What changed in this filing

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Item 1. Financial Statements

2020-12-03 compared with 2020-06-02 · 149 added, 296 removed, 293 unchanged (60% of the section changed)

13 unchanged sentences

Operating lease right-of-use assets, net

Investment in unconsolidated subsidiary

Intangible assets

LIABILITIES AND SHAREHOLDERS’ EQUITY

1 unchanged sentence

Accounts payable

Taxes withheld and accrued

Accrued employee compensation

Current operating lease liabilities

Current portion of long-term debt

Other current liabilities

11 unchanged sentences

Common stock – 400,000,000 shares of $ 0.01 par value authorized;

23,693,981 shares issued and outstanding at May 1, 2020, and 24,049,240 shares issued and outstanding at August 2, 2019

23,720,324 shares issued and outstanding at October 30, 2020, and 23,697,396 shares issued and outstanding at July 31, 2020

Additional paid-in capital

4 unchanged sentences

See Notes to unaudited Condensed Consolidated Financial Statements.

* This Condensed Consolidated Balance Sheet has been derived from the audited Consolidated Balance Sheet as of August 2, 2019, as filed with the Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the fiscal year ended August 2, 2019.

* This Condensed Consolidated Balance Sheet has been derived from the audited Consolidated Balance Sheet as of July 31, 2020, as filed with the Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2020.

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share data)

Quarter Ended

Nine Months Ended

Total revenue

3 unchanged sentences

General and administrative expenses

Operating income (loss)

Gain on sale and leaseback transaction

Operating income

Interest expense, net

Income (loss) before income taxes

Provision for income taxes (income tax benefit)

Income before income taxes

Provision for income taxes

Loss from unconsolidated subsidiary

Net income (loss)

Net income (loss) per share:

Net income per share:

Weighted average shares:

1 unchanged sentence

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited and in thousands)

Quarter Ended

Nine Months Ended

Net income (loss)

Other comprehensive loss before income tax benefit:

Other comprehensive income (loss) before income tax expense:

Change in fair value of interest rate swaps

Income tax benefit

Other comprehensive loss, net of tax

Comprehensive income (loss)

Income tax expense (benefit)

Other comprehensive income (loss), net of tax

Comprehensive income

See Notes to unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(Unaudited and in thousands except share data)

For the Nine Month Period Ended May 1, 2020

Comprehensive

Shareholders’

Balances at August 2, 2019

Comprehensive Income (Loss):

Other comprehensive loss, net of tax

Total comprehensive income (loss)

Cash dividends declared - $ 1.30 per share

Balances at July 31, 2020

Comprehensive Income:

Other comprehensive income, net of tax

Total comprehensive income

Cash dividends previously declared in prior quarters

Share-based compensation

Issuance of share-based compensation awards, net of shares withheld for employee taxes

Purchases and retirement of common stock

Cumulative-effect of change in accounting principle

Balances at November 1, 2019

Comprehensive Income (Loss):

Other comprehensive loss, net of tax

Total comprehensive income (loss)

Cash dividends declared - $ 1.30 per share

Share-based compensation

Issuance of share-based compensation awards

Purchases and retirement of common stock

Balances at January 31, 2020

Comprehensive Loss:

Other comprehensive loss, net of tax

Total comprehensive loss

Cash dividends declared - $ 1.30 per share

Share-based compensation

Issuance of share-based compensation awards

Purchases and retirement of common stock

Balances at May 1, 2020

See Notes to unaudited Condensed Consolidated Financial Statements.

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited and in thousands, except share data)

For the Nine Month Period Ended May 3, 2019

Balances at October 30, 2020

Comprehensive

Shareholders’

Income (Loss)

Balances at August 2, 2019

Comprehensive Income:

Other comprehensive income, net of tax

Other comprehensive loss, net of tax

Total comprehensive income

2 unchanged sentences

Issuance of share-based compensation awards, net of shares withheld for employee taxes

Purchases and retirement of common stock

Cumulative-effect of change in accounting principle

Balances at November 1, 2019

Comprehensive Income (Loss):

Other comprehensive income (loss), net of tax

Total comprehensive income (loss)

Cash dividends declared - $ 1.25 per share

Share-based compensation

Issuance of share-based compensation awards, net of shares withheld for employee taxes

Balances at February 1, 2019

Comprehensive Income (Loss):

Other comprehensive income (loss), net of tax

Total comprehensive income (loss)

Cash dividends declared - $ 1.25 per share

Share-based compensation

Issuance of share-based compensation awards, net of shares withheld for employee taxes

Balances at May 3, 2019

See Notes to unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(Unaudited and in thousands)

Nine Months Ended

Three Months Ended

Cash flows from operating activities:

Net income (loss)

Net loss from unconsolidated subsidiary

2 unchanged sentences

Loss on disposition of property and equipment

Gain on sale and leaseback transaction

Share-based compensation

Noncash lease expense

Amortization of asset recognized from gain on sale and leaseback transactions

Changes in assets and liabilities:

1 unchanged sentence

Accounts payable

Accrued employee compensation

Other current liabilities

Long-term operating lease liabilities

Deferred income taxes

7 unchanged sentences

Acquisition of business, net of cash acquired

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

3 unchanged sentences

Purchases and retirement of common stock

Deferred financing costs

Dividends on common stock

22 unchanged sentences

The results of operations for any interim period are not necessarily indicative of results for a full year.

These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended August 2, 2019 (the “2019 Form 10-K”).

The accounting policies used in preparing these condensed consolidated financial statements are the same as described in the 2019 Form 10-K except for the newly adopted accounting guidance for leases discussed in Note 11.

These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended July 31, 2020 (the “2020 Form 10-K”).

The accounting policies used in preparing these condensed consolidated financial statements are the same as described in the 2020 Form 10-K.

References to a year in these Notes to Condensed Consolidated Financial Statements are to the Company’s fiscal year unless otherwise noted.

COVID-19 Impact

In March 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) to be a pandemic.

