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 April 28, 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_
59,973,197 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 April 28, July 29,
- ------------------------ 1995 1994
---- ----
ASSETS
- ------
Cash and cash equivalents $ 6,644,968 $ 13,050,523
Short-term investments 48,792,674 65,530,819
Receivables 3,079,202 2,993,735
Inventories 46,146,753 41,989,546
Prepaid expenses 484,101 1,094,862
Deferred income taxes 3,220,016 3,220,016
------------ ------------
Total current assets 108,367,714 127,879,501
------------ ------------
Property and equipment 544,700,981 460,134,481
Accumulated depreciation and
amortization 94,553,100 74,174,676
------------ ------------
Property and equipment-net 450,147,881 385,959,805
------------ ------------
Long-term investments 6,303,432 15,690,799
------------ ------------
Other assets 697,284 533,622
------------ ------------
Total assets $565,516,311 $530,063,727
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Accounts payable $ 22,773,093 $ 25,766,024
Other current liabilities 41,142,031 41,391,982
------------ ------------
Total current liabilities 63,915,124 67,158,006
------------ ------------
Long-term debt 19,500,000 23,500,000
------------ ------------
Capital lease obligations 1,638,283 1,708,619
------------ ------------
Deferred income taxes 7,851,185 7,851,185
------------ ------------
Stockholders' equity:
Common stock 29,982,330 29,950,658
Additional paid-in
capital 194,727,330 194,073,393
Retained earnings 247,902,059 205,821,866
------------ ------------
Total stockholders' equity 472,611,719 429,845,917
------------ ------------
Total liabilities and
stockholders' equity $565,516,311 $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
----------------------
April 28, April 29,
1995 1994
---- ----
Net sales $188,306,113 $155,368,895
Cost of goods sold 60,831,162 50,758,879
------------ ------------
Gross profit on sales 127,474,951 104,610,016
------------ ------------
Expenses:
Store operations 92,908,040 75,310,682
General and administrative 11,155,961 9,368,754
------------ ------------
Total expenses 104,064,001 84,679,436
------------ ------------
Operating income 23,410,950 19,930,580
Interest expense 200,073 429,275
Interest income 727,704 719,853
------------ ------------
Income before income taxes and
cumulative effect of change
in accounting principle 23,938,581 20,221,158
Provision for income taxes 8,881,214 7,623,377
------------ ------------
Income before cumulative effect
of change in accounting principle 15,057,367 12,597,781
Cumulative effect on prior years
of changing method of accounting
for income taxes -- --
------------ ------------
Net income $ 15,057,367 $ 12,597,781
============ ============
Earnings per share:
Before cumulative effect of change
in accounting principle $ .25 $ .21
Cumulative effect on prior years
of changing method of accounting
for income taxes -- --
------------ ------------
Net earnings per share $ .25 $ .21
============ ============
Average common and common
equivalent shares outstanding 60,549,557 60,730,647
============ ============
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 Nine Months Ended
-------------------------
April 28, April 29,
1995 1994
---- ----
Net sales $561,876,795 $458,699,470
Cost of goods sold 190,370,141 155,208,363
------------ ------------
Gross profit on sales 371,506,654 303,491,107
------------ ------------
Expenses:
Store operations 270,841,131 218,829,289
General and administrative 34,089,259 27,935,491
------------ ------------
Total expenses 304,930,390 246,764,780
------------ ------------
Operating income 66,576,264 56,726,327
Interest expense 722,479 1,802,995
Interest income 2,475,602 2,665,909
------------ ------------
Income before income taxes and
cumulative effect of change
in accounting principle 68,329,387 57,589,241
Provision for income taxes 25,350,203 21,711,144
------------ ------------
Income before cumulative effect
of change in accounting principle 42,979,184 35,878,097
Cumulative effect on prior years
of changing method of accounting
for income taxes -- 988,262
------------ ------------
Net income $ 42,979,184 $ 36,866,359
============ ============
Earnings per share:
Before cumulative effect of change
in accounting principle $ .71 $ .59
Cumulative effect on prior years
of changing method of accounting
for income taxes -- .02
------------ ------------
Net earnings per share $ .71 $ .61
============ ============
Average common and common
equivalent shares outstanding 60,543,029 60,604,140
============ ============
Dividends per common share $ 0.01500 $ 0.01500
============ ============
See notes to financial statements.
