s we look back on 2014, we are pleased with
our accomplishments. We continued to focus
for many perception attributes including Value,
on our long-term strategy to Enhance the
Food Quality, Menu Variety, and Friendly Service.
Core business, Expand the Footprint of our stores,
and Extend the Cracker Barrel® brand. In every
quarter of the year, we outperformed the Knapp-TrackTM
Casual Dining Index for sales and traffic. This
achievement marks eleven consecutive quarters in
which we have outperformed this peer group.
We grew our restaurant and retail comparable store
sales, operating margins, and earnings per
diluted share despite continued headwinds within
the restaurant industry. In addition, we once
again celebrated record sales on Thanksgiving Day.
In addition, we were named to Forbes Magazine’s list
of America’s 100 Most Trustworthy Companies.
This list, developed by GMI Ratings, evaluated the
accounting and governance behaviors of more than
8,000 publicly traded companies in North America.
We are proud to be on this list, which we believe
further demonstrates that Cracker Barrel is a brand
not only our customers can trust, but also a solid
long-term investment our shareholders can trust.
Financial Perform ance
Our Operations team consistently executed our
Our success in the 2014 fiscal year was achieved in
mission of Pleasing People® and we saw year-over-
the face of a challenging economic environment for
year increases in several of our guest loyalty
our consumer, severe winter weather, and signifi-
metrics. Consumer ratings for the 2014 fiscal year
cant promotional activity by many of our competitors.
indicate that Cracker Barrel received the highest
We grew our revenues by 1.5% to $2.7 billion, with
overall rating among 32 large restaurant chains
comparable store restaurant sales increasing
analyzed by Technomic Inc., a well-recognized
0.7% and comparable store retail sales increasing
industry research firm. Moreover, we led in ratings
0.4%. Adjusted for proxy contest and severance
1
expenses, we improved our operating margins to 7.9%
the Cracker Barrel brand. This culture begins with
from 7.8% in the prior fiscal year1. This improvement
our mission of Pleasing People. The Pleasing People
was the result of the many cost savings initiatives that
mission is demonstrated by our employees and is
we implemented as part of our strategic plan. Our
evidenced in our guests’ and employees’ survey
adjusted earnings per diluted share grew 13.3% to
responses about their experience at Cracker Barrel.
$5.63, compared to $4.97 in fiscal 2013. During 2014,
Overall guest and employee satisfaction remained
we directly increased shareholder return by growing
high during fiscal 2014. Guests’ perceptions of overall
our regular quarterly dividend by over 33% to $1.00,
value once again showed a year-over-year increase.
resulting in an annual yield of approximately 4.0%.
Among our front-line store employees, employee
Pleasing Peo ple ®
We believe that Cracker Barrel Old Country Store®
morale and sentiment toward the company remained
high. More than 80% of our hourly and management
is one of the most unique and differentiated brands
1 Operating income determined in accordance with GAAP
in full-service dining. This belief is supported by
Technomic Inc. research regarding customer ratings
of brand uniqueness. We also believe that our
organizational culture is uniquely capable of delivering
was $208.4 million, or 7.8% of total revenue, for 2014 and
$201.5 million, or 7.6% of total revenue, for 2013. Diluted
earnings per share in accordance with GAAP were $5.51 for
2014 and $4.90 for 2013. The GAAP amount for 2014
includes proxy contests expenses and their related tax effects.
The GAAP amount for 2013 includes proxy contest
expenses, other items and their related tax effects. Please
see selected financial data for further explanation.
Cracker Barrel Old Country Store, Inc.
Earnings Per Diluted Share
Cracker Barrel Old Country Store, Inc.
From Continuing Operations
Earnings Per Diluted Share
Cracker Barrel Old Country Store, Inc.
Declared Dividends per Share
Cracker Barrel Old Country Store, Inc.
Since FY 2010
Declared Dividends Per Share Since FY 2010
$6.00
$5.00
$4.00
$3.00
$2.00
$ 1.00
$0
2010
2011(a)
2012(b)
Fiscal Year
2013(c)
2014(d)
(a)
(b)
(c)
(d)
Fiscal 2011 adjusted for charges related to an impairment, severance and the proxy contest.
Fiscal 2012 adjusted for charges related to severance and the proxy contest, and on a 52-week basis.
Fiscal 2013 adjusted for charges related to severance, the proxy contest, and retroactive
reinstatement of the work opportunities tax credit.
Fiscal 2014 adjusted for charges related to proxy contests.
e
r
a
h
S
r
e
P
s
d
n
e
d
i
v
i
D
d
e
r
a
l
c
e
D
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$ .50
$0
2010
2011
2012
Fiscal Year
2013
2014
employees responded to our annual employee
engagement survey that they feel proud to work at
Cracker Barrel, while over 90% responded that they
would recommend Cracker Barrel as a great place to
eat and shop. In addition, our management retention
rates have remained high.
S t r a t e gic Prio rit ies
At the beginning of 2014, we announced fi ve strategic
business priorities for the fi scal year: fi rst, focusing on
better-for-you additions and reinforcing everyday value
on our menu; second, continuing to message our
“Handcrafted by Cracker Barrel” theme in support of the
brand, menu, and merchandise; third, driving retail
sales with improved quality and breadth of our
merchandise assortment; fourth, improving operations
and margins by applying technology and process
improvements; and fi fth, focusing on enhancing long-
term total shareholder returns. We believe that we
made signifi cant progress on all fi ve 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
Our guests responded positively to the new menu
Country Dinner Plates at a $7.69 price point, further
category. We saw improvements in survey scores
enhancing the value perception of our menu.
measuring guests’ attitudes about the brand
including “offers appealing healthy options,” “uses
fresh ingredients,” and “is a restaurant I can trust.”
