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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 21, 2005
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CBRL GROUP, INC.
Tennessee 0-25225 62-1749513
- ----------------- ----------------------- -------------------
(State or Other (Commission File Number) (I.R.S. Employer
Jurisdiction Identification No.)
of Incorporation)
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 21, 2005, CBRL Group, Inc. (the "Company") 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 fiscal 2006 first quarter results, trends and the possible effects on
earnings for the second quarter of fiscal 2006 and the full fiscal year, 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 21, 2005.
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 21, 2005 CBRL GROUP, INC.
By: /s/ N.B. Forrest Shoaf
-----------------------------------------
Name: N.B. Forrest Shoaf
Title: Senior Vice President, Secretary and
General Counsel
[Logo of CBRL Group, Inc.] Post Office Box 787
Lebanon, Tennessee
37088-0787
Phone 615.443.9869
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CBRL GROUP, INC.
- --------------------------------------------------------------------------------
Contact: Lawrence E. White
Senior Vice President/
Finance and
Chief Financial Officer
CBRL GROUP, INC. ANNOUNCES RESULTS FOR FISCAL 2006 FIRST QUARTER
Adopts New Accounting Rule For Expensing Stock Options
Discusses Trends and Possible Effect on Fiscal 2006 Second Quarter and Full
Fiscal Year
LEBANON, Tenn. (November 21, 2005) -- CBRL Group, Inc. (the "Company") (Nasdaq:
CBRL) today announced results for the first quarter ended October 28, 2005,
reporting diluted net income per share of $0.51 compared with $0.57 in the first
quarter of fiscal 2005. The Company noted that results for the first quarter of
fiscal 2006 included approximately $0.04 per diluted share of stock option
expense after tax as a result of initial adoption of Statement of Financial
Accounting Standards No. 123 Revised, "Share-Based Payment," ("SFAS 123R"),
which requires the Company to recognize as expense the fair value of options
granted after the date of adoption and any unvested stock option grants at the
date of adoption. In addition, the Company described how current trends could
affect results for its second quarter and the 2006 full fiscal year.
A summary of fiscal 2006 first-quarter results includes:
o Comparable store restaurant sales were down 0.4% for Cracker Barrel
Old Country Store(R) ("Cracker Barrel"), and comparable store retail
sales at Cracker Barrel were down 11.6%.
o Comparable restaurant sales for the first fiscal quarter were up
0.5% for Logan's Roadhouse(R) ("Logan's").
o Total revenue for the first quarter of $633.4 million increased 3.4%
from the year-ago quarter.
o Net income and diluted net income per share for the first quarter
were $25.7 million and $0.51, respectively (including approximately
$1.8 million and $0.04 per diluted share, respectively, of stock
option expense after tax), compared to net income of $29.9 million
and diluted net income per share of $0.57 in the year-ago quarter.
o Operating income margin in the first quarter was 6.6% of total
revenues (including an impact of approximately 0.4% of revenues
attributable to stock option expense) compared to 7.9% in the
year-ago quarter.
First-Quarter Fiscal 2006 Results
Total revenue for the first quarter of fiscal 2006 ended October 28, 2005 of
$633.4 million represented an increase of 3.4% above the first quarter of fiscal
2005. Comparable store restaurant sales for the first quarter for Cracker Barrel
decreased 0.4%, including a 3.8% higher average check, while guest traffic was
4.2% lower. Cracker Barrel's average menu price increase for the full quarter
was approximately 3.7% compared with last year. Comparable store retail sales at
Cracker Barrel decreased 11.6% for the quarter. Logan's comparable restaurant
sales for the quarter were up 0.5% as average check increased 2.3% while guest
traffic decreased 1.8%. Logan's had approximately 2.5% of average menu price
increase during the first quarter compared with last year. During the quarter,
the Company lost approximately 243 store operating days due to closings for
hurricane damage and related power outages. During the quarter, the Company
opened eight new Cracker Barrel units and five new Logan's company-owned
restaurants.
The Company reported net income for the first quarter of fiscal 2006 of $25.7
million, or $0.51 per diluted share, compared to net income of $29.9 million and
diluted net income per share of $0.57 for the first quarter of fiscal 2005. As a
result of the Company's adoption of SFAS 123R during the first quarter of fiscal
2006, stock option expense for the quarter was approximately $1.8 million after
income taxes, or $0.04 per diluted share.
