SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-K/A
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AMENDMENT NO. 1 TO FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 25, 1999
COMMISSION FILE NUMBER 0-19253
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PANERA BREAD COMPANY
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(Exact name of registrant as specified in its charter)
DELAWARE 04-2723701
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(State or other jurisdiction (I.R.S. employer
of incorporation or identification No.)
organization)
7930 BIG BEND BOULEVARD, ST. LOUIS, MISSOURI 63119
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(Address of principal executive offices) (Zip Code)
(314) 918-7779
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(Registrant's telephone number, including area code)
AMENDMENT NO. 1
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The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report for the fiscal year
ended December 25, 1999 on Form 10-K as set forth in the pages attached hereto:
1. Part III: Item 10 - Directors and Executive Officers of the Registrant.
2. Part III: Item 11 - Executive Compensation.
3. Part III: Item 12 - Security Ownership of Certain Beneficial Owners and
Management.
4. Part III: Item 13 - Certain Relationships and Related Transactions.
5. Part IV: Item 14 - Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
BACKGROUND INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS
The following table and biographical descriptions set forth
information regarding the principal occupation, other affiliations, committee
memberships and age, for each Director in office and the executive officers
of the Company, based on information furnished to the Company by each
director and officer. The following information is as of April 1, 2000 unless
otherwise noted.
TERM AS A
NAME AGE POSITION WITH COMPANY DIRECTOR ENDS
---- --- --------------------- -------------
Domenic Colasacco(3)........... 51 Director 2000
George E. Kane (1)(2)(3)....... 95 Director 2001
Henry J. Nasella (1)(2)(3)..... 53 Director 2001
Ronald M. Shaich(2)............ 45 Chairman, Director, 2002
Chief Executive Officer
Thomas R. Howley............... 49 Vice President, General
Counsel and Construction --
William W. Moreton............. 40 Senior Vice President,
Chief Financial Officer --
Richard C. Postle.............. 51 President, Chief Operating
Officer --
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(1) Member of the Compensation and Stock Option Committee.
(2) Member of the Committee on Nominations.
(3) Member of the Audit Committee.
DOMENIC COLASACCO, Director since March 2000. Mr. Colasacco has been
President and Chief Executive Officer of United States Trust Company since
1992. He joined USTC in 1974 after beginning his career in the research
division of Merrill Lynch & Co., in New York City. Mr. Colasacco is also a
director of Hometown Auto Retailers.
GEORGE E. KANE, Director since November 1988. Mr. Kane was a Director of
the Company from March 1981 to December 1985 and a Director Emeritus from
December 1985 to November 1988. Mr. Kane retired in 1970 as President of
Garden City Trust Company (now University Trust Company). Mr. Kane is an
Honorary Director of USTrust.
HENRY J. NASELLA, Director since June 1995. Since May 1999, Mr. Nasella
has been the Chairman and Chief Executive Officer of OnLine Retail Partners,
an e-commerce company. Prior to that he was the President, Chief Executive
Officer and Chairman of Star Markets Company, Inc. from September 1994. From
January 1994 to September 1994, he was a principal of Phillips-Smith
Specialty Venture Capital. From 1988 to July 1993, Mr. Nasella served as the
President and Chief Operating Officer of Staples, Inc. Mr. Nasella served as
President and Chief Executive Officer of Staples USA (Domestic) from 1992 to
July 1993. Mr. Nasella currently is a member of the Board of Visitors of
Northeastern University School of Business and a member of the Board of
Trustees of Northeastern University Corporation. Mr. Nasella is also a
director of Zany Brainy and Blinds to Go.
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RONALD M. SHAICH, Director since 1981, co-founder of the Company,
Chairman of the Board since May 1999, Co-Chairman of the Board from January
1988 to May 1999, Chief Executive Officer since May 1994 and Co-Chief
Executive Officer from January 1988 to May 1994. Mr. Shaich is Chairman of
the Board of Trustees of Clark University.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
THOMAS R. HOWLEY, Vice President, General Counsel, and Assistant
Secretary since January 1993, and Vice President, Construction since June
1999. Prior to that time, and for the five years preceding January 1993,
Mr. Howley was an attorney with the law firm of Rackemann, Sawyer & Brewster.
WILLIAM W. MORETON, Senior Vice President, Chief Financial Officer, and
Treasurer since May 1999. Senior Vice President and Chief Financial Officer
of the Saint Louis Bread Co./Panera Bread business unit since November 1998.
Prior to that time and since April 1997, Mr. Moreton served as Executive Vice
President and Chief Financial Officer of Quality Dining, Inc. Prior to that
time and since October 1992, Mr. Moreton served as Executive Vice President
and Chief Financial Officer of Houlihan's Restaurants, Inc.
RICHARD C. POSTLE, Chief Operating Officer and President since May 1999.
President of the Saint Louis Bread Co./Panera Bread business unit since
August 1995. From August 1994 through August 1995, Mr. Postle was President
and Chief Operating Officer of Checkers Drive-In Restaurants, Inc. From
January 1992 through August 1994, Mr. Postle was Senior Vice President,
Operations of KFC-USA. From 1988 through December 1991, Mr. Postle was Chief
Operating Executive of Brice Foods, Inc.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and Directors, and persons who own more than 10% of the
Company's outstanding shares of Common Stock to file reports of ownership and
changes in ownership with the Commission and Nasdaq. Officers, Directors and
greater than 10% stockholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
In accordance with the provisions of Item 405 of Regulation S-K, to the
Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports
were required during the fiscal year ended December 25, 1999, all Section
16(a) filing requirements applicable to its executive officers, Directors and
greater than 10% beneficial owners were satisfied.
