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BAKER
DONELSON
BEARMAN, CALDWELL
& BERKOWITZ, PC
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COMMERCE
CENTER
SUITE
1000
211
COMMERCE STREET
NASHVILLE,
TENNESSEE 37201
PHONE: 615.726.5600
FAX: 615.726.0464
MAILING
ADDRESS:
P.O.
BOX 190613
NASHVILLE,
TENNESSEE 37219
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www.bakerdonelson.com
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Gary
M. Brown
Direct Dial:
(615)
726-5763
Direct Fax:
(615)
744-5763
E-Mail
Address:
gbrown@bakerdonelson.com
April 13,
2009
Mr. Max
A. Webb
Assistant
Director
United
States Securities and Exchange Commission
Division
of Corporation Finance
100 F
Street, N.E.
Washington,
D.C. 20549
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Re:
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CBRL Group, Inc. (n/k/a Cracker Barrel Old Country Store, Inc.) (the “Company”) |
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Form
10-K
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Filed: September
30, 2008
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File
No. 000-25225
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Dear Mr.
Webb:
Set forth
below are the Company’s responses to the comments of the staff (the “Staff”) of
the Division of Corporation Finance of the Securities and Exchange Commission
(the “Commission”) contained in the letter addressed to Michael A. Woodhouse,
Chief Executive Officer of the Company, dated March 31, 2009 (the “Supplemental
Comment Letter”), relating to the Company’s Annual Report on Form 10-K for the
year ended August 1, 2008 (the “2008 Form 10-K”) and Definitive Proxy Statement
filed on Schedule 14A on October 16, 2008 (the “2008 Proxy
Statement”). The Supplemental Comment Letter followed our letter of
March 23, 2009 (the “Initial Response”) to the Commission’s letter dated
February 23, 2009 to the Company (the “Initial Comment Letter”).
For
convenience of reference, each of the Staff’s comments has been reproduced in
its entirety in italicized type followed immediately by the Company’s
response.
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Exhibit
13
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MD&A, page
3
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Comment
#1:
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We
note your response to prior comment 2. Where a change to a line item
is attributed to more than one cause, each cause should be separately analyzed
and quantified. All material causes,
United States Securities and
Exchange Commission
April 13,
2009
Page 2
furthermore,
should be analyzed, not just those outside the scope of ordinary
business. Because you have identified multiple causes affecting
several of your line item changes, those causes should be separately analyzed
and quantified, where possible, rather than simply identifying them or listing
them by order of magnitude. Accordingly, please confirm that in
future filings you will separately analyze and quantify any material causes
affecting line item changes. Please refer to Instruction 4 to Item
303(a) of Regulation S-K.
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Response to Comment
#1:
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As
discussed, the Company, in future filings, will focus on the major causes of
changes in line items and we hereby confirm, on behalf of the Company, with
respect to the factors that the Company deems material to the changes in line
items in its financial statements, it will, in future filings, to the extent
practicable, quantify those factors.
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Schedule
14A:
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Compensation
Discussion and Analysis, page
13
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Comment
#2:
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We
note your response to prior comment 3 regarding your use of benchmarking, in
particular the last sentence of the second paragraph where you state that these
“survey sources were used to benchmark base salaries, annual incentive and
long-term incentive opportunities and total compensation.” As
previously requested, the companies in those surveys should be
disclosed. Some other registrants are including long lists of
companies in an appendix to the proxy statement. Accordingly, please
confirm that you will list all companies against which you benchmark, if they
are indeed used for benchmarking purposes. Refer to Compliance and
Disclosure Interpretation 118.05 to Regulation S-K.
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Response to Comment
#2:
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Please
refer to the Response to Comment #3 in the Initial Response. As I
indicated in our April 8 conversation, the Company does not use the referenced
surveys to “benchmark” compensation. Any benchmarking is done with
the compensation of the peer group of companies, which is
disclosed. We regret any confusion that might have been caused by the
sentence that you referenced above. Accordingly, we hereby confirm,
on behalf of the Company, that the Company will, in future filings, disclose the
names all companies against which it benchmarks, if they are indeed used for
benchmarking purposes. To the extent that surveys are used or
presented for other purposes (e.g., general information),
no attempt would be made to disclose the names of survey
participants.
United States Securities and
Exchange Commission
April 13,
2009
Page 3
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Annual Bonus Plan,
page 19
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Comment
#3:
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We
note your response to prior comments 4 and 5. The causal connection
between the disclosure of your performance targets for the most recent audited
period and any present or future competitive harm, however, is not entirely
clear. If you believe that your performance targets may be omitted
due to the risk of competitive harm, please provide additional detailed analysis
in support of this conclusion. We request that you address, with
greater specificity, how the disclosure of performance targets might be expected
to affect the particular business decisions of your competitors and, in so
doing, place you at a competitive disadvantage. You should further
discuss, in the future, how difficult it would be for the named executive
officers or how likely it will be for you to achieve the undisclosed target
levels or other factors. General statements or thresholds
representing the level of difficulty, or ease, associated with achieving
performance goals either as a corporation or for each executive are not
sufficient. Refer to Instruction 4 of Item 402(b) of Regulation
S-K.
