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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): November 18, 2004
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CBRL GROUP, INC.
Tennessee 0-25225 62-1749513
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
305 Hartmann Drive, Lebanon, Tennessee 37087
(615) 444-5533
Check the appropriate box if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions :
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR.13e-4(c))
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Item 2.02. Results of Operations and Financial Condition.
On November 18, 2004, CBRL Group, Inc. issued the press release that is
furnished as Exhibit 99 to this Current Report on Form 8-K, which by this
reference is incorporated herein as if copied verbatim, with respect to first
quarter results, current sales trends and earnings guidance for the first fiscal
quarter of 2005, other information and the conference call to be held to discuss
this information.
Item 7.01. Regulation FD Disclosure.
The information set forth in Item 2.02 above is incorporated by reference
as if fully set forth herein.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements. None
(b) Pro Forma Financial Information. None
(c) Exhibits.
99 Press Release issued by CBRL Group, Inc. dated November 18, 2004
Reporting First Quarter Results and Sales Trends and Earnings Guidance.
SIGNATURE
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 hereunto duly authorized.
Dated: November 18, 2004 CBRL GROUP, INC.
By: /s/ James F. Blackstock
------------------------------------
Name: James F. Blackstock
Title: Senior Vice President, General
Counsel and Secretary
POST OFFICE BOX 787
LEBANON, TENNESSEE
37088-0787
PHONE 615.443.9869
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CBRL GROUP, INC.
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[CBRL Group, Inc. Logo]
Contact: Lawrence E. White
Senior Vice President/
Finance and
Chief Financial Officer
CBRL GROUP, INC. ANNOUNCES FISCAL 2005 FIRST-QUARTER RESULTS
Provides Guidance for Fiscal 2005 Second Quarter and Full Year
LEBANON, Tenn. (November 18, 2004) -- CBRL Group, Inc. (the "Company") (NASDAQ:
CBRL) today announced results for its first quarter of fiscal 2005 ended October
29, 2004, reporting diluted net income per share of $0.61, an 8.9% increase from
$0.56 in the first quarter of fiscal 2004.
Highlights of the fiscal 2005 first-quarter results include:
o Diluted net income per share for the first quarter was up 8.9% and
net income was up 7.5% from the year-ago quarter on a 6.3% increase
in total revenue.
o Comparable store restaurant sales for the first fiscal quarter were
up 2.3% for the Company's Cracker Barrel Old County Store(R)
("Cracker Barrel") operations, and comparable store retail sales at
Cracker Barrel were down 5.4%.
o Comparable restaurant sales for the first fiscal quarter were up 3.9%
in the Company's Logan's Roadhouse(R) ("Logan's") restaurants.
o Effects of hurricanes that resulted in approximately $2 million lower
total sales and approximately $0.6 million of additional expenses in
the first quarter.
o Net cash provided by operating activities of $37.8 million up sharply
from $5.3 million of net cash provided by operating activities in the
first quarter of fiscal 2004.
o Repurchase of 1.1 million shares of the Company's outstanding common
stock, and declaration of its first increase in the new quarterly
dividend policy adopted a year ago.
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CBRL Announces First-Quarter Results
Page 2
November 18, 2004
First-Quarter Fiscal 2005 Results
Total revenue for the first fiscal quarter ended October 29, 2004 of $612.7
million increased 6.3% from the first fiscal quarter of 2004. Comparable store
restaurant sales for the first quarter for the Cracker Barrel concept increased
2.3%, including a 3.2% higher average check and 0.9% lower guest traffic.
Cracker Barrel implemented approximately a 1.7% menu price increase during
October, bringing the average menu price increase for the full quarter to
approximately 2.1%. Comparable store retail sales at Cracker Barrel decreased
5.4% for the quarter. Logan's comparable restaurant sales for the quarter were
up 3.9% as average check increased 5.0%, and guest traffic decreased 1.1%.
Logan's implemented approximately a 0.9% menu price increase at the beginning of
October, bringing the average menu price increase to approximately 3.2% for the
full quarter. As previously reported, sales at both Cracker Barrel and Logan's
were unfavorably affected by hurricanes during the quarter. The Company
estimated that comparable store restaurant sales were reduced by less than 0.5%
at Cracker Barrel and Logan's for the quarter as a result of net lost sales from
the hurricanes. The Company also estimated that net lost sales from the
hurricanes reduced comparable store retail sales at Cracker Barrel by
approximately 0.5-1.0%. The combined net lost sales for the quarter, including
stores not yet in the comparable store base, for Cracker Barrel and Logan's was
an estimated $2 million. During the quarter, the Company opened five new Cracker
Barrel units and seven new company-operated Logan's locations.
