Positive Comparable Restaurant and Retail Sales in the Quarter

LEBANON, Tenn.--(BUSINESS WIRE)-- Cracker Barrel Old Country Store, Inc. ("Cracker Barrel" or the "Company") (Nasdaq: CBRL) today reported financial results for the first quarter of fiscal 2014 ended November 1, 2013.

First-Quarter Fiscal 2014 Highlights

• Compared to the prior year first quarter, comparable store restaurant sales increased 2.8% and comparable store retail sales increased 2.5%.
• Eighth consecutive quarter of positive comparable restaurant sales and retail sales, and outperformance of the Knapp-Track^TM casual dining index.
• On a GAAP basis, operating income margin was 6.8% of total revenue, compared with 7.2% in the prior year quarter. Adjusted for proxy contest expenses, adjusted operating income margin was 7.2% of total revenue, compared with 7.8% in the prior year quarter. (See non-GAAP reconciliation below.)
• On a GAAP basis, earnings per diluted share were $1.14, or $1.22 when adjusted for proxy contest expenses, compared with adjusted EPS of $1.08 in the prior year quarter.

Commenting on the first-quarter results, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, "We are pleased with our first quarter results, which represent our eighth consecutive quarter of increased year-over-year comparable store sales. Although the government shutdown challenged our consumer and added to an already difficult environment, this quarter's financial results exceeded our expectations and reflect our initial success in executing our business priorities for fiscal 2014."

First-Quarter Fiscal 2014 Results

Revenue

The Company reported total revenue of $649.1 million for the first quarter of fiscal 2014, representing an increase of 3.5% over the first quarter of the prior year. Comparable store restaurant sales increased 2.8%, including a 2.9% increase in average check. The average menu price increase for the quarter was approximately 2.5%. Comparable store retail sales increased 2.5% for the quarter. The Company opened one new Cracker Barrel store during the quarter.

Comparable store restaurant traffic, average check and comparable store restaurant and retail sales for the fiscal months of August, September and October and for the first quarter were as follows:

		August		September		October		First Quarter
Comparable restaurant traffic		1.2%		-0.1%		-1.1%		-0.1%
Average check		2.0%		3.3%		3.2%		2.9%
Comparable restaurant sales		3.2%		3.2%		2.1%		2.8%
Comparable retail sales		2.9%		3.3%		1.7%		2.5%

The Company believes that the 16-day partial shutdown of the federal government in October had a negative impact on comparable store traffic and sales of between 20 and 30 basis points for the quarter.

Operating Income

GAAP operating income in the first quarter was $44.2 million, or 6.8% of total revenue. Adjusted for proxy contest expenses, adjusted operating income was $47.1 million, or 7.2% of total revenue, compared with adjusted operating income of $49.2 million, or 7.8% of total revenue, in the prior year quarter. A 60 basis point reduction in store labor and related expenses was offset by the cost of a company-wide managers' conference and the timing of advertising expenses related to the Wholesome Fixin's® rollout.

Diluted Earnings per Share

On a GAAP basis, earnings per diluted share in the first quarter of fiscal 2014 were $1.14, compared with $0.97 in the prior year quarter. Adjusted for proxy contest expenses, adjusted earnings per diluted share were $1.22, compared with adjusted earnings per diluted share of $1.08 in the prior year quarter.

Fiscal 2014 Outlook

Based upon year-to-date financial performance and continuing uncertainty about economic trends, the Company re-affirmed its previous full year earnings guidance. For fiscal 2014, the Company expects total revenue of between $2.7 billion and $2.75 billion, an operating income margin of between 7.8% and 8.0%, and earnings per diluted share of between $5.60 and $5.80. The revenue projection for fiscal 2014 reflects the expected opening of seven or eight new Cracker Barrel stores, and projected increases in comparable store restaurant sales and retail sales in a range of 2.0% to 3.0%. The Company's projections are based upon expected food commodity inflation of approximately 2% for the year; depreciation expense between $68 million and $70 million; net interest expense between $16 million and $18 million; and an effective tax rate of between 31% and 32%. The Company expects capital expenditures during fiscal 2014 to be between $90 million and $100 million.