Operating income for the first quarter of fiscal 2006 of $41.8 million was 6.6%
of total revenue compared to 7.9% in the first quarter of fiscal 2005. Before
the effect of stock option expense, operating income margin would have been 7.0%
for the first quarter of fiscal 2006. The comparison of operating income margin
to the first quarter of last year primarily reflected sales softness and higher
other store operating expenses (including higher utilities, advertising and
maintenance expenses) and higher general and administrative expenses (including
stock option expense), partly offset by lower cost of goods sold, as lower food
cost and lower retail sales benefited this cost.
Commenting on the first-quarter results, CBRL Group, Inc. Chairman, President
and Chief Executive Officer Michael A. Woodhouse said, "We have faced a
challenging sales environment this year, as many restaurant and retail companies
have reported. Restaurant sales at Cracker Barrel were at the low end of our
expectations, and retail sales, as well as Logan's restaurant sales, were below
our expectations. In addition, we saw higher utility costs as energy prices
increased even more sharply than we expected over year-ago levels. In the face
of these challenges, we were pleased that our operating teams showed solid
improvements managing product costs and hourly restaurant labor productivity."
Woodhouse added, "Our retail sales have been disappointing, reflecting lower
restaurant guest traffic and the fact that our customers have been spending less
on average per retail purchase. On the other hand, we saw only a small decline
in the incidence of retail purchases per guest during the quarter, and we
continue to believe our strategy aimed at building the frequency of retail
purchases by our significant traffic of restaurant guests provides us an
opportunity to grow retail sales over time."
The Company urges caution in considering its current trends and the possible
effect on earnings disclosed in this press release. The restaurant industry is
highly competitive, and trends and earnings 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 ("SEC").
Fiscal 2006 Trends and Possible Effect on Earnings
The Company provided possible effects of current trends on earnings for its
second quarter of fiscal 2006, which ends January 27, 2006, and for the full
fiscal year of 2006. The Company noted a high degree of uncertainty in its
current sales trends, as consumer sentiment remains weak and additional
pressures on consumer spending from high winter heating costs and rising
interest rates are possible. Trends could be affected favorably, however, by
adaptation of consumer spending to moderating gasoline prices, mild winter
weather during the holiday travel season, increased purchases of seasonal retail
product as the holiday shopping season begins, and an extended Spring travel
season with a later Easter holiday this year.
In light of these uncertainties, the Company estimates that a continuation of
current trends in sales for the second quarter and full fiscal year could result
in total revenues that range from 3% to 6% above prior year. Without a
significant change in trends, comparable store restaurant sales at Cracker
Barrel could range between down 1% to up 1% from prior year, and comparable
store retail sales declines from last year could range between 5% and 10%.
Trends in Logan's comparable restaurant sales could range from up 1% to 4% from
prior year. With these revenue trends, the Company could see diluted net income
per share between $0.57 to $0.63, including approximately $0.03 to $0.04 per
diluted share of stock option expense, for the second quarter of fiscal 2006,
compared with $0.63 per share in the second quarter last year.
For the full year of fiscal 2006, diluted net income per share could range
between $2.30 and $2.45, including approximately $0.12 to $0.14 per diluted
share of stock option expense, compared with $2.45 for the full year of fiscal
2005. With these revenue trends, combined with expected improvements in cost of
goods sold, but other cost pressures, the Company's operating income margins for
the second quarter and full fiscal year, before an estimated 0.3% to 0.4% of
total revenue effect from stock option expense, could fall below prior year. The
Company presently expects to open three new Cracker Barrel units in the second
quarter, one of which has already opened, five new Logan's company-operated
units and one new Logan's franchised unit. For the full year of fiscal 2006, the
Company continues to anticipate opening 26 new Cracker Barrel stores and
presently expects to open 20 to 22 new Logan's company-owned units and two new
Logan's franchised units. The Company presently expects its income tax rate for
fiscal 2006 to be equal to fiscal 2005, and the Company still has 0.8 million
shares remaining to be repurchased under a previously disclosed authorization.