Our marketing focus at the beginning of the fiscal
year was to build awareness around the introduction
of the Wholesome Fixin’s menu category. We
Throughout the year, we continued to build upon the
promoted the category with new television and radio
Wholesome Fixin’s category through our limited
commercials which ran for five weeks during our
time promotional offerings, and we plan to add these
first fiscal quarter. During the holiday season we high-
new entrees to the core menu category during fiscal
lighted the Cracker Barrel brand and our value
year 2015. We look forward to the long-term growth
message through national cable television advertising
of the Wholesome Fixin’s® category on our menu.
for an additional five weeks. In support of the
Through our promotional menu activity, we reinforced
summer travel season, we again featured our Country
the affordability of our menu by featuring two
Dinner Plate value messaging during a national
new limited time Weekday Lunch Special entrees at
television commercial campaign.
$5.99. Additionally, we continued to highlight our
Additionally, we continued to promote the
Cracker Barrel brand through our more than 1,600
billboards. During the fourth quarter, we refreshed
4
approximately one-fourth of our billboards with
Our third strategic priority for the year was to drive
new price-point messaging around our $5.99 and
retail sales with improved quality and breadth of
$7.69 value positions at both lunch and dinner.
the merchandise assortment. During the fi scal year,
As part of an ongoing sponsorship of military
families, we held an online nationwide charity
auction. Not only did the online auction generate
proceeds to support our returning service men,
women, and their families, it also afforded us the
opportunity to increase the level of digital
engagement and connection with our guests.
we increased the number of merchandise themes
that we feature each year and shortened their
time on the fl oor in order to keep the merchandise
assortment fresh and new. We introduced some
eye-catching color themes such as Passion for Purple
and Red Hot, with bright décor, home goods,
and women’s clothing, which resonated with our
guests. Additionally, our merchandising team
To enhance our digital market presence during the
broadened the appeal of the brand by sourcing
summer travel season, we followed “The Four-
products that have seasonal appeal and reach
Star Salute: Cracker Barrel’s Military Family Online
across generations and genders.
Charity Auction” with our “Summer Stories
Sweepstakes.” The digital sweepstakes allowed
our guests to share summer pictures with
us and other guests thus generating a two-way
personalized online experience between our
guests and our brand. We were very pleased
with both of these digital media events
and the brand impressions that they generated.
Our women’s apparel and accessories continued
process. These technology and process enhance-
to be one of our strongest selling categories. To build
ments, as well as others that are not listed,
upon the strength of this category, we successfully
resulted in increased productivity and throughput,
introduced women’s footwear providing depth to the
ultimately contributing in part to our increase
assortment. Another leading sales category in
in operating margin.
2014 was Décor. Our guests responded especially
well to our sentiment and inspirational décor items.
Our fi nal business priority has been, and will
continue to be, a continued focus on maximizing
We continue to invest in our employees and their
total shareholder return. In 2014 we targeted
career development. At the onset of our fi scal year,
increasing the quarterly dividend, expanding the
we held a very successful General Manager’s
footprint through new unit growth, and extending
conference. This conference provided a platform
the brand outside of the four walls. In the third quarter,
for the introduction and training of several new
we declared a 33% dividend increase to $1.00,
technology-based programs. We trained all of our
which was paid in the first quarter of 2015. This
General Managers on the second phase of our
marks a fourth increase in the quarterly dividend
labor management system and all of our Retail
Managers on improved selling techniques to high-
light our fun, unique, and nostalgic merchandise.
Other successful process and technology improve-
ments during the year included a new back of house
system that supports superior food quality and
enhances the employee experience and an inventory
management technology system that can be built
upon to automate the inventory and replenishment
NOW available at
your supermarket
premium
bacon
spiral sliced
ham
6
cboldcountrystore.com
since November 2011, generating a total increase
R e f l e c t i o n a n d O u t l o o k
of 400% over that time period.
While 2014 was a challenging year within the
We delivered “total shareholder return” or TSR,
which we believe is an appropriate measure of value
returned on the shareholders’ investment, of
approximately 133%, compared to 77% for the S&P
600 restaurant index. Additionally, we successfully
opened seven new Cracker Barrel Old Country Store®
locations during the year, bringing our total store
count at the end of the fi scal year to 631.
restaurant industry, I am very proud of our leader-
ship teams and our employees who consistently
delivered on our mission of Pleasing People and
executed our business priorities. As we look to
2015, we are well-positioned with a talented
management team and engaged employees. We
remain committed to delivering an outstanding
dining and retail experience to our guests, providing
a positive employee experience, and building
In October, we shipped our fi rst licensed products
on our accomplishments to provide value to our
with John Morrell Food Group under our new
shareholders.
mark, CB Old Country StoreTM. Our licensed products
have been well received at grocery stores and
at the close of the fi scal year we had 19 products
available through our licensing program.
Sincerely,
Sandra B. Cochran
President and Chief Executive Offi cer
7
C R AC KE R BAR RE L OLD COUNTRY STO RE, INC.
Directors
Thomas H. Barr
Interim CEO and Global President of
Hailo Network, USA; former Vice President,
Global 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
President of G. A. Food Service, Inc.;
former Chairman and CEO of Morrison
Management Specialists
Richard J. Dobkin
Retired; former Managing Partner of the
Tampa, FL office of Ernst & Young, LLP
Norman E. Johnson
Retired; former Executive Chairman
and CEO of CLARCOR, Inc.
William W. McCarten
Chairman of the board of directors of
DiamondRock Hospitality Company
Coleman H. Peterson
President and CEO of Hollis Enterprises,
LLC; former Chief People Officer of
Wal-Mart Stores, Inc.
Andrea M. Weiss
President and CEO of Retail Consulting, Inc.;
former President of dELiA*s Corp.