In an effort to contain and mitigate the spread of COVID-19, federal, state and local governmental authorities have imposed unprecedented restrictions on travel, group gatherings and non-essential activities, such as “social distancing” guidance, shelter-in-place orders and limitations on or full prohibitions of dine-in services.

In response to the business disruption caused by the COVID-19 pandemic, the Company has taken the following actions.

Operating Initiatives

In response to the COVID-19 pandemic and the orders and guidance from U.S.

federal and applicable state and local governmental authorities, in March 2020, the Company temporarily closed the dining rooms in all of its restaurants and operated with pick-up or delivery only.

As part of the Company’s efforts to support an off-premise-only business model, the Company implemented various changes to its Cracker Barrel offerings, including a limited menu and multi-serving takeout Family Meal Baskets, the expansion of third-party delivery services and the implementation of various operating model changes, including contactless curbside delivery.

As of the end of March 2020, all of the Company’s restaurant operations were limited to pick-up and delivery only with no dine-in service.

In late April 2020, certain state and municipal authorities began to remove or modify existing restrictions on dine-in restaurant operations in certain jurisdictions, and the Company has been able to resume dine-in services at a limited number of its restaurants;

however, the Company’s dine-in services have been and continue to be limited to occupancy levels well below capacity, and some are yet to open at all for dine-in service.

The Company is taking a cautious approach to reopening dining rooms and is instituting operational protocols to comply with applicable regulatory requirements and to monitor developing health authority recommendations in order to protect the health and foster the confidence of employees and guests in these communities.

The adverse impacts of the COVID-19 pandemic resulted in the Company testing its restaurant long-lived assets for recoverability.

As a result of this analysis, the Company recorded impairment charges of $ 18,336 due to the expected deterioration in operating performance of certain Cracker Barrel stores.

Expense Reductions

The Company has made significant reductions in operating expenses to reflect reduced operations and sales levels as well as eliminating non-essential spending where feasible.

The Company furloughed employees and eliminated a significant number of positions at all levels of the Company, both at the corporate headquarters and in the field.

Severance expenses of $ 3,122 related to the elimination of 450 positions were recorded in the third quarter of 2020.

The Company also implemented pay reductions for the remainder of the fiscal year for corporate officers and reduced cash retainers payable to the Company’s Board of Directors.

Additionally, the Company has adapted its labor model, instituted inventory management measures and negotiated revised terms with landlords and vendors.

Liquidity Initiatives

As a precautionary measure and in order to increase the Company’s cash position and provide financial flexibility given the uncertainty in the market caused by the COVID-19 pandemic, the Company borrowed $ 415,000 under the Company’s 2019 Revolving Credit Facility (as defined herein), leaving approximately $ 3,271 in borrowing availability.

To further preserve available cash, the payment of the dividend that was declared on March 3, 2020 was deferred until September 2, 2020 and the Company has suspended all further dividend payments until further notice.

The Company has also temporarily suspended all future share repurchases under its previously announced $ 25,000 share repurchase program.

In keeping with the Company’s strategy of concentrating its resources on its core business during the COVID-19 pandemic, the Company has decided not to invest further resources or otherwise provide additional funding to PBS HoldCo, LLC (see Note 3, “Equity Investment” for further information regarding the Company’s strategic relationship with PBS HoldCo, LLC).

The Company continues to explore additional measures to enhance liquidity as the COVID-19 pandemic and related events develop.

Additionally, on March 27, 2020, P.L.

116-136, the Coronavirus Aid, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic.

The CARES Act, among other things, contains several provisions offering liquidity to businesses.

The Company has benefited and will continue to benefit from two of these provisions, including recovering a portion of qualifying retention pay and health expenses paid to furloughed employees, and deferring a portion of employment taxes until calendar 2021 and calendar 2022.

The COVID-19 pandemic continues to negatively impact the Company’s sales and traffic due to changes in consumer behavior as federal, state and local governmental authorities have imposed unprecedented restrictions on travel, group gatherings and non-essential activities, such as “social distancing” guidance, shelter-in-place orders and limitations on or full prohibitions of dine-in services.

In response to the COVID-19 pandemic, the Company has instituted operational protocols to comply with applicable regulatory requirements to protect the health and safety of employees and guests, and the Company has implemented various strategies to support the recovery of its business and navigate through the uncertain environment.

The Company continues to focus on growing its off-premise business and investing in its digital infrastructure to improve the guest experience.

Furthermore, the Company continued to maintain and bolster its cash reserves by completing a sale and leaseback transaction in August 2020 in which the Company sold a total of 62 Cracker Barrel owned properties and received net proceeds, after fees and expenses, of $ 146,357 .

See Note 10 for additional information regarding this sale and leaseback transaction.

Recent Accounting Pronouncements Adopted

In February 2016, the Financial Accounting Standards Board (“FASB”) issued accounting guidance which requires the recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements.

The Company adopted this accounting guidance as of August 3, 2019, using the modified retrospective approach.

Under this approach, existing leases were recorded at the adoption date rather than the beginning of the earliest comparative period presented.

This approach allows for a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, and prior periods are not restated.

The Company elected the transition package of practical expedients permitted under this guidance, which among other things, allows the carryforward of historical lease classifications.

The Company elected to not separate lease and non-lease components for all classes of leased assets.

Additionally, the Company elected to apply the short-term lease exemption to all asset classes.

The Company chose not to elect the hindsight practical expedient.

Adoption of the accounting guidance for leases resulted in the recognition of right-of-use operating lease assets of $ 464,394 and total operating lease liabilities of $ 506,406 as of August 3, 2019.

At adoption, the lease liabilities were measured based upon the present value of remaining rental payments for existing operating leases primarily related to real estate leases.

The right-of-use assets were offset primarily by straight-line lease liabilities that existed at the adoption date.

The cumulative-effect of applying the accounting guidance for leases resulted in an adjustment to retained earnings of $ 4,125 at August 3, 2019, related to the elimination of the deferred gains on the Company’s sale-leaseback transactions from 2000 and 2009.