CRACKER BARREL OLD COUNTRY STORE, INC.
- --------------------------------------
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
- ----------------------------------------------
For the Nine Months Ended
-------------------------
April 28, April 29,
1995 1994
---- ----
Cash flows from operating activities:
Net income $42,979,184 $36,866,359
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of
property and equipment 20,611,087 16,160,577
(Gain)loss on disposition of property
and equipment (101,414) 21,766
Increase in inventories (4,157,207) (8,242,029)
(Increase)decrease in other assets (163,662) 139,903
Decrease in accounts payable (2,992,931) (1,670,585)
(Decrease)increase in other current
assets and liabilities (224,657) 3,586,340
Decrease in deferred income taxes -- (838,262)
----------- -----------
Net cash provided by operating activities 55,950,400 46,024,069
----------- -----------
Cash flows from investing activities:
Decrease in short-term and long-term
investments 26,125,512 5,705,248
Purchase of property and equipment (85,594,398) (69,160,849)
Proceeds from sale of property and
equipment 896,649 74,120
----------- -----------
Net cash used in investing activities (58,572,237) (63,381,481)
----------- -----------
Cash flows from financing activities:
Proceeds from exercise of stock options 685,609 4,473,099
Principal payments under long-term debt
and capital lease obligations (3,570,336) (13,457,152)
Dividends on common stock (898,991) (895,647)
----------- -----------
Net cash used in financing activities (3,783,718) (9,879,700)
----------- -----------
Net decrease in cash and cash equivalents (6,405,555) (27,237,112)
Cash and cash equivalents,
beginning of year 13,050,523 38,552,111
----------- -----------
Cash and cash equivalents,
end of quarter $ 6,644,968 $11,314,999
=========== ===========
Supplemental disclosures of cash flow
information:
Cash paid during the nine months for:
Interest $ 1,380,585 $ 2,260,533
Income taxes 29,315,781 19,989,599
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 April 28, 1995 and the related condensed
statements of income and cash flows for the quarters and nine-month periods
ended April 28, 1995 and April 29, 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 nine-month period ended
April 28, 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 nine-month period ended April 28, 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 third quarter of
fiscal 1995 as compared to the fiscal 1994 third quarter:
Relationship to Net Sales
Quarters Ended Period to Period
04/28/95 04/29/94 Increase(Decrease)
-------- -------- ------------------
Net sales:
Restaurant 80.5% 80.4% 21%
Gift shop 19.5% 19.6% 21%
------ ------
Total sales 100.0% 100.0% 21%
Cost of goods sold 32.3% 32.7% 20%
Expenses:
Store operations 49.3% 48.5% 23%
General and administrative 5.9% 6.0% 19%
------ ------
Total expenses 55.3% 54.5% 23%
Operating income 12.4% 12.8% 17%
Interest expense 0.1% 0.3% (53%)
Interest income 0.4% 0.5% 1%
Income before income taxes
and cumulative effect of
change in accounting
principle 12.7% 13.0% 18%
Provision for income taxes 4.7% 4.9% 16%
Income before cumulative effect
of change in accounting
principle 8.0% 8.1% 20%
Cumulative effect on prior
years of changing method of
accounting for income taxes -- -- --
Net income 8.0% 8.1% 20%
Same Store Sales Analysis
152 Store Average ($000)
-------------------------
Restaurant $743.5 $717.4 4%
Gift shop 178.1 174.1 2%
------ ------
Restaurant & gift shop $921.6 $891.5 3%
====== ======
The following table highlights operating results for the nine months ended
April 28, 1995 as compared to the same period last year:
Relationship to Net Sales
Year to Date Period to Period
04/28/95 04/29/94 Increase(Decrease)
-------- -------- ------------------
Net sales:
Restaurant 77.5% 77.9% 22%
Gift shop 22.5% 22.1% 25%
------ ------
Total sales 100.0% 100.0% 22%
Cost of goods sold 33.9% 33.8% 23%
Expenses:
Store operations 48.2% 47.7% 24%
General and administrative 6.1% 6.1% 22%
------ ------
Total expenses 54.3% 53.8% 24%
Operating income 11.8% 12.4% 17%
Interest expense 0.1% 0.4% (60%)
Interest income 0.4% 0.6% (7%)
Income before income taxes
and cumulative effect of
change in accounting
principle 12.2% 12.6% 19%
Provision for income taxes 4.5% 4.7% 17%
Income before cumulative effect
of change in accounting
principle 7.6% 7.8% 20%
Cumulative effect on prior
years of changing method of
accounting for income taxes -- .2% (100%)
Net income 7.6% 8.0% 17%
Same Store Sales Analysis
152 Store Average ($000)
-------------------------
Restaurant $2,228.1 $2,145.2 4%
Gift shop 640.3 607.2 5%
-------- --------
Restaurant & gift shop $2,868.4 $2,752.4 4%
======== ========
Net sales for the third quarter of fiscal 1995 increased 21% over last
year's third quarter. Same store restaurant sales increased 3.6%,
including .1% in real terms; same store gift shop sales increased 2.3%.
