0001067294-01-500008.txt : 20011019
0001067294-01-500008.hdr.sgml : 20011019
ACCESSION NUMBER: 0001067294-01-500008
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 6
CONFORMED PERIOD OF REPORT: 20010803
FILED AS OF DATE: 20011012
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CBRL GROUP INC
CENTRAL INDEX KEY: 0001067294
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812]
IRS NUMBER: 621749513
STATE OF INCORPORATION: TN
FISCAL YEAR END: 0731
FILING VALUES:
FORM TYPE: 10-K405
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-25225
FILM NUMBER: 1757780
BUSINESS ADDRESS:
STREET 1: PO BOX 787
CITY: LEBANON
STATE: TN
ZIP: 370880787
BUSINESS PHONE: 6154439217
MAIL ADDRESS:
STREET 1: PO BOX 787
CITY: LEBANON
STATE: TN
ZIP: 37087
10-K405
1
a10k2001.txt
FY 01 10K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[x] Annual Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934 For the fiscal year ended August 3, 2001
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For the transition period from ________ to ________
Commission file number
000-25225
CBRL GROUP, INC.
(Exact name of registrant as specified in its charter)
Tennessee 62-1749513
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Hartmann Drive, P.O. Box 787 37088-0787
Lebanon, Tennessee (Zip code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
(615)444-5533
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Par Value $.01)
Common Stock Purchase Rights
(No Par Value)
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 _
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
The aggregate market value of voting stock held by nonaffiliates of the
registrant is $1,040,599,280 as of September 20, 2001. As of that date, there
were 55,057,364 shares of common stock outstanding.
Documents Incorporated by Reference
-----------------------------------
Document from which Portions Part of Form 10-K
are Incorporated by Reference into which incorporated
----------------------------- -----------------------
1. Annual Report to Shareholders Part II
for the fiscal year ended
August 3, 2001 (the "2001 Annual Report")
2. Proxy Statement for Annual Part III
Meeting of Shareholders
to be held November 27, 2001
(the "2001 Proxy Statement")
Except for specific historical information, the matters discussed in this
Form 10-K, as well as the 2001 Annual Report that is incorporated herein by
reference, are forward-looking statements that involve risks, uncertainties and
other factors which may cause actual results and performance of CBRL Group, Inc.
to differ materially from those expressed or implied by those statements. All
forward-looking information is provided by the Company 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 "assumptions", "target", "plans", "may", "will", "would", "expect",
"intend", "estimate", "anticipate", "believe", "potential", or "continue" (or
the negative of each of these terms) or similar terminology. Factors which will
affect actual results include, but are not limited to: adverse general economic
conditions including high or escalating gasoline prices and declining consumer
confidence; the actual results of pending or threatened litigation; the effects
of negative publicity; commodity, group health and utility price increases; the
effect of plans intended to improve operational execution and performance; the
effects of increased competition at Company locations on sales and on labor
recruiting, cost and retention; the ability of and cost to the Company to
recruit, train and retain qualified restaurant hourly and management employees;
the ability of the Company to identify successful new lines of retail
merchandise; the availability and costs of acceptable sites for development;
adverse weather conditions; the acceptance of the Company's concepts as the
Company continues to expand into new markets and geographic regions; changes in
interest rates affecting the Company's financing costs; changes in or
implementation of additional governmental rules and regulations affecting wage
and hour matters, health and safety, pensions and insurance; other
undeterminable areas of government actions or regulations; and other factors
described from time to time in the Company's filings with the Securities and
Exchange Commission, press releases and other communications.
PART I
ITEM 1. BUSINESS
OVERVIEW
CBRL Group, Inc. (the "Company") is a holding company that, through certain
subsidiaries, is engaged in the operation and development of the Cracker Barrel
Old Country Store(R) and Logan's Roadhouse(R) restaurant and retail concepts.
The Company was organized under the laws of the state of Tennessee in August
1998.
CONCEPTS
Cracker Barrel Old Country Store
--------------------------------
Cracker Barrel Old Country Store, Inc. ("Cracker Barrel"), headquartered in
Lebanon, Tennessee, through its various subsidiaries, as of October 12, 2001,
operates 439 full service "country store" restaurants and gift shops, which are
located in 40 states, primarily the southeast, midwest, mid-atlantic and
southwest regions of the United States. Stores primarily are located along
interstate highways, however, 10 stores are located at "tourist destinations"
and 22 "off-interstate" stores are located at locations that are neither a
tourist destination nor an interstate location. The restaurants serve breakfast,
lunch and dinner between the hours of 6:00 a.m. and 10:00 p.m. (11:00 p.m. on
Fridays and Saturdays) and feature home style country cooking prepared on the
premises from Cracker Barrel's own recipes using quality ingredients and
emphasizing authenticity. Menu items are moderately priced and include country
ham, chicken, fish, roast beef, beans, turnip greens, vegetable plates, salads,
sandwiches, pancakes, eggs, bacon, sausage and grits. The restaurants do not
serve alcoholic beverages. The stores are constructed in a rustic, country store
design and feature a separate retail area offering a wide variety of decorative
and functional items specializing in hand-blown glassware, cast iron cookware,
toys, apparel and wood crafts as well as various old fashioned candies, jellies
and other foods. Cracker Barrel stores are intended to appeal to both the
traveler and the local customer and consistently have been a consumer favorite.
Cracker Barrel was ranked as the top family dining chain for the eleventh
consecutive year in the 2000 Restaurants & Institutions magazine "Choice in
Chains" annual customer survey.
Logan's Roadhouse
-----------------
Logan's Roadhouse, Inc. ("Logan's"), headquartered in Nashville, Tennessee,
through its various subsidiaries, as of October 12, 2001, operates 78 Logan's
Roadhouse restaurants and franchises an additional eight Logan's restaurants in
15 states. Logan's restaurants feature steaks, ribs, chicken and seafood dishes
served in a distinctive atmosphere reminiscent of an American roadhouse of the
1940s and 1950s. Logan's serves lunch and dinner between the hours of 11:00 a.m.
and 10:00 p.m. (11:00 p.m. on Fridays and Saturdays). The Logan's concept is
designed to appeal to a broad range of customers by offering generous portions
of moderately-priced, high quality food in a very casual, relaxed dining
environment that is lively and entertaining. The fun atmosphere is enhanced by
display cooking of grilled items and complimentary peanuts, which the guests are
encouraged to enjoy and let the shells fall on the floor. The restaurants are
open seven days a week for lunch and dinner and offer full bar service.
Alcoholic beverages represented approximately 9% of Logan's total revenue in
fiscal 2001. The Logan's menu is designed to appeal to a wide variety of tastes,
and emphasizes extra-aged, hand-cut USDA choice steaks and signature dishes
such as baked sweet potatoes and made-from-scratch yeast rolls.
OPERATIONS
Cracker Barrel Old Country Store
--------------------------------
Store Format: The format of Cracker Barrel stores consists of a rustic,
country-store style building. All stores are freestanding buildings. Store
interiors are subdivided into a dining room consisting of approximately 30% of
the total interior store space, and a retail shop consisting of approximately
22% of such space, with the balance primarily consisting of kitchen and storage
areas. All stores have stone fireplaces, which burn wood wherever permitted. All
are decorated with antique-style furnishings and other authentic and nostalgic
items, similar to those used and sold in the past in original old country
stores. The front porch of each store features a row of the signature Cracker
Barrel rocking chairs that are used by guests waiting for a table and are sold
in the retail shop. The kitchens contain modern food preparation and storage
equipment allowing for flexibility in menu variety and development.
Products: Cracker Barrel's restaurants, which generated approximately 76%
of Cracker Barrel's total revenue in fiscal 2001, offer home-style country
cooking featuring Cracker Barrel's own recipes. In keeping with Cracker Barrel's
emphasis on authenticity and quality, Cracker Barrel restaurants prepare menu
selections on the premises. The restaurants offer breakfast, lunch and dinner
from a moderately-priced menu. Breakfast items can be ordered at any time
throughout the day and include juices, eggs, pancakes, bacon, country ham,
sausage, grits, and a variety of biscuit specialties, including gravy and
biscuits and country ham and biscuits. Prices for a breakfast meal range from
$1.99 to $7.99. Lunch and dinner items include country ham, chicken and
dumplings, chicken fried chicken, meatloaf, country fried steak, pork chops,
fish, steak, roast beef, vegetable plates, salads, sandwiches, soups and
specialty items such as pinto beans and turnip greens. Lunches and dinners range
in price from $2.99 to $13.99. The average check per customer for fiscal 2001
was $7.19. Cracker Barrel from time to time adjusts its prices. Price increases
of approximately 1% each and totaling approximately 3% were instituted in
December 2000, June 2001 and July 2001.
The retail area of the stores, which generated approximately 24% of Cracker
Barrel's total revenue in fiscal 2001, offers a wide variety of decorative and
functional items such as hand-blown glassware, cast iron cookware, old-fashioned
crockery, handcrafted figurines, classic children's toys, apparel, a
book-on-audio sale and exchange program and various other gift items, as well as
various candies, preserves, smoked sausage, syrups and other food items. Many of
the candy items, smoked bacon, jellies and jams, along with other high quality
products, are sold under the "Cracker Barrel Old Country Store" brand name.
Product Development and Merchandising: Cracker Barrel maintains a product
development department, which develops new and improved menu items in response
to shifts in customer preferences and creates customer interest. Cracker Barrel
merchandising specialists are involved on a continuing basis in selecting and
positioning merchandise in the retail shop with an overall nostalgic theme.
Management believes that Cracker Barrel has adequate flexibility to meet future
shifts in consumer preference on a timely basis. Coordinated seasonal promotions
are used regularly in the restaurants and retail shops.
Store Management and Quality Controls: Cracker Barrel store management
typically consists of a general manager, four associate managers and a retail
manager who are responsible for approximately 100 employees on two shifts. The
relative complexity of operating a Cracker Barrel Old Country Store requires an
effective management team at the individual store level. As a motivation to
store managers to improve sales and operational efficiency, Cracker Barrel has a
bonus plan designed to provide store management with an opportunity to share in
the profits of their store. Starting in fiscal 2000, Cracker Barrel implemented
a supplemental bonus plan, providing managers an opportunity to earn an
additional bonus based on achieving specific operational targets. Cracker Barrel
also offers managers and certain hourly employees stock options based on their
position and tenure. To assure that individual stores are operated at a high
level of quality, Cracker Barrel emphasizes the selection and training of store
managers. It also employs District Managers to support individual store managers
and Regional Vice Presidents to support individual District Managers. Each
District Manager's individual span of control typically is seven to eight
individual restaurants, and Regional Vice Presidents support eight to ten
District Managers. Each store and District, respectively, are assigned to both a
restaurant and a retail District Manager and Regional Vice President.
The store management recruiting and training program begins with an
evaluation and screening process. In addition to multiple interviews and
background and experience verification, Cracker Barrel conducts testing which is
designed to identify those applicants most likely to be best suited to manage
store operations. Those candidates who successfully pass this screening process
are then required to complete an 11-week training program consisting of eight
weeks of in-store training and three weeks of training at Cracker Barrel's
corporate facilities. This program allows new managers the opportunity to become
familiar with Cracker Barrel operations, culture, management objectives,
controls and evaluation criteria before assuming management responsibility.
Cracker Barrel provides its managers with ongoing training through its various
management development classes. Additionally, the Company is developing
internet-based computer-assisted instruction capability to train both hourly and
management staff consistently at all locations.
Purchasing and Distribution: Cracker Barrel negotiates directly with food
vendors as to price and other material terms of most food purchases. Cracker
Barrel is a party to a prime vendor contract with an unaffiliated distributor
with custom distribution centers in Lebanon, Tennessee; McKinney, Texas;
Gainesville, Florida; and Belcamp, Maryland. The contract pricing terms were
adjusted in July 2000, and the contract will remain in effect until both parties
mutually modify it in writing or until terminated by either Cracker Barrel or
the distributor upon 180 days written notice to the other party. Cracker Barrel
purchases the majority of its food products and restaurant supplies on a
cost-plus basis through its unaffiliated distributor. The distributor is
responsible for placing food orders and warehousing and delivering food products
to Cracker Barrel's stores. Deliveries generally are made once per week to the
individual stores. Certain perishable food items are purchased locally by
Cracker Barrel stores.
Three food categories (beef, pork and poultry) account for the largest
shares of Cracker Barrel's food purchasing expense at approximately 15%, 14% and
12% each, respectively. The single food item within these categories accounting
for the largest share of Cracker Barrel's food purchasing expense is chicken
tenderloin. Cracker Barrel presently purchases its beef through six vendors,
pork through seven vendors, and poultry through five vendors. Cracker Barrel
purchases its chicken tenderloin through five vendors. Should any food items
from these vendors become unavailable, management is of the opinion that these
food items could be obtained in sufficient quantities from other sources at
competitive prices.
The majority of retail items are centrally purchased directly by Cracker
Barrel from domestic and international retail vendors and warehoused at its
owned Lebanon distribution center. The distribution center fulfills retail item
orders generated by Cracker Barrel's automated replenishment system and
generally ships the retail orders once a week to the individual stores. Certain
retail items, not centrally purchased and warehoused at the distribution center,
are drop-shipped directly from Cracker Barrel's vendors to its stores. The
distribution center is a 367,200 square foot warehouse facility with 36 foot
ceilings and 170 bays, and includes an additional 13,800 square feet of office
and maintenance space. The facility originally was built in 1993 and expanded in
1996.
On January 29, 2001, the Company entered into a new dedicated carriage
agreement with an unaffiliated transportation company for the transportation of
retail merchandise from the Cracker Barrel distribution center throughout the
Cracker Barrel system. This agreement commenced on April 1, 2001 for a period of
60 months and is structured to facilitate the growth of Cracker Barrel's retail
business over the term of the agreement, but is terminable by either party upon
180 days written notice to the other party. The transportation company or
Cracker Barrel may terminate the agreement 90 days following notice of a breach
that remains uncured.
Cost and Inventory Controls: Cracker Barrel's computer systems and various
analysis tools are used to evaluate store operating information and provide
management with reports to determine if any material variances in food costs,
labor costs or operating expenses have occurred. Management also monitors
individual store restaurant and retail sales on a daily basis and closely
monitors sales mix, sales trends, operational costs and inventory levels. The
information generated by the computer systems, analysis tools and monitoring
processes are used to manage the operations of the store, replenish retail
inventory levels and to facilitate retail purchasing decisions. These systems
and processes also are used in the development of budget analyses and planning.
Guest Satisfaction: Cracker Barrel is committed to providing its guests a
home-style, country-cooked meal, served with genuine hospitality in a
comfortable environment, in a way that evokes memories of the past. The
concept's commitment to offering guests a quality experience begins with its
employees. Its mission statement, "Pleasing People", means all people, guests
and employees alike, and the Company's employees are trained and reinforced on
its importance in our culture of mutual respect. Cracker Barrel also is
committed to staffing each store with an experienced management team to ensure
attentive customer service and consistent food quality. Through the regular use
of guest surveys and store visits by its District Managers and Regional Vice
Presidents, management receives valuable feedback, which it uses in its ongoing
efforts to improve the stores and to demonstrate Cracker Barrel's continuing
commitment to pleasing its guests.
Marketing: Outdoor advertising (i.e., billboards) is the primary
advertising medium utilized to reach consumers in the primary trade area for
each Cracker Barrel store and also reach interstate travelers and tourists.
Outdoor advertising accounted for approximately 50% of advertising expenditures
in fiscal 2001. In recent years Cracker Barrel has utilized more effectively and
efficiently other types of media, such as radio and print, in its core markets
to maintain customer awareness, and outside of its core markets to increase name
awareness and to build brand loyalty. Cracker Barrel defines its core markets
based on geographic location, longevity in the market and name awareness in each
market. Cracker Barrel plans to maintain its overall advertising spending at
approximately 2% of Cracker Barrel's net sales in fiscal 2002, as it did in
fiscal 2000 and fiscal 2001. Outdoor advertising should continue to represent
approximately 50% of advertising expenditures in fiscal 2002. New store
locations generally are not advertised in the media until several weeks after
they have been opened in order to give the staff time to adjust to local
customer habits and traffic volume, after which time a full marketing plan is
implemented.
Logan's Roadhouse
-----------------
Store Format: Logan's Roadhouse restaurants are constructed of rough-hewn
cedar siding in combination with bands of corrugated metal outlined in red neon
with a yellow washlight. Interiors are decorated with murals and other artifacts
depicting scenes reminiscent of American roadhouses of the 1940s and 1950s,
concrete and wooden planked floors and neon signs. The lively, upbeat,friendly,
relaxed atmosphere seeks to appeal to families, couples, single adults and
business persons. The restaurants feature display cooking and an old-fashioned
meat counter displaying ribs and hand-cut steaks, and also include a spacious,
comfortable bar area. While dining or waiting for a table, guests may eat
complimentary roasted in-shell peanuts and toss the shells on the floor, and
watch as cooks prepare steaks and other entrees on gas-fired mesquite grills.
Products: Logan's restaurants offer a wide variety of items designed to
appeal to a broad range of consumer tastes. Specialty appetizers include hot
wings Roadhouse style, baby back ribs basket and Roadhouse nachos. Logan's
dinner menu features an assortment of specially seasoned USDA choice steaks,
extra-aged, and cut by hand on premises. Guests also may choose from slow-cooked
baby back ribs, seafood, mesquite grilled shrimp, mesquite grilled pork chops,
grilled chicken and an assortment of hamburgers, salads and sandwiches. All
dinner entrees include dinner salad, made-from-scratch yeast rolls and a choice
of brown sugar and cinnamon sweet potato, baked potato, mashed potatoes, steamed
vegetables, fries or rice pilaf at no additional cost. Logan's express lunch
menu provides specially priced items to be served in less than 15 minutes. All
lunch salads are served with made-from-scratch yeast rolls, and all lunch
sandwiches are served with home-style potato chips at no additional cost. Prices
range from $4.79 to $8.49 for lunch items and from $5.39 to $17.99 for dinner
entrees. The average check per customer for fiscal 2001 was $11.40. Logan's
adjusts its prices from time to time and increased menu prices approximately 1%
in July 2001.