See Note 11 for additional information regarding leases.

Accounting for Hedging Activities

In August 2017, the FASB issued accounting guidance which amends the recognition, presentation and disclosure requirements of hedge accounting in order to better portray the economics of entities’ risk management activities, increase transparency and understandability of hedging relationships and simplify the application of hedge accounting.

The adoption of this accounting guidance in the first quarter of 2020 did not have a significant impact on the Company’s consolidated financial position or results of operations, and the Company did not record a cumulative-effect adjustment to the opening balance of retained earnings.

The amended presentation and disclosure requirements were applied on a prospective basis.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

On December 22, 2017, the U.S.

government enacted P.L.

115-97, the Tax Cuts and Jobs Act (the “Tax Act”).

In February 2018, the FASB issued accounting guidance which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act.

This accounting guidance was effective for the Company in the first quarter of 2020.

The Company did not elect this reclassification option.

As a result, this accounting guidance had no impact on the Company’s consolidated financial position or results of operations.

Share-Based Payment Arrangements With Nonemployees

In June 2018, the FASB issued accounting guidance in order to simplify the accounting for share-based payments granted to nonemployees for goods and services.

This new guidance aligns most of the accounting requirements for share-based payments granted to nonemployees with the existing guidance for share-based payments granted to employees.

The adoption of this accounting guidance in the first quarter of 2020 had no impact on the Company’s consolidated financial position or results of operations.

In March 2020, the FASB issued optional accounting guidance in order to ease the potential burden in accounting for contracts, hedging relationships and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

The expedients and exceptions provided by this accounting guidance do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022 if certain criteria are met.

The Company has certain contracts and hedging relationships which reference LIBOR for which the Company has elected to use the optional accounting guidance.

The Company elected to apply this accounting guidance for contract modifications prospectively as of February 1, 2020.

Additionally, the Company elected to apply this accounting guidance to eligible hedging relationships existing as of February 1, 2020 and to any new hedging relationships entered into during the effective period of the accounting guidance.

The adoption of this accounting guidance in the third quarter of 2020 had no impact on the Company’s consolidated financial position or results of operations.

Recent Accounting Pronouncements Not Adopted

Goodwill Impairment

In January 2017, the FASB issued accounting guidance related to the subsequent measurement of goodwill.

In January 2017, the Financial Accounting Standards Board (“FASB”) issued accounting guidance related to the subsequent measurement of goodwill.

Under this new guidance, an entity will perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value.

This guidance is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

Early adoption is permitted.

This guidance should be applied on a prospective basis.

The Company is currently evaluating the impact of adopting this accounting guidance in the first quarter of 2021.

The adoption of this accounting guidance in the first quarter of 2021 did not have a significant impact on the Company’s consolidated financial position or results of operations.

Recent Accounting Pronouncements Not Adopted

Accounting for Income Taxes

7 unchanged sentences

The Company is currently evaluating the impact of adopting this accounting guidance in the first quarter of 2022.

The Company accounts for all transactions that represent business combinations using the acquisition method of accounting, where the identifiable assets acquired and the liabilities assumed are recognized and measured at their fair values on the date the Company obtains control in the acquiree.

Such fair values that are not finalized for reporting periods following the acquisition date are estimated and recorded as estimated amounts.

Adjustments to these estimated amounts during the measurement period (defined as the date through which all information required to identify and measure the consideration transferred, the assets acquired and the liabilities assumed has been obtained, limited to one year from the acquisition date) are recorded when identified.

Goodwill is determined as the excess of the fair value of the consideration conveyed in the acquisition over the fair value of the net assets acquired.

Goodwill and other intangibles will be evaluated for impairment annually during each fourth quarter period and when an event occurs or circumstances change that, more likely than not, reduce the fair value of the reporting unit below its carrying value.

Effective October 10, 2019, the Company acquired 100 % ownership of Maple Street Biscuit Company (“MSBC”), a breakfast and lunch fast casual concept, for a purchase price of $ 36,000 , of which $ 32,000 was paid to the sellers in cash with the remaining $ 4,000 being held as security for the satisfaction of indemnification obligations of the sellers.

The unused portion held as security, if any, will be paid in two installments with $ 1,500 due to the principal seller on the one-year anniversary of closing and the remaining amount due to the sellers on the two-year anniversary of closing.

The Company believes that this investment supports its strategic initiative to extend the brand by becoming a market leader in the breakfast and lunch-focused fast casual dining segment of the restaurant industry and by providing a platform for growth.

At May 1, 2020, MSBC had 28 company-owned and six franchised fast casual locations across seven states.

The goodwill of $ 6,364 arising from the acquisition consists largely of the Company’s determination of the value of MSBC’s future free cash flows less the value of the identifiable tangible and intangible assets and liabilities.

Maple Street Biscuit Company

The first installment of $ 1,500 , to be held as security, was paid to the principal seller in the first quarter of 2021, and the remaining amount, if any, will be paid in a final installment to the sellers on the two-year anniversary of closing.

The Company believes that this acquisition supports its strategic initiative to extend the brand by becoming a market leader in the breakfast and lunch-focused fast casual dining segment of the restaurant industry and by providing a platform for growth.

At October 30, 2020, MSBC had 35 company-owned and six franchised fast casual locations across seven states.

The goodwill of $ 4,690 arising from the acquisition consisted largely of the Company’s determination of the value of MSBC’s future free cash flows less the value of the identifiable tangible and intangible assets and liabilities.

All amounts recorded for the assets acquired, liabilities assumed and goodwill are final.

None of the goodwill recognized is expected to be deductible for income tax purposes.

Acquisition-related costs of $ 1,269 were recorded in the general and administrative expenses line in the Condensed Consolidated Statement of Income (Loss) in the quarter ended November 1, 2019.

