Cracker Barrel 2010 Annual Report Download - page 28

Cash Generated from Operations
Our cash generated from operating activities was $212,106,
$164,171 and $124,510 in 2010, 2009 and 2008, respectively.
e increase in net cash ow provided by operating activities
from 2009 to 2010 reected higher net income, the timing of
payments for accounts payable and estimated income taxes,
higher incentive compensation accruals and an increase in the
sales of our gi cards partially oset by the change in retail
inventories. e increase in incentive compensation accruals
reects beer performance against nancial objectives in
2010 as compared to the prior year. e change in retail
inventories is primarily due to the timing of seasonal
inventory purchases. e increase in net cash ow provided
by operating activities from 2008 to 2009 primarily reected
improvements in the management of our retail inventories
and the timing of payments for estimated income taxes
partially oset by the timing of payments for interest.
Borrowing Capacity and Debt Covenants
On November 6, 2009, we amended our credit facility (the
“Credit Facility”), which consists of term loans (aggregate
outstanding at July 30, 2010 was $580,144) and the Revolving
Credit Facility. e amendment extended the maturity date of
$250,000 of our then outstanding term loans to April 27, 2016
from April 27, 2013. e amendment also extended the
availability of $165,000 of the Revolving Credit Facility to
January 27, 2013 from April 27, 2011. During 2010 and 2009,
we made $57,856 and $130,988, respectively, in optional
principal prepayments under the term loans. At July 30, 2010,
although we had no outstanding borrowings under the
Revolving Credit Facility, we had $30,346 of standby leers of
credit related to securing reserved claims under workers’
compensation insurance which reduce our availability under the
Revolving Credit Facility. At July 30, 2010, we had $219,654
available under our Revolving Credit Facility. See “Material
Commitments” below and Note 5 to our Consolidated Financial
Statements for further information on our long-term debt.
e Credit Facility contains customary nancial covenants,
which include a requirement that we maintain a maximum
consolidated total leverage ratio (ratio of total indebtedness to
EBITDA, which is dened as earnings before interest, taxes,
depreciation and amortization) of 3.75 at July 30, 2010
and throughout the remaining term of the Credit Facility.
e Credit Facility’s nancial covenants also require that
we maintain a minimum consolidated interest coverage ratio
(ratio of EBITDA to cash interest payable, as dened) of 4.00
at July 30, 2010 and throughout the remaining term of the
Credit Facility. At July 30, 2010, our consolidated total
leverage ratio and consolidated interest coverage ratio were
2.37 and 16.45, respectively. We presently expect to remain in
compliance with the Credit Facility’s nancial covenants for
the remaining term of the facility.
Sale-leaseback Transactions
In the fourth quarter of 2009, we completed sale-leaseback
transactions involving 15 of our stores and our retail distribu-
tion center. Under these transactions, the land, buildings and
improvements at the locations were sold for pre-tax net
proceeds of $56,260. e stores and the retail distribution
center have been leased back for initial 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 Credit Facility (see
“Borrowing Capacity and Debt Covenants” above). See Note
10 to our Consolidated Financial Statements for further
information on our sale-leaseback transactions.
Share Repurchases, Dividends and Proceeds from the
Exercise of Share-Based Compensation Awards
We were authorized by our Board of Directors to repurchase
shares of our common stock in 2010 to oset share dilution
that might result from share issuances under our equity
compensation plans. Additionally, subject to a maximum
amount of $65,000, we have been authorized by our Board of
Directors to repurchase shares in 2011 to oset share dilution
that might result from share issuances under our equity
compensation plans. e principal criteria for share repurchases
are that they be accretive to expected net income per share, are
within the limits imposed by our Credit Facility and that they
be made only from free cash ow (operating cash ow less
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