FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended October 27, 1995
Commission file number 0-7536
CRACKER BARREL OLD COUNTRY STORE, INC.
Incorporated in Tennessee I.R.S. Employer Identification
No. 62-0812904
Hartmann Drive, P.O. Box 787
Lebanon, Tennessee 37087
615-444-5533
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No_
60,234,822 Shares of Common Stock
Issued and Outstanding
Page 1 of 14
1
PART I
Item 1. Financial Statements
____________________
CRACKER BARREL OLD COUNTRY STORE, INC.
______________________________________
(Unaudited) (Audited)
CONDENSED BALANCE SHEETS October 27, July 28,
1995 1995
____ ____
ASSETS
______
Cash and cash equivalents $ 31,578,685 $ 48,123,914
Short-term investments 14,081,075 11,103,625
Receivables 3,105,720 3,192,910
Inventories 63,699,330 51,514,831
Prepaid expenses 481,574 912,481
Deferred income taxes 5,518,702 5,518,702
____________ ____________
Total current assets 118,465,086 120,366,463
____________ ____________
Property and equipment 610,370,532 576,854,438
Accumulated depreciation and
amortization 105,152,495 97,336,457
____________ ____________
Property and equipment-net 505,218,037 479,517,981
____________ ____________
Long-term investments 2,492,475 4,037,830
____________ ____________
Other assets 694,037 593,117
____________ ____________
Total assets $626,869,635 $604,515,391
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
____________________________________
Accounts payable $ 26,267,737 $ 29,750,675
Other current liabilities 52,434,471 47,015,779
____________ ____________
Total current liabilities 78,702,208 76,766,454
____________ ____________
Long-term debt 21,290,000 19,500,000
____________ ____________
Capital lease obligations 1,570,461 1,598,093
____________ ____________
Deferred income taxes 10,567,946 10,567,946
Stockholders' equity:
Common stock 30,117,411 29,996,023
Additional paid-in
capital 197,463,065 195,420,664
Retained earnings 287,158,544 270,666,211
____________ ____________
Total stockholders' equity 514,739,020 496,082,898
____________ ____________
Total liabilities and
stockholders' equity $626,869,635 $604,515,391
============ ============
Note: The balance sheet as of July 28, 1995 has been taken from the
audited financial statements at that date, and condensed.
See notes to financial statements.
2
CRACKER BARREL OLD COUNTRY STORE, INC.
______________________________________
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
__________________________________________
For the Quarters Ended
______________________
October 27, October 28,
1995 1994
____ ____
Net sales $221,011,273 $184,947,701
Cost of goods sold 73,607,311 61,389,938
____________ ____________
Gross profit on sales 147,403,962 123,557,763
____________ ____________
Expenses:
Store operations:
Labor & other related expenses 73,949,014 60,620,088
Other store operating expenses 33,330,893 27,309,321
General and administrative 13,562,292 11,462,938
____________ ____________
Total expenses 120,842,199 99,392,347
____________ ____________
Operating income 26,561,763 24,165,416
Interest expense 179,367 244,959
Interest income 703,947 879,680
____________ ____________
Income before income taxes 27,086,343 24,800,137
Provision for income taxes 10,292,810 9,200,851
____________ ____________
Net income $ 16,793,533 $ 15,599,286
============ ============
Earnings per share $ .28 $ .26
============ ============
Average common and common
equivalent shares outstanding 60,621,289 60,592,156
============ ============
Dividends per common share $ .005 $ .005
============ ============
See notes to financial statements.
3
CRACKER BARREL OLD COUNTRY STORE, INC.
