CBRL Group, Inc. Form 10-Q for the Period Ending October 27, 2006
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D. C. 20549
FORM
10-Q
(Mark
One)
of the Securities Exchange Act of 1934
For
the
Quarterly Period Ended October 27, 2006
or
of the Securities Exchange Act of 1934
For
the
Transition Period from ________ to _______.
Commission
file number 000-25225
CBRL
GROUP, INC.
(Exact
Name of Registrant as
Specified
in Its Charter)
Tennessee
|
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62-1749513
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(State
or Other Jurisdiction
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(IRS
Employer
|
of
Incorporation or Organization)
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|
Identification
No.)
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305
Hartmann Drive, P. O. Box 787
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Lebanon,
Tennessee 37088-0787
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(Address
of Principal Executive Offices)
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(Zip
Code)
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|
|
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615-443-9869
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|
(Registrant’s
Telephonember, Including Area Code)
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|
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|
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 whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of “accelerated
filer” and “large accelerated filer” (Rule 12b-2 of the Exchange
Act).
Large
accelerated filer X Accelerated
filer ____ Non-accelerated filer
____
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule
12b-2 of the Exchange Act).
Yes
No
X
31,338,682
Shares
of
Common Stock
Outstanding
as of November 24, 2006
CBRL
GROUP, INC.
FORM
10-Q
For
the Quarter Ended October 27, 2006
INDEX
PART
I.
|
FINANCIAL
INFORMATION
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Page |
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Item
1
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· Condensed
Consolidated Financial Statements (Unaudited)
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a) Condensed
Consolidated Balance Statement of Income for the Quarters Ended
October
27, 2006 |
3
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|
|
|
|
b)
Condensed
Consolidated Statement of Income for the Quarters Ended October 27,
2006
and
October 28,
2005
|
4
|
|
|
|
|
c)
Condensed
Consolidated Statement of Cash Flows for the Quarters Ended
October 27,
2006
and
October 28,
2005
|
5
|
|
|
|
|
d) Notes
to
Condensed Consolidated Financial Statements |
6
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|
|
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|
Item 2 |
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· Mangement's
Discussion and Analysis of Financial Condition and Results
of
Operations
|
14
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|
|
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|
Item 3 |
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· Quantitative
and Qualitative Disclosures About Market Risk |
24
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|
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Item 4 |
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· Controls
and Procedures |
24
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|
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|
PART II. |
OTHER INFORMATION |
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|
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|
Item 1A |
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· Risk
Factors |
25
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|
|
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|
Item 4 |
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|
· Submission
of Matters to Vote a Security Holders |
25
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Item 6 |
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· Exhibits |
25
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SIGNATURES |
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26
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PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements
CBRL
GROUP, INC.
CONDENSED
CONSOLIDATED BALANCE SHEET
(In
thousands, except share and per share data)
(Unaudited)
|
|
October 27,
2006
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|
July 28,
2006*
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|
ASSETS
|
|
|
|
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Current
assets:
|
|
|
|
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|
Cash and cash equivalents
|
|
$
|
73,103
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|
$
|
87,830
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|
Property held for sale
|
|
|
3,527
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|
|
3,127
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|
Receivables
|
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|
10,686
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|
11,434
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|
Inventories
|
|
|
144,309
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|
|
128,303
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|
Prepaid expenses
|
|
|
11,328
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|
|
4,395
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|
Deferred income taxes
|
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|
19,670
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|
17,519
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|
Current assets of discontinued operations (Note 15)
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|
412,062
|
|
|
401,222
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|
Total
current
assets
|
|
|
674,685
|
|
|
653,830
|
|
|
|
|
|
|
|
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Property
and equipment
|
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|
1,437,299
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1,415,374
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|
Less:
Accumulated depreciation and amortization of capital
leases
|
|
|
445,289
|
|
|
432,870
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|
Property
and equipment - net
|
|
|
992,010
|
|
|
982,504
|
|
|
|
|
|
|
|
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|
Other
assets
|
|
|
46,702
|
|
|
44,963
|
|
|
|
|
|
|
|
|
|
Total
assets
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|
$
|
1,713,397
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|
$
|
1,681,297
|
|
|
|
|
|
|
|
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|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
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|
Current
liabilities:
|
|
|
|
|
|
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|
Accounts payable
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|
$
|
69,123
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|
$
|
70,944
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|
Taxes withheld and accrued
|
|
|
26,478
|
|
|
30,905
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|
Other accrued expenses
|
|
|
149,756
|
|
|
148,923
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|
Current maturities of long-term debt and other long-term
obligations
|
|
|
8,098
|
|
|
8,116
|
|
Current liabilities of discontinued operations (Note 15)
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|
77,934
|
|
|
71,645
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|
Total
current
liabilities
|
|
|
331,389
|
|
|
330,533
|
|
|
|
|
|
|
|
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|
Long-term
debt (Note 12)
|
|
|
910,931
|
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|
911,464
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|
Other
long-term obligations
|
|
|
149,591
|
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|
137,018
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|
|
|
|
|
|
|
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Commitments
and contingencies (Note 9)
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|
|
|
|
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Shareholders’
equity:
|
|
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Preferred
stock - 100,000,000 shares of $.01 par
|
|
|
|
|
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|
value authorized; no shares issued
|
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|
--
|
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|
--
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|
Common
stock - 400,000,000 shares of $.01 par
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|
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|
value authorized; at October 27, 2006, 31,188,584
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|
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shares issued and outstanding and at July 28, 2006,
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30,926,906 shares issued and outstanding
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|
312
|
|
|
309
|
|
Additional
paid-in capital
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|
15,462
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|
|
4,257
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|
Accumulated
other comprehensive loss (Note 10)
|
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|
(11,584
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)
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|
(4,529
|
)
|
Retained
earnings
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|
|
317,296
|
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|
302,245
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|
Total shareholders’ equity
|
|
|
321,486
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|
|
302,282
|
|
|
|
|
|
|
|
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|
Total
liabilities and shareholders’ equity
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|
$
|
1,713,397
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|
$
|
1,681,297
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|
See
notes
to unaudited condensed consolidated financial statements.
*
This
condensed consolidated balance sheet has been derived from the audited
consolidated balance sheet as of July 28, 2006, as filed in the Company’s Annual
Report on Form 10-K for the fiscal year ended July 28, 2006.
CBRL
GROUP, INC.
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
(In
thousands, except share and per share data)
(Unaudited)
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|
|
Quarter
Ended
|
|
|
|
|
October
27, 2006 |
|
|
October
28, 2005 |
|
Total
revenue
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|
$
|
558,263
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|
$
|
535,485
|
|
|
|
|
|
|
|
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Cost
of goods sold
|
|
|
172,856
|
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|
166,612
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|
Gross
profit
|
|
|
385,407
|
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|
368,873
|
|
|
|
|
|
|
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Labor
and other related expenses
|
|
|
212,174
|
|
|
204,418
|
|
Other
store operating expenses
|
|
|
97,722
|
|
|
95,184
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|
Store
operating income
|
|
|
75,511
|
|
|
69,271
|
|
|
|
|
|
|
|
|
|
General
and administrative expenses
|
|
|
37,260
|
|
|
33,062
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|
Operating
income
|
|
|
38,251
|
|
|
36,209
|
|
|
|
|
|
|
|
|
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Interest
expense
|
|
|
15,177
|
|
|
2,487
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|
Interest
income
|
|
|
598
|
|
|
--
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|
Income
before income taxes
|
|
|
23,672
|
|
|
33,722
|
|
|
|
|
|
|
|
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|
Provision
for income taxes
|
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|
8,510
|
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|
11,668
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Income
from continuing operations
|
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|
15,162
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|
22,054
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Income
from discontinued operations,
net
of taxes of
$3,940 and $1,941,
respectively
(see Note 15)
|
|
|
4,265
|
|
|
3,668
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|
Net
income
|
|
$
|
19,427
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|
$
|
25,722
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|
|
|
|
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|
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Basic
net income per share (see Note 6):
|
|
|
|
|
|
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|
Income
from
continuing operations
|
|
$
|
0.49
|
|
$
|
0.47
|
|
Income
from
discontinued operations
|
|
$
|
0.14
|
|
$
|
0.08
|
|
Net
income per
share
|
|
$
|
0.63
|
|
$
|
0.55
|
|
|
|
|
|
|
|
|
|
Diluted
net income per share (see Note 6):
|
|
|
|
|
|
|
|
Income
from
continuing operations
|
|
$
|
0.45
|
|
$
|
0.44
|
|
Income
from
discontinued operations
|
|
$
|
0.12
|
|
$
|
0.07
|
|
Net
income per
share
|
|
$
|
0.57
|
|
$
|
0.51
|
|
|
|
|
|
|
|
|
|
Weighted
average shares (see Note 6):
|
|
|
|
|
|
|
|
Basic
|
|
|
30,996,700
|
|
|
46,672,202
|
|
Diluted
|
|
|
36,011,802
|
|
|
51,836,594
|
|
See
notes
to unaudited condensed consolidated financial statements.
CBRL
GROUP, INC.
