Cracker Barrel 2005 Annual Report Download - page 42

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bi-weekly or semi-monthly schedules in arrears for
hours worked, and certain expenses such as certain
taxes and some benefits are deferred for longer
periods of time.
Capital expenditures (purchase of property and
equipment) were $171,447, $144,611 and $120,921
in 2005, 2004 and 2003, respectively. Costs of
new locations accounted for the majority of these
expenditures.
The Company’s internally generated cash, along
with cash at July 30, 2004, proceeds from stock option
exercises, the Company’s available revolver and
the Company’s new operating leases, were sufficient to
finance all of its growth, share repurchases and other
cash payment obligations in 2005.
In 2002, the Company issued $422,050 (face value
at maturity) of Notes, maturing on April 2, 2032,
and received proceeds totaling approximately $172,756
prior to debt issuance costs. The Notes require no cash
interest payments and were issued at a discount repre-
senting a yield to maturity of 3.00% per annum. The
Notes are redeemable at the Company’s option on or
after April 3, 2007, and the holders of the Notes may
require the Company to redeem the Notes on April 3,
2007, 2012, 2017, 2022 or 2027, and in certain other
circumstances. In addition, each $1 (face value at
maturity) Note is convertible into 10.8584 shares of
the Company’s common stock (approximately 4.6
million shares in the aggregate) if any of the follow-
ing conditions occur: 1) the closing price of the
Company’s common stock exceeds a specified price
(initially, 120% of the accreted conversion price, and
declining .08474% per quarter thereafter to approxi-
mately 110% of the accreted conversion price on the
last day of the quarter ending January 30, 2032, with
a specified price of $49.19 at July 29, 2005); 2) the
Company exercises its option to redeem the Notes; 3)
the credit rating of the Notes is reduced by Moody’s
and Standard and Poor’s to or below both Ba3 and BB-,
respectively; or 4) certain specified corporate events.
The Company’s closing share price, as reported by
Nasdaq, on July 29, 2005 was $39.17. The holders of
the Senior Notes had the option to require the
Company to repurchase the Senior Notes on April 3,
2005. That option was not exercised. After the adop-
tion of EITF No. 04-08, “The Effect of Contingently
Convertible Debt on Diluted Earnings Per Share,” in
the second quarter of 2005, the Company was required
to include approximately 4.6 million shares in its
diluted shares outstanding related to its convertible
debt. Additionally, diluted consolidated net income
per share is calculated excluding the after-tax interest
and financing expenses associated with the Notes,
since these Notes are treated as if converted into
common stock although at the end of 2005 the Notes
were not actually converted into stock, nor did the
requirements exist that would have allowed them to
be converted.
As mentioned previously, the Company has a
$300,000 Revolving Credit Facility, which expires on
February 21, 2008. At July 29, 2005, the Company had
$21,500 outstanding borrowings under the Revolving
Credit Facility.
At the beginning of 2005, the Company had
2,892,000 shares remaining under repurchase authori-
zations previously in effect at the end of 2004. During
2005, the Company’s Board of Directors (the “Board”)
authorized the repurchase of up to an additional 2
million shares of the Company’s common stock. The
repurchases are to be made from time to time in the
open market at prevailing market prices. During 2005,
the Company completed repurchases of 4,070,919
shares of its common stock for a net expenditure of
$159,328 or approximately $39.14 per share. The
Company presently expects to repurchase the remaining
821,081 shares authorized during 2006, although
there can be no assurance that such repurchases
actually will be completed in that period of time. The
Company’s principal criteria for share repurchases
are that they be accretive to net income per share and
that they do not unfavorably affect the Company’s
investment grade debt rating and target capital struc-
ture.
During 2005 the Company received proceeds of
$39,341 from the exercise of stock options to acquire
1,921,354 shares of its common stock and tax benefit
upon exercise of stock options of $12,990.
During the first quarter of 2005, the Board
approved a quarterly dividend of $0.12 per common
share (an annual equivalent of $0.48 per share), an
increase from a quarterly dividend of $0.11 approved
in 2004. The Company paid such dividends of $0.12
per share during the second, third and fourth quarters