Cracker Barrel 2009 Annual Report Download - page 42

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Our primary sources of liquidity are cash generated
from our operations and our borrowing capacity under our
$250,000 revolving credit facility (the “Revolving Credit
Facility”), which will expire on April 27, 2011. Our
internally generated cash, along with cash on hand at
August 1, 2008, borrowings under our Revolving Credit
Facility, net proceeds from our sale-leaseback transactions
and proceeds from exercises of share-based compensation
awards, were sufficient to finance all of our growth,
dividend payments, working capital needs and other cash
payment obligations in 2009.
We believe that cash at July 31, 2009, along with
cash generated from our operating activities, and the
borrowing capacity under our Revolving Credit Facility,
will be sufficient to finance our continued operations,
our continued expansion plans, principal payments on
our debt and our dividend payments for at least the next
twelve months and thereafter for the foreseeable future.
Cash Generated from Operations
Our cash generated from operating activities was
$164,171, $124,510 and $96,872 in 2009, 2008 and
2007, respectively. Most of the cash generated from
operating activities in 2009 was provided by net income
adjusted by depreciation and amortization and share-
based compensation and a decrease in retail inventories.
The increase in net cash flow provided by operating
activities from 2008 to 2009 primarily reflected
improvements in the management of our retail inventories
and the timing of payments for estimated income taxes
partially offset by the timing of payments for interest.
The increase in net cash flow provided by operating
activities from 2007 to 2008 reflected lower net income
from continuing operations in 2008 and the non-
recurrence of taxes and expenses related to the sale of
Logan’s and the redemption of our zero-coupon
convertible notes in 2007.
Borrowing Capacity and Debt Covenants
At July 31, 2009, although we did not have any out-
standing borrowings under the Revolving Credit Facility,
we had $33,892 of standby letters of credit related
to securing reserved claims under workers’ compensation
insurance which reduce our availability under the
Revolving Credit Facility. At July 31, 2009, we had
$216,108 available under our Revolving Credit Facility.
We may refinance our Revolving Credit Facility in 2010.
The Revolving Credit Facility is part of our $1,250,000
credit facility (the “Credit Facility”), which also includes
a Term Loan B facility and Delayed-Draw Term Loan
facility, each of which has a scheduled maturity date of
April 27, 2013. At July 31, 2009, our Term Loan B
balance was $600,000 and our Delayed-Draw Term Loan
balance was $45,000. During 2009, we made $26,288 and
$104,700, respectively, in optional principal prepayments
under the Term Loan B facility and the Delayed-Draw
Term Loan facility. See “Material Commitments” below
and Note 5 to our Consolidated Financial Statements for
further information on our long-term debt.
The Credit Facility contains customary financial
covenants, which include a requirement that we maintain
a maximum consolidated total leverage ratio (ratio
of total indebtedness to EBITDA, which is defined as
earnings before interest, taxes, depreciation and
amortization) of 3.75 at July 31, 2009 and throughout
the remaining term of the Credit Facility. The Credit
Facility’s financial covenants also require that we
maintain a minimum consolidated interest coverage ratio
(ratio of earnings before interest, taxes, depreciation and
amortization to cash interest payable, as defined) of 3.75
at July 31, 2009. The minimum consolidated interest
coverage ratio increases to 4.00 for the fourth quarter of
2010 and for the remaining term of the Credit Facility.
At July 31, 2009, our consolidated total leverage ratio
and consolidated interest coverage ratio were 3.02 and
7.00, respectively. We presently expect to remain in
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