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(In
thousands)
(Unaudited)
|
|
Quarter
Ended
|
|
|
October 27,
2006
|
|
October 28,
2005
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
Net
income
|
|
$
|
19,427
|
|
$
|
25,722
|
|
Net
income from discontinued operations, net of tax
|
|
|
(4,265
|
)
|
|
(3,668
|
)
|
Adjustments
to reconcile net income to net cash provided by
|
|
|
|
|
|
|
|
operating
activities of continuing operations:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
13,723
|
|
|
13,556
|
|
Loss
on disposition of property and equipment
|
|
|
292
|
|
|
669
|
|
Accretion on zero-coupon contingently convertible senior
notes
|
|
|
1,467
|
|
|
1,423
|
|
Share-based compensation
|
|
|
2,645
|
|
|
3,655
|
|
Excess tax benefit from share-based compensation
|
|
|
(877
|
)
|
|
(522
|
)
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
Inventories
|
|
|
(16,006
|
)
|
|
(22,902
|
)
|
Prepaid expenses
|
|
|
(6,933
|
)
|
|
(3,240
|
)
|
Accounts payable
|
|
|
(1,821
|
)
|
|
(3,179
|
)
|
Taxes withheld and accrued
|
|
|
(4,427
|
)
|
|
(76
|
)
|
Income taxes payable
|
|
|
2,577
|
|
|
5,376
|
|
Accrued employee compensation
|
|
|
968
|
|
|
(11,497
|
)
|
Other current assets and other current liabilities
|
|
|
(2,354
|
)
|
|
256
|
|
Other assets and other long-term liabilities
|
|
|
(168
|
)
|
|
843
|
|
Net
cash provided by operating activities of continuing
operations
|
|
|
4,248
|
|
|
6,416
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
Purchase
of property and equipment
|
|
|
(23,707
|
)
|
|
(23,095
|
)
|
Proceeds
from insurance recoveries
|
|
|
91
|
|
|
-
|
|
Proceeds
from sale of property and equipment
|
|
|
79
|
|
|
36
|
|
Net
cash used in investing activities of continuing operations
|
|
|
(23,537
|
)
|
|
(23,059
|
)
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
Proceeds
from issuance of long-term debt
|
|
|
--
|
|
|
331,200
|
|
Principal
payments under long-term debt and other
|
|
|
|
|
|
|
|
long-term
obligations
|
|
|
(2,035
|
)
|
|
(308,753
|
)
|
Proceeds
from exercise of stock options
|
|
|
7,686
|
|
|
2,298
|
|
Excess
tax benefit from share-based compensation
|
|
|
877
|
|
|
522
|
|
Dividends
on common stock
|
|
|
(4,020
|
)
|
|
(5,592
|
)
|
Net
cash provided by financing activities of continuing
operations
|
|
|
2,508
|
|
|
19,675
|
|
|
|
|
|
|
|
|
|
Cash
flows from discontinued operations:
|
|
|
|
|
|
|
|
Net
cash provided by operating activities of discontinued
operations
|
|
|
12,871
|
|
|
10,300
|
|
Net
cash used in investing activities of discontinued
operations
|
|
|
(10,817
|
)
|
|
(11,693
|
)
|
Net
cash provided by (used in) discontinued operations
|
|
|
2,054
|
|
|
(1,393
|
)
|
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents
|
|
|
(14,727
|
)
|
|
1,639
|
|
Cash
and cash equivalents, beginning of period
|
|
|
87,830
|
|
|
15,577
|
|
Cash
and cash equivalents, end of period
|
|
$
|
73,103
|
|
$
|
17,216
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
Cash
paid during the three months for:
|
|
|
|
|
|
|
|
Interest, net of amounts capitalized
|
|
$
|
14,778
|
|
$
|
606
|
|
Income taxes
|
|
$
|
6,638
|
|
$
|
7,275
|
|
See
notes
to unaudited condensed consolidated financial statements.
CBRL
GROUP,
INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In
thousands, except percentages, share and per share data)
(Unaudited)
1.
Condensed
Consolidated Financial Statements
The
condensed
consolidated balance sheets as of October 27, 2006 and July 28, 2006
and the
related condensed consolidated statements of income and cash flows
for the
quarters ended October 27, 2006 and October 28, 2005, have been prepared
by CBRL
Group, Inc. (the “Company”) in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) and pursuant to the rules and
regulations of the Securities and Exchange Commission (“SEC”) without audit. The
Company is principally engaged in the operation and development of
the Cracker
Barrel Old Country StoreÒ
(“Cracker Barrel”) restaurant and retail concept and the Logan’s
RoadhouseÒ
(“Logan’s”) restaurant concept. On October 12, 2006, the Company’s Board of
Directors approved the terms under which management was authorized
to negotiate
an agreement to sell Logan’s (see Notes 15 and 16). As a result, Logan’s is
presented as discontinued operations in the accompanying condensed
consolidated
financial statements. The definitive agreement subsequently was entered
into and
announced on October 30, 2006. In the opinion of management, all adjustments
(consisting of normal and recurring items) necessary for a fair presentation
of
such condensed consolidated financial statements have been made. The
results of
operations for any interim period are not necessarily indicative of
results for
the full year.
These
condensed consolidated financial statements should be read in conjunction
with
the audited consolidated financial statements and notes thereto contained
in the
Company's Annual Report on Form 10-K for the year ended July 28,
2006 (the “2006
Form 10-K”). The accounting policies used in preparing these condensed
consolidated financial statements are the same as those described
in our 2006
Form 10-K.
References
in
these Notes to the Condensed Consolidated Financial Statements
to a year are to
the Company’s fiscal year unless otherwise noted. Certain
reclassifications have been made in the 2006 condensed consolidated
financial
statements to present Logan’s as discontinued operations. These
reclassifications have no effect on the Company’s net income or financial
position as previously reported.
2.
Summary
of Significant Accounting Policies
The
significant accounting policies of the Company are included
in the 2006 Form
10-K. During the quarter ended October 27, 2006, there were
no significant
changes to those accounting policies.
3.
Share-Based
Compensation
Effective
July 30, 2005, the Company adopted SFAS No. 123 (Revised
2004), “Share Based
Payment” (“SFAS No. 123R”), which requires the measurement and recognition of
compensation cost at fair value for all share-based payments.
Share-based
compensation includes compensation expense, recognized
over the applicable
vesting periods, for new share-based awards and for share-based
awards granted
prior to, but not yet vested, as of July 29, 2005. Share-based
compensation
totaled approximately $1,883 and $762 for stock options
and nonvested stock,
respectively, for the first quarter of fiscal 2007. Included
in these totals are
share-based compensation from continuing operations of
$1,820 and $1,242 and
from discontinued operations of $63 and $(480) for stock
options and nonvested
stock, respectively. Share-based compensation totaled approximately
$2,800 and
$855 for stock options and nonvested stock, respectively,
for the first quarter
of fiscal 2006. See the discussion below regarding stock
option and nonvested
stock expenses reversed in the first quarter of 2007 related
to discontinued
operations. Share-based compensation is recorded in general
and administrative
expenses for continuing operations.
The
Company
has four share-based compensation plans for employees and non-employee
directors, which authorize the granting of stock options, nonvested stock,
and
other types of awards consistent with the purpose of the plans (see Notes 8
and
9 in the 2006 Form 10-K).
In
October
2006, following the Board of Directors’ approval as discussed in Note 1
concerning the sale of Logan’s, the Company modified certain share-based
compensation awards for eleven employees of Logan’s. These employees would have
forfeited these unvested awards upon Logan’s divestiture due to the performance
and/or service conditions of the awards not being met. The modification of
these
awards consisted of the cancellation of the Mid-Term Incentive Retention
Plans
(“MTIRP”) and nonvested stock grants for these employees and the concurrent
grant of cash replacement awards for the cancelled awards. No replacement
awards
for these employees’ stock options were given and thus, the unvested stock
options will be forfeited upon the completion of the Logan’s
divestiture. In
accordance with SFAS No. 123R, if a company modifies an award that is not
expected to vest, the previously accrued compensation cost for the award
is
reversed and no compensation cost is recorded for the award. Total compensation
cost reversed in the first quarter of 2007 related to these awards is
approximately $101 for stock options and $559 for nonvested stock awards
and is
recorded as discontinued operations in the accompanying condensed consolidated
financial statements. The cash replacement awards for the 2005 and 2006 MTIRP
awards retain their original vesting terms and vest on August 3, 2007 and
August
4, 2008, respectively. The
cash
replacement awards of the nonvested stock grants retain their original vesting
terms and vest on various dates between August 2007 and February 2011.
Compensation cost for these modified awards will be recognized by Logan’s over
the remaining vesting period of the awards.
4.
Seasonality
Historically,
the net income of the Company has been lower in the first three quarters
of each
year and highest in the fourth quarter, which includes much of the summer
vacation and travel season. Management attributes these variations to
the
decrease in interstate tourist traffic and propensity to dine out less
during
the regular school year and winter months and the increase in interstate
tourist
traffic and propensity to dine out more during the summer months. The
Company's
retail sales historically have been highest in the Company's second quarter,
which includes the Christmas holiday shopping season. The Company also
expects
to open additional new locations throughout the year. Therefore,
the results of operations for the quarter ended October 27, 2006 cannot
be
considered indicative of the operating results for the entire year.