The following table summarizes the consideration paid for MSBC and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date:

Fair value of total consideration transferred

Recognized amounts of identifiable assets acquired and liabilities assumed

Financial assets

Property and equipment

Operating lease right-of-use assets, net

Indefinite-lived intangible asset*

Other current and noncurrent assets

Financial liabilities

Operating lease liabilities

Other noncurrent liabilities

Total identifiable net assets

* Consists entirely of MSBC’s Tradename

All amounts recorded for the assets acquired, liabilities assumed and goodwill are provisional and are subject to revision as additional information about the fair value of assets acquired and liabilities assumed becomes available.

We expect the final purchase price allocation to be completed in the first quarter of 2021.

Equity Method Investment

Effective July 18, 2019, the Company purchased approximately 58.6 % of the economic ownership interest, and approximately 49.7 % of the voting interest, in PBS HoldCo, LLC (“PBS HC”).

Prior to suspending all restaurant operations in response to the COVID-19 pandemic as further detailed below, PBS HC and its subsidiaries developed, owned, and operated food, beverage and entertainment establishments under the name of Punch Bowl Social (“PBS”).

The Company does not have the power to unilaterally direct any activities of PBS HC, a variable interest entity, that most significantly impact PBS HC’s economic performance.

As a result, the Company’s investment in PBS HC, for which it has the ability to exercise significant influence, but not control and is not the primary beneficiary, was accounted for using the equity method.

Accordingly, the Company recognized its proportionate share of the reported earnings or losses of PBS HC adjusted for basis differences on its consolidated statements of income (loss) and as an adjustment to the Company’s investment in unconsolidated subsidiary on the consolidated balance sheet.

The Company’s investment in PBS HC was valued at $ 89,100 at August 2, 2019, and was recorded on the Company’s Condensed Consolidated Balance Sheet as investment in unconsolidated subsidiary.

Additionally, as part of the purchase transaction, the Company purchased promissory notes of PBS HC in principal amount of $ 6,900 along with the related interest on the notes and provided additional funding of $ 8,000 to PBS HC in exchange for a promissory note.

As part of the purchase agreement with PBS HC, the Company agreed to fund PBS HC up to $ 51,000 through calendar 2020, of which the Company had funded $ 48,000 and $ 12,500 , respectively, as of May 1, 2020 and August 2, 2019.

The related promissory notes were included in the other assets line on the Condensed Consolidated Balance Sheet.

The Company’s exposure to risk of loss in PBS HC is generally limited to its investment in the ownership interest and its receivable related to the promissory notes.

The Company assesses the impairment of its equity investment whenever events or changes in circumstances indicate that a decrease in value of the investment has occurred that is other than temporary.

As a result of the COVID-19 pandemic, PBS HC’s wholly-owned subsidiary, in March 2020, PBS BrandCo, LLC (“Brandco”) suspended all operations at each of its 19 locations and laid off substantially all restaurant and corporate employees.

On March 20, 2020, the primary lender under Brandco’s secured credit facility provided notice of the lender’s intention to foreclose on its collateral interest in all equity and/or assets of Brandco unless the Company repaid or unconditionally guaranteed the indebtedness.

In keeping with the Company’s strategy of concentrating its resources on its core business during the COVID-19 pandemic, and in light of the substantial uncertainties surrounding the PBS business coming out of the COVID-19 pandemic, the Company decided not to invest further resources to prevent foreclosure or otherwise provide additional capital to PBS HC.

In the third quarter of 2020, the Company recorded a loss of $ 132,878 , which represented its equity investment in PBS HC and its receivable related to the principal and accumulated interest amounts related to the promissory notes.

This loss was recorded in the net loss in unconsolidated subsidiary line on the Condensed Consolidated Statement of Income (Loss) in the third quarter of 2020.

Acquisition-related costs of $ 1,269 were recorded in the general and administrative expenses line in the Condensed Consolidated Statement of Income in the quarter ended November 1, 2019.

Fair Value Measurements

The Company’s assets and liabilities measured at fair value on a recurring basis at May 1, 2020 were as follows:

The Company’s assets and liabilities measured at fair value on a recurring basis at October 30, 2020 were as follows:

Cash equivalents*

3 unchanged sentences

Total liabilities at fair value

The Company’s assets and liabilities measured at fair value on a recurring basis at August 2, 2019 were as follows:

The Company’s assets and liabilities measured at fair value on a recurring basis at July 31, 2020 were as follows:

Cash equivalents*

12 unchanged sentences

The fair values of the Company’s accounts receivable and accounts payable approximate their carrying amounts because of their short duration.

The fair value of the Company’s variable rate debt, based on quoted market prices, which are considered Level 1 inputs, approximates its carrying amount at May 1, 2020 and August 2, 2019.

Assets Measured at Fair Value on a Nonrecurring Basis

As part of the Company’s acquisition of MSBC effective October 10, 2019, the Company recorded MSBC’s property and equipment and the MSBC tradename at fair value.

The remaining identifiable assets and liabilities acquired were recorded at carrying value, which approximated their fair value at October 10, 2019.

Additionally, goodwill was recorded as the excess of fair value of the consideration conveyed in the acquisition over the fair value of the net assets acquired.

The fair value of MSBC’s property and equipment, tradename and the related goodwill are considered Level 3 inputs.

The valuation method used by the Company depends on the type of asset and the availability of data.

The Company’s assets measured at fair value on a nonrecurring basis as of October 10, 2019 were as follows:

Property and equipment

* Included in the Condensed Consolidated Balance Sheets as other assets.

As noted in Note 2 above, the amounts recorded for these assets are estimated.

See Note 2 for further information in regard to the determination of goodwill.

The fair value of the property and equipment was determined by using the cost approach.

Assumptions used in the cost method included estimates of replacement costs for similar property and equipment.

Replacement cost was estimated to be approximately $ 500 per MSBC store.

The fair value of MSBC’s tradename was determined by using the present value of estimated cash flows from comparable industry royalty rates for MSBC’s estimated future revenue streams.

Assumptions used under this approach included an approximate 2.5 % royalty rate and a discount rate of 12.0 %.

During the quarter ended May 1, 2020, five leased Cracker Barrel stores were determined to be impaired.