The Company expects to report earnings per diluted share for the second quarter of 2014 of between $1.50 and $1.60. The Company notes that its guidance does not include expenses related to the proxy contest at its recent annual shareholders' meeting. The Company reminds investors that its outlook for fiscal 2014 reflects a number of assumptions, many of which are outside the Company's control.

Fiscal 2014 First-Quarter Conference Call

As previously announced, the live broadcast of Cracker Barrel's quarterly conference call will be available to the public on-line at investor.crackerbarrel.com on November 26, 2013, beginning at 11:00 a.m. (Eastern Time). An on-line replay will be available at 2:00 p.m. (Eastern Time) and continue through December 10, 2013.

About Cracker Barrel

Cracker Barrel Old Country Store provides a friendly home-away-from-home in its old country stores and restaurants. Guests are cared for like family while relaxing and enjoying real home-style food and shopping that's surprisingly unique, genuinely fun and reminiscent of America's country heritage…all at a fair price. The restaurants serve up delicious, home-style country food such as meatloaf and homemade chicken n' dumplins as well as our signature biscuits using an old family recipe. The authentic old country retail store is fun to shop and offers unique gifts and self-indulgences.

Cracker Barrel Old Country Store, Inc. (Nasdaq: CBRL) was established in 1969 in Lebanon, Tenn. and operates 625 company-owned locations in 42 states. Every Cracker Barrel store is open seven days a week with hours Sunday through Thursday, 6 a.m. — 10 p.m., and Friday and Saturday, 6 a.m. - 11 p.m. For more information, visit: crackerbarrel.com.

CBRL-F

Except for specific historical information, certain 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 Cracker Barrel Old Country Store, Inc. and its subsidiaries to differ materially from those expressed or implied by this discussion. All forward-looking information is subject to completion of our financial procedures for Q1 FY14 and is provided 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," "opportunity," "future," "plans," "goals," "objectives," "expectations," "near-term," "long-term," "projection," "may," "will," "would," "could," "expect," "intend," "estimate," "anticipate," "believe," "potential," "regular," "should," "projects," "forecasts," or "continue" (or the negative or other derivatives of each of these terms) or similar terminology and include the expected effects of operational improvement initiatives, such as new menu items and retail offerings. Factors which could materially affect actual results include, but are not limited to: the effects of uncertain consumer confidence, higher costs for energy, general or regional economic weakness, weather on sales and customer travel, and discretionary income or personal expenditure activity of our customers; our ability to identify, acquire and sell successful new lines of retail merchandise and new menu items at our restaurants; our ability to successfully implement or sustain plans intended to improve operational or marketing execution and performance; 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; our ability to successfully implement plans intended to promote or protect our brands and products; commodity price increases; the ability of and cost to us to recruit, train, and retain qualified hourly and management employees in an escalating wage environment; the effects of increased competition at our locations on sales and on labor recruiting, cost, and retention; workers' compensation, group health and utility price changes; consumer behavior based on negative publicity or concerns over nutritional or safety aspects of our food or products or those of the restaurant industry in general, including concerns about pandemics, as well as the possible effects of such events on the price or availability of ingredients used in our restaurants; the effects of our substantial indebtedness and associated restrictions on our financial and operating flexibility and ability to execute or pursue our operating plans and objectives; changes in interest rates or capital market conditions affecting our financing costs and ability to refinance all or portions of our indebtedness; the effects of business trends on the outlook for individual restaurant locations and the effect on the carrying value of those locations; the availability and cost of suitable sites for restaurant development and our ability to identify those sites; changes in land, building materials and construction 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; practical or psychological effects of natural disasters or terrorist acts or war and military or government responses; disruptions to our restaurant or retail supply chain; changes in foreign exchange rates affecting our future retail inventory purchases; implementation of new or changes in interpretation of existing accounting principles generally accepted in the United States of America; and other factors described from time to time in our filings with the Securities and Exchange Commission, press releases, and other communications.

