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 January 26, 1996
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_
60,431,557 Shares of Common Stock
Issued and Outstanding
Page 1 of 12
1
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements
____________________
CRACKER BARREL OLD COUNTRY STORE, INC.
CONDENSED BALANCE SHEETS
(In thousands, except share data)
January 26, July 28,
1996 1995
(Unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents $ 16,746 $ 48,124
Short-term investments 13,391 11,103
Receivables 2,916 3,193
Inventories 49,328 51,515
Prepaid expenses 489 912
Deferred income taxes 5,519 5,519
________ ________
Total current assets 88,389 120,366
________ ________
Property and equipment, net 527,979 479,518
Long-term investments 1,007 4,038
Other assets 633 593
________ ________
Total assets $618,008 $604,515
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 17,858 $ 29,751
Accrued expenses 37,620 42,904
Current portion of long-term debt 5,790 4,000
Current portion of capital lease
obligations 111 111
________ ________
Total current liabilities 61,379 76,766
________ ________
Long-term debt 17,290 19,500
Capital lease obligations 1,543 1,598
Deferred income taxes 10,568 10,568
Stockholders' equity:
Common stock - $.50 par value, 30,155 29,996
authorized 150,000,000 shares,
issued and outstanding 60,310,772
at January 26, 1996 and 59,992,047
at July 28, 1995
Additional paid-in capital 197,681 195,421
Retained earnings 299,392 270,666
________ ________
Total stockholders' equity 527,228 496,083
________ ________
Total liabilities and stockholders'
equity $618,008 $604,515
======== ========
See notes to financial statements.
2
CRACKER BARREL OLD COUNTRY STORE, INC.
CONDENSED STATEMENTS OF INCOME
(In thousands, except share data)
(Unaudited)
Quarters Ended Six Months Ended
January 26, January 27, January 26, January 27,
1996 1995 1996 1995
____ ____ ____ ____
Net sales:
Restaurant $162,593 $138,317 $337,150 $283,738
Gift shop 56,891 50,306 103,345 89,833
________ ________ ________ ________
Total net sales 219,484 188,623 440,495 373,571
________ ________ ________ ________
Cost of goods sold 80,629 68,149 154,236 129,539
________ ________ ________ ________
Gross profit on sales 138,855 120,474 286,259 244,032
Expenses:
Labor & related
expenses 72,347 61,669 146,296 122,270
Other store operating
expenses 34,096 28,335 67,427 55,664
General and
administrative 12,682 11,470 26,244 22,933
________ ________ ________ ________
Total expenses 119,125 101,474 239,967 200,867
________ ________ ________ ________
Operating income 19,730 19,000 46,292 43,165
Interest expense 82 277 261 522
Interest income 569 868 1,273 1,748
________ ________ ________ ________
Pretax income 20,217 19,591 47,304 44,391
Provision for income
taxes 7,682 7,268 17,976 16,469
________ ________ ________ ________
Net income $ 12,535 $ 12,323 $ 29,328 $ 27,922
======== ======== ======== ========
Earnings per share $ 0.21 $ 0.20 $ 0.48 $ 0.46
======== ======== ======== ========
Weighted average
common shares and
equivalents 60,630,474 60,487,373 60,625,881 60,539,765
========== ========== ========== ==========
Dividends per share $ 0.005 $ 0.005 $ 0.010 $ 0.010
======== ======== ======== ========
See notes to financial statements.
3
CRACKER BARREL OLD COUNTRY STORE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
January 26, January 27,
1996 1995
____ ____
Cash flows from operating activities:
Net income $29,328 $27,922
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of
property and equipment 16,098 13,350
Gain on disposition of property and equipment (144) (91)
Decrease(increase) in inventories 2,187 (215)
Increase in other assets (40) (56)
Decrease in accounts payable (11,893) (3,828)
Decrease in other current assets
and liabilities (4,584) (5,102)
_______ _______
Net cash provided by operating activities 30,952 31,980
_______ _______
Cash flows from investing activities:
Purchase of investments (1,937) (3,280)
Proceeds from maturities of investments 2,680 17,207
Purchase of property and equipment (61,672) (59,111)
Proceeds from sale of property and equipment 837 845
_______ _______
Net cash used in investing activities (60,092) (44,339)
_______ _______
Cash flows from financing activities:
Proceeds from exercise of stock options 2,419 350
Principal payments under long-term debt
and capital lease obligations (4,055) (3,547)
Dividends on common stock (602) (599)
_______ _______
Net cash used in financing activities (2,238) (3,796)
_______ _______
Net decrease in cash and cash equivalents (31,378) (16,155)
Cash and cash equivalents, beginning of year 48,124 47,306
_______ _______
Cash and cash equivalents, end of quarter $16,746 $31,151
======= =======
Supplemental disclosures of cash flow
information:
Cash paid during the six months for:
Interest $ 1,139 $ 1,373
Income taxes 23,915 23,434
Supplemental schedule of noncash investing and financing activities:
The Company purchased land during the quarter ended October 27, 1995 for
$2,700 in cash and $3,580 in a mortgage agreement, of which $1,790 is
classified as current portion of long-term debt as of January 26, 1996.
