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 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_
59,945,261 Shares of Common Stock
Issued and Outstanding
Page 1 of 14
PART I
Item 1. Financial Statements
--------------------
CRACKER BARREL OLD COUNTRY STORE, INC.
- --------------------------------------
(Unaudited) (Audited)
CONDENSED BALANCE SHEETS January 27, July 29,
- ------------------------ 1995 1994
---- ----
ASSETS
- ------
Cash and cash equivalents $ 7,150,552 $ 13,050,523
Short-term investments 42,665,158 65,530,819
Receivables 1,766,331 2,993,735
Inventories 42,204,183 41,989,546
Prepaid expenses 531,776 1,094,862
Deferred income taxes 3,220,016 3,220,016
------------ ------------
Total current assets 97,538,016 127,879,501
------------ ------------
Property and equipment 518,348,535 460,134,481
Accumulated depreciation and
amortization 87,381,922 74,174,676
------------ ------------
Property and equipment-net 430,966,613 385,959,805
------------ ------------
Long-term investments 14,374,629 15,690,799
------------ ------------
Other assets 589,802 533,622
------------ ------------
Total assets $543,469,060 $530,063,727
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Accounts payable $ 21,938,043 $ 25,766,024
Other current liabilities 34,999,799 41,391,982
------------ ------------
Total current liabilities 56,937,842 67,158,006
------------ ------------
Long-term debt 19,500,000 23,500,000
------------ ------------
Capital lease obligations 1,661,728 1,708,619
------------ ------------
Deferred income taxes 7,851,185 7,851,185
------------ ------------
Stockholders' equity:
Common stock 29,961,403 29,950,658
Additional paid-in
capital 194,412,405 194,073,393
Retained earnings 233,144,497 205,821,866
------------ ------------
Total stockholders' equity 457,518,305 429,845,917
------------ ------------
Total liabilities and
stockholders' equity $543,469,060 $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
----------------------
January 27, January 28,
1995 1994
---- ----
Net sales $188,622,981 $150,831,678
Cost of goods sold 68,149,041 54,056,184
------------ ------------
Gross profit on sales 120,473,940 96,775,494
------------ ------------
Expenses:
Store operations 90,003,682 71,748,488
General and administrative 11,470,360 9,256,389
------------ ------------
Total expenses 101,474,042 81,004,877
------------ ------------
Operating income 18,999,898 15,770,617
Interest expense 277,447 751,538
Interest income 868,218 892,543
------------ ------------
Income before income taxes and
cumulative effect of change
in accounting principle 19,590,669 15,911,622
Provision for income taxes 7,268,138 5,998,681
------------ ------------
Income before cumulative effect
of change in accounting principle 12,322,531 9,912,941
Cumulative effect on prior years
of changing method of accounting
for income taxes -- --
------------ ------------
Net income $ 12,322,531 $ 9,912,941
============ ============
Earnings per share:
Before cumulative effect of change
in accounting principle $ .20 $ .16
Cumulative effect on prior years
of changing method of accounting
for income taxes -- --
------------ ------------
Net earnings per share $ .20 $ .16
============ ============
Average common and common
equivalent shares outstanding 60,487,373 60,621,566
============ ============
Dividends per common share $ 0.00500 $ 0.00500
============ ============
See notes to financial statements.
CRACKER BARREL OLD COUNTRY STORE, INC.
- --------------------------------------
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
- ------------------------------------------
For the Six Months Ended
------------------------
January 27, January 28,
1995 1994
---- ----
Net sales $373,570,682 $303,330,575
Cost of goods sold 129,538,979 104,449,484
------------ ------------
Gross profit on sales 244,031,703 198,881,091
------------ ------------
Expenses:
Store operations 177,933,091 143,518,607
General and administrative 22,933,298 18,566,737
------------ ------------
Total expenses 200,866,389 162,085,344
------------ ------------
Operating income 43,165,314 36,795,747
Interest expense 522,406 1,373,720
Interest income 1,747,898 1,946,056
------------ ------------
Income before income taxes and
cumulative effect of change
in accounting principle 44,390,806 37,368,083
Provision for income taxes 16,468,989 14,087,767
------------ ------------
Income before cumulative effect
of change in accounting principle 27,921,817 23,280,316
Cumulative effect on prior years
of changing method of accounting
for income taxes -- 988,262
------------ ------------
Net income $ 27,921,817 $ 24,268,578
============ ============
Earnings per share:
Before cumulative effect of change
in accounting principle $ .46 $ .38
Cumulative effect on prior years
of changing method of accounting
for income taxes -- .02
------------ ------------
Net earnings per share $ .46 $ .40
============ ============
Average common and common
equivalent shares outstanding 60,539,765 60,540,887
============ ============
Dividends per common share $ 0.01000 $ 0.01000
============ ============
See notes to financial statements.
