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 28, 1994
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_
54,915,056 Shares of Common Stock
Issued and Outstanding
Page 1 of 13
PART I
Item 1. Financial Statements
--------------------
CRACKER BARREL OLD COUNTRY STORE, INC.
- --------------------------------------
(Unaudited) (Audited)
CONDENSED BALANCE SHEETS October 28, July 29,
- ------------------------ 1994 1994
---- ----
ASSETS
- ------
Cash and cash equivalents $ 3,974,309 $ 13,050,523
Short-term investments 59,030,747 65,530,819
Accounts receivable 2,811,672 2,993,735
Inventories 50,654,021 41,989,546
Prepaid expenses 405,631 1,094,862
Deferred income taxes 3,220,016 3,220,016
------------ ------------
Total current assets 120,096,396 127,879,501
------------ ------------
Property and equipment 489,375,694 460,134,481
Accumulated depreciation and
amortization 80,597,967 74,174,676
------------ ------------
Property and equipment-net 408,777,727 385,959,805
------------ ------------
Long-term investments 15,439,091 15,690,799
------------ ------------
Other assets 575,468 533,622
------------ ------------
Total assets $544,888,682 $530,063,727
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Accounts payable $ 23,643,460 $ 25,766,024
Other current liabilities 42,886,521 41,391,982
------------ ------------
Total current liabilities 66,529,981 67,158,006
------------ ------------
Long-term debt 23,500,000 23,500,000
------------ ------------
Capital lease obligations 1,685,174 1,708,619
------------ ------------
Deferred income taxes 7,851,185 7,851,185
------------ ------------
Stockholders' equity:
Common stock 29,956,127 29,950,658
Capital in excess of
par value 194,244,644 194,073,393
Retained earnings 221,121,571 205,821,866
------------ ------------
Total stockholders' equity 445,322,342 429,845,917
------------ ------------
Total liabilities and
stockholders' equity $544,888,682 $530,063,727
============ ============
Note: The balance sheet as of July 29, 1994 has been taken from the
audited financial statements at that date, and condensed.
See notes to financial statements.
CRACKER BARREL OLD COUNTRY STORE, INC.
- --------------------------------------
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
- ------------------------------------------
For the Quarters Ended
----------------------
October 28, October 29,
1994 1993
---- ----
Net sales $184,947,701 $152,498,897
Cost of goods sold 61,389,938 50,393,300
------------ ------------
Gross profit on sales 123,557,763 102,105,597
------------ ------------
Expenses:
Store operations 87,929,409 71,770,119
General and administrative 11,462,938 9,310,348
------------ ------------
Total expenses 99,392,347 81,080,467
------------ ------------
Operating income 24,165,416 21,025,130
Interest expense 244,959 622,182
Interest income 879,680 1,053,513
------------ ------------
Income before income taxes and
cumulative effect of change
in accounting principle 24,800,137 21,456,461
Provision for income taxes 9,200,851 8,089,086
------------ ------------
Income before cumulative effect
of change in accounting principle 15,599,286 13,367,375
Cumulative effect on prior years
of changing method of accounting
for income taxes -- 988,262
------------ ------------
Net income $ 15,599,286 $ 14,355,637
============ ============
Earnings before cumulative
effect of change in accounting
principle $ .26 $ .22
Cumulative effect on prior years
of changing method of accounting
for income taxes -- .02
------------ ------------
Earnings per share $ .26 $ .24
============ ============
Average common and common
equivalent shares outstanding 60,592,156 60,460,208
============ ============
Dividends per common share $ .00500 $ .00500
============ ============
See notes to financial statements.
CRACKER BARREL OLD COUNTRY STORE, INC.
