What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-23 compared with 2021-05-25 · 304 added, 358 removed, 192 unchanged (78% of the section changed)

1 unchanged sentence

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED

BALANCE SHEETS

(In thousands, except share data)

13 unchanged sentences

Accounts payable

Dividends payable

Other current liabilities

2 unchanged sentences

Long-term operating lease liabilities

Long-term interest rate swap liability

Other long-term obligations

6 unchanged sentences

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

23,726,372 shares issued and outstanding at April 30, 2021 , and 23,697,396 shares issued and outstanding at July 31, 2020

Additional paid-in capital

Accumulated other comprehensive loss

23,519,857 shares issued and outstanding at October 29, 2021 , and 23,497,166 shares issued and outstanding at July 30, 2021

Retained earnings

2 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 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.

* This Condensed Consolidated Balance Sheet has been derived from the audited Consolidated Balance Sheet as of July 30,

2021, as filed with the Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the fiscal year ended July 30, 2021.

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

Gain on sale and leaseback transaction

Operating income (loss)

Gain on sale and leaseback transactions

Operating income

Interest expense, net

Income (loss) before income taxes

Provision for income taxes (income tax benefit)

Loss from unconsolidated subsidiary

Net income (loss)

Net income (loss) per share:

Income before income taxes

Provision for income taxes

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 income (loss) before income tax expense (benefit):

Other comprehensive income before income tax expense:

Change in fair value of interest rate swaps

Income tax expense (benefit)

Other comprehensive income (loss), net of tax

Comprehensive income (loss)

Income tax expense

Other comprehensive income, 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 April 30, 2021

Comprehensive

Shareholders’

Income (Loss)

Balances at July 30, 2021

Comprehensive Income (Loss):

Comprehensive Income:

Other comprehensive income, net of tax

Total comprehensive income

Cash dividends previously declared in prior quarters

Cash dividends declared - $ 1.30 per share

Share-based compensation

Cumulative-effect of change in accounting principle, net of taxes (see Note 1)

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

Balances at October 29, 2021

Comprehensive Income (Loss):

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

Balances at January 29, 2021

Comprehensive Income (Loss):

Comprehensive

Shareholders’

Balances at July 31, 2020

Comprehensive Income:

Other comprehensive income, net of tax

3 unchanged sentences

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

Balances at April 30, 2021

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 1, 2020

Comprehensive

Shareholders’

Income (Loss)

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

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

Balances at October 30, 2020

See Notes to unaudited Condensed Consolidated Financial Statements.

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

CONDENSED CONSOLIDATED STATEMENTS OF

(Unaudited and in thousands)

Nine Months Ended

Three Months Ended

Cash flows from operating activities:

Net income (loss)

Net loss from unconsolidated subsidiary

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Amortization of debt issuance costs

Loss on disposition of property and equipment

7 unchanged sentences

Other current liabilities

Long-term operating lease liabilities

Deferred income taxes

5 unchanged sentences

Proceeds from sale of property and equipment

Notes receivable from unconsolidated subsidiary

Acquisition of business, net of cash acquired

1 unchanged sentence

Cash flows from financing activities:

Proceeds from issuance of long-term debt

Taxes withheld from issuance of share-based compensation awards

Principal payments under long-term debt

Purchases and retirement of common stock

Deferred financing costs

Dividends on common stock

Net cash provided by (used in) financing activities

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

4 unchanged sentences

Interest, net of amounts capitalized

Supplemental schedule of non-cash investing and financing activities * :

Supplemental schedule of non-cash investing and

financing activities * :

Capital expenditures accrued in accounts payable

2 unchanged sentences

Dividends declared but not yet paid

* See Note 10 for additional supplemental disclosures related to leases.

* See Note 8 fo r additional supplemental disclosures related to leases.

See Notes to unaudited Condensed Consolidated Financial Statements.

4 unchanged sentences

Cracker Barrel Old Country Store, Inc.

and its affiliates (collectively, in these Notes to Condensed Consolidated Financial Statements, the “Company”) are principally engaged in the operation and development in the United States of the Cracker Barrel Old Country Store® (“Cracker Barrel”) concept.

The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) without audit.

In the opinion of management, all adjustments (consisting of normal and recurring items) necessary for a fair presentation of such condensed consolidated financial statements have been made.

and its affiliates (collectively, in these Notes to Condensed Consolidated Financial Statements,

the “Company”) are principally engaged in the operation and development in the United States of the Cracker Barrel Old Country Store® (“Cracker Barrel”) concept.

The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles

generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) without audit.

In the opinion of management, all adjustments (consisting of normal and recurring items)

necessary for a fair presentation of such condensed consolidated financial statements have been made.

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 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.

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 30, 2021 (the “2021 Form 10-K”).

The accounting policies used in preparing these condensed consolidated financial statements are the same as described in the

2021 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

While recovery is progressing and all dining rooms were open to some extent during the third fiscal quarter, the COVID-19 pandemic continues to negatively impact the Company’s sales and traffic as a result of both changes in consumer behavior and federal, state and local governmental authorities’ continuation of various restrictions on travel, group gatherings and limitations on dine-in services.

