   2013   2012   2011   2010
AWS $47,655   $47,403   $46,676   $44,313   $42,852
                   
                   

 

  2014 Company-Owned AWS By Year Opened       Year-Over-Year Change in Company-Owned AWS
  2014 Opens   2013 Opens [a]   2012 Opens & Prior   2013 Acquisitions [b]      Total   2013 Opens [c]   2012 Opens & Prior   AWS Total
Bakery-Cafes 65   63   796   1   925            
Q1 14 $55,230   $40,919   $47,539   $55,601   $47,142   -33.9%   1.0%   0.0%
Q2 14 $45,499   $41,953   $48,885   $46,482   $48,313   -13.0%   0.3%   -0.8%
Q3 14 $42,245   $40,224   $47,639   $46,285   $46,936   -4.1%   2.6%   1.5%
Q4 14 $44,763   $42,825   $50,900   $52,138   $50,002   -0.3%   3.5%   2.5%
2014 YTD $44,986   $41,481   $48,739   $50,127   $48,114   -5.9%   1.8%   0.8%
                               

 

[a] 2013 Company-owned AWS excludes acquisition data.
   
[b] Represents one Panera bakery-cafe in 2013.
   
[c] Change in Company-owned AWS in 2014 from 2013 compares 63 bakery-cafes in 2014 against 63 bakery-cafes at the end of fiscal Q4 2013.
   
   

 

  2014 Franchise-Operated AWS By Year Opened   Year-Over-Year Change in Franchise-Operated AWS
  2014 Opens [d]   2013 Opens [d]   2012 Opens & Prior      Total   2013 Opens [d]   2012 Opens & Prior   AWS Total
Bakery-Cafes 49   70   836   955            
Q1 14 $58,891   $43,874   $46,881   $46,717   -14.9%   0.2%   -0.2%
Q2 14 $52,347   $43,581   $47,500   $47,290   -11.8%   -0.4%   -1.0%
Q3 14 $47,958   $41,832   $46,154   $45,881   -11.9%   1.0%   0.2%
Q4 14 $46,953   $44,620   $49,398   $48,934   -1.6%   2.7%   2.1%
2014 YTD $48,881   $43,477   $47,483   $47,215   -7.4%   0.8%   0.3%
                           

 

[d] Change in Franchise-operated AWS in 2014 from 2013 compares 70 bakery-cafes in 2014 against 70 bakery-cafes at the end of fiscal Q4 2013.
   
   

 

  Traditional and Non-Traditional AWS [e]
  Company-Owned   Franchise-Operated   System-Wide
  2014 Opens     2013 Opens     2014 Opens     2013 Opens     2014 Opens     2013 Opens
Traditional Bakery-Cafes 58   57   47   66   105   123
Non-Traditional
Bakery-Cafes
7   6   2   4   9   10
Traditional AWS $46,849   $44,703   $48,799   $47,903   $47,787   $46,437
Non-Traditional AWS $32,448   $39,428   $48,669   $40,408   $36,169   $39,857
Total $44,986   $44,084   $48,881   $46,948   $46,769   $45,614
                       

 

[e] Represents year-to-date bakery-cafe openings and AWS for fiscal 2014 and fiscal 2013. Traditional bakery-cafes generally represent bakery-cafes opened in suburban geographies approximating our standard 4,200 square foot design. Non-traditional bakery-cafes reflect all other bakery-cafes including urban, small footprint formats, and delivery units. Because the non-traditional bakery-cafe designation covers various formats and the formats of non-traditional bakery-cafe openings may vary from period-to-period, comparing AWS for non-traditional bakery-cafes on a year-over-year basis may not be meaningful.
   
   

 

Schedule II (continued)
 
  Bakery-Cafe Openings (excluding acquisitions) [f]
  Company   Franchise   Total     Company   Franchise   Total
Q1 14 16   11   27 Q1 13   10   12   22
Q2 14 10   9   19 Q2 13   18   19   37
Q3 14 13   15   28 Q3 13   17   15   32
Q4 14 26   14   40 Q4 13   18   24   42
2014 YTD 65   49   114 2013 YTD   63   70   133
                         

 

[f] Bakery-cafe openings in fiscal Q1 2014 exclude the opening of one Company-owned delivery hub. Bakery-cafe openings in fiscal Q2 2014 exclude the opening of one Company-owned and one franchise-operated delivery hub. Bakery-cafe openings in fiscal Q3 2014 exclude the opening of four Company-owned delivery hubs. Bakery-cafe openings in fiscal Q4 2014 exclude the opening of nine Company-owned delivery hubs. As of 2014, there were 21 Company-owned and one franchise-operated delivery hubs operating.

 

 
Schedule III
 
PANERA BREAD COMPANY
Comparable Net Bakery-Cafe Sales Information

The Company's fiscal year ended December 30, 2014 consisted of 52 weeks, while the Company's fiscal year ended December 30, 2013 consisted of 53 weeks. As a result, the Company's results for the five weeks, 14 weeks, and 53 weeks ended December 31, 2013 included an additional week, with an impact of approximately $28.3 million and $30.5 million of sales in the additional week for Company-owned and franchise-operated base store bakery-cafes, respectively. Accordingly, the Company believes it is appropriate to provide the following two measures of comparable net bakery-cafe sales for fiscal 2014: calendar basis and fiscal basis.