Fair value of the leased stores was determined by using a cash flow model.

Assumptions used in the cash flow model included projected annual revenue growth rates and projected cash flows, which can be affected by economic conditions and management’s expectations.

The Company has determined that the majority of the inputs used to value its long-lived assets held and used are unobservable inputs, and thus, are considered Level 3 inputs.

Based on its analysis, the Company recorded an estimated impairment charge of $ 18,336 , which is included in the impairment line on the Condensed Consolidated Statement of Income (Loss).

The fair value of the Company’s variable rate debt, based on quoted market prices, which are considered Level 1 inputs, approximates its carrying amount at October 30, 2020 and July 31, 2020.

Inventories were comprised of the following at:

August 2, 2019

October 30, 2020

July 31, 2020

On September 5, 2018, the Company entered into a five-year $ 950,000 revolving credit facility (“2019 Revolving Credit Facility”).

The 2019 Revolving Credit Facility also contains an option to increase the revolving credit facility by $ 300,000 .

Subsequent to May 1, 2020, we have drawn an additional $ 39,400 under this option.

At May 1, 2020 and August 2, 2019, the Company had $ 940,000 and $ 400,000 , respectively, of outstanding borrowings under the 2019 Revolving Credit Facility.

At May 1, 2020, the Company had $ 6,729 of standby letters of credit, which reduce the Company’s borrowing availability under the 2019 Revolving Credit Facility (see Note 13 for more information on the Company’s standby letters of credit).

At May 1, 2020, the Company had $ 3,271 in borrowing availability under the 2019 Revolving Credit Facility.

In the fourth quarter of 2020, the Company drew an additional $ 39,395 under this option for a one-year period.

At both October 30, 2020 and July 31, 2020, the Company had a total of $ 949,395 of outstanding borrowings under the 2019 Revolving Credit Facility.

At October 30, 2020, the Company had $ 31,804 of standby letters of credit, which reduce the Company’s borrowing availability under the 2019 Revolving Credit Facility (see Note 12 for more information on the Company’s standby letters of credit).

At October 30, 2020, the Company had $ 8,196 in borrowing availability under the 2019 Revolving Credit Facility.

In accordance with the 2019 Revolving Credit Facility, outstanding borrowings bear interest, at the Company’s election, either at LIBOR or prime plus a percentage point spread based on certain specified financial ratios under the 2019 Revolving Credit Facility.

At May 1, 2020, $ 400,000 of the Company’s outstanding borrowings were swapped at a weighted average interest rate of 3.61 % (see Note 7 for information on the Company’s interest rate swaps).

At May 1, 2020, the weighted average interest rate on the remaining $ 540,000 of the Company’s outstanding borrowings was 2.22 %.

At October 30, 2020, $ 400,000 of the Company’s outstanding borrowings were swapped at a weighted average interest rate of 5.36 % (see Note 6 for information on the Company’s interest rate swaps).

At October 30, 2020, the weighted average interest rate on the remaining $ 549,395 of the Company’s outstanding borrowings was 3.31 %.

The 2019 Revolving Credit Facility contains customary financial covenants, which include maintenance of a maximum consolidated total leverage ratio and a minimum consolidated interest coverage ratio.

At May 1, 2020, the Company was in compliance with all financial covenants.

As a result of the uncertainty regarding the impact of the COVID-19 pandemic on the Company’s financial position and results of operations, the Company has obtained a waiver for the financial covenants for the fourth quarter of 2020 and the first and second quarters of 2021.

During this Covenant Relief Period, the Company is required to maintain certain liquidity measures (defined as the availability under the 2019 Revolving Credit Facility plus unrestricted cash and cash equivalents) of at least $ 140,000 .

Additionally, during this Covenant Relief Period, the Company’s cash payments with respect to capital expenditures may not exceed $ 60,000 in the aggregate.

The 2019 Revolving Credit Facility also imposes restrictions on the amount of dividends the Company is permitted to pay and the amount of shares the Company is permitted to repurchase.

Under the 2019 Revolving Credit Facility, provided there is no default existing and the total of the Company’s availability under the 2019 Revolving Credit Facility plus the Company’s cash and cash equivalents on hand is at least $ 100,000 (the “cash availability”), the Company may declare and pay cash dividends on shares of its common stock and repurchase shares of its common stock (1) in an unlimited amount if, at the time such dividend or repurchase is made, the Company’s consolidated total leverage ratio is 3.00 to 1.00 or less and (2) in an aggregate amount not to exceed $ 100,000 in any fiscal year if the Company’s consolidated total leverage ratio is greater than 3.00 to 1.00 at the time the dividend or repurchase is made;

During the Covenant Relief Period described above, the Company is subject to restrictions on its ability to pay dividends (other than the deferred dividend payment that the Company paid on September 2, 2020).

Following the Covenant Relief Period described above, under the 2019 Revolving Credit Facility, provided there is no default existing and the total of the Company’s availability under the 2019 Revolving Credit Facility plus the Company’s cash and cash equivalents on hand is at least $ 100,000 (the “Cash Availability”), the Company may declare and pay cash dividends on shares of its common stock and repurchase shares of its common stock (1) in an unlimited amount if, at the time such dividend or repurchase is made, the Company’s consolidated total leverage ratio is 3.00 to 1.00 or less and (2) in an aggregate amount not to exceed $ 100,000 in any fiscal year if the Company’s consolidated total leverage ratio is greater than 3.00 to 1.00 at the time the dividend or repurchase is made;

notwithstanding (1) and (2), so long as immediately after giving effect to the payment of any such dividends, Cash Availability is at least $ 100,000 , the Company may declare and pay cash dividends on shares of its common stock in an aggregate amount not to exceed in any fiscal year the product of the aggregate amount of dividends declared in the fourth quarter of the immediately preceding fiscal year multiplied by four .

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The interest rates on the portion of the Company’s outstanding debt covered by its interest rate swaps are fixed at the rates in the table below plus the Company’s credit spread.

The Company’s credit spread at May 1, 2020 was 1.25 %.