- --------------------------------------
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
- ----------------------------------------------
For the Quarters Ended
----------------------
October 28, October 29,
1994 1993
---- ----
Cash flows from operating activities:
Net income $15,599,286 $14,355,637
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of
property and equipment 6,469,656 5,069,697
Loss(gain) on disposition of property
and equipment 94,265 (16,306)
Increase in inventories (8,664,475) (7,116,613)
(Increase) decrease in other assets (41,846) 41,490
(Decrease) increase in accounts payable (2,122,564) 190,558
Increase in other current assets
and liabilities 2,365,833 4,679,001
(Decrease) in deferred income taxes -- (938,262)
----------- -----------
Net cash provided by operating activities 13,700,155 16,265,202
----------- -----------
Cash flows from investing activities:
Decrease(increase) in short-term and
long-term investments 6,751,780 (6,868,216)
Purchase of property and equipment (29,404,958) (26,051,278)
Proceeds from sale of property and
equipment 23,115 53,479
----------- -----------
Net cash used in investing activities (22,630,063) (32,866,015)
----------- -----------
Cash flows from financing activities:
Proceeds from exercise of stock options 176,720 413,543
Principal payments under long-term debt
and capital lease obligations (23,445) (24,739)
Dividends on common stock (299,581) (297,913)
----------- -----------
Net cash (used in) provided by
financing activities (146,306) 90,891
----------- -----------
Net decrease in cash and cash
equivalents (9,076,214) (16,509,922)
Cash and cash equivalents,
beginning of year 13,050,523 38,552,111
----------- -----------
Cash and cash equivalents,
end of quarter $ 3,974,309 $22,042,189
=========== ===========
Supplemental disclosures of cash flow
information:
Cash paid during the quarter for:
Interest $ 11,603 $ 341,924
Income taxes 5,235,866 2,361,899
See notes to financial statements.
CRACKER BARREL OLD COUNTRY STORE, INC.
- --------------------------------------
NOTES TO CONDENSED FINANCIAL STATEMENTS
- ---------------------------------------
1. Condensed Financial Statements
------------------------------
The condensed balance sheet as of October 28, 1994 and the related
condensed statements of income and cash flows for the quarters ended
October 28, 1994 and October 29, 1993, 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 29, 1994.
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 28, 1994
has been computed based on management's estimate of the tax rate for the
entire fiscal year of 37.1%. 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 and targeted jobs tax credits and non-
taxable interest income.
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 28, 1994 cannot
be considered indicative of the operating results for the full fiscal
year.
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 1995 as compared to the fiscal 1994 first quarter:
Relationship to Net Sales
Quarters Ended Period to Period
10/28/94 10/29/93 Increase(Decrease)
-------- -------- ------------------
Net sales:
Restaurant 78.6% 79.1% 21%
Gift shop 21.4% 20.9% 24%
------ ------
Total sales 100.0% 100.0% 21%
Cost of goods sold 33.2% 33.0% 22%
Expenses:
Store operations 47.5% 47.1% 23%
General and administrative 6.2% 6.1% 23%
------ ------
Total expenses 53.7% 53.2% 23%
Operating income 13.1% 13.8% 15%
Interest expense .1% .4% (61%)
Interest income .5% .7% (17%)
Income before income taxes
and cumulative effect of
change in accounting
principle 13.4% 14.1% 16%
Provision for income taxes 5.0% 5.3% 14%
Income before cumulative effect
of change in accounting
principle 8.4% 8.8% 17%
Cumulative effect on prior
years of changing method of
accounting for income taxes -- .6% (100%)
Net income 8.4% 9.4% 9%
Same Store Sales Analysis
152 Store Average ($000)
-------------------------
Restaurant $778.6 $758.7 3%
Gift shop 210.0 199.8 5%
------ ------
Restaurant & gift shop $988.6 $958.5 3%
====== ======
Net sales for the first quarter of fiscal 1995 increased 21% over last
year's first quarter. Same store restaurant sales increased 2.6%,
including a 3.3% menu price increase. Same store gift shop sales
increased 5.1%. Total same store sales (restaurant and gift shop)
increased 3.1%. Sales from new stores accounted for the remainder of
the increase.
Cost of goods sold as a percentage of net sales was 33.2% this year
compared to 33.0% 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 an increase in the sales mix of gift shop items from
20.9% last year to 21.4% this year. These items carry a higher cost of
goods, and therefore, caused total cost of goods sold as a percentage of
net sales to increase.
Total operating expenses as a percentage of net sales were 53.7% this
year compared to 53.2% in the first quarter of last year. The primary
reason for the increase in store operating expenses as a percent of net
sales was an increase in labor costs due to the higher costs to hire and
retain employees in certain markets as a result of low unemployment
rates. General and administrative expenses as a percentage of net sales
increased primarily due to increased costs involved with our management
training program.