The Company reported net income for the first quarter of fiscal 2005 of
$30.3 million, or $0.61 per diluted share, up from net income of $28.2 million
and diluted net income per share of $0.56 for the first quarter of fiscal 2004.
In addition to the lost income on the sales effect noted above, the Company
estimated that pre-tax income for the first quarter was also reduced by
approximately $0.6 million in hurricane-related property damage and higher
direct costs associated with restoring operations at affected stores, net of
estimated insurance recoveries.
Operating income for the first quarter increased 5.8% from the prior year
and was 7.9% of total revenue compared to 8.0% in the first quarter of fiscal
2004. Compared with the first quarter of last year, operating income margin
reflected higher cost of goods sold, including the effects of a mid-single-digit
percentage increase in commodity costs, and higher other store operating
expenses, partly offset by lower labor and general and administrative expenses.
The Company reported that net cash provided by operating activities of
$37.8 million was up sharply from $5.3 million in the first quarter of fiscal
2004, and slightly higher than net cash used for the purchase of property and
equipment (capital expenditures) of $37.4 million. The increased cash provided
by operations reflected increased levels of accounts payable from the relatively
low levels at the end of fiscal 2004 as well as the higher reported net income.
Capital expenditures were higher than the prior year's $29.7 million, primarily
reflecting a greater number of new store openings in development for fiscal
2005.
The Company repurchased 1.1 million shares of its common stock for
approximately $39.9 million during the quarter, paid $5.4 million to
shareholders in a quarterly dividend, and declared a 9% increase in the dividend
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CBRL Announces First-Quarter Results
Page 3
November 18, 2004
from $0.11 quarterly to $0.12 quarterly. As of the end of the first quarter, the
Company had approximately 1.8 million shares remaining to be repurchased under
previously disclosed authorizations.
Commenting on the first-quarter results, CBRL Group, Inc. President and
Chief Executive Officer Michael A. Woodhouse said, "We are pleased to report
solid results for our first quarter despite a continuing challenging operating
environment. We were able to achieve comparable store restaurant sales increases
at Cracker Barrel throughout the first quarter following the decline in the
previous quarter, and we had our sixth consecutive quarter of comparable
restaurant sales growth at Logan's. These results came despite four hurricanes
during the quarter in Florida and less than robust consumer sentiment. In
addition, despite continued commodity pressures and significant costs related to
the hurricanes, we delivered solid growth in net income per share and strong
cash flow."
The Company urges caution in considering its current trends and the
earnings guidance disclosed in this press release. The restaurant industry is
highly competitive, and trends and guidance are subject to numerous factors and
influences, some of which are discussed in the cautionary language at the end of
this press release. The Company disclaims any obligation to update disclosed
information on trends or targets other than in its periodic filings under Forms
10-K, 10-Q, and 8-K with the Securities and Exchange Commission.
Fiscal 2005 Earnings Guidance
The Company's present guidance for diluted net income per share for the
second quarter of fiscal 2005, which ends January 28, 2005, is for a percentage
increase up to the low double digits compared to $0.57 per share in the second
quarter of last year on a total revenue increase of approximately 7-8% (see
discussion of "Potential Change in Accounting for Convertible Debt Securities"
below for the potential impact on guidance and historical diluted net income per
share of potential new accounting requirements). Earnings guidance reflects many
assumptions, many of which cannot be known, including, very importantly, sales
expectations. The Company presently expects comparable store restaurant sales
for the full second quarter to be up approximately 1-3% at Cracker Barrel and up
approximately 2-4% at Logan's. Comparable store retail sales at Cracker Barrel
are presently expected to be down 0-2% compared with the year-ago quarter,
reflecting an improvement from first-quarter trends anticipated as a result of
planned merchandising and retail operations initiatives during the Christmas
holiday shopping season. The Company presently expects operating income margins
for the quarter to be down slightly from prior year, primarily reflecting the
fact that the Company has not yet lapped the significant commodity cost
increases that began late in the second quarter of the prior fiscal year, as
well as higher expected advertising spending and utilities costs. The Company
presently has an estimated 80% of its expected food purchases for the second
quarter contracted with an overall expected percentage inflation on food
purchases of approximately 5% from the second quarter of last year, primarily
reflecting expectations for higher beef, pork and tomato prices. The Company
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CBRL Announces First-Quarter Results
Page 4
November 18, 2004
presently expects to open five new Cracker Barrel units in the second quarter,
of which one has already opened, and five new Logan's company-operated units,
of which one has already opened. In addition, one new franchised Logan's
restaurant has already opened in the quarter.