Calendar Basis

Set forth below is comparable net bakery-cafe sales growth information comparing consistent calendar weeks in fiscal 2014 to fiscal 2013:

  For the 4 weeks ended   For the 5 weeks ended   For the 4 weeks ended   For the 13 weeks ended   For the 52 Weeks Ended
  October 28, 2014   December 2, 2014   December 30, 2014   December 30, 2014   December 30, 2014
Company-owned 2.9%   2.3%   5.2%   3.3%   1.4%
Franchise-operated 2.1%   1.7%   4.6%   2.7%   0.9%
System-wide 2.5%   2.0%   4.9%   3.0%   1.1%

Fiscal Basis

Set forth below is comparable net bakery-cafe sales growth information comparing the fiscal 2014 periods to comparable periods in fiscal year 2013, which include an additional week due to the Company's 53-week fiscal year in 2013:

    For the 4 weeks ended   For the 13 weeks ended   For the 52 weeks ended
    December 30, 2014   December 30, 2014   December 30, 2014
Company-owned   (13.3)%   (4.0)%   (0.3)%
Franchise-operated   (13.6)%   (4.6)%   (1.0)%
System-wide   (13.5)%   (4.3)%   (0.6)%

 

 
Schedule IV
 
PANERA BREAD COMPANY
Panera 2.0 Initiative - Converted Base Bakery-Cafes Operating Metrics

The schedule below details certain operating metrics for base Company-owned bakery-cafes converted to the Panera 2.0 format as of December 30, 2014. Panera 2.0 is our strategic initiative designed to enhance the customer experience that is enabled by technology and operational improvements. The operating metrics are grouped by timing of conversion ("iteration") with a reference to the relevant geographic markets also noted. Reference is also given to key features of the bakery-cafe conversion for each iteration. The operating metrics presented in this schedule, as defined in the footnotes below, reflect certain components of the items presented in the Company's consolidated statements of comprehensive income, included in this release as Schedule I.

         
        Quarter Converted (2)
    Pre-Period (1)   1st Quarter   2nd Quarter   3rd Quarter   4th Quarter   5th Quarter   6th Quarter   7th Quarter   8th Quarter   9th Quarter
Iteration 1: Boston - Prototype Development: Added wall, added table delivery, added labor, and inclusive of additional special projects                    
Total bakery-cafes converted   3   3   3   3   3   3   3   3   3   2
Base bakery-cafes converted (3)   3   3   3   3   3   3   3   3   3   2
                                         
Cumulative gross retail sales increase (4)   N/A   17.3%   17.3%   14.7%   14.1%   21.7%   24.1%   20.4%   17.2%   33.8%
Labor and benefits expense - percentage of gross sales (5)   27.3%   33.7%   30.5%   29.2%   29.4%   29.9%   29.6%   29.7%   31.4%   29.4%
Other controllable expenses - percentage of gross sales (6)   5.9%   8.0%   7.0%   6.3%   6.9%   6.6%   6.5%   5.7%   6.4%   6.2%
                                         
Iteration 2: Charlotte - Added wall, added table delivery, and added labor                    
Total bakery-cafes converted   17   17   16   16   10   10                
Base bakery-cafes converted (3)   14   14   14   14   10   10                
                                         
Cumulative gross retail sales increase (4)   N/A   1.2%   2.2%   2.7%   6.9%   6.3%                
Labor and benefits expense - percentage of gross sales (5)   23.4%   29.2%   27.3%   27.4%   27.0%   26.4%                
Other controllable expenses - percentage of gross sales (6)   4.6%   5.9%   5.5%   5.4%   4.5%   4.8%                
                                         
Iteration 3: Dallas, Jacksonville, Southwest Florida - Added wall, existing table service, and revised labor model                    
Iteration 3a - Converted fiscal Q3 2014                    
Total bakery-cafes converted   24   24   24                            
Base bakery-cafes converted (3)   20   20   20                            
                                         
Cumulative gross retail sales increase (4)   N/A   3.2%   9.1%                            
Labor and benefits expense - percentage of gross sales (5)   24.0%   27.4%   25.9%                            
Other controllable expenses - percentage of gross sales (6)   5.3%   5.1%   5.2%                            
                                         
Iteration 3b - Converted fiscal Q4 2014                    
Total bakery-cafes converted   28   28                                
Base bakery-cafes converted (3)   23   23                                
                                         
Cumulative gross retail sales increase (4)   N/A   2.9%                                
Labor and benefits expense - percentage of gross sales (5)   23.5%   25.2%                                
Other controllable expenses - percentage of gross sales (6)   4.9%   5.1%                                
                                         