8
2014
Financial Table of Contents
10 Forward-Looking Statements – Risk Factors
12 Selected Financial Data
13 Shareholder Return Performance Graph
14 Management’s Discussion and Analysis of
Financial Condition and Results of Operations
29 Management’s Report on Internal Control
Over Financial Reporting
30 Report Of Independent Registered
Public Accounting Firm
31 Report Of Independent Registered
Public Accounting Firm
32 Consolidated Balance Sheets
33 Consolidated Statements of Income
and Consolidated Statements of
Comprehensive Income
34 Consolidated Statements of Changes
in Shareholders’ Equity
35 Consolidated Statements of Cash Flows
36 Notes To Consolidated Financial Statements
54 Corporate Officers
55 Corporate Information
CB Financials_8-14_03.indd 1
9/24/14 6:06 PM
Forward-Looking Statements – Risk Factors
Except for specific historical information, many of the matters
discussed in this Annual Report to Shareholders may express or
imply projections of items such as revenues or expenditures,
estimated capital expenditures, compliance with debt
covenants, plans and objectives for future operations, inventory
shrinkage, 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 that Cracker Barrel Old Country Store, Inc.
(the “Company”) expects will or may occur in the future, are
forward-looking statements that, by their nature, involve risks,
uncertainties and other factors which may cause our actual
results and performance 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,”
“opportunity,” “future,” “plans,” “goals,” “objectives,” “expecta-
tions,” “near-term,” “long-term,” “projection,” “may,” “will,”
“would,” “could,” “expect,” “intend,” “estimate,” “anticipate,”
“believe,” “potential,” “regular,” “should,” “projects,” “forecasts”
or “continue” (or the negative or other derivatives of each of
these terms) or similar terminology. We believe the assumptions
underlying any 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 summarized below, as well as other factors discussed
throughout this document, including, without limitation,
the factors described under “Critical Accounting Estimates”
on pages 24 to 27 of this Annual Report or, from time
to time, in the Company’s filings with the Securities and
Exchange Commission (“SEC”), press releases and other
communications.
10
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. Except as
may be required by law, 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 future public disclosures that the
Company may make on related subjects in its documents filed
or furnished to the SEC or in its other public disclosures.
Set forth below is a summary of the material risks associated
with our business and, therefore, any investment in our
securities. Our 2014 Annual Report on Form 10-K, filed with
the SEC on September 25, 2014 and available at sec.gov,
as well as our website, crackerbarrel.com, contains a more
comprehensive discussion of these risks, 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 business, financial condition and results of operations.
• We face intense competition, and if we are unable to
continue to compete effectively, our business, financial
condition and results of operations would be adversely
affected.
• The price and availability of food, ingredients, retail
merchandise and utilities used by our stores could adversely
affect our revenues and results of operations.
• Our plans depend significantly on our strategic priorities
and business initiatives designed to enhance our menu and
retail offerings, support our brand, improve operating
margins and improve the efficiencies and effectiveness of
our operations. Failure to achieve or sustain these plans
could adversely affect our results of operations.
• We are dependent upon attracting and retaining qualified
employees while also controlling labor costs.
CB Financials_8-14_03.indd 10
9/24/14 6:06 PM
• Our risks are heightened because of our single retail
• Health concerns, government regulation relating to the
distribution facility and our potential inability or failure to
execute on a comprehensive business continuity plan
following a major national disaster at or near our corporate
facility could adversely affect our business.
• Our reliance on certain significant vendors, particularly
for foreign-sourced retail products, subjects us to numerous
risks, including possible interruptions in supply, which
could adversely affect our business.
consumption of food products and widespread infectious
diseases could affect consumer preferences and could
negatively affect our results of operations.
• Failure to maximize or to successfully assert our intellectual
property rights could adversely affect our business and
results of operations.
• Litigation may adversely affect our business, financial
condition and results of operations.
• Our ability to manage our retail inventory levels and changes
• Unfavorable publicity could harm our business. In addition,
in merchandise mix may adversely affect our business.
• Our capital structure contains substantial indebtedness,
which may decrease our flexibility, increase our borrowing
costs and adversely affect our liquidity. In addition, we
cannot provide any guaranty of future cash dividend
payments or that we will be able to actively repurchase our
common stock pursuant to a share repurchase program.
• Our advertising is heavily dependent on billboards, which
are highly regulated; our evolving marketing strategy
involves increased advertising and marketing costs that
could adversely affect our results of operations.
• A material disruption in our information technology,
network infrastructure and telecommunication systems
could adversely affect our business and results of operations.
• A privacy breach could adversely affect our business.
• We outsource certain business processes to third-party
vendors that subject us to risks, including disruptions
in business and increased costs; our use of third party
technologies has increased and if we are unable to maintain
our rights to these technologies our business may be harmed.
• Our business is somewhat seasonal and also can be affected
by extreme weather conditions and natural disasters.
• If we fail to execute our business strategy, which includes
our ability to find new store locations and 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.
our failure to recognize, respond to and effectively
manage the impact of social media could materially impact
our business.
• The loss of key executives or difficulties in recruiting and
retaining qualified personnel could jeopardize our future
growth and success.
• We are subject to a number of risks relating to federal,
state and local regulation of our business including the areas
of minimum wage increases, health care reform and
environmental matters, and an insufficient or ineffective
response to government regulation may increase our
costs and decrease our profit margins.
• Our current insurance programs may expose us to unexpected
costs, which could have a material adverse effect on our
financial condition and results of operations.
• Our reported results can be affected adversely and
unexpectedly by the implementation of new, or changes in
the interpretation of existing, accounting principles or
financial reporting requirements.
• Failure of our internal control over financial reporting could
adversely affect our business and financial results.
• Our annual and quarterly operating results may fluctuate
significantly and could fall below the expectations of
investors and securities analysts due to a number of factors,
some of which are beyond our control, resulting either in
volatility or a decline in the price of our securities.
• Our business could be negatively affected as a result of
actions of activist shareholders.
• Provisions in our charter, Tennessee law and our share-
holder rights plan may discourage potential acquirers of
our company.
CB Financials_8-14_03.indd 11
11
9/24/14 6:06 PM
CR ACKER BA R R EL OLD COUN TRY STOR E, I NC.
