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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 Quarter Ended April 29, 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_
Shares of Common Stock
Issued and Outstanding 59,876,561
Page 1 of 15
PART I
Item 1. Financial Statements
--------------------
CRACKER BARREL OLD COUNTRY STORE, INC.
- - - - - --------------------------------------
(Unaudited) (Audited)
CONDENSED BALANCE SHEETS April 29, July 30,
- - - - - ------------------------ 1994 1993
---- ----
ASSETS
- - - - - ------
Cash and cash equivalents $ 11,314,999 $ 38,552,111
Short-term investments 64,158,120 65,094,791
Receivables 1,864,948 2,436,918
Inventories 36,668,437 28,426,408
Prepaid expenses 192,557 832,262
Deferred income taxes 4,014,475 --
------------ ------------
Total current assets 118,213,536 135,342,490
------------ ------------
Property and equipment 431,480,033 362,587,593
Accumulated depreciation and
amortization 72,979,781 56,991,727
------------ ------------
Property and equipment-net 358,500,252 305,595,866
------------ ------------
Long-term investments 22,652,801 27,421,378
------------ ------------
Other assets 572,880 712,783
------------ ------------
Total assets $499,939,469 $469,072,517
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- - - - - ------------------------------------
Accounts payable $ 21,466,713 $ 23,137,298
Other current liabilities 38,142,425 36,089,916
------------ ------------
Total current liabilities 59,609,138 59,227,214
------------ ------------
Long-term debt 23,500,000 36,575,799
------------ ------------
Capital lease obligations 1,742,703 1,801,900
------------ ------------
Deferred income taxes 7,859,144 4,682,931
------------ ------------
Stockholders' equity:
Common stock 29,936,606 29,785,234
Capital in excess of
par value 192,251,661 187,929,934
Retained earnings 185,040,217 149,069,505
------------ ------------
Total stockholders' equity 407,228,484 366,784,673
------------ ------------
Total liabilities and
stockholders' equity $499,939,469 $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
----------------------
April 29, April 30,
1994 1993
---- ----
Net sales $155,368,895 $125,151,916
Cost of goods sold 50,758,879 40,518,184
------------ ------------
Gross profit on sales 104,610,016 84,633,732
------------ ------------
Expenses:
Store operations 75,310,682 61,082,263
General and administrative 9,368,754 7,500,443
------------ ------------
Total expenses 84,679,436 68,582,706
------------ ------------
Operating income 19,930,580 16,051,026
Interest expense 429,275 803,430
Interest income 719,853 837,073
------------ ------------
Income before income taxes and
cumulative effect of change in
accounting principle 20,221,158 16,084,669
Provision for income taxes 7,623,377 6,015,666
------------ ------------
Income before cumulative effect
of change in accounting
principle 12,597,781 10,069,003
Cumulative effect on prior years
of changing method of accounting
for income taxes -- --
------------ ------------
Net income $ 12,597,781 $ 10,069,003
============ ============
Earnings per share:
Before cumulative effect of change
in accounting principle $ .21 $ .17
Cumulative effect on prior years
of changing method of accounting
for income taxes -- --
------------ ------------
Net earnings per share $ .21 $ .17
============ ============
Average common and common
equivalent shares outstanding 60,730,647 60,323,795
============ ============
Dividends per common share $ 0.005 $ 0.005
============ ============
See notes to financial statements.
CRACKER BARREL OLD COUNTRY STORE, INC.
- - - - - --------------------------------------
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
- - - - - ------------------------------------------
For the Nine Months Ended
-------------------------
April 29, April 30,
1994 1993
---- ----
Net sales $458,699,470 $367,707,396
Cost of goods sold 155,208,363 122,732,485
------------ ------------
Gross profit on sales 303,491,107 244,974,911
------------ ------------
Expenses:
Store operations 218,829,289 176,997,644
General and administrative 27,935,491 22,730,174
------------ ------------
Total expenses 246,764,780 199,727,818
------------ ------------
Operating income 56,726,327 45,247,093
Interest expense 1,802,995 2,381,713
Interest income 2,665,909 1,630,289
------------ ------------
Income before income taxes and
cumulative effect of change in
accounting principle 57,589,241 44,495,669
Provision for income taxes 21,711,144 16,641,380
------------ ------------
Income before cumulative effect
of change in accounting
principle 35,878,097 27,854,289
Cumulative effect on prior years
of changing method of accounting
for income taxes 988,262 --
------------ ------------
Net income $ 36,866,359 $ 27,854,289
============ ============
Earnings per share:
Before cumulative effect of change
in accounting principle $ .59 $ .48
Cumulative effect on prior years
of changing method of accounting
for income taxes .02 --
------------ ------------
Net earnings per share $ .61 $ .48
============ ============
Average common and common
equivalent shares outstanding 60,604,140 58,228,840
============ ============
Dividends per common share $ 0.015 $ 0.013
============ ============
See notes to financial statements.
