Cracker Barrel 2011 Annual Report Download - page 23

Amount of Commitment Expirations by Year
Total 2012 2013-2014 2015-2016 Aer 2016
2011 Revolving
Credit Facility
expiring on
July 8, 2016
(b)
$500,000 — — $500,000 —
Standby leers
of credit 29,981 $29,981 — — —
Guarantees
(g)
1,802 507 $636 228 $431
Total commitments $531,783 $30,488 $636 $500,228 $431
(a) At July 29, 2011, the entire liability for uncertain tax positions
(including penalties and interest) is classified as a long-term liability.
At this time, we are unable to make a reasonably reliable estimate
of the amounts and timing of payments in individual years because of
uncertainties in the timing of the effective selement of tax positions. As
such, the liability for uncertain tax positions of $19,547 is not included
in the contractual cash obligations and commitments table above.
(b) Using our expected principal payments and projected interest rates, we
will have interest payments of $42,612, $58,064, and $33,989 in 2012,
2013-2014 and 2015-2016, respectively. e projected interest rates for
our swapped portion of our outstanding borrowings are our fixed rates
under our interest rate swaps (see Note 2 to the Consolidated Financial
Statements) plus our current credit spread of 2.00%. e projected
interest rate for our unswapped portion of our outstanding borrowings is
the three-year swap rate at July 29, 2011 of 1.23% plus our current
credit spread. Based on having $318,750 outstanding borrowings under
our 2011 Revolving Credit Facility at July 29, 2011 and our current
unused commitment fee as defined in the 2011 Credit Facility, our
unused commitment fees in 2012 would be $461; however, the actual
amount will differ based on actual usage of the 2011 Revolving Credit
Facility in 2012.
(c) e note payable consists of a five-year note with a vendor in the original
principal amount of $507 and represents the financing of prepaid
maintenance for telecommunications equipment. e note payable is
payable in monthly installments of principal and interest of $9 through
October 16, 2013 and bears interest at 2.88%. Principal and interest
payments for the note payable are included in the contractual cash
obligations and commitments table above.
(d) Includes base lease terms and certain optional renewal periods, for which
at the inception of the lease, it is reasonably assured that we will exercise.
(e) Purchase obligations consist of purchase orders for food and retail
merchandise; purchase orders for capital expenditures, supplies, other
operating needs and other services; and commitments under contracts
for maintenance needs and other services. We have excluded contracts
that do not contain minimum purchase obligations. We excluded long-
term agreements for services and operating needs that can be cancelled
within 60 days without penalty. We included long-term agreements
and certain retail purchase orders for services and operating needs that
can be cancelled with more than 60 days notice without penalty only
through the term of the notice. We included long-term agreements for
services and operating needs that only can be cancelled in the event
of an uncured material breach or with a penalty through the entire term
of the contract. Because of the uncertainties of seasonal demands and
promotional calendar changes, our best estimate of usage for food,
supplies and other operating needs and services is ratably over either the
notice period or the remaining life of the contract, as applicable, unless
we had beer information available at the time related to each contract.
(f) Other long-term obligations include our Non-Qualified Savings Plan
($29,665, with a corresponding long-term asset to fund the liability;
see Note 12 to the Consolidated Financial Statements), Deferred
Compensation Plan ($4,453), FY2009, FY2010 and FY2011
Long-Term Retention Incentive Plans ($1,779), FY2011 District Manager
Long-Term Performance Plan ($430) and FY2010 and FY2011
Long-Term Performance Plans ($9,198).
(g)Consists solely of guarantees associated with properties that have been
assigned. We are not aware of any non-performance under these
arrangements that would result in us having to perform in accordance
with the terms of those guarantees.
Quantitative and Qualitative Disclosures
about Market Risk
We are exposed to market risk, such as changes in interest
rates and commodity prices. We do not hold or use derivative
financial instruments for trading purposes.
Interest Rate Risk. We have interest rate risk relative to
our outstanding borrowings under our 2011 Credit Facility.
At July 29, 2011, our outstanding borrowings under our 2011
Credit Facility totaled $550,000 (see Note 5 to our Consoli-
dated Financial Statements). Loans under the 2011 Credit
Facility bear interest, at our election, either at the prime rate
or LIBOR plus a percentage point spread based on certain
specified financial ratios. Our policy has been to manage
interest cost using a mix of fixed and variable rate debt (see
Notes 5, 6 and 10 to our Consolidated Financial Statements).
To manage this risk in a cost efficient manner, we have entered
into interest rate swaps. In 2006, we entered into an interest
rate swap with a fixed rate of 5.57% plus our credit spread;
this interest rate swap expires in May 2013. During 2011, we
entered into three additional interest rate swaps with an
effective date of May 2013. Additionally, on September 19,
2011, we entered into two additional swaps with an effective
date of May 2013. At July 29, 2011, our outstanding
borrowings were swapped at a rate of 7.57%. See Notes 2 and
6 to our Consolidated Financial Statements for further
discussion of our interest rate swaps.
Commodity Price Risk. Many of the food products that
we purchase are affected by commodity pricing and are,
therefore, subject to price volatility caused by market
conditions, weather, production problems, delivery difficul-
ties and other factors which are outside our control and
which are generally unpredictable. Four food categories (dairy
(including eggs), beef, poultry and pork) account for the
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