See notes to financial statements.
4
CRACKER BARREL OLD COUNTRY STORE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Condensed Financial Statements
______________________________
The condensed balance sheet as of January 26, 1996 and the related
condensed statements of income and cash flows for the quarters and six-month
periods ended January 26, 1996 and January 27, 1995, 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 and six-month period ended
January 26, 1996 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 and six-month period ended January 27, 1995 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 and six-month period ended January 26, 1996 cannot be considered
indicative of the operating results for the full fiscal year.
4. Reclassifications
_________________
Certain reclassifications have been made in the quarter and six-month
period ended January 27, 1995 financial statements to conform to the
classifications used at fiscal year end 1995.
5
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (In thousands)
RESULTS OF OPERATIONS
The following table highlights operating results for the quarter and six-month
period ended January 26, 1996 as compared to the same periods a year ago:
Quarters Ended Six Months Ended
January 26, January 27, January 26, January 27,
1996 1995 1996 1995
____ ____ ____ ____
Net sales:
Restaurant 74.1% 73.3% 76.5% 76.0%
Gift shop 25.9 26.7 23.5 24.0
_____ _____ _____ _____
Total net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 36.7 36.1 35.0 34.7
Gross profit 63.3 63.9 65.0 65.3
Expenses:
Labor & related expenses 33.0 32.7 33.2 32.7
Other store operating
expenses 15.5 15.0 15.3 14.9
General and administrative 5.8 6.1 6.0 6.1
Total expenses 54.3 53.8 54.5 53.8
Operating income 9.0 10.1 10.5 11.6
Interest expense 0.0 0.1 0.1 0.1
Interest income 0.3 0.5 0.3 0.5
Pretax income 9.2 10.4 10.7 11.9
Provision for income taxes 3.5 3.9 4.1 4.4
Net income 5.7% 6.5% 6.7% 7.5%
Same Store Sales Analysis
181 Store Average
_________________
Restaurant $703.5 $693.3 $1,486.4 $1,460.4
Gift shop 242.7 252.1 451.6 460.7
______ ______ ________ ________
Restaurant & gift shop $946.2 $945.4 $1,938.0 $1,921.1
====== ====== ======== ========
6
Sales
_____
Net sales for the second quarter of fiscal 1996 increased 16% over last
year's second quarter. Same store restaurant sales increased 1.5%. Same
store gift shop sales decreased 3.7%. Total same store sales (restaurant and
gift shop) increased .1%. Net sales for the six months ended January 26,
1996, increased 18% over the six-month period ended January 27, 1995. Same
store restaurant sales increased 1.8% and same store gift shop sales
decreased 2.0%. Total same store sales (restaurant and gift shop) increased
.9%. Sales from new stores accounted for the remainder of the increase.
Sales during the quarter were negatively affected by extreme winter weather
conditions.
Cost of Goods Sold
__________________
Cost of goods sold as a percentage of net sales was 36.7% this year
compared to 36.1% in the second quarter of last year. For the six months
ended January 26, 1996, cost of goods sold as a percentage of net sales was
35.0% compared to 34.7% for the same period a year ago. Cost of goods sold
as a percentage of sales for the second quarter and six months increased from
the same periods last year primarily due to a new menu which was implemented
in May 1995, and also because of operating inefficiencies in the stores due
to the extreme winter weather conditions.
Labor and Related Expenses
__________________________
Labor and related expenses include all direct and indirect labor and
related costs incurred in store operations. Labor expenses as a percentage
of net sales were 33.0% for the second quarter of this year compared to 32.7%
for the second quarter of last year. For the six months ended January 26,
1996, labor expenses as a percentage of net sales were 33.2% compared to
32.7% for the same period last year. Labor expenses as a percentage of net
sales increased from the second quarter and six months of last year primarily
due to the continuing labor pressures as the costs to hire and retain
employees continued to increase, unemployment rates remained low, and
competition remained high in the industry.