Selected Financial Data
August 1, 2014(a)
(Dollars in thousands except percentages and share data)
For each of the fiscal years ended
August 3, 2012(c)
August 2, 2013(b)
July 29, 2011(d)
July 30, 2010(e)
$ 2,683,677
132,128
$ 2,644,630
117,265
$ 2,580,195
103,081
$ 2,434,435
85,208
$ 2,404,515
85,258
5.55
5.51
3.25
3.00
32.5%
36.0
18.9
12.6
4.8
—
7.8
7.1
4.95
4.90
2.25
1.90
32.3%
36.5
18.2
13.0
5.4
—
7.6
6.3
4.47
4.40
1.15
0.97
32.1%
36.8
18.0
13.1
5.7
—
7.4
5.7
3.70
3.61
0.88
0.86
31.7%
37.1
18.6
12.6
5.7
—
6.9
4.8
3.71
3.62
0.80
0.80
31.0%
37.8
18.2
13.0
6.1
0.1
6.8
4.8
$
(14,789)
1,432,248
4,704
375,000
3,239
123,221
528,641
$
(13,873)
1,388,306
—
400,000
11,644
120,073
484,026
$
18,249
1,418,992
20,215
525,036
14,166
114,897
382,675
$
(21,188)
1,310,884
—
550,143
51,604
105,661
268,034
$
(73,289)
1,292,067
—
573,744
66,281
93,822
191,617
$
90,564
12,473
$
73,961
3,570
$
80,170
14,923
$
77,686
33,563
$
69,891
62,487
23,821,227
631
23,795,327
624
23,473,024
616
22,840,974
603
22,732,781
593
$
3,415
873
$
3,390
869
$
$
3,369
863
3,234
837
$
3,226
832
0.7%
0.4
609
3.1%
2.9
596
2.2%
1.6
591
0.2%
0.7
583
0.8%
(0.9)
569
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:
Cost of goods sold
Labor and related expenses
Other store operating expenses
Store operating income
General and administrative expenses
Impairment and store dispositions, net
Operating income
Income before income taxes
SELECTED BALANCE SHEET DATA:
Working capital (deficit)
Total assets
Current interest rate swap liability
Long-term debt
Long-term interest rate swap liability
Other long-term obligations
Shareholders’ equity
SELECTED CASH FLOW DATA:
Purchase of property and equipment, net
Share repurchases
SELECTED OTHER DATA:
Common shares outstanding at end of year
Stores open at end of year
AVERAGE UNIT VOLUMES (f):
Restaurant
Retail
COMPARABLE STORE SALES (g):
Period to period increase (decrease)
in comparable store sales:
Restaurant
Retail
Memo: Number of stores in comparable base
12
CB Financials_8-14_03.indd 12
9/24/14 6:06 PM
(a) We incurred $4,313 in costs related to the November 2013 proxy contest and April 2014 special shareholders’ meeting, which are included in general and
administrative expenses.
(b) We incurred $4,111 in costs related to the November 2012 proxy contest, which are included in general and administrative expenses.
(c) Fiscal 2012 consisted of 53 weeks while all other periods presented consisted of 52 weeks. The estimated impact of the additional week was to increase
consolidated fiscal 2012 results as follows: total revenue, $51,059; store operating income, 0.2% of total revenue; operating income, 0.2% of total revenue; net
income, 0.2% of total revenue; and diluted net income per share, $0.27. As part of our restructuring of our field organization in April 2012, we incurred
severance charges of $1,660, which are included in general and administrative expenses. We also incurred $5,203 in costs related to the December 2011
proxy contest, which are also included in general and administrative expenses.
(d) Includes impairment charges of $3,219 before taxes and pre-tax gains on store dispositions of $4,109. Our debt refinancing in the fourth quarter of fiscal 2011
resulted in additional interest expense of $5,136 related to transaction fees and the write-off of deferred financing costs. During the fourth quarter of fiscal 2011,
as part of our cost reduction and organization streamlining initiative, we incurred severance charges of $1,768, which are included in general and administrative
expenses. We also incurred $404 in costs related to the December 2011 proxy contest, which are also included in general and administrative expenses.
(e) Includes impairment charges for two stores of $2,672 before taxes.
(f) Average unit volumes include sales of all stores. Fiscal 2012 includes a 53rd week while all other periods presented consist of 52 weeks.
(g) Comparable store sales consist of sales of stores open at least six full quarters at the beginning of the year; and are measured on comparable calendar weeks.
MARKET PRICE AND DIVIDEND INFORMATION
The following table indicates the high and low sales prices of our common stock, as reported by Nasdaq, and dividends declared
and paid for the quarters indicated.
First
Second
Third
Fourth
s
r
a
l
l
o
D
n
I
$500
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
Fiscal Year 2014
Fiscal Year 2013
Prices
High
Low
Dividends
Declared
Dividends
Paid
Prices
High
Low
Dividends
Declared
Dividends
Paid
$ 111.70
118.63
103.30
103.32
$ 96.32
96.41
93.59
92.84
$ 0.75
0.75
1.75
—
$ 0.75
0.75
0.75
0.75
$ 69.30
65.94
84.41
102.95
$ 62.06
60.07
64.53
83.02
$ 0.50
0.50
0.50
0.75
$ 0.40
0.50
0.50
0.50
Cracker Barrel Old Country Store, Inc.
CR ACKER BA R R EL OLD COU N TRY STO R E, I N C.
Shareholder Return Performance Graph
The graph (left) shows the changes over the
past six-year period in the value of $100
invested in Cracker Barrel Old Country Store,
Inc. Common Stock, the Standard & Poor’s
Small Cap Index, and the Standard & Poor’s
600 Restaurant Index which we believe is an
adequate peer composite 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.
2008
2009
2010
2011
2012
2013
2014
Cracker Barrel Old Country Store, Inc.