5.
Inventories
Inventories
from continuing operations were comprised of the following at:
|
|
|
October
27, 2006
|
|
|
July
28,
2006
|
|
|
|
|
|
|
|
|
|
Retail
|
|
$
|
111,643
|
|
$
|
97,799
|
|
Restaurant
|
|
|
17,902
|
|
|
16,463
|
|
Supplies
|
|
|
14,764
|
|
|
14,041
|
|
Total
|
|
$
|
144,309
|
|
$
|
128,303
|
|
6.
Consolidated
Income From Continuing Operations Per Share and Weighted Average
Shares
Basic
consolidated income from continuing operations per share is computed
by dividing
consolidated income from continuing operations available to common
shareholders
by the weighted average number of common shares outstanding for
the reporting
period. Diluted consolidated income from continuing operations
per share
reflects the potential dilution that could occur if securities,
options or other
contracts to issue common stock were exercised or converted into
common stock.
Additionally, diluted consolidated income from continuing operations per share
is calculated excluding the after-tax interest and financing expenses
associated
with the Senior Notes since these Senior
Notes
are
treated as if converted into common stock (See Notes 4 and 6 to the Company’s
Consolidated Financial Statements included in the 2006 Form 10-K).
The
Company’s Senior Notes, outstanding employee and director stock options,
nonvested stock, and stock awards issued by the Company represent the only
dilutive effects on income from continuing operations per share. The following
table reconciles the components of the diluted income from continuing operations
per share computations:
|
|
Quarter
Ended
|
|
|
|
October
27,
2006
|
|
October
28,
2005
|
|
|
|
|
|
|
|
Income
from continuing operations per share numerator:
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
15,162
|
|
$
|
22,054
|
|
Add: Interest and loan acquisition costs
associated
with
Senior Notes, net of
related
tax effects
|
|
|
1,125
|
|
|
931
|
|
Income
from continuing operations available to
common
shareholders
|
|
$
|
16,287
|
|
$
|
22,985
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations per share
denominator:
|
|
|
|
|
|
Weighted average shares outstanding for basic
income
from continuing operations per share
|
|
|
30,996,700
|
|
|
46,672,202
|
|
Add potential dilution:
|
|
|
|
|
|
|
|
Senior
Notes
|
|
|
4,582,788
|
|
|
4,582,788
|
|
Stock
options, nonvested stock and stock awards
|
|
|
432,314
|
|
|
581,604
|
|
Weighted average shares outstanding for diluted
income
from continuing operations per share
|
|
|
36,011,802
|
|
|
51,836,594
|
|
7.
Segment
Reporting
Cracker
Barrel units represent a single, integrated operation with two related
and
substantially integrated product lines. The operating expenses of the
restaurant
and retail product line of a Cracker Barrel unit are shared and are
indistinguishable in many respects. The chief operating decision-maker
reviews
operating results for both restaurant and retail operations on a combined
basis.
Accordingly, the Company manages its business on the basis of one reportable
operating segment. As a result of approving an agreement to sell Logan’s, the
operations of Logan’s
are reported as discontinued operations (see Note 15) and have been excluded
from segment reporting.
All
of the
Company’s operations are located within the United States. The following data
are presented in accordance with SFAS No. 131, “Disclosures About Segments of an
Enterprise and Related Information,” for all periods presented.
|
|
Quarter
Ended
|
|
|
|
October 27,
2006
|
|
October
28, 2006
|
|
Net
sales in Company-owned stores
from continuing operations
|
|
|
|
|
|
Restaurant
|
|
$
|
442,327
|
|
$
|
426,645
|
|
Retail
|
|
|
115,936
|
|
|
108,840
|
|
Total revenue
|
|
$
|
558,263
|
|
$
|
535,485
|
|
8.
Impairment
of Long-lived Assets
Property
and
Equipment
In
accordance
with SFAS No. 144 “Impairment or Disposal 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 value of an asset may not be recoverable. An
impairment is determined by comparing undiscounted future operating cash
flows
that are expected to result from an asset to the carrying values of an
asset on
a store by store basis. In addition, the recoverability test considers
the
likelihood of possible outcomes that existed at the balance sheet date,
including the assessment of the likelihood of the future sale of the asset.
If
an impairment exists, the amount of impairment is measured as the sum of
the
estimated discounted future operating cash flows of the asset and the expected
proceeds upon sale of the asset less its carrying value. Assets held for
sale,
if any, are reported at the lower of carrying value or fair value less
costs to
sell. The Company recorded no impairment losses in the quarters ended October
27, 2006 and October 28, 2005.
Goodwill
At
least
annually the Company assesses the recoverability of goodwill and other
intangible assets. The impairment tests require the Company to estimate
fair
values of its related reporting units by making assumptions regarding
future
cash flows and other factors. This valuation may reflect, among other
things,
such external factors as capital market valuation for public companies
comparable to the operating unit. If these assumptions change in the
future, the
Company may be required to record material impairment charges for these
assets.
The Company performed its annual assessment in the second quarter ended
January
27, 2006, and concluded at that time that there was no indication of
impairment.
This annual assessment is performed in the second quarter of each year.
Additionally, an assessment is performed between annual assessments
if an event
occurs or circumstances change that would more likely than not reduce
the fair
value of a reporting unit below its carrying amount. The Company does
not
believe that any such events or changes in circumstances have occurred
since the
annual assessment performed in the second quarter ended January 27,
2006. The
Company’s goodwill relates to Logan’s and is presented as current assets of
discontinued operations in the accompanying condensed consolidated
balance
sheet.
9.
Commitments and Contingencies
The
Company
and its subsidiaries are parties to various legal and regulatory
proceedings and
claims incidental to and arising out of the ordinary course of
its business. In
the opinion of management, however, based upon information currently
available,
the ultimate liability with respect to these other proceedings
and claims will
not materially affect the Company’s consolidated results of operations or
financial position. However, litigation involves an element of
uncertainty.
Future developments could cause these actions or claims to have
a material
adverse effect on the Company’s financial statements as a whole.
The
Company
is a member of a class of a settled lawsuit against Visa U.S.A.
Inc. (“Visa”)
and MasterCard International Incorporated (“MasterCard”). The Visa
Check/Mastermoney Antitrust litigation settlement became final
on June 1, 2005.
The settlement provides $3,050,000 in compensatory relief by
Visa and MasterCard
to be funded over a fixed period of time to respective Settlement
Funds. The
Company expects to receive $1,551 ($850 after taxes and third
party collection
fees) as its share of the proceeds from the settlement for continuing
operations. The Company believes this settlement represents an
indeterminate mix
of loss recovery and gain contingency and therefore believes
the application of
a gain contingency model is the appropriate model to use for
the entire amount
of expected proceeds. Therefore, the Company has excluded the
expected
settlement proceeds from recognition in the condensed consolidated
financial
statements for the quarter ended October 27, 2006. At the time
the settlement
amount and timing is reasonably certain, the Company will record
such gain
contingency. The Company expects this to occur in the second
quarter of
2007.
The
Company
was contingently liable pursuant to standby letters of credit as credit
guarantees primarily related to insurers. As of October 27, 2006, the Company
had $47,591 of standby letters of credit related primarily to securing reserved
claims under workers' compensation and general liability insurance. All standby
letters of credit are renewable annually and reduce the Company’s availability
under its $250,000 revolving credit facility.
The
Company
is secondarily liable for lease payments under the terms of an operating
lease
that has been assigned to a third party and a second operating lease that
has
been sublet to a third party. The operating leases have remaining lives of
approximately 6.9 and 11 years, with annual lease payments of approximately
$361
and $100, respectively. Under the assigned lease the Company’s performance is
only required if the assignee fails to perform his obligations as lessee.
At
this time, the Company has no reason to believe that the assignee will not
perform and, therefore, no provision has been made in the accompanying condensed
consolidated financial statements for amounts to be paid as a result of
non-performance by the assignee. Under the sublease the Company’s performance is
only required if the sublessee fails to perform its obligations as lessee.
In
the first quarter of 2007, the Company has a remaining liability of $691
in the
accompanying Condensed Consolidated Balance Sheet for estimated amounts to
be
paid in case of non-performance by the sublessee.
10.
Shareholders’
Equity
During
the
quarter ended October 27, 2006, the Company received proceeds of $7,686
from the
exercise of stock options on 261,678 shares of its common stock. During
the
quarter ended October 27, 2006, the Company did not make any share
repurchases.
During
the
quarter ended October 27, 2006, the Company paid a dividend of $0.13
per common
share on August 8, 2006 (declared on May 25, 2006). The Company declared
a
dividend of $0.14 per common share on September 21, 2006 that was paid
on
November 8, 2006 in the amount of $4,363.
During
the
quarter ended October 27, 2006, the unrealized loss, net of tax, on the
Company’s interest rate swap increased by $7,055 to $11,584 and is recognized in
accumulated other comprehensive loss.
During
the
quarter ended October 27, 2006, total share-based compensation was $2,645
and
the excess tax benefit from share-based compensation was $877.