Product Development and Merchandising: Logan's strives to obtain consistent
quality items at competitive prices from reliable sources. Logan's tests various
new products in an effort to obtain the highest quality products possible and to
be responsive to changing customer tastes. In order to maximize operating
efficiencies and provide the freshest ingredients for its food products,
purchasing decisions are made by Logan's corporate management. Management
believes that Logan's has adequate flexibility to meet future shifts in consumer
preference on a timely basis.
Restaurant Management and Quality Controls: Restaurant management typically
consists of a general manager, one kitchen manager and four assistant managers
who are responsible for approximately 100 hourly employees. Each restaurant
employs a skilled meat-cutter to cut steaks from USDA choice beef. The general
manager of each restaurant is responsible for the day-to-day operations of the
restaurant, including maintaining the standards of quality and performance
established by Logan's corporate management. The relative complexity of
operating a Logan's restaurant requires an effective management team at the
individual restaurant level. As a motivation to restaurant managers to increase
revenues and operational efficiency, Logan's has a bonus plan that rewards
managers for improving sales and profits, achieving Logan's standard of guest
satisfaction as measured through the secret shopper program, and achieving key
operating costs targets. Management believes that guests benefit from the
attentive service and high quality food, which results from having six managers
in the majority of restaurants. Logan's restaurant management teams are
typically comprised of two non-management employees promoted into management
positions who therefore fully understand the Logan's concept, and four managers
with high levels of previous management experience. To assure that individual
restaurants are operated at a high level of quality, Logan's has Regional
Managers to support individual restaurant managers, three Regional Directors and
one Vice President of Operations to support individual Regional Managers. Each
Regional Manager supports 4 to 5 individual restaurants, and each Regional
Director supports 7 to 8 Regional Managers. Through regular visits to the
restaurants, the Vice President of Operations, the Regional Directors and the
Regional Managers ensure that the Logan's concept, strategy and standards of
quality are being adhered to in all aspects of restaurant operations.
In November 2000 Logan's opened a modern training facility in Nashville,
Tennessee to support and improve the training of new management candidates.
Logan's requires that its restaurant managers have significant experience
in the full-service restaurant industry. All new managers are required to
complete a comprehensive ten-week training course. This course is comprised of
eight weeks of training at a Logan's restaurant and two weeks of classroom
training conducted at the Logan's training facility in Nashville. The entire
course emphasizes the Logan's operating strategy, procedures and standards.
Purchasing and Distribution: Logan's negotiates directly with food vendors
as to price and other material terms of most food purchases. Logan's purchases
the majority of its food products and restaurant supplies on a cost-plus basis
through the same unaffiliated distributor that is used by Cracker Barrel. The
distributor is responsible for placing food orders and warehousing and
delivering food products for Logan's restaurants. Certain perishable food items
are purchased locally by the restaurants.
The single food category accounting for the largest share (approximately
37%) of Logan's food purchasing expense is beef. Each Logan's restaurant employs
a meat cutter who hand-cuts steak on premises. Logan's presently purchases its
beef through two supply contracts. Should any beef items from these vendors
become unavailable for any reason, management believes that such items could be
obtained in sufficient quantities from other sources at competitive prices.
Cost and Inventory Controls: Management closely monitors sales, product
costs and labor at each of its restaurants. Weekly restaurant operating results
are analyzed by management to detect trends at each location, and negative
trends are promptly addressed and remedied when possible. Financial controls are
maintained through management of an accounting and information management system
that is implemented at the restaurant level. Administrative and management staff
prepare daily reports of sales, labor and customer counts. On a weekly basis,
condensed operating statements are compiled by the accounting department and
provide management a detailed analysis of sales, product and labor costs, with a
comparison to budget and prior period performance. These systems also are used
in the development of budget analyses and planning.
Guest Satisfaction: Logan's is committed to providing its guests prompt,
friendly, efficient service, keeping table-to-server ratios low and staffing
each restaurant with an experienced management team to ensure attentive guest
service and consistent food quality. Through the regular use of guest surveys
and an independently run "mystery shoppers" program, management receives
valuable feedback, which it uses to improve restaurants and demonstrate a
continuing interest in guest satisfaction.
Marketing: Logan's employs an advertising and marketing strategy designed
to establish and maintain a high level of name recognition and to attract new
customers. Logan's primarily uses radio and outdoor advertising in selected
markets. Management's goal is to develop a sufficient number of restaurants in
certain markets to permit the cost-efficient use of television, radio and
outdoor advertising. Logan's currently spends approximately 1.5% of its net
sales on advertising. Logan's also engages in a variety of promotional
activities, such as contributing time, money and complimentary meals to
charitable, civic and cultural programs, in order to increase public awareness
of Logan's restaurants. Logan's also has numerous tie-ins with the National
Football League's Tennessee Titans, including two concession facilities (named
"Logan's Landing") inside Nashville, Tennessee's Adelphia Coliseum and various
promotions during and around the games. Additionally, Logan's peanuts are sold
at the Gaylord Entertainment Center, home of the Nashville Predators of the
National Hockey League.
Franchising: Prior to the Company acquiring Logan's Roadhouse, Inc.,
Logan's entered into three area development agreements and accompanying
franchise agreements. Subsequent to the acquisition, Logan's terminated one of
the area development agreements. Franchisees operate 8 Logan's restaurants in 4
states, and they have rights under the existing agreements, subject to
development terms, conditions and timing requirements, to open up to 19
additional locations in those same states plus parts of Oregon. Certain of the
agreements provide for the possible acquisition of the franchise locations by
Logan's under specified terms. Management currently is not planning any other
future franchising opportunities beyond the current development agreements.
EXPANSION
The Company opened the following 15 new Cracker Barrel stores in fiscal
2001:
Interstate 35 (1) San Marcos, Texas
Interstate 70 (1) St. Clairsville, Ohio
Interstate 80 (1) Mt. Arlington, New Jersey
Interstate 84 (1) Sturbridge, Massachusetts
Interstate 95 (1) Elkton, Maryland
Interstate 476 (1) Plymouth Meeting, Pennsylvania
Off Interstate (9) Florence and Foley, Alabama; Hot Springs, Arkansas;
Murray, Kentucky; Traverse City, Michigan;
Jacksonville, North Carolina; Gallatin and Memphis,
Tennessee; Lynchburg, Virginia
The Company plans to open 20 new Cracker Barrel stores during fiscal 2002,
of which the following two of those stores are already open:
Off Interstate (2) Bloomington, Indiana; Pittsburgh, Pennsylvania
The Company opened the following 13 new Logan's restaurants in fiscal 2001:
Michigan (4) Canton, Livonia, Southgate and Troy
Texas (3) Laredo, Round Rock and San Angelo
Alabama (2) Decatur and Oxford
Virginia (2) Bristol and Fredricksburg
Indiana (1) Greenwood
Tennessee(1) Antioch
The Company plans to open nine new Logan's restaurants during fiscal 2002,
of which the following three restaurants are already open:
Ohio (1) Reynoldsburg
Tennessee(1) Gallatin
Virginia (1) Lynchburg
Prior to committing to a new location, Cracker Barrel and Logan's perform
extensive reviews of various available sites, gathering cost, demographic,
traffic and other data. This information is analyzed by computer models to help
with the decision on building a store. Cracker Barrel and Logan's utilize
in-house engineers to consult on architectural plans, develop engineering plans
and oversee new construction. Cracker Barrel and Logan's are currently engaged
in the process of seeking and selecting new sites, negotiating purchase or lease
terms and developing chosen sites.
It has traditionally been the Company's strategy to own its store
properties. However, on July 31, 2000, the Company's Cracker Barrel Old Country
Store, Inc. subsidiary completed a sale-leaseback transaction involving 65 of
its owned Cracker Barrel Old Country Store units. Under the transaction, the
land, buildings and improvements at the locations were sold for net
consideration of $138.3 million and have been leased back for an initial term of
21 years. Equipment was not included. The leases include specified renewal
options for up to 20 additional years and have certain financial covenants
related to fixed charge coverage for the leased units. Net rent expense during
the initial term will be approximately $15.0 million annually, and the assets
sold and leased back previously had depreciation expense of approximately $2.7
million annually. Net proceeds from the sale were used to reduce outstanding
borrowings under the Company's Revolving Credit Facility, and the commitment
under that facility was reduced by $70 million to $270 million. Of the 439
Cracker Barrel stores open as of October 12, 2001, the Company owns 341, while
the other 98 properties are either ground leases or ground and building leases.
Based on recent and projected new store development, the average cost for a new
Cracker Barrel store is approximately $700,000 to $850,000 for land on purchased
sites and development cost of $2,000,000 to $2,100,000, including approximately
$585,000 in furniture, fixtures and equipment. In addition, approximately
$200,000 is budgeted for pre-opening expenses. The current Cracker Barrel store
prototype is approximately 10,000 square feet with 184 seats in the restaurant
and 2,200 square feet in the retail gift shop. The Company typically projects
that a new Cracker Barrel store will generate annual sales of approximately
$4,200,000 and mature operating cash flow before rent of approximately 18% of
sales. The Company plans, for the foreseeable future, to open a higher
percentage of leased units than purchased units.
Of the 86 Logan's stores open as of October 12, 2001, 8 are franchised
stores. Of the remaining 78 Logan's stores, the Company owns 47. The other 31
properties are ground leases. The average cost for a new Logan's, based on
recent and projected new store development, is approximately $750,000 to
$850,000 for land on purchased sites and $1,900,000 to $2,100,000 for
development cost, including approximately $485,000 in furniture, fixtures and
equipment. In addition, pre-opening expenses of approximately $130,000 are
budgeted. The current Logan's store prototype is approximately 8,000 square feet
with 277 seats, including 34 seats in the bar area. The Company typically
projects annual sales for a new Logan's restaurant of approximately $3,175,000
and mature operating cash flow before rent of approximately 20% of sales. The
Company's plans reflect a higher percentage of leased units than purchased units
for the foreseeable future. During fiscal 2001 Logan's opened a new prototype
restaurant designed to improve operational efficiency and guest perception; with
some additional modifications, it will be used as the expansion vehicle for
future unit development.
EMPLOYEES
As of August 3, 2001, CBRL Group, Inc. employed 19 people, of whom 7 were
in advisory and supervisory capacities, and 5 were officers of the Company.
Cracker Barrel employed 49,140 people, of whom 414 were in advisory and
supervisory capacities, 2,671 were in store management positions and 30 were
officers. Logan's employed 6,556 people, of whom 48 were in advisory and
supervisory capacities, 440 were in store management positions and 6 were
officers. Many of the restaurant personnel are employed on a part-time basis.
Competition for and availability of qualified new employees has become more
difficult in recent years, contributing to increases in store labor expenses.
The Company's employees are not represented by any union, and management
considers its employee relations to be good.
COMPETITION
The restaurant business is highly competitive and often is affected by
changes in the taste and eating habits of the public, local and national
economic conditions affecting spending habits, and population and traffic
patterns. Restaurant industry segments overlap and often provide competition for
widely diverse restaurant concepts. In exceptionally good economic times,
consumers can be expected to patronize a broader range of restaurants and the
breadth of competition at different restaurant segments is likewise increased.
The principal basis of competition in the industry is the quality, variety and
price of the food products offered. Site selection, quality and speed of
service, advertising and the attractiveness of facilities are also important.
There are many restaurant companies catering to the public, including
several franchised operations, a number of which are substantially larger and
have greater financial and marketing resources than those of the Company and
which compete directly and indirectly in all areas in which the Company
operates.
TRADEMARKS
Cracker Barrel through its affiliate, CBOCS General Partnership, owns
certain registered copyrights and trademarks relating to the name "Cracker
Barrel Old Country Store", as well as its logo, menus, designs of buildings,
general trade dress and other aspects of operations. Logan's owns or has applied
for certain registered copyrights and trademarks relating to the name "Logan's
Roadhouse", as well as its logo, menus, designs of buildings, general trade
dress and other aspects of operations. The Company believes that the use of
these names have value in maintaining the atmosphere and public acceptance of
its mode of operations. The Company's policy is to pursue registration of its
copyrights and trademarks whenever possible and to oppose vigorously any
infringement of its copyrights and trademarks.
RESEARCH AND DEVELOPMENT
While research and development are important to the Company, these
expenditures have not been material due to the nature of the restaurant and
retail industry.
SEASONAL ASPECTS
Historically the profits of the Company have been lower in the second
fiscal quarter than in the first and third fiscal quarters and highest in the
fourth fiscal quarter. Management attributes these variations primarily to the
decrease in interstate tourist traffic during the winter months and the increase
in interstate tourist traffic during the summer months. The Company's retail
sales historically have been highest in the Company's second fiscal quarter,
which includes the Christmas holiday season.
SEGMENT REPORTING
The Company has one reportable segment. See Notes 2 and 9 to the
consolidated financial statements contained in the 2001 Annual Report
incorporated by reference in Part II of this Annual Report on Form 10-K for more
information on segment reporting.
WORKING CAPITAL
In the restaurant industry, substantially all sales are either for cash or
credit card. Like most other restaurant companies, the Company is able to, and
may from time to time, operate with negative working capital. Restaurant
inventories purchased through the Company's principal food distributor now are
on terms of net zero days, while restaurant inventories purchased locally
generally are financed from normal trade credit. Retail inventories purchased
domestically generally are financed from normal trade credit, while imported
retail inventories generally are purchased through letters of credit. These
various trade terms are aided by rapid turnover of the restaurant inventory.
ITEM 2. PROPERTIES
The Company's corporate headquarters are located on approximately 10 acres
of land owned by the Company in Lebanon, Tennessee. The Company utilizes 10,000
square feet of office space for its corporate headquarters.
The Cracker Barrel Old Country Store, Inc. corporate headquarters and
warehouse facilities are located on approximately 120 acres of land owned by
Cracker Barrel Old Country Store, Inc. in Lebanon, Tennessee. Cracker Barrel
utilizes approximately 110,000 square feet of office space for its corporate
headquarters and 367,200 square feet of warehouse facilities and an additional
13,800 square feet of office and maintenance space for its retail distribution
center.
The Logan's Roadhouse, Inc. corporate headquarters and training facility
are located in approximately 22,500 square feet of office space in Nashville,
Tennessee, under a lease expiring on April 1, 2010.
Cracker Barrel Old Country Store, Inc. opened a retail-only mall store,
named "The Store," in a regional mall in Nashville, Tennessee in July 1999 to
test this growth opportunity to leverage the Cracker Barrel's merchandising and
logistical expertise. The retail-only mall store is leased and is presently
considered a research and development site.
In addition to the various corporate facilities, 17 properties owned or
leased for future development, Cracker Barrel's retail-only mall store and 19
parcels of excess real property and improvements including three leased
properties, which the Company intends to dispose of, the Company owns or leases
the following Cracker Barrel and Logan's store properties as of October 12,
2001:
State Cracker Barrel Logan's Combined
----- ---------------- ---------------- -----------------
Owned Leased Owned Leased Owned Leased
----- ------ ----- ------ ----- ------
Tennessee 29 9 10 3 39 12
Texas 23 4 7 8 30 12
Florida 33 - 4 1 37 1
Georgia 23 5 5 2 28 7
Kentucky 16 6 - 5 16 11
Indiana 17 5 4 1 21 6
Ohio 20 5 1 1 21 6
Alabama 14 5 5 2 19 7
North Carolina 18 5 - - 18 5
Virginia 15 1 6 1 21 2
Illinois 21 1 - - 21 1
Michigan 13 2 2 4 15 6
Pennsylvania 8 7 - - 8 7
South Carolina 10 5 - - 10 5
Louisiana 7 2 3 2 10 4
Missouri 11 2 - - 11 2
Arkansas 4 6 - - 4 6
Mississippi 8 2 - - 8 2
Arizona 2 7 - - 2 7
New York 7 1 - - 7 1
West Virginia 3 4 - 1 3 5
Oklahoma 4 2 - - 4 2
Kansas 4 1 - - 4 1
Wisconsin 5 - - - 5 -
Colorado 3 1 - - 3 1
Maryland 3 1 - - 3 1
New Jersey 1 3 - - 1 3
Iowa 3 - - - 3 -
Massachusetts - 3 - - - 3
New Mexico 2 1 - - 2 1
Utah 3 - - - 3 -
Connecticut 1 1 - - 1 1
Minnesota 2 - - - 2 -
Montana 2 - - - 2 -
Nebraska 1 1 - - 1 1
Idaho 1 - - - 1 -
New Hampshire 1 - - - 1 -
North Dakota 1 - - - 1 -
Rhode Island 1 - - - 1 -
South Dakota 1 - - - 1 -
Total 341 98 47 31 388 129
See "Business-Operations" and "Business-Expansion" for additional
information on the Company's stores.
ITEM 3. LEGAL PROCEEDINGS
The Company's Cracker Barrel Old Country Store, Inc. subsidiary is involved
in certain lawsuits, two of which are not ordinary routine litigation incidental
to its business: Serena McDermott and Jennifer Gentry v. Cracker Barrel Old
Country Store, Inc., a collective action under the federal Fair Labor Standards
Act ("FLSA"), was served on Cracker Barrel on May 3, 1999; and Kelvis Rhodes,
Maria Stokes et al. v. Cracker Barrel Old Country Store, Inc., an action under
Title VII of the Civil Rights Act of 1964 and Section 1981 of the Civil Rights
Act of 1866, was served on Cracker Barrel on September 15, 1999. The McDermott
case alleges that certain tipped hourly employees were required to perform
non-serving duties and that certain hourly employees were required to wait "off
the clock," without being paid the minimum wage or overtime compensation for
that work or wait. The McDermott case seeks recovery of unpaid wages and
overtime wages related to those claims. The Rhodes case seeks certification as a
company-wide class action, a declaratory judgment to redress an alleged systemic
pattern and practice of racial discrimination in employment opportunities, an
order to effect certain hiring and promotion goals and back pay and other
related monetary damages. No class has yet been certified in the Rhodes case. No
punitive damages are sought in either case.