S&P Small Cap
S&P 600 Restaurant
CB Financials_8-14_03.indd 13
13
9/24/14 6:06 PM
CR ACKER BA R R EL OLD COUN TRY STOR E, I NC.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of
Financial Condition and Results of Operations (“MD&A”)
provides information which management believes is relevant
to an assessment and understanding of our consolidated
results of operations and financial condition. MD&A should
be read in conjunction with the Consolidated Financial
Statements and notes thereto. Readers also should carefully
review the information presented under the section entitled
“Risk Factors” and other cautionary statements in this
report. All dollar amounts (other than per share amounts)
reported or discussed in this MD&A are shown in
thousands. References in MD&A to a year or quarter are to
our fiscal year or quarter unless expressly noted or the context
clearly indicates otherwise.
This overview summarizes the MD&A, which includes the
following sections:
• Executive Overview – a general description of our business,
the restaurant and retail industries, our key performance
indicators and the Company’s performance in 2014.
• Results of Operations – an analysis of our consolidated
statements of income for the three years presented in our
Consolidated Financial Statements.
• Liquidity and Capital Resources – an analysis of our primary
sources of liquidity, capital expenditures and material
commitments.
• Critical Accounting Estimates – a discussion of accounting
policies that require critical judgments and estimates.
EXECUTIVE OVERVIEW
Cracker Barrel Old Country Store, Inc. (the “Company,” “our”
or “we”) is a publicly traded (Nasdaq: CBRL) company
that, through its operations and those of certain subsidiaries,
is engaged in the operation and development of the
Cracker Barrel Old Country Store® (“Cracker Barrel”)
concept. Each Cracker Barrel store consists of a restaurant
with a gift shop. The restaurants 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 of record.
14
Restaurant and Retail Industries
Our stores operate in both the restaurant and retail industries
in the United States. The restaurant and retail industries
are highly competitive with respect to quality, variety and price
of the food products and retail merchandise offered. We
compete with a significant number of national and regional
restaurant and retail chains. Additionally, there are many
segments within the restaurant industry, such as family dining,
casual dining, fast casual and quick service, which often
overlap and provide competition for widely diverse restaurant
concepts. We operate in the full-service segment of the
restaurant industry. Competition also exists in securing prime
real estate locations for new stores, in hiring qualified
employees, in advertising, in the attractiveness of facilities and
with competitors having similar menu offerings or conve-
nience. The restaurant and retail industries are often affected
by changes in consumer taste and preference; national,
regional or local economic conditions; demographic trends;
traffic patterns; the type, number and location of competing
restaurants and retailers; and consumers’ discretionary
purchasing power.
Additionally, economic, seasonal and weather conditions
affect the restaurant and retail industries. Adverse economic
conditions and unemployment rates affect consumer discre-
tionary income and dining and shopping habits. Historically,
interstate tourist traffic and the propensity to dine out
have been much higher during the summer months, thereby
contributing to higher profits in our fourth quarter. Retail
sales, which are made substantially to our restaurant guests,
are strongest in the second quarter, which includes the
Christmas holiday shopping season. Severe weather also
affects restaurant and retail sales adversely from time to time.
Key Performance Indicators
Management uses a number of key performance measures to
evaluate our operational and financial performance, including
the following:
Comparable store restaurant sales and restaurant guest traffic
consist of sales and calculated number of guests, respectively,
CB Financials_8-14_03.indd 14
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of stores open at least six full quarters at the beginning of the
year and are measured on comparable calendar weeks. This
measure excludes the impact of new store openings.
Percentage of retail sales to total sales indicates the relative
proportion of spending by guests on retail product at our
stores and helps identify overall effectiveness of our retail
operations. Management uses this measure to analyze a store’s
ability to convert restaurant traffic into retail sales since we
believe that the substantial majority of our retail customers
are also guests in our restaurants.
Average check per guest is an indicator which management
uses to analyze the dollars spent per guest in our stores on
restaurant purchases. This measure aids management in
identifying trends in guest preferences as well as the effective-
ness of menu price increases and other menu changes.
Store operating margins are defined as total revenue less
cost of goods sold, labor and other related expenses and other
store operating expenses, all as a percentage of total revenue.
Management uses this indicator as a primary measure of
operating profitability.
Company Performance in 2014
Management believes that the Cracker Barrel brand remains
one of the strongest and most differentiated brands in the
restaurant industry. During 2014, we focused on five key
business priorities which were based on our previously
announced long-term strategy.
Our long-term strategy includes the following:
• Enhancing the core business by increasing our brand’s
relevance to customers in order to drive guest traffic and
sales in both restaurant and retail, implementing geographic
pricing tiers to optimize average check and re-engineering
store processes to increase operating margins.
• Expanding the footprint through continued use of our
proven site selection tools, introducing a new and more
efficient building and equipment prototype and the
selective entry into new markets.
• Extending the brand by building on the initial success of our
licensing business, leveraging our brand strengths into a
new fast casual concept and growing our retail business into
an omni-channel business.
Our five priorities for 2014 were to:
1) Focus on better-for-you additions to and reinforce
everyday value on our menu. In the first quarter of 2014,
we rolled-out a new menu category, Wholesome Fixin’s,
to meet our guests’ desire for additional healthy menu
items. The Wholesome Fixin’s launch introduced nine
complete meals for fewer than 600 calories. We believe
that our guests responded positively to the new menu
category. Throughout the year, we built upon the
Wholesome Fixin’s category through our limited time
promotional offerings. We reinforced the affordability of
our menu by featuring two new limited time Weekday
Lunch Special entrees at $5.99. Additionally, we continued
to highlight our Country Dinner Plates at a $7.69 price
point, which we believe further enhances the value
perception of our menu.
2) Continue messaging with our Handcrafted by
Cracker Barrel theme in support of the brand, menu
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 high-
lighted the Cracker Barrel brand and our value message
through national cable television advertising. In support
of the summer travel season, we again featured our
Country Dinner Plate value messaging during a national
television commercial campaign. Additionally, we
continued to promote the Cracker Barrel brand through
our more than 1,600 billboards. During the fourth
quarter of 2014, we refreshed approximately one-fourth
of our billboards with new price-point messaging around
our $5.99 and $7.69 value positions at both lunch and
dinner, respectively.