Dining room service was operational to varying degrees, yet in most locations continued to be impacted by capacity restrictions, social distancing guidelines and decreased consumer demand for in-person dining.

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.

The Company continues to recover from the COVID-19 pandemic as all dining rooms were open to some extent during the first quarter of

Although dining room service was operational to varying degrees, some locations continued to be adversely impacted by capacity restrictions and social distancing guidelines.

It is possible that renewed outbreaks or increases in cases, either as

part of a national trend or on a more localized basis, could result in additional capacity restrictions or otherwise limit our dine-in services, or negatively affect consumer demand.

In response to the COVID-19 pandemic, we instituted

operational protocols to comply with applicable regulatory requirements to protect the health and safety of employees and guests, and we implemented and have continually adapted a number of strategies to support the recovery of our business and

navigate through the uncertain environment.

We continue to focus on growing our off-premise business and investing in our digital infrastructure to improve the guest experience in the face of these ongoing challenges.

Recent Accounting Pronouncements Adopted

Goodwill Impairment

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.

Accounting for Convertible Instruments

In August 2020, the Financial Accounting Standards Boar d (“FASB”) issued accounting guidance to simplify the accounting and measurement of convertible

instruments and the settlement assessment for contracts in an entity’s own equity.

For convertible instruments, the Board decided to reduce the number of accounting models for convertible debt instruments and convertible preferred stock.

the separation model, a convertible debt instrument will be reported as a single liability instrument with no separate accounting for embedded conversion features.

This new standard also removes certain settlement conditions that are required for

contracts to qualify for equity classification and simplifies the diluted earnings per share calculations by requiring that an entity use the if-converted method and that the effect of potential share settlement be included in diluted earnings per

share calculations.

This guidance is effective for public business entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

This guidance should be applied on a prospective basis.

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

Early adoption is permitted.

This guidance should be applied through either

a modified retrospective method of transition or a fully retrospective method of transition.

The Company elected to early adopt this guidance in the first quarter of 2022 using the modified retrospective method.

The impact of this adoption in the

first quarter of 2022 on the Condensed Consolidated Balance Sheet resulted in the increase in long-term debt of $ 49,242 , a reduction in

deferred income taxes of $ 12,286 and decrease in equity of $ 36,956 .

The decrease in equity is comprised of a decrease in Retained Earnings of $ 36,956 ,

which is due to the depletion of Additional Paid-In Capital as a result of this adoption.

There was no impact to earnings per share in the first quarter of 2022 as a result of the adoption.

Accounting for Income Taxes

In December 2019, the FASB issued accounting guidance in order to simplify the accounting for income taxes.

This new guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

This guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

This accounting guidance is effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

Early adoption is permitted.

In general, entities will apply the new guidance on a prospective basis, except for certain items such as the guidance on franchise taxes that are partially based on income.

The guidance on franchise taxes that are partially based on income will be applied either retrospectively for all periods presented or using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

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

Maple Street Biscuit Company

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 at closing with the remaining $ 4,000 being held as security for the satisfaction of indemnification obligations of the sellers, if any.

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 April 30, 2021, MSBC had 37 company-owned and seven franchised fast casual locations across eight 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 in the quarter ended November 1, 2019.

This new guidance

eliminates certain exceptions to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

This guidance also

simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

This accounting guidance is effective for public

business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

The new guidance was applied on a prospective basis, except for the guidance on franchise taxes that are partially based on income

which was applied using a modified retrospective approach.

The adoption of the accounting guidance in the first quarter of 2022 did not have a significant impact on the Company’s consolidated financial position or results of operations.

Fair Value Measurements

The Company’s assets and liabilities measured at fair value on a recurring basis at April 30, 2021 were as follows:

The Company’s assets measured at fair value on a recurring basis at October 29, 2021 were as follows:

Cash equivalents*

1 unchanged sentence

Total assets at fair value

Interest rate swap liability (see Note 6)

Total liabilities at fair value

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

The Company’s assets measured at fair value on a recurring basis at July 30, 2021 were as follows:

Cash equivalents*

1 unchanged sentence

Total assets at fair value

Interest rate swap liability (see Note 6)

Total liabilities at fair value

* Consists of money market fund investments.

** Represents plan assets invested in mutual funds established under a rabbi trust for the Company’s non-qualified savings plan and is included in the Condensed Consolidated Balance Sheets as other assets.

** Represents plan assets invested in

mutual funds established under a rabbi trust for the Company’s non-qualified savings plan and is included in the Condensed Consolidated Balance Sheets as other

The Company did no t

have any liabilities measured at fair value on a recurring basis at October 29, 2021 and July 30, 2021.

The Company’s money market fund investments are measured at fair value using quoted market prices.

The fair values of the Company’s interest rate swap liabilities are determined based on the present value of expected future cash flows.