Other Store Operating Expenses
______________________________
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 15.5% this year
versus 15.0% during the same quarter last year. For the six months ended
January 26, 1996, other store operating expenses as a percentage of net sales
were 15.3% compared to 14.9% for the same period last year. The primary
reason for the increase in other store operating expenses as a percentage of
net sales for the quarter and six months was a $500 charge for the closure of
one store in Memphis, Tennessee. Advertising expenses as a percentage of net
sales also accounted for part of the increase as a result of an increase in
developmental market advertising in an effort to build name awareness. We
have also taken on other initiatives in our overall advertising efforts to
continue to build brand loyalty in our core and growth markets.
7
General and Administrative Expenses
___________________________________
General and administrative expenses as a percentage of net sales decreased
to 5.8% during the second quarter of this year from 6.1% during the second
quarter of last year. For the six months ended January 26, 1996, general and
administrative expenses were 6.0% of net sales as compared to 6.1% during the
same period last year. The primary reason for the decrease was increased
volume.
Interest Expense
________________
Interest expense decreased to $82 and $261 for the quarter and six-month
periods ended January 26, 1996 from $277 and $522, respectively, for the same
periods a year ago. The decrease was primarily due to lower average debt
outstanding during the quarter and six-month periods ended January 26, 1996.
Interest Income
_______________
Interest income decreased to $569 and $1,273 for the quarter and six-month
periods ended January 26, 1996 from $868 and $1,748, respectively, for the
same periods 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 $30,952 for the six
months ended January 26, 1996. Net income adjusted by depreciation and
amortization provided most of the cash. Decreases in accounts payable and
other current assets and liabilities were partially offset by decreases in
inventories.
Capital expenditures were $61,672 for the first six months of fiscal 1996.
Land purchases and cost of new stores accounted for substantially all of
these expenditures, except for approximately $1,923 for the expansion of the
gift shop distribution center. Capitalized interest was $527 and $979 for the
quarter and six months ended January 26, 1996, respectively, as compared to
$502 and $988 for the same periods a year ago.
The Company's internally generated cash and investments were sufficient to
finance all of its growth in the first six months of fiscal 1996.
The Company estimates that its capital expenditures for fiscal 1996 will be
approximately $150,000, substantially all of which will be land purchases and
cost of new stores, except for $8,000 relating to the expansion of the gift
shop distribution center to meet the increased demand from new stores.
Management believes that cash and investments at January 26, 1996, 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 $15,000.
8
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of
Cracker Barrel Old Country Store, Inc.
Lebanon, Tennessee
We have reviewed the accompanying condensed balance sheet of Cracker Barrel
Old Country Store, Inc. as of January 26, 1996, and the related condensed
statements of income and cash flows for the quarters and six-month periods
ended January 26, 1996 and January 27, 1995. 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
March 6, 1996
9
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: Previously reported.
C. Other Matters: Previously reported.
Item 5. Other Information
_________________
None.
Item 6. Exhibits and Reports on Form 8-K
________________________________
Letter regarding unaudited financial information.
10
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: 3/8/96 By/s/Michael A. Woodhouse
______ _____________________________________________
Michael A. Woodhouse, Chief Financial Officer
Date: 3/8/96 By/s/Patrick A. Scruggs
______ _____________________________________________
Patrick A. Scruggs, Assistant Treasurer
11
March 6, 1996
Cracker Barrel Old Country Store, Inc.
Hartmann Drive
Lebanon, TN 37088-0787
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 and six-month periods ended January 26, 1996 and January 27, 1995,
as indicated in our report dated March 6, 1996; 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 January 26, 1996, is
incorporated by reference in Registration Statement Nos. 2-86602, 33-15775,
33-37567, 33-45482 and 333-01465 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
12
5
1,000
6-MOS
AUG-2-1996
JUL-29-1995
JAN-26-1996
16,746
13,391
2,916
0
49,328
88,389
641,169
113,190
618,008
61,379
17,290
0
0
30,155
497,073
618,008
440,495
440,495
154,236
213,723
26,244
0
261
47,304
17,976
29,328
0
0
0
29,328
.48
.48