______________________________________
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
______________________________________________
For the Quarters Ended
______________________
October 27, October 28,
1995 1994
____ ____
Cash flows from operating activities:
Net income $16,793,533 $15,599,286
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of
property and equipment 7,862,844 6,469,656
Loss on disposition of property
and equipment 8,938 94,265
Increase in inventories (12,184,499) (8,664,475)
Increase in other assets (100,920) (41,846)
Decrease in accounts payable (3,482,938) (2,122,564)
Increase in other current assets
and liabilities 4,146,789 2,365,833
___________ ___________
Net cash provided by operating activities 13,043,747 13,700,155
___________ ___________
Cash flows from investing activities:
Purchase of short-term and long-term
investments (1,834,823) (3,279,921)
Proceeds from maturities of short-term
and long-term investments 402,728 5,755,273
Purchase of property and equipment (30,011,851) (29,404,958)
Proceeds from sale of property and
equipment 20,013 23,115
___________ ___________
Net cash used in investing activities (31,423,933) (26,906,491)
___________ ___________
Cash flows from financing activities:
Proceeds from exercise of stock options 2,163,789 176,720
Principal payments under long-term debt
and capital lease obligations (27,632) (23,445)
Dividends on common stock (301,200) (299,581)
___________ __________
Net cash provided by (used in)
financing activities 1,834,957 (146,306)
___________ __________
Net decrease in cash and cash
equivalents (16,545,229) (13,352,642)
Cash and cash equivalents,
beginning of year 48,123,914 47,305,523
___________ ___________
Cash and cash equivalents,
end of quarter $31,578,685 $33,952,881
=========== ===========
Supplemental disclosures of cash flow
information:
Cash paid during the quarter for:
Interest $ 11,749 $ 11,603
Income taxes 5,494,941 5,235,866
4
Supplemental schedule of noncash investing and financing activities:
The Company purchased land during the quarter ended October 27,1995 for
$2,700,000 in cash and $3,580,000 in a mortgage agreement, of which $1,790,000
is classified as other current liabilities at October 27, 1995.
5
CRACKER BARREL OLD COUNTRY STORE, INC.
______________________________________
NOTES TO CONDENSED FINANCIAL STATEMENTS
_______________________________________
1. Condensed Financial Statements
______________________________
The condensed balance sheet as of October 27, 1995 and the related
condensed statements of income and cash flows for the quarters ended October
27, 1995 and October 28, 1994, have been prepared by the Company, without
audit; in the opinion of management, all adjustments for a fair presentation
of such condensed financial statements have been made.
These condensed financial statements should be read in conjunction with the
financial statements and notes thereto contained in the Company's annual
report for the year ended July 28, 1995.
Deloitte & Touche LLP, the Company's independent accountants, have
performed a limited review of the financial information included herein.
Their report on such review accompanies this filing.
2. Income Taxes
____________
The provision for income taxes for the quarter ended October 27, 1995 has
been computed based on management's estimate of the tax rate for the entire
fiscal year of 38.0%. The variation between the statutory tax rate and the
effective tax rate is due primarily to employer tax credits for FICA taxes
paid on tip income. The Company's effective tax rate for the quarter ended
October 28, 1994 was 37.1% and for the entire fiscal year of 1995 was 37.3%.
3. Seasonality
___________
The sales and profits of the Company are affected significantly by seasonal
travel and vacation patterns because of its interstate highway locations.
Historically, the Company's greatest sales and profits have occurred during
the period of June through August. Early December through the last part of
February, excluding the Christmas holidays, has historically been the period
of lowest sales and profits. Therefore, the results of operations for the
quarter ended October 27, 1995 cannot be considered indicative of the
operating results for the full fiscal year.
4. Reclassifications
_________________
Certain reclassifications have been made in the first quarter fiscal 1995
financial statements to conform to the classifications used at fiscal year
end 1995.
6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
_____________________
The following table highlights operating results for the first quarter of
fiscal 1996 as compared to the fiscal 1995 first quarter:
Relationship to Net Sales
Quarters Ended Period to Period
10/27/95 10/28/94 Increase(Decrease)
________ ________ __________________
Net sales:
Restaurant 79.0% 78.6% 20%
Gift shop 21.0% 21.4% 18%
______ ______
Total sales 100.0% 100.0% 19%
Cost of goods sold 33.3% 33.2% 20%
Expenses:
Store operations:
Labor & other related
expenses 33.5% 32.8% 22%
Other store operating
expenses 15.1% 14.8% 22%
General and administrative 6.1% 6.2% 18%
_____ _____
Total expenses 54.7% 53.7% 22%
Operating income 12.0% 13.1% 10%
Interest expense 0.1% 0.1% (27%)
Interest income 0.3% 0.5% (20%)
Income before income taxes 12.3% 13.4% 9%
Provision for income taxes 4.7% 5.0% 12%
Net income 7.6% 8.4% 8%
Same Store Sales Analysis
182 Store Average ($000)
_________________________
Restaurant $781.5 $765.8 2%
Gift shop 208.3 207.9 0%
______ ______
Restaurant & gift shop $989.8 $973.7 2%
====== ======
7
Net sales for the first quarter of fiscal 1996 increased 19% over last
year's first quarter. Same store restaurant sales increased 2.0%. Same
store gift shop sales increased 0.2%. Total same store sales (restaurant and
gift shop) increased 1.7%. Sales from new stores accounted for the remainder
of the increase.