Woodhouse concluded, "Our outlook, particularly in the near term, remains
uncertain. While we are hopeful that moderating gasoline prices and other
factors could boost consumer sentiment and spending, especially in the important
post-Thanksgiving holiday shopping season, a significant improvement in our
sales trends is not yet in evidence. In the meantime, we will continue to focus
on managing our costs and improving operating efficiencies throughout our
company."
Fiscal 2006 First-Quarter Conference Call
The live broadcast of CBRL Group's quarterly conference call will be
available to the public on-line at investorcalendar.com or cbrlgroup.com today
beginning at 11:00 a.m. (EST). The on-line replay will follow immediately and
continue through November 28, 2005.
Headquartered in Lebanon, Tennessee, CBRL Group, Inc. presently operates 538
Cracker Barrel Old Country Store restaurants and gift shops located in 41 states
and 129 company-operated and 23 franchised Logan's Roadhouse restaurants in 19
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 "trends," "assumptions," "target,"
"guidance," "outlook," "plans," "goals," "objectives," "expectations,"
"near-term," "long-term," "projection," "may," "will," "would," "could,"
"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: the effects of uncertain consumer confidence,
higher costs for energy, consumer debt payments, or general or regional economic
weakness on sales and customer travel, discretionary income or personal
expenditure activity; the ability of the Company to identify, acquire and sell
successful new lines of retail merchandise; competitive marketing and
operational initiatives; the ability of the Company to sustain or the effects of
plans intended to improve operational execution and performance; commodity,
workers' compensation, group health and utility price changes; actuarial
estimate uncertainties with respect to self-insured workers' compensation,
general liability and group health; the availability and cost of acceptable
sites for development and the Company's ability to identify such sites; the
ability of the Company to open and operate new locations successfully; changes
in building materials and construction costs; the effects of plans intended to
promote or protect the Company's brands and products; the effects of increased
competition at Company locations on sales and on labor recruiting, cost, and
retention; changes in foreign exchange rates affecting the Company's future
retail inventory purchases; consumer behavior based on negative publicity or
concerns over nutritional or safety aspects of the Company's products or
restaurant food in general; changes in or implementation of additional
governmental or regulatory rules, regulations and interpretations affecting tax,
wage and hour matters, health and safety, pensions, insurance or other
undeterminable areas; practical or psychological effects of natural disasters or
terrorist acts or war and military or government responses; disruptions to the
company's restaurant or retail supply chain; the ability of and cost to the
Company to recruit, train, and retain qualified hourly and management employees;
changes in interest rates affecting the Company's financing costs; the actual
results of pending, future or threatened litigation or governmental
investigations and the costs and effects of negative publicity associated with
these activities; implementation of new or changes in interpretation of existing
accounting principles generally accepted in the United States of America
("GAAP"); effectiveness of internal controls over financial reporting and
disclosure; changes in capital market conditions that could affect valuations of
restaurant companies in general or the Company's goodwill in particular; and
other factors described from time to time in the Company's filings with the SEC,
press releases, and other communications.
CBRL GROUP, INC.