3) Drive retail sales with improved quality and breadth of
our merchandise assortment. During 2014, we increased
the number of merchandise themes that we feature
each year and shortened their time on the floor in order
to keep the merchandise assortment fresh and new.
CB Financials_8-14_03.indd 15
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We introduced some eye-catching color themes, with
bright décor, home goods, and women’s clothing, which
we believe resonated well with our guests. Additionally,
our merchandising team broadened the appeal of the
brand by sourcing products that have seasonal appeal and
reach across the generations and genders. Our women’s
apparel and accessories continued to be one of our
strongest selling categories. To build upon the strength of
this category, we introduced women’s footwear providing
depth to the assortment.
We believe the successful implementation of these five
priorities resulted in our revenue growth during the year,
positive comparable store restaurant and retail sales for the
year with both comparable store traffic and sales out-
performing the Knapp-Track™ Casual Dining Index for the
year, and higher operating margin and profit as compared
to the prior year. All of these were accomplished despite the
pressures from widespread discounting within the restau-
rant industry, the challenges from a continuing uncertain
consumer environment and severe winter weather.
RESULTS OF OPERATIONS
The following table highlights operating results over the past
three years:
Relationship to Total Revenue
2013
2012*
2014
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 taxes
Provision for income taxes
Net income
100.0%
32.5
67.5
100.0%
32.3
67.7
100.0%
32.1
67.9
36.0
36.5
36.8
18.9
12.6
4.8
7.8
0.7
7.1
2.2
4.9
18.2
13.0
5.4
7.6
1.3
6.3
1.9
4.4
18.0
13.1
5.7
7.4
1.7
5.7
1.7
4.0
* 2012 consists of 53 weeks while the other periods presented consist of
52 weeks.
4) Apply technology and process enhancements to improve
the employee experience, the guest experience and
operating margins. At the beginning of 2014, we held a
General Manager’s conference. This conference provided
a platform for the introduction and training of several
new technology-based programs, including the second
phase of our labor management system. We also trained all
of our retail managers on improved selling techniques.
Other process and technology improvements during the
year included an enhancement to our food production
system to automate inventory labeling which resulted in
increased productivity and through-put which we
believe allows us to continue a very strong value platform.
Guest survey responses to overall value once again
measured a year-over-year increase.
5) Focus on enhancing long-term total shareholder returns.
In 2014, we increased our regular quarterly dividend,
continued to expand our store footprint, and began
extending the brand beyond our existing stores. In the third
quarter of 2014, we declared a 33% increase in our
regular quarterly dividend to $1.00. This marks the fourth
increase in the quarterly dividend since November 2011,
generating a total increase of 400% over that time period.
We opened seven new Cracker Barrel stores during the
year bringing our total store count at the end of 2014 to
631. In the first quarter of 2014, we launched our
licensing platform with John Morrell Food Group under
our new trademark, CB Old Country Store™. We believe
that our licensed products have been well received
at the grocery stores, and at the end of 2014 we had
19 products available through our licensing program.
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CB Financials_8-14_03.indd 16
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Total Revenue
The following table highlights the key components of revenue
for the past three years:
2014
2013
2012
Revenue in dollars: (1)
Restaurant
Retail
Total revenue
Total revenue percentage
increase (1)
$ 2,137,405
546,272
$ 2,683,677
$ 2,104,768
539,862
$ 2,644,630
$ 2,054,127
526,068
$ 2,580,195
1.5%
2.5%
6.0%
Total revenue by percentage
relationships:
Restaurant
Retail
Comparable number of stores
Comparable store averages
per store: (2)
Restaurant
Retail
Total
Restaurant average
weekly sales (3)
$
Retail average weekly sales (3)
$
$
79.6%
20.4%
609
79.6%
20.4%
596
79.6%
20.4%
591
$
$
$
3,422
871
4,293
65.7
16.8
$
$
$
3,409
871
4,280
65.2
16.7
3,375
861
4,236
63.6
16.3
(1) 2012 consists of 53 weeks while the other periods presented consist of
52 weeks.
Our comparable store restaurant sales increased from 2013
to 2014 resulting from a higher average check of 2.6%,
including a 2.1% average menu price increase, partially offset
by a decrease in guest traffic of 1.9%. Our comparable store
restaurant sales increased from 2012 to 2013 resulting from a
higher average check of 2.5%, including a 2.2% average
menu price increase, and an increase in guest traffic of 0.6%.
The comparable store retail sales increase from 2013 to
2014 resulted primarily from strong performance in apparel
and accessories and home décor merchandise categories
partially offset by a decline in the bed and bath merchandise
category and the decrease in guest traffic. The comparable
store retail sales increase from 2012 to 2013 resulted primarily
from strong performance in apparel and accessories merch-
andise category and the increase in guest traffic.
Cost of Goods Sold
The following table highlights the components of cost of goods
sold in dollar amounts for the past three years:
2014
2013
2012*
(2) 2012 is calculated on a 53-week basis while the other periods are
calculated on a 52-week basis.
(3) Average weekly sales are calculated by 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, respectively. Total revenue in
2012 also benefited from the additional week in 2012, which
resulted in an increase in revenues of $51,059.
The following table highlights comparable store sales*
results over the past two years:
* 2012 consists of 53 weeks while all other periods presented consist of
52 weeks.
The following table highlights restaurant cost of goods sold as
a percentage of restaurant revenue for the past three years:
Restaurant Cost of Goods Sold
27.6%
27.2%
2014
2013
2012
26.9%
Restaurant
Retail
Restaurant & Retail
Period to Period Increase
2014 vs 2013 2013 vs 2012
(609 Stores) (596 Stores)
0.7%
0.4
0.6
3.1%
2.9
3.0
* Comparable store sales consist of sales of stores open at least six full
quarters at the beginning of the year and are measured on comparable
calendar weeks.
