Cracker Barrel 2014 Annual Report Download

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Table of contents

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    ... traded companies in North America. which we have outperformed this peer group. We are proud to be on this list, which we believe We grew our restaurant and retail comparable store further demonstrates that Cracker Barrel is a brand sales, operating margins, and earnings per not only our customers...

  • Page 4
    ... share grew 13.3% to $5.63, compared to $4.97 in fiscal 2013. During 2014, we directly increased shareholder return by growing our regular quarterly dividend by over 33% to $1.00, resulting in an annual yield of approximately 4.0%. the Cracker Barrel brand. This culture begins with our mission...

  • Page 5
    ... progress on all five priorities in 2014. In August, we rolled out a new category within the Cracker Barrel menu to meet our guests' desire for additional healthy menu items. The Wholesome Fixin's® category introduced nine complete meals for under 600 calories at breakfast, lunch or dinner. 3

  • Page 6
    ... to build upon the Wholesome Fixin's category through our limited time promotional offerings, and we plan to add these new entrees to the core menu category during fiscal year 2015. We look forward to the long-term growth of the Wholesome Fixin's® category on our menu. Through our promotional menu...

  • Page 7
    ...our billboards with new price-point messaging around our $5.99 and $7.69 value positions at both lunch and dinner. Our third strategic priority for the year was to drive retail sales with improved quality and breadth of the merchandise assortment. During the fiscal year, we increased the number of...

  • Page 8
    ...and training of several new technology-based programs. We trained all of our General Managers on the second phase of our labor management system and all of our Retail Managers on improved selling techniques to highlight our fun, unique, and nostalgic merchandise. total shareholder return. In 2014 we...

  • Page 9
    ... with a talented 600 restaurant index. Additionally, we successfully management team and engaged employees. We opened seven new Cracker Barrel Old Country Store® remain committed to delivering an outstanding locations during the year, bringing our total store dining and retail experience to our...

  • Page 10
    ...Coffee at Starbucks Corporation James W. Bradford Chairman of the Board; Retired; former Dean and Professor for the Practice of Management at Vanderbilt University's Owen Graduate School of Management Sandra B. Cochran President and CEO of Cracker Barrel Old Country Store, Inc. Glenn A. Davenport...

  • Page 11
    ... Data Shareholder Return Performance Graph Management's Discussion and Analysis of Financial Condition and Results of Operations Management's Report on Internal Control Over Financial Reporting Report Of Independent Registered Public Accounting Firm Report Of Independent Registered Public Accounting...

  • Page 12
    ...and you are encouraged to review that Annual Report on Form 10-K and all our SEC filings. Risks Related to Our Business • General economic, business and societal conditions as well as those specific to the restaurant or retail industries that are largely out of our control may adversely affect our...

  • Page 13
    ... open new stores that are profitable, our business could suffer. • Individual store locations are affected by local conditions that could change and adversely affect the carrying value of those locations. • Health concerns, government regulation relating to the consumption of food products and...

  • Page 14
    ... years ended August 1, 2014(a) August 2, 2013(b) August 3, 2012(c) July 29, 2011(d) July 30, 2010(e) SELECTED INCOME STATEMENT DATA: Total revenue Net income Net income per share: Basic Diluted Dividends declared per share Dividends paid per share AS PERCENT OF TOTAL REVENUE: $ 2,683,677 132...

  • Page 15
    ... for the Company. The plotted points represent the closing price on the last day of the fiscal year indicated and assume the reinvestment of dividends. The data set forth in the graph has been provided by FactSet Research Systems, Inc. In Dollars Cracker Barrel Old Country Store, Inc. S&P Small...

  • Page 16
    ... serve breakfast, lunch and dinner. The gift shop area offers a variety of decorative and functional items specializing in rocking chairs, holiday gifts, toys, apparel and foods. As of September 18, 2014, the Company operated 633 Cracker Barrel stores located in 42 states and had 8,473 shareholders...

  • Page 17
    ... and merchandise. To help build awareness and support of the Wholesome Fixin's roll-out, we promoted the menu category with new television and radio commercials which ran for five weeks during our first quarter of 2014. During the holiday season, we highlighted the Cracker Barrel brand and our value...

  • Page 18
    ... results over the past three years: Relationship to Total Revenue 2014 2013 2012* Total revenue Cost of goods sold Gross profit Labor and other related expenses Other store operating expenses Store operating income General and administrative Operating income Interest expense Income before income...

  • Page 19
    ... dividing net sales by operating weeks and include all stores. Cost of Goods Sold: Restaurant Retail Total Cost of Goods Sold $ 589,390 283,368 $ 872,758 $ 571,825 282,859 $ 854,684 $ 553,478 274,006 $ 827,484 Total revenue benefited from the opening of 7, 8 and 13 stores in 2014, 2013 and 2012...

  • Page 20
    ... in 2015 related to the plan year ending December 31, 2014. The decrease in store hourly labor costs as a percentage of total revenue from 2013 to 2014 resulted from menu price increases being higher than wage inflation and improved productivity. The year-to-year percentage change from 2012 to 2013...

