View:
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 28, 1994
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_
59,803,900 Shares of Common Stock
Issued and Outstanding
Page 1 of 15
PART I
Item 1. Financial Statements
--------------------
CRACKER BARREL OLD COUNTRY STORE, INC.
- --------------------------------------
(Unaudited) (Audited)
CONDENSED BALANCE SHEETS January 28, July 30,
- ------------------------ 1994 1993
---- ----
ASSETS
- ------
Cash and cash equivalents $ 15,572,725 $ 38,552,111
Short-term investments 55,948,717 65,094,791
Receivables 1,295,285 2,436,918
Inventories 32,465,695 28,426,408
Prepaid expenses 489,905 832,262
Deferred income taxes 4,014,475 --
------------ ------------
Total current assets 109,786,802 135,342,490
------------ ------------
Property and equipment 409,134,162 362,587,593
Accumulated depreciation and
amortization 67,345,597 56,991,727
------------ ------------
Property and equipment-net 341,788,565 305,595,866
------------ ------------
Long-term investments 23,130,817 27,421,378
------------ ------------
Other assets 526,226 712,783
------------ ------------
Total assets $475,232,410 $469,072,517
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Accounts payable $ 16,909,811 $ 23,137,298
Other current liabilities 31,347,043 36,089,916
------------ ------------
Total current liabilities 48,256,854 59,227,214
------------ ------------
Long-term debt 23,500,000 36,575,799
------------ ------------
Capital lease obligations 1,762,602 1,801,900
------------ ------------
Deferred income taxes 7,809,144 4,682,931
------------ ------------
Stockholders' equity:
Common stock 29,896,888 29,785,234
Additional paid-in
capital 191,265,289 187,929,934
Retained earnings 172,741,633 149,069,505
------------ ------------
Total stockholders' equity 393,903,810 366,784,673
------------ ------------
Total liabilities and
stockholders' equity $475,232,410 $469,072,517
============ ============
Note: The balance sheet as of July 30, 1993 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 28, January 29,
1994 1993
---- ----
Net sales $150,831,678 $119,575,294
Cost of goods sold 54,056,184 41,865,742
------------ ------------
Gross profit on sales 96,775,494 77,709,552
------------ ------------
Expenses:
Store operations 71,748,488 57,464,767
General and administrative 9,256,389 7,584,681
------------ ------------
Total expenses 81,004,877 65,049,448
------------ ------------
Operating income 15,770,617 12,660,104
Interest expense 751,538 769,792
Interest income 892,543 332,114
------------ ------------
Income before income taxes and
cumulative effect of change
in accounting principle 15,911,622 12,222,426
Provision for income taxes 5,998,681 4,571,187
------------ ------------
Income before cumulative effect
of change in accounting principle 9,912,941 7,651,239
Cumulative effect on prior years
of changing method of accounting
for income taxes -- --
------------ ------------
Net income $ 9,912,941 $ 7,651,239
============ ============
Earnings per share:
Before cumulative effect of change
in accounting principle $ .16 $ .13
Cumulative effect on prior years
of changing method of accounting
for income taxes -- --
------------ ------------
Net earnings per share $ .16 $ .13
============ ============
Average common and common
equivalent shares outstanding 60,621,566 57,635,867
============ ============
Dividends per common share $ 0.00500 $ 0.00417
============ ============
See notes to financial statements.
CRACKER BARREL OLD COUNTRY STORE, INC.
- --------------------------------------
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
- ------------------------------------------
For the Six Months Ended
------------------------
January 28, January 29,
1994 1993
---- ----
Net sales $303,330,575 $242,555,480
Cost of goods sold 104,449,484 82,214,301
------------ ------------
Gross profit on sales 198,881,091 160,341,179
------------ ------------
Expenses:
Store operations 143,518,607 115,915,381
General and administrative 18,566,737 15,229,731
------------ ------------
Total expenses 162,085,344 131,145,112
------------ ------------
Operating income 36,795,747 29,196,067
Interest expense 1,373,720 1,578,283
Interest income 1,946,056 793,216
------------ ------------
Income before income taxes and
cumulative effect of change
in accounting principle 37,368,083 28,411,000
Provision for income taxes 14,087,767 10,625,714
------------ ------------
Income before cumulative effect
of change in accounting principle 23,280,316 17,785,286
Cumulative effect on prior years
of changing method of accounting
for income taxes 988,262 --
------------ ------------
Net income $ 24,268,578 $ 17,785,286
============ ============
Earnings per share:
Before cumulative effect of change
in accounting principle $ .38 $ .31
Cumulative effect on prior years
of changing method of accounting
for income taxes .02 --
------------ ------------
Net earnings per share $ .40 $ .31
============ ============
Average common and common
equivalent shares outstanding 60,540,887 57,191,346
============ ============
Dividends per common share $ 0.01000 $ 0.00834
============ ============
See notes to financial statements.