Total same store sales (restaurant and gift shop) increased 3.4%. Net
sales for the nine months ended April 28, 1995, increased 22% over the
nine-month period ended April 29, 1994. Same store restaurant sales
increased 3.9%, including .3% in real terms and same store gift shop
sales increased 5.5%. Total same store sales (restaurant and gift shop)
increased 4.2%. Sales from new stores accounted for the remainder of
the increases in the quarter and nine month periods ended April 28,
1995.
Cost of goods sold as a percentage of net sales was 32.3% in the third
quarter of this year compared to 32.7% in the third quarter of last
year. The primary reason for the decrease was higher menu prices. Cost
of goods sold as a percentage of net sales was 33.9% for the nine months
ended this year compared to 33.8% for the same period last year. The
primary reasons for the increase was an increase in the mix of gift shop
sales, which carry a higher cost of goods, from 22.1% last year to 22.5%
this year, and higher markdowns this year than last year to move out
seasonal merchandise. These increases were partially offset by a
decrease in restaurant cost of goods sold as a percentage of net sales
for the nine-month period primarily due to higher menu prices.
Total operating expenses as a percentage of net sales were 55.3% and
54.3% in the quarter and nine-month period ended April 28, 1995 compared
to 54.5% and 53.8%, 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 as a result of low unemployment rates.
Interest expense decreased to $200,073 and $722,479 for the quarter
and nine-month period ended April 28, 1995 from $429,275 and $1,802,995,
respectively, in the same periods a year ago. The decrease was due to
lower average debt outstanding during the quarter and nine-month period
ended April 28, 1995. Interest income increased to $727,704 for the
third quarter of this year compared to $719,853 in the same period last
year. The primary reason for the increase was higher interest rates in
1995. Interest income decreased to $2,475,601 for the nine months ended
this year compared to $2,665,909 for the same period 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 $56.0 million
for the nine months ended April 28, 1995. Net income adjusted by
depreciation and amortization provided most of the cash. Increases in
inventories and decreases in accounts payable partially offset the cash
provided by net income adjusted by depreciation and amortization.
Capital expenditures were $26.5 million in the third quarter of fiscal
1995 and $85.6 million for the nine months ended April 28, 1995. Land
purchases and cost of new stores accounted for substantially all of
these expenditures, except for $1.5 million in the third quarter of
fiscal 1995 and $5.1 million for the nine months ended April 28, 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
nine 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 April 28, 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 reviewed the accompanying condensed balance sheet of Cracker
Barrel Old Country Store, Inc. as of April 28, 1995, the related
condensed statements of income for the quarters and nine-month periods
ended April 28, 1995 and April 29, 1994, and the related condensed
statements of cash flows for the nine-month periods ended April 28, 1995
and April 29, 1994. 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 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
June 7, 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: 6/7/95 By /s/Jimmie D. White
------ ----------------------------------------
Jimmie D. White, Chief Financial Officer
Date: 6/7/95 By /s/Patrick A. Scruggs
------ ---------------------------------------
Patrick A. Scruggs, Assistant Treasurer
June 7, 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 nine-month periods ended
April 28, 1995 and April 29, 1994, as indicated in our report dated
June 7, 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 April
28, 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