For the full year, the Company presently expects a percentage increase in
diluted net income per share in the mid-teens above $2.31 in fiscal 2004
(excluding the settlement charge taken in the fourth quarter of last year),
reflecting a high-single-digit percentage increase in total revenue and a
full-year operating income margin that is approximately flat to the 8.0% of
revenue recorded in fiscal 2004 (also excluding the effect of the settlement
charge). (See discussion of "Potential Change in Accounting for Convertible Debt
Securities" below for the potential impact on guidance and historical diluted
net income per share of potential new accounting requirements). The Company's
full-year guidance reflects less commodity inflation in the second half of the
year than in the first half, and the Company reported that approximately 55% of
its food cost purchases for the second half of the fiscal year are contracted.
The Company is developing plans to address the impact of recently enacted
minimum wage increases in certain states in which it operates. The estimated
cost of the minimum wage increases is expected to be approximately $1.2-$1.3
million in the fourth quarter and substantially less than that in the third
quarter, and these increases are reflected in the Company's current guidance.
Potential Change in Accounting for Convertible Debt Securities
The Company announced that it is likely to be required to implement a
change in accounting for convertible debt that would change its calculation of
diluted net income per share. An accounting change is expected to be required as
proposed under the Emerging Issues Task Force Issue Abstract No. 04-8 that would
require the use of "if-converted" accounting for contingently convertible debt
regardless of whether the contingency allowing debt holders to convert is met.
Under present rules (SFAS 128, "Earnings Per Share"), contingently issuable
shares are included as diluted shares outstanding only when the contingency is
met. The present contingent conversion share price on the Company's convertible
debt is $48.53 per share, and the Company's convertible notes may not actually
be converted unless its common shares close at this price for 20 of the last 30
trading days of the present fiscal quarter. This contingent conversion price
increases over time. Under the rule change, the Company would be required to
include approximately 4.6 million shares in its diluted shares outstanding
related to its convertible debt, and delete from net income the interest and
financing cost associated with this debt, in calculating diluted net income per
share. The rule is likely to require the Company to implement the change
beginning in the second quarter of fiscal 2005 and to restate certain
prior-period results to reflect the change as well. A table showing restated
diluted net income per share for the full fiscal years of 2002, 2003 and 2004,
and each quarter of fiscal 2004 and the first quarter of fiscal 2005 is included
at the end of this press release. The restatement effect on fiscal 2004 is
slightly less than previously estimated by the Company (restated fiscal 2004
diluted net income per share of $2.14 including the effect of the settlement
charge compared with a previous estimate of $2.12). The Company noted that the
change in accounting does not change the income statement or balance sheet for
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CBRL Announces First-Quarter Results
Page 5
November 18, 2004
those affected periods nor does it have any economic effect, since the terms of
the notes are unchanged. At the present time, the Company has not determined
what response or change in policy, if any, it might undertake to offset any part
of the dilutive effect of this accounting change.
The impact on the Company's guidance for the second quarter and full year
of fiscal 2005 is as follows. Including the effect of the accounting change, if
required to be adopted, the Company presently expects diluted net income per
share to be reduced by approximately three cents in each of the second and third
quarters and approximately five cents in the fourth quarter. The effect on the
fourth quarter of fiscal 2005 is expected to be slightly higher as the Company
will have amortized fully the deferred financing costs on issuance of the
convertible notes during the third quarter. Because prior-year diluted net
income per share also must be reduced under the proposed accounting change, the
Company expects its guidance of percentage growth in diluted net income per
share compared with the prior year not to be affected materially.
Fiscal 2005 First-Quarter Conference Call
The live broadcast of CBRL Group's quarterly conference call will be
available to the public on-line at www.vcall.com or www.cbrlgroup.com today
beginning at 11:00 a.m. (EST). The on-line replay will follow immediately and
continue through November 24, 2004.