Interest expense decreased to $244,959 for the quarter ended October
28, 1994 from $622,182 in the same quarter a year ago. The decrease was
due to lower average debt outstanding during the quarter ended October
28, 1994. Interest income decreased to $879,680 in this year's first
quarter from $1,053,513 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 1995.
Liquidity and Capital Resources
- -------------------------------
The Company's operating activities provided net cash of $13.7 million
in the first quarter of fiscal 1995. 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.
Capital expenditures were $29.4 million in the first quarter of fiscal
1995. Land purchases and cost of new stores accounted for substantially
all of these expenditures, except for $1.7 million for the renovation of
the old gift shop warehouse into office space.
The Company's internally generated cash and short-term investments
were sufficient to finance all of its growth in the first quarter of
fiscal 1995.
The Company estimates that its capital expenditures for fiscal 1995
will be approximately $120 million, substantially all of which will be
land purchases and cost of new stores, except for $6 million relating to
the renovation of the old gift shop warehouse into office space.
Management believes that cash and short-term and long-term investments
at October 28, 1994, along with cash generated from the Company's
operating activities, will be sufficient to finance its continued
expansion in fiscal 1995 and its expansion plans through fiscal 1997.
Presently the Company has an unused revolving credit line of $15
million.
INDEPENDENT ACCOUNTANTS' REPORT
Cracker Barrel Old Country Store, Inc.
We have made a review of the condensed balance sheet of Cracker Barrel
Old Country Store, Inc. as of October 28, 1994, and the related
condensed statements of income and cash flows for the three-month
periods ended October 28, 1994 and October 29, 1993, in accordance with
standards established by the American Institute of Certified Public
Accountants.
A review of interim financial information consists principally of
obtaining an understanding of the system for preparation of interim
financial information, applying analytical procedures to financial data,
and 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 29, 1994, 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 7, 1994, 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 29, 1994 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, 1994
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 22,
1994.
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.
There were no new directors elected at this meeting.
C. Other matters:
Proposal 2 - Approval of appointment of auditors. This
proposal was to approve the selection of Deloitte & Touche
LLP as the Company's independent auditors for the 1995
fiscal year.
Affirmative votes cast 44,709,583
----------
Negative votes cast 723,599
----------
Votes cast to abstain 433,058
----------
Proposal 3 - Shareholder proposal. This shareholder
proposal requested the Board of Directors to consider and
take action on a proposal of the New York City Employees'
Retirement System to amend the Company's employment
policies to include language relating gay and lesbian
sexual preferences.
Affirmative votes cast 4,380,978
----------
Negative votes cast 24,896,268
----------
Votes cast to abstain 1,988,423
----------
Broker non-votes 14,600,571
----------
Proposal 4 - Shareholder proposal. This shareholder
proposal requested the Board of Directors to consider and
take action on a proposal of a certain shareholder,
relating to the expansion of the Board of Directors to
reflect the varied races, genders and sexual orientations
of shareholders.
Affirmative votes cast 2,543,437
----------
Negative votes cast 27,788,844
----------
Votes cast to abstain 933,388
----------
Broker non-votes 14,600,571
----------
D. None.
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Letter regarding unaudited financial information.
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: 12/9/94 By/s/Jimmie D. White
------- ----------------------------------------
Jimmie D. White, Chief Financial Officer
Date: 12/9/94 By/s/Patrick A. Scruggs
------- ----------------------------------------
Patrick A. Scruggs, Assistant Treasurer
December 6, 1994
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 three-month periods ended October 28, 1994 and October 29, 1993,
as indicated in our report dated December 6, 1994; 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 28,
1994, 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, 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
5
1,000
3-MOS
JUL-28-1995
JUL-30-1994
OCT-28-1994
3,974
59,031
2,812
0
50,654
120,096
489,376
80,598
544,889
66,530
23,500
29,956
0
0
415,366
544,889
184,948
184,948
61,390
87,929
11,463
0
245
24,800
9,201
15,599
0
0
0
15,599
.26
.26
