What changed in this filing

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Item 1. Financial Statements

2022-12-02 compared with 2022-06-07 · 186 added, 291 removed, 258 unchanged (65% of the section changed)

7 unchanged sentences

Accounts receivable

Income taxes receivable

Prepaid expenses and other current assets

8 unchanged sentences

Accounts payable

Dividends payable

Other current liabilities

11 unchanged sentences

shares of $ 0.01 par value authorized;

22,912,320 shares issued and outstanding at April 29, 2022 , and 23,497,166 shares issued and outstanding at July 30, 2021

22,195,467 shares issued and outstanding at October 28, 2022 , and 22,281,443 shares issued and outstanding at July 29, 2022

Retained earnings

9 unchanged sentences

Quarter Ended

Nine Months Ended

Total revenue

3 unchanged sentences

General and administrative expenses

Gain on sale and leaseback transaction

Operating income

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

(Unaudited and in thousands)

Quarter Ended

Nine Months Ended

Other comprehensive income before income tax expense:

Change in fair value of interest rate swaps

Income tax expense

Other comprehensive income, net of tax

Comprehensive income

See Notes to unaudited Condensed Consolidated Financial Statements.

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’

CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited and in thousands, except share data)

For the Nine Month Period Ended April 29, 2022

Comprehensive

Shareholders’

1 unchanged sentence

Comprehensive Income:

Other comprehensive income, net of tax

Total comprehensive income

1 unchanged sentence

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:

Other comprehensive income, net of tax

Total comprehensive income

Cash dividends declared - $ 1.30

Share-based compensation

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

Purchases and retirement of common stock

Balances at January 28, 2022

Comprehensive Income:

Other comprehensive income, net of tax

Total comprehensive income

Cash dividends declared - $ 1.30

Share-based compensation

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

Purchases and retirement of common stock

Balances at April 29 ,

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 April 30, 2021

Comprehensive

Balances at October 28, 2022

Shareholders’

Income (Loss)

Balances at July 30, 2021

Comprehensive Income:

Other comprehensive income, net of tax

Total comprehensive income

Cash dividends previously declared in prior quarters

Cash dividends declared - $ 1.30

Share-based compensation

Cumulative-effect of change in accounting principle, net of taxes

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

Balances at October 29, 2021

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

Balances at January 29, 2021

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

Balances at April 30 ,

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:

3 unchanged sentences

Loss on disposition of property and equipment

Gain on sale and leaseback transaction

Share-based compensation

5 unchanged sentences

Other current liabilities

Deferred income taxes

Long-term operating lease liabilities

Other long-term assets and liabilities

Net cash provided by operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities:

3 unchanged sentences

Acquisition of business, net of cash acquired

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities:

1 unchanged sentence

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 used in financing activities

Net cash provided by (used in) financing activities

Net decrease in cash and cash equivalents

6 unchanged sentences

Capital expenditures accrued in accounts payable

Change in fair value of interest rate swaps

Change in deferred tax asset for interest rate swaps

Dividends declared but not yet paid

6 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.

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 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

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 29, 2022 (the “2022 Form 10-K”).

The accounting policies used in preparing these condensed

consolidated financial statements are the same as described in the 2022 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

The Company continues to recover from the COVID-19 pandemic, and all dining rooms were open to some extent during the first nine months of 2022.

While most of our dining rooms are

currently operating with few, if any, restrictions, it is possible that renewed outbreaks, increases in cases and/or new variants of the disease, either as part of a national trend or on a more localized basis, could result in COVID-19-related

restrictions including 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 continually adapted a number of strategies to support the recovery of our business and navigate through the uncertain

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

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.

By removing 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.

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

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 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.

While all of our dining rooms are currently operating without

COVID-19-related restrictions, it is possible that renewed outbreaks or increases in cases and/or new variants of the disease, either as part of a national trend or on a more localized basis, could result in COVID-19-related restrictions including

capacity restrictions, otherwise limit our dine-in services, or negatively affect consumer demand.

In response to the COVID-19 pandemic, the Company instituted operational

protocols to comply with applicable regulatory requirements to protect the health and safety of employees and guests, and the Company implemented and continually adapted a number of strategies to support the recovery of our 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 in the face of these ongoing challenges.