  • Page 21
    ... media spending. We plan to spend approximately 2.5% of our total revenue on advertising in 2015 compared to 2.4% of total revenue in 2014. In the first quarter of 2014, we held a general manager conference which was attended by our store operations management team. The last such conference was...

  • Page 22
    ... higher retail inventories. Higher retail inventories at the end of 2014 resulted primarily from the early receipt of holiday and other merchandise and lower than anticipated sales in 2014. The decrease in net cash flow provided by operating activities from 2012 to 2013 reflected higher annual and...

  • Page 23
    ...637 $266,863 * Our standby letters of credit relate to securing reserved claims under workers' compensation insurance and reduce our borrowing availability under the Revolving Credit Facility. We prepaid our 2014 required principal payments under our term loan in 2013. As a result, we did not make...

  • Page 24
    ... companies in the restaurant industry. Retail inventories are generally financed through trade credit at terms of 60 days or less. These various trade terms are aided by rapid turnover of the restaurant inventory. Employees generally are paid on weekly or semi-monthly schedules in arrears for hours...

  • Page 25
    the current portion of our interest rate swaps partially offset by higher retail inventory and the timing of payments for accounts payable and estimated income taxes. The change in working capital at August 2, 2013 compared to August 3, 2012 primarily reflected a decrease in cash due to optional ...

  • Page 26
    ... our Consolidated Financial Statements: • Impairment of Long-Lived Assets and Provision for Asset Dispositions • Insurance Reserves • Retail Inventory Valuation • Tax Provision • Share-Based Compensation Management has reviewed these critical accounting estimates and related disclosures...

  • Page 27
    ... used in estimating future cash flows and fair values of long-lived assets, we may be exposed to losses that could be material. Insurance Reserves We self-insure a significant portion of our expected workers' compensation and general liability programs. We purchase insurance for individual workers...

  • Page 28
    ... employer tax credits for items such as FICA taxes paid on employee tip income, Work Opportunity and Welfare to Work credits, as well as estimates related to certain depreciation and capitalization policies. Our estimates are made based on current tax laws, the best available information at the time...

  • Page 29
    ... is equal to the market price of our stock at the date of grant. In addition to providing the requisite service, MSU Grants contain both a market condition, total shareholder return, and a performance condition. Total shareholder return is defined as the change in our stock price plus dividends paid...

  • Page 30
    ... average interest rate of 3.73%, which is the weighted average fixed rate of our interest rate swaps plus our current credit spread. See Note 6 to our Consolidated Financial Statements for further discussion of our interest rate swaps. Commodity Price Risk. Many of the food products that we purchase...

  • Page 31
    ...our website. They set the tone for our organization and include factors such as integrity and ethical values. Our internal control over financial reporting is supported by formal policies and procedures, which are reviewed, modified and improved as changes occur in business conditions and operations...

  • Page 32
    .... Report Of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Cracker Barrel Old Country Store, Inc. Lebanon, Tennessee We have audited the accompanying consolidated balance sheets of Cracker Barrel Old Country Store, Inc. and its subsidiaries (the "Company...

  • Page 33
    ... Report Of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Cracker Barrel Old Country Store, Inc. Lebanon, Tennessee We have audited the internal control over financial reporting of Cracker Barrel Old Country Store, Inc. and its subsidiaries (the "Company...

  • Page 34
    ... share data) August 1, 2014 August 2, 2013 ASSETS Current Assets: Cash and cash equivalents Property held for sale Accounts receivable Income taxes receivable Inventories Prepaid expenses and other current assets Deferred income taxes Total current assets Property and Equipment: Land Buildings...

  • Page 35
    ...(In thousands except share data) August 1, 2014 Fiscal years ended August 2, 2013 August 3, 2012 Total revenue Cost of goods sold Gross profit Labor and other related expenses Other store operating expenses Store operating income General and administrative expenses Operating income Interest expense...

  • Page 36
    ... taxes 897,588 Tax benefit realized upon exercise of share-based compensation awards - Purchases and retirement of common stock (265,538) Balances at August 3, 2012 23,473,024 Comprehensive Income: Net income - Other comprehensive income, net of tax - Total comprehensive income - Cash dividends...

  • Page 37
    ... Purchases and retirement of common stock Deferred financing costs Dividends on common stock Excess tax benefit from share-based compensation Net cash used in financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash...

  • Page 38
    ...and development in the United States ("U.S.") of the Cracker Barrel Old Country Store® ("Cracker Barrel") concept. Approximately 70% to 75% of retail inventories are valued using RIM and the remaining retail inventories are valued using an average cost method. See Note 4 for additional information...

  • Page 39
    ... to its outstanding borrowings, which bear interest at the Company's election either at the prime rate or LIBOR plus a percentage point spread based on certain specified financial ratios under its credit facility (see Note 5). The Company's policy has been to manage interest cost using a mix of...