CRACKER BARREL OLD COUNTRY STORE, INC.
- --------------------------------------
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
- ----------------------------------------------
For the Six Months Ended
------------------------
January 28, January 29,
1994 1993
---- ----
Cash flows from operating activities:
Net income $24,268,578 $17,785,286
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of
property and equipment 10,456,295 7,812,105
Loss on disposition of property
and equipment 9,879 3,067
(Increase)decrease in inventories (4,039,287) 1,690,912
Decrease in other assets 186,557 42,970
Decrease in accounts payable (6,227,487) (2,009,183)
(Decrease)increase in other current
assets and liabilities (2,936,727) 2,000,493
(Decrease)increase in deferred
income taxes (888,262) 100,000
----------- -----------
Net cash provided by operating activities 20,829,546 27,425,650
----------- -----------
Cash flows from investing activities:
Decrease(increase) in short-term and 13,436,635 (57,031,762)
long-term investments
Purchase of property and equipment (46,715,632) (37,378,530)
Proceeds from sale of property and
equipment 56,759 31,928
----------- -----------
Net cash used in investing activities (33,222,238) (94,378,364)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of capital stock -- 69,501,753
Proceeds from exercise of stock options 3,447,009 9,667,491
Principal payments under long-term debt
and capital lease obligations (13,437,253) (1,104,657)
Dividends on common stock (596,450) (464,313)
----------- -----------
Net cash (used in) provided by
financing activities (10,586,694) 77,600,274
----------- -----------
Net (decrease)increase in cash and cash
equivalents (22,979,386) 10,647,560
Cash and cash equivalents,
beginning of year 38,552,111 12,951,661
----------- -----------
Cash and cash equivalents,
end of quarter $15,572,725 $23,599,221
=========== ===========
Supplemental disclosures of cash flow
information:
Cash paid during the six months for:
Interest $ 2,221,856 $ 1,826,065
Income taxes 15,057,919 8,108,168
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 28, 1994 and the related
condensed statements of income and cash flows for the quarters and six-month
periods ended January 28, 1994 and January 29, 1993, have been prepared by
the Company, without audit; in the opinion of management, all adjustments,
including normal recurring accruals, have been made for a fair presentation
of such condensed financial statements.
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 30, 1993.
Deloitte & Touche, 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. Long Term Debt
--------------
The Company elected to prepay the following two outstanding debt issues
during the second quarter of fiscal year 1994, unsecured notes payable of
$6,800,000 and Industrial Development Revenue Bonds of $3,465,000. The
unsecured notes payable of $6,800,000 had annual installments of $800,000
through 1999, and a final installment due August 5, 2000. The annual
interest rate on the notes was 9.5% through 1997 and thereafter at a rate
equal to the U.S. Treasury Note rate plus 1.2%. The $3,465,000 Industrial
Development Revenue Bonds were redeemable in annual installments of $700,000
from December 1, 2009 through December 1, 2012, with a final installment due
on December 1, 2013, with interest at an annual rate of 8.5%.
3. Income Taxes
------------
The provision for income taxes for the quarter and six-month period
ended January 28, 1994 has been computed based on management's estimate of
the tax rate for the entire fiscal year. The variation between the statutory
tax rate and the effective tax rate is due primarily to credits for FICA tax
on tips above minimum wage and targeted jobs tax credits.