Since the values of the Company’s interest rate swaps are based on the LIBOR forward curve, which is observable at commonly quoted intervals for the full terms of the swaps, it is considered a Level 2 input.

Non-performance risk is reflected in determining the fair value of the interest rate swaps by using the Company’s credit spread less the risk-free interest rate, both of which are observable at commonly quoted intervals for the terms of the swaps.

Thus, the adjustment for non-performance risk is also considered a Level 2 input.

The Company’s deferred compensation plan assets are measured based on net asset value per share as a practical expedient to estimate fair value.

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 April 30, 2021 and July 31, 2020.

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 October 29, 2021 and July 30, 2021.

The Company’s financial instruments that are not remeasured at fair value include the 0.625 % convertible Senior Notes (see Note 4).

The Company estimates the fair value of the Notes through consideration of quoted market prices of similar instruments, classified

The estimated fair value of the Notes was $ 292,344 and $ 249,233 , respectively, as of October 29, 2021 and July 30, 2021 .

Inventories were comprised of the following at:

April 30, 2021

October 29, 2021

July 30, 2021

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 .

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

The 2019 Revolving Credit Facility contains an option to increase the revolving credit facility by $ 300,000 , of which $ 260,605 remains.

I n the third quarter of 2021 , the Company entered into an amendment to the 2019 Revolving Credit Facility which reduced the commitment amount from $ 950,000 to $ 800,000 .

The Company’s outstanding borrowings under the 2019 Revolving Credit Facility were $ 614,395 and $ 949,395 , respectively, at April 30, 2021 and July 31, 2020 .

At April 30, 2021 , the Company had $ 31,626 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 April 30, 2021, the Company had $ 193,374 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 April 30, 2021, $ 400,000 of the Company’s outstanding borrowings were swapped at a weighted average interest rate of 5.86 % (see Note 6 for information on the Company’s interest rate swaps).

At April 30, 2021, the weighted average interest rate on the remaining $ 214,395 of the Company’s outstanding borrowings was 3.69 %.

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.

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 waivers for the financial covenants for the fourth quarter of 2020 and the first and second quarters of 2021 (“Covenant Relief Period”) as well as the third and fourth quarters of 2021 (“Extended Covenant Relief Period”).

During these relief periods, 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 the Extended Covenant Relief Period, the Company’s cash payments with respect to capital expenditures may not exceed $ 70,000 in the aggregate.

As of April 30, 2021 , the Company’s cash payments with respect to capital expenditures during the Extended Covenant Relief Period were $ 12,704 .

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.

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 .

Additionally, during the Extended Covenant Relief Period, the Company is subject to additional restrictions on its ability to pay dividends.

The Company was prohibited from declaring or paying cash dividends during the third quarter of 2021.

The Company may declare but not pay cash dividends during the fourth quarter of 2021 .

Derivative Instruments and Hedging Activities

The Company has interest rate risk relative to its outstanding borrowings (see Note 5 for information on the Company’s outstanding borrowings).

The Company’s policy has been to manage interest cost using a mix of fixed and variable rate debt.

To manage this risk in a cost-efficient manner, the Company uses derivative instruments, specifically interest rate swaps.

For each of the Company’s interest rate swaps, the Company has agreed to exchange with a counterparty the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount.

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 April 30, 2021 was 3.50 %.

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 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.

The Company also does not have any derivatives not designated as hedging instruments and has not designated any non-derivatives as hedging instruments.

Companies may elect to offset related assets and liabilities and report the net amount on their financial statements if the right of setoff exists.

Under a master netting agreement, the Company has the legal right to offset the amounts owed to the Company against amounts owed by the Company under a derivative instrument that exists between the Company and a counterparty.

When the Company is engaged in more than one outstanding derivative transaction with the same counterparty and also has a legally enforceable master netting agreement with that counterparty, its credit risk exposure is based on the net exposure under the master netting agreement.

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 April 30, 2021 is as follows:

Effective Date

Notional Amount

January 30, 2015

January 16, 2019

August 6, 2019

November 4, 2019

August 7, 2019

The estimated fair value of the Company’s derivative instruments as of April 30, 2021 and July 31, 2020 were as follows:

Balance Sheet Location

April 30, 2021

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 April 30, 2021 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 April 30, 2021 and July 31, 2020 resulted in reductions of $ 431 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 April 30, 2021, the estimated pre-tax portion of AOCL that is expected to be reclassified into earnings over the next twelve months is $ 6,230 .

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 nine months ended April 30, 2021 and the year ended July 31, 2020:

Amount of Income (Loss) Recognized

in AOCL on Derivatives

Nine Months Ended

April 30, 2021

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 months ended April 30, 2021 and May 1, 2020:

Location of Loss

Reclassified from

AOCL into Income

(Effective Portion)

Amount of Loss Reclassified from AOCL into Income

(Effective Portion)

Quarter Ended

Nine Months Ended

Cash flow hedges:

Interest rate swaps

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 April 30, 2021:

Amount Reclassified from AOCL

Affected Line Item in the

The Company’s outstanding borrowings under the 2019 Revolving Credit Facility were $ 85,000 at both October 29, 2021 and July 30, 2021 .