ITEM 11. EXECUTIVE COMPENSATION.
COMPENSATION TABLES
The following tables set forth information concerning the
compensation paid or accrued by the Company during the fiscal years ended
December 27, 1997, December 26, 1998, and December 25, 1999, to or for the
Company's Chief Executive Officer and its four other most highly compensated
executive officers whose salary and bonus combined exceeded $100,000 for
fiscal year 1999 (hereinafter referred to as the "named executive officers").
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SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------ ------------
NAME AND SALARY BONUS OPTIONS/SARS
PRINCIPAL POSITION YEAR ($) ($) (#)
------------------ ---- --- --- ---
Ronald M. Shaich 1999 325,000 - -
Chairman and Chief 1998 254,807 - -
Executive Officer 1997 250,000 - 400,000
Richard C. Postle 1999 310,492 - 108,178
President and Chief 1998 316,067 - 100,000
Operating Officer 1997 295,192 75,000 10,000
William W. Moreton (a) 1999 274,976 - -
Senior Vice President and 1998 48,461 - 150,000
Chief Financial Officer
Michael J. Kupstas 1999 160,230 - -
Vice President, 1998 165,231 38,975 45,000
Franchising and Brand 1997 159,813 78,785 8,000
Communication
Thomas R. Howley 1999 150,000 23,452 -
Vice President, General 1998 122,260 22,659 12,000
Counsel and Vice 1997 118,295 16,380 5,000
President, Construction
(a) Mr. Moreton commenced his employment with the Company in November 1998.
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AGGREGATED OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
--------------------------------------- ANNUAL RATES OF STOCK
NUMBER OF PERCENT OF VALUED AT ASSUMED PRICE
SECURITIES TOTAL OPTIONS/ APPRECIATION PRICES
UNDERLYING SARS GRANTED EXERCISE OR FOR OPTION TERM ($)*
NAME OPTIONS/SARS TO EMPLOYEES IN BASE PRICE EXPIRATION ------------------------------
NAME GRANTED (#) FISCAL YEAR (%) ($/SHARE) DATE 5% 10%
----------- --------------- --------- ---- -- ---
Ronald M. Shaich n/a n/a n/a n/a n/a n/a
Richard C. Postle (1) 108,178 47 6.63 06/03/09 451,056 1,143,064
William W. Moreton n/a n/a n/a n/a n/a n/a
Michael J. Kupstas n/a n/a n/a n/a n/a n/a
Thomas R. Howley n/a n/a n/a n/a n/a n/a
* The dollar amounts in this table are the result of calculations at stock
appreciation rates specified by the Securities and Exchange Commission and are
not intended to forecast actual future appreciation rates of the Company's stock
price.
(1) Options were awarded under the 1992 Equity Incentive Plan. The options are
exercisable in four annual installments of 25% per year beginning June 3,
2001.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
ACQUIRED ON VALUE OPTIONS/SARS AT FY-END (#) SARS AT FISCAL YEAR END
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ ------------ ------------------------- -------------------------
Ronald M. Shaich - - 677,330/0 293,337/0
Richard C. Postle - - 53,867/246,133 45,407/304,283
William W. Moreton - - 0/150,000 0/214,950
Michael J. Kupstas - - 7,750/56,750 4,553/70,290
Thomas R. Howley - - 18,320/13,975 8,756/1,745
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THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company's Board of Directors held 8 meetings, including 2 actions
by written consent, during fiscal year 1999. The Board of Directors has
established an Audit Committee, a Compensation and Stock Option Committee and a
Committee on Nominations.
The Audit Committee, which held 3 meetings in fiscal year 1999, meets
with the Company's auditors and principal financial personnel to review the
results of the annual audit. The Audit Committee also reviews the scope of, and
establishes fees for, audit and non-audit services performed by the independent
accountants, reviews the independence of the independent accountants and the
adequacy and effectiveness of the Company's internal accounting controls. The
Audit Committee consists of 3 members, currently Messrs. George E. Kane, Henry
J. Nasella, and Domenic Colasacco, and is reconstituted annually.
The Compensation and Stock Option Committee (the "Compensation
Committee"), which held 3 meetings in fiscal year 1999, establishes the
compensation, including stock options and other incentive arrangements, of
the Company's Chairman and Chief Executive Officer. It also administers the
Company's 1992 Equity Incentive Plan and 1992 Employee Stock Purchase Plan.
The Compensation Committee consists of 2 members, currently Messrs. George E.
Kane and Henry J. Nasella, and is reconstituted annually.
The Committee on Nominations was established in November 1995 and held
1 meeting in fiscal year 1999. The Committee on Nominations selects nominees for
election as Directors and will consider written recommendations from any
stockholder of record with respect to nominees for Directors of the Company. The
Committee on Nominations consists of 3 members, currently Messrs. Ronald M.
Shaich, George E. Kane, and Henry J. Nasella, and is reconstituted annually.
All Directors attended 100% of the meetings of the Board and of the
committees of which they are members in fiscal year 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee has interlocking or
other relationships with other boards or with the Company.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive a quarterly fee
ranging from $3,000 to $3,500 for serving on the Board, plus reimbursement of
out-of-pocket expenses for attendance at each Board or committee meeting.