On March 17, 2000, the Court granted the plaintiffs' motion in the
McDermott case to send notice to a provisional class of plaintiffs. The Court
defined the provisional class as all persons employed as servers and all
second-shift hourly employees at Cracker Barrel Old Country Store restaurants
since January 4, 1996. That notice was sent to 376,207 persons, and 10,838
potential plaintiffs "opted-in" to the case by May 30, 2001. Some of the opt-ins
asserted "off the clock" claims; some asserted they were required to perform
non-serving duties at tipped wages; and some opt-ins asserted both types of
claims. Because of the provisional status of the plaintiff collective action,
the Court could subsequently amend its decision. If amended, the scope of the
collective action could either be reduced or increased or, if appropriate, the
Court could dismiss the collective aspects of the case entirely.
Cracker Barrel Old Country Store, Inc. believes it has substantial defenses
to the claims made, and it is defending each of these cases vigorously. During
fiscal year 2001, the parties engaged in mediation with respect to both cases,
but focused on the FLSA claims that are the subject of the McDermott case. The
mediation process is confidential by court order and the parties cannot comment
on the process or the status of their discussions. Because only limited
discovery has occurred to date, neither the likelihood of an unfavorable outcome
nor the amount of ultimate liability, if any, with respect to these cases can be
determined at this time. Nevertheless, the Company has established a reserve of
$3.5 million with respect to the McDermott case. Cracker Barrel Old Country
Store, Inc. offered this amount to resolve the case and avoid the ongoing
expenses and distractions associated with defending the litigation. With the
exception of that reserve, no provision for any potential liability has been
made in the consolidated financial statements of the Company with respect to
these lawsuits. In the event of an unfavorable result in either of these cases,
the Company's results of operation and financial condition could be materially
and adversely affected.
In addition to the litigation described in the preceding paragraphs, the
Company is a party to other legal proceedings incidental to its business. In the
opinion of management, based upon information currently available, the ultimate
liability with respect to these other actions will not materially affect the
Company's consolidated financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
Pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General
Instruction G(3) to Form 10-K, the following information is included in Part I
of this Form 10-K.
Executive Officers of the Registrant
------------------------------------
The following table sets forth certain information concerning the executive
officers of the Company, as of September 20, 2001:
Name Age Position with Registrant
---- --- ------------------------
Dan W. Evins 66 Chairman of the Board
Michael A. Woodhouse 56 President & Chief Executive
Officer of the Company and
CEO of Cracker Barrel Old
Country Store, Inc.
Lawrence E. White 51 Senior Vice President, Finance
& Chief Financial Officer
James F. Blackstock 54 Senior Vice President,
General Counsel and Secretary
Donald M. Turner 53 President and Chief Operating
Officer of Cracker Barrel Old
Country Store, Inc.
Peter W. Kehayes 44 President and Chief Operating
Officer of Logan's Roadhouse, Inc.
The following background material is provided for those executive officers
who have been employed by the Registrant for less than five years:
Prior to his employment with the Company in January 1999, Mr. Evins was
Chairman of the Board and Chief Executive Officer of Cracker Barrel Old Country
Store, Inc. since its founding in 1969. He continued to serve as CEO of Cracker
Barrel Old Country Store, Inc. until August 2001.
Prior to his employment with the Company in January 1999, Mr. Woodhouse was
Senior Vice President of Finance and Chief Financial Officer of Cracker Barrel
Old Country Store, Inc. since December 1995. He now also serves as CEO of
Cracker Barrel Old Country Store, Inc.
Prior to his employment with the Company in September 1999, Mr. White was
Executive Vice President and Chief Financial Officer of Boston Chicken, Inc.
from 1998 to 1999. Mr. White was Executive Vice President and Chief Financial
Officer of El Chico Restaurants, Inc. from 1992 to 1998 and also served as its
Chief Operating Officer during a period in 1994 and 1995.
Mr. Blackstock served the Company as Vice President, General Counsel and
Secretary from January 1999 to February 2000 when he was promoted to Senior Vice
President. Prior to his employment with the Company in January 1999, Mr.
Blackstock was Vice President, General Counsel and Secretary of Cracker Barrel
Old Country Store, Inc. since June 1997. From 1993 to 1997 Mr. Blackstock served
as Vice President, General Counsel and Secretary of TravelCenters of America,
Inc.
Mr. Turner returned to Cracker Barrel Old Country Store, Inc. in December
1999, serving as Executive Vice President and Chief Operations Officer until his
promotion to President and Chief Operating Officer in August 2001. Prior to his
return to Cracker Barrel Old Country Store, Inc. in November 1999, Mr. Turner
was retired. Mr. Turner retired from Cracker Barrel Old Country Store, Inc. as
Senior Vice President and Chief Operations Officer in 1993, prior to which he
served in various capacities since 1976.
Mr. Kehayes joined Logan's in August 1997, where he served as Senior Vice
President of Operations from October 1997 until his promotion to President and
Chief Operating Officer in April 2000. Prior to his employment with Logan's, Mr.
Kehayes served as Senior Vice President of Operations of Cucina!Cucina! Inc.
from June 1994 to August 1997 and Director of Regional Operations for Cooker
Restaurant Corporation from June 1986 to June 1994.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on The Nasdaq Stock Market (National
Market System) ("Nasdaq") under the symbol CBRL. There were 16,283 shareholders
of record as of September 20, 2001.
The table "Market Price and Dividend Information" on page 21 of the 2001
Annual Report is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The table "Selected Financial Data" on page 21 of the 2001 Annual Report is
incorporated herein by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following portions of the 2001 Annual Report are incorporated herein by
this reference:
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 22 through 25.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The following portion of the 2001 Annual Report is incorporated herein by
this reference:
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 24 and 25.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following portions of the 2001 Annual Report are incorporated herein by
this reference:
Consolidated Financial Statements and Independent Auditors' Report on pages
26 through 36.
Quarterly Financial Data (Unaudited) on page 35.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item with respect to directors of the
Company is incorporated herein by this reference to the section entitled
"Proposal 1: Election of Directors" in the 2001 Proxy Statement. The information
required by this item with respect to executive officers of the Company is set
forth in Part I of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by this
reference to the sections entitled "Board of Directors and Committees" and
"Executive Compensation" in the 2001 Proxy Statement. The matters labeled
"Report of the Compensation and Stock Option Committee" and "Shareholder Return
Performance Graph" shall not be deemed to be incorporated by reference into this
Annual Report on Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by this
reference to the section entitled "Stock Ownership of Management and Certain
Beneficial Owners" in the 2001 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by this
reference to the section entitled "Certain Transactions" in the 2001 Proxy
Statement.
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
A. List of documents filed as part of this report:
1. The following Financial Statements and the Report of Deloitte &
Touche LLP on pages 26 through 36 of the 2001 Annual Report are
incorporated herein by this reference:
Independent Auditors' Report dated September 13, 2001
Consolidated Balance Sheet as of August 3, 2001 and July 28, 2000
Consolidated Statement of Income for each of the three fiscal
years ended August 3, 2001, July 28, 2000 and July 30, 1999
Consolidated Statement of Changes in Shareholders' Equity for each
of the three fiscal years ended August 3, 2001, July 28, 2000,
and July 30, 1999
Consolidated Statement of Cash Flows for each of the three fiscal
years ended August 3, 2001, July 28, 2000 and July 30, 1999
Notes to Consolidated Financial Statements
2. The exhibits listed in the accompanying Index to Exhibits on pages
18 and 19 are filed as part of this annual report.
B. Reports on Form 8-K:
There were no reports filed on Form 8-K during the fourth quarter
of the fiscal year ended August 3, 2001.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Cracker Barrel Old Country Store, Inc. has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CBRL GROUP, INC.
By: /s/Michael A. Woodhouse By: /s/Patrick A. Scruggs
------------------------------------ ---------------------------------
Michael A. Woodhouse Patrick A. Scruggs
President and CEO Assistant Treasurer
(Principal Executive Officer) (Principal Accounting Officer)
By: /s/Lawrence E. White
------------------------------------
Lawrence E. White
Senior Vice President, Finance and CFO
(Principal Financial Officer)
Date: October 12, 2001
--------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
/s/James C. Bradshaw
--------------------------------- ------------------------------
James C. Bradshaw, M.D., Director Charles T. Lowe, Jr., Director
Date: October 12, 2001 Date:
--------------------------- -------------------------
/s/Robert V. Dale /s/B.F. Lowery
--------------------------------- ------------------------------
Robert V. Dale, Director B. F. Lowery, Director
Date: October 12, 2001 Date:October 12, 2001
--------------------------- -------------------------
/s/Dan W. Evins /s/Gordon L. Miller
--------------------------------- ------------------------------
Dan W. Evins, Director Gordon L. Miller, Director
Date: October 12, 2001 Date: October 12, 2001
--------------------------- ------------------------
/s/Edgar W. Evins
--------------------------------- ------------------------------
Edgar W. Evins, Director Martha M. Mitchell, Director
Date: October 12, 2001 Date:
----------------------------- ------------------------
/s/Robert C. Hilton /s/Jimmie D. White
---------------------------------- ------------------------------
Robert C. Hilton, Director Jimmie D. White, Director
Date: October 12, 2001 Date: October 12, 2001
---------------------------- ------------------------
/s/Charles E. Jones, Jr. /s/Michael A. Woodhouse
--------------------------------- ------------------------------
Charles E. Jones, Jr., Director Michael A. Woodhouse, Director
Date: October 12, 2001 Date: October 12, 2001
--------------------------- ------------------------
INDEX TO EXHIBITS
Exhibit
3(I), 4(a) Charter (1)
3(II), 4(b) Bylaws (1)
4(c) Shareholder Rights Agreement dated 9/7/1999 (2)
10(a) Credit Agreement dated 2/16/1999, relating to the
$50,000,000 Term Loan and the $300,000,000 Revolving Credit
Facility (3)
10(b) First Amendment to Credit Agreement dated 7/29/1999 (3)
10(c) Second Amendment to Credit Agreement dated 9/29/1999 (3)
10(d) Third Amendment to Credit Agreement dated 2/29/2000 (4)
10(e) Fourth Amendment to Credit Agreement dated 9/12/2001
10(f) Lease dated 8/27/1981 for lease of Macon, Georgia, store
between Cracker Barrel Old Country Store, Inc. and B. F.
Lowery, a director of the Company (5)
10(g) The Company's 1987 Stock Option Plan, as amended (6)
10(h) The Company's Amended and Restated Stock Option Plan, as
amended (3)
10(i) The Company's Non-Employee Director's Stock Option Plan, as
amended (7)
10(j) The Company's Non-Qualified Savings Plan, effective 1/1/1996,
as amended (6)
10(k) The Company's Deferred Compensation Plan, effective 1/1/1994
(5)
10(l) The Company's Executive Employment Agreement for Dan W. Evins
(8)
10(m) Change-in-control Agreement for Dan W. Evins dated 10/8/1999
(3)
10(n) Change-in-control Agreement for Michael A. Woodhouse dated
10/8/1999 (3)
10(o) Change-in-control Agreement for Lawrence E. White dated
10/8/1999 (3)
10(p) Change-in-control Agreement for James F. Blackstock dated
10/8/1999 (3)
10(q) Change-in-control Agreement for Donald M. Turner dated
12/6/1999
10(r) Master Lease dated July 31, 2000 between Country Stores
Property I, LLC ("Lessor") and Cracker Barrel Old Country
Store, Inc. ("Lessee") for lease of 21 Cracker Barrel Old
Country Store(R)sites (4)
10(s) Master Lease dated July 31, 2000 between Country Stores
Property I, LLC ("Lessor") and Cracker Barrel Old Country
Store, Inc. ("Lessee") for lease of 9 Cracker Barrel Old
Country Store(R)sites*
10(t) Master Lease dated July 31, 2000 between Country Stores
Property II, LLC ("Lessor") and Cracker Barrel Old Country
Store, Inc. ("Lessee") for lease of 23 Cracker Barrel Old
Country Store(R)sites*
10(u) Master Lease dated July 31, 2000 between Country Stores
Property III, LLC ("Lessor") and Cracker Barrel Old Country
Store, Inc. ("Lessee") for lease of 12 Cracker Barrel Old
Country Store(R)sites*
13 Pertinent portions, incorporated by reference herein, of the
Company's 2001 Annual Report to Shareholders
21 Subsidiaries of the Registrant
23 Consent of Deloitte & Touche LLP
*Document not filed because essentially identical in terms and conditions to
Exhibit 10(r).
(1) Incorporated by reference to the Company's Registration Statement on
Form S-4/A under the Securities Act of 1933 (File No. 333-62469).
(2) Incorporated by reference to the Company's Forms 8-K and 8-A under the
Securities Exchange Act of 1934, filed September 21, 1999
(File No. 000-25225).
(3) Incorporated by reference to the Company's Annual Report on Form 10-K
under the Securities Exchange Act of 1934 for the fiscal year ended
July 30, 1999 (File No. 000-25225).
(4) Incorporated by reference to the Company's Annual Report on Form 10-K
under the Securities Exchange Act of 1934 for the fiscal year ended
July 28, 2000 (File No. 000-25225).
(5) Incorporated by reference to the Company's Registration Statement on
Form S-7 under the Securities Act of 1933 (File No. 2-74266).
(6) Incorporated by reference to the Company's Registration Statement on
Form S-8 under the Securities Act of 1933 (File No. 33-45482).
(7) Incorporated by reference to the Company's Annual Report on Form 10-K
under the Securities Exchange Act of 1934 for the fiscal year ended
August 2, 1991 (File No. 0-7536).
(8) Incorporated by reference to the Company's Annual Report on Form 10-K
under the Securities Exchange Act of 1934 for the fiscal year ended
July 28, 1989 (File No. 0-7536).
EX-10
3
aex10e01.txt
FOURTH AMENDMENT
FOURTH AMENDMENT TO CREDIT AGREEMENT
------------------------------------
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (the "Amendment") is dated this
the 12th day of September, 2001 (effective August 3, 2001) by and between CBRL
GROUP, INC., a Tennessee corporation ("Borrower") and SUNTRUST BANK, a Georgia
state banking corporation as agent (the "Administrative Agent") for the Lenders,
as described and defined below.
RECITALS:
--------
A. Borrower, Administrative Agent and the Lenders are parties to a Credit
Agreement dated as of February 16, 1999, as amended by a First Amendment to
Credit Agreement dated July 29, 1999, as amended by a Second Amendment to Credit
Agreement dated September 30, 1999 and as amended by a Third Amendment to Credit
Agreement effective January 28, 2000 (as amended or restated from time to time,
the "Credit Agreement").
B. SunTrust Bank, Fifth-Third Bank, Hibernia National Bank, First Union
National Bank, AmSouth Bank, Firstar Bank, N.A. (as successor to Mercantile Bank
National Association), Fleet National Bank (as assignee of Bank One, NA),
Wachovia Bank, N.A. and Union Planters National Bank, presently constitute all
the Lenders under the Credit Agreement.
C. The Borrower and the requisite percentage of Required Lenders desire to
amend the Credit Agreement as hereinafter provided in order to: (i) reduce total
Revolving Credit Commitments from $270,000,000 to $250,000,000; and (ii) to
terminate and permanently prepay the Term Loan Notes.
D. Terms not defined herein shall have the meanings ascribed to such terms
in the Credit Agreement.
E. Attached hereto as collective Exhibit A are the requisite consents of
the Required Lenders, consenting to this Amendment and to the Administrative
Agent's execution and delivery of this Amendment on behalf of Lenders.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
Section 1. The Administrative Agent, on behalf of the Lenders, acknowledges
payment and termination of the Term Loan Notes and the Term Loan Commitments.
Section 2. Pursuant to Section 7.3(d) of the Credit Agreement, the
Revolving Credit Commitments have previously been permanently reduced from
$340,000,000 to $270,000,000. The Credit Agreement is amended as follows:
(a) The Revolving Credit Commitments are decreased as of the date
of this Amendment from $270,000,000 to $250,000,000. The amount of the
Revolving Credit Commitments and the Applicable Commitment Percentages are
amended as follows:
SunTrust Bank
-------------
Revolving Credit Commitment $66,025,000
Applicable Commitment Percentag 26.41%
Wachovia Bank, N.A.
-------------------
Revolving Credit Commitment $51,475,000
Applicable Commitment Percentage 20.59%
Fleet National Bank
-------------------
(assignee of Bank One, NA)
Revolving Credit Commitment $25,900,000
Applicable Commitment Percentage 10.36%
First Union National Bank
-------------------------
Revolving Credit Commitment $36,775,000
Applicable Commitment Percentage 14.71%
Union Planters Bank, National Association
-----------------------------------------
Revolving Credit Commitment $19,425,000
Applicable Commitment Percentage 7.77%
Firstar Bank, N.A.
------------------
(as successor to Mercantile
Bank, National Association)
Revolving Credit Commitment $ 9,450,000
Applicable Commitment Percentage 3.78%
AmSouth Bank
------------
Revolving Credit Commitment $22,050,000
Applicable Commitment Percentage 8.82%
Hibernia National Bank
----------------------
Revolving Credit Commitment $ 9,450,000
Applicable Commitment Percentage 3.78%
Fifth-Third Bank
----------------
Revolving Credit Commitment $ 9,450,000
Applicable Commitment Percentage 3.78%
(b) Borrower shall execute an Amended and Restated Revolving
Credit Note to each of the Lenders listed in subsection (a) of this
Section, in the forms as set forth in collective Exhibit B.
Section 3. In the calculation and determination of the Interest Coverage
Ratio as set forth in Section 7.1(iii) of the Credit Agreement, the $10,428,000
write-down relating to exiting its Carmine Giardini's business will not be
included.
Section 4. In consideration for the consents by the Required Lenders to
this Amendment, the Borrower shall pay, concurrently with Administrative Agent's
execution hereof, an amendment fee equal to five one hundreths of one percent of
the Total Commitments (as amended by this Amendment), payable to the Lenders
which consent to this Amendment prior to its execution. Such fee shall be paid
to the Administrative Agent for payment to such consenting Lenders on a pro rata
basis.
Section 5. All other documents executed and delivered in connection with
the Credit Agreement are hereby amended to the extent necessary to conform to
this Amendment. Except as specifically amended herein, the Credit Agreement
shall remain unamended and in full force and effect.
Section 6. Borrower represents and warrants that the execution and terms of
this Amendment have been duly authorized by all necessary corporate action.