Headquartered in Lebanon, Tennessee, CBRL Group, Inc. presently operates
510 Cracker Barrel Old Country Store restaurants and gift shops located in 41
states and 115 company-operated and 21 franchised Logan's Roadhouse restaurants
in 18 states.
Except for specific historical information, many of the matters discussed
in this press release may express or imply projections of revenues or
expenditures, statements of plans and objectives or future operations or
statements of future economic performance. These, and similar statements are
forward-looking statements concerning matters that involve risks, uncertainties
and other factors which may cause the actual performance of CBRL Group, Inc. and
its subsidiaries to differ materially from those expressed or implied by this
discussion. All forward-looking information is provided by the Company pursuant
to the safe harbor established under the Private Securities Litigation Reform
Act of 1995 and should be evaluated in the context of these factors.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "assumptions", "target", "guidance",
"outlook", "plans", "projection", "may", "will", "would", "expect", "intend",
"estimate", "anticipate", "believe", "potential" or "continue" (or the negative
or other derivatives of each of these terms) or similar terminology. Factors
which could materially affect actual results include, but are not limited to:
changes in or implementation of additional governmental or regulatory rules,
regulations and interpretations affecting accounting (including but not limited
to, accounting for convertible debt under EITF 04-8), tax, wage and hour
matters, health and safety, pensions, insurance or other undeterminable areas;
the effects of uncertain consumer confidence or general or regional economic
weakness on sales and customer travel activity; the ability of the Company to
identify, acquire and sell successful new lines of retail merchandise;
commodity, workers' compensation, group health and utility price changes;
consumer behavior based on concerns over nutritional or safety aspects of the
Company's products or restaurant food in general; competitive marketing and
operational initiatives; the effects of plans intended to improve operational
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CBRL Announces First-Quarter Results
Page 6
November 18, 2004
execution and performance; practical or psychological effects of terrorist acts
or war and military or government responses; the effects of increased
competition at Company locations on sales and on labor recruiting, cost, and
retention; the ability of and cost to the Company to recruit, train, and retain
qualified restaurant hourly and management employees; disruptions to the
company's restaurant or retail supply chain; changes in foreign exchange rates
affecting the Company's future retail inventory purchases; the availability and
cost of acceptable sites for development and the Company's ability to identify
such sites; the actual results of pending or threatened litigation or
governmental investigations and the costs and effects of negative publicity
associated with these activities; changes in accounting principles generally
accepted in the United States of America or changes in capital market conditions
that could affect valuations of restaurant companies in general or the Company's
goodwill in particular; increases in construction costs; changes in interest
rates affecting the Company's financing costs; and other factors described from
time to time in the Company's filings with the SEC, press releases, and other
communications.
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CBRL Announces First-Quarter Results
Page 7
November 18, 2004
CBRL GROUP, INC.
CONSOLIDATED INCOME STATEMENT
(Unaudited)
(In thousands, except per share amounts)
First Quarter Ended
------------------------------------------
10/29/04 10/31/03 Change
----------- ----------- ------
Total revenue $ 612,653 $ 576,365 6%
Cost of goods sold 199,842 185,900 7
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Gross profit 412,811 390,465 6
Labor & other related expenses 226,189 214,303 6
Other store operating expenses 104,021 96,728 8
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Store operating income 82,601 79,434 4
General and administrative 33,929 33,417 2
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Operating income 48,672 46,017 6
Interest expense 2,095 2,223 (6)
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Pretax income 46,577 43,794 6
Provision for income taxes 16,302 15,634 4
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Net income $ 30,275 $ 28,160 8
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Earnings per share:
Basic $ 0.62 $ 0.59 5
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Diluted $ 0.61 $ 0.56 9
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Weighted average shares:
Basic 48,712 48,122 1
Diluted 49,774 50,036 (1)
RATIO ANALYSIS
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Net sales:
Restaurant 80.7% 79.2%
Retail 19.2 20.7
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Total net sales 99.9 99.9
Franchise fees and royalties 0.1 0.1
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Total revenue 100.0 100.0
Cost of goods sold 32.6 32.2
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Gross profit 67.4 67.8