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Response to Comment
#3:
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Please
refer to the Response to Comments #4 and #5 in the Initial
Response.
From our
discussion on April 8, I understand the Commission’s primary concern at this
point to be how disclosure of past performance metrics could cause the Company
competitive harm. As we discussed, with respect to undisclosed
metrics, the Company would continue to discuss how difficult it would be for the
named executive officers or how likely it will be for the Company to achieve the
undisclosed target levels or other factors. For example, to the
extent relevant, the Company would continue disclosure such as that contained in
its past two proxy statements in which the Company referred to its publicly
disclosed revenue and earnings guidance and then indicated the level of
operating income increase that would be required to achieve certain bonus
levels. That type of disclosure clearly indicates the level of
difficulty in achieving the underlying targets and is not the type of “[g]eneral
statements or thresholds” that the Commission deems insufficient.
As
indicated in the Initial Response, the metrics that were not disclosed by the
Company were internal plan target income, internal plan target revenue and
internal plan target EBIT margin. These metrics are based on the
Company’s internal operating plans, which are highly confidential and
competitively sensitive. Insofar as Cracker Barrel is viewed by some
as a leader in a highly competitive market, any such public disclosure could
materially harm the Company’s competitive position within its industry, even if
disclosed on a historical basis.
United States Securities and
Exchange Commission
April 13,
2009
Page 4
The
Company is in a single line of business – it is a one-concept restaurant
company. Additionally, many of its competitors (e.g., ten of the fifteen
restaurant companies in its peer group) have franchised operations in which they
license their concept(s) to independent operators. The
Company has no franchise operations – it owns and operates all of its
restaurants. As a result, its operational metrics are easier to
discern and, therefore, more sensitive to disclosure. Although it is
possible that disclosure of a single year of metrics might not cause harm, once
two or more years of such data were disclosed, a pattern of targeted internal
growth for the Company could be constructed. That, in turn, would
allow persons, including competitors, to “reverse engineer” (using other
publicly available data) the Company’s operational intentions with respect to
such items as capital expenditures, costs, pricing and promotional
spending. This information could then be used by competitors to
unfairly and adversely affect its relationships with key vendors and/or
suppliers and to their advantage (and consequently the Company’s disadvantage)
in recruiting and retaining key employees. Furthermore, the
disclosure of this information would also provide the Company’s vendors and
other third parties with insight into the Company’s internal financial
projections and plans that could be exploited by them in the course of
contractual negotiations and other business arrangements.
The
performance metrics discussed clearly constitute both “commercial or financial”
and “confidential” information within the meaning of Exemption 4 of the Freedom
of Information Act. Our reasons supporting this position are set
forth above. As discussed, the Company believes that disclosure of
these targets, even on a retrospective basis, would cause substantial
competitive harm to the Company and, for this reason, that such targets are not
required to be disclosed.
The
Company nevertheless confirms that in future filings the Company will disclose
the specific performance targets used to determine incentive amounts, to the
extent that such information does not constitute commercial or financial
information that is privileged or confidential within the meaning of Exemption 4
to FOIA, as discussed above. The Company further confirms that to the
extent it is appropriate to omit specific performance targets in future filings,
the Company will continue to discuss the degree of difficulty of achieving the
target levels. In this latter regard, the Company acknowledges that
general statements or thresholds representing the level of difficulty, or ease,
associated with achieving performance goals either as a corporation or for each
executive would not be sufficient.
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* *
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On behalf of the Company, the Company
acknowledges that (i) it is responsible for the adequacy and accuracy of the
disclosure in the filing; (ii) staff comments or changes to disclosure in
response to staff comments in the filing reviewed by the staff do not foreclose
the
United States Securities and
Exchange Commission
April 13,
2009
Page 5
Commission
from taking any action with respect to the filing; and (iii) the Company may not
assert staff comments as a defense in any proceeding initiated by the Commission
or any person under the federal securities laws of the United
States.
Please feel free to contact me with
respect to this response.
| Very truly yours, | |
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BAKER,
DONELSON, BEARMAN,
CALDWELL
& BERKOWITZ, PC
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| /s/ Gary M. Brown | |
| Gary M. Brown |
| cc: | Michael A. Woodhouse |
| Sandra B. Cochran | |
| N.B. Forrest Shoaf |