Section 7. This Amendment shall be governed by and construed in accordance
with the laws of the State of Tennessee.
Section 8. This Amendment may be executed in one or more counterparts, all
of which shall, taken together, constitute one original. The parties agree that
facsimile signatures shall be deemed to be and treated as original signatures of
such parties.
IN WITNESS WHEREOF, the parties hereto have duly executed this Fourth
Amendment to Credit Agreement as of the day and date first set forth above.
CBRL GROUP, INC.
By:/s/Lawrence E. White
----------------------------------
Title: Senior Vice President and CFO
-----------------------------
SUNTRUST BANK, as
Administrative Agent for the Lenders
By:/s/Ned Spitzer
---------------------------------
Title: Assistant Vice President
-----------------------------
EX-10
4
aex10q01.txt
CIC AGREEMENT - TURNER
December 6, 1999
Donald M. Turner
P.O. Box 292
Lebanon, TN 37088-0292
Re: Employee Retention Agreement
----------------------------
Dear Don:
The Board of Directors of the CBRL Group, Inc. recognizes the contribution
that you have made to CBRL Group, Inc. or one of its direct or indirect
subsidiaries (collectively, the "Company") and wishes to ensure your continuing
commitment to the Company and its business operations. Accordingly, in exchange
for your continuing commitment to the Company, and your energetic focus on
continually improving operations, the Company promises you the following
benefits if your employment with the Company is terminated in certain
circumstances:
1. DEFINITIONS. As used in this Agreement, the following terms have the
-----------
following meanings which are equally applicable to both the singular and plural
forms of the terms defined:
1.1 "Cause" means any one of the following:
(a) personal dishonesty;
(b) willful misconduct;
(c) breach of fiduciary duty; or
(d) conviction of any felony or crime involving moral turpitude.
1.2 "Change in Control" means: (a) that after the date of this Agreement, a
person becomes the beneficial owner, directly or indirectly, of securities of
the Company representing 20% or more of the combined voting power of the
Company's then outstanding voting securities, unless that acquisition was
approved by a vote of at least 2/3 of the directors in office immediately prior
to the acquisition; (b) that during any period of 2 consecutive years following
the date of this Agreement, individuals who at the beginning of the period
constitute members of the Board of Directors of the Company cease for any reason
to constitute a majority of the Board unless the election, or the nomination for
election by the Company's shareholders, of each new director was approved by a
vote of at least 2/3 of the directors then still in office who were directors at
the beginning of the 2-year period; (c) a merger, consolidation or
reorganization of the Company (but this provision does not apply to a
recapitalization or similar financial restructuring which does not involve a
material change in ownership of equity of the Company and which does not result
in a change in membership of the Board of Directors); or (d) a sale of all or
substantially all of the Company's assets.
1.3 "Change in Control Period" means a 2-year year period beginning the day
after a Change in Control occurs.
1.4 "Change in Duties or Compensation" means any one of: (a) a material
change in your duties and responsibilities for the Company (without your
consent) from those duties and responsibilities for the Company in effect at the
time a Change in Control occurs, which change results in the assignment of
duties and responsibilities inferior to your duties and responsibilities at the
time such Change in Control occurs (it being understood and acknowledged by you
that a Change in Control that results in two persons of which you are one having
similar or sharing duties and responsibilities shall not be a material change in
your duties and responsibilities); (b) a reduction in your salary or a material
change in benefits (excluding discretionary bonuses), from the salary and
benefits in effect at the time a Change in Control occurs; or (c) a change in
the location of your work assignment from your location at the time a Change in
Control occurs to any other city or geographical location that is located
further than 50 miles from that location.
2. TERMINATION OF EMPLOYMENT; SEVERANCE. Your immediate supervisor or the
Company's Board of Directors may terminate your employment, with or without
cause, at any time by giving you written notice of your termination, such
termination of employment to be effective on the date specified in the notice.
You also may terminate your employment with the Company at any time. The
effective date of termination (the "Effective Date") shall be the last day of
your employment with the Company, as specified in a notice by you, or if you are
terminated by the Company, the date that is specified by the Company in its
notice to you. The following subsections set forth your rights to severance in
the event of the termination of your employment in certain circumstances by
either the Company or you. Section 5 also sets forth certain restrictions on
your activities if your employment with the Company is terminated, whether by
the Company or you. That section shall survive any termination of this Agreement
or your employment with the Company.
2.1 Termination by the Company for Cause. If you are terminated for Cause,
the Company shall have no further obligation to you, and your participation in
all of the Company's benefit plans and programs shall cease as of the Effective
Date. In the event of a termination for Cause, you shall not be entitled to
receive severance benefits described in Section 3.
2.2 Termination by the Company Without Cause Other Than During a Change in
Control Period. If your employment with the Company is terminated by the Company
without Cause at a time other than during a Change in Control Period, you shall
be entitled to only those severance benefits provided by the Company's severance
policy or policies then in effect. You shall not be entitled to receive benefits
pursuant to Section 3 of this Agreement.
2.3 Termination by the Company Without Cause During a Change in Control
Period. If your employment with the Company is terminated by the Company without
Cause during a Change in Control Period, you shall be entitled to receive
Benefits pursuant to Section 3. A termination within 90 days prior to a Change
in Control which occurs solely in order to make you ineligible for the benefits
of this Agreement shall be considered a termination without Cause during a
Change in Control Period.
2.4 Termination By You For Change in Duties or Compensation During a Change
in Control Period. If during a Change in Control Period there occurs a Change in
Duties or Compensation you may terminate your employment with the Company at any
time within 30 days after the occurrence of the Change in Duties or
Compensation, by giving to the Company not less than 120 nor more than 180 days
notice of termination. During the notice period that you continue to work, any
reduction in your Compensation will be restored. At the option of the Company,
following receipt of this notice, it may: (a) change or cure, within 15 days,
the condition that you claim has caused the Change in Duties or Compensation, in
which case, your rights to terminate your employment with the Company pursuant
to this Section 2.4 shall cease (unless there occurs thereafter another Change
in Duties or Compensation) and you shall continue in the employment of the
Company notwithstanding the notice that you have given; (b) allow you to
continue your employment through the date that you have specified in your
notice; or (c) immediately terminate your employment pursuant to Section 2.3. If
you terminate your employment with the Company pursuant to this Section 2.4, you
shall be entitled to receive Benefits pursuant to Section 3. Your failure to
provide the notice required by this Section 2.4 shall result in you having no
right to receive any further compensation from the Company except for any base
salary or vacation earned but not paid, plus any bonus earned and accrued by the
Company through the Effective Date.
3. SEVERANCE BENEFITS. If your employment with the Company is terminated as
described in Section 2.3 or 2.4, you shall be entitled to the benefits specified
in subsections 3.1, 3.2, and 3.3 (the "Benefits") for the period of time set
forth in the applicable section.
3.1 Salary Payment or Continuance. You will be paid a single lump sum
payment in an amount equal to 2.99 times the average of your annual base salary
and any bonus payments for the 3 years immediately preceding the Effective Date.
The determination of the amount of this payment shall be made by the Company's
actuaries and benefit consultants and, absent manifest error, shall be final,
binding and conclusive upon you and the Company.
3.2 Continuation of Benefits. During the 2 years following the Effective
Date (the "Severance Period") that results in benefits under this Article 3, you
shall continue to receive the medical, prescription, dental, employee life and
group life insurance benefits at the levels to which you were entitled on the
day preceding the Effective Date, or reasonably equivalent benefits, to the
extent continuation is not prohibited or limited by applicable law. In no event
shall substitute plans, practices, policies and programs provide you with
benefits which are less favorable, in the aggregate, than the most favorable of
those plans, practices, policies and programs in effect for you at any time
during the 120-day period immediately preceding the Effective Date. However, if
you become reemployed with another employer and are eligible to receive medical
or other welfare benefits under another employer-provided plan, Company payments
for these medical and other welfare benefits shall cease.
4. EFFECT OF TERMINATION ON STOCK OPTIONS AND RESTRICTED STOCK. In the event of
any termination of your employment, all stock options and restricted stock held
by you that are vested prior to the Effective Date shall be owned or exercisable
in accordance with their terms; all stock options held by you that are not
vested prior to the Effective Date shall lapse and be void; however, if your
employment with the Company is terminated as described in Sections 2.3 or 2.4,
then, if your option or restricted stock grants provide for immediate vesting in
the event of a Change in Control, the terms of your option or restricted stock
agreement shall control. If your option or restricted stock agreement does not
provide for immediate vesting, you shall receive, within 30 days after the
Effective Date, a lump sum cash distribution equal to: (a) the number of shares
of the Company's ordinary shares that are subject to options or restricted stock
grants held by you that are not vested as of the Effective Date multiplied by
(b) the difference between: (i) the closing price of a share of the Company's
ordinary shares on the NASDAQ National Market System as reported by The Wall
Street Journal as of the day prior to the Effective Date (or, if the market is
closed on that date, on the last preceding date on which the market was open for
trading), and (ii) the applicable exercise prices or stock grant values of those
non-vested shares.
5. DISCLOSURE OF INFORMATION. You recognize and acknowledge that, as a result of
your employment by the Company, you have or will become familiar with and
acquire knowledge of confidential information and certain trade secrets that are
valuable, special, and unique assets of the Company. You agree that all that
confidential information and trade secrets are the property of the Company.
Therefore, you agree that, for and during your employment with the Company and
continuing following the termination of your employment for any reason, all
confidential information and trade secrets shall be considered to be proprietary
to the Company and kept as the private records of the Company and will not be
divulged to any firm, individual, or institution, or used to the detriment of
the Company. The parties agree that nothing in this Section 6 shall be construed
as prohibiting the Company from pursuing any remedies available to it for any
breach or threatened breach of this Section 6, including, without limitation,
the recovery of damages from you or any person or entity acting in concert with
you.
6. GENERAL PROVISIONS.
------------------
6.1 Other Plans. Nothing in this Agreement shall affect your rights during
your employment to receive increases in compensation, responsibilities or duties
or to participate in and receive benefits from any pension plan, benefit plan or
profit sharing plans except plans which specifically address benefits of the
type addressed in Sections 3 and 4 of this Agreement.
6.2 Death During Severance Period. If you die during the Severance Period,
any Benefits remaining to be paid to you shall be paid to the beneficiary
designated by you to receive those Benefits (or in the absence of designation,
to your surviving spouse or next of kin).
6.3 Notices. Any notices to be given under this Agreement may be effected by
personal delivery in writing or by mail, registered or certified, postage
prepaid with return receipt requested. Mailed notices shall be addressed to the
parties at the addresses appearing on the first page of this Agreement (to the
attention of the Secretary in the case of notices to the Company), but each
party may change the delivery address by written notice in accordance with this
Section 7.3. Notices delivered personally shall be deemed communicated as of
actual receipt; mailed notices shall be deemed communicated as of the second day
following deposit in the United States Mail.
6.4 Entire Agreement. This Agreement supersedes all previous oral or written
agreements, understandings or arrangements between the Company and you regarding
a termination of your employment with the Company or a change in your status,
scope or authority and the salary, benefits or other compensation that you
receive from the Company as a result of the termination of your employment with
the Company (the "Subject Matter"), all of which are wholly terminated and
canceled. This Agreement contains all of the covenants and agreements between
the parties with respect to the Subject Matter. Each party to this Agreement
acknowledges that no representations, inducements, promises, or agreements,
orally or otherwise, have been made with respect to the Subject Matter by any
party, or anyone acting on behalf of any party, which are not embodied in this
Agreement. Any subsequent agreement relating to the Subject Matter or any
modification of this Agreement will be effective only if it is in writing signed
by the party against whom enforcement of the modification is sought.
6.5 Partial Invalidity. If any provision in this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
6.6 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Tennessee, and it shall be enforced or
challenged only in the courts of the State of Tennessee.
6.7 Waiver of Jury Trial. The Company and you expressly waive any right to a
trial by jury in any action or proceeding to enforce or defend any rights under
this Agreement, and agree that any such action or proceeding shall be tried
before a court and not a jury. You irrevocably waive, to the fullest extent
permitted by law, any objection that you may have now or hereafter to the
specified venue of any such action or proceeding and any claim that any such
action or proceeding has been brought in an inconvenient forum.
6.8 Miscellaneous. Failure or delay of either party to insist upon
compliance with any provision of this Agreement will not operate as and is not
to be construed to be a waiver or amendment of the provision or the right of the
aggrieved party to insist upon compliance with the provision or to take remedial
steps to recover damages or other relief for noncompliance. Any express waiver
of any provision of this Agreement will not operate, and is not to be construed,
as a waiver of any subsequent breach, irrespective of whether occurring under
similar or dissimilar circumstances. You may not assign any of your rights under
this Agreement. The rights and obligations of the Company under this Agreement
shall benefit and bind the successors and assigns of the Company. The Company
agrees that if it assigns this Agreement to any successor company, it will
ensure that its terms are continued.
6.9 Certain Additional Payments by the Company.
a. The Company will pay you an amount (the "Additional Amount") equal
to the excise tax under the United States Internal Revenue Code of 1986, as
amended (the "Code"), if any, incurred by you by reason of the payments under
this Agreement and any other plan, agreement or understanding between you and
the Company or its parent, subsidiaries or affiliates (collectively, "Separation
Payments") constituting excess parachute payments under Section 280G of the Code
(or any successor provision). In addition, the Company will pay an amount equal
to all excise taxes and federal, state and local income taxes incurred by you
with respect to receipt of the Additional Amount. All determinations required to
be made under this Section 6.9 including whether an Additional Amount is
required and the amount of any Additional Amount, will be made by the
independent auditors engaged by the Company immediately prior to the Change in
Control (the "Accounting Firm"), which will provide detailed supporting
calculations to the Company and you. In computing taxes, the Accounting Firm
will use the highest marginal federal, state and local income tax rates
applicable to you and will assume the full deductibility of state and local
income taxes for purposes of computing federal income tax liability, unless you
demonstrate that you will not in fact be entitled to such a deduction for the
year of payment.
b. The Additional Amount, computed assuming that all of the
Separation Payments constitute excess parachute payments as defined in Section
280G of the Code (or any successor provision), will be paid to you at the time
that the payments made pursuant to Section 3.1 is made unless the Company, prior
to the Severance Period, provides you with an opinion of the Accounting Firm
that you will not incur an excise tax on part or all of the Separation Payments.
That opinion will be based upon the applicable regulations under Sections 280G
and 4999 of the Code (or any successor provisions) or substantial authority
within the meaning of Section 6662 of the Code. If that opinion applies only to
part of the Separation Payments, the Company will pay you the Additional Amount
with respect to the part of the Separation Payments not covered by the opinion.
c. The amount of the Additional Amount and the assumptions to be
utilized in arriving at the determination, shall be made by the Company's
Accounting Firm, whose decision shall be final and binding upon both you and the
Company. You must notify the Company in writing no later than 30 days after you
are informed of any claim by the Internal Revenue Service that, if successful,
would require the payment by the Company of the Additional Amount. You must also
cooperate fully with the Company and give the Company any information reasonably
requested relating to the claim, and take all action in connection with
contesting the claim as the Company reasonably requests in writing from time to
time.
If all of the terms and conditions in this Agreement are agreed to by you,
please signify your agreement by executing the enclosed duplicate of this letter
and returning it to us. At the date of your return, this letter shall constitute
a fully enforceable Agreement between us.
CBRL GROUP, INC.
By: /s/Dan W. Evins
------------------------------------
Dan W. Evins
Chairman and Chief Executive Officer
The foregoing is fully agreed to and accepted by:
Company Employee's Signature: /s/Donald M. Turner
-----------------------
Please Print or Type Name:Donald M. Turner
---------------------------------
Please Print or Type Title:Executive Vice President and Chief Operations Officer
-----------------------------------------------------
EX-13
5
aex1301.txt
ANNUAL REPORT ON FORM 10K
SELECTED FINANCIAL DATA
(In thousands except per share data)
For each of the fiscal years ended
August 3, July 28, July 30, July 31, August 1,
2001(b)(c)(d) 2000(e) 1999(f) 1998(g) 1997
-------------------------------------------------------------------------------------
OPERATING RESULTS
Total revenue $1,963,692 $1,772,712 $1,531,625 $1,317,104 $1,123,851
Cost of goods sold 664,332 614,472 538,051 450,120 387,703
Gross profit 1,299,360 1,158,240 993,574 866,984 736,148
Labor & other related
expenses 732,419 645,976 538,348 441,121 378,117
Other store operating
expenses 353,334 294,012 248,208 197,098 162,675
Store operating income 213,607 218,252 207,018 228,765 195,356
General and administrative 102,541 95,289 82,006 63,648 57,798
Amortization of goodwill 14,370 3,994 2,169 208 --
Operating income 96,696 118,969 122,843 164,909 137,558
Interest expense 12,316 24,616 11,324 3,026 2,089
Interest income 84 352 1,319 2,847 1,988
Income before income taxes 84,464 94,705 112,838 164,730 137,457
Provision for income taxes 35,283 35,707 42,653 60,594 50,859
Net income $ 49,181 $ 58,998 $ 70,185 $ 104,136 $ 86,598
SHARE DATA Net earnings per share:
Basic $.88 $1.02 $1.16 $1.68 $1.42
Diluted .87 1.02 1.16 1.65 1.41
Dividends per share(a) $.02 $ .01 $ .02 $ .02 $ .02
Weighted average
shares outstanding:
Basic 56,129 57,960 60,329 61,832 60,824
Diluted 56,799 58,041 60,610 63,028 61,456
FINANCIAL POSITION
Working capital $ (42,059) $ (29,543) $ (5,803) $ 60,804 $ 60,654
Total assets 1,212,872 1,335,023 1,277,781 992,108 828,705
Property and equipment-net 955,028 1,075,134 1,020,055 812,321 678,167
Long-term debt 125,000 292,000 312,000 59,500 62,000
Other long-term
obligations 8,829 1,762 902 1,502 1,302
Shareholders' equity 846,108 828,970 791,007 803,374 660,432
====================================================================================
(a)On November 24, 1999, the Company's Board of Directors adopted a policy to
consider and pay dividends, if declared, on an annual basis each January in the
future. This new policy is intended to reduce administrative and mailing costs
related to dividends.