Cost of goods sold as a percentage of net sales was 33.3% this year
compared to 33.2% in the first quarter of last year. Cost of goods sold as
a percentage of sales increased from the first quarter last year primarily
due to a new menu which was implemented in May 1995, and also because of an
increase in commodity prices over the first quarter of last year.
Labor and other related expenses include all direct and indirect labor and
related costs incurred in store operations. Labor expenses as a percentage
of net sales were 33.5% this year compared to 32.8% last year. Labor
expenses as a percentage of net sales increased from the first quarter last
year primarily due to the continuing labor pressures as the costs to hire and
retain employees continue to increase, unemployment rates remain low, and
competition remains high in our industry. Other store operating expenses
include all unit-level operating costs, the major components of which are
operating supplies, repairs and maintenance, advertising expenses, utilities
and depreciation and amortization. Other store operating expenses as a
percentage of net sales were 15.1% this year versus 14.8% during the same
quarter last year. The primary reason for the increase in other store
operating expenses as a percent of net sales was an increase in the overall
advertising budget due to developmental market advertising in an effort to
build name awareness and other new initiatives to build brand loyalty in our
core and growth markets.
General and administrative expenses as a percentage of net sales decreased
to 6.1% during the first quarter of this year from 6.2% during the first
quarter of last year. The primary reason for the decrease was increased
volume.
Interest expense decreased to $179,367 for the quarter ended October 27,
1995 from $244,959 in the same quarter a year ago. The decrease was
primarily due to lower average debt outstanding during the quarter ended
October 27, 1995.
Interest income decreased to $703,947 in this year's first quarter from
$879,680 a year ago. The primary reason for the decrease in interest income
was lower average funds available for investment which was partially offset
by higher interest rates in fiscal 1996.
Liquidity and Capital Resources
_______________________________
The Company's operating activities provided net cash of $13.0 million in
the first quarter of fiscal 1996. Net income adjusted by depreciation and
amortization provided most of the cash. Increases in inventories and
decreases in accounts payable were partially offset by increases in other
current assets and liabilities.
8
Capital expenditures were $30.0 million in the first quarter of fiscal
1996. Land purchases and cost of new stores accounted for substantially all
of these expenditures.
The Company's internally generated cash and short-term investments were
sufficient to finance all of its growth in the first quarter of fiscal 1996.
The Company estimates that its capital expenditures for fiscal 1996 will be
approximately $150 million, substantially all of which will be land purchases
and cost of new stores, except for $8 million relating to the expansion of
the gift shop distribution center to meet the increased demand from new
stores. Management believes that cash, short-term and long-term investments
at October 27, 1995, along with cash generated from the Company's operating
activities, will be sufficient to finance its continued expansion in fiscal
1996 and its continued expansion plans through most of fiscal 1997.
Presently, the Company has an unused revolving credit line of $15 million.
9
INDEPENDENT ACCOUNTANTS' REPORT
Cracker Barrel Old Country Store, Inc.
We have reviewed the accompanying condensed balance sheet of Cracker Barrel
Old Country Store, Inc. as of October 27, 1995, and the related condensed
statements of income and cash flows for the quarters ended October 27, 1995
and October 28, 1994. These financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and of making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such condensed financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of Cracker Barrel Old Country Store, Inc. as of
July 28, 1995, and the related statements of income, stockholders' equity,
and cash flows for the year then ended (not presented herein); and in our
report dated September 6, 1995, we expressed an unqualified opinion on those
financial statements. In our opinion, the information set forth in the
accompanying condensed balance sheet as of July 28, 1995 is fairly stated, in
all material respects, in relation to the balance sheet from which it has
been derived.
Deloitte & Touche LLP
Nashville, Tennessee
December 6, 1995
10
PART II
Item 1. Legal Proceedings
_________________
None.
Item 2. Changes in Securities
_____________________
None.
Item 3. Defaults Upon Senior Securities
_______________________________
None.
Item 4. Submission of Matters to a Vote of Security Holders
___________________________________________________
A. The annual meeting of shareholders was held November 28, 1995.
B. Election of Directors - The following represents directors
whose terms of offices continued after the meeting: James C.
Bradshaw, Robert V. Dale, Dan W. Evins, Edgar W. Evins, William
D. Heydel, Robert C. Hilton, Charles E. Jones, Jr., Charles T.
Lowe, Jr., B. F. Lowery, Gordon L. Miller, Martha M. Mitchell,
James H. Stewart and Jimmie D. White. Ronald N. Magruder was
elected to the board at this meeting.
C. Other matters:
Proposal 2 - Increase number of shares available under 1987
stock option plan. This proposal was to increase the number of
shares available under the Company's 1987 Stock Option Plan from
8,550,607 to 11,550,607.