Iteration 4: Bay Area, Los Angeles, Seattle - No wall, existing table service, and revised labor model                    
Total bakery-cafes converted   32   32                                
Base bakery-cafes converted (3)   21   21                                
                                         
Cumulative gross retail sales increase (4)   N/A   2.1%                                
Labor and benefits expense - percentage of gross sales (5)   25.0%   26.7%                                
Other controllable expenses - percentage of gross sales (6)   4.7%   4.7%                                
                                         

 

(1) "Pre-Period" reflects operating metrics for the twelve month period prior to the start of the Panera 2.0 conversion process.
(2) "Quarter Converted" reflects operating metrics for each successive, three month period following the completion of the Panera 2.0 conversion process. Most recent quarter of each iteration could represent a partial quarter for some bakery-cafes.
(3) Operating metrics reflects data only for converted base Company-owned bakery-cafes. Base Company-owned bakery-cafes are defined as bakery-cafes open in fiscal 2012 or prior.
(4) "Cumulative gross retail sales increase" defined as the cumulative percentage increase in retail gross sales compared to the same period in the fiscal year prior to the completion of the Panera 2.0 conversion. Retail gross sales excludes catering sales.
(5) "Labor and benefits expense - percentage of gross sales" defined as total associate and manager direct bakery-cafe labor and benefits expense (excluding bonus expense) as a percentage of total bakery-cafe gross sales, including catering sales.
(6) "Other controllable expenses - percentage of gross sales" defined as other controllable expenses as a percentage of total bakery-cafe gross sales, including catering sales. Other controllable expenses represent a component of other operating expenses for Company-owned bakery-cafes and includes, among other things, expenses such as bakery-cafe information technology operating expenditures.
   
   
   

 

Schedule V
 
PANERA BREAD COMPANY
Reconciliation of GAAP and Non-GAAP Information
(in thousands, except per share information)

The Company uses diluted earnings per share excluding certain items as a key performance measure of results of operations for purposes of evaluating performance internally. This non-GAAP measurement is not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of results excluding certain items provides additional information to facilitate the comparison of past and present operations, excluding items that the Company does not believe were indicative of our ongoing operations in the 13 and 52 weeks ended December 30, 2014 and the 14 and 53 weeks ended December 31, 2013.

    For the 13 Weeks Ended      For the 52 Weeks Ended  
    December 30, 2014   December 30, 2014  
Net income, as reported   $ 48,492   $ 179,293  
Goodwill impairment charge (1)     1,351     1,351  
Favorable tax adjustments (2)     -     (2,319 )
Favorable resolution of insurance coverage matter (3)     -     (2,049 )
Net income, excluding certain items   $ 49,843   $ 176,276  
               
Diluted earnings per share, as reported   $ 1.82   $ 6.64  
Impact of goodwill impairment charge on diluted earnings per share     0.05     0.05  
Impact of favorable tax adjustments on diluted earnings per share     -     (0.08 )
Impact of favorable resolution of insurance coverage matter on diluted earnings per share     -     (0.08 )
Diluted earnings per share, excluding certain items   $ 1.87   $ 6.53  
               
               

 

    For the 14 Weeks Ended        For the 53 Weeks Ended  
    December 31, 2013     December 31, 2013  
Net income, as reported   $ 54,248     $ 196,169  
Additional operating week (4)     (3,718 )     (3,718 )
Tax adjustments (5)     -       (3,834 )
Resolution of legal and tax matters (6)     -       (1,374
Net income, excluding certain items   $ 50,530     $ 187,243  
                 
Diluted earnings per share, as reported   $ 1.96     $ 6.81  
Impact of additional operating week on diluted earnings per share     (0.13 )     (0.13 )
Impact of tax adjustments on diluted earnings per share     -       (0.13 )
Impact of resolution of legal and tax matters on diluted earnings per share     -       (0.05 )
Diluted earnings per share, excluding certain items   $ 1.83     $ 6.50  
                 

 

(1) Goodwill impairment charge of $2.1 million before the effective tax rate recorded during the thirteen weeks ended December 30, 2014 in other (income) expense, net in the Consolidated Statements of Comprehensive Income.
(2) Favorable tax adjustments of $2.3 million related to additional federal tax credits and an increased deduction for domestic production activities related to prior period income tax returns recorded during the thirteen weeks ended September 30, 2014.
(3) Benefit from a favorable resolution of an insurance coverage matter of $3.2 million before the effective tax rate recorded during the thirteen weeks ended July 1, 2014.
(4) Estimated impact of the additional operating week on the fourteen and fifty-three week periods ended December 31, 2013 of $5.9 million before the effective tax rate.
(5) Adjustment of $3.8 million of previously recorded tax expense to reflect the refinement of estimates for certain federal and state tax liabilities to amounts in filed returns, the settlement of tax audits, and an increase in federal tax credits.
(6) Benefit from resolution of legal and tax matters of $2.2 million before the effective tax rate recorded during the thirteen weeks ended March 26, 2013.
   

SOURCE Panera Bread

Contact:

Steve West
Vice President of Investor Relations
Steve.West@panerabread.com

###

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