CRACKER BARREL OLD COUNTRY STORE, INC.
- --------------------------------------
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
- ----------------------------------------------
For the Six Months Ended
------------------------
January 27, January 28,
1995 1994
---- ----
Cash flows from operating activities:
Net income $27,921,817 $24,268,578
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of
property and equipment 13,349,858 10,456,295
(Gain)loss on disposition of property
and equipment (90,865) 9,879
Increase in inventories (214,637) (4,039,287)
(Increase)decrease in other assets (56,180) 186,557
Decrease in accounts payable (3,827,981) (6,227,487)
Decrease in other current assets
and liabilities (5,101,693) (2,936,727)
Decrease in deferred income taxes -- (888,262)
----------- -----------
Net cash provided by operating activities 31,980,319 20,829,546
----------- -----------
Cash flows from investing activities:
Decrease in short-term and long-term
investments 24,181,831 13,436,635
Purchase of property and equipment (59,110,681) (46,715,632)
Proceeds from sale of property and
equipment 844,880 56,759
----------- -----------
Net cash used in investing activities (34,083,970) (33,222,238)
----------- -----------
Cash flows from financing activities:
Proceeds from exercise of stock options 349,757 3,447,009
Principal payments under long-term debt
and capital lease obligations (3,546,891) (13,437,253)
Dividends on common stock (599,186) (596,450)
----------- -----------
Net cash used in financing activities (3,796,320) (10,586,694)
----------- -----------
Net decrease in cash and cash equivalents (5,899,971) (22,979,386)
Cash and cash equivalents,
beginning of year 13,050,523 38,552,111
----------- -----------
Cash and cash equivalents,
end of quarter $ 7,150,552 $15,572,725
=========== ===========
Supplemental disclosures of cash flow
information:
Cash paid during the six months for:
Interest $ 1,372,980 $ 2,221,856
Income taxes 23,433,941 15,057,919
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 January 27, 1995 and the related
condensed statements of income and cash flows for the quarters and six-month
periods ended January 27, 1995 and January 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 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 and six-month period ended
January 27, 1995 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, 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 and six-month period ended January 27, 1995 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 second quarter of
fiscal 1995 as compared to the fiscal 1994 second quarter:
Relationship to Net Sales
Quarters Ended Period to Period
01/27/95 01/28/94 Increase(Decrease)
-------- -------- ------------------
Net sales:
Restaurant 73.3% 74.0% 24%
Gift shop 26.7% 26.0% 28%
------ ------
Total sales 100.0% 100.0% 25%
Cost of goods sold 36.1% 35.8% 26%
Expenses:
Store operations 47.7% 47.6% 25%
General and administrative 6.1% 6.1% 24%
----- -----
Total expenses 53.8% 53.7% 25%
Operating income 10.1% 10.5% 20%
Interest expense 0.1% 0.5% (63%)
Interest income 0.5% 0.6% (3%)
Income before income taxes
and cumulative effect of
change in accounting
principle 10.4% 10.5% 23%
Provision for income taxes 3.9% 4.0% 21%
Income before cumulative effect
of change in accounting
principle 6.5% 6.6% 24%
Cumulative effect on prior
years of changing method of
accounting for income taxes -- -- --
Net income 6.5% 6.6% 24%
Same Store Sales Analysis
152 Store Average ($000)
-------------------------
Restaurant $706.0 $669.2 6%
Gift shop 252.1 233.2 8%
------ ------
Restaurant & gift shop $958.1 $902.4 6%
====== ======
The following table highlights operating results for the six months ended
January 27, 1995 as compared to the same period last year:
Relationship to Net Sales
Year to Date Period to Period
01/27/95 01/28/94 Increase(Decrease)
-------- -------- ------------------
Net sales:
Restaurant 76.0% 76.6% 22%
Gift shop 24.0% 23.4% 26%
------ ------
Total sales 100.0% 100.0% 23%
Cost of goods sold 34.7% 34.4% 24%
Expenses:
Store operations 47.6% 47.3% 24%
General and administrative 6.1% 6.1% 24%
------ ------
Total expenses 53.8% 53.4% 24%
Operating income 11.6% 12.1% 17%
Interest expense 0.1% 0.5% (62%)
Interest income 0.5% 0.6% (10%)
Income before income taxes
and cumulative effect of
change in accounting
principle 11.9% 12.3% 19%
Provision for income taxes 4.4% 4.6% 17%
Income before cumulative effect
of change in accounting
principle 7.5% 7.7% 20%
Cumulative effect on prior
years of changing method of
accounting for income taxes -- 0.3% (100%)
Net income 7.5% 8.0% 15%
Same Store Sales Analysis
152 Store Average ($000)
-------------------------
Restaurant $1,484.6 $1,427.8 4%
Gift shop 462.1 433.0 7%
-------- --------
Restaurant & gift shop $1,946.7 $1,860.8 5%
======== ========
Net sales for the second quarter of fiscal 1995 increased 25% over
last year's second quarter. Same store restaurant sales increased 5.5%,
including 2.1% in real terms. Same store gift shop sales increased
8.1%. Total same store sales (restaurant and gift shop) increased 6.2%.