Any forward-looking statement made by us herein, or elsewhere, speaks only as of the date on which made. We expressly disclaim any intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

CRACKER BARREL OLD COUNTRY STORE, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)
(In thousands, except share and per share amounts, percentages and ratios)
		First Quarter Ended
			11/1/13				11/2/12			Percentage Change
Total revenue		$	649,141			$	627,451			4	%
Cost of goods sold			205,929				197,858			4
Gross profit			443,212				429,593			3
Labor and related expenses			236,747				232,739			2
Other store operating expenses			125,341				115,865			8
Store operating income			81,124				80,989			0
General and administrative expenses			36,887				35,681			3
Operating income			44,237				45,308			(2	)
Interest expense			4,407				10,712			(59	)
Pretax income			39,830				34,596			15
Provision for income taxes			12,670				11,404			11
Net income		$	27,160			$	23,192			18
Earnings per share — Basic:		$	1.14			$	0.98			16
Earnings per share — Diluted:		$	1.14			$	0.97			17
Weighted average shares:
Basic			23,817,436				23,577,574			1
Diluted			23,925,088				23,787,625			1
Ratio Analysis
Total revenue:
Restaurant			80.4	%			80.4	%
Retail			19.6				19.6
Total revenue			100.0				100.0
Cost of goods sold			31.7				31.5
Gross profit			68.3				68.5
Labor and related expenses			36.5				37.1
Other store operating expenses			19.3				18.5
Store operating income			12.5				12.9
General and administrative expenses			5.7				5.7
Operating income			6.8				7.2
Interest expense			0.7				1.7
Pretax income			6.1				5.5
Provision for income taxes			1.9				1.8
Net income			4.2	%			3.7	%

CRACKER BARREL OLD COUNTRY STORE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share amounts)
			11/1/13			8/2/13
Assets
Cash and cash equivalents		$	57,542		$	121,718
Property held for sale			883			883
Accounts receivable			16,730			15,942
Inventory			173,296			146,687
Prepaid expenses			15,913			12,648
Deferred income taxes			4,315			4,316
Property and equipment, net			1,026,185			1,026,369
Other long-term assets			59,719			59,743
Total assets		$	1,354,583		$	1,388,306
Liabilities and Shareholders' Equity
Accounts payable		$	93,694		$	110,637
Other current liabilities			205,487			205,430
Long-term debt			393,750			400,000
Interest rate swap liability			11,298			11,644
Other long-term obligations			117,392			120,073
Deferred income taxes			57,111			56,496
Shareholders' equity, net			475,851			484,026
Total liabilities and shareholders' equity		$	1,354,583		$	1,388,306
Common shares issued and outstanding			23,795,590			23,795,327

CRACKER BARREL OLD COUNTRY STORE, INC.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(Unaudited and in thousands)
		Three Months Ended
			11/1/13				11/2/12
Cash flows from operating activities:
Net income		$	27,160			$	23,192
Depreciation and amortization			16,477				15,959
Loss on disposition of property and equipment			877				655
Share-based compensation, net of excess tax benefit			2,252				595
(Increase) in inventories			(26,609	)			(34,208	)
(Decrease) in accounts payable			(16,943	)			(2,424	)
Net changes in other assets and liabilities			(12,445	)			(17,397	)
Net cash used in operating activities			(9,231	)			(13,628	)
Cash flows from investing activities:
Purchase of property and equipment, net of insurance recoveries			(17,122	)			(13,310	)
Proceeds from sale of property and equipment			144				6
Net cash used in investing activities			(16,978	)			(13,304	)
Cash flows from financing activities:
Net payments for credit facilities and other long-term obligations			(1	)			(29	)
(Taxes withheld) and proceeds from issuance of share-based compensation awards, net			(8,214	)			2,322
Excess tax benefit from share-based compensation			568				1,274
Purchases and retirement of common stock			(12,473	)			0
Dividends on common stock			(17,847	)			(9,732	)
Net cash used in financing activities			(37,967	)			(6,165	)
Net change in cash and cash equivalents			(64,176	)			(33,097	)
Cash and cash equivalents, beginning of period			121,718				151,962
Cash and cash equivalents, end of period		$	57,542			$	118,865