11.
Comprehensive
Income
|
|
|
October
27, 2006
|
|
|
October
28, 2005
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
19,427
|
|
$
|
25,722
|
|
Other
comprehensive loss:
Change
in fair value of interest rate swap , net of tax
|
|
|
(7,055
|
)
|
|
--
|
|
Total
comprehensive income
|
|
$
|
12,372
|
|
$
|
25,722
|
|
12.
Debt
Long-term
debt consisted of the following at:
|
|
October
27,
2006
|
|
July
28,
2006
|
|
|
|
|
|
|
|
Term
Loan B
|
|
|
|
|
|
Payable $2,000 per quarter with the remainder due
on April 27, 2013
|
|
$
|
721,000
|
|
$
|
723,000
|
|
3.0%
Zero-Coupon Contingently convertible
Senior Notes payable on or before April 2, 2032
|
|
|
197,931
|
|
|
196,464
|
|
|
|
|
918,931
|
|
|
919,464
|
|
Current
maturities of Term Loan B
|
|
|
(8,000
|
)
|
|
(8,000
|
)
|
Long-term
debt
|
|
$
|
910,931
|
|
$
|
911,464
|
|
Effective
April 27, 2006, the Company entered into a $1,250,000 credit facility (the
“2006
Credit Facility”) that consisted of up to $1,000,000 in term loans with a
scheduled maturity date of April 27, 2013 and a $250,000 revolving credit
facility expiring April 27, 2011. The 2006 Credit Facility contains customary
financial covenants, which include maintenance of a maximum consolidated total
leverage ratio as specified in the agreement and maintenance of minimum interest
coverage ratios. As of October 27, 2006, the Company is in compliance with
all
debt covenants.
Subject
to
there being no events of default, covenants under the 2006 Credit Facility
permits the Company to declare and pay cash dividends to its stockholders
as
long as the Company has at least $100,000 available under its Revolving Credit
Facility and the aggregate amount of such dividends paid during any fiscal
year
would be less than 15% of Consolidated EBITDA from continuing operations,
as
defined, for the fiscal year immediately preceding the fiscal year in which
such
dividend is paid. Additionally, the Company may increase its regular quarterly
cash dividend in any fiscal quarter by an amount not to exceed the greater
of
$.01 of 10% of the amount of the regular quarterly cash dividend paid in
the
prior fiscal quarter.
13.
Derivative
Instruments and Hedging Activities
The
Company
accounts for its interest rate swap in accordance with SFAS No. 133,
“Accounting
for Derivative Instruments and Hedging Activities”. The estimated fair value of
this interest rate swap liability was $17,960 at October 27, 2006 and
is
included in other long-term obligations. The offset to the interest rate
swap
liability is in accumulated other comprehensive loss, net of the deferred
tax
asset. Cash flows related to the interest rate swap are included in operating
activities.
14.
Compensatory
Plans and Arrangements
In
connection
with the Company’s announced strategic review, the Company’s Compensation and
Stock Option Committee of the Board of Directors approved, pursuant
to the
Company’s 2002 Omnibus Incentive Compensation Plan, the “2006 Success Plan” for
certain officers of the Company. During the first quarter of 2007,
the Company
recorded expense of $585 for this plan as general and administrative
expenses
from continuing operations and $586 related to CBRL Group officers
and $206
related to Logan’s officers as discontinued operations on the accompanying
condensed consolidated statement of income. The maximum amount payable
under the
2006 Success Plan is $6,647 by CBRL Group and $1,168 by Logan’s. The amounts
payable under the 2006 Success Plan will become earned and payable
six months
after the completion of Logan’s divestiture. During the third and fourth
quarters of 2006, the Company recorded expense of $511 and $676 for
this plan as
general and administrative expenses from continuing operations and
$512 and $675
related to CBRL Group officers and $180 and $237 related to Logan’s officers as
discontinued operations, respectively.
15.
Disposition
of Logan’s
On
October
12, 2006, the Company’s Board of Directors approved, within specified
parameters, the terms and provisions of a stock purchase agreement
(the “Stock
Purchase Agreement”)
with
LRI
Holdings, Inc. (“LRI”) to divest Logan’s and authorized management to
complete,
and, subject to the receipt of written confirmation that the
consideration to be
received in the divestiture was fair to the Company from a financial
perspective, thereafter, to
execute
and deliver the Stock Purchase Agreement. Therefore, the
Company believes that Logan’s met the criteria for classification as
discontinued operations on October 12, 2006. The
decision to sell Logan’s was the result of the Company’s decision to focus on
the Cracker Barrel restaurant and retail concept and to increase shareholder
value. The divestiture was completed on December 6, 2006. (See Note
16).
The
Company
has reported the results of operations of Logan’s as discontinued operations,
which consist of the following:
|
|
Quarter
Ended
|
|
|
October
27,
2006
|
|
October
28,
2005
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
110,638
|
|
$
|
97,872
|
|
|
|
|
|
|
|
|
|
Income
before provision for income taxes from discontinued
operations
|
|
|
8,205
|
|
|
5,609
|
|
Provision
for income taxes
|
|
|
3,940
|
|
|
1,941
|
|
Net
income from
discontinued operations
|
|
$
|
4,265
|
|
$
|
3,668
|
|
In
accordance
with Emerging Issues Task Force Issue No. 93-17 “Recognition of Deferred Tax
Assets for a Parent Company’s Excess Tax Basis in the Stock of a Subsidiary That
is Accounted for as a Discontinued Operation”, the provision for income taxes
for the first quarter of 2007 includes a deferred tax expense, with a related
liability, of $1,429 for the basis difference between book and tax.
In
addition,
the assets and liabilities of Logan’s are aggregated and disclosed as current
assets and current liabilities in the condensed consolidated balance
sheets as
follows:
|
|
October
27, 2006
|
|
July
28,
2006
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
3,363
|
|
$
|
1,732
|
|
Property
held for sale
|
|
|
--
|
|
|
1,589
|
|
Receivables
|
|
|
5,191
|
|
|
3,194
|
|
Inventories
|
|
|
9,198
|
|
|
9,874
|
|
Prepaid
expenses
|
|
|
2,732
|
|
|
1,601
|
|
Property
and equipment, net
|
|
|
295,785
|
|
|
287,580
|
|
Goodwill
|
|
|
93,725
|
|
|
93,725
|
|
Other
assets
|
|
|
2,068
|
|
|
1,927
|
|
Current
assets of
discontinued operations
|
|
$
|
412,062
|
|
$
|
401,222
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
12,485
|
|
$ |
12,901
|
|
Other
accrued expenses
|
|
|
29,922
|
|
|
23,891
|
|
Other
long-term obligations
|
|
|
12,484
|
|
|
11,790
|
|
Deferred
income taxes
|
|
|
23,043
|
|
|
23,063
|
|
Current
liabilities
of discontinued operations
|
|
$
|
77,934
|
|
$
|
71,645
|
|
16.
Subsequent
Event
On
October
30, 2006, the Company entered into the Stock Purchase Agreement that was
approved by the Company’s Board of Directors on October 12, 2006. Pursuant to
the terms of the Stock Purchase Agreement, Logan’s has been sold to LRI.
Total
consideration in the transaction is approximately $486 million, subject
to
customary post-closing adjustments, for working capital, indebtedness and
capital expenditures. This amount includes the gross proceeds from a real
estate
sale-leaseback transaction closed on December 1, 2006, the proceeds
of
which were distributed to the Company in satisfaction of
intercompany indebtedness. The sale/leaseback consideration also included
retention by the Company of three Logan’s restaurant locations at which certain
real estate matters precluded their being included in the sale/leaseback at
this
time. Until these three properties can be sold, CBRL will lease them to Logan’s
under terms and conditions consistent with the sale-leaseback transaction.
The
expected net proceeds to the Company after payment of taxes and expenses
associated with the divestiture transaction are approximately $385 million,
plus
retention of the three Logan’s properties. The Company expects that the net cash
proceeds will be used in a combination of share repurchases and debt reduction,
including a modified Dutch Auction tender offer for up to $250 million and
open
market share repurchases of an additional $100 million, and, including cash
balances on hand, debt reduction of $75 million.
17.
Recent
Accounting Pronouncements Not Yet Adopted
In
June 2006, the FASB issued Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109”
(“FIN 48”), which clarifies the accounting for uncertainty in income taxes
recognized in financial statements in accordance with FASB No. 109,
“Accounting for Income Taxes”. FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement
of
a tax position taken or expected to be taken in a tax return. The provisions
of
FIN 48 are effective for fiscal years beginning after December 15, 2006,
with the cumulative effect of the change in accounting principle recorded
as an
adjustment to opening retained earnings. The Company is currently evaluating
the
impact of adopting FIN 48 and cannot yet determine the impact of its
adoption in
the first quarter of 2008.
In
September
2006, the FASB issued Statement of Financial Accounting Standard No.
157, “Fair
Value Measurements” (“SFAS 157”), which defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair
value
measurements. The provisions of SFAS 157 are effective for fiscal years
beginning after November 15, 2007. The Company is currently evaluating
the
impact of adopting SFAS 157 and cannot yet determine the impact of
its
adoption.
