Cracker Barrel 2011 Annual Report Download - page 19

was conducted to gain consumer insight into menu offerings
and recent guest traffic trends. e increase in supplies
expense resulted from increases in numerous supply categories
including office supplies and shopping bags. Higher general
insurance expense resulted from favorable actuarial reserve
adjustments made in the prior year.
e year-to-year increase from 2009 to 2010 was due in
equal parts to higher maintenance and rent expenses.
Higher maintenance expense resulted from the timing of sign
maintenance and other programs. e increase in rent
expense resulted from the sale-leaseback transactions we
completed in the fourth quarter of 2009 (see Note 10
to the accompanying Consolidated Financial Statements).
General and Administrative Expenses
General and administrative expenses as a percentage of total
revenue were 5.7%, 6.1% and 5.1% in 2011, 2010 and 2009,
respectively. e year-to-year decrease from 2010 to 2011
resulted from a decrease of 0.6% in incentive compensation,
includingshare-based compensation, partially offset by a 0.2%
increase in salaries. e decrease in incentive compensation
reflected lower performance against financial objectives in
2011 as compared to the prior year. e increase in salaries
resulted primarily from severance charges related to our cost
reduction and organizational streamlining initiative (see
sub-section below entitled “Restructuring”) and an increase
in the number of store managers in training. e year-to-year
increase from 2009 to 2010 resulted from higher incentive
compensation, including share-based compensation, which
reflected beer performance against financial objectives in
2010 as compared to the prior year.
Impairment and Store Dispositions, Net
Impairment and store dispositions, net consisted of the
following at:
2011 2010 2009
Impairment $ 3,219 $2,672 $2,088
Gains on disposition of stores (4,109) — —
Store closing costs 265 128 —
Total $(625) $2,800 $2,088
During July 2011, as part of our cost reduction and
organization streamlining initiative (see sub-section below
entitled “Restructuring”), we recorded an impairment
charge of $1,044 for office space that we expect to sell within
one year. Additionally, during 2011, we determined that
one leased store was impaired, resulting in an impairment
charge of $2,175. e leased store was impaired because
of declining operating performance and resulting negative cash
flow projections. During 2010, we also determined that
one leased store was impaired and closed one owned store,
resulting in total impairment charges of $2,672. During 2009,
we recorded a total impairment of $2,088 related to one
owned store, office space, property adjacent to the office space
and our management trainee housing facility. See Notes 3
and 9 to the accompanying Consolidated Financial Statements
for more details regarding our impairment charges.
During 2011, we sold two closed stores. Additionally, one
of our stores was acquired by the State of Florida for road
expansion pursuant to eminent domain.ese transactions
resulted in a net gain of $4,109.
Restructuring
In July 2011, we implemented a cost reduction and organiza-
tion streamlining initiative, which we estimate will generate
annual pre-tax savings of approximately $10,000. is
initiative resulted in the elimination of approximately 60
management and staffpositions. Most of the employees
affected worked in our headquarters in Lebanon, Tennessee,
and the restructuring did not affect any store positions. As
a result, in the fourth quarter of 2011, we incurred severance
charges of $1,768, which are recorded in general and
administrative expenses (see sub-section above entitled
“General and Administrative Expenses”). Additionally, as part
of our cost reduction and organization streamlining initiative,
we incurred an impairment charge of $1,044 related to office
space we expect to sell within one year (see sub-section above
entitled “Impairment and Store Dispositions, Net”).
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Interest Expense
Interest expense was $51,490, $48,959 and $52,177 in 2011,
2010, and 2009, respectively.e year-to-year increase
from 2010 to 2011 resulted primarily from costs related to
our debt renancing partially oset by lower average debt
outstanding. As part of our debt refinancing, we incurred
additional expenses of $5,136 related to transaction fees
and the write-oof deferred nancing costs.e year-to-year