The Company’s credit spread at October 30, 2020 was 3.00 %.

All of the Company’s interest rate swaps are accounted for as cash flow hedges.

For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings and is presented in the same statement of income (loss) line item as the earnings effect of the hedged item.

Gains and losses on the derivative instrument representing hedge components excluded from the assessment of effectiveness, if any, will be recognized currently in earnings in the same statement of income (loss) line item as the earnings effect of the hedged item.

For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings and is presented in the same statement of income line item as the earnings effect of the hedged item.

Gains and losses on the derivative instrument representing hedge components excluded from the assessment of effectiveness, if any, will be recognized currently in earnings in the same statement of income line item as the earnings effect of the hedged item.

The Company does not hold or use derivative instruments for trading purposes.

4 unchanged sentences

If, on a net basis, the Company owes the counterparty, the Company regards its credit exposure to the counterparty as being zero.

A summary of the Company’s interest rate swaps at May 1, 2020 is as follows:

A summary of the Company’s interest rate swaps at October 30, 2020 is as follows:

Effective Date

11 unchanged sentences

August 7, 2019

The estimated fair value of the Company’s derivative instruments as of May 1, 2020 and August 2, 2019 were as follows:

The estimated fair value of the Company’s derivative instruments as of October 30, 2020 and July 31, 2020 were as follows:

Balance Sheet Location

August 2, 2019

October 30, 2020

July 31, 2020

Interest rate swaps

Other current liabilities

Interest rate swaps

Long-term interest rate swap liability

Total liabilities**

** These interest rate swap liabilities are recorded gross at both May 1, 2020 and August 2, 2019 since there were no offsetting assets under the Company’s master netting agreements.

** These interest rate swap liabilities are recorded gross at both October 30, 2020 and July 31, 2020 since there were no offsetting assets under the Company’s master netting agreements.

The estimated fair value of the Company’s interest rate swap liabilities incorporates the Company’s non-performance risk (see Note 3).

The adjustment related to the Company’s non-performance risk at May 1, 2020 and August 2, 2019 resulted in reductions of $ 1,547 and $ 399 , respectively, in the fair value of the interest rate swap liabilities.

The adjustment related to the Company’s non-performance risk at October 30, 2020 and July 31, 2020 resulted in reductions of $ 848 and $ 978 , respectively, in the fair value of the interest rate swap liabilities.

The offset to the interest rate swap liabilities are recorded in accumulated other comprehensive loss (“AOCL”), net of the deferred tax asset, and will be reclassified into earnings over the term of the underlying debt.

As of May 1, 2020, the estimated pre-tax portion of AOCL that is expected to be reclassified into earnings over the next twelve months is $ 5,385 .

Cash flows related to the interest rate swaps are included in the interest expense line in the Condensed Consolidated Statements of Income (Loss) and in operating activities in the Condensed Consolidated Statements of Cash Flows.

The following table summarizes the pre-tax effects of the Company’s derivative instruments on AOCL for the nine months ended May 1, 2020 and the year ended August 2, 2019:

Amount of Loss Recognized

in AOCL on Derivatives

Nine Months Ended

August 2, 2019

As of October 30, 2020, the estimated pre-tax portion of AOCL that is expected to be reclassified into earnings over the next twelve months is $ 6,016 .

Cash flows related to the interest rate swaps are included in the interest expense line in the Condensed Consolidated Statements of Income and in operating activities in the Condensed Consolidated Statements of Cash Flows.

The following table summarizes the pre-tax effects of the Company’s derivative instruments on AOCL for the three months ended October 30, 2020 and the year ended July 31, 2020:

Amount of Income (Loss) Recognized in

AOCL on Derivatives

Three Months Ended

October 30, 2020

July 31, 2020

Cash flow hedges:

Interest rate swaps

The following table summarizes the pre-tax effects of the Company’s derivative instruments on income for the quarters and nine-month periods ended May 1, 2020 and May 3, 2019:

Location of Loss

Reclassified from

AOCL into Income

(Effective Portion)

Amount of Loss Reclassified from AOCL into Income

(Effective Portion)

The following table summarizes the pre-tax effects of the Company’s derivative instruments on income for the quarters ended October 30, 2020 and November 1, 2019:

Location of Gain Reclassified

from AOCL into Income

Amount of Gain Reclassified

from AOCL into Income

Quarter Ended

Nine Months Ended

Cash flow hedges:

1 unchanged sentence

Interest expense

The following table summarizes the amounts reclassified out of AOCL related to the Company’s interest rate swaps for the quarter and nine months ended May 1, 2020:

Amount Reclassified from AOCL

The following table summarizes the amounts reclassified out of AOCL related to the Company’s interest rate swaps for the quarter ended October 30, 2020:

Details about AOCL

Amount Reclassified

Affected Line Item in the

Quarter Ended

Nine Months Ended

Condensed Consolidated

Financial Statements

Loss on cash flow hedges:

Statement of Income

Gain on cash flow hedges:

Interest rate swaps

Interest expense

Provision for income taxes (income tax benefit)

No gains or losses representing amounts excluded from the assessment of effectiveness were recognized in earnings for the nine months ended May 1, 2020.

The following table summarizes the changes in AOCL, net of tax, related to the Company’s interest rate swaps for the nine months ended May 1, 2020:

Provision for income taxes

No gains or losses representing amounts excluded from the assessment of effectiveness were recognized in earnings for the three -months ended October 30, 2020.

The following table summarizes the changes in AOCL, net of tax, related to the Company’s interest rate swaps for the three months ended October 30, 2020:

Changes in AOCL

AOCL balance at August 2, 2019

Other comprehensive loss before reclassifications

AOCL balance at July 31, 2020

Other comprehensive income before reclassifications

Amounts reclassified from AOCL

Other comprehensive loss, net of tax

AOCL balance at May 1, 2020

Other comprehensive income, net of tax

AOCL balance at October 30, 2020

Historically, the net income of the Company has been lower in the first and third quarters and higher in the second and fourth quarters.