The increase from 2013 to 2014 was primarily the result
of food commodity inflation of 1.8%, a shift to higher cost
menu items and higher food waste partially offset by our menu
price increase referenced above. Higher cost menu items and
higher food waste accounted for 0.3% and 0.1%, respectively,
in restaurant cost of goods sold as a percentage of restaurant
revenue. The increase from 2012 to 2013 was primarily the
result of food commodity inflation of 3.4% partially offset by
our menu price increase referenced above and a reduction
in food waste. The reduction in food waste from 2012 to 2013
CB Financials_8-14_03.indd 17
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accounted for a 0.2% decrease in restaurant cost of goods sold
as a percentage of restaurant revenue.
We presently expect the rate of commodity inflation to be
approximately 4% to 5% in 2015 as compared to 2014.
We expect to partially offset the effects of food commodity
inflation through a combination of menu price increases,
supply contracts and other cost reduction initiatives.
The year-to-year percentage change from 2013 to 2014
resulted from the following:
Store bonus expense
Employee health care expenses
Store hourly labor
2013 to 2014
(Decrease) as a Percentage
of Total Revenue
(0.3%)
(0.1%)
(0.1%)
The following table highlights retail cost of goods sold as a
Lower store bonus expense in 2014 as compared to
percentage of retail revenue for the past three years:
Retail Cost of Goods Sold
51.9%
52.4%
2014
2013
2013 reflected lower performance against financial objectives
in 2014 as compared to the prior year.
The decrease in our employee health care expenses as
2012
52.1%
The decrease in retail cost of goods sold as a percentage
of retail revenue in 2014 as compared to 2013 resulted
primarily from lower freight, higher initial markup on retail
merchandise, lower shrinkage and a reduction in the
obsolescence inventory reserve partially offset by higher
markdowns.
Freight
Higher initial markup on merchandise
Retail inventory shrinkage
Obsolescence inventory reserve
Markdowns
2013 to 2014
(Decrease) Increase as a
Percentage of Total Revenue
(0.4%)
(0.2%)
(0.1%)
(0.1%)
0.4%
The increase in retail cost of goods sold as a percentage of
retail revenue in 2013 as compared to 2012 resulted from
lower initial markup on retail merchandise partially offset by
lower freight and shrinkage.
compared to the prior year is primarily the result of the
reimbursement of approximately $4,700 for certain health
care premiums related to the plan year ending December 31,
2013 partially offset by higher enrollment and higher net
premium costs related to the plan year ending December 31,
2014. During 2014, we recorded a receivable of $6,200
for reimbursement of certain health care premiums related to
the plan year ending December 31, 2014 of which $3,600
reduced employee health care expenses in 2014. We presently
expect to record an additional reimbursement of approxi-
mately $2,000 to $4,000 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
2012 to 2013
Increase (Decrease) as a
Percentage of Total Revenue
resulted from the following:
0.6%
(0.2%)
(0.1%)
Store hourly labor
Store bonus expense
2012 to 2013
(Decrease) Increase as a
Percentage of Total Revenue
(0.5%)
0.2%
Lower initial markup on merchandise
Freight
Retail inventory shrinkage
Labor and Related Expenses
Labor and other related expenses include all direct and
indirect labor and related costs incurred in store operations.
The following table highlights labor and other related expenses
as a percentage of total revenue for the past three years:
Labor and other related expenses
36.0%
36.5%
36.8%
2014
2013
2012
18
The decrease in store hourly labor costs as a percentage
of total revenue from 2012 to 2013 resulted from menu price
increases being higher than wage inflation and improved
productivity. Higher store bonus expense in 2013 as compared
to 2012 reflected better performance against financial
objectives in 2013 as compared to the prior year.
CB Financials_8-14_03.indd 18
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Other Store Operating Expenses
Other store operating expenses include all store-level
operating costs, the major components of which are utilities,
operating supplies, repairs and maintenance, depreciation and
amortization, advertising, rent, credit card fees, real and
personal property taxes and general insurance. The following
table highlights other store operating expenses as a percent-
age of total revenue for the past three years:
Other store operating expenses
18.9%
18.2%
18.0%
2014
2013
2012
The increase in advertising expense from 2012 to 2013
resulted primarily from higher media spending. Higher mainte-
nance expenses resulted primarily from planned increases
in nationally managed repair and preventative maintenance
programs. Lower utilities expense resulted primarily from
lower electricity costs.
General and Administrative Expenses
The following table highlights general and administrative
expenses as a percentage of total revenue for the past three years:
2014
2013
2012
The year-to-year percentage change from 2013 to 2014
General and administrative expenses
4.8%
5.4%
5.7%
resulted primarily from the following:
Utilities
Advertising
Store manager conference expense
Maintenance
2013 to 2014
Increase as a Percentage
of Total Revenue
0.1%
0.1%
0.1%
0.1%
The year-to-year percentage change from 2013 to 2014
resulted primarily from lower incentive compensation.
Lower incentive compensation in 2014 as compared to 2013
resulted primarily from lower performance against financial
objectives as compared to the prior year and a decrease in the
price of our common stock in 2014.
The increase in utilities expense from 2013 to 2014 resulted
The year-to-year percentage change from 2012 to 2013
primarily from higher heating costs due to unseasonably cold
weather experienced at many of our store locations during the
winter months in 2014.
The increase in advertising expense from 2013 to 2014
resulted primarily from higher 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 manage-
ment team. The last such conference was held during the
first quarter of 2012 and the next conference is scheduled to
be held in the first quarter of 2016.
Higher maintenance expenses resulted primarily from
increases in lighting replacement costs, snow removal, kitchen
equipment repairs and national inspection and repair programs.
