Cracker Barrel 2009 Annual Report Download - page 69

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for the year ended July 31, 2009:
Amount of Loss Location of Loss Amount of Loss
Recognized in AOCL Reclassified from AOCL Reclassified from
on Derivative into Income AOCL into Income
(Effective Portion) (Effective Portion) (Effective Portion)
Cash flow hedge:
Interest rate swap $(21,614) Interest expense $19,469
No ineffectiveness has been recorded in 2009, 2008
and 2007.
7SHARE REPURCHASES
On July 31, 2008, the Company’s Board of Directors approved
share repurchases of up to $65,000 of the Company’s common
stock. The principal criteria for share repurchases are that
they be accretive to expected net income per share, are
within the limits imposed by the Company’s Credit Facility
and that they be made only from free cash flow (operating
cash flow less capital expenditures and dividends) rather
than borrowings. During 2009, the Company did not
make any share repurchases owing to a suspension of the
Company’s share repurchase plans during the current
economic climate. During 2010, however, the Company has
been authorized, and intends, to repurchase shares to
offset share dilution that might result from employee option
exercises or employee share issuances.
Pursuant to prior grants of authority, during 2008, the
Company repurchased a total of 1,625,000 shares of its
common stock in the open market at an aggregate cost of
$52,380. Related transaction costs and fees that were
recorded as a reduction to shareholders’ equity resulted in
the shares being repurchased at an average cost of $32.23
per share.
8SEGMENT INFORMATION
Cracker Barrel units represent a single, integrated operation
with two related and substantially integrated product
lines. The operating expenses of the restaurant and retail
product lines of a Cracker Barrel unit are shared and are
indistinguishable in many respects. Accordingly, the
Company manages its business on the basis of one reportable
operating segment. All of the Company’s operations are
located within the United States. As stated in Note 16, the
operations of Logan’s are reported as discontinued
operations and have been excluded from segment reporting.
Total revenue was comprised of the following at:
2009 2008 2007
Revenue from continuing
operations:
Restaurant $1,875,688 $1,872,152 $1,844,804
Retail 491,597 512,369 506,772
Total revenue from
continuing operations $2,367,285 $2,384,521 $2,351,576
9SALE-LEASEBACK TRANSACTIONS
In the fourth quarter of 2009, Cracker Barrel completed
sale-leaseback transactions involving 15 of its owned stores
and its retail distribution center. Under the transactions,
the land, buildings and improvements at the locations were
sold for pre-tax net proceeds of $56,260. The stores and
the retail distribution center have been leased back for
initial terms of 20 and 15 years, respectively. Equipment
was not included. The leases include specified renewal
options for up to 20 additional years. Net rent expense
during the initial term of the store leases will be
approximately $4,867 annually, and the assets sold and
leased back previously had depreciation expense of
approximately $753 annually. Net rent expense during the
initial term of the retail distribution center lease will be
approximately $1,142 annually, and the assets sold and
leased back previously had depreciation expense of
approximately $331 annually. The Company recorded a loss
on three of the stores, which is recorded in other store
operating expenses in 2009. The gains on the sales of the
12 stores and retail distribution center will be amortized
over the initial lease terms of 20 and 15 years, respectively.
Net proceeds from the sale-leaseback transactions, along
with excess cash from operations, were used to reduce
outstanding borrowings under the Company’s Credit Facility.
On July 31, 2000, Cracker Barrel completed a sale-
leaseback transaction involving 65 of its owned stores.
Under the transaction, the land, buildings and building
improvements at the locations were sold and leased back
for an initial term of 21 years. The leases for these
65 stores include specified renewal options for up to 20
additional years and have certain financial covenants
related to fixed charge coverage for the leased units. At
July 31, 2009 and August 1, 2008, the Company was in
compliance with all those covenants.
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