(b)The Company recorded charges of $33,063 before taxes during the quarter ended
August 3, 2001, principally as a result of exiting its Carmine Giardini's
Gourmet Market(TM) business and the closing of four Cracker Barrel Old Country
Store(R) units and three Logan's Roadhouse(R) units, as well as an accrual for a
settlement proposal for a certain collective action under the Fair Labor
Standards Act. Before the effect of these charges, net income would have been
$73,654 and diluted net earnings per share would have been $1.30. (See Notes 2
and 10 to the Company's Consolidated Financial Statements.)
(c)The Company's fiscal year ended August 3, 2001 consisted of 53 weeks. As a
result, comparisons to fiscal 2000 also reflect the impact of having one
additional week in fiscal 2001 than in fiscal 2000. The estimated impact of the
additional week was to increase consolidated fiscal 2001 results as follows:
total revenue, $40,485; store operating income, $9,006; operating income,
$8,056; net income, $4,954; and diluted earnings per share, $0.09.
(d)The Company completed a sale-leaseback transaction in the first quarter of
fiscal 2001, under which $138,300 of long-term debt was paid down, operating
income was reduced by $12,256 and interest expense was reduced by approximately
$10,100. (See Note 12 to the Company's Consolidated Financial Statements.)
(e)The Company recorded charges of $8,592 before taxes during the quarter ended
January 28, 2000, principally as a result of management changes and the
resulting refocused operating priorities. Before the effect of these charges,
net income would have been $64,350 and diluted net earnings per share would have
been $1.11. (See Note 2 to the Company's Consolidated Financial Statements.)
(f)The Company acquired Logan's Roadhouse, Inc. on February 16, 1999. (See
Note 7 to the Company's Consolidated Financial Statements.)
(g)The Company acquired Carmine's Prime Meats, Inc. on April 1, 1998.
MARKET PRICE AND DIVIDEND INFORMATION
The following table indicates the high and low sales prices of the
Company's common stock, as reported by The Nasdaq Stock Market (National
Market), and dividends paid.
Fiscal Year 2001 Fiscal Year 2000
------------------------ ------------------------
Prices Prices
------------- Dividends ------------- Dividends
Quarter High Low Paid* High Low Paid
---------------------------------------------------------------------------
First $15.94 $11.75 -- $15.50 $12.81 $.005
Second 24.25 15.69 $.02 14.19 8.13 .005
Third 21.81 17.63 -- 14.00 8.38 --
Fourth 21.94 16.26 -- 15.31 11.88 --
---------------------------------------------------------------------------
*On November 24, 1999, the Company's Board of Directors adopted a policy to
consider and pay dividends, if declared, on an annual basis each January in the
future. This new policy is intended to reduce administrative and mailing costs
related to dividends.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
All dollar amounts reported or discussed in Management's Discussion and
Analysis of Financial Condition and Results of Operations are shown in
thousands.
The following table highlights operating results over the past three
fiscal years (immediately following the table are details of the impact of
certain charges taken in fiscal 2000 and fiscal 2001 on the values shown in the
table):
Period to Period
Relationship to Total Revenue Increase(Decrease)
----------------------------- ---------------------------
2001 2000 1999 2001 vs 2000 2000 vs 1999
-------------------------------------------------------------------------------------
Net Sales:
Restaurant 78.6% 77.8% 76.0% 12% 19%
Retail 21.4 22.2 24.0 7 7
Total net sales 100.0 100.0 100.0 11 16
Franchise fees and
royalties -- -- -- 16 134
----------------------------------------------------
Total revenue 100.0% 100.0% 100.0% 11 16
Cost of goods sold 33.8 34.7 35.1 8 14
Gross profit 66.2 65.3 64.9 12 17
Labor & other related
expenses 37.3 36.4 35.2 13 20
Other store operating
expenses 18.0 16.6 16.2 20 18
Store operating income 10.9 12.3 13.5 (2) 5
General & administrative 5.2 5.4 5.4 8 16
Amortization of goodwill 0.8 0.2 0.1 260 84
Operating income 4.9 6.7 8.0 (19) (3)
Interest expense 0.6 1.4 0.7 (50) 117
Interest income -- -- 0.1 (76) (73)
Income before income taxes 4.3 5.3 7.4 (11) (16)
Provision for income taxes 1.8 2.0 2.8 (1) (16)
Net income 2.5 3.3 4.6 (17) (16)
================================================================================
The Company recorded charges of $33,063 before taxes during the quarter
ended August 3, 2001, principally as a result of exiting the Carmine Giardini's
Gourmet Market(TM) ("Carmine's") business and the closing of four Cracker Barrel
Old Country Store(R) ("Cracker Barrel") units and three Logan's Roadhouse(R)
("Logan's") units, as well as an accrual for a settlement proposal for a certain
collective action under the Fair Labor Standards Act. These charges consisted
primarily of $10,428 for the write-off of goodwill related to the acquisition of
Carmine's and $14,003 for the write-down of fixed assets of all three Carmine's
units, four Cracker Barrel units and three Logan's units in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 121 (see Note 2 to the
Company's Consolidated Financial Statements). These charges also consisted of
$1,234 for severance and related expenses for approximately 1,000 employees,
consisting primarily of store personnel, and $3,898 for other charges primarily
consisting of lease termination costs, inventory write-downs related to the
closed units and other unit closing costs. Additionally, the Company accrued
$3,500 for a settlement proposal for a certain collective action under the Fair
Labor Standards Act (see Note 10 to the Company's Consolidated Financial
Statements). These charges affect line items in the company's Consolidated
Statement of Income in dollars and as a percent of total revenue for the fiscal
year ended August 3, 2001, respectively, as follows: Cost of goods sold $669,
0.0%; Labor and other related expenses $924, 0.0%; Other store operating
expenses $20,552, 1.1%; General and administrative $490, 0.0%; and Amortization
of goodwill $10,428, 0.6%. As of August 3, 2001, approximately $285 of the
severance costs and $620 of the other charges had been paid with no changes from
the original estimate. The Company has paid substantially all of the remaining
severance in the first quarter of fiscal 2002 with no changes from the original
estimates. The Company has paid substantially all of the remaining other charges
in the first quarter of fiscal 2002, except the $1,213 accrued for certain lease
termination costs, with no changes from the original estimates. After taking
into effect the property and equipment write-downs, the Company's carrying value
of the property and equipment associated with the charges is approximately
$2,946 as of August 3, 2001. The expected cash benefit reflected in the charges
net of estimated proceeds from disposition of assets and tax benefit of the
charges is approximately $5,000.
The Company recorded charges of $8,592 before taxes during the quarter
ended January 28, 2000, principally as a result of management changes and the
resulting refocused operating priorities. These charges consisted of $3,887 for
the write-down of certain Cracker Barrel properties no longer expected to be
used for future development and for Cracker Barrel's test, retail-only mall
store in accordance with SFAS No. 121 (see Note 2 to the Company's Consolidated
Financial Statements), $1,955 for severance and related expenses for a total of
20 corporate employees, including 18 at Cracker Barrel, and $2,750 for other
charges primarily consisting of the future minimum lease payments on certain
properties no longer expected to be used for future development, the write-down
of certain abandoned property, inventory write-downs related to the closing of
Cracker Barrel's test outlet store and other contractual obligations. These
charges affect line items on the Company's Consolidated Statement of Income in
dollars and as a percent of total revenue for the fiscal year ended July 28,
2000, respectively, as follows: Cost of goods sold $205, 0.0%; Other store
operating expenses $5,609, 0.3%; and General and administrative $2,778, 0.2%. As
of July 28, 2000, substantially all of the amounts previously recorded had been
paid or settled with no changes from the original estimates.
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's consolidated results of operations and financial condition. The
discussion should be read in conjunction with the consolidated financial
statements and notes thereto. Except for specific historical information, the
matters discussed in this Annual Report to Shareholders, as well as the
Company's Form 10-K filed with the Securities and Exchange Commission for the
year ended August 3, 2001, contain forward-looking statements that involve
risks, uncertainties and other factors which may cause actual results and
performance of CBRL Group, Inc. to differ materially from those expressed or
implied by these statements. All forward-looking information is provided by the
Company 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 "assumptions", "target", "plans", "may",
"will", "would", "expect", "intend", "estimate", "anticipate", "believe",
"potential", or "continue" (or the negative of each of these terms) or similar
terminology. Factors which will affect actual results include, but are not
limited to: adverse general economic conditions including high or escalating
gasoline prices and declining consumer confidence; the actual results of pending
or threatened litigation; the effects of negative publicity; commodity, group
health and utility price increases; the effect of plans intended to improve
operational execution and performance; the effects of increased competition at
Company locations on sales and on labor recruiting, cost and retention; the
ability of and cost to the Company to recruit, train and retain qualified
restaurant hourly and management employees; the ability of the Company to
identify successful new lines of retail merchandise; the availability and costs
of acceptable sites for development; adverse weather conditions; the acceptance
of the Company's concepts as the Company continues to expand into new markets
and geographic regions; changes in interest rates affecting the Company's
financing costs; changes in or implementation of additional governmental rules
and regulations affecting wage and hour matters, health and safety, pensions and
insurance; other undeterminable areas of government actions or regulations; and
other factors described from time to time in the Company's filings with the
Securities and Exchange Commission, press releases and other communications.
CBRL Group, Inc. acquired Logan's on February 16, 1999 in the third
quarter of the Company's fiscal year ended July 30, 1999, and, therefore,
results for the fiscal years ended August 3, 2001 and July 28, 2000 are not
directly comparable to the fiscal year ended July 30, 1999.
The following table highlights comparable store sales* results over the
past two fiscal years:
Cracker Barrel Old Country Store Logan's Roadhouse
Period to Period Period to Period
Increase(Decrease) Increase(Decrease)
-------------------------------- --------------------------
2001 vs 2000 2000 vs 1999 2001 vs 2000 2000 vs 1999
(376 Stores) (326 Stores) (40 Stores) (25 Stores)
-----------------------------------------------------------------------------------
Restaurant 5% 1% (1)% 3%
Retail 1 (2) -- --
Restaurant & retail 4 0 (1) 3
==============================================================================
*Comparable store sales consist of sales of stores open six full quarters at the
beginning of the fiscal year.
Cracker Barrel comparable store restaurant sales increased 5% in fiscal
2001 versus the comparable 53-week period of a year earlier. Comparable store
restaurant sales increased 1% for the comparable 52 weeks of fiscal 2000 versus
fiscal 1999. The increase in comparable store sales growth from fiscal 2000 to
fiscal 2001 was primarily due to the increases in average check of approximately
3% and guest traffic of approximately 2%.
Cracker Barrel comparable store retail sales increased 1% in fiscal 2001
versus the comparable 53-week period of a year earlier. Comparable store retail
sales decreased 2% for the comparable 52 weeks of fiscal 2000 versus fiscal
1999. The comparable store retail sales increase from fiscal 2000 to fiscal 2001
was primarily due to the restaurant guest traffic increase.
In fiscal 2001 total net sales (restaurant and retail) in the 376 Cracker
Barrel comparable stores averaged $4,028.0. Restaurant sales were 76.5% of total
net sales in the comparable 376 stores in fiscal 2001 and 75.9% in fiscal 2000.
Logan's comparable store sales decreased 1% in fiscal 2001 versus the
comparable 53-week period of a year earlier. Comparable store sales increased
3% for the comparable 52 weeks of fiscal 2000 versus fiscal 1999. The
comparable store sales decrease from fiscal 2000 to fiscal 2001 was primarily
due to an increase in average check of approximately 1% and a decrease in guest
traffic of approximately 2%.
Total revenue, which increased 11% and 16% in fiscal 2001 and 2000,
respectively, benefited from the opening of 15, 30 and 40 new Cracker Barrel
stores in fiscal 2001, 2000 and 1999, respectively, the opening of 13 and 12 new
company-operated Logan's restaurants in fiscal 2001 and 2000, respectively, and
the acquisition of Logan's in February 1999. (See Note 7 to the Company's
Consolidated Financial Statements.) Additionally, fiscal 2001 benefited from a
53rd week.
Cost of goods sold as a percentage of total revenue decreased in fiscal
2001 to 33.8% from 34.7% in 2000. This decrease was primarily due to higher menu
pricing, improved food cost management in the Cracker Barrel stores, lower bacon
and potato prices, an increased mix of restaurant sales, which have a lower cost
of goods than retail sales, and higher initial mark-ons and lower markdowns of
retail merchandise versus the prior year. Additionally, the Company had the non-
recurrence of $205 in charges to cost of goods sold related to management's
decision during the second quarter of fiscal 2000 to close Cracker Barrel's test
outlet store. These decreases were partially offset by commodity cost pressure
in beef, ribs and butter, higher retail shrinkage versus the prior year, and
$669 in charges to cost of goods sold related to management's decision during
the fourth quarter of fiscal 2001 to exit the Carmine's business and to close
four Cracker Barrel units and three Logan's units. Food cost as a percentage of
net restaurant sales in fiscal 2001 decreased from fiscal 2000 primarily for the
reasons described above.
Cost of goods sold as a percentage of total revenue decreased in fiscal
2000 to 34.7% from 35.1% in 1999. This decrease was primarily due to a decrease
in markdowns of retail merchandise versus the prior year, lower retail shrinkage
versus the prior year, an increased mix of restaurant sales, which have a lower
cost of goods than retail sales, the benefit to cost of goods sold from the
inclusion of Logan's, which has a lower cost of goods as a percentage of total
revenue than Cracker Barrel, improved food cost management in the Cracker Barrel
stores and lower dairy prices. These decreases were partially offset by
commodity cost pressure in pork and beef and lower initial retail mark-ons.
Additionally, the Company had $205 in charges to cost of goods sold related to
management's decision during the second quarter of fiscal 2000 to close Cracker
Barrel's test outlet store. Food cost as a percentage of net restaurant sales in
fiscal 2000 increased slightly from fiscal 1999 primarily for the reasons
described above.
Labor and other related expenses include all direct and indirect labor
and related costs incurred in store operations. Labor expenses as a percentage
of total revenue were 37.3%, 36.4% and 35.2% in fiscal 2001, 2000 and 1999,
respectively. The year to year increase in fiscal 2001 versus fiscal 2000 was
primarily due to hourly wage inflation in Cracker Barrel and Logan's stores,
increases in Cracker Barrel's store manager staffing and wages, increased bonus
payouts under the Cracker Barrel store-level bonus programs and increases in
group health costs. Additionally, the Company had $924 in charges to labor and
other related expenses related to management's decision during the fourth
quarter of fiscal 2001 to exit the Carmine's business and to close four Cracker
Barrel units and three Logan's units. These increases were partially offset by
higher menu pricing and improved volume at Cracker Barrel stores.
The year to year increase in labor and other related expenses in fiscal
2000 versus fiscal 1999 was primarily due to hourly wage inflation in Cracker
Barrel and Logan's stores, increases in Cracker Barrel's field management salary
structure to attract and retain quality store managers, increased staffing
levels at Cracker Barrel stores versus the prior year, increased bonus payouts
under the Cracker Barrel store-level bonus programs and increases in group
health costs and workers compensation insurance costs at Cracker Barrel stores.
These increases were partially offset by improved hourly labor efficiency at
Cracker Barrel stores and the benefit to labor from adding Logan's, which has
lower labor costs as a percentage of total revenue than Cracker Barrel.
Other store operating expenses include all unit-level operating costs, the
major components of which are operating supplies, utilities, repairs and
maintenance, advertising expenses, rent, depreciation and amortization. Other
store operating expenses as a percentage of total revenue were 18.0%, 16.6% and
16.2% in fiscal 2001, 2000 and 1999, respectively. The year to year increase in
fiscal 2001 versus fiscal 2000 was primarily due to charges in the fourth
quarter of fiscal 2001 of $20,552, consisting primarily of impairment losses of
$14,003 (see Note 2 to the Company's Consolidated Financial Statements).
Additionally, this increase was due to the net effect of the Company's
sale-leaseback transaction, which increased rent expense and decreased
depreciation expense (see Note 12 to the Company's Consolidated Financial
Statements). These increases were partially offset due to the non-recurrence of
charges in the second quarter of fiscal 2000 of $5,609, consisting primarily of
impairment losses of $3,887 (see Note 2 to the Company's Consolidated Financial
Statements). The net effect of the fiscal 2001 charges and the sale-leaseback
transaction reduced by the non-recurrence of fiscal 2000 charges was to increase
other store operating expenses as a percentage of total revenue by 1.4%.
Therefore, the changes from fiscal 2000 to fiscal 2001 in the other components
of other store operating expenses as a percentage of total revenue offset each
other. Higher utility and maintenance costs were offset by lower advertising
spending at the Cracker Barrel concept and higher menu pricing and improved
volume at Cracker Barrel stores.
The year to year increase in other store operating expenses in fiscal
2000 versus fiscal 1999 was primarily due to charges in the second quarter of
fiscal 2000 of $5,609, consisting primarily of impairment losses of $3,887 (see
Note 2 to the Company's Consolidated Financial Statements). Additionally, this
increase was due to the inclusion of Logan's, which has higher other store
operating expenses as a percentage of total revenue than Cracker Barrel. These
increases were partially offset due to lower advertising spending at the Cracker
Barrel concept.
General and administrative expenses as a percentage of total revenue
were 5.2%, 5.4% and 5.4% in fiscal 2001, 2000 and 1999, respectively. General
and administrative expenses as a percentage of total revenue decreased from
fiscal 2000 to fiscal 2001 primarily due to the non-recurrence of charges of
$2,778 in second quarter of fiscal 2000, consisting primarily of severance and
related expenses (see Note 2 to the Company's Consolidated Financial
Statements). These decreases were partially offset due to $490 in charges to
general and administrative expenses related to management's decision during the
fourth quarter of fiscal 2001 to exit the Carmine's business and to close four
Cracker Barrel units and three Logan's units (see Note 2 to the Company's
Consolidated Financial Statements).
General and administrative expenses as a percentage of total revenue
were unchanged from fiscal 1999 to fiscal 2000 primarily due to an increase in
corporate bonus accruals versus the prior year and $2,778 in second quarter
fiscal 2000 charges, consisting primarily of severance and related expenses (see
Note 2 to the Company's Consolidated Financial Statements) offset by the
inclusion of Logan's, which had lower general and administrative expenses as a
percentage of total revenue than Cracker Barrel and improved volume.