Under a formula-based stock option plan for independent directors
(the "Directors' Plan"), as amended by the stockholders at the 1995 Annual
Meeting of Stockholders, each current Director who is not an employee or
principal stockholder of the Company (an "Independent Director") and who is
first elected after the effective date of the Directors' Plan receives, upon
his or her election to the Board, a one-time grant of an option to purchase
5,000 shares of Class A Common Stock. Each Independent Director who serves as
such at the end of each of the Company's fiscal years receives at the end of
such fiscal year an option to purchase an additional 5,000 shares of Class A
Common Stock. All such options have an exercise price per share equal to the
closing price of a share of Class A Common Stock as of the close of the
market the trading day immediately preceding the grant date, are fully vested
when granted, and are exercisable for a period of 10 years.
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REPORT OF THE COMPENSATION COMMITTEE
This report is made by the Compensation and Stock Option Committee
(the "Compensation Committee") of the Board of Directors, the committee which
is responsible for establishing the compensation, including base salary and
incentive compensation, for the Company's Chairman of the Board and Chief
Executive Officer, Ronald M. Shaich.
PHILOSOPHY
The Compensation Committee seeks to set the compensation of the
Company's Chief Executive Officer and Chairman at a level which is competitive
with companies of similar size in the Company's industry. Mr. Shaich has the
overall responsibility of Chairman of the Board of Directors and Chief Executive
Officer. The Compensation Committee examined compensation structures for the
chief executive officer of companies in the restaurant industry using generally
available source material from business periodicals and other sources, and
sought to structure the Chairman and Chief Executive Officer's compensation at a
competitive level appropriate to the comparable companies' group. The companies
that were examined for purposes of evaluating and setting compensation of the
Chairman and Chief Executive Officer are not necessarily included in the
"Standard & Poor's 400 - MidCap Restaurant Index" used in the Stock Performance
Graph set forth under "Stock Performance" below.
COMPENSATION STRUCTURE
The compensation of the Chairman and Chief Executive Officer is
structured to be competitive within the Company's industry and is based upon the
general performance of the Company, and is reviewed annually by the Committee.
COMPONENTS OF COMPENSATION
SALARY. The salary shown in the Summary Compensation Table represents
the fixed portion of compensation for the Chairman and Chief Executive Officer
for the year. Changes in salary depend upon overall Company performance as well
as levels of base salary paid by companies of similar size in the Company's
industry.
BONUS. The cash bonus is the principal incentive-based compensation
paid annually to the Chairman and Chief Executive Officer. The Chairman and
Chief Executive Officer receives a bonus in a predetermined amount if the
Company achieves its objectives for the fiscal year. A higher bonus is paid if
the Company exceeds the objectives by a predetermined percentage. In determining
the bonus amount, the Compensation Committee seeks to create an overall
compensation package for the Chairman and Chief Executive Officer which is at
the mid-point for comparable companies in the restaurant industry. For 1999, Mr.
Shaich asked the Board not to award a bonus to him for the current fiscal year
as he believed the Company was in a transitional period.
The Chairman and Chief Executive Officer may elect to take the bonus in
the form of 10-year, fully vested stock options for that number of shares of the
Company's Class A Common Stock that could be purchased with an amount equal to
two times the cash value of his bonus. The exercise price of the option equals
the fair market value of the Company's Class A Common Stock on the date of
grant.
STOCK OPTIONS. Mr. Shaich does not participate in either the
Performance-Based Option Program under the Company's 1992 Equity Incentive Plan
or the 1992 Employee Stock Purchase Plan. In order to provide what the
Compensation Committee believes to be appropriate and continuing long-term
incentives to its Chairman and Chief Executive Officer, and in order to align
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more fully the interests of the stockholders and the Chairman and Chief
Executive Officer, the Compensation Committee on June 12, 1997 granted to Mr.
Shaich a 10-year option, vesting in equal monthly installments over a
five-year period, subject to continued employment, or immediately in the
event of the sale of the Company, to purchase 400,000 shares of the Company's
Class A Common Stock at an exercise price per share equal to the closing
price of a share of the Class A Common Stock calculated immediately preceding
the date of grant. On November 17, 1998, the Board of Directors approved the
recommendation of the Compensation Committee to accelerate the vesting of Mr.
Shaich's options to the date on which the proposed sale of the Company's Au
Bon Pain Division was completed. As these options have exercise prices equal
to the market value of the Company's Class A Common Stock on the date
immediately preceding the grant date, they provide incentive for the creation
of stockholder value over the long term since their full benefit cannot be
realized unless there occurs over time an appreciation in the price of the
Company's Class A Common Stock. The Compensation Committee considers the
number of shares to be an appropriate incentive for the Chairman and Chief
Executive Officer to continue to focus on building stockholder value. The
Compensation Committee has not determined whether any ongoing program of
long-term incentive compensation should or will be adopted with respect to
its Chairman and Chief Executive Officer.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Compensation Committee has reviewed the potential consequences
for the Company of Section 162(m) of the Code which imposes a limit on tax
deductions for annual compensation in excess of one million dollars paid to
any of the five most highly compensated executive officers. Based on such
review, the Compensation Committee believes that the limitation will have no
effect on the Company in 2000.
Respectfully submitted,
HENRY J. NASELLA, GEORGE E. KANE
COMPENSATION COMMITTEE
EXECUTIVE OFFICER COMPENSATION
The Company's Chief Executive Officer is responsible for establishing
the compensation, including salary, bonus and incentive compensation, for all of
the Company's executive officers other than the Chief Executive Officer and
Chairman of the Board.
PHILOSOPHY
In compensating its executive officers, the Chief Executive Officer
seeks to structure a salary, bonus and incentive compensation package that will
help attract and retain talented
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individuals and align the interests of the executive officers with the interests
of the Company's stockholders.
COMPONENTS OF COMPENSATION
There are two components to the compensation of the Company's executive
officers: annual cash compensation (consisting of salary and bonus incentives)
and long-term incentive compensation.