In
September
2006, the Securities and Exchange Commission issued Staff Accounting
Bulletin
No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements” (“SAB 108”), which provides
interpretive guidance on how the effects of the carryover or reversal
of prior
year misstatements should be considered in quantifying a current
year
misstatement. SAB 108 is effective for fiscal years ending after November
15, 2006. The Company is currently evaluating the impact of adopting SAB
108 and cannot yet determine the impact of its adoption.
Item
2. Management's Discussion and Analysis of Financial Condition and Results
of
Operations
CBRL
Group,
Inc. and its subsidiaries (collectively, the “Company”) are principally engaged
in the operation and development in the United States of the Cracker Barrel
Old
Country StoreÒ
(“Cracker Barrel”) restaurant and retail concept and the Logan’s
RoadhouseÒ
(“Logan’s”) restaurant concept. All dollar amounts reported or discussed in Part
I, Item 2 of this Quarterly Report on Form 10-Q are shown in thousands, except
per share amounts. References in management’s discussion and analysis of
financial condition and results of operations to a year are to the Company’s
fiscal year unless otherwise noted.
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 (i) condensed consolidated financial statements and
notes
thereto in this Form 10-Q and (ii) the financial statements and the notes
thereto included in the Company’s Annual Report on Form 10-K for the fiscal year
ended July 28, 2006 (the “2006 Form 10-K”). Except for specific historical
information, many of the matters discussed in this Form 10-Q may express
or
imply projections of revenues or expenditures, plans and objectives for
future
operations, growth or initiatives, expected future economic performance,
or the
expected outcome or impact of pending or threatened litigation. These and
similar statements regarding events or results which CBRL Group, Inc. (the
“Company”) expects will or may occur in the future, are forward-looking
statements that involve risks, uncertainties and other factors which may
cause
actual results and performance of the Company to differ materially from
those
expressed or implied by those statements. All forward-looking information
is
provided pursuant to the safe harbor established under the Private Securities
Litigation Reform Act of 1995 and should be evaluated in the context of
these
risks, uncertainties and other factors. Forward-looking statements generally
can
be identified by the use of forward-looking terminology such as “trends,”
“assumptions,” “target,” “guidance,” “outlook,” “plans,” “goals,” “objectives,”
“expectations,” “near-term,” “long-term,” “projection,” “may,” “will,” “would,”
“could,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “potential,”
“regular,” or “continue” (or the negative or other derivatives of each of these
terms) or similar terminology.
The
Company
believes the assumptions underlying these forward-looking statements
are
reasonable; however, any of the assumptions could be inaccurate, and
therefore,
actual results may differ materially from those projected in or implied
by the
forward-looking statements. Factors and risks that may result in actual
results
differing from this forward-looking information include, but are not
limited to,
those contained in Part I, Item 1A of the 2006 Form 10-K, which is incorporated
herein by this reference, as well as other factors discussed throughout
this
document, including, without limitation, the factors described under
“Critical
Accounting Policies and Estimates” on pages 19-23 of this Form 10-Q or, from
time to time, in the Company’s filings with the SEC, press releases and other
communications.
Readers
are
cautioned not to place undue reliance on forward-looking statements
made in this
document, since the statements speak only as of the document’s date. The
Company has no obligation, and does not intend, to publicly update
or revise any
of these forward-looking statements to reflect events or circumstances
occurring
after the date of this document or to reflect the occurrence of unanticipated
events. Readers are advised, however, to consult any further disclosures
the
Company may make on related subjects in its documents filed with or
furnished to
the SEC or in its other public disclosures.
Results
of Operations
The
following
table highlights operating results by percentage relationships to total revenue
for the quarter ended October 27, 2006 as compared to the same period a year
ago:
|
|
|
Quarter
Ended
|
|
|
|
|
October
27, 2006
|
|
|
October
28, 2005
|
|
|
|
|
|
|
|
|
|
Total
revenue
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
Cost
of goods sold
|
|
|
31.0
|
|
|
31.1
|
|
Gross
profit
|
|
|
69.0
|
|
|
68.9
|
|
|
|
|
|
|
|
|
|
Labor
and other related expenses
|
|
|
38.0
|
|
|
38.2
|
|
Other
store operating expenses
|
|
|
17.5
|
|
|
17.8
|
|
Store
operating income
|
|
|
13.5
|
|
|
12.9
|
|
|
|
|
|
|
|
|
|
General
and administrative expenses
|
|
|
6.6
|
|
|
6.1
|
|
Operating
income
|
|
|
6.9
|
|
|
6.8
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
2.8
|
|
|
0.5
|
|
Interest
income
|
|
|
0.1
|
|
|
--
|
|
Income
before income taxes
|
|
|
4.2
|
|
|
6.3
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
1.5
|
|
|
2.2
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
|
2.7
|
|
|
4.1
|
|
|
|
|
|
|
|
|
|
Income
from discontinued operations
net
of taxes
|
|
|
0.8
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
3.5
|
%
|
|
4.8
|
%
|
The
following
table highlights the components of total revenue by percentage relationships
to
total revenue for the quarter ended October 27, 2006 as compared to the same
period a year ago:
|
|
Quarter
Ended
|
|
|
|
October
27, 2006
|
|
October
28, 2005
|
|
|
|
|
|
|
|
Net
sales:
|
|
|
|
|
|
Cracker Barrel restaurant
|
|
|
79.2
|
%
|
|
79.7
|
%
|
Cracker Barrel retail
|
|
|
20.8
|
|
|
20.3
|
|
Total
revenue
|
|
|
100.0
|
%
|
|
100.0
|
%
|
The
following
table highlights the units in operation and units added for the quarter ended
October 27, 2006 as compared to the same period a year ago:
|
|
Quarter
Ended
|
|
|
|
October
27, 2006 |
|
October
28, 2006 |
|
|
|
|
|
|
|
Cracker
Barrel:
|
|
|
|
|
|
Open
at beginning
of period
|
|
|
543
|
|
|
529
|
|
Opened
during
period
|
|
|
5
|
|
|
8
|
|
Open
at end of
period
|
|
|
548
|
|
|
537
|
|
|
|
|
|
|
|
|
|
Average
unit
volumes include sales of all stores and are measured on comparable calendar
weeks in the prior year. The following table highlights average unit volumes
for
the quarter ended October 27, 2006 as compared to the same period a year
ago for
continuing operations:
|
|
Quarter
Ended
|
|
|
|
October
27, 2006 |
|
October
28, 2005 |
|
|
|
|
|
|
|
Cracker
Barrel
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
Restaurant
|
|
$
|
812.6
|
|
$
|
799.4
|
|
Retail
|
|
|
213.0
|
|
|
204.0
|
|
Total
net sales
|
|
$
|
1,025.6
|
|
$
|
1,003.4
|
|
Total
Revenue
Total
revenue
for the first quarter of 2007 increased 4.3% compared to last year’s first
quarter. For the quarter, Cracker Barrel comparable store restaurant sales
increased 1.4% and comparable store retail sales increased 4.4% resulting
in a
combined comparable store sales (total net sales) increase of 2.0%. The
comparable store restaurant sales increase consisted of a 1.2% average
check
increase for the quarter (including 0.9% average menu price increase) and
a 0.2%
guest traffic increase. The comparable store retail sales increase is due
to
positive guest traffic and an increase in guest spending from last year.
The
Company believes that lower gasoline prices were a contributing factor
in the
increase in guest spending. The Company also believes that its retail
merchandise selection, particularly for seasonal merchandise, is more appealing
than last year. Furthermore, the Company did not experience any lost operating
days due to hurricanes during the first quarter of 2007. During the first
quarter of 2006, the Company lost approximately 243 store operating days
due to
closings for hurricane damage and related power outages, but certain stores
that
operated without disruption realized higher sales from hurricane evacuee
traffic.
Cost
of Goods Sold
Cost
of goods
sold as a percentage of total revenue for the first quarter of 2007
decreased to
31.0% from 31.1% in the first quarter of last year. The decrease was
due to
higher menu pricing, lower food waste, and higher initial mark-ons
of retail
merchandise versus the prior year, partially offset by higher commodity
costs,
higher markdowns of retail merchandise and a shift in the mix of sales
versus
prior year from restaurant sales toward retail sales, the latter of
which
typically have a higher cost of sales.
Labor
and Other Related Expenses
Labor
and
other related expenses include all direct and indirect labor and related costs
incurred in store operations. Labor and other related expenses as a percentage
of total revenue decreased to 38.0% in the first quarter this year from 38.2%
last year. The decrease was due to lower group health and workers compensation
costs offset by higher store management and related bonus costs versus prior
year and the non-recurrence of hurricane-related labor expenses.
Other
Store Operating Expenses
Other
store
operating expenses include all unit-level operating costs, the major components
of which are operating supplies, repairs and maintenance, advertising expenses,
utilities, rent, depreciation, general insurance, credit card fees and
non-labor-related pre-opening expenses. Other store operating expenses
as a
percentage of total revenue decreased to 17.5% in the first quarter of
2007 from
17.8% in the first quarter of last year. The decrease was due to lower
advertising and maintenance expenses as a percent of revenue and the
non-recurrence of hurricane-related costs.