CRACKER BARREL OLD COUNTRY STORE, INC.
Supplemental Information
(Unaudited)
		First Quarter Ended
			11/1/13			11/2/12
Units in operation:
Open at beginning of period			624			616
Opened during period			1			4
Open at end of period			625			620
Total revenue: (In thousands)
Restaurant		$	521,947		$	504,314
Retail			127,194			123,137
Total revenue		$	649,141		$	627,451
Cost of goods sold: (In thousands)
Restaurant		$	142,596		$	135,183
Retail			63,333			62,675
Total cost of goods sold		$	205,929		$	197,858
Average unit volume: (In thousands)
Restaurant		$	836.1		$	815.1
Retail			203.7			199.1
Total		$	1,039.8		$	1,014.2
Operating weeks:			8,116			8,043

	Q1 2014 vs. Q1 2013
Comparable store sales period-to-period increase:
Restaurant	2.8	%
Retail	2.5	%
Number of locations in comparable store base	609

CRACKER BARREL OLD COUNTRY STORE, INC.
Reconciliation of GAAP basis operating
results to adjusted non-GAAP operating results
(Unaudited and in thousands)

The Company makes reference in this release to "adjusted operating income," "adjusted net income," "adjusted earnings per diluted share," and "adjusted general and administrative expenses," excluding the impact of severance and proxy contest expenses. The Company believes that excluding these items and their related tax effects from its financial results reflects operating results that are more indicative of the Company's ongoing operating performance while improving comparability to prior periods, and as such, may provide investors with an enhanced understanding of the Company's past financial performance and prospects for the future. This information is not intended to be considered in isolation or as a substitute for operating income, net income, or earnings per share or expense information prepared in accordance with GAAP.

											First Quarter ended November 1, 2013
											As Reported				Adjust					As Adjusted
															(1)
Store operating income											$	81,124			$	-				$	81,124
General and administrative expenses												36,887				(2,824	)				34,063
Operating income												44,237				2,824					47,061
Interest Expense												4,407									4,407
Pretax income												39,830				2,824					42,654
Provision for income taxes												12,670				898					13,568
Net income											$	27,160			$	1,926				$	29,086
Earning per share - Basic											$	1.14			$	0.08				$	1.22
Earning per share - Diluted											$	1.14			$	0.08				$	1.22
											First Quarter ended November 2, 2012
											As Reported				Adjust					As Adjusted
															(1), (2)
Store operating income												80,989									80,989
General and administrative expenses												35,681				(3,908	)				31,773
Operating income												45,308				3,908					49,216
Interest Expense												10,712				-					10,712
Pretax income												34,596				3,908					38,504
Provision for income taxes												11,404				1,288					12,692
Net income											$	23,192			$	2,620				$	25,812
Earning per share - Basic											$	0.98			$	0.11				$	1.09
Earning per share - Diluted											$	0.97			$	0.11				$	1.08
(1) Proxy contest costs and related tax effects.
(2) Severance and related costs and tax effects.

Cracker Barrel Old Country Store, Inc.
Investor Contact:
Lawrence E. Hyatt, (615) 235-4432
or
Media Contact:
Andy Merrill, (212) 886-9304

Source: Cracker Barrel Old Country Store, Inc.

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