CASH COMPENSATION. The Company participates annually in an
industry-specific survey of executive officers, which serves as the basis for
determining total target cash compensation packages, which are crafted
individually for each executive officer. The individual's compensation consists
of a base salary and contingent compensation based on actual performance against
agreed to expectations of performance. The individual compensation packages are
structured so that, if the executive officer attains the expected level of
achievement of each performance goal, the cash compensation of the executive
officer will be approximately at the 75th percentile of the compensation of
individuals occupying similar positions in the industry, using generally
available surveys of executive compensation within the retail industry for
companies with comparable revenues.
At the beginning of each fiscal year, the Chief Executive Officer and
each executive officer establish a series of individual performance goals which
are specific to the executive's responsibilities. These goals seek to measure
performance of each executive officer's job responsibilities: for executive
officers whose responsibilities are operational in nature, attainment of
operating group goals and objectives is stressed, and for corporate staff
officers, overall Company performance measured by earnings per share growth is
utilized. Currently, the maximum potential cash bonus for the Company's
executive officers, as a percentage of base salary, ranges from 20% to 60%.
Thus, the Company's cash compensation practices seek to motivate
executives by requiring excellent performance measured against both internal
goals and competitive performance.
LONG-TERM INCENTIVE COMPENSATION. The second element of executive
compensation, long-term incentive compensation, currently takes the form of
stock options granted under the Company's 1992 Equity Incentive Plan. Currently,
stock options are granted under the Performance-Based Option program, which
consists of a series of guidelines which provide for the periodic granting of
specific amounts of stock options, denominated in dollars rather than in numbers
of shares, depending upon the executive's position within the Company. Existing
holdings of stock or stock options are not a factor in determining the dollar
value of an individual executive officer's award.
As is the case with short-term incentive compensation, at the beginning
of each fiscal year, the Chief Executive Officer and each executive officer
establish a series of individual performance goals specifically related to the
executive's responsibilities and designed to measure execution of these
responsibilities. In addition, a Company-wide performance goal measured in
earnings per share growth is established. Further consideration is given to each
executive officer's accountability and/or level of responsibility for managing
one or more aspects of the Company's overall business. These factors are
weighted for each executive officer, with greater emphasis and value being
placed on those factors which could have a greater impact on the Company's
long-term profitability. An individual executive officer's performance against
each of these criteria is then graded at one of five levels: significantly less
than expected, less than expected, as expected, exceeds expectation, and
significantly exceeds expectation. Awards of options are then made based upon a
dollar value, which increases as the executive officer achieves higher grades
for overall performance.
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As often as seems appropriate, but at least annually, the Chief
Executive Officer reviews the Company's executive compensation program to judge
its consistency with the Company's compensation philosophy, whether it supports
the Company's strategic and financial objectives, and whether it is competitive
within the Company's industry.
EMPLOYMENT RELATED AGREEMENTS
The Company and Richard C. Postle are parties to an Executive
Employment Agreement dated September 1, 1995, which provides Mr. Postle with
a base salary of $300,000 for a two year period. The Agreement automatically
renews for additional one year periods unless either party gives notice of his
or its intent not to renew the Agreement at least twenty-six weeks prior to
its expiration. In the event that the Company gives notice of its intent not
to renew the Agreement, Mr. Postle will be entitled to his base salary, car
allowance (if any) and other benefits for twenty-six weeks, such payments to
be reduced dollar for dollar by any compensation and benefits received by Mr.
Postle from other sources. In the event the Company chooses to terminate Mr.
Postle's employment without cause, it may do so by giving Mr. Postle thirty
(30) days' written notice. In the event of a termination without cause, Mr.
Postle would be entitled to fifty-two (52) weeks severance.
The Company and William W. Moreton are parties to an Executive
Employment Letter Agreement dated September 29, 1998, which provides Mr.
Moreton with a base salary of $275,000, a bonus of $25,000 payable in March
2000 which is based on continued employment, 150,000 stock options vesting
over five years and a relocation assistance package. The Letter Agreement
also provides that under the terms of a separate severance agreement, in the
event of an involuntary termination of Mr. Moreton's employment without
cause, Mr. Moreton will be entitled to continue to receive his base salary,
car allowance and medical and/or dental benefits for a period of up to twelve
months, such payments to be reduced by any compensation received by Mr.
Moreton in connection with any future employment during such twelve month
period.
The Company and Michael J. Kupstas are parties to an Executive
Employment Letter Agreement dated December 22, 1995, which provides Mr.
Kupstas with a base salary of $150,000, a right to participate in the
Company's Incentive Compensation Program with a guaranteed minimum bonus
under the plan of 20% of his annual salary for fiscal 1996, subject to
continued employment, 11,500 stock options subject to the discretion of the
Company's Board of Directors, reimbursement of one year of COBRA expenses and
a relocation assistance package. The Letter Agreement also provides that
under the terms of a separate severance agreement, in the event of an
involuntary termination of Mr. Kupstas' employment without cause, Mr. Kupstas
will be entitled to continue to receive his base salary, car allowance and
medical and/or dental benefits for a period of up to twelve months, such
payments to be reduced by any compensation received by Mr. Kupstas in
connection with any future employment during such twelve month period.
-10-
The Company and Thomas R. Howley are parties to Executive Employment
Agreement dated December 13, 1996 and an Amendment thereto dated November 17,
1999. The Amendment provides Mr. Howley with a base salary of $150,000, the
right to participate in the Company's performance compensation program and a
$5,000 per year car allowance. The Amendment also provides that all of Mr.