General
and Administrative Expenses
General
and
administrative expenses as a percentage of total revenue increased
to 6.6% in
the first quarter of 2007 as compared to 6.1% in the first quarter
of last year.
The increase was due to an increase in bonus accruals and manager meeting
expense versus the prior year. The increase in the bonus accruals reflected
better performance against financial objectives in the first quarter
of 2007
versus prior year and the declaration and payment of discretionary
bonuses for
certain executives in the first quarter of 2007, as well as certain
bonus plans
established in the second half of 2006 related to strategic initiatives.
The
increase in the manager meeting expense in the first quarter of 2007
is due to
the prior year’s meeting being cancelled due to the hurricanes in the first
quarter of 2006.
Interest
Expense
Interest
expense as a percentage of total revenue increased to 2.8% in the
first quarter
of 2007 as compared to 0.5% in the first quarter of last year.
The increase in
interest expense was due to the Company’s third quarter 2006 recapitalization
and corresponding higher debt levels.
Provision
for Income Taxes
The
provision
for income taxes as a percent of pre-tax income was 35.9% in
the first quarter
of 2007 and was slightly higher than last year’s first quarter due to the
expiration of certain tax credits on December 31, 2005 that
have not been
re-enacted into law.
Liquidity
and Capital Resources
The
Company's
operating activities from continuing operations provided
net cash of $4,248 for
the quarter ended October 27, 2006, which represented a
decrease from the $6,416
provided during the same period a year ago. This decrease
was due to lower net
income from continuing operations, related to higher interest
expense
attributable to the Company’s recapitalization, decreases in taxes withheld and
accrued and increases in prepaid expenses. These decreases
were partially offset
by an increase this year compared with a decrease last
year in accrued employee
compensation, a smaller increase in inventories, and a
smaller decrease in
accounts payable than the previous year. The change in
accounts payable was
primarily due to the timing of payments this year compared
with the timing of
payments last year.
Excluding
the
current assets and liabilities of discontinued operations,
the Company had
positive working capital of $9,168 at October 27, 2006
versus negative working
capital of $6,280 at July 28, 2006. In the restaurant
industry, substantially
all sales are either for cash or credit card. Like many
other restaurant
companies, the Company is able to, and may more often
than not, operate with
negative working capital. Restaurant inventories purchased
through the Company's
principal food distributor 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 wire
transfers. These various trade terms are aided by rapid
turnover of the
restaurant inventory. Employees generally are paid on
weekly, bi-weekly or
semi-monthly schedules in arrears of hours worked, and
certain expenses such as
certain taxes and some benefits are deferred for longer
periods of time. The
change in working capital compared with July 28, 2006,
reflected higher
inventories, prepaid expenses, and deferred income tax
assets partially offset
by lower cash and cash equivalents and receivables.
Capital
expenditures were $23,707 for the quarter ended October
27, 2006 as compared to
$23,095 during the same period a year ago. Construction
of new locations
accounted for most of the expenditures. Capitalized interest,
excluding Logan’s,
was $212 for the quarter ended October 27, 2006, as compared
to $95 for the
quarter ended October 28, 2005. This difference was due
to higher interest rates
versus the same period a year ago. The Company estimates
that its capital
expenditures (purchase of property and equipment) for
2007 will be up to
$105,000 (excluding capital expenditures for Logan’s), most of which will be
related to the acquisition of sites and construction
of 19 new Cracker Barrel
stores and openings that will occur during 2007, as well
as for acquisition and
construction costs for locations to be opened in 2008.
In
October
2006, the Company’s Board of Directors approved an agreement to sell
Logan’s.
The sale was completed on December 6, 2006. Total consideration
in the
transaction was approximately $486 million. The
Company expects that the net cash proceeds will be
used in a combination of
share repurchases and debt reduction, including a modified
Dutch Auction tender
offer for up to $250 million and open market share
repurchases of an additional
$100 million, and, including cash balances on hand,
debt reduction of $75
million.
During
the
quarter ended October 27, 2006, the Company did not make
any share repurchases.
As of October 27, 2006, the Company had 821,081 shares
remaining under
repurchase authorizations previously in effect at the
end of 2005. The Company
has not determined when it expects to repurchase the
remaining 821,081 shares
authorized; this matter will be reviewed in connection
with the timing and
amount of proceeds from the divestiture of Logan’s. The Company’s principal
criteria for share repurchases are that they be accretive
to expected net income
per share and are within the limits imposed by the Company’s debt covenants
under the 2006 Credit Facility.
During
the
first quarter of 2007, the Company received proceeds
of $7,686 from the exercise
of stock options on 261,678 shares of its common stock.
During the quarter, the
Company paid a dividend of $0.13 per common share on
August 8, 2006 (declared on
May 25, 2006). The Company declared a dividend of $0.14
per common share on
September 21, 2006 that was paid on November 8, 2006
in the amount of
$4,363.
The
Company's
internally generated cash and cash generated by option
exercises, along with
cash at October 27, 2006, the Company’s availability under the 2006 Credit
Facility and its real estate operating lease arrangements,
were sufficient to
finance all of its growth, dividend payment and working
capital needs in the
first quarter of 2007.
Management
believes that cash at October 27, 2006, along with cash
proceeds from the
Logan’s divestiture transaction, cash generated from the Company’s operating
activities, stock option exercises and available borrowings
under the 2006
Credit Facility, will be sufficient to finance its continued
operations, its
remaining share repurchase authorizations (including
the expected tender offer),
its continued expansion plans, its expected refinancing
of its senior
convertible notes, its principal payments on its debt
and its dividend payments
through 2007. At October 27, 2006, the Company had $202,409
available under its
revolving credit facility.
Subject
to
there being no events of default, covenants under the
2006 Credit Facility
permits the Company to declare and pay cash dividends
to its stockholders as
long as the Company has at least $100,000 available under
its Revolving Credit
Facility and the aggregate amount of such dividends paid
during any fiscal year
would be less than 15% of Consolidated EBITDA from continuing
operations, as
defined, for the fiscal year immediately preceding the
fiscal year in which such
dividend is paid. Additionally, the Company may increase
its regular quarterly
cash dividend in any fiscal quarter by an amount not
to exceed the greater of
$.01 of 10% of the amount of the regular quarterly cash
dividend paid in the
prior fiscal
quarter.
Recent
Accounting Pronouncements Not Yet Adopted
In
June 2006, the FASB issued Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109”
(“FIN 48”), which clarifies the accounting for uncertainty in income taxes
recognized in financial statements in accordance with FASB No. 109,
“Accounting for Income Taxes”. FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement
of
a tax position taken or expected to be taken in a tax return. The provisions
of
FIN 48 are effective for fiscal years beginning after December 15, 2006,
with the cumulative effect of the change in accounting principle recorded
as an
adjustment to opening retained earnings. The Company is currently evaluating
the
impact of adopting FIN 48 and cannot yet determine the impact of its adoption
in
the first quarter of 2008.
In
September
2006, the FASB issued Statement of Financial Accounting Standard No.
157, “Fair
Value Measurements” (“SFAS 157”), which defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair
value
measurements. The provisions of SFAS 157 are effective for fiscal years
beginning after November 15, 2007. The Company is currently evaluating
the
impact of adopting SFAS 157 and cannot yet determine the impact of its
adoption.
In
September
2006, the Securities and Exchange Commission issued Staff Accounting
Bulletin
No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements” (“SAB 108”), which provides
interpretive guidance on how the effects of the carryover or reversal
of prior
year misstatements should be considered in quantifying a current year
misstatement. SAB 108 is effective for fiscal years ending after November
15, 2006. The Company is currently evaluating the impact of adopting SAB
108 and cannot yet determine the impact of its adoption.
Critical
Accounting Policies and Estimates
The
Company
prepares its consolidated financial statements in conformity with
accounting
principles generally accepted in the United States of America.
The preparation
of these financial statements requires the Company to make estimates
and
assumptions that affect the reported amounts of assets and liabilities
and
disclosure of contingent assets and liabilities at the date of
the financial
statements, and the reported amounts of revenues and expenses during
the
reporting period (see Note 2 to the Consolidated Financial Statements
contained
in the 2006 Form 10-K). Actual results could differ from those
estimates.
Critical accounting policies are those that management believes
are both most
important to the portrayal of the Company's financial condition
and operating
results, and require management's most difficult, subjective or
complex
judgments, often as a result of the need to make estimates about
the effect of
matters that are inherently uncertain. The Company bases its estimates
on
historical experience and on various other assumptions that are
believed to be
reasonable under the circumstances, the results of which form the
basis for
making judgments about the carrying value of assets and liabilities
that are not
readily apparent from other sources. Judgments and uncertainties
affecting the
application of those policies may result in materially different
amounts being
reported under different conditions or using different assumptions.
The Company
considers the following policies to be most critical in understanding
the
judgments that are involved in preparing its consolidated financial
statements.
