Cracker Barrel 2015 Annual Report Download - page 24

interest,at our election, either at the prime rate or LIBOR
plus a percentage point spread based on certain specied
nancial ratios. Our policy has been to manage interest cost
using a mix of xed and variablerate debt (seeNotes 5, 6
and9 to our Consolidated FinancialStatements). To manage
this riskin a cost ecient manner, we haveentered into
interest rate swaps. A summaryof our interest rate swapsat
July 31, 2015 is as follows:
Term Notional Fixed
Trade Date Eective Date (in Years) AmountRate
July 25, 2011 May3, 2013 3$50,000 2.45%
December 7, 2011 May3, 2013 350,000 1.40%
March 18, 2013 May3, 2015 350,000 1.51%
April 8, 2013 May3, 2015 250,000 1.05%
April 15, 2013 May3, 2015 250,000 1.03%
April 22, 2013 May3, 2015 325,000 1.30%
April 25, 2013 May3, 2015 325,000 1.29%
June 18, 2014 May3, 2015 440,000 2.51%
June 24, 2014 May3, 2015 430,000 2.51%
July 1, 2014 May5, 2015 430,000 2.43%
January 30, 2015 May3, 2019 280,000 2.15%
January 30, 2015 May3, 2019 260,000 2.16%
January 30, 2015 May4, 2021 3120,000 2.41%
January 30, 2015 May3, 2019 260,000 2.15%
January 30, 2015 May4, 2021 380,000 2.40%
e notional amount for the interest rate swap entered
into on June 18, 2014 increases by $40,000 each May over
the four-year term of the interest rate swap beginning in May
2016 until the notional amount reaches $160,000 in May
2018. e notional amounts for the interest rate swaps
entered into on June 24, 2014 and July 1, 2014 increase by
$30,000 each May over the four-year termsof the interest rate
swaps beginning in May 2016 until the notional amounts
each reach$120,000 in May 2018.
At July 31, 2015 and August 1, 2014, our outstanding
borrowingswere swapped at a weighted average interest rate
of 2.96% and 3.73%, respectively, which are the weighted
average xed rates of our interest rate swapsplus our current
creditspread.See Note 6 to our Consolidated Financial
Statementsfor further discussion of our interestrate swaps.
Commodity Price Risk.Many of the food products
that we purchase are aected by commodity pricing and are,
therefore, subject to pricevolatility caused by market
conditions, weather, production problems,delivery dicul-
ties and other factors which are outside our control and
which are generally unpredictable.
e following table highlights the ve food categories
which accounted for the largest sharesof our food purchases
in 2015 and 2014:
Percentage of Food Purchases
2015 2014
Beef 15% 13%
Dairy (including eggs)13% 12%
Fruits and vegetables12% 12%
Pork 11% 11%
Poultry10% 11%
Other categories aected by the commodities markets,
such as grains and seafood, may each account for as much as
8% of our food purchases.While some of our food items
areproduced to our proprietary specications, our food items
arebased on generally available products, and if any existing
suppliersfail, or are unableto deliver in quantities required by
us, we believe that there are sucient other quality suppliers
in the marketplacethat our sourcesof supply can be replaced
as necessary to allow us to avoid any materialadverse eects
that could be caused by such unavailability.We also recognize,
however, that commodity pricing is extremely volatileand
can change unpredictably even over short periods of time.
Changes in commodity prices would aectus and our
competitors generally, anddepending on the terms and
duration of supply contracts, sometimes simultaneously. We
enter into contracts for certain of our products in an eort
to minimize volatility of supply and pricing. In manycases, or
over the longer term, we believe we will be able to pass
through some or much of the increased commodity costs by
adjusting our menu pricing. Fromtime to time, competitive
circumstances, or judgmentsabout consumer acceptance
of price increases, may limit menu priceexibility, and in those
circumstances, increases in commodity prices can result in
lower margins.
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