At October 29, 2021 , the Company had $ 31,896 of standby letters of credit, which reduce the Company’s borrowing availability under the 2019 Revolving Credit Facility (see Note 10 for more information on the Company’s standby

letters of credit).

At October 29, 2021, the Company had $ 683,104 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 the

London Inter-Bank Offered Rate (“LIBOR”) or prime plus a percentage point spread based on certain specified financial ratios under the 2019 Revolving Credit Facility.

At October 29, 2021, the weighted average interest rate on $ 85,000 of the Company’s outstanding borrowings was 2.33 %.

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 October 29, 2021, the Company was in compliance with all debt covenants under the 2019 Revolving Credit Facility.

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

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 .

Convertible Senior Notes

On June 18, 2021, the Company completed a $ 300,000 principal aggregate amount private offering of 0.625 % convertible Senior Notes due in 2026 (the “Notes”), which included the exercise in full of the initial purchasers’ option to purchase up to an

additional $ 25,000 principal amount of the Notes.

The Notes are governed by the terms of an indenture between the Company and U.S.

National Association as the Trustee.

The Notes will mature on June 15, 2026 , unless earlier converted, repurchased or redeemed.

bear cash interest at an annual rate of 0.625 %, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2021.

The Notes are unsecured obligations and do not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or

any of its subsidiaries.

In an event of default, the principal amount of, and all accrued and unpaid interest on, all of the notes then outstanding will immediately become due and payable.

However, notwithstanding the foregoing, the Company may

elect, at its option, that the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture will consist exclusively of the right of the noteholders to receive special

interest on the Notes for up to 180 calendar days during which such event of default has occurred and is continuing, at a specified rate

for the first 90 days of 0.25 % per annum, and thereafter at a rate of 0.50 % per annum, on the principal amount of the Notes.

The initial conversion rate applicable to the Notes was 5.3153 shares of the Company’s common stock per $ 1,000 principal amount of Notes, which represented an initial conversion price of approximately $ 188.14 per share of the Company’s common stock, a premium of 25.0 % over the last

reported sale price of $ 150.51 per share on June 15, 2021, the date on which the Notes were priced.

The conversion rate is subject to

customary adjustments upon the occurrence of certain events, including the payment of dividends to holders of the Company’s common stock.

As of October 29, 2021, the conversion rate, as adjusted, was 5.4042 shares of the Company’s common stock per $ 1,000 principal

amount of Notes.

In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

Net proceeds from the 2026 Notes offering were $ 291,125 , after deducting the initial purchasers’ discounts and

commissions and the Company’s offering fees and expenses.

In accounting for the issuance of the Notes as of July 30, 2021, the Company separated the Notes into liability and equity components.

The carrying amount of the liability component before the allocation of any issuance costs was

calculated by measuring the fair value of a similar liability that does not have an associated exchangeable feature.

The carrying amount of the equity component (before the allocation of any issuance costs), representing the conversion option, which

did not require separate accounting as a derivative as it met a scope exception for certain contracts involving an entity’s own equity, was determined by deducting the fair value of the liability component from the par value of the Notes.

difference between the principal amount of the Notes and the liability component represented the debt discount, which was recorded as a direct deduction from the related debt liability in the Condensed Consolidated Balance Sheet and accreted over the

period from the date of issuance to the contractual maturity date, resulting in the recognition of non-cash interest expense.

The equity component of the Notes of $ 53,004 was included in additional-paid in capital in the consolidated balance sheet as of July 30, 2021 and was not remeasured since it continued to meet the conditions for equity

classification.

Issuance costs were allocated to the liability and equity components in the same proportion as the allocation of the proceeds.

Issuance costs attributable to the liability component were recorded as debt issuance costs in the

Condensed Consolidated Balance Sheet and are amortized to interest expense using the effective interest method over the term of the Notes, and issuance costs attributable to the equity component were netted with the equity component in stockholders’

Due to our adoption of new accounting guidance for convertible instruments on July 31, 2021, we no longer bifurcate the Notes into a liability and an equity component in our Condensed Consolidated Balance Sheets (see Note 1 for

additional information regarding the adoption of this new accounting guidance).

Upon adoption of this new accounting guidance, the Notes are accounted for entirely as a liability, and the issuance costs of the Notes are accounted for wholly as debt

issuance costs.

The equity conversion feature that was recorded to equity, as well as the unamortized debt discount and amortization expense attributable to equity, have been derecognized.

The following table includes the outstanding principal amount and carrying value of the Notes as of the period indicated:

October 29, 2021

Liability component

Debt issuance costs (1)

Net carrying amount

Debt issuance costs are amortized to interest expense using the

effective interest method over the expected life of the Notes.

The effective rate of the Notes over their expected life is 1.24 %.

The following is a summary of interest expense for the Notes for the quarter ended October 29, 2021:

Quarter Ended

Nine Months Ended

Condensed Consolidated

Financial Statements

Loss on cash flow hedges:

Interest rate swaps

Interest expense

Provision for income taxes

No gains or losses representing amounts excluded from the assessment of effectiveness were recognized in earnings for the nine months ended April 30, 2021.

The following table summarizes the changes in AOCL, net of tax, related to the Company’s interest rate swaps for the nine months ended April 30, 2021:

Changes in AOCL

AOCL balance at July 31, 2020

Other comprehensive income before reclassifications

Amounts reclassified from AOCL

Other comprehensive income, net of tax

AOCL balance at April 30, 2021

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

October 29, 2021

Coupon interest

Amortization of issuance costs

Total interest expense

During any calendar quarter after September 30, 2021, in which the closing price of the Company’s common stock exceeds 130 %

of the applicable conversion price of the Notes on at least 20 of the last 30 consecutive trading days of the quarter, holders may in the quarter immediately following, convert all or a portion of their Notes.

The holders of the Notes were not eligible to convert

their Notes during the first quarter of 2022.

When a conversion notice is received, the Company has the option to pay or deliver the conversion amount entirely in cash or a combination of cash and shares of the Company’s common stock.

Accordingly, as

of October 29, 2021, the Company could not be required to settle the Notes and, therefore, the Notes are classified as long-term debt.

Convertible Note Hedge and Warrant Transactions

In connection with the offering of the Notes, the Company entered into convertible note hedge transactions (the “Convertible Note Hedge Transactions”) with certain of the initial purchasers of the Notes and/or their respective

affiliates and other financial institutions (in this capacity, the “Hedge Counterparties”).

Concurrently with the Company’s entry into the Convertible Note Hedge Transactions, the Company also entered into separate, warrant transactions with the

Hedge Counterparties collectively relating to the same number of shares of the Company’s common stock, which initially is approximately 1,600,000

shares, subject to customary anti-dilution adjustments, and for which the Company received proceeds that partially offset the cost of entering into the Convertible Note Hedge Transactions (the “Warrant Transactions”).

The Convertible Note Hedge Transactions cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s common stock that initially underlie the Notes, and are expected generally to reduce the

potential equity dilution, and/or offset any cash payments in excess of the principal amount due, as the case may be, upon conversion of the Notes.

The Warrant Transactions could have a dilutive effect on the Company’s common stock to the extent that

the price of its common stock exceeds the strike price of the Warrant Transactions.

The strike price was initially $ 263.39 per share and is

subject to certain adjustments under the terms of the Warrant Transactions.

As of October 29, 2021, the strike price, as adjusted, of the Warrant Transactions was $ 259.06 per share as a result of dividends declared since the Notes were issued.

The portion of the net proceeds to the Company from the offering of the Notes that was used to pay the premium on the Convertible Note Hedge Transactions, net of the proceeds to the Company from the Warrant Transactions, was

approximately $ 30,310 .

The net costs incurred in connection with the Convertible Note Hedge Transactions and Warrant Transactions were

recorded as a reduction to additional paid-in capital on the Company’s Condensed Consolidated Balance Sheet during 2021.

As these transactions meet certain accounting criteria, the Convertible Note Hedge

Transactions and Warrant Transactions were recorded in stockholders’ equity, not accounted for as derivatives and are not remeasured each reporting period.

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

Management attributes these variations to the holiday shopping season and the summer vacation and travel season.

The Company’s retail sales, which are made substantially to the Company’s restaurant customers, historically have been highest in the Company’s second quarter, which includes the holiday shopping season.

Historically, interstate tourist traffic and the propensity to dine out have been higher during the summer months, thereby contributing to higher profits in the Company’s fourth quarter.

The Company’s retail sales, which are made substantially to the Company’s restaurant customers, historically have been

highest in the Company’s second quarter, which includes the holiday shopping season.

Historically, interstate tourist traffic and the propensity to dine out have been higher during the summer months, thereby contributing to higher profits in the

Company’s fourth quarter.

The Company generally opens additional new locations throughout the year.

Therefore, the results of operations for any interim period cannot be considered indicative of the operating results for an entire year.

Currently, the Company is not able to predict the impact that the COVID-19 pandemic may have on these historical consumer demand patterns or, as a result, on the seasonality of its business generally.

Currently, the Company is not able to predict the impact that the COVID-19 pandemic may have on these historical consumer demand patterns or, as a result, on the seasonality of

its business generally.

Segment Information

Cracker Barrel stores 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 store are shared and are indistinguishable in many respects.

Accordingly, the Company currently manages its business on the basis of one reportable operating segment.

The operating expenses of the restaurant and retail product lines of a Cracker Barrel store are shared and are

indistinguishable in many respects.

Accordingly, the Company currently manages its business on the basis of one reportable operating

All of the Company’s operations are located within the United States.

1 unchanged sentence

Revenue consists primarily of sales from restaurant and retail operations.

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 on a net presentation basis after deducting sales tax.

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 on a net presentation

basis after deducting sales tax.

Disaggregation of revenue

1 unchanged sentence

Quarter Ended

Nine Months Ended

Total revenue

Restaurant Revenue

The Company recognizes revenues from restaurant sales when payment is tendered at the point of sale, as the Company’s performance obligation to provide food and beverages is satisfied.

The Company recognizes revenues from restaurant sales when payment is tendered at the point of sale, as the Company’s performance

obligation to provide food and beverages is satisfied.

Retail Revenue

The Company recognizes revenues from retail sales when payment is tendered at the point of sale, as the Company’s performance obligation to provide merchandise is satisfied.

The Company recognizes revenues from retail sales when payment is tendered at the point of sale, as the Company’s performance obligation

to provide merchandise is satisfied.

Ecommerce sales, including shipping revenue, are recorded upon delivery to the customer.

2 unchanged sentences

Included in restaurant and retail revenue is gift card breakage.

Customer purchases of gift cards, to be utilized at the Company’s stores, are not recognized as sales until the card is redeemed and the customer purchases food and/or merchandise.

Customer purchases of gift cards, to be utilized at the Company’s

stores, are not recognized as sales until the card is redeemed and the customer purchases food and/or merchandise.

Gift cards do not carry an expiration date;

therefore, customers can redeem their gift cards indefinitely.

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

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 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.

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.

The determination of the gift card breakage rate is based upon the Company’s specific historical redemption patterns.

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 April 30, 2021, respectively, gift card breakage was $ 1,247 and $ 3,940 .

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

Deferred revenue related to the Company’s gift cards was $ 98,510 and $ 94,754 , respectively, at April 30, 2021 and July 31, 2020.

Revenue recognized in the Condensed Consolidated Statements of Income for the nine months ended April 30, 2021 and May 1, 2020, respectively, for the redemption of gift cards which were included in the deferred revenue balance at the beginning of the fiscal year was $ 35,157 and $ 33,937 .

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.

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

For the quarter ended October 29, 2021, gift card breakage was $ 1,105 .

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

Deferred revenue related to the Company’s gift cards was $ 88,001 and $ 93,098 , respectively, at October 29, 2021 and July 30, 2021.

recognized in the Condensed Consolidated Statements of Income for the three months ended October 29, 2021 and October 30, 2020, respectively, for the redemption of gift cards which were included in the deferred revenue balance at the beginning of the

fiscal year was $ 16,807 and $ 16,242 .

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 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.

If the contract has the right to obtain substantially all of the economic benefit from use of the identified asset and the right to direct the use of the identified asset, the Company recognizes a right-of-use asset and lease liability.

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.

If the contract has the right to obtain substantially all of the economic benefit from use of the identified asset and the right to direct the use of the identified asset, the Company recognizes a

right-of-use asset and lease liability.

The Company’s leases all have varying terms and expire at various dates through 2055.

Restaurant leases typically have base terms of ten years with four to five optional renewal periods of five years each.

Restaurant leases typically have base terms of ten years with four to five optional renewal periods of five years

The Company uses a lease life that generally begins on the commencement date, including the rent holiday periods, and generally extends through certain renewal periods that can be exercised at the Company’s option.

The Company has included lease renewal options in the lease term for calculations of the right-of-use asset and liability for which at the commencement of the lease it is reasonably certain that the Company will exercise those renewal options.

During rent holiday periods, which include the pre-opening period during construction, the Company has possession of and access to the property, but is not obligated to, and normally does not,

make rent payments.

exercise those renewal options.

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.

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.

The Company has entered into agreements for real estate leases that are not recorded as right-of-use assets or lease liabilities as we have not yet taken possession.

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

The Company has entered into agreements for real estate leases that are not recorded as right-of-use assets or lease liabilities as we

have not yet taken possession.

These leases are expected to commence in 2022 with undiscounted future payments of $ 7,053 .

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, 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 ended and nine months ended April 30, 2021 as compared to the same periods in the prior year:

The Company has elected not to 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, 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

The following table summarizes the components of lease cost for operating leases for the quarters ended October 29, 2021 and October 30,2020:

Quarter Ended

Nine Months Ended

April 30, 2021

Quarter Ended

October 29,2021

October 30, 2020

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 ended and nine months ended April 30, 2021 as compared to the same periods in the prior year:

The following table summarizes supplemental cash flow information and non-cash activity related to the Company’s operating leases for

the quarters ended October 29, 2021 and October 30, 2020:

Quarter Ended

Nine Months Ended

Operating cash flow information:

Gain on sale and leaseback transaction

Quarter Ended

October 29, 2021

October 30, 2020

Operating cash flow information:

Gain on sale and leaseback transactions

Cash paid for amounts included in the measurement of lease liabilities

3 unchanged sentences

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 April 30, 2021 and May 1, 2020:

April 30 , 2021

The following table summarizes the weighted-average remaining lease term and the weighted-average discount rate for operating leases

as of October 29, 2021 and October 30, 2020:

October 29 , 2021

October 30 , 2020

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 April 30, 2021:

The following table summarizes the maturities of undiscounted cash flows reconciled to the total operating lease liability as of October 29, 2021:

Remainder of 2022

5 unchanged sentences

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.

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 .

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.

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.

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 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.

Shareholder Rights Plan

On April 9, 2021 , the Company’s Board of Directors declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock, par value $ 0.01 per share, and adopted a shareholder rights plan, as set forth in the Rights Agreement dated as of April 9, 2021 (the “Rights Agreement”), by and between the Company and American Stock Transfer & Trust Company, LLC, as rights agent.

The dividend was payable on April 19, 2021 to the shareholders of record on April 19, 2021 .

The Rights Agreement is intended to replace the Company’s previous shareholder rights plan adopted in 2018 (the “2018 Plan”), and it became effective immediately following the expiration of the 2018 Plan at the close of business on April 9, 2021 .

The 2018 Plan and the preferred share purchase rights issued thereunder expired by their own terms and shareholders of the Company were not entitled to any payment as a result of the expiration of the 2018 Plan.

The Rights Agreement will terminate unless approved by shareholders at the Company’s 2021 annual meeting.

The Rights initially trade with, and are inseparable from, the Company’s common stock.

The Rights are evidenced only by certificates or book entries that represent shares of common stock.

New Rights will accompany any new shares of common stock the Company issues after April 9, 2021 until the Distribution Date described below.

Exercise Price

Each Right will allow its holder to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock (a “Preferred Share”) for $ 600.00 (the “Exercise Price”), once the Rights become exercisable.

This portion of a Preferred Share will give the shareholder approximately the same dividend and liquidation rights as would one share of common stock.

Prior to exercise, the Right does not give its holder any dividend, voting, or liquidation rights.

Exercisability

The Rights will not be exercisable until 10 days after the public announcement that a person or group has become an “Acquiring Person” by obtaining beneficial ownership of 20 % or more of the Company’s outstanding common stock.

Certain synthetic interests in securities created by derivative positions – whether or not such interests are considered to be ownership of the underlying common stock or are reportable for purposes of Regulation 13D of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) – are treated as beneficial ownership of the number of shares of the Company’s common stock equivalent to the economic exposure created by the derivative.

The date when the Rights become exercisable is the “Distribution Date.” Until that date, the common stock certificates will also evidence the Rights, and any transfer of shares of common stock will constitute a transfer of Rights.

After that date, the Rights will separate from the common stock and will be evidenced by book-entry credits or by Rights certificates that the Company will mail to all eligible holders of common stock.

Any Rights held by an Acquiring Person will be void and may not be exercised.

At April 30, 2021, none of the Rights were exercisable.

Consequences of a Person or Group Becoming an Acquiring Person

If a person or group becomes an Acquiring Person, all holders of Rights except the Acquiring Person may, for $ 600.00 , purchase shares of the Company’s common stock with a market value of $ 1,200.00 , based on the market price of the common stock prior to such acquisition.

If the Company is later acquired in a merger or similar transaction after the Distribution Date, all holders of Rights except the Acquiring Person may, for $ 600.00 , purchase shares of the acquiring corporation with a market value of $ 1,200.00 , based on the market price of the acquiring corporation’s stock prior to such transaction.

Notional Shares .

Shares held by affiliates and associates of an Acquiring Person, and Notional Common Shares (as defined in the Rights Agreement) held by counterparties to a Derivatives Contract (as defined in the Rights Agreement) with an Acquiring Person, will be deemed to be beneficially owned by the Acquiring Person.

Preferred Share Provisions

Each one one-hundredth of a Preferred Share, if issued:

will not be redeemable;

will entitle holders to quarterly dividend payments of $ 0.01 per share, or an amount equal to the dividend paid on one share of common stock, whichever is greater;

will entitle holders upon liquidation either to receive $ 1.00 per share or an amount equal to the payment made on one share of common stock, whichever is greater;

will have the same voting power as one share of common stock;

if shares of the Company’s common stock are exchanged via merger, consolidation, or a similar transaction, will entitle holders to a per share payment equal to the payment made on one share of common stock.

The value of one one-hundredth of a Preferred Share will generally approximate the value of one share of common stock.

The Board of Directors may redeem the Rights for $ 0.01 per Right at any time before any person or group becomes an Acquiring Person.

If the Board of Directors redeems any Rights, it must redeem all of the Rights.

Once the Rights are redeemed, the only right of the holders of Rights will be to receive the redemption price of $ 0.01 per Right.

The redemption price will be adjusted if the Company has a stock split or stock dividends of its common stock.

Qualifying Offer Provision

The Rights would also not interfere with any all-cash, fully financed tender offer, exchange offer of common stock of the offeror meeting certain terms and conditions further described below, or a combination thereof, in each case for all shares of common stock that remain open for a minimum of 60 business days and subject to a minimum condition of a majority of the outstanding shares and provide for a 20 -business day “subsequent offering period” after consummation (such offers are referred to as “qualifying offers”).