Impairment
of Long-Lived Assets and Provision for Asset Dispositions
Property
and Equipment
In
accordance
with SFAS No. 144 “Impairment or Disposal of Long-Lived Assets,” the Company
assesses the impairment of long-lived assets whenever events
or changes in
circumstances indicate that the carrying value may not be recoverable.
Recoverability of assets is measured by comparing the carrying
value to the
undiscounted future cash flows expected to be generated by
the asset. In
addition to the recoverability test, the Company considers
the likelihood of
possible outcomes existing at the balance sheet date, including
the assessment
of the likelihood of the future sale of the asset. If the asset
will be
classified as held and used, then the asset is written down
to its estimated
fair
value. If the asset will be classified as held for sale, then the asset is
written down to its estimated fair value, net of estimated costs of disposal.
Judgments and estimates made by the Company related to the expected useful
lives
of long-lived assets are affected by factors such as changes in economic
conditions and changes in operating performance. As the Company assesses the
ongoing expected cash flows and carrying amounts of its long-lived assets,
these
factors could cause the Company to realize a material impairment charge. From
time to time the Company has decided to exit from or dispose of certain
operating units. Typically, such decisions are made based on operating
performance or strategic considerations and must be made before the actual
costs
or proceeds of disposition are known, and management must make estimates of
these outcomes. Such outcomes could include the sale of a property or leasehold,
mitigating costs through a tenant or subtenant, or negotiating a buyout of
a
remaining lease term. In these instances management evaluates possible outcomes,
frequently using outside real estate and legal advice, and records in the
financial statements provisions for the effect of such outcomes. The accuracy
of
such provisions can vary materially from original estimates, and management
regularly monitors the adequacy of the provisions until final disposition
occurs.
Goodwill
In
addition,
at least annually the Company assesses the recoverability of goodwill.
The
impairment tests require the Company to estimate fair values of its related
reporting units by making assumptions regarding future cash flows and other
factors. This valuation may reflect, among other things, such external
factors
as capital market valuation for public companies comparable to the operating
unit. If these assumptions change in the future, the Company may be required
to
record material impairment charges for these assets. The Company performed
its
annual assessment in the quarter ending January 27, 2006, and concluded
at that
time that there was no indication of impairment. This annual assessment
is
performed in the second quarter of each year. Additionally, an assessment
is
performed between annual assessments if an event occurs or circumstances
change
that would more likely than not reduce the fair value of a reporting unit
below
its carrying amount. The Company’s goodwill relates to Logan’s and is presented
as current assets of discontinued operations in the accompanying condensed
consolidated balance sheet.
Insurance
Reserves
The
Company
self-insures a significant portion of its expected workers’ compensation,
general liability and health insurance claims. The Company has purchased
insurance for individual claims that exceed $500 and $1,000 for certain
coverages since 2004. Since 2004, the Company elected not to purchase
such
insurance for its primary group health program, but its offered benefits
are
limited to not more than $1,000 lifetime for any employee (including
dependents)
in the program. The Company records a liability for workers’ compensation and
general liability for all unresolved claims and for an estimate of
incurred but
not reported claims at the anticipated cost to the Company based upon
an
actuarially determined reserve as of the end of the Company’s third quarter and
adjusting it by the actuarially determined losses and actual claims
payments for
the subsequent quarters until the next annual, actuarial study of its
reserve
requirements. Those reserves and these losses are determined actuarially
from a
range of possible outcomes within which no given estimate is more likely
than
any other estimate. In accordance with SFAS No. 5, “Accounting for
Contingencies,” the Company records the losses at the low end of that range and
discounts them to present value using a risk-free interest rate based
on the
actuarially projected timing of payments. The Company also monitors
actual
claims development, including incurrence or settlement of individual
large
claims during the interim period between actuarial studies as another
means of
estimating the adequacy of its reserves. From time to time the Company
has
performed limited scope interim updates of its actuarial studies to
verify
and/or modify its reserves. The Company records a liability for its
group health
program for all unpaid claims based upon a loss development analysis
derived
from actual group health claims payment experience provided by the
Company’s
third-party administrator. The Company's accounting policies regarding
insurance
reserves include certain actuarial assumptions and management judgments
regarding economic conditions, the frequency and severity of claims
and claim
development history and settlement practices. Unanticipated changes in
these factors may produce materially different amounts of expense and
liabilities that would be reported under these insurance programs.
Inventory
Shrinkage
Cost
of goods
sold includes the cost of retail merchandise sold at the Cracker Barrel
stores
utilizing the retail inventory accounting method. It includes an estimate
of
shortages that are adjusted upon physical inventory counts in subsequent
periods. This estimate is consistent with Cracker Barrel's historical practice
in all periods shown. Actual shrinkage recorded upon physical inventory
counts
may produce materially different amounts of shrinkage than estimated by
the
Company for the first quarter ended on October 27, 2006.
Tax
Provision
The
Company
must make estimates of certain items that comprise its income tax provision.
These estimates include effective state and local income tax rates,
employer tax
credits for items such as FICA taxes paid on tip income, Work Opportunity
and
Welfare to Work, as well as estimates related to certain depreciation
and
capitalization policies. These estimates are made based on current
tax laws, the
best available information at the time of the provision and historical
experience. The Company files its income tax returns many months after
its
year-end. These returns are subject to audit by various federal and
state
governments years after the returns are filed and could be subject
to differing
interpretations of the tax laws. The Company then must assess the likelihood
of
successful legal proceedings or reach a settlement with the relevant
taxing
authority, either of which could result in material adjustments to
the Company’s
consolidated financial statements and its consolidated financial position
(see
Note 10 to the Consolidated Financial Statements contained in the 2006
Form
10-K).
Unredeemed
Gift Cards and Certificates
Unredeemed
gift cards and certificates represent a liability of the Company
related to
unearned income and are recorded at their expected redemption value.
No revenue
is recognized in connection with the point-of-sale transaction
when gift cards
or gift certificates are sold. For those states that exempt gift
cards and
certificates from their escheat laws, the Company makes estimates
of the
ultimate unredeemed (“breakage”) gift cards and certificates in the period of
the original sale and amortizes this breakage over the redemption
period that
other gift cards and certificates historically have been redeemed
by reducing
its liability and recording revenue accordingly. For those states
that do not
exempt gift cards and certificates from their escheat laws, the
Company records
breakage in the period that gift cards and certificates are remitted
to the
state and reduces its liability accordingly. Any
amounts remitted to states under escheat laws reduce the Company’s deferred
revenue liability and have no effect on revenue or expense while
any amounts
permitted by the state escheat laws to be retained by the Company
for
administrative costs are recorded as revenue. Changes in redemption
behavior or
management's judgments regarding redemption trends in the future
may produce
materially different amounts of deferred revenue to be reported.
If gift cards
and certificates that have been removed from the liability are
later redeemed,
the Company recognizes revenue and reduces the liability as it
would with any
redemption. Additionally, the initial reduction to the liability
would be
reversed to offset the redemption.
Share-Based
Compensation
In
accordance
with SFAS No. 123 (Revised 2004), “Share Based Payment” (“SFAS No. 123R”),
share-based compensation cost is measured at the grant date
based on the fair
value of the award and is recognized as expense over the requisite
service
period. The
Company’s policy is to recognize compensation cost for awards with
only service
conditions and a graded vesting schedule on a straight-line
basis over the
requisite service period for the entire award. Additionally,
the Company’s
policy is to issue new shares of common stock to satisfy stock
option exercises
or grants of nonvested shares. The fair value of each option award granted
subsequent to the adoption of SFAS No. 123R on July 29, 2005
has been estimated
on the date of grant using a binomial lattice-based option
valuation model. This
model incorporates the following ranges of assumptions:
· The
expected
volatility is a blend of implied volatility based on market-traded options
on
the Company’s stock and historical volatility of the Company’s
stock
over the
contractual life of the options.
· The
Company
uses historical data to estimate option exercise and employee termination
behavior within the valuation model; separate groups of
employees
that have
similar historical exercise behavior are considered separately for valuation
purposes. The expected life of options granted is
derived
from the
output of the option valuation model and represents the period of time
the
options are expected to be outstanding.
· The
risk-free interest rate is based on the U.S. Treasury yield curve in
effect at
the time of grant for periods within the contractual life of the option.
· The
expected
dividend yield is based on the Company’s current dividend yield as the best
estimate of projected dividend yield for periods within the
contractual
life of
the option.
The
expected
volatility, option exercise and termination assumptions involve management’s
best estimates at that time, all of which impact the fair value of
the option
calculated by the binomial lattice-based option valuation model and,
ultimately,
the expense that will be recognized over the life of the option.
Management updates the historical and implied components of the expected
volatility assumption quarterly. Management updates option exercise and
termination assumptions quarterly. The expected life is a by-product
of the
lattice model, and is updated when new grants are made.
SFAS
No. 123R
also requires that compensation expense be recognized for only the
portion of
options that are expected to vest. Therefore, an estimated forfeiture
rate
derived from historical employee termination behavior, grouped by
job
classification, is applied against share-based compensation expense.