Labor & other related expenses 36.9 37.2
Other store operating expenses 17.0 16.8
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Store operating income 13.5 13.8
General and administrative 5.6 5.8
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Operating income 7.9 8.0
Interest expense 0.3 0.4
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Pretax income 7.6 7.6
Provision for income taxes 2.7 2.7
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Net income 4.9% 4.9%
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CBRL Announces First-Quarter Results
Page 8
November 18, 2004
CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
(In thousands)
10/29/04 7/30/04
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Assets
Cash and cash equivalents $ 16,957 $ 28,775
Other current assets 208,172 174,265
Property and equipment, net 1,139,503 1,118,573
Goodwill 92,882 92,882
Other assets 24,614 20,367
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Total assets $ 1,482,128 $ 1,434,862
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Liabilities and Stockholders' Equity
Current liabilities $ 270,355 $ 246,782
Long-term debt 206,520 185,138
Other long-term obligations 127,711 122,695
Stockholders' equity 877,542 880,247
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Total liabilities and stockholders' equity $ 1,482,128 $ 1,434,862
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CONSOLIDATED CONDENSED CASH FLOW STATEMENT
(Unaudited)
(In thousands)
First Quarter Ended
------------------------------
10/29/04 10/31/03
---------- ---------
Cash flow from operating activities:
Net income $ 30,275 $ 28,160
Depreciation and amortization 16,179 15,191
Loss on disposition of property and equipment 527 238
Accretion on zero-coupon notes 1,382 1,338
Net changes in other assets and liabilities (10,521) (39,669)
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Net cash provided by operating activities 37,842 5,258
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Cash flows from investing activities:
Purchase of property and equipment (37,369) (29,683)
Proceeds from sale of property and equipment 184 100
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Net cash used in investing activities (37,185) (29,583)
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Cash flows from financing activities:
Proceeds from issuance of long-term debt 108,200 130,000
Principal payments under long-term obligations (88,248) (122,025)
Proceeds from exercise of stock options 12,811 18,616
Purchase and retirement of common stock (39,873) --
Dividends on common stock (5,365) --
Other -- (533)
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Net cash (used in) provided by financing activities (12,475) 26,058
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Net (decrease) increase in cash and cash equivalents (11,818) 1,733
Cash and cash equivalents, beginning of period 28,775 14,389
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Cash and cash equivalents, end of period $ 16,957 $ 16,122
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CBRL Announces First-Quarter Results
Page 9
November 18, 2004
CBRL GROUP, INC.
Supplemental Information
(Unaudited)
As of As of As of
10/29/04 7/30/04 10/31/03
------------ ------------ ------------
Common shares outstanding 48,322,751 48,769,368 48,885,387
============ ============ ============
Units in operation:
Cracker Barrel 509 504 484
Logan's Roadhouse - company-owned 114 107 101
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Total company-owned units 623 611 585
Logan's Roadhouse - franchised 20 20 16
----------- ---------- -----------
System-wide units 643 631 601
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First Quarter Ended
-----------------------------
Total revenue in company-owned stores: (In thousands) 10/29/04 10/31/03
---------- -----------
Cracker Barrel - restaurant $ 408,413 $ 383,311
Cracker Barrel - retail 117,911 119,439
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Cracker Barrel - total 526,324 502,750
Logan's Roadhouse 85,800 73,209
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Total net sales 612,124 575,959
Franchise fees and royalties 529 406
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Total Revenue $ 612,653 $ 576,365
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Operating weeks - company-owned stores:
Cracker Barrel 6,573 6,268
Logan's Roadhouse 1,439 1,281
Average comparable store sales - company-owned stores: (In thousands)
Cracker Barrel - restaurant $ 812.9 $ 794.7
Cracker Barrel - retail 231.3 244.4
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Cracker Barrel - total $ 1,044.2 $ 1,039.1
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Logan's Roadhouse $ 764.4 $ 735.3
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Capitalized interest $ 181 $ 124
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Effect of Potential Change in Accounting for Convertible
Debt Securities on Diluted EPS
Reported Pro-forma
Period Diluted EPS Dilution Diluted EPS
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FY05 Q1 $0.61 (0.03) $0.58
FY04 full year 2.25 (0.11) 2.14
FY04 Q4 0.60 (0.03) 0.57
FY04 Q3 0.52 (0.02) 0.50
FY04 Q2 0.57 (0.03) 0.54
FY04 Q1 0.56 (0.02) 0.54
FY03 full year 2.09 (0.09) 2.00
FY02 full year 1.64 (0.02) 1.62
- END -