CRACKER BARREL OLD COUNTRY STORE, INC.
- - - - - --------------------------------------
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
- - - - - ----------------------------------------------
For the Nine Months Ended
-------------------------
April 29, April 30,
1994 1993
---- ----
Cash flows from operating activities:
Net income $ 36,866,359 $ 27,854,289
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of
property and equipment 16,160,577 12,122,910
Loss on disposition of property
and equipment 21,766 2,698
Increase in inventories (8,242,029) (2,007,084)
Decrease in other assets 139,903 27,761
(Decrease)increase in accounts payable (1,670,585) 1,246,758
Increase(decrease)in other current
assets and liabilities 3,586,340 (3,090,534)
(Decrease)increase in deferred income
taxes (838,262) 150,000
------------ ------------
Net cash provided by operating activities 46,024,069 36,306,798
------------ ------------
Cash flows from investing activities:
Decrease(increase) in short-term and
long-term investments 5,705,248 (55,094,033)
Purchase of property and equipment (69,160,849) (58,148,551)
Proceeds from sale of property and
equipment 74,120 36,918
------------ ------------
Net cash used in investing activities (63,381,481) (113,205,666)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of capital stock -- 69,501,753
Proceeds from exercise of stock options 4,473,099 25,127,946
Principal payments under long-term debt
and capital lease obligations (13,457,152) (2,231,773)
Dividends on common stock (895,647) (760,730)
------------ ------------
Net cash (used in) provided by
financing activities (9,879,700) 91,637,196
------------ ------------
Net (decrease)increase in cash and
cash equivalents (27,237,112) 14,738,328
Cash and cash equivalents,
beginning of year 38,552,111 12,951,661
------------ ------------
Cash and cash equivalents,
end of quarter $ 11,314,999 $ 27,689,989
============ ============
Supplemental disclosures of cash flow
information:
Cash paid during the nine months for:
Interest $ 2,260,533 $ 2,022,549
Income taxes 19,989,599 9,038,849
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 29, 1994 and the
related condensed statements of income and cash flows for the
quarters and nine-month periods ended April 29, 1994 and April 30,
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 nine-month
period ended April 29, 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 nine months ended April 29, 1994. The adjustment
primarily 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 were 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 April 29, 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 nine
months ended April 29, 1994 was $21,711,144 of which $21,561,144
is current income tax expense and $150,000 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 nine
months ended April 30, 1993 was $16,641,380 of which $16,491,380
was current income tax expense and $150,000 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 nine-month period ended April 29, 1994 cannot
be considered indicative of the operating results for the full
year.
5. Reclassifications
-----------------
Certain reclassifications have been made in the April 30, 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 April 30, 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 third
quarter of fiscal 1994 as compared to the fiscal 1993 third quarter:
Relationship to Net Sales
Quarters Ended Period to Period
04/29/94 04/30/93 Increase(Decrease)
-------- -------- ------------------
Net sales:
Restaurant 80.4% 81.0% 23%
Gift shop 19.6% 19.0% 28%
------ ------
Total sales 100.0% 100.0% 24%
Cost of goods sold 32.7% 32.4% 25%
Expenses:
Store operations 48.5% 48.8% 23%
General and administrative 6.0% 6.0% 25%
Total expenses 54.5% 54.8% 23%
Operating income 12.8% 12.8% 24%
Interest expense 0.3% 0.6% (47%)
Interest income 0.5% 0.7% (14%)
Income before income taxes
and cumulative effect of
change in accounting
principle 13.0% 12.9% 26%
Provision for income taxes 4.9% 4.8% 27%
Income before cumulative effect
of change in accounting
principle 8.1% 8.0% 25%
Cumulative effect on prior
years of changing method of
accounting for income taxes -- -- --
Net income 8.1% 8.0% 25%
Same Store Sales Analysis
127 Store Average ($000)
-------------------------
Restaurant $726.5 $697.4 4%
Gift shop 174.9 162.9 7%
------ ------
Restaurant & gift shop $901.4 $860.3 5%
====== ======
The following table highlights operating results for the nine
months ended April 29, 1994 as compared to the same period last
year.