Interest expense decreased in fiscal 2001 to $12,316 from $24,616 in
fiscal 2000. Interest expense increased in fiscal 2000 to $24,616 from $11,324
in fiscal 1999. The decrease from fiscal 2000 to fiscal 2001 was primarily due
to net revolving principal payments from the proceeds of the Company's
sale-leaseback transaction (see Note 12 to the Company's Consolidated Financial
Statements) and from operating and other cash flow not otherwise needed in the
Company's business and financing activities. The increase from fiscal 1999 to
fiscal 2000 was primarily due to the full year effect of the Company's drawing
on its bank revolving credit facility to finance the Logan's acquisition and the
repurchase of stock in mid-fiscal 1999.
Interest income decreased to $84 in fiscal 2001 from $352 in fiscal 2000
and $1,319 in fiscal 1999. The primary reason for the decrease was lower average
funds available for investment.
Provision for income taxes as a percent of pretax income was 41.8% for
fiscal 2001, 37.7% for fiscal 2000 and 37.8% for fiscal 1999. The primary reason
for the increase in the tax rate from fiscal 2000 to fiscal 2001 was the
non-deductibility of the $10,428 write-off of goodwill related to Carmine's in
fiscal 2001. (See Note 2 to the Company's Consolidated Financial Statements.)
The primary reason for the decrease in the tax rate from fiscal 1999 to fiscal
2000 was decreases in effective state tax rates.
As a result of the Company's fiscal year ended August 3, 2001
consisting of 53 weeks, comparisons to fiscal 2000 also reflected the impact of
having one additional week in fiscal 2001 than in fiscal 2000. The estimated
impact of the additional week was to increase consolidated fiscal 2001 results
as follows: total revenue, $40,485; store operating income, $9,006; operating
income, $8,056; net income, $4,954; and diluted earnings per share, $0.09.
Impact of Recent Accounting Pronouncements Not Yet Adopted
Recent accounting pronouncements not yet adopted - In July 2001, the
Financial Accounting Standards Board issued SFAS No. 141, "Business
Combinations" and No. 142 "Goodwill and Other Intangible Assets". SFAS No. 141
will require that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 and that the use of the
pooling-of-interest method is no longer allowed. SFAS No. 142 requires that upon
adoption, amortization of goodwill will cease and instead, the carrying value of
goodwill will be evaluated for impairment on an annual basis. Identifiable
intangible assets will continue to be amortized over their useful lives and
reviewed for impairment in accordance with SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of".
SFAS No. 142 is effective for fiscal years beginning after December 15, 2001;
however, the Company may elect early adoption of this statement effective August
4, 2001, the beginning of its 2002 fiscal year. The Company is evaluating the
impact of the adoption of these standards and has not yet determined the effect
of adoption on its financial position and results of operations.
Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk. With certain instruments entered into for other
than trading purposes, the Company is subject to market risk exposure related to
changes in interest rates. As of October 12, 2001, the Company has in place a
$250,000 bank credit facility, which matures December 31, 2003. The facility
bears interest at a percentage point spread from LIBOR based on the Company's
ratio of lease adjusted funded debt to EBITDAR (earnings before interest
expense, income taxes, depreciation and amortization and rent expense), adjusted
quarterly. As of August 3, 2001, the Company had $75,000 outstanding under the
revolver at interest rates ranging from 5.10% to 6.75%. The remaining portion of
the bank credit facility was a $50,000 5-year term loan bearing interest at
LIBOR plus the Company's credit spread, adjusted quarterly. As of August 3,
2001, the Company's interest rate on the $50,000 term loan was 5.31%. On
September 12, 2001, the Company amended its bank credit facility, thereby
converting its $50,000 term loan into a revolving loan under the facility, and
reduced the entire facility by $70,000 to the current $250,000 facility. The
Company's credit spread on its bank credit facility decreased by 25 basis points
on August 6, 2001 due to the Company's improving financial ratios. The Company's
credit spread will increase by 25 basis points on November 5, 2001 due to the
Company's charges to exit the Carmine's business. As of August 6, 2001, the
weighted average interest rates through the expected maturity dates for the
Company's term loan and revolving credit facility were 5.06% and 5.07%,
respectively, based on the Company's then current credit spread of 1.0%. While
changes in LIBOR would affect the cost of funds borrowed in the future, the
Company believes that the effect, if any, of reasonably possible near-term
changes in interest rates on the Company's consolidated financial position,
results of operations or cash flows would not be material. Based on discounted
cash flows of future payment streams, assuming rates equivalent to the Company's
incremental borrowing rate on similar liabilities, the fair value of the $50,000
term loan and the $75,000 outstanding under the revolving credit facility
approximates carrying value as of August 3, 2001.
Commodity Price Risk. Many of the food products purchased by the
Company are affected by commodity pricing and are, therefore, subject to price
volatility caused by weather, production problems, delivery difficulties and
other factors which are outside the control of the Company and which are
generally unpredictable. Three food categories (beef, pork and poultry) account
for the largest shares of the Company's food purchases at approximately 18%, 13%
and 11%, respectively. Other items affected by the commodities markets, such as
dairy, produce and coffee, may each account for as much as 10% of the Company's
food purchases. While the Company has some of its food items prepared to its
specifications, the Company's food items are based on generally available
products, and if any existing suppliers fail, or are unable to deliver in
quantities required by the Company, the Company believes that there are
sufficient other quality suppliers in the marketplace that its sources of supply
can be replaced as necessary. The Company also recognizes, however, that
commodity pricing is extremely volatile and can change unpredictably and over
short periods of time. Changes in commodity prices would affect the Company and
its competitors generally and often simultaneously. The Company also enters into
supply contracts for certain of its products in an effort to minimize volatility
of supply and pricing. In many cases, the Company believes it will be able to
pass through any increased commodity costs by adjusting its menu pricing. From
time to time, competitive circumstances may limit menu price flexibility, and in
those circumstances increases in commodity prices can result in lower margins
for the Company. The Company does not use financial instruments to hedge
commodity prices. However, the Company believes that any changes in commodity
pricing which cannot be adjusted for by changes in menu pricing or other product
delivery strategies would not be material.
Liquidity and Capital Resources
The Company's cash generated from operating activities was $147,762 in
fiscal 2001. Most of this cash was provided by net income adjusted by
depreciation and amortization and non-cash impairment loss. Decreases in
receivables and increases in accounts payable, taxes withheld and accrued,
income taxes payable, accrued employee compensation, accrued employee benefits,
other accrued expenses and other long-term obligations were partially offset by
increases in inventories, prepaid expenses and other assets and decreases in
deferred income taxes.
Capital expenditures were $91,439 in fiscal 2001. Land purchases and costs
of new stores accounted for substantially all of these expenditures.
The Company's internally generated cash along with cash balances at July
28, 2000 were sufficient to finance repurchase of stock and new store growth of
its Cracker Barrel and Logan's concepts in fiscal 2001.
On November 22, 2000, the Company announced that the Board of Directors
had authorized the repurchase of up to 2 million shares of the Company's common
stock. The purchases were to be made from time to time in the open market at
prevailing prices. As of August 3, 2001, the Company completed this share
repurchase authorization for $36,444 or an average of $18.22 per share. This
brings the Company's completed share repurchases over the past three fiscal
years to 8 million shares or approximately 13% of the then outstanding shares.
On September 17, 2001, the Company announced that the Board of
Directors had authorized the repurchase of up to 3 million shares of the
Company's common stock. The purchases are to be made from time to time in the
open market at prevailing prices. Upon completion of this latest authorization,
the Company will have repurchased 11 million shares since these activities began
in fiscal 1999, or approximately 18% of the shares outstanding at the beginning
of these activities.
The Company estimates that its capital expenditures for fiscal 2002
will be approximately $100,000 to $105,000, substantially all of which will be
land purchases and the construction of 20 new Cracker Barrel stores and nine new
Logan's restaurants.
On February 16, 1999, the Company completed its merger and acquisition
of Logan's Roadhouse, Inc. for $24 cash per share or approximately $188,039,
excluding transaction costs. (See Note 7 to the Company's Consolidated Financial
Statements.) In order to finance this acquisition and the Company's fiscal 1999
share repurchase authorization, the Company refinanced its $50,000 term loan and
$75,000 revolving credit facility, which increased the credit spreads. The
credit spread increase was primarily due to changes in the credit markets as
compared to the credit spread environment when the Company entered into the
$125,000 bank credit facility. As part of the February 16, 1999 bank facility
refinancing, the Company increased the total bank credit facility to $350,000
from $125,000.
On October 1, 1999, the Company increased its bank revolving credit
facility an additional $40,000.
On July 31, 2000, the Company completed a sale-leaseback transaction
involving 65 of its owned Cracker Barrel units. Under the transaction, the land,
buildings and improvements at the locations were sold for net consideration of
$138,280 and have been leased back for an initial term of 21 years. Net proceeds
from the sale were used to reduce outstanding borrowings under the Company's
revolving credit facility, and the commitment under that facility was reduced by
$70,000 to $270,000. (See Note 12 to the Company's Consolidated Financial
Statements.)
During fiscal 2001 the Company made net payments of $29,000 beyond its
sale-leaseback proceeds to reduce its revolving credit facility with excess
available cash beyond its funding needs to complete its share repurchase program
and to continue the expansion of its various concepts.
On September 12, 2001, the Company reduced its entire bank credit
facility to $250,000 from $320,000 and converted its $50,000 term loan into a
revolving loan. As of August 3, 2001, the Company's credit spread on its term
loan and revolving credit facility was 1.25%. Due to the Company's improving
financial ratios, the Company's credit spread decreased by 0.25% as of the
beginning of the first quarter of fiscal 2002, but will increase 0.25% as of the
beginning of the second quarter of fiscal 2002 due to the Company's charges to
exit the Carmine's business.
Management believes that cash balances at August 3, 2001, along with
cash generated from the Company's operating activities, will be sufficient to
finance its continued operations and its continued expansion plans through
fiscal 2002. The Company has approximately $125,000 available under its
revolving credit facility following the conversion of the $50,000 term loan and
reduction of the entire bank facility on September 12, 2001, which may be used
for interim cash needs during fiscal 2002. The Company estimates that it will
generate excess cash of approximately $60,000 which it intends to use in fiscal
2002 for its previously announced additional 3 million share repurchase. The
Company's principal criteria for share repurchases are that they be accretive to
earnings per share and that they do not unfavorably affect the Company's
investment grade debt rating.
Employment Litigation
As more fully discussed in Note 10 to the Consolidated Financial
Statements, the Company is a defendant in two lawsuits, one of which has been
provisionally certified as a collective action. The Company believes it has
substantial defenses in these actions and intends to defend each of them
vigorously. Nevertheless, in order to avoid continuing distraction of management
and to avoid continuing defense costs, the Company offered $3,500 to resolve one
of the cases. As a result, the Company recorded an accrual of this amount in the
fourth quarter of fiscal 2001. Except for that accrual there currently is no
provision for any potential liability with respect to these lawsuits in the
Consolidated Financial Statements. If there were to be an unfavorable outcome in
either of these cases, the Company's results of operations, financial position
and liquidity could be materially and adversely affected.
CONSOLIDATED BALANCE SHEET
(In thousands except share data)
August 3, July 28,
Assets 2001 2000
--------------------------------------------------------------------------
Current Assets:
Cash and cash equivalents $ 11,807 $ 13,865
Receivables 10,201 11,570
Inventories 116,590 107,377
Prepaid expenses 10,019 6,916
Deferred income taxes 6,573 4,307
--------------------------------------------------------------------------
Total current assets 155,190 144,035
--------------------------------------------------------------------------
Property and Equipment:
Land 261,988 299,709
Buildings and improvements 590,557 656,038
Buildings under capital leases 3,289 3,289
Restaurant and other equipment 309,070 301,907
Leasehold improvements 87,137 68,688
Construction in progress 8,511 20,168
--------------------------------------------------------------------------
Total 1,260,552 1,349,799
Less: Accumulated depreciation and
amortization of capital leases 305,524 274,665
--------------------------------------------------------------------------
Property and equipment-net 955,028 1,075,134
--------------------------------------------------------------------------
Goodwill - net 92,882 107,253
Other Assets 9,772 8,601
--------------------------------------------------------------------------
Total $1,212,872 $1,335,023
==========================================================================
Liabilities and Shareholders' Equity
--------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 64,939 $ 62,377
Current maturities of long-term debt
and other long-term obligations 200 200
Taxes withheld and accrued 29,834 28,378
Income taxes payable 21,665 13,435
Accrued employee compensation 40,421 37,180
Accrued employee benefits 25,550 23,329
Other accrued expenses 14,640 8,679
--------------------------------------------------------------------------
Total current liabilities 197,249 173,578
--------------------------------------------------------------------------
Long-term Debt 125,000 292,000
--------------------------------------------------------------------------
Other Long-term Obligations 8,829 1,762
--------------------------------------------------------------------------
Deferred Income Taxes 35,686 38,713
--------------------------------------------------------------------------
Commitments and Contingencies (Note 10)
Shareholders' Equity:
Preferred stock - 100,000,000 shares of
$.01 par value authorized; no shares
issued -- --
Common stock - 400,000,000 shares of $.01
par value authorized; 2001 - 55,026,846
shares issued and outstanding; 2000 -
62,668,349 shares issued and 56,668,349
shares outstanding 550 627
Additional paid-in capital 149,073 284,429
Retained earnings 696,485 648,489
--------------------------------------------------------------------------
846,108 933,545
Less treasury stock, at cost, 0 and
6,000,000 shares, respectively -- (104,575)
--------------------------------------------------------------------------
Total shareholders' equity 846,108 828,970
--------------------------------------------------------------------------
Total $1,212,872 $1,335,023
==========================================================================
See notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF INCOME
(In thousands except per share data)
Fiscal years ended
August 3, July 28, July 30,
2001 2000 1999
-----------------------------------------------------------------------
Net sales:
Restaurant $1,543,815 $1,378,753 $1,163,213
Retail 419,104 393,293 368,127
-----------------------------------------------------------------------
Total net sales 1,962,919 1,772,046 1,531,340
Franchise fees and royalties 773 666 285
-----------------------------------------------------------------------
Total revenue 1,963,692 1,772,712 1,531,625
Cost of goods sold 664,332 614,472 538,051
-----------------------------------------------------------------------
Gross profit 1,299,360 1,158,240 993,574
-----------------------------------------------------------------------
Labor & other related expenses 732,419 645,976 538,348
Other store operating expenses 353,334 294,012 248,208
-----------------------------------------------------------------------
Store operating income 213,607 218,252 207,018
General and administrative 102,541 95,289 82,006
Amortization of goodwill 14,370 3,994 2,169
-----------------------------------------------------------------------
Operating income 96,696 118,969 122,843
Interest expense 12,316 24,616 11,324
Interest income 84 352 1,319
-----------------------------------------------------------------------
Income before income taxes 84,464 94,705 112,838
Provision for income taxes 35,283 35,707 42,653
-----------------------------------------------------------------------
Net income $ 49,181 $ 58,998 $ 70,185
=======================================================================
Net earnings per share - basic $.88 $1.02 $1.16
=======================================================================
Net earnings per share - diluted $.87 $1.02 $1.16
=======================================================================
See notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands except per share data)
Additional Total
Common Paid-In Retained Treasury Shareholders'
Stock Capital Earnings Stock Equity
--------------------------------------------------------------------------------
Balances at July 31, 1998 $31,240 $251,236 $520,898 -- $803,374
Cash dividends - $.015 per
share -- -- (955) -- (955)
Exercise of stock options 21 1,244 -- -- 1,265
Tax benefit realized upon
exercise of stock options -- 609 -- -- 609
Purchases of treasury stock -- -- -- $(83,471) (83,471)
Reduction in par value of
common stock (30,635) 30,635 -- -- --
Net income -- -- 70,185 -- 70,185
-------------------------------------------------------------------------------
Balances at July 30, 1999 626 283,724 590,128 (83,471) 791,007
Cash dividends - $.010 per
share -- -- (637) -- (637)
Exercise of stock options 1 529 -- -- 530
Tax benefit realized upon
exercise of stock options -- 176 -- -- 176
Purchases of treasury stock -- -- -- (21,104) (21,104)
Net income -- -- 58,998 -- 58,998
-------------------------------------------------------------------------------
Balances at July 28, 2000 627 284,429 648,489 (104,575) 828,970
Cash dividends - $.020 per
share -- -- (1,185) -- (1,185)
Exercise of stock options 3 5,152 -- -- 5,155
Tax benefit realized upon
exercise of stock options -- 431 -- -- 431
Purchases and retirement of
treasury stock (80) (140,939) -- 104,575 (36,444)
Net income -- -- 49,181 -- 49,181
--------------------------------------------------------------------------------
Balances at August 3, 2001 $ 550 $149,073 $696,485 $ -- $846,108
================================================================================
See notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Fiscal years ended
August 3, July 28, July 30,
2001 2000 1999
-------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 49,181 $ 58,998 $70,185
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 64,902 65,218 53,838
Loss(gain)on disposition of property
and equipment 671 664 (259)
Impairment loss 24,431 3,887 --
Tax benefit realized upon
exercise of stock options 431 176 609
Changes in assets and liabilities,
net of effects from acquisition:
Receivables 1,369 (2,635) (2,270)
Inventories (9,213) (6,922) (8,083)
Prepaid expenses (3,103) 1,125 (1,516)
Other assets (1,473) (427) (5,814)
Accounts payable 2,562 (4,909) 25,104
Taxes withheld and accrued 1,456 4,801 3,316
Income taxes payable 8,230 11,224 798
Accrued employee compensation 3,241 14,548 (2,759)
Accrued employee benefits 2,221 5,688 5,754
Other accrued expenses 892 773 (1,256)
Other long-term obligations 7,257 1,094 --
Deferred income taxes (5,293) 6,944 3,886
-------------------------------------------------------------------------------
Net cash provided by
operating activities 147,762 160,247 141,533
-------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and
equipment (91,439) (138,032) (164,718)
Cash paid for acquisition, net
of cash acquired -- -- (182,392)
Proceeds from sale of property and
equipment 141,283 17,333 3,383
-------------------------------------------------------------------------------
Net cash provided by (used in) investing
activities 49,844 (120,699) (343,727)
-------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of
long-term debt 355,600 444,500 355,000
Proceeds from exercise of
stock options 5,155 530 1,265
Principal payments under
long-term debt and other
long-term obligations (522,790) (467,234) (113,976)
Treasury stock purchases (36,444) (21,104) (83,471)
Dividends on common stock (1,185) (637) (955)
-------------------------------------------------------------------------------
Net cash (used in) provided by
financing activities (199,664) (43,945) 157,863
-------------------------------------------------------------------------------
Net decrease in cash
and cash equivalents (2,058) (4,397) (44,331)
Cash and cash equivalents,
beginning of year 13,865 18,262 62,593
-------------------------------------------------------------------------------
Cash and cash equivalents,
end of year $ 11,807 $ 13,865 $ 18,262
===============================================================================
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 12,739 $ 26,500 $ 11,742
Income taxes 32,642 19,333 37,846
Supplemental schedule of noncash investing and financing activities:
On February 16, 1999, the Company acquired all of the capital stock of
Logan's Roadhouse, Inc. for cash of $24 per share or approximately $188,039. In
conjunction with the acquisition, liabilities were assumed as follows:
Fair value of assets acquired $109,367
Goodwill 101,172
Cash paid for the capital stock (188,039)
--------
Liabilities assumed $ 22,500
========
See notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share and per share data)
1. DESCRIPTION OF THE BUSINESS
CBRL Group, Inc. and its subsidiaries (the "Company") are principally
engaged in the operation and development of the Cracker Barrel Old Country
Store(R)("Cracker Barrel") and Logan's Roadhouse(R)("Logan's") concepts. The
Company exited its Carmine Giardini's Gourmet Market(TM)("Carmine's") concept at
the end of fiscal 2001. (See Note 2.) CBRL Group, Inc. Common Stock is traded on
The Nasdaq Stock Market (National Market) under the symbol CBRL.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal year - The Company's fiscal year ends on the Friday nearest July
31st and each quarter consists of thirteen weeks unless noted otherwise. The
Company's fiscal year ended August 3, 2001 consisted of 53 weeks and the fourth
quarter of fiscal 2001 consisted of 14 weeks.