Affirmative votes cast 40,939,740
__________
Negative votes cast 8,027,839
__________
Votes cast to abstain 399,724
__________
Broker non-votes 1,004,804
__________
Proposal 3 - Approval of appointment of auditors. This proposal
was to approve the selection of Deloitte and Touche LLP as the
Company's independent auditors for the 1996 fiscal year.
Affirmative votes cast 49,861,744
__________
Negative votes cast 316,600
__________
Votes cast to abstain 193,763
__________
Proposal 4 - Shareholder proposal. This shareholder proposal
requested the Board of Directors to consider and take action on
a proposal of a certain shareholder, requesting that the Board
of Directors prepare a report in which the primary emphasis
would be to explore ways to link executive compensation to
social issues.
Affirmative votes cast 2,227,463
__________
Negative votes cast 28,719,993
__________
Votes cast to abstain 682,811
__________
Broker non-votes 18,741,840
__________
Proposal 5 - Shareholder proposal. This shareholder proposal
requested the Board of Directors to consider and take action on
a proposal of a certain shareholder, requesting that the Board
of Directors prepare a report ascertaining the costs incurred by
the Company due to the alleged "continuing controversy"
regarding its policies towards gay men and lesbians.
Affirmative votes cast 2,572,750
__________
Negative votes cast 27,350,065
__________
Votes cast to abstain 1,707,452
__________
Broker non-votes 18,741,840
__________
D. None.
Item 5. Other Information
_________________
As announced on September 6, 1995, Jimmie D. White will retire
as Senior Vice President - Finance and Chief Financial Officer
as soon as his replacement is in place. Mr. White will remain
on the Board of Directors.
On November 27, 1995, the Company announced that Michael A.
Woodhouse will join the Company as Senior Vice President -
Finance and Chief Financial Officer effective December 11, 1995.
Mr. Woodhouse (Age 50) was most recently Senior Vice President
and Chief Financial Officer of Daka International, Inc.
(Nasdaq/NM:DKAI), a leading supplier of food service management,
vending operations and owner of Fuddruckers restaurants.
Mr. Woodhouse joined Daka in 1993 as Vice President - Finance
and in 1994 was promoted to Senior Vice President and Chief
Financial Officer. At Daka he was responsible for all facets of
the company's financial reporting and investor relations.
Woodhouse is best known in the industry for his work with Steak
& Ale Restaurants where he served as Executive Vice President
and Chief Financial Officer during a period of substantial unit
expansion. He is also known for his work as Executive Vice
President and Chief Financial Officer of T.G.I. Friday's Inc.
during its successful turnaround.
On November 1, 1995, one store, located in Memphis, Tennessee,
was closed. The closing will result in a one-time expense of
approximately $500,000 effective in the second quarter of this
year.
Item 6. Exhibits and Reports on Form 8-K
________________________________
Letter regarding unaudited financial information.
12
SIGNATURES
__________
Pursuant to the requirements of the Securities Exchange Act of
1934 the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
CRACKER BARREL OLD COUNTRY STORE, INC.
Date: 12/8/95 By/s/Jimmie D. White
_______ ________________________________________
Jimmie D. White, Chief Financial Officer
Date: 12/8/95 By/s/Patrick A. Scruggs
_______ _______________________________________
Patrick A. Scruggs, Assistant Treasurer
13
December 6, 1995
Cracker Barrel Old Country Store, Inc.
305 Hartmann Drive
Lebanon, TN 37087
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of Cracker Barrel Old Country Store, Inc. for the
quarters ended October 27, 1995 and October 28, 1994, as indicated in our
report dated December 6, 1995; because we did not perform an audit, we
expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended October 27, 1995, is
incorporated by reference in Registration Statement Nos. 2-86602, 33-15775,
33-37567 and 33-45482 on Forms S-8 and Registration Statement No. 33-59582 on
Form S-3.
We also are aware that the aforementioned report, pursuant to rule 436(c)
under the Securities Act of 1933, is not considered a part of the
Registration Statement prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of Sections 7 and
11 of that Act.
Deloitte & Touche LLP
Nashville, Tennessee
14
5
1,000
3-MOS
AUG-2-1996
JUL-29-1995
OCT-27-1995
31,579
14,081
3,106
0
63,699
118,465
610,371
105,153
626,870
78,702
21,290
30,117
0
0
484,622
626,870
221,011
221,011
73,607
107,280
13,562
0
179
27,087
10,293
16,794
0
0
0
16,794
.28
.28
