Decision case 10-2

Panera and Chipotle annual report 2015

Part B. The Business Decision Model

If you were an investor, would you be willing to lend money to either or both companies based on their use of debt?

1. Formulate the Question
2. Gather Information from the Financial Statements and Other Sources
3. Analyze the Information Gathered (compare the company's ratios with industry averages and look at trends)
4. Make the Decision (lend money or find an alternative use for the money)
5. Monitor Your Decision (Monitor your investment periodically)

Panera

AP tle Mexican Grill, Inc. Form 10-K for the Fiscal Year Ended December 31, 2015 A Cash and cash equivalents 248,003 419.465 Accounts receivable, net of allowance for doubtful accounts of $1, 176 and $1, 199 as of December 31. 2015 and December 31, 2014, respectively. 38.283 34,839 Inventory 15.043 15.332 Prepaid expenses and other current assets 39.965 34.795 Income tax receivable 58.152 16,488 Investments 415,199 338.592 Total current assets 814,647 859.511 Leasehold improvements, property and equipment, net 1,217,220 1,106,984 Long term investments 622.939 496,106 Other assets 48,321 42,777 Goodwill 21.939 21,939 Total assets S 2.725,066 S 2.527.317 Liabilities and shareholders' equity Current liabilities: Accounts payable S 85.709 S 69.613 Accrued payroll and benefits 64,958 73,894 Accrued liabilities 129,275 102,203 Total current liabilities 279.942 245,710 Deferred rent 251,962 219,414 Deferred income tax liability 32.305 21,561 Other liabilities 32,883 28,263 Total liabilities Jim 597,092 514,948 Shareholders' equity. Preferred stock, 50.01 par value, 600,000 shares authorized, no shares issued as of December 31, 2015 and December 31, 2014, respectivelyotle Mexican Grill, Inc. Form 10-K for the Fiscal Year Ended December 31, 2015 Liabilities and shareholders' equity Current liabilities: Accounts payable S 85.709 S 69.613 Accrued payroll and benefits 64.958 73.894 Accrued liabilities 129,275 102,203 Total current liabilities 279.942 245,710 Deferred rent 251,962 219.414 Deferred income tax liability 32,305 21,561 Other liabilities 32.883 28,263 Total liabilities 597.092 514.948 Shareholders' equity: Preferred stock, 50.01 par value, 600,000 shares authorized, no shares issued as of December 31, 2015 and December 31, 2014, respectively Common stock $0.01 par value, 230,000 shares authorized, and 35,790 and 35,394 sued as of December 31, 2015 and December 31, 2014, respectively 358 354 Additional paid-in capital 1.172,628 1,038,932 Treasury stock, at cost, 5,206 and 4,367 common shares at December 31, 2015 and December 31, 2014, respectively (1,234,612) (748,759) Accumulated other comprehensive income (loss) (8,273) (429) Retained earnings 2,197,873 1,722.271 Total shareholders' equity 2.127.974 2,012,369 Total liabilities and shareholders' equity $ 2,725,066 S 2,527,317 See accompanying notes to consolidated financial statements.Mexican Grill, Inc. Form 10-K for the Fiscal Year Ended December 31, 2015 A CHIPOTLE MEXICAN GRILL, INC. + CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME (in thousands, except per share data) Year ended December 31. 2015 2014 2013 Revenue S 4,501,223 $ 4,108,269 5 3.214,591 Restaurant operating costs (exclusive of depreciation and amortization shown separately below): Food, beverage and packaging 1,503,835 1,420,994 1,073,514 Labor 1,045,726 .904.407 739,800 Occupancy 262.412 230,868 199,107 Other operating costs 514,963 434.244 347,401 General and administrative expenses 250,214 273,897 203,733 Depreciation and amortization 130,368 1 10,474 96.054 Pre-opening costs 16,922 15,609 15,511 Loss on disposal of assets 13,194 6,976 6,751 Total operating expenses 3.737.634 3.397.469 2.681.871 Income from operations 763,589 710,800 532,720 Interest and other income (expense), net 6.278 3,503 1,751 Income before income taxes 769,867 714.303 534,471 Provision for income taxes (294,265) (268,929) (207.033) Net income S 475.602 S 445.374 327.438Q se nera Bread Company Form 10-K for the Fiscal Year Ended December 29, 2015 1/ AA Inventories 22,482 22,811 Prepaid expenses and other 59,457 51,588 Deferred income taxes 34,479 28,621 Assets held for sale 28,699 Total current assets 502.789 406,166 Property and equipment, net 776,248 787,294 Other assets: Goodwill 121,791 120,778 Other intangible assets, net 63,877 70,940 Deposits and other 10,613 5.508 Total other assets 196.281 197.226 Total assets S 1,475.318 5 1,390,686 Liabilities, Redeemable Noncontrolling Interest, and Stockholders' Equity Current liabilities: Accounts payable 5 19,805 5 19.511 Accrued expenses 359.464 333,201 Current portion of long-term debt 17,229 Liabilities associated with assets held for sale 2.945 Total current liabilities 399.443 352,712 Long-term debt 388,971 99.784 Deferred rent 62,610 67,390 Deferred income taxes 70,447 76.589 Other long-term liabilities 52.566 58,027 Total liabilities 974.037 654,502 Commitments and contingencies (Note 14) Redeemable noncontrolling interest 3,981 Stockholders' equity: Common stock. 5.000) nar value ner share:IDTAP Q s era Bread Company Form 10-K for the Fiscal Year Ended December 29, 2015 1/ AA Current liabilities: Accounts payable 19,805 5 19.511 Accrued expenses 359.464 333.201 Current portion of long-term debt 17.229 Liabilities associated with assets held for sale 2.945 Total current liabilities 399.443 352,712 Long-term debt 388,971 99.784 Deferred rent 62,610 67.390 Deferred income taxes 70,447 76.589 Other long-term liabilities 52.566 58,027 Total liabilities 974,037 654,502 Commitments and contingencies (Note 14) Redeemable noncontrolling interest 3,981 Stockholders' equity: Common stock, 5.0001 par value per share: Class A. 1 12,500,000 shares authorized; 30,836,669 shares issued and 23,346,185 shares outstanding at December 29, 2015 and 30.703,472 shares issued and 25,442,728 shares outstanding at December 30, 2014 Class B. 10,000,000 shares authorized; 1,381,730 shares issued and outstanding at December 29, 2015 and 1,381,865 shares issued and outstanding at December 30, 2014 Treasury stock, carried at cost: 7,490,481 shares at December 29, 2015 and 5,260,744 (1,1 11,586) (706,073) shares at December 30, 2014 Preferred stock, 5.0001 par value per share; 2,000,000 shares authorized and no shares issued or outstanding at December 29, 2015 and December 30, 2014 Additional paid-in capital 235.393 214.437 Accumulated other comprehensive income (loss) (5,029) (1,360) Retained earnings 1,378.519 1,229,177 Total stockholders' equity 497.300 736,184 Total liabilities, redeemable noncontrolling interest, and stockholders' equity 5 1,475,318 5 1,390.686TAP ra Bread Company Form 10-K for the Fiscal Year Ended December 29, 2015 103,423 Total revenues 2,681,580 5 2.529.195 $ 2,385,002 Costs and expenses: Bakery-cafe expenses: Cost of food and paper products S 715.502 $ 669,860 5 625.622 Labor 754.646 685.576 625.457 Occupancy 169.998 159.794 148,816 Other operating expenses 334.635 314,879 295.539 Total bakery-cafe expenses 1.974.781 1,830,109 1,695.434 Fresh dough and other product cost of sales to franchisees 160,706 152.267 142,160 Depreciation and amortization 135.398 124,109 106,523 General and administrative expenses 142.904 138,060 123.335 Pre-opening expenses 9.089 . 8,707 7.794 Refranchising loss 17,108 Total costs and expenses 2.439.986 2.253.252 2,075.246 Operating profit 241.594 275.943 309.756 Interest expense 3,830 1,824 1,053 Other (income) expense, net 1.192 (3.175) (4,017) Income before income taxes 236.572 277,294 312,720 Income taxes 87.247 98,001 116,551 Net income S 149.325 S 179,293 S 196,169 Less: Net loss attributable to noncontrolling interest (17) Net income attributable to Panera Bread Company 149,342 179,293 196.169 Damning mar nomman chara