Howley's nonqualified stock options held on May 15, 1999, the effective date
of the sale of the Company's Au Bon Pain division shall vest and be
immediately exercisable, subject to the approval of the Company's Board of
Directors and that the Company will make best efforts to replace expired
options at the same exercise price. The Amendment also provides that in the
event of an involuntary termination of Mr. Howley's employment without cause,
Mr. Howley will be entitled to continue to receive his base salary, car
allowance and medical and/or dental benefits for a period of up to twelve
months, such payments to be reduced by any compensation received by Mr.
Howley in connection with any future employment during such twelve month
period.
TOTAL RETURN TO STOCKHOLDERS
(ASSUMES $100 INVESTMENT ON DECEMBER 31, 1994)
The following graph and chart compare the cumulative annual
stockholder return on the Company's Class A Common Stock over the period
commencing December 31, 1994, and continuing through December 31, 1999, to
that of the total return index for the NASDAQ Stock Market (U.S. Companies)
and the Standard & Poor's 400 - MidCap Restaurant Index, assuming the
investment of $100 on December 31, 1994. In calculating total annual
stockholder return, reinvestment of dividends is assumed. The stock
performance graph and chart below are not necessarily indicative of future
price performance.
PERFORMANCE GRAPH
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TOTAL RETURN ANALYSIS
12/31/94 12/29/95 12/30/96 12/31/97 12/31/98 12/31/99
- ------------------- ---------------- --------------- ---------------- --------------- ---------------- ---------------
Panera Bread $ 100.00 $ 51.56 $ 40.63 $ 47.27 $ 42.19 $ 48.44
Company
- ------------------- ---------------- --------------- ---------------- --------------- ---------------- ---------------
S&P MidCap $ 100.00 $ 98.22 $ 58.06 $ 66.14 $ 80.64 $ 63.40
Restaurants
- ------------------- ---------------- --------------- ---------------- --------------- ---------------- ---------------
Nasdaq Composite $ 100.00 $ 139.92 $ 171.69 $ 208.83 $ 291.60 $ 541.16
- ------------------- ---------------- --------------- ---------------- --------------- ---------------- ---------------
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
OWNERSHIP OF PANERA BREAD COMPANY COMMON STOCK
The following table sets forth certain information as of March 31,
2000, with respect to the Company's Class A and Class B Common Stock owned by
(1) each director of the Company, (2) the executive officers named in the
Summary Compensation Table, (3) all directors and executive officers of the
Company as a group, and (4) each person who is known by the Company to
beneficially own more than five percent of the Company's capital stock. Unless
otherwise indicated in the footnotes to the table, all stock is owned of record
and beneficially by the persons listed in the table.
CLASS A COMMON CLASS B COMMON COMBINED VOTING
NAME AND, WITH RESPECT TO OWNER -------------- -------------- ---------------
OF MORE THAN 5%, ADDRESS NUMBER PERCENT (1) NUMBER PERCENT (2) PERCENTAGE (3)
- ------------------------------ ------ ----------- ------ ----------- --------------
Ronald M. Shaich............................ 740,865(4) 6.5% 1,291,646 84.4% 29.0%
c/o Panera Bread Company
7930 Big Bend Boulevard
St. Louis, MO 63119
George E. Kane.............................. 28,542(5) * 20,000 1.3% *
Director
Domenic Colasacco........................... 5,000(6) * -- -- *
Director
Henry J. Nasella............................ 25,080(7) * -- -- *
Director
Richard C. Postle........................... 92,531(8) * -- -- *
William W. Moreton.......................... -- -- -- -- --
Michael J. Kupstas.......................... 13,781(9) * -- -- *
Thomas R. Howley............................ 22,198(10) * -- -- *
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CLASS A COMMON CLASS B COMMON COMBINED VOTING
NAME AND, WITH RESPECT TO OWNER -------------- -------------- ---------------
OF MORE THAN 5%, ADDRESS NUMBER PERCENT (1) NUMBER PERCENT (2) PERCENTAGE (3)
- ------------------------------ ------ ----------- ------ ----------- --------------
All Directors and executive officers as
a group (8 persons)....................... 927,997(11) 8.7% 1,311,646 85.7% 31.9%
Louis I. Kane............................... 678,580(12) 6.0% 35,800 2.3% 4.9%
19 Fid Kennedy Avenue
Boston, MA 02210
Brown Capital Management.................... 1,957,750(13) 18.4% -- -- 12.8%
1201 N. Calvert Street
Baltimore, MD 21201
Merrill Lynch & Co., Inc.
Merrill Lynch Asset Management Group........ 1,131,100(14) 10.6% -- -- 7.4%
Merrill Lynch Special
Value Fund, Inc.
800 Scudders Mill Road
Plainsboro, NJ 08536
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 ................... 804,000(15) 7.5% -- -- 5.3%
Cobalt Capital Management, Inc.............. 623,300(16) 5.8% -- -- 4.1%
237 Park Avenue, Suite 801
New York, NY 10012
- -------------
* Less than one percent.
(1) Percentage ownership of Class A Common Stock is based on 10,668,831
shares issued and outstanding plus shares subject to options
exercisable within sixty days of March 31, 2000 held by the stockholder
or group.
(2) Percentage ownership of Class B Common Stock is based on 1,530,524
shares issued and outstanding plus shares subject to options
exercisable within sixty days of March 31, 2000 held by the stockholder
or group.
(3) This column represents voting power rather than percentage of equity
interest as each share of Class A Common Stock is entitled to one vote
while each share of Class B Common Stock is entitled to three votes.
(4) Includes options exercisable within 60 days for 677,330 shares.
