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Mod 11 Adjusting enterprise operations Panera

Mod 11 Adjusting enterprise operations Panera. Yiwen Lin. Agenda. Adjustment A: Inventory Method Adjustment B: Operating Leases Adjustment C: Share-Based Compensation. A: Inventory Method. Note 2

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Mod 11 Adjusting enterprise operations Panera

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  1. Mod 11 Adjusting enterprise operations Panera Yiwen Lin

  2. Agenda Adjustment A: Inventory Method Adjustment B: Operating Leases Adjustment C: Share-Based Compensation

  3. A: Inventory Method • Note 2 Inventories, which consist of food products, paper goods, and supplies, are valued at the lower of cost or market, with cost determined under the first-in, first-out method. • Thus, no adjustment is necessary for Panera.

  4. B: Operating Leases • No capital lease footnote disclosure available • Panera has access to a $250 million credit facility. During fiscal 2013, no borrowings were outstanding under the credit facility. • Credit facility interest rate determination: The Base Rate (which is defined as the higher of Bank of America prime rate, the Federal funds rate plus 0.50 percent, or LIBOR plus 1.00 percent) plus the Applicable Rate for Base Rate loans (which is an amount ranging from 0.00 percent to 1.00 percent depending on our consolidated leverage ratio).

  5. Interest rate selection • The current prime rate for Bank of America is 3.25%. • The current federal funds rate is 0.25% • The current one year LIBOR rate is 0.56% • Thus, for the purpose of calculation, We calculated the interest rate as 4.25% (3.25%+1%), conservatively. Source: http://www.bankrate.com/rates

  6. ITEM 7: MD&A

  7. Calculation: PV of operating lease payments

  8. Lease Adjustments

  9. C: Share-Based Compensation • Panera does not provide information about the range of exercise price in its 2013 10k. • Note 16 provides Panera’s only active stock-based compensation plan — 2006 Stock Incentive Plan

  10. Note 16: Information on stock options

  11. Stock Option Adjustments

  12. Adjusted Journal Entry

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