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes", effective July 31, 1993. This
Statement supersedes Accounting Principles Board Opinion No. 11, "Accounting
for Income Taxes", which was the Company's prior method of accounting for
income taxes. The cumulative effect of adopting SFAS No. 109 on the
Company's financial statements increased income by $988,262 ($0.02
per share), for the six months ended January 28, 1994. The adjustment
represents the impact of adjusting deferred taxes to new rates as opposed to
the higher tax rates in effect when the deferred taxes originated.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's net deferred tax liability
as of July 31, 1993 are as follows:
Deferred tax assets:
Financial accruals without economic performance $ 3,778,730
Other 797,357
-----------
4,576,087
-----------
Deferred tax liabilities:
Excess tax depreciation over book 8,235,680
Other 35,076
-----------
8,270,756
-----------
Net deferred tax liability $(3,694,669)
===========
The Company provided no valuation allowance against deferred
tax assets recorded as of July 31, 1993 and January 28, 1994, as the
"more-likely-than-not" valuation method determined all deferred assets
to be fully realizable in future taxable periods.
The provision for income tax expense for the six months ended
January 28, 1994 was $14,087,767 of which $13,987,767 is current income tax
expense and $100,000 is deferred income tax expense. The Company's effective
tax rate for fiscal year 1994 is estimated to be 37.7%.
The provision for income tax expense for the six months ended
January 29, 1993 was $10,625,714 of which $10,525,714 was current income tax
expense and $100,000 was deferred income tax expense.
The Company's effective tax rate for fiscal year 1993 was 37.4%. The
adoption of SFAS No. 109 had no impact on the Company's effective tax rate
for fiscal years 1993 or 1994.
4. 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 28, 1994 cannot
be considered indicative of the operating results for the full year.
5. Stock Split
-----------
Per share amounts and average common and common equivalent shares for
the quarter and six-month period ended January 29, 1993 have been restated to
give effect to the three-for-two stock split in March 1993.
6. Reclassifications
-----------------
Certain reclassifications have been made in the January 29, 1993 and
July 31, 1992 condensed balance sheets to conform to the classifications used
in fiscal 1994 and in the 1993 annual report for the purpose of preparing the
January 29, 1993 condensed statement of cash flows.
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 1994 as compared to the fiscal 1993 second quarter:
Relationship to Net Sales
Quarters Ended Period to Period
01/28/94 01/29/93 Increase(Decrease)
-------- -------- ------------------
Net sales:
Restaurant 74.0% 75.4% 24%
Gift shop 26.0% 24.6% 33%
------ ------
Total sales 100.0% 100.0% 26%
Cost of goods sold 35.8% 35.0% 29%
Expenses:
Store operations 47.6% 48.1% 25%
General and administrative 6.1% 6.3% 22%
------ ------
Total expenses 53.7% 54.4% 25%
Operating income 10.5% 10.6% 25%
Interest expense 0.5% 0.6% (2%)
Interest income 0.6% 0.3% 169%
Income before income taxes
and cumulative effect of
change in accounting
principle 10.5% 10.2% 30%
Provision for income taxes 4.0% 3.8% 31%
Income before cumulative effect
of change in accounting
principle 6.6% 6.4% 30%
Cumulative effect on prior
years of changing method of
accounting for income taxes -- -- --
Net income 6.6% 6.4% 30%
Same Store Sales Analysis
127 Store Average ($000)
-------------------------
Restaurant $674.7 $650.4 4%
Gift shop 232.3 211.4 10%
------ ------
Restaurant & gift shop $907.0 $861.8 5%
====== ======
The following table highlights operating results for the six months ended
January 28, 1994 as compared to the same period last year:
Relationship to Net Sales
Year to Date Period to Period
01/28/94 01/29/93 Increase(Decrease)
-------- -------- ------------------
Net sales:
Restaurant 76.6% 77.2% 24%
Gift shop 23.4% 22.8% 29%
------ ------
Total sales 100.0% 100.0% 25%
Cost of goods sold 34.4% 33.9% 27%
Expenses:
Store operations 47.3% 47.8% 24%
General and administrative 6.1% 6.3% 22%
------ ------
Total expenses 53.4% 54.1% 24%
Operating income 12.1% 12.0% 26%
Interest expense 0.5% 0.7% (13%)
Interest income 0.6% 0.3% 145%
Income before income taxes
and cumulative effect of
change in accounting
principle 12.3% 11.7% 32%
Provision for income taxes 4.6% 4.4% 33%
Income before cumulative effect
of change in accounting
principle 7.7% 7.3% 31%
Cumulative effect on prior
years of changing method of
accounting for income taxes .3% -- --
Net income 8.0% 7.3% 36%
Same Store Sales Analysis
127 Store Average ($000)
-------------------------
Restaurant $1,439.9 $1,385.2 4%
Gift shop 434.6 406.2 7%
-------- --------
Restaurant & gift shop $1,874.5 $1,791.4 5%
======== ========
Net sales for the second quarter of fiscal 1994 increased 26% over
last year's second quarter. Same store restaurant sales increased 3.7%,
including .5% in real terms. Same store gift shop sales increased 9.9%.