Principles of consolidation - The consolidated financial statements include
the accounts of the Company and its subsidiaries, all of which are wholly owned.
All significant intercompany transactions and balances have been eliminated.
Cash and cash equivalents - The Company's policy is to consider all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.
Inventories - Inventories are stated at the lower of cost or market. Cost
of restaurant inventory is determined by the first-in, first-out (FIFO) method.
Cost of retail inventory is determined by the retail inventory method.
Start-up costs - The Company adopted Statement of Position ("SOP") 98-5,
"Reporting of the Costs of Startup Activities", during the first quarter of
fiscal 2000. This SOP requires the Company to expense the start-up costs of a
new store when incurred rather its previous practice of expensing the costs when
the store opened. The adoption of SOP 98-5 did not have a material impact on the
Company's consolidated financial statements.
Property and equipment - Property and equipment are stated at cost. For
financial reporting purposes, depreciation and amortization on these assets are
computed by use of the straight-line and double-declining balance methods over
the estimated useful lives of the respective assets, as follows:
Years
-----------------------------------------------------------------------------
Buildings and improvements 30-45
Buildings under capital leases 15-25
Restaurant and other equipment 3-10
Leasehold improvements 1-35
-----------------------------------------------------------------------------
Accelerated depreciation methods are generally used for income tax
purposes.
Interest is capitalized in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 34, "Capitalization of Interest Costs."
Capitalized interest was $851, $1,511 and $1,827 for fiscal years 2001, 2000 and
1999, respectively.
Gain or loss is recognized upon disposal of property and equipment, and the
asset and related accumulated depreciation and amortization amounts are removed
from the accounts.
Maintenance and repairs, including the replacement of minor items, are
charged to expense, and major additions to property and equipment are
capitalized.
Impairment of long-lived assets - The Company evaluates long-lived assets
and certain identifiable intangibles to be held and used in the business for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. An impairment is determined
by comparing estimated undiscounted future operating cash flows to the carrying
amounts of assets on a store by store basis. If an impairment exists, the amount
of impairment is measured as the sum of the estimated discounted future
operating cash flows of such asset and the expected proceeds upon sale of the
asset less its carrying amount. Assets held for sale are reported at the lower
of carrying amount or fair value less costs to sell. During fiscal 2001, the
Company's other store operating expense included impairment losses of $14,003
and the Company's amortization of goodwill included $10,428 in accordance with
SFAS No. 121, "Accounting for the Impairment of Certain Long-Lived Assets and
for Long-Lived Assets to be Disposed Of". These impairment losses consisted of
$10,428 for the write-off of goodwill related to the acquisition of Carmine's
and $14,003 for the write-down of fixed assets of all three Carmine's units,
four Cracker Barrel units and three Logan's units. During fiscal 2000, the
Company's other store operating expense included impairment losses of $3,887
related to impairment of long-lived assets in accordance with SFAS No. 121.
These impairment losses consisted of certain Cracker Barrel properties no longer
expected to be used for future development and for Cracker Barrel's test
retail-only mall store.
Advertising - The Company generally expenses the costs of producing and
communicating advertising the first time the advertising takes place. Net
advertising expense was $38,886, $37,225 and $41,230 for the fiscal years 2001,
2000 and 1999, respectively.
Insurance - The Company retains a significant portion of the risk for its
workers' compensation, employee health insurance, general liability, and
property coverages. Accordingly, provisions are made for the Company's estimates
of discounted future claim costs for such risks, the substantial majority of
which are determined actuarially. To the extent that subsequent claim costs vary
from those estimates, current earnings are charged or credited.
Goodwill - Goodwill represents the excess of the cost over the net tangible
and identifiable intangible assets of acquired businesses, is stated at cost and
is amortized, on a straight-line basis, over the estimated future periods to be
benefited (20-30 years). On an annual basis the Company reviews the
recoverability of goodwill based primarily upon an analysis of undiscounted cash
flows from the acquired businesses. Accumulated amortization was $8,291 and
$6,370 at August 3, 2001 and July 28, 2000, respectively. See Impairment of
long-lived assets above regarding the write-off of Carmine's goodwill. See
Recent accounting pronouncements not yet adopted on the next page regarding the
effect on amortization of goodwill in the future.
Income taxes - The Company accounts for income taxes in accordance with
SFAS No. 109, "Accounting for Income Taxes." Employer tax credits for FICA taxes
paid on tip income are accounted for by the flow-through method. 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. (See Note 8.)
Earnings per share - The Company accounts for earnings per share in
accordance with SFAS No. 128, "Earnings Per Share," which requires presentation
of basic and diluted earnings per share. Basic earnings per share are computed
by dividing income available to common shareholders by the weighted average
number of common shares outstanding for the reporting period. Diluted earnings
per share reflect the potential dilution that could occur if securities, options
or other contracts to issue common stock were exercised or converted into common
stock. Outstanding stock options issued by the Company represent the only
dilutive effect reflected in diluted weighted average shares. Weighted average
basic shares were 56,128,956, 57,959,646 and 60,328,593 for 2001, 2000 and 1999,
respectively. Weighted average diluted shares were 56,799,124, 58,041,290 and
60,610,288 for 2001, 2000 and 1999, respectively.
Comprehensive income - The Company accounts for comprehensive income in
accordance with SFAS No. 130, "Reporting Comprehensive Income." Comprehensive
income is defined as the change in equity of a business enterprise during a
period from transactions and other events and circumstances from non-owner
sources. Comprehensive income for fiscal 2001, 2000 and 1999 is equal to net
income as reported.
Stock-based compensation - SFAS No. 123, "Accounting for Stock-Based
Compensation," encourages, but does not require, companies to adopt the fair
value method of accounting for stock-based employee compensation. The Company
has chosen to continue to account for stock-based employee compensation in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and related Interpretations. (See Note 6.)
Segment Reporting - The Company accounts for its segment in accordance with
SFAS No. 131, "Disclosure About Segments of an Enterprise and Related
Information." SFAS No. 131 requires that a public company report annual and
interim financial and descriptive information about its reportable operating
segments. Operating segments, as defined, are components of an enterprise about
which separate financial information is available that is evaluated regularly by
the chief operating decision maker in deciding how to allocate resources and in
assessing performance. SFAS No. 131 allows aggregation of similar operating
segments into a single operating segment if the businesses are considered
similar under the criteria established by SFAS No. 131. The Company primarily
operates restaurants under the Cracker Barrel Old Country Store(R) and Logan's
Roadhouse(R) brands. These two brands have similar investment criteria, customer
demographics and economic and operating characteristics. Therefore, the Company
has one reportable operating segment. (See Note 9.)
Derivative instruments and hedging activities - The Company adopted SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," and its
subsequent amendments, SFAS Nos. 137 and 138, in the first quarter 2001. These
statements specify how to report and display derivative instruments and hedging
activities. The adoption of these statements did not have a material effect on
the Company's consolidated financial statements. Upon adoption of these
statements on July 29, 2000, during fiscal 2001 and at August 3, 2001, the
Company had no derivative financial instruments that required hedge accounting.
The Company is exposed to market risk, such as changes in interest rates
and commodity prices. To manage the volatility relating to these exposures, the
Company nets the exposures on a consolidated basis to take advantage of natural
offsets. For the residual portion, the Company may enter into various derivative
financial instruments pursuant to the Company's policies in areas such as
counterparty exposure and hedging practices. The Company would review these
derivative financial instruments on a specific exposure basis to support hedge
accounting. The changes in fair value of these hedging instruments would be
offset in part or in whole by the corresponding changes in the fair value or
cash flows of the underlying exposures being hedged. The Company does not hold
or use derivative financial instruments for trading purposes. The Company's
historical practice has been no to enter into derivative financial instruments.
The Company's policy has been to manage interest cost using a mix of
fixed and variable rate debt. The Company has accomplished this objective
through the use of interest rate swaps and/or sale-leaseback transactions. In an
interest rate swap, the Company agrees to exchange, at specified intervals, the
difference between fixed and variable interest amounts calculated by reference
to an agreed-upon notional amount. In a sale-leaseback transaction, the Company
finances its operating facilities by selling them to a third party and then
leasing them back under a long-term operating lease at fixed terms. (See Note
12.)
Many of the food products purchased by the Company are affected by
commodity pricing and are, therefore, subject to price volatility caused by
weather, production problems, delivery difficulties and other factors which are
outside the control of the Company and which are generally unpredictable.
Changes in commodity prices would affect the Company and its competitors
generally and often simultaneously. In many cases, the Company believes it will
be able to pass through any increased commodity costs by adjusting its menu
pricing. From time to time, competitive circumstances may limit menu price
flexibility, an in those circumstances increases in commodity prices can result
in lower margins for the Company. Some of the Company's purchase contracts are
used to hedge commodity prices and may contain features that could be classified
as derivative financial instruments under SFAS Nos. 133, 137 and 138. However,
these features that could be classified as derivative financial instruments are
exempt from hedge accounting based on the normal purchases exemption. The
Company presently believes that any changes in commodity pricing which cannot be
adjusted for by changes in menu pricing or other product delivery strategies
would not be material.
Revenue recognition - The Company early adopted the Securities and
Exchange Commission's ("SEC") Staff Accounting Bulletin ("SAB") No. 101,
"Revenue Recognition in Financial Statements," and its subsequent amendments SAB
Nos. 101A and 101B in the first quarter of fiscal 2001. SAB No. 101 summarizes
certain of the SEC's views in applying generally accepted accounting principles
to revenue recognition in financial statements. The adoption of SAB No. 101 did
not have a material effect on the Company's consolidated financial statements.
Use of estimates - Management of the Company has made certain estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent liabilities to prepare these consolidated financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
Recent accounting pronouncements not yet adopted - In July 2001, the
Financial Accounting Standards Board issued SFAS No. 141, "Business
Combinations" and No. 142 "Goodwill and Other Intangible Assets". SFAS No. 141
will require that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 and that the use of the
pooling-of-interest method is no longer allowed. SFAS No. 142 requires that upon
adoption, amortization of goodwill will cease and instead, the carrying value of
goodwill will be evaluated for impairment on an annual basis. Identifiable
intangible assets will continue to be amortized over their useful lives and
reviewed for impairment in accordance with SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of".
SFAS No. 142 is effective for fiscal years beginning after December 15, 2001;
however, the Company may elect early adoption of this statement effective August
4, 2001, the beginning of its 2002 fiscal year. The Company is evaluating the
impact of the adoption of these standards and has not yet determined the effect
of adoption on its financial position and results of operations.
3. Inventories
Inventories were composed of the following at:
August 3, July 28,
2001 2000
-------------------------------------------------------------------------------
Retail $ 87,445 $ 81,200
Restaurant 15,853 16,083
Supplies 13,292 10,094
-------------------------------------------------------------------------------
Total $116,590 $107,377
===============================================================================
4. Debt
Long-term debt consisted of the following at:
August 3, July 28,
2001 2000
-------------------------------------------------------------------------------
Term Loan payable on or before December 1, 2001
(5.31% at August 3, 2001 and 8.59% at
July 28, 2000) $ 50,000 $ 50,000
Revolving Credit Facility payable on or before
December 31, 2003 (rates ranging from 5.10%
to 6.75% at August 3, 2001 and 8.38% to 9.50%
at July 28, 2000) 75,000 242,000
------------------------------------------------------------------------------
Long-term debt $125,000 $292,000
==============================================================================
On September 12, 2001, the Company amended its bank credit facility,
thereby converting its $50,000 Term Loan into a $50,000 Revolving Credit Loan
due December 31, 2003, as such, the $50,000 Term Loan is classified as long-term
at August 3, 2001.
The financial covenants related to the Term Loan and the Revolving Credit
Facility require that the Company maintain an interest coverage ratio of 2.5 to
1.0, a lease adjusted funded debt to total capitalization ratio not to exceed
0.4 to 1.0 and a lease adjusted funded debt to EBITDAR (earnings before interest
expense, income taxes, depreciation and amortization and rent expense) ratio not
to exceed 2.5 to 1.0. At August 3, 2001 and July 28, 2000, the Company was in
compliance with all covenants.
The aggregate maturities of long-term debt subsequent to August 3, 2001 are
as follows (see Note 12):
Fiscal year
------------------------------------------------------------------------------
2002 --
2003 --
2004 $125,000
------------------------------------------------------------------------------
Total $125,000
==============================================================================
5. Common Stock
During fiscal 1999 and 1996 the Board of Directors granted certain
executive officers upon their employment a total of 25,000 and 37,000 restricted
shares, respectively which were to vest over five years. In fiscal 1999 another
officer was granted 4,100 restricted shares which were to vest over three years.
In fiscal 2000 two executive officers were granted a total of 39,000 restricted
shares which vest over five years. One of the executive officers hired in fiscal
1996 left the Company in fiscal 1999 and forfeited 12,800 restricted shares. The
executive officer hired in fiscal 1999 left the Company in fiscal 2000 and
forfeited 20,000 restricted shares. The other officer granted 4,100 restricted
shares in fiscal 1999 left the company in fiscal 2001 and forfeited 4,100
restricted shares. The Company's compensation expense for these restricted
shares was $69, $70 and $135 in fiscal 2001, 2000 and 1999, respectively.
During the second quarter ended January 26, 2001, the Board of Directors
authorized the retirement of the Company's treasury stock and authorized the
retirement of all future repurchases of the Company's Common Stock. As a result
of this retirement, the Company's Treasury Stock at cost was reclassified to
reduce Common Stock and Additional Paid-in Capital. These retired shares will
remain as authorized, but unissued, shares.
6. Stock Option Plans
The Company's employee stock option plans are administered by the
Compensation and Stock Option Committee (the "Committee"). Members of the
Committee are appointed by the Board of Directors and consist of independent
members of the Board of Directors. The Committee is authorized to determine, at
time periods within its discretion and subject to the direction of the Board,
which key employees shall be granted options, the number of shares covered by
the options granted to each, and within applicable limits, the terms and
provisions relating to the exercise of such options.
On May 25, 2000, the Board of Directors approved a new stock option
plan for employees who are not officers or directors of the Company. The new
plan is known as the CBRL Group, Inc. 2000 Non-Executive Stock Option Plan
("Employee Plan"). The Committee is currently authorized to grant options to
purchase an aggregate of 4,750,000 shares of the Company's common stock under
the Employee Plan. The option price per share under the Employee Plan must be at
least 100% of the fair market value of a share of the Company's common stock
based on the closing price on the day preceding the day the option is granted.
Options are generally intended to become exercisable each year on a cumulative
basis at a rate of 33% of the total shares covered by the option beginning one
year from the date of grant, to expire ten years from the date of grant and to
be non-transferable. At August 3, 2001, there were 3,154,325 shares of unissued
common stock reserved for issuance under the Employee Plan.
As of August 3, 2001, the Committee is authorized to grant options to
purchase an aggregate of 17,525,702 shares of the Company's common stock under
the Company's Amended and Restated Stock Option Plan ("the Plan"). At August 3,
2001, there were 1,880,374 shares of unissued common stock reserved for issuance
under the Plan. The option price per share under the Plan must be at least 100%
of the fair market value of a share of the Company's common stock based on the
closing price on the day preceding the day the option is granted. Options are
generally exercisable each year on a cumulative basis at a rate of 33% of the
total number of shares covered by the option beginning one year from the date of
grant, expire ten years from the date of grant and are non-transferable. During
fiscal 2000, a long-term incentive award was granted to certain officers, which
included stock options. The options granted under this award vest at the end of
five years after the grant (subject to earlier vesting upon accomplishments of
specified Company performance goals), expire six months after vesting and are
non-transferable.
In fiscal 1989, the Board of Directors adopted the 1989 Non-employee
Plan ("Directors Plan") for non-employee directors. The stock options were
granted with an exercise price equal to the fair market value of the Company's
common stock as of the date of grant and expire one year from the retirement of
the director from the board. An aggregate of 1,518,750 shares of the Company's
common stock is authorized under this plan. Due to the overall plan limit, no
shares have been granted under this plan since fiscal 1994.