  • Page 40
    ... recorded as revenue. Insurance - The Company self-insures a significant portion The Company's group health plans combine the use of self-insured and fully-insured programs. Benefits for any individual (employee or dependents) in the self-insured program are limited. The Company records a liability...

  • Page 41
    ..., the Company's policy is to issue shares of common stock to satisfy exercises of share-based compensation awards. Income taxes - The Company's provision for income taxes includes employer tax credits for FICA taxes paid on employee tip income and other employer tax credits are accounted for by...

  • Page 42
    ... weighted average number of common and common equivalent shares outstanding during the year. Common equivalent shares related to stock options, nonvested stock awards and MSU Grants issued by the Company are calculated using the treasury stock method. Outstanding employee and director stock options...

  • Page 43
    ... 3 FAIR VALUE MEASUREMENTS Fair value for certain of the Company's assets and liabilities is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between $11,644 $11,644 *Consists of money market fund investments. **Represents plan...

  • Page 44
    ... availability under the Revolving Credit Facility. In accordance with the Credit Facility, outstanding borrowings bear interest, at the Company's election, either at LIBOR or prime plus a percentage point spread based on certain specified financial ratios. At both August 1, 2014 and August 2, 2013...

  • Page 45
    ... stock if the aggregate amount of dividends paid and shares repurchased in any fiscal year is less than the sum of (1) 20% of Consolidated EBITDA from continuing operations (as defined in the Credit Facility) (the "20% limitation") and (2) provided the Company's consolidated total leverage ratio...

  • Page 46
    ... 2013 2012 August 1, August 2, August 1, August 2, August 1, 2014 2013 2014 2013 2014 Interest rate swaps Cash flow hedges: Interest rate swaps $3,058 $23,620 $17,223 $240 $1,159 $ - $(276) $240 $883 The following table summarizes the changes in AOCL, net of tax, related to the Company...

  • Page 47
    ... shared and are indistinguishable in many respects. Accordingly, the Company manages its business on the basis of one reportable operating segment. All of the Company's operations are located within the United States. Total revenue was comprised of the following at: 2014 2013 2012 Restaurant Retail...

  • Page 48
    ... plan at August 1, 2014: 2010 Omnibus Plan Amended and Restated Stock Option Plan 2002 Omnibus Incentive Compensation Plan Total 254,188 41,184 49,948 345,320 free interest rate. Other nonvested stock awards accrue dividends and their fair value is equal to the market price of the Company's stock...

  • Page 49
    ... for each annual plan is based on total shareholder return, which is defined as the change in the Company's stock price plus dividends paid during the performance period. The number of shares awarded at the end of the performance period will vary in direct proportion to a target number of shares set...

  • Page 50
    ... Transfer & Trust Company, LLC, as rights agent (the "Rights Agreement"). Pursuant to the terms of the Rights Agreement, the Board of Directors declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of common stock, par value $0.01 per share. The dividend...

  • Page 51
    ... shares of the Company's common stock (or, in certain circumstances, Preferred Shares) having a market value equal to twice the Right's then-current exercise price. In addition, if the Company is later acquired in a merger or similar transaction after the Distribution Date, each Right will generally...

  • Page 52
    ... Person. Anti-Dilution Provisions The Board of Directors may adjust the purchase price of the Preferred Shares, the number of Preferred Shares issuable and the number of outstanding Rights to prevent dilution that may occur from a stock dividend, a stock split, a reclassification of the Preferred...

  • Page 53
    ... the Company's total gross liability for uncertain tax positions exclusive of interest and penalties: August 1, 2014 August 2, 2013 August 3, 2012 Provision computed at federal statutory income tax rate State and local income taxes, net of federal benefit Employer tax credits for FICA taxes paid on...

  • Page 54
    ... shares outstanding 23,966,015 23,708,875 23,067,566 239,446 340,560 Company had $20,637 of standby letters of credit related to securing reserved claims under workers' compensation insurance. All standby letters of credit are renewable annually and reduce the Company's borrowing availability...

  • Page 55
    16 QUARTERLY FINANCIAL DATA (UNAUDITED) Quarterly financial data for 2014 and 2013 are summarized as follows: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2014 Total revenue $649,141 $698,491 $643,298 $692,747 Gross profit 443,212 455,476 441,791 470,440 Income before income taxes 39,830 54,235 ...

  • Page 56
    ..., Restaurant and Retail Operations Support Brenda L. Cool Regional Vice President, Retail Operations P. Doug Couvillion Vice President, Corporate Controller and Principal Accounting Officer Leon De Wet Vice President, Information Services and CIO Robert F. Doyle Vice President, Product Development...

  • Page 57
    ... Report are available for a reasonable fee. Annual Meeting The annual meeting of shareholders will be held at 10:00 a.m. Thursday, November 13, 2014, at the Cracker Barrel Old Country Store home office on Hartmann Drive, Lebanon, Tennessee. Dividend Reinvestment and Direct Stock Purchase Plan...

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