(5) Includes options for 28,542 shares exercisable within sixty days of
March 31, 2000 pursuant to the Directors' Plan for independent
directors.
(6) Consists of options for 5,000 shares exercisable within 60 days of
March 31, 2000, issued pursuant to the Director's plan for
independent directors.
(7) Consists of (a) options for 24,080 shares exercisable within sixty days
of March 31, 2000 pursuant to the Directors' Plan for independent
directors, (b) 1,000 shares owned by Mr. Nasella.
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(8) Includes options for 53,867 shares exercisable within 60 days of March
31, 2000.
(9) Includes options for 10,625 shares exercisable within 60 days of March
31, 2000.
(10) Includes options for 19,426 shares exercisable within sixty days of
March 31, 2000.
(11) Includes options for 818,870 shares exercisable within sixty days of
March 31, 2000.
(12) Consists of (a) 1,200 shares owned by Mr. Kane's spouse and as to which
Mr. Kane disclaims beneficial ownership (b) 50 shares owned by Mr. Kane
and (c) options exercisable within 60 days for 677,330 shares.
(13) All of the shares of Common Stock are owned by various investment
advisory clients of Brown Capital Management, Inc., which is deemed to
be a beneficial owner of those shares pursuant to Rule 13d-3 under the
Securities Exchange Act of 1934, due to its discretionary power to make
investment decisions over such shares for its clients and its ability
to vote such shares. In all cases, persons other than Investment
Counselors of Maryland, Inc. have the right to receive, or the power to
direct the receipt of, dividends from, or the proceeds from the sale of
the shares. No individual client holds more than five percent of the
class.
Information regarding beneficial ownership of the shares has been
obtained solely from the Schedule 13G, Amendment No. 1 filed with the
Commission on February 10, 2000.
(14) Merrill Lynch & Co., Inc. ("ML & Co.") is a parent holding company. The
Merrill Lynch Asset Management Group ("AMG") is an operating division
of ML & Co. consisting of ML & Co.'s indirectly-owned asset management
subsidiaries. The following asset management subsidiaries hold certain
shares of the common stock of the Company. Merrill Lynch Asset
Management, L.P., Fund Asset Management, L.P.
Merrill Lynch Asset Management Group of ML & Co. ("AMG") is comprised
of doing business as Merrill Lynch Asset Management ("MLAM"), QA
Advisers, LLC ("QA"), Merrill Lynch Quantitative Advisers, Inc.
Hotchkis and Wiley divisions thereof; Fund Asset Management, L.P.,
doing business as Fund Asset Management ("FAM"); Merrill Lynch Asset
Management U.K. Limited ("MLAM UK"); Merrill Lynch (Suisse) Investment
Management Limited ("MLS"); Mercury Asset Management International
Limited ("MAMI"); Mercury Asset Management Ltd; Mercury Asset
Management, Ltd.; Mercury Asia Limited; Merrill Lynch Mercury
Kapitalanlagegesellschaft MBH; Munich London Investment Management,
Ltd.; Merrill Lynch Asset Management (Hong Kong) Limited; Merrill Lynch
Mercury Asset Management Japan Limited; Atlas Asset Management, Inc.;
Merrill Lynch Investment Management Canada, Inc.; DSP Merrill Lynch
Asset Management (India) Limited; PT Merrill Lynch Indonesia; Merrill
Lynch Phatra Securities Co., Ltd.; Merrill Lynch Global Asset
Management, Limited; Mercury Asset Management Channel Islands, Limited;
Mercury Asset Management International Channel Islands Limited
("MAMCI"); Grosvenor Venture Managers, Limited; and Mercury Fund
Managers, Limited. Each of MLAM, FAM, MLAM UK, MAMCI, QA, MLS, and MAMI
is an investment adviser registered under Section 203 of the Investment
Advisers Act of 1940, which acts as investment adviser to various
investment companies registered under Section 8 of the Investment
Company Act of 1940. Each other firm constituting part of AMG is an
investment adviser operating under the laws of a jurisdiction other
than the united States. The investment advisers that comprise AMG
exercise voting and investment powers over portfolio securities
independently from other direct and indirect subsidiaries of ML & Co.
Information regarding beneficial ownership of the shares has been
obtained solely from the joint Schedule 13G, Amendment No. 3 filed with
the Commission on February 7, 2000.
(15) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered
under the Investment Company Act of 1940, and serves as investment
manager to certain other commingled group trusts and separate accounts.
These investment companies, trusts and accounts are the :Funds:. In its
role as investment adviser or manager, Dimensional possesses voting
and/or investment power over the securities of the Issuer described in
this schedule that are owned the Funds. All securities reported in this
schedule are owned by the Funds. Dimensional disclaims beneficial
ownership of such securities.
Information regarding beneficial ownership of the shares has been
obtained solely from the Schedule 13G filed with the Commission on
February 3, 2000.
(16) Information on beneficial ownership of the shares has been obtained
solely from the Schedule 13G, Amendment No. 1 filed with the Commission
on February 15, 2000.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no Certain Relationships or Related Transactions during the
fiscal year ended December 25, 1999 that exceeded $60,000 to report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. FINANCIAL STATEMENTS
The following described consolidated financial statements of the
Company are included in this report:
Report of Independent Accountants
Consolidated Balance Sheets as of December 25, 1999, and December 26,
1998.
Consolidated Statements of Operations for the fiscal years ended
December 25, 1999, December 26, 1998, and December 27, 1997.
Consolidated Statements of Cash Flows for the fiscal years ended
December 25, 1999, December 26, 1998, and December 27, 1997.