The
forfeiture rate is applied on a straight-line basis over the service
(vesting)
period for each separately vesting portion of the award as if the
award was,
in-substance, multiple awards. Management updates the estimated forfeiture
rate
to actual on each of the vesting dates and adjusts compensation expense
accordingly, so that the amount of compensation cost recognized at
any date is
at least equal to the portion of the grant-date value of the award
that is
vested at that date.
Legal
Proceedings
The
Company
and its subsidiaries are parties to various legal and regulatory
proceedings and
claims incidental to its business. In the opinion of management,
however, based
upon information currently available, the ultimate liability
with respect to
these proceedings and claims will not materially affect the Company’s
consolidated results of operations or financial position. The
Company reviews outstanding claims and proceedings internally
and with external
counsel as necessary to assess probability of loss and for the
ability to
estimate loss. These assessments are re-evaluated each quarter
or as new
information becomes available to determine whether a reserve
should be
established or if any existing reserve should be adjusted. The
actual cost of
resolving a claim or proceeding ultimately may be substantially
different than
the amount of the recorded reserve. In addition, because it is not
permissible under GAAP to establish a litigation reserve until
the loss is both
probable and estimable, in some cases there may be insufficient
time to
establish a reserve prior to the actual incurrence of the loss
(upon verdict and
judgment at trial, for example, or in the case of a quickly negotiated
settlement).
The
Company
is a member of a class of a settled lawsuit against Visa U.S.A.
Inc. (“Visa”)
and MasterCard International Incorporated (“MasterCard”). The Visa
Check/Mastermoney Antitrust litigation settlement became final
on June 1, 2005.
The settlement provides $3,050,000 in compensatory relief by
Visa and MasterCard
to be funded over a fixed period of time to respective Settlement
Funds. The
Company expects to receive 1,551 ($850 after taxes and third
party collection
fees) as its share of the proceeds from the settlement for
continuing
operations. The Company believes this settlement represents
an indeterminate mix
of loss recovery and gain contingency and therefore believes
the application of
a gain contingency model is the appropriate model to use for
the entire amount
of expected proceeds. Therefore, the Company decided to exclude
the expected
settlement proceeds from recognition in the condensed consolidated
financial
statements for the quarter ended October 27,
2006.
At the time the settlement amount and timing is reasonably certain, the Company
will record such gain contingency. The Company expects this to occur in the
second quarter of 2007.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
Part
II, Item
7A of the 2006 Form 10-K is incorporated in this item of this Quarterly Report
by this reference. There have been no material changes in the quantitative
and
qualitative market risks of the Company since July 28, 2006.
Item
4. Controls and Procedures
The
Company’s
management, with the participation of its principal executive and financial
officers, including the Chief Executive Officer and the Chief Financial
Officer,
evaluated the effectiveness of the Company’s disclosure controls and procedures
(as defined in Rule 13a-15(e) and 15d-15(f) promulgated under the Securities
Exchange Act of 1934 (the “Exchange Act”). Based upon this evaluation, the Chief
Executive Officer and the Chief Financial Officer concluded that as of
October
27, 2006, the Company’s disclosure controls and procedures were effective for
the purposes set forth in the definition thereof in Exchange Act Rule
13a-15(e).
There
have
been no changes (including corrective actions with regard to significant
deficiencies and material weaknesses) during the quarter ended October
27, 2006
in the Company’s internal controls over financial reporting (as defined in
Exchange Act Rule 13a-15(f)) that have materially affected, or are
reasonably
likely to materially affect, the Company’s internal controls over financial
reporting.
PART
II - OTHER INFORMATION
Item
1A. Risk
Factors
There
have been no material
changes from our risk factors previously disclosed in “Item 1A. Risk Factors” of
the Company’s 2006 Form 10-K for
the
year ended July 28,
2006.
Item
4. Submission
of Matters to a Vote of Security Holders
|
(a)
|
Although
no items were submitted to a vote of security holders during
the quarter
ended October 27, 2006, the annual meeting of shareholders
(the “Annual
Meeting”) was held on November 28,
2006.
|
|
(b)
|
Proxies
for the Annual Meeting were solicited in accordance with
Regulation 14 of
the Exchange Act; there was no solicitation in opposition
to management’s
nominees and all of management’s nominees were elected. Each director is
elected to serve for a 1-year term and until his or her successor
is
elected and qualified.
|
(c) The
following sets forth the results of voting on each matter at the Annual
Meeting:
Proposal
1 - Election of
Directors.
|
FOR
|
WITHHOLD
AUTHORITY
|
|
|
|
James
D. Carreker
|
27,959,575
|
433,568
|
Robert
V. Dale
|
27,489,070
|
904,073
|
Richard
J. Dobkin
|
27,721,134
|
672,009
|
Robert
C. Hilton
|
27,493,548
|
899,595
|
Charles
E. Jones, Jr.
|
27,902,546
|
490,597
|
B.
F. “Jack” Lowery
|
27,301,546
|
1,091,597
|
Martha
M. Mitchell
|
26,590,682
|
1,802,461
|
Erik
Vonk
|
27,702,899
|
690,244
|
Andrea
M. Weiss
|
28,031,624
|
361,519
|
Jimmie
D. White
|
26,479,133
|
1,914,010
|
Michael
A. Woodhouse
|
27,492,563
|
900,580
|
Proposal
2 - To approve the
selection of Deloitte & Touche LLP as the Company’s independent
registered public accounting firm for
the 2007
fiscal year.
Votes cast for |
27,760,54
|
|
Votes cast against |
604,939
|
|
Votes cast to abstain |
27,660
|
|
See
Exhibit Index immediately following the signature page hereto.
SIGNATURES
Pursuant
to
the requirements of the Securities Exchange Act of 1934, the registrant has
duly
caused this report to be signed on its behalf by the undersigned thereunto
duly
authorized.
CBRL
GROUP, INC.
Date: December
6,
2006
By: /s/ Lawrence E. White
Lawrence E. White, Senior Vice President, Finance
and
Chief
Financial Officer
Date: December
6,
2006
By: /s/ Patrick A. Scruggs
Patrick A. Scruggs, Vice
President, Accounting and Tax
and
Chief
Accounting Officer
EXHIBIT
INDEX
Exhibit
No.
|
Description
|
10.1
|
CBRL
Group, Inc. FY 2007 Annual Bonus Plan (incorporated by reference
to
Exhibit 10.1 to the Company’s Current Report on Form 8-K dated July 27,
2006 and filed with the Commission on August 1, 2006)
|
|
|
10.2
|
CBRL
Group, Inc. FY 2007 Mid-Term Incentive and Retention Plan (incorporated
by
reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
dated July 27, 2006 and filed with the Commission on August 1,
2006)
|
|
|
10.3
|
CBRL
Group, Inc. Severance Policy (incorporated by reference to Exhibit
10.3 to
the Company’s Current Report on Form 8-K dated July 27, 2006 and filed
with the Commission on August 1, 2006)
|
|
|
10.4
|
Severance
Agreement with David L. Gilbert (incorporated by reference to Exhibit
10.1
to the Company’s Current Report on Form 8-K dated August 14, 2006 and
filed with the Commission on August 15, 2006)
|
|
|
10.5
|
Retention
Agreement for Douglas E. Barber (incorporated by reference to Exhibit
10.2
to the Company’s Current Report on Form 8-K dated August 14, 2006 and
filed with the Commission on August 15, 2006)
|
|
|
10.6
|
Retention
Agreement for Terry A. Maxwell (incorporated by reference to Exhibit
10.3
to the Company’s Current Report on Form 8-K dated August 14, 2006 and
filed with the Commission on August 15, 2006)
|
|
|
10.7
|
Retention
Agreement for Simon Turner (incorporated by reference to Exhibit
10.8 to
the Company’s Current Report on Form 8-K dated August 14, 2006 and filed
with the Commission on August 15, 2006)
|
|
|
10.8
|
Changes
to or adoption of Compensatory Plans and Arrangements described
in the
Company’s Current Report on Form 8-K dated and filed with the Commission
on October 18, 1006 and incorporated herein by this
reference
|
|
|
10.9
|
Stock
Purchase Agreement dated October 30, 2006 between CBRL Group, Inc.
and LRI
Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the
Company’s
Current Report on Form 8-K dated October 30, 2006 and filed with
the
Commission on November 3, 2006)
|
|
|
10.10
|
Agreement
for Purchase and Sale between Logan’s Roadhouse, Inc., as Seller and
Wachovia Development Corporation, or its assigns, as Buyer, dated
October
30, 3006 (incorporated by reference to Exhibit 2.2 to the Company’s
Current Report on Form 8-K dated October 30, 2006 and filed with
the
Commission on November 3, 2006)
|
|
|
10.11
|
Agreement
for Purchase and Sale between Logan’s Roadhouse, Inc., as Seller and
Trustreet Properties, Inc., or its assigns, as Buyer dated October
30,
2006*
|
|
|
10.12
|
Agreement
for Purchase and Sale between Logan’s Roadhouse, Inc., as Seller and
National Retail Properties, Inc., or its assigns, as Buyer, dated
October
30, 2006*
|
|
|
31
|
Rule
13a-14(a)/15d-14(a) Certifications
|
|
|
32
|
Section
1350 Certifications
|
*Document
not
filed because substantially identical to Exhibit 10.10.
28