Cracker Barrel 2008 Annual Report Download - page 42

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General and Administrative Expenses
General and administrative expenses as a percentage of
total revenue were 5.4%, 5.7% and 5.8% in 2008, 2007
and 2006, respectively. Without the additional week in
2007, general and administrative expenses would have
been 5.8% of total revenue in 2007. The year-to-year
decrease from 2007 to 2008 was due to lower incentive
compensation accruals, including share-based
compensation, and higher revenues driven by menu
pricing and new unit openings. The decrease in incentive
compensation accruals primarily reflected lower
performance against financial objectives in 2008 versus
2007 and the non-recurrence of bonuses related to
strategic initiatives and the additional share-based
compensation recorded in 2007 for participants eligible
for retirement prior to the vesting date of the award.
The year-to-year decrease from 2006 to 2007 was due
to the gain on the sale of two properties we retained
when we sold Logan’s and a decrease in stock option
expense partially offset by an increase in bonus accruals
and an increase in share-based compensation for
nonvested stock. The decrease in the stock option
expense is due to the adoption of Statement of Financial
Accounting Standard (“SFAS”) No. 123 (Revised 2004)
“Share-Based Payment” (“SFAS No. 123R”) in 2006 and
our granting fewer options in 2007 versus 2006. The
increase in share-based compensation for nonvested stock
is due to an increase in the number of nonvested stock
grants during the year as compared with the prior year as
well as accruals for retirement eligibility prior to the
vesting date of certain awards. The increase in the bonus
accruals reflected improved performance against financial
objectives and the declaration and payment of
discretionary bonuses for certain executives in the first
quarter of 2007, as well as certain bonus plans related to
strategic initiatives. See Note 9 to the accompanying
Consolidated Financial Statements for more details
surrounding the strategic initiatives bonuses.
Interest Expense
Interest expense as a percentage of total revenue was
2.4%, 2.5% and 1.0% in 2008, 2007, and 2006,
respectively. The year-to-year decrease from 2007 to 2008
was primarily due to slightly lower interest expense in
2008 combined with higher revenues. The absolute dollar
decrease primarily was due to lower non-use fees
incurred under our credit facility and lower average debt
outstanding partially offset by higher average interest
rates in 2008 as compared to 2007. The decrease in the
non-use fees was due to our borrowing $100,000
available under the Delayed-Draw Term Loan facility
during the fourth quarter of 2007 and the remaining
$100,000 during the first quarter of 2008. The year-to-
year increase from 2006 to 2007 was due to our 2006
recapitalization and corresponding higher debt levels.
Interest Income
Interest income as a percentage of total revenue was zero
in 2008, 0.3% in 2007 and zero in 2006. The year-to-year
decrease from 2007 to 2008 was due to a lower level of
cash on hand at the beginning of 2008 versus 2007. The
year-to-year increase from 2006 to 2007 was due to the
increase in average funds available for investment as a
result of the proceeds from the divestiture of Logan’s and
a higher level of cash on hand at the beginning of 2007
versus 2006.
Provision for Income Taxes
Provision for income taxes as a percent of income before
income taxes was 30.2% for 2008, 34.8% for 2007 and
32.0% for 2006. The decrease in the effective tax rate
from 2007 to 2008 reflected higher employer tax credits
as a percent of income before income taxes due to the
decrease in income from continuing operations, lower
effective state income tax rates and the non-recurrence
of certain non-deductible compensation expense.
The increase in the effective tax rate from 2006 to
2007 reflected a higher effective state income tax rate and
certain non-deductible compensation partially offset by
higher employer tax credits as a percent of income before
income taxes due to the decrease in income from