Net sales for the six months ended January 27, 1995, increased 23% over
the six-month period ended January 28, 1994. Same store restaurant
sales increased 4.0%, including .6% in real terms and same store gift
shop sales increased 6.7%. Total same store sales (restaurant and gift
shop) increased 4.6%. Sales from new stores accounted for the remainder
of the increase.
Cost of goods sold as a percentage of net sales was 36.1% in the
second quarter of this year compared to 35.8% in the second quarter of
last year. For the six months ended January 27, 1995, cost of goods
sold as a percentage of net sales was 34.7% compared to 34.4% for the
same period a year ago. There were two primary reasons for the
increases in the quarter and six months ended January 27, 1995. First,
gift shop cost of goods sold was higher than last year primarily due to
higher markdowns to move out seasonal merchandise. Secondly, the mix of
gift shop sales increased from 26.0% last year to 26.7% this year and
23.4% last year to 24.0% this year for the quarter and six months,
respectively; gift shop items carry a higher cost of goods, and
therefore, caused total cost of goods sold as a percentage of net sales
to increase. These increases were partially offset by a decrease in
restaurant cost of goods sold as a percentage of net sales for the
quarter and six-month periods primarily due to higher menu prices.
Total operating expenses as a percentage of net sales were 53.8% in
the quarter and six-month period ended January 27, 1995 compared to
53.7% and 53.4%, respectively, in the same periods a year ago. 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.
Interest expense decreased to $277,447 and $522,406 for the quarter
and six-month period ended January 27, 1995 from $751,538 and
$1,373,720, respectively, in the same periods a year ago. The decrease
was due to lower average debt outstanding during the quarter and six-
month period ended January 27, 1995. Interest income decreased to
$868,218 and $1,747,898 in the quarter and six-month period ended
January 27, 1995 from $892,543 and $1,946,056, respectively, in 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 1995.
Liquidity and Capital Resources
- -------------------------------
The Company's operating activities provided net cash of $32.0 million
for the six months ended January 27, 1995. Net income adjusted by
depreciation and amortization provided most of the cash. Decreases in
accounts payable and decreases in other current assets and liabilities
partially offset the cash provided by net income adjusted by
depreciation and amortization.
Capital expenditures were $29.7 million in the second quarter of
fiscal 1995 and $59.1 million for the six months ended January 27, 1995.
Land purchases and cost of new stores accounted for substantially all of
these expenditures, except for $1.9 million in the second quarter of
fiscal 1995 and $3.6 million for the six months ended January 27, 1995
for the renovation of the old gift shop warehouse into office space.
The Company's internally generated cash and short-term and long-term
investments were sufficient to finance all of its growth in the first
six months 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 January 27, 1995, along with cash generated from the Company's
operating activities, will be sufficient to finance its continued
expansion in fiscal 1995 and its continued 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 January 27, 1995, and the related
condensed statements of income and cash flows for the quarters and six-
month periods ended January 27, 1995 and January 28, 1994, 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 the 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
March 8, 1995
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: 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.
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: 3/08/95 By /s/Jimmie D. White
------- ----------------------------------------
Jimmie D. White, Chief Financial Officer
Date: 3/08/95 By /s/Patrick A. Scruggs
------- ----------------------------------------
Patrick A. Scruggs, Assistant Treasurer
March 8, 1995
Cracker Barrel Old Country Store, Inc.
Hartmann Drive
Lebanon, Tennessee 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 27, 1995 and January 28, 1994, as indicated in our report
dated March 8, 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 was included
in your Quarterly Report on Form 10-Q for the quarter ended January
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