Consolidated Statements of Stockholders' Equity for the fiscal years
ended December 25, 1999, December 26, 1998, and December 27, 1997.
Notes to Consolidated Financial Statements.
(a) 2. FINANCIAL STATEMENT SCHEDULE
The following financial statement schedule for the Company is filed
herewith:
SCHEDULE II--Valuations and Qualifying Accounts
PANERA BREAD COMPANY
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
BALANCE AT BALANCE
BEGINNING AT END OF
DESCRIPTION OF PERIOD ADDITIONS DEDUCTIONS PERIOD
- ----------- ---------- --------- ---------- ---------
Allowance for Doubtful Accounts
Fiscal Year ended December 27, 1997................. $ 104 $ 49 $ 19 $ 134
Fiscal Year ended December 26, 1998................. $ 134 $ 96 $ 22 $ 208
Fiscal Year ended December 25, 1999................. $ 208 $ 93 $104 $ 197
Deferred Tax Valuation Allowance
Fiscal Year ended December 27, 1997................. $ -- $1,308 $ -- $1,308
Fiscal Year ended December 26, 1998................. $1,308 $3,434 $ -- $4,742
Fiscal Year ended December 25, 1999................. $4,742 $ -- $ -- $4,742
(b) Form 8-K
No reports on Form 8-K have been filed during the fourth quarter of
the fiscal year ended December 25, 1999.
(a) 3. EXHIBITS
EXHIBIT DESCRIPTION
NUMBER -----------
-------
2.1 Asset Purchase Agreement by and among Au Bon Pain Co., Inc., ABP
Midwest Manufacturing Co., Inc. and Bunge Foods Corporation dated
as of February 11, 1998; Amendment to Asset Purchase Agreement,
dated as of March 23, 1998. Incorporated by reference to Exhibit
2.1 to the Company's Annual Report on Form 10-K for the year
ended December 27, 1997.
2.2.1 Stock Purchase Agreement dated August 12, 1998 by and between the
Company, ABP Holdings, Inc. ("ABPH") and ABP Corporation.
Incorporated by reference to the Company's Report on Form 8-K
filed August 21, 1998.
2.2.2 Amendment to Stock Purchase Agreement dated October 28, 1998 by
and among the Company, ABPH and ABP Corporation. Incorporated by
reference to the Company's Report on Form 8-K filed November 6,
1998.
3.1 Certificate of Incorporation of Registrant, as amended to June 2,
1991. Incorporated by reference to Exhibit 3.1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994.
3.1.1 Certificate of Amendment to Certificate of Incorporation,
dated and filed June 3, 1991. Incorporated by reference to
Exhibit 3.1.1 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1994.
3.1.2 Certificate of Amendment to the Certificate of Incorporation
filed on June 2, 1994. Incorporated by reference to Exhibit 3.1.2
to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994.
3.1.3 Certificate of Designations, Preferences and Rights of the Class
B Preferred Stock (Series 1), filed November 30, 1994.
Incorporated by reference to Exhibit 3.1.3 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994.
3.2 Bylaws of Registrant, as amended to date. Incorporated by
reference to Registrant's registration statement on Form S-1
(File No. 33-40153), Exhibit 3.2. 4.1.1 Amended and Restated
Revolving Credit Agreement dated as of February 13, 1998 among
the Issuer, Saint Louis Bread Company, Inc., ABP Midwest
Manufacturing Co., Inc., BankBoston, N.A., USTrust and BankBoston
N.A. as Agent. Incorporated by reference to Exhibit 4.1.1 to the
Company's Annual Report on Form 10-K for the year ended December
27, 1997.
4.1.2 Amended and Restated Revolving Credit Note dated as of February
13, 1998 of the Issuer, Saint Louis Bread Company, Inc. and ABP
Midwest Manufacturing Co., Inc. in favor of BankBoston, N.A.
Incorporated by reference to Exhibit 4.1.2 to the Company's
Annual Report on Form 10-K for the year ended December 27, 1997.
4.1.3 Amended and Restated Revolving Credit Note dated as of
February 13, 1998 of the Issuer, Saint Louis Bread Company, Inc.
and ABP Midwest Manufacturing Co., Inc. in favor of USTrust.
Incorporated by reference to Exhibit 4.1.3 to the Company's
Annual Report on Form 10-K for the year ended December 27, 1997.
4.1.4 First Amendment to Amended and Restated Revolving Credit
Agreement dated as of June 30, 1998.
4.1.5 Second Amendment and Waiver to Amended and Restated
Revolving Credit Agreement dated as of October 14, 1998.
4.1.6 Third Amendment and Waiver to Amended and Restated
Revolving Credit Agreement dated as of January 20, 1999.
4.1.7 Fourth Amendment to Amended and Restated Revolving Credit
Agreement dated as of March 25, 1999.
4.1.8 Fifth Amendment to Amended and Restated Revolving Credit
Agreement dated as of May 14, 1999. *
4.2 Form of 4.75% Convertible Subordinated Note due 2001.
Incorporated by reference to Registrant's Form 8-K filed
December 22, 1993, Exhibit 4.
10.3.3 Registrant's 1992 Employee Stock Purchase Plan. Incorporated by
reference to the Registrant's Annual Report on Form 10-K for the
year ended December 30, 1995.
10.3.4 Registrant's Formula Stock Option Plan for Independent Directors
and form of option agreement thereunder, as amended. Incorporated
by reference to the Registrant's Annual Report on Form 10-K for
the year ended December 30, 1995.