A summary of the status of the Company's stock option plans for fiscal
2001, 2000 and 1999, and changes during those years follows:
(Shares in thousands) 2001 2000 1999
-------------------------------------------------------------------------------
Weighted- Weighted- Weighted-
Average Average Average
Fixed Options Shares Price Shares Price Shares Price
--------------------------------------------------------------------------------
Outstanding at
beginning of year 9,630 $20.89 7,714 $23.94 5,816 $24.18
Granted 2,481 14.76 3,253 13.85 2,888 23.24
Exercised (357) 14.23 (67) 7.04 (107) 10.82
Forfeited or canceled (1,250) 20.03 (1,270) 22.12 (883) 24.83
--------------------------------------------------------------------------------
Outstanding at
end of year 10,504 19.77 9,630 20.89 7,714 23.94
================================================================================
Options exercisable
at year-end 5,919 23.16 5,075 23.56 3,867 23.04
Weighted-average fair
value per share of
options granted
during the year $ 7.16 $ 6.65 $10.32
The following table summarizes information about fixed stock options
outstanding at August 3, 2001:
(Shares in thousands)
Options Outstanding Options Exercisable
------------------------------------------ -------------------------
Number Weighted-Average Weighted- Number Weighted-
Range of Outstanding Remaining Average Exercisable Average
Exercise Prices at 8/03/01 Contractual Life Exercise Price at 8/03/01 Exercise Price
-------------------------------------------------------------------------------------
$ 5.09 - 10.00 160 3.80 $ 7.55 121 $ 6.84
10.01 - 20.00 5,981 7.85 15.15 1,871 16.74
20.01 - 30.00 3,395 4.59 25.28 2,959 25.31
30.01 - 31.75 968 6.15 31.01 968 31.01
-------------------------------------------------------------------------------------
$ 5.09 - 31.75 10,504 6.58 $19.77 5,919 $23.16
=====================================================================================
Had the fair value of options granted under these plans beginning in fiscal 1996
been recognized as compensation expense on a straight-line basis over the
vesting period of the grant, the Company's net earnings and earnings per share
would have been reduced to the pro forma amounts indicated below:
2001 2000 1999
------------------------------------------------------------------------------
Net income:
As reported $49,181 $58,998 $70,185
Pro forma 36,082 46,792 58,831
Net earnings per share:
As reported - diluted .87 1.02 1.16
Pro forma - diluted .64 .81 .97
------------------------------------------------------------------------------
The pro forma effect on net income for 2001, 2000 and 1999 is not
representative of the pro forma effect on net income in future years because it
does not take into consideration pro forma compensation expense related to
grants made prior to 1996.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in fiscal 2001, 2000 and 1999: dividend yield of
0.1%, 0.2% and 0.1%, respectively; expected volatility of 43, 40 and 38 percent,
respectively; risk-free interest rate ranges of 4.8% to 5.9%, 6.0% to 6.7% and
4.5% to 5.9%; and expected lives of six years.
The Company recognizes a tax deduction upon exercise of non-qualified
stock options in an amount equal to the difference between the option price and
the fair market value of the common stock. These tax benefits are credited to
Additional paid-in capital.
7. Acquisitions
On February 16, 1999, the Company acquired all of the capital stock of
Logan's Roadhouse, Inc. for cash of approximately $188,039, excluding
transaction costs. The acquisition has been accounted for using the purchase
method of accounting, and accordingly, the purchase price has been allocated to
the assets purchased and the liabilities assumed based upon the fair values at
the date of acquisition. The excess of the purchase price over the fair value of
the net assets acquired was $101,172 and has been recorded as goodwill, which
has been amortized on a straight-line basis over its estimated useful life, 30
years. The amount of goodwill amortization in both 2001 and 2000 was $3,372. The
Company has the option to early adopt SFAS No. 142, "Goodwill and Other
Intangible Assets," effective in the first quarter of fiscal 2002. This
statement will require that goodwill no longer be amortized, but instead will be
tested for impairment at least annually.
The net purchase price was allocated as follows:
Current assets, net of cash acquired $ 3,329
Property and equipment 97,621
Other assets 286
Goodwill 101,172
Liabilities assumed (20,016)
--------
Purchase price, net of cash received $182,932
========
The operating results of this acquired business have been included in the
consolidated statement of income from the date of acquisition. On the basis of a
pro forma consolidation of the results of operations as if the acquisition had
taken place at the beginning of fiscal 1999 rather than at February 16, 1999,
consolidated revenue, pretax income, net income and earnings per share would not
have been materially different from the reported amounts for fiscal 1999 and are
shown in the table below. Such pro forma amounts are not necessarily indicative
of what the actual consolidated results of operations might have been if the
acquisition had been effective at the beginning of fiscal 1999.
Fiscal year ended
July 30, 1999
-------------
Consolidated revenue $1,583,628
Pretax income 111,577
Net income 68,767
Earnings per share:
Basic $1.14
Diluted $1.13
8. Income Taxes
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
consisted of the following at:
August 3, July 28,
2001 2000
--------------------------------------------------------------------------
Deferred tax assets:
Financial accruals without
economic performance $14,304 $12,364
Other 4,923 4,767
--------------------------------------------------------------------------
Deferred tax assets 19,227 17,131
--------------------------------------------------------------------------
Deferred tax liabilities:
Excess tax depreciation over book 36,332 39,120
Other 12,008 12,417
--------------------------------------------------------------------------
Deferred tax liabilities 48,340 51,537
--------------------------------------------------------------------------
Net deferred tax liability $29,113 $34,406
==========================================================================
The Company provided no valuation allowance against deferred tax assets
recorded as of August 3, 2001 and July 28, 2000, as the "more-likely-than-not"
valuation method determined all deferred assets to be fully realizable in future
taxable periods.
The components of the provision for income taxes for each of the three
fiscal years were as follows:
2001 2000 1999
---------------------------------------------------------------------------
Current:
Federal $34,959 $24,933 $32,534
State 5,617 4,216 6,233
Deferred (5,293) 6,558 3,886
---------------------------------------------------------------------------
Total income tax provision $35,283 $35,707 $42,653
===========================================================================
A reconciliation of the provision for income taxes as reported and the
amount computed by multiplying the income before the provision for income taxes
by the U.S. federal statutory rate of 35% was as follows:
2001 2000 1999
---------------------------------------------------------------------------
Provision computed at federal
statutory income tax rate $29,562 $33,147 $39,497
State and local income taxes,
net of federal benefit 4,169 3,208 3,103
Amortization of goodwill and
acquisition costs 5,034 1,398 770
Employer tax credits for FICA taxes
paid on tip income (3,420) (2,889) (2,281)
Other-net (62) 843 1,564
---------------------------------------------------------------------------
Total income tax provision $35,283 $35,707 $42,653
===========================================================================
9. Segment Information
The Company operates restaurants under the Cracker Barrel Old Country Store
and Logan's Roadhouse brands. These two brands have similar investment criteria
and economic and operating characteristics. The Company also has operated units
under the Carmine Giardini Gourmet Market brand which were a combination gourmet
market and full-service Italian restaurant under one roof. This operating
segment was not material to the Company. The Company exited the Carmine's
concept at the end of fiscal 2001. (See Note 2.) Therefore, the Company believes
it has one reportable operating segment. The following data is presented in
accordance with SFAS No. 131 for all periods presented.
Fiscal Years Ended
August 3, July 28, July 30,
Sales in Company-Owned Stores 2001 2000 1999
--------------------------------------------------------------------------------
Cracker Barrel - restaurant $1,324,903 $1,196,680 $1,090,296
Cracker Barrel - retail 407,887 382,932 358,577
--------------------------------------------------------------------------------
Cracker Barrel - total $1,732,790 $1,579,612 $1,448,873
Carmine Giardini's 15,587 14,137 12,609
Logan's Roadhouse 214,542 178,297 69,858
--------------------------------------------------------------------------------
Total Net Sales $1,962,919 $1,772,046 $1,531,340
================================================================================
10. Commitments and Contingencies
The Company's Cracker Barrel Old Country Store, Inc. subsidiary is
involved in certain lawsuits, two of which are not ordinary routine litigation
incidental to its business: Serena McDermott and Jennifer Gentry v. Cracker
Barrel Old Country Store, Inc., a collective action under the federal Fair Labor
Standards Act ("FLSA"), was served on Cracker Barrel on May 3, 1999; and Kelvis
Rhodes, Maria Stokes et al. v. Cracker Barrel Old Country Store, Inc., an action
under Title VII of the Civil Rights Act of 1964 and Section 1981 of the Civil
Rights Act of 1866, was served on Cracker Barrel on September 15, 1999. The
McDermott case alleges that certain tipped hourly employees were required to
perform non-serving duties and that certain hourly employees were required to
wait "off the clock," without being paid the minimum wage or overtime
compensation for that work or wait. The McDermott case seeks recovery of unpaid
wages and overtime wages related to those claims. The Rhodes case seeks
certification as a company-wide class action, a declaratory judgment to redress
an alleged systemic pattern and practice of racial discrimination in employment
opportunities, an order to effect certain hiring and promotion goals and back
pay and other related monetary damages. No class has yet been certified in the
Rhodes case. No punitive damages are sought in either case.
On March 17, 2000, the Court granted the plaintiffs' motion in the
McDermott case to send notice to a provisional class of plaintiffs. The Court
defined the provisional class as all persons employed as servers and all
second-shift hourly employees at Cracker Barrel Old Country Store restaurants
since January 4, 1996. That notice was sent to 376,207 persons, and 10,838
potential plaintiffs "opted-in" to the case by May 30, 2001. Some of the opt-ins
asserted "off the clock" claims; some asserted they were required to perform
non-serving duties at tipped wages; and some opt-ins asserted both types of
claims. Because of the provisional status of the plaintiff collective action,
the Court could subsequently amend its decision. If amended, the scope of the
collective action could either be reduced or increased or, if appropriate, the
Court could dismiss the collective aspects of the case entirely.
Cracker Barrel Old Country Store, Inc. believes it has substantial
defenses to the claims made, and it is defending each of these cases vigorously.
During fiscal year 2001, the parties engaged in mediation with respect to both
cases, but focused on the FLSA claims that are the subject of the McDermott
case. The mediation process is confidential by court order and the parties
cannot comment on the process or the status of their discussions. Because only
limited discovery has occurred to date, neither the likelihood of an unfavorable
outcome nor the amount of ultimate liability, if any, with respect to these
cases can be determined at this time. Nevertheless, the Company has established
a reserve of $3,500 with respect to the McDermott case. Cracker Barrel Old
Country Store, Inc. offered this amount to resolve the case and avoid the
ongoing expenses and distractions associated with defending the litigation. With
the exception of that reserve, no provision for any potential liability has been
made in the consolidated financial statements of the Company with respect to
these lawsuits. In the event of an unfavorable result in either of these cases,
the Company's results of operations and financial condition could be materially
and adversely affected.
In addition to the litigation described in the preceding paragraphs, the
Company is a party to other legal proceedings incidental to its business. In the
opinion of management, based upon information currently available, the ultimate
liability with respect to these other actions will not materially affect the
Company's consolidated financial statements.
The Company maintains insurance coverage for various aspects of its
business and operations. The Company has elected, however, to retain a portion
of losses that occur through the use of various deductibles, limits and
retentions under its insurance programs. This situation may subject the Company
to some future liability for which it is only partially insured, or completely
uninsured. The Company intends to mitigate any such future liability by
continuing to exercise prudent business judgment in negotiating the terms and
conditions of its contracts.
As of August 3, 2001, the Company operated 96 Cracker Barrel stores and 30
Logan's Roadhouse restaurants from leased facilities and also leased certain
land and advertising billboards. (See Note 12.) These leases have been
classified as either capital or operating leases in accordance with the criteria
contained in SFAS No. 13, "Accounting for Leases." The interest rates for
capital leases vary from 10% to 17%. Amortization of capital leases is included
with depreciation expense. A majority of the Company's lease agreements provide
for renewal options and some of these options contain escalation clauses.
Additionally, certain store leases provide for contingent lease payments based
upon sales volume in excess of specified minimum levels.
The following is a schedule by years of future minimum lease payments under
capital leases, together with the present value of the minimum lease payments as
of August 3, 2001:
Fiscal year
------------------------------------------------------------------------
2002 $ 239
2003 147
2004 147
2005 147
2006 147
Later years 64
------------------------------------------------------------------------
Total minimum lease payments 891
Less amount representing interest 213
------------------------------------------------------------------------
Present value of minimum lease payments 678
Less current portion 200
------------------------------------------------------------------------
Long-term portion of capital lease obligations $ 478
========================================================================
The following is a schedule by years of the future minimum rental payments
required under noncancelable operating leases, excluding leases for advertising
billboards, as of August 3, 2001:
Fiscal year
------------------------------------------------------------------------
2002 $ 21,682
2003 21,563
2004 21,612
2005 21,442
2006 21,308
Later years 298,371
------------------------------------------------------------------------
Total $405,978
========================================================================
The following is a schedule by years of the future minimum rental payments
required under noncancelable operating leases for advertising billboards as of
August 3, 2001:
Fiscal year
------------------------------------------------------------------------
2002 $21,522
2003 8,426
2004 1,240
------------------------------------------------------------------------
Total $31,188
========================================================================
Rent expense under operating leases for each of the three fiscal years was:
Minimum Contingent Total
-------------------------------------------------------------------------
2001 $44,829 $592 $45,421
2000 25,933 689 26,622
1999 20,343 726 21,069
11. Employee Savings Plan
The Company has an employee savings plan which provides for retirement
benefits for eligible employees. The plan is funded by elective employee
contributions up to 16% of their compensation and the Company matches 25% of
employee contributions for each participant up to 6% of the employee's
compensation. The Company contributed $1,545, $1,397 and $1,356 for fiscal 2001,
2000 and 1999, respectively.
12. Sale-Leaseback
On July 31, 2000, the Company, through its Cracker Barrel Old Country
Store, Inc. subsidiary, completed a sale-leaseback transaction involving 65 of
its owned Cracker Barrel Old Country Store units. Under the transaction, the
land, buildings and building improvements at the locations were sold for net
consideration of $138,325 and have been leased back for an initial term of 21
years. Equipment was not included. The leases include specified renewal options
for up to 20 additional years and have certain financial covenants related to
fixed charge coverage for the leased units. Net rent expense during the initial
term will be $14,963 annually, and the assets sold and leased back previously
had depreciation expense of approximately $2,707 annually. The gain on the sale
will be amortized over the initial lease term of 21 years. Net proceeds from the
sale were used to reduce outstanding borrowing under the Company's revolving
credit facility, and the commitment under that facility was reduced by $70,000
to $270,000.
13. Quarterly Financial Data (Unaudited)
Quarterly financial data for fiscal 2001 and 2000 are summarized as
follows:
1st 2nd 3rd 4th
Quarter Quarter* Quarter Quarter**
---------------------------------------------------------------------------
2001
Total revenue $467,255 $484,267 $468,101 $544,069
Gross profit 311,183 309,728 312,433 366,016
Income before income
taxes 27,008 24,013 23,281 10,162
Net income 16,934 15,056 14,597 2,594
Net earnings per
-
share - diluted .30 .26 .26 .05
---------------------------------------------------------------------------
2000
Total revenue $422,607 $443,170 $435,986 $470,949
Gross profit 276,848 280,281 287,856 313,255
Income before income
taxes 23,605 9,881 23,184 38,035
Net income 14,472 6,390 14,443 23,693
Net earnings per
-
share - diluted .25 .11 .25 .42
---------------------------------------------------------------------------
*The Company recorded charges of $8,592 before taxes during the quarter ended
January 28, 2000 principally as a result of management changes and the resulting
refocused operating priorities. (See Note 2 to the Company's Consolidated
Financial Statements.)
**The Company recorded charges of $33,063 before taxes during the quarter ended
August 3, 2001 principally as a result of exiting its Carmine Giardini's Gourmet
Market(TM) business and the closing of four Cracker Barrel Old Country Store(R)
units and three Logan's Roadhouse(R) units, as well as an accrual for a
settlement proposal for a certain collective action under the Fair Labor
Standards Act. The Company's fourth fiscal quarter of fiscal 2001 consisted of
14 weeks. (See Notes 2 and 10 to the Company's Consolidated Financial
Statements.)
INDEPENDENT AUDITORS' REPORT
To the Shareholders of CBRL Group, Inc.:
We have audited the accompanying consolidated balance sheet of CBRL
Group, Inc. and subsidiaries (the "Company") as of August 3, 2001 and July 28,
2000 and the related consolidated statements of income, changes in shareholders'
equity, and cash flows for each of the three fiscal years in the period ended
August 3, 2001. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the consolidated financial position of the Company at
August 3, 2001 and July 28, 2000, and the results of its operations and its cash
flows for each of the three fiscal years in the period ended August 3, 2001, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ DELOITTE & TOUCHE LLP
Nashville, Tennessee
September 13, 2001
EX-21
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aex2101.txt
SUBSIDIARY LIST
EXHIBIT 21
Subsidiaries of the Registrant
The following is a list of the significant subsidiaries of the Registrant as of
August 3, 2001, all of which are wholly-owned:
State of
Parent Incorporation
------ -------------
CBRL Group, Inc. Tennessee
Subsidiaries
Cracker Barrel Old Country Store, Inc. Tennessee
Logan's Roadhouse, Inc. Tennessee
CBOCS General Partnership Michigan
CBOCS Michigan, Inc. Michigan
CBOCS West, Inc. Nevada
Rocking Chair, Inc. Nevada
EX-23
7
aex2301.txt
INDEPENDENT AUDITORS CONSENT
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
2-86602, 33-15775, 33-37567, 33-45482, 333-01465, 333-63442, 333-71384 and
333-81063 of CBRL Group, Inc. on Form S-8 and Registration Statement No.
33-59582 on Form S-3 of our report dated September 13, 2001, appearing in
and incorporated by reference in the Annual Report on Form 10-K of CBRL Group,
Inc. for the year ended August 3, 2001.
/S/ DELOITTE & TOUCHE LLP
Nashville, Tennessee
October 12, 2001