Cracker Barrel 2004 Annual Report Download - page 54

5. DEBT
Long-term debt consisted of the following at:
July 30,
2004
August 1,
2003
$300,000 Revolving Credit Facility
payable on or before February 21, 2008
(rate at 2.36% at August 1, 2003) $ −− $ 7,000
3.0% Zero-Coupon Contingently
Convertible Senior Notes payable on
or before April 2, 2032 185,138 179,730
Long-term debt $185,138 $186,730
At July 30, 2004, the Company had no outstanding borrowings under the Revolving Credit Facility, which bears
interest, at the Company’s election, either at the prime rate or a percentage point spread from LIBOR based on certain
financial ratios set forth in the loan agreement. At July 30, 2004, the Company’s percentage point spread from LIBOR
was 1.25% and will decrease to 1.0% for the first quarter of 2005 then increase to 1.25% in the second quarter of 2005.
The percentage point spread from LIBOR for the third and fourth quarters of 2005 remains to be determined.
The financial covenants related to the Revolving Credit Facility require that the Company maintain an interest
coverage ratio (as defined in the Revolving Credit Facility) of 2.5 to 1.0, a lease adjusted funded debt to total
capitalization ratio (as defined in the Revolving Credit Facility) not to exceed 0.5 to 1.0 and a lease adjusted funded
debt to EBITDAR (earnings before interest expense, income taxes, depreciation and amortization and rent expense)
ratio (as defined in the Revolving Credit Facility) not to exceed 3.0 to 1.0. At July 30, 2004 and August 1, 2003, the
Company was in compliance with all of those covenants.
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 representing 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, 2005, 2007, 2012, 2017, 2022 or 2027, and in certain other
circumstances. Although the holders of the Notes have the ability to require the Company to repurchase the Notes
on April 3, 2005, the Company has classified this debt as long-term due to its intent and ability, in the event it were
required to repurchase any portion of the Notes, to refinance this indebtedness on a long-term basis through
borrowings under the Revolving Credit Facility. 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
following 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 approximately 110% of the
accreted conversion price on the last day of the quarter ending January 30, 2032, with a specified price of $48.21 at
July 30, 2004); 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 accreted conversion price is equal to the issue price of the Note plus accrued original issue discount
divided by 10.8584 shares, and was $40.40 per share at July 30, 2004. The Company’s closing share price, as
reported by Nasdaq, on July 30, 2004 was $33.22.
All subsidiaries of the Company have fully and unconditionally guaranteed on a joint and several basis the
obligations under the Revolving Credit Facility and the Notes. Each guarantor is, directly or indirectly, a wholly-
owned affiliate of the parent company, CBRL Group, Inc., which has no independent assets or operations.
The aggregate maturities of long-term debt subsequent to July 30, 2004 are as follows:
Year
2005 --
2006 --
2007 --
2008 --
2009 --
2010 and thereafter $185,138
Total $185,138
6. COMMON STOCK
During 2000 two executive officers were granted, respectively, 20,000 and 19,000 restricted shares of the
Company’s common stock that were to vest over five years. In 2002 one executive officer was granted 48,000
restricted shares of the Company’s common stock that were to vest over three years, subject to certain early vesting
provisions which did occur and resulted in early vesting at the end of 2003. In 2004, one executive officer was granted