10.4 Amended and Restated Coffee Supply Agreement by and among
Registrant and Peet's Companies, Inc., Peet's Coffee and Tea,
Inc., and Peet's Trademark Company, dated as of the 26th day of
October, 1994. Incorporated by reference to Exhibit 10.8 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994.
10.5 Indenture of Trust dated as of July 1, 1995 by and between the
Industrial Development Authority of the City of Mexico, Missouri
and Mark Twain Bank, as Trustee. Incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended
December 30, 1995. 10.5.1 Loan Agreement dated as of July 1, 1995
by and between the Industrial Development Authority of the City
of Mexico, Missouri and ABP Midwest Manufacturing Co., Inc.
Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 30, 1995.
10.5.2 Promissory Note issued by ABP Midwest Manufacturing Co., Inc. in
the face amount of $8,741,370. Incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended
December 30, 1995.
10.6.1 Employment Agreement between the Registrant and Richard Postle.
Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 30, 1995.+
10.6.2 Employment Agreement between the Registrant and Robert Taft.
Incorporated by reference to the Registrant's Annual Report on
Form 10-K for the year ended December 28, 1996.+
10.6.3 Employment Agreement between the Registrant and Maxwell Abbott.
Incorporated by reference to Exhibit 10.6.3 of the Registrant's
Annual Report on Form 10-K for the year ended December 28, 1996.+
10.6.4 Employment Letter between the Registrant and Samuel Yong.
Incorporated by reference to Exhibit 10.6.4 of the Registrant's
Annual Report on Form 10-K for the year ended December 28, 1996.+
10.6.5 Employment Letter between the Registrant and William Moreton.*
10.6 Employment Letter between the Registrant and Michael Kupstas.*
10.7 Employment Letter between the Registrant and Thomas Howley.
10.8 Executive Employment Agreement between the Registrant and
Thomas R. Howley.
10.6.8.1 Amendment to Executive Employment Agreement between the
Registrant and Thomas R. Howley.**+
10.7.1 Form of Stock Purchase Warrant from Au Bon Pain Co., Inc. to
Allied Capital Corporation, Allied Capital Corporation II, and
Capital Trust Investments, Ltd. Incorporated by reference to
Exhibit 10.7.1 of the
Registrant's Annual Report on Form 10-K for the year ended
December 28, 1996.
10.7.2 Form of Contingent Stock Purchase Warrant from Au Bon Pain Co.,
Inc. to Allied Capital Corporation, Allied Capital Corporation II
and Capital Trust Investments, Ltd. Incorporated by reference to
Exhibit 10.7.2 of the Registrant's Annual Report on Form 10-K for
the year ended December 28, 1996.
10.7.3 Form of Stock Purchase Warrant from Au Bon Pain Co, Inc. to
Princes Gate Investors, L.P., Acorn Partnership I L.P., PG
Investments Limited, PGI Sweden AB and Gregor Von Open.
Incorporated by reference to Exhibit 10.7.3 of the Registrant's
Annual Report on Form 10-K for the year ended December 28, 1996.
10.7.4 Registration Rights Agreement dated as of July 24, 1996 among
Allied Capital Corporation, Allied Capital Corporation II,
Capital Trust Investments, Ltd., Princes Gate Investors, L.P.,
Acorn Partnership I, L.P., PGI Investments Limited, PGI Sweden
AB, Gregor Von Open and Au Bon Pain Co., Inc., Incorporated by
reference to Exhibit 10.7.4 of the Registrant's Annual Report on
Form 10-K for the year ended December 28, 1996.
10.8.4 Form of Rights Agreement, dated as of October 21, 1996 between
the Registrant and State Street Bank and Trust Company.
Incorporated by reference to the Registrant's Registration
Statement on Form 8-A (File No. 000-19253).
10.9 Bakery Product Supply Agreement by and between Bunge Foods
Corporation and Saint Louis Bread Company, Inc. dated as of March
23, 1998. Incorporated by reference to Exhibit 10.9 to the
Company's Annual Report on Form 10-K for the year ended December
27, 1997. 10.10 Bakery Product Supply Agreement by and between
Bunge Foods Corporation and Au Bon Pain Co., Inc. dated as of
March 23, 1998. Incorporated by reference to Exhibit 10.10 to the
Company's Annual Report on Form 10-K for the year ended December
27, 1997.
10.11 Executive Employment Agreement between the Company and Sam Yong
dated June 16, 1998. Incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the period ended July 11,
1998.+
21 Registrant's Subsidiaries.*
23.1 Consent of PricewaterhouseCoopers L.L.P.*
27 Financial Data Schedule.*
- -----------
* Filed April 10, 2000, with the Commission on Form 10-K.
** Filed herewith.
+ Management contract or compensatory plan required to be filed as an
exhibit to this Form 10-K pursuant to Item 14(c).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
PANERA BREAD COMPANY
By: /s/ RONALD M. SHAICH
-----------------------------------------
Ronald M. Shaich, Chairman of the Board
and Chief Executive Officer
Date: April 24, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this amendment has been duly signed by the following persons on behalf
of the registrant and in the capacities and on the date indicated:
/s/ RONALD M. SHAICH
- --------------------------------------------
Ronald M. Shaich, Chairman of the
Board and Chief Executive Officer
/s/ WILLIAM W. MORETON
- --------------------------------------------
William W. Moreton, Senior Vice
President and Chief Financial Officer
/s/ GEORGE E. KANE
- --------------------------------------------
George E. Kane, Director
/s/ HENRY J. NASELLA
- --------------------------------------------
Henry J. Nasella, Director
/s/ DOMENIC COLASACCO
- --------------------------------------------
Domenic Colasacco, Director
All dated: April 24, 2000
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