Relationship to Net Sales
Year to Date Period to Period
04/29/94 04/30/93 Increase(Decrease)
-------- -------- ------------------
Net sales:
Restaurant 77.9% 78.5% 24%
Gift shop 22.1% 21.5% 28%
------ ------
Total sales 100.0% 100.0% 25%
Cost of goods sold 33.8% 33.4% 26%
Expenses:
Store operations 47.7% 48.1% 24%
General and administrative 6.1% 6.2% 23%
Total expenses 53.8% 54.3% 24%
Operating income 12.4% 12.3% 25%
Interest expense 0.4% 0.6% (24%)
Interest income 0.6% 0.4% 64%
Income before income taxes
and cumulative effect of
change in accounting
principle 12.6% 12.1% 29%
Provision for income taxes 4.7% 4.5% 30%
Income before cumulative effect
of change in accounting
principle 7.8% 7.6% 29%
Cumulative effect on prior
years of changing method of
accounting for income taxes .2% -- --
Net income 8.0% 7.6% 32%
Same Store Sales Analysis
127 Store Average ($000)
-------------------------
Restaurant $2,166.4 $2,082.6 4%
Gift shop 609.6 569.0 7%
-------- --------
Restaurant & gift shop $2,776.0 $2,651.6 5%
======== ========
Net sales for the third quarter of fiscal 1994 increased 24%
over third quarter 1993. Same store restaurant sales increased
4.2%, including 1.1% in real terms; and same store gift shop sales
increased 7.4%. Sales from new stores accounted for the remainder
of the increase. Net sales for the nine months ended April 29,
1994, increased 25% over the same period in 1993. Same store
restaurant sales increased 4.0%, including 0.9% in real terms; and
same store gift shop sales increased 7.1%. Sales from new stores
accounted for the remainder of the increase.
Cost of goods sold as a percentage of net sales were 32.7% in
the third quarter of this year compared to 32.4% in the same period
last year. This increase was primarily due to an increasing mix of
gift shop sales, which have a higher cost than restaurant sales.
For the nine months ended April 29, 1994, cost of goods sold were
33.8% compared to 33.4% 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
54.5% and 53.8% in the quarter and nine month period ended April
29, 1994, compared to 54.8% and 54.3%, respectively, in the same
periods a year ago. The decreases in store operating expenses as
a percent of net sales were primarily due to lower workers'
compensation insurance expenses as a result of various safety
programs instituted in the stores. General and administrative
expenses as a percentage of sales were unchanged this year compared
to the third quarter of last year. General and administrative
expenses for the nine months ended April 29, 1994, as a percentage
of sales were lower than last year primarily due to higher volume.
Interest expense decreased to $429,275 and $1,802,995 for the
quarter and nine month period ended April 29, 1994, from $803,430
and $2,381,713, respectively, in the same periods a year ago. The
decreases were primarily due to lower average debt outstanding
during the quarter and nine month period ended April 29, 1994. For
the quarter ended April 29, 1994, interest income decreased to
$719,853 from $837,073 last year. This decrease was primarily due
to a lower amount of invested funds this year compared to last
year. For the nine months ended April 29, 1994, interest income
increased to $2,665,909 from $1,630,289 last year. The primary
reason for the increase in interest income was higher average funds
available for investment this year compared to last year.
Liquidity and Capital Resources
- - - - - -------------------------------
The Company's operating activities provided net cash of $46.0
million for the nine months ended April 29, 1994. Net income
adjusted by depreciation and amortization provided most of the
cash. Increases in inventories and decreases in accounts payable
partially offset increases in other current assets and liabilities
and the cash provided by net income adjusted by depreciation and
amortization.
Capital expenditures were $22.5 million in the third quarter
of fiscal 1994 and $69.2 million for the nine months ended April
29, 1994. Land purchases and cost of new stores accounted for
substantially all of these expenditures. The gift shop
warehouse expansion capital expenditures were $3.4 million for
the nine month period ended April 29, 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 nine 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
April 29, 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 April 29, 1994, and the
related condensed statements of income and cash flows for the
quarters and nine-month periods ended April 29, 1994 and April 30,
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
June 8, 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: June 8, 1994 By /s/Jimmie D. White
------------ ----------------------------------------
Jimmie D. White, Chief Financial Officer
Date: June 8, 1994 By /s/Patrick A. Scruggs
------------ ----------------------------------------
Patrick A. Scruggs, Assistant Treasurer
June 8, 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 nine-month periods ended
April 29, 1994 and April 30, 1993, as indicated in our report dated
June 8, 1994; 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
29, 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 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
Nashville, Tennessee