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The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a restaurant guest, retail customer or other customer.

The Company’s policy is to present sales in the Condensed Consolidated Statements of Income (Loss) on a net presentation basis after deducting sales tax.

The Company’s policy is to present sales in the Condensed Consolidated Statements of Income on a net presentation basis after deducting sales tax.

Disaggregation of revenue

1 unchanged sentence

Quarter Ended

Nine Months Ended

Total revenue

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A certain number of gift cards will not be fully redeemed.

Management estimates unredeemed balances and recognizes gift card breakage revenue for these amounts in the Company’s Condensed Consolidated Statements of Income (Loss) over the expected redemption period.

Management estimates unredeemed balances and recognizes gift card breakage revenue for these amounts in the Company's Condensed Consolidated Statements of Income over the expected redemption period.

Gift card breakage is recognized when the likelihood of a gift card being redeemed by the customer is remote and the Company determines that there is not a legal obligation to remit the unredeemed gift card balance to the relevant jurisdiction.

1 unchanged sentence

The Company recognizes gift card breakage by applying its estimate of the rate of gift card breakage over the period of estimated redemption.

For the quarter and nine months ended May 1, 2020, gift card breakage was $ 1,574 and $ 5,234 .

For the quarter and nine months ended May 3, 2019, gift card breakage was $ 1,699 and $ 5,355 .

Deferred revenue related to the Company’s gift cards was $ 95,829 and $ 80,073 , respectively, at May 1, 2020 and August 2, 2019.

Revenue recognized in the Condensed Consolidated Statements of Income (Loss) for the nine months ended May 1, 2020 and May 3 , 2019, respectively, for the redemption of gift cards which were included in the deferred revenue balance at the beginning of the fiscal year was $ 33,937 and $ 36,815 .

For the quarter ended October 30, 2020, gift card breakage was $ 940 .

For the quarter ended November 1, 2019, gift card breakage was $ 1,238 .

Deferred revenue related to the Company’s gift cards was $ 89,237 and $ 94,754 , respectively, at October 30, 2020 and July 31, 2020.

Revenue recognized in the Condensed Consolidated Statements of Income for the three months ended October 30, 2020 and November 1, 2019, respectively, for the redemption of gift cards which were included in the deferred revenue balance at the beginning of the fiscal year was $ 16,242 and $ 17,947 .

The Company has ground leases for its leased stores and office space leases that are recorded as operating leases under various non-cancellable operating leases.

The Company also leases advertising billboards, vehicle fleets, and certain equipment under various non-cancellable operating leases.

Additionally, the Company also completed sale-leaseback transactions in 2000 and 2009.

In 2009, the Company 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 and leased back for terms of 20 and 15 years, respectively.

Equipment was not included.

The leases include specified renewal options for up to 20 additional years.

In 2000, the Company 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 a term of 21 years.

The leases for these stores include specified renewal options for up to 20 additional years and certain financial covenants which include maintenance of a minimum fixed charge coverage for the leased stores.

At May 1, 2020 and August 2, 2019, the Company was in compliance with these covenants.

Additionally, the Company completed sale-leaseback transactions in 2009, 2020 and 2021 (see section below entitled “Sale and Leaseback Transactions”).

To determine whether a contract is or contains a lease, the Company determines at contract inception whether it contains the right to control the use of an identified asset for a period of time in exchange for consideration.

5 unchanged sentences

Additionally, some of the leases have contingent rent provisions and others require adjustments for inflation or index.

Contingent rent is determined as a percentage of gross sales in excess of specified levels.

The Company records a contingent rent liability and corresponding rent expense when it is probable sales have been achieved in amounts in excess of the specified levels.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

1 unchanged sentence

These leases are expected to commence in 2021 with undiscounted future payments of $ 16,677 .

As further discussed in Note 1 under the lease discussion in the “Recent Accounting Standards Adopted” section, the Company has elected to not separate lease and non-lease components.

The Company has elected to not separate lease and non-lease components.

Additionally, the Company has elected to apply the short term lease exemption to all asset classes and the short term lease expense for the period reasonably reflects the short term lease commitments.

As the Company’s leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at the time of commencement or modification date in determining the present value of lease payments.

For operating leases that commenced prior to the date of adoption of the new lease accounting guidance, we used the incremental borrowing rate as of the adoption date.

For operating leases that commenced prior to the date of adoption of the new lease accounting guidance, the Company used the incremental borrowing rate as of the adoption date.

Assumptions used in determining the Company’s incremental borrowing rate include the Company’s implied credit rating and an estimate of secured borrowing rates based on comparable market data.

The following table summarizes the components of lease cost for operating leases for the quarter and nine months ended May 1, 2020:

The following table summarizes the components of lease cost for operating leases for the quarters ended October 30, 2020 and November 1, 2019 :

Quarter Ended

Nine Months Ended

October 30, 2020

Quarter Ended

November 1, 2019

Operating lease cost

2 unchanged sentences

Total lease cost

The following table summarizes supplemental cash flow information and non-cash activity related to the Company’s operating leases for the quarter and nine months ended May 1, 2020:

The following table summarizes supplemental cash flow information and non-cash activity related to the Company’s operating leases for the quarters ended October 30, 2020 and November 1, 2019 :

Quarter Ended

Nine Months Ended

October 30, 2020

Quarter Ended

November 1, 2019

Operating cash flow information:

Gain on sale and leaseback transaction

Cash paid for amounts included in the measurement of lease liabilities

1 unchanged sentence

Right-of-use assets obtained in exchange for new operating lease liabilities

Lease modifications granting additional right-of-use assets

Lease modifications or reassessments increasing or decreasing right-of-use assets

Lease modifications removing right-of-use assets

The following table summarizes the weighted-average remaining lease term and the weighted-average discount rate for operating leases as of May 1, 2020:

The following table summarizes the weighted-average remaining lease term and the weighted-average discount rate for operating leases as of October 30, 2020 and November 1, 2019 :

October 30, 2020

November 1, 2019

Weighted-average remaining lease term

Weighted-average discount rate

The following table summarizes the maturities of undiscounted cash flows reconciled to the total lease liability as of May 1, 2020:

The following table summarizes the maturities of undiscounted cash flows reconciled to the total lease liability as of October 30, 2020:

Remainder of 2021

2 unchanged sentences

Total present value of operating lease liabilities

The following table summarizes the maturities of lease commitments as of August 2, 2019, prior to the adoption of the new lease guidance, as previously disclosed in our 2019 Form 10-K:

Sale and Leaseback Transactions

In 2009, the Company 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 and leased back for terms of 20 and 15 years, respectively.