If an offer includes shares of common stock of the offeror, the Rights would not interfere with such offer if such consideration consists solely of freely-tradeable common stock of a publicly-owned United States corporation;

such common stock is listed or admitted to trading on the New York Stock Exchange, Nasdaq Global Select Market or Nasdaq Global Market;

the offeror has already received stockholder approval to issue such common stock prior to the commencement of such offer or no such approval is or will be required;

the offeror has no other class of voting stock outstanding;

no person (including such person’s affiliated and associated persons) beneficially owns twenty percent ( 20 %) or more of the shares of common stock of the offeror then outstanding at the time of commencement of the offer or at any time during the term of the offer;

and the offeror meets the registrant eligibility requirements for use of a registration statement on Form S-3 for registering securities under the Securities Act of 1933, as amended, including the filing of all reports required to be filed pursuant to the Exchange Act in a timely manner during the twelve (12) calendar months prior to the date of commencement, and throughout the term, of such offer.

In the event the Company receives a qualifying offer and the Board of Directors has not redeemed the Rights prior to the consummation of such offer, the consummation of the qualifying offer will not cause the offeror or its affiliates to become an Acquiring Person, and the Rights will immediately expire upon consummation of the qualifying offer.

After a person or group becomes an Acquiring Person, but before an Acquiring Person owns 50 % or more of the Company’s outstanding common stock, the Board of Directors may extinguish the Rights by exchanging one share of common stock or an equivalent security for each Right, other than Rights held by the Acquiring Person.

Anti-Dilution Provisions

The Board of Directors may adjust the purchase price of the Preferred Shares, the number of Preferred Shares issuable and the number of outstanding Rights to prevent dilution that may occur from a stock dividend, a stock split, a reclassification of the Preferred Shares or common stock.

No adjustments to the Exercise Price of less than 1 % will be made.

The terms of the Rights Agreement may be amended by the Board of Directors without the consent of the holders of the Rights.

After a person or group becomes an Acquiring Person, the Board of Directors may not amend the agreement in a way that adversely affects holders of the Rights.

If the Rights Agreement is approved by the shareholders at the 2021 annual meeting, the Rights will expire on April 9, 2024 .

If shareholders do not approve the Rights Agreement, it will expire immediately following certification of the vote at the 2021 annual meeting.

Net Income (Loss) Per Share and Weighted Average Shares

B asic consolidated net income per share is computed by dividing consolidated net income available to common shareholders by the weighted average number of shares of common stock outstanding for the reporting period.

Diluted consolidated net income per share reflects the potential dilution that could occur if securities, options or other contracts to issue shares of common stock were exercised or converted into shares of common stock and is based upon the weighted average number of shares of common stock and common equivalent shares outstanding during the reporting period.

Common equivalent shares related to nonvested stock awards and units issued by the Company are calculated using the treasury stock method.

The outstanding nonvested stock awards and units issued by the Company represent the only dilutive effects on diluted consolidated net income per shar e.

Net Income Per Share and Weighted Average Shares

Basic consolidated net income per share is computed by dividing consolidated net income available to common shareholders by the weighted

average number of shares of common stock outstanding for the reporting period.

Diluted consolidated net income per share reflects the potential dilution that could occur if securities, options or other contracts to issue shares of common stock were

exercised or converted into shares of common stock and is based upon the weighted average number of shares of common stock and common equivalent shares outstanding during the reporting period.

Common equivalent shares related to nonvested stock

awards and units issued by the Company are calculated using the treasury stock method.

The outstanding nonvested stock awards and units issued by the Company represent the only dilutive effects on diluted consolidated net income per share.

The Company’s convertible senior notes and related warrants are calculated using the net share settlement option under the if converted method.

The convertible senior notes have been excluded

from the computation of diluted earnings per share since the conversion price of the convertible senior notes exceeded the average market price of the Company’s common stock.

Warrants were excluded from the computation of diluted earnings per

share since the warrants’ strike price was greater than the average market price of the Company’s common stock during the period.

See Note 4 for additional information regarding the Company’s convertible senior notes .

The following table reconciles the components of diluted earnings per share computations:

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

3 unchanged sentences

Commitments and Contingencies

The Company and its subsidiaries are party to various legal and regulatory proceedings and claims incidental to their business in the ordinary course.

The Company and its subsidiaries are party to various legal and regulatory proceedings and claims incidental to their business in the

ordinary course.

In the opinion of management, based upon information currently available, the ultimate liability with respect to these contingencies will not materially affect the Company’s financial statements.

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 April 30, 2021 , the Company had $ 31,626 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 April 30, 2021, 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.

Related to its insurance coverage, the Company is contingently liable pursuant to standby letters of credit as credit guarantees to

certain insurers.

As of October 29, 2021, the Company had $ 31,896 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 4).

During 2020, the Company received notice regarding non-performance by the primary obligor under lease arrangements for two

properties occupied by a third party.

At October 29 , 2021, the Company has recorded an accrual of $ 344 in the Condensed Consolidated Balance Sheet for amounts to be paid as of result of

non-performance by the primary obligor .

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 April 30, 2021 .

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 October 29 , 2021 .

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