Fair Value Measurements

The Company’s assets measured at fair value on a recurring basis at April 29, 2022

were as follows:

The Company’s assets measured at fair value on a recurring basis at October 28, 2022 were as follows:

Cash equivalents*

10 unchanged sentences

The Company did no t have any

liabilities measured at fair value on a recurring basis at April 29, 2022 and July 30, 2021.

liabilities measured at fair value on a recurring basis at October 28, 2022 and July 29, 2022.

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

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 29,

2022 and July 30, 2021.

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 October 28, 2022 and July 29, 2022.

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 as Level 2.

estimated fair value of the Notes was $ 275,133 and $ 249,233 , respectively, as of April 29, 2022 and July 30, 2021 .

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 $ 270,750 and $ 255,894 , respectively, as of October 28, 2022 and July 29, 2022 .

Inventories were comprised of the following at:

April 29, 2022

October 28, 2022

July 29, 2022

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 contains an option to increase the revolving credit facility by $ 300,000 , of which

$ 260,605 remains.

In 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 $ 80,000 and $ 85,000 on April 29, 2022 and July 30, 2021,

respectively.

At April 29, 2022, 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).

April 29, 2022, the Company had $ 688,104 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 April 29, 2022, the weighted average interest rate on the Company’s

outstanding borrowings under the 2019 Revolving Credit Facility was 2.91 %.

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 April 29, 2022, 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 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 .

On June 17, 2022, the Company entered into a five-year

$ 700,000 revolving credit facility (the “2022 Revolving Credit Facility”) with substantially the same terms and financial covenants as our

previous amended $ 800,000 revolving credit facility, which it replaced.

The 2022 Revolving Credit Facility also contains an option to

increase the revolving credit facility by $ 200,000 .

The Company’s outstanding borrowings under the 2022 Revolving Credit Facility were $ 190,000 and $ 130,000 on October 28, 2022

and July 29, 2022, respectively.

At October 28, 2022, the Company had $ 31,896 of standby letters of credit, which reduce the Company’s borrowing availability under the 2022 Revolving Credit Facility (see Note 10 for more information on the Company’s

standby letters of credit).

At October 28, 2022, the Company had $ 478,104 in borrowing availability under the 2022 Revolving Credit

In accordance with the 2022 Revolving Credit Facility, outstanding borrowings bear interest, at the Company’s election, either at Term Secured

Overnight Financing Rate (SOFR) or prime plus or a rate of 0.5 % in excess of the Federal Funds Rate plus an applicable margin based on

certain specified financial ratios.

At October 28, 2022, the weighted average interest rate on the Company’s outstanding borrowings was 4.60 %.

The 2022 Revolving Credit Facility contains customary financial covenants, which include maintenance of a maximum consolidated total senior secured leverage ratio and a

minimum consolidated interest coverage ratio.

At October 28, 2022, the Company was in compliance with all financial covenants under the 2022 Revolving Credit Facility.

The 2022 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 2022 Revolving Credit Facility, provided there is no default existing and the total of the Company’s availability under the 2022 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 senior secured leverage ratio is 2.75 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 2.75 to 1.00 at the time the dividend or repurchase

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.

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”).

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

1 unchanged sentence

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

The Notes 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 April 29, 2022, the conversion rate, as adjusted, was 5.5197 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.

The Notes bear cash interest at an annual rate of 0.625 %, payable semi-annually in arrears on June 15 and December

15 of each year.

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 28, 2022, the conversion rate, as adjusted, was 5.6759 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 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

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.

The 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.

equity component of the Notes of $ 53,004 was included in additional paid-in capital in the Condensed 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’ equity.

Due to our adoption of new accounting guidance for convertible instruments on July 31, 2021, the Company no longer bifurcates

the Notes into a liability and an equity component in the Company’s 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:

April 29, 2022

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 following table includes the outstanding principal amount and carrying value of the

Notes as of the periods indicated:

October 28, 2022

July 29, 2022

Liability component

1 unchanged sentence

Net carrying amount

Debt issuance costs are amortized to interest expense using the effective

interest method over the expected life of the Notes.