Equipment was not included.

The leases include specified renewal options for up to 20 additional years.

On July 29, 2020, the Company entered into an agreement with the original lessor and a third party financier to obtain ownership of 64 of the 65 Cracker Barrel properties previously covered in the original sale and leaseback arrangement and simultaneously entered into a sale and leaseback transaction with the financier for an aggregate purchase price, net of closing costs, of $ 198,083 .

The Company purchased the remaining property for approximately $ 3,200 .

In connection with this sale and leaseback transaction, the Company entered into lease agreements for each of the properties for initial terms of 20 years and renewal options up to 50 years.

The aggregate initial annual rent payment for the properties is approximately $ 14,379 and includes 1 % annual rent increases over the initial lease terms.

All the properties qualified for sale and leaseback and operating lease accounting classification and the Company recorded a gain on the sale and leaseback transaction of $ 69,954 in the fourth quarter of 2020.

The Company recorded operating lease right-of-use assets, including a non-cash asset recognized as a part of accounting for the transaction of $ 79,049 , and corresponding operating lease liabilities of $ 261,698 and $ 182,649 , respectively.

On August 4, 2020, the Company completed a subsequent sale and leaseback transaction involving 62 of its owned Cracker Barrel stores for an aggregate purchase price, net of closing costs, of $ 146,357 .

Under the transaction, the land, buildings and building improvements at the locations were sold and leased back for initial terms of 20 years and renewal options up to 50 years.

The aggregate initial annual rent payment for the properties is approximately $ 10,393 and includes 1 % annual rent increases over the initial lease terms.

All of the properties qualified for sale and leaseback and operating lease accounting classification, and the Company recorded a gain of $ 217,722 which is recorded in the gain on sale and leaseback transaction line in the Condensed Consolidated Statement of Income in the first quarter of 2021.

The Company also recorded operating lease right-of-use assets, including a non-cash asset recognized as part of accounting for the transaction of $ 175,960 and corresponding operating lease liabilities of $ 309,624 and $ 133,663 , respectively.

On November 11, 2020, Cracker Barrel Old Country Store, Inc.

and related affiliate entities entered into the First Amendment to Amended and Restated Master Lease (the “Amendment”) to bifurcate the existing Amended and Restated Master Lease (the “Original Lease”) into two separate lease pools.

The Amendment removed 35 sites from the Original Lease and placed them in a new pool governed by the terms of a new Master Lease (the “New Master Lease”).

This bifurcation was completed as an accommodation for the landlord to facilitate the landlord’s securitization of the properties.

The terms and conditions of the Original Lease and New Master Lease are the same and no material changes were made to the terms thereof.

Net Income Per Share and Weighted Average Shares

5 unchanged sentences

Quarter Ended

Nine Months Ended

Net income (loss) per share numerator

Net income (loss) per share denominator:

Net income per share numerator

Net income per share denominator:

Weighted average shares

6 unchanged sentences

Related to its workers’ compensation insurance coverage, the Company is contingently liable pursuant to standby letters of credit as credit guarantees to certain insurers.

As of May 1, 2020, the Company had $ 6,729 of standby letters of credit related to securing reserved claims under workers’ compensation insurance.

As of October 30, 2020, the Company had $ 31,804 of standby letters of credit related to securing reserved claims under workers’ compensation insurance and the July 29, 2020 and August 4, 2020 sale and leaseback transactions .

All standby letters of credit are renewable annually and reduce the Company’s borrowing availability under its 2019 Revolving Credit Facility (see Note 5).

At May 1, 2020, the Company is secondarily liable for lease payments associated with two properties occupied by a third party.

Prior to the third quarter of 2020, the Company was not aware of any non-performance under these lease arrangements that would result in the Company having to perform in accordance with the terms of these guarantees;

and therefore, no provision had been recorded in the Condensed Consolidated Balance Sheets for amounts to be paid in case of non-performance by the primary obligor under such lease arrangements.

During the third quarter of 2020, the Company received notice regarding non-performance by the primary obligor under these lease arrangements.

At May 1, 2020, the Company has recorded a provision of $ 324 in the Condensed Consolidated Balance Sheet for amounts to be paid as of result of non-performance by the primary obligor.

At October 30, 2020, the Company has recorded a provision of $ 344 in the Condensed Consolidated Balance Sheet for amounts to be paid as of result of non-performance by the primary obligor for lease payments associated with two properties occupied by a third party.

The Company enters into certain indemnification agreements in favor of third parties in the ordinary course of business.

The Company believes that the probability of incurring an actual liability under such indemnification agreements is sufficiently remote that no such liability has been recorded in the Condensed Consolidated Balance Sheet as of May 1, 2020.

On July 31, 2000, the Company entered into a sale-leaseback transaction involving 65 of its owned Cracker Barrel stores.

In 2020, the Company entered into an agreement to purchase the properties from the landlord for $ 200,835 .

In connection with the purchase, the Company made an earnest money deposit of $ 6,000 which is included in the prepaid expenses and other current assets line on the Condensed Consolidated Balance Sheet as of May 1, 2020.

The Company’s intent is to enter into an agreement in the fourth quarter of 2020 to assign its right of title and interest as purchaser to another party.

The closing on the purchase of the property is subject to customary closing conditions and is currently scheduled to occur on or before July 29, 2020, at which time the existing leaseback will terminate, and new lease agreements will be entered with the assigned party.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements