Guidelines for forecasting work in Panera Bread Case

The Panera Bread Company case analysis (done individually) focuses on forecasting financial statements using the Percent of Sales approach for a firm that will almost surely need significant external financing for the first time in its recent corporate history.

Address each of the following:

1. Complete the financing portion of the Panera Bread Company's 2007 forecast financial statements, and provide a forecast for the next five years (2008-2012).

A worksheet has been provided for this purpose. Assume all borrowings are some form of debt and that interest expense equals 6% of the outstanding debt.

You may also assume the $75 million share repurchase occurs in 2008 as planned. Assume sales growth of 25% for the first two years after 2007 and 5% thereafter. Note that you need not provide a detailed forecast of the current asset and current liability accounts.

The Excel spreadsheet must have the following format:

All of your assumptions about growth rates and percent of sales, etc. must be listed in the upper left-hand corner.

Those assumptions must then be LINKED to the forecasts in the financial statements. For example, if cell B5 contains an assumed sales growth rate of .25, the 2008 sales forecast in your income statement should show "sales 2007 * (1+ B5)" behind the figure reflected in
the 2008 Sales cell.

2. Given the need for external sources of capital, please also briefly discuss (without adjusting your actual forecasts) the pros and cons of using

a) a public issue of debt,

b) a bank term loan, and

c) a bank revolving line of credit.

You are encouraged to do outside research to address this second question, but please limit your response to a well-crafted, clear half-page of qualitative analysis that focuses on the key differences between using each of these three forms of financing.

The submission should begin with a one-page Executive Summary that contains a cover page with your name, the title (that specifies the type of document, the name of the company, and the financial issue explores), and the man body with the key issue(s) at hand and your recommended solution to that problem(s).

This document is directed at Panera Bread senior management, so do not review background known to them. Remember to focus and to be as clear and concise as possible in describing the problem, the results, and the solution; the goal is to help Panera Bread senior managers make a more informed decision moving forward.

You may add up to two pages of more detailed analysis of the points raised in your executive summary. Remember those additional analyses are there for reference only, if the reader would like to confirm or further explore your main points in the summary. The document should be double-spaced with 12 font using normal margins; please insert page numbers and use subheadings as needed for clarity, flow and organization.

In the end, you will submit TWO files to the Assignment: the Excel file of these forecast financial statements, and the PDF file containing the Executive Summary (and the additional analysis if any). Be sure to retain the original Excel formatting so that I may click on each cell to
determine its derivation.