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 1.23 %.

The following is a summary of interest expense for the Notes for the quarter ended and nine months ended April 29, 2022:

The following is a summary of interest expense for the Notes for specified periods:

Quarter Ended

April 29, 2022

Nine Months Ended

April 29, 2022

October 28, 2022

Quarter Ended

October 29, 2021

Coupon interest

1 unchanged sentence

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 nine months 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 April 29, 2022, the Company could not be required to settle the Notes and, therefore, the Notes are classified as long-term

During any calendar quarter commencing 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 2022 or 2021.

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 28, 2022, 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.

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 was 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 underlay 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 April 29, 2022, the strike price, as adjusted,

of the Warrant Transactions was $ 253.64 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 .

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.

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 28, 2022, the

strike price, as adjusted, of the Warrant Transactions was $ 246.66 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.

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

Transactions and Warrant Transactions were recorded in shareholders’ 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 quarters.

5 unchanged sentences

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 future variants of COVID-19 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.

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.

All of the Company’s operations

are located within the United States.

Company’s operations are located within the United States.

Revenue Recognition

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Quarter Ended

Nine Months Ended

Total revenue

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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.

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.

therefore, customers can redeem their gift cards indefinitely.

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.

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

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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 29, 2022, gift card breakage was $ 1,514 and $ 4,783 , respectively.

For the quarter and nine months

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

Deferred revenue related to the Company’s gift cards was $ 102,390 and $ 93,098 , respectively, at April 29 , 2022 and

July 30, 2021.

Revenue recognized in the Condensed Consolidated Statements of Income for the nine months ended April 29 , 2022 and April 30 , 2021, respectively, for the redemption of gift cards which were included in the deferred revenue balance at the beginning of the fiscal year

was $ 36,420 and $ 35,157 .

For the quarter ended October 28, 2022, gift card breakage was $ 1,305 .

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

Deferred revenue related to the Company’s gift cards was $ 88,524

and $ 93,569 , respectively, at October 28, 2022 and July 29, 2022.

Revenue recognized in the Condensed Consolidated Statements of Income

for the three months ended October 28, 2022 and October 29, 2021, respectively, for the redemption of gift cards which were included in the deferred revenue balance at the beginning of the fiscal year was $ 16,489 and $ 16,807 .

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

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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.

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.

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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.

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 .

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.

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.

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.

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

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.

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.

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 2023 and 2024 with undiscounted future payments of $ 14,276 and $ 35,255 , respectively.

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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 quarter ended and nine months ended April 29, 2022 as compared to the same periods in the prior year:

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 quarters ended October 28, 2022 and October 29,2021:

Quarter Ended

Nine Months Ended

Quarter Ended

October 28, 2022

October 29, 2021

Operating lease cost

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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 29, 2022 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 28, 2022 and October 29, 2021:

Quarter Ended

Nine Months Ended

Operating cash flow information:

Gain on sale and leaseback transaction

Quarter Ended

October 28, 2022

October 29, 2021

Operating cash flow information:

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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 29, 2022 and April 30, 2021:

April 29 , 2022

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 28, 2022 and October 29, 2021:

October 28 , 2022

October 29 , 2021

Weighted-average remaining lease term

Weighted-average discount rate

The following table summarizes the maturities of undiscounted cash flows reconciled to the total operating lease liability as of April 29, 2022:

The following table summarizes the maturities of undiscounted cash flows reconciled to the total operating lease liability as of October 28, 2022:

Remainder of 2023

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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

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.

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 .

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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.

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

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excess conversion value settled in cash or shares of common stock, the convertible senior notes have been excluded from the computation of diluted earnings per share because the average market price of the Company’s common stock during the

reporting period did not exceed the conversion price of $ 181.17 as of April 29, 2022.

reporting period did not exceed the conversion price of $ 176.18 as of October 28, 2022.

Warrants were excluded from the computation of

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Quarter Ended

Nine Months Ended

Net income per share numerator

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

As of April 29, 2022, 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).

As of October 28, 2022, 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 2022 Revolving Credit Facility (see Note 4).

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 29 , 2022 .

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