Sales from new stores accounted for the remainder of the increase. Net
sales for the six months ended January 28, 1994, increased 25% over the
six month period ended January 29, 1993. Same store restaurant sales
increased 3.9%, including .8% in real terms and same store gift shop
sales increased 7.0%. Sales from new stores accounted for the remainder
of the increase.
Cost of goods sold as a percentage of net sales were 35.8% in the
second quarter of this year compared to 35.0% in the same period a year
ago. This increase was primarily due to an increasing mix of gift shop
sales, which have a higher cost than restaurant sales. In addition,
this increase was partially due to an increase in restaurant cost of
goods sold as a percentage of sales, which was primarily due to a new
seasonal promotion instituted in the second quarter of fiscal 1994.
For the six months ended January 28, 1994, cost of goods sold were 34.4%
compared to 33.9% for the same period a year ago. This increase was
primarily due to both an increasing mix of gift shop sales, which have
a higher cost than restaurant sales, and due to an increase in food
cost.
Total operating expenses as a percentage of net sales were 53.7%
and 53.4% in the quarter and six-month period ended January 28, 1994,
compared to 54.4% and 54.1%, respectively, in the same periods a year
ago. The decreases in store operating expenses as a percent to net
sales were primarily due to increased volume. General and
administrative expenses as a percentage of sales were lower this year
compared to the second quarter and six-month period of last year
primarily due to higher volume.
Interest expense decreased to $751,538 and $1,373,720 for the
quarter and six-month period ended January 28, 1994 from $769,792 and
$1,578,283, respectively, in the same periods a year ago. The decreases
were primarily due to lower average debt outstanding during the quarter
and six-month period ended January 28, 1994. Interest income increased
to $892,543 and $1,946,056 in the quarter and six-month period ended
January 28, 1994 from $332,114 and $793,216, respectively, in the same
periods a year ago. The primary reason for the increase in interest
income was higher average funds available for investment.
Liquidity and Capital Resources
- -------------------------------
The Company's operating activities provided net cash of $20.8
million for the six months ended January 28, 1994. Net income adjusted
by depreciation and amortization provided most of the cash. Decreases
in accounts payable, increases in inventories and decreases in other
current assets and liabilities partially offset the cash provided by net
income adjusted by depreciation and amortization.
Capital expenditures were $20.6 million in the second quarter of
fiscal 1994 and $46.7 million for the six months ended January 28,1994.
Land purchases and cost of new stores accounted for substantially all
of these expenditures. The gift shop warehouse expansion capital
expenditures were $3.2 million for the six-month period ended
January 28, 1994.
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 1994.
The Company estimates that its capital expenditures for fiscal 1994
will be approximately $100 million, substantially all of which will be
land purchases and cost of new stores, except for $4 million relating to
the gift shop warehouse expansion. Management believes that cash and
short-term and long-term investments at January 28, 1994, along with
cash generated from the Company's operating activities, will be
sufficient to finance its continued expansion in fiscal 1994 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 28,
1994, and the related condensed statements of income and cash
flows for the quarters and six-month periods ended January
28, 1994 and January 29, 1993, 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 30, 1993, 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 10, 1993, 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 30, 1993 is fairly stated,
in all material respects, in relation to the balance sheet
from which it has been derived.
DELOITTE & TOUCHE
March 9, 1994
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 23, 1993.
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: 3/09/94 By /s/Jimmie D. White
------------ ----------------------------------------
Jimmie D. White, Chief Financial Officer
Date: 3/09/94 By /s/Patrick A. Scruggs
------------ ----------------------------------------
Patrick A. Scruggs, Assistant Treasurer
March 9, 1994
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 28, 1994 and January 29,
1993, as indicated in our reports dated March 9, 1994;
because we did not perform an audit, we expressed no opinion
on that information.
We are aware that our reports referred to above, which were
included in your Quarterly Report on Form 10-Q for the
quarter ended January 28, 1994, 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 reports, pursuant
to Rule 436(c) under the Securities Act, are 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
Nashville, Tennessee