CONSOLIDATED INCOME STATEMENT
(Unaudited)
(In thousands, except share amounts)
First Quarter Ended
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10/28/05 10/29/04 Change
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Total revenue $ 633,357 $ 612,653 3%
Cost of goods sold 199,321 199,842 -
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Gross profit 434,036 412,811 5
Labor & other related expenses 235,976 226,189 4
Other store operating expenses 117,527 104,103 13
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Store operating income 80,533 82,519 (2)
General and administrative expenses 38,704 34,376 13
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Operating income 41,829 48,143 (13)
Interest expense 2,498 2,095 19
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Pretax income 39,331 46,048 (15)
Provision for income taxes 13,609 16,118 (16)
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Net income $ 25,722 $ 29,930 (14)
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Earnings per share:
Basic $ 0.55 $ 0.61 (10)
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Diluted $ 0.51 $ 0.57 (11)
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Weighted average shares: 46,672,202 48,712,161 (4)
Basic 51,836,594 54,356,771 (5)
Diluted
RATIO ANALYSIS
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Net sales:
Restaurant 82.7% 80.7%
Retail 17.2 19.2
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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 31.5 32.6
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Gross profit 68.5 67.4
Labor & other related expenses 37.3 36.9
Other store operating expenses 18.5 17.0
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Store operating income 12.7 13.5
General and administrative expenses 6.1 5.6
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Operating income 6.6 7.9
Interest expense 0.4 0.4
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Pretax income 6.2 7.5
Provision for income taxes 2.1 2.6
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Net income 4.1% 4.9%
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CONSOLIDATED CONDENSED BALANCE SHEET
(Unaudited)
(In thousands)
10/28/05 7/29/05
------------ ------------
Assets
Cash and cash equivalents $ 19,987 $ 17,173
Other current assets 202,242 173,310
Property and equipment, net 1,235,122 1,218,298
Long-lived assets 126,586 124,491
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Total assets $ 1,583,937 $ 1,533,272
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Liabilities and Shareholders' Equity
Current liabilities $ 292,602 $ 295,345
Long-term debt 236,140 212,218
Other long-term obligations 159,088 155,721
Shareholders' equity 896,107 869,988
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Total liabilities and shareholders' equity $ 1,583,937 $ 1,533,272
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CONSOLIDATED CONDENSED CASH FLOW STATEMENT
(Unaudited)
(In thousands)
First Quarter Ended
------------------------------
10/28/05 10/29/04
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Cash flow from operating activities:
Net income $ 25,722 $ 29,930
Depreciation and amortization 17,186 16,179
Loss on disposition of property and equipment 742 527
Accretion on zero-coupon notes 1,423 1,382
Share-based compensation, net of excess tax benefit 3,133 66
Net changes in other assets and liabilities (30,315) (10,176)
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Net cash provided by operating activities 17,891 38,510
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Cash flows from investing activities:
Purchase of property and equipment (34,788) (37,369)
Proceeds from sale of property and equipment 36 184
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Net cash used in investing activities (34,752) (37,185)
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Cash flows from financing activities:
Net Borrowings on credit facilities 22,447 19,952
Proceeds from exercise of stock options 2,298 12,143
Excess tax benefit from share-based compensation 522 --
Purchase and retirement of common stock -- (39,873)
Dividends on common stock (5,592) (5,365)
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Net cash provided by (used in) financing activities 19,675 (13,143)
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Net increase (decrease) in cash and cash equivalents 2,814 (11,818)
Cash and cash equivalents, beginning of period 17,173 28,775
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Cash and cash equivalents, end of period $ 19,987 $ 16,957
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CBRL GROUP, INC.
Supplemental Information
(Unaudited)
As of As of As of
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10/28/05 7/29/05 10/29/04
Common shares outstanding 46,726,847 46,619,803 48,322,751
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First Quarter Ended
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Units in operation: 10/29/05 10/29/04
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Cracker Barrel
Open at beginning of period 529 504
Opened during period 8 5
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Open at end of period 537 509
Logan's Roadhouse - company-owned
Open at beginning of period 124 107
Opened during period 5 7
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Open at end of period 129 114
Total company-owned units 666 623
Logan's Roadhouse - franchised
Open at beginning of period 23 20
Opened during period 0 0
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Open at end of period 23 20
System-wide units 689 643
========== ========
Total revenue in company-owned stores: (In thousands)
Cracker Barrel - restaurant $ 426,645 $ 408,413
Cracker Barrel - retail 108,840 117,911
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Cracker Barrel - total 535,485 526,324
Logan's Roadhouse 97,327 85,800
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Total net sales 632,812 612,124
Franchise fees and royalties 545 529
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Total Revenue $ 633,357 $ 612,653
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Operating weeks - company-owned stores:
Cracker Barrel 6,938 6,573
Logan's Roadhouse 1,652 1,439
Average unit volume - company-owned stores: (In thousands)
Cracker Barrel - restaurant $ 799.4 $ 807.8
Cracker Barrel - retail 204.0 233.2
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Cracker Barrel - total $ 1,003.4 $ 1,041.0
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Logan's Roadhouse $ 765.9 $ 775.1
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Q1 2006 vs. Q1 2005
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Comparable store sales period to period (decrease) increase: Cracker Barrel Logan's
Restaurant (0.4%) 0.5%
Retail (11.6%) --
Number of locations in comparable store base 488 103
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