The year-to-year percentage change from 2012 to 2013
resulted from the following:
Advertising
Maintenance
Litigation settlement received in 2012
Utilities
2012 to 2013
Increase (Decrease) as a
Percentage of Total Revenue
0.1%
0.1%
0.1%
(0.1%)
resulted from the following:
Payroll and related expenses
Manager conference expense
2012 to 2013
(Decrease) as a Percentage
of Total Revenue
(0.2%)
(0.1%)
Lower payroll and related expenses in 2013 as compared to
2012 resulted primarily from fewer store managers in training
due to lower turnover and our opening fewer stores in 2013 as
compared to 2012. The decrease in general and administrative
expenses in 2013 as compared to 2012 also resulted from the
non-recurrence of expenses associated with a biannual manager
conference which was held in the first quarter of 2012.
Interest Expense
The following table highlights interest expense for the past
three years:
Interest expense
$ 17,557
$ 35,742
$ 44,687
2014
2013
2012
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The year-to-year decrease from 2013 to 2014 resulted
primarily from lower interest rates because of the expiration
of our seven-year interest rate swap on May 3, 2013, which
had a fixed interest rate of 5.57% plus our credit spread and
lower debt outstanding.
The year-to-year decrease from 2012 to 2013 resulted
primarily from lower debt outstanding and lower interest
rates because of a reduction in our credit spread and the
expiration of our seven-year interest rate swap on May 3,
2013, which had a fixed interest rate of 5.57% plus our
credit spread.
Provision for Income Taxes
The following table highlights the provision for income taxes
as a percentage of income before income taxes (“effective tax
rate”) for the past three years:
Effective tax rate
2014
2013
2012
30.8%
29.3%
29.5%
The increase in our effective tax rate from 2013 to 2014
resulted primarily from the expiration of the Work Opportu-
nity Tax Credit (“WOTC”) as of December 31, 2013. The
decrease in our effective tax rate from 2012 to 2013 resulted
primarily from the retroactive extension by Congress of the
WOTC through the end of calendar 2013 partially offset by
the increase in pretax income.
We presently expect our effective tax rate for 2015 to
be between 32% and 33%. This estimate assumes that the
WOTC, which expired on December 31, 2013, is not
renewed. We estimate that the renewal of the WOTC could
reduce our provision for income taxes by $5,000 to $6,000
in 2015.
LIQUIDITY AND CAPITAL RESOURCES
The following table presents a summary of our cash flows for
the last three years:
2014
2013
2012
Net cash provided by operating
activities
Net cash used in investing
activities
Net cash used in financing
activities
Net (decrease) increase in cash
and cash equivalents
$ 177,625
$ 208,499
$ 219,822
(88,815)
(73,406)
(79,547)
(91,167)
(165,337)
(40,587)
$ (2,357) $ (30,244) $ 99,688
Our primary sources of liquidity are cash generated from
our operations and our borrowing capacity under our
revolving credit facility. Our internally generated cash, along
with cash on hand at August 2, 2013, was sufficient to
finance all of our growth, dividend payments, working capital
needs, share repurchases and other cash payment obligations
in 2014.
We believe that cash at August 1, 2014, along with cash
expected to be generated from our operating activities
and the borrowing capacity under our revolving credit facility
will be sufficient to finance our continuing operations,
our continuing expansion plans and our expected dividend
payments for 2015.
Cash Generated from Operations
The decrease in net cash flow provided by operating activities
from 2013 to 2014 reflected the timing of payments for
accounts payable and 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 long-term incentive bonus payments
and related taxes made in 2013 as a result of the prior year’s
performance and the timing of payments for income
taxes partially offset by higher net income and the timing of
payments for interest and accounts payable.
20
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Capital Expenditures
The following table presents our capital expenditures
(purchase of property and equipment), net of proceeds from
insurance recoveries, for the last three years:
Capital expenditures, net of proceeds
from insurance recoveries
$ 90,564
$ 73,961
$ 80,170
2014
2013
2012
Our capital expenditures consisted primarily of costs of
new store locations and capital expenditures for maintenance
programs. The increase in capital expenditures from 2013
to 2014 resulted primarily from an increase in the number of
new store locations acquired and under construction as
compared to the prior year and higher maintenance capital
expenditures due to our aging store base. The decrease in
capital expenditures from 2012 to 2013 resulted primarily
from a decrease in the number of new store locations acquired
and under construction as compared to the prior year
partially offset by higher capital expenditures for operational
initiatives and maintenance programs.
We estimate that our capital expenditures during 2015 will
be between $100,000 and $110,000. This estimate includes
the acquisition of sites and construction costs of approximate-
ly six or seven new stores that will open during 2015, as well
as acquisition and construction costs for store locations to be
opened in 2016. We also expect to increase capital expendi-
tures for maintenance programs related to our aging store base
and technology and operational improvements, which are
intended to improve the guest experience and improve margins.
We intend to fund our capital expenditures with cash
generated by operations and borrowings under our revolving
credit facility, as necessary.
Borrowing Capacity and Debt Covenants
In July 2011, we entered into a five-year $750,000 credit
facility (the “Credit Facility”) consisting of a $250,000 term
loan (aggregate principal amount outstanding at both
August 1, 2014 and August 2, 2013 was $187,500) and
a $500,000 revolving credit facility (“the Revolving Credit
Facility”). The Credit Facility expires on July 8, 2016. We
currently plan to refinance the Credit Facility before the end
of 2015.
The following table highlights our borrowing capacity and
outstanding borrowings under the Revolving Credit Facility,
our standby letters of credit and our borrowing availability
under the Revolving Credit Facility as of August 1, 2014:
August 1, 2014
Borrowing capacity under the Revolving Credit Facility
Less: Outstanding borrowings under the Revolving
Credit Facility
212,500
Less: Standby letters of credit*
20,637
Borrowing availability under the Revolving Credit Facility $ 266,863
$ 500,000
* 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 any debt
payments under our Credit Facility in 2014. We reduced
our borrowings under our Credit Facility by $125,000 and
$25,000 in 2013 and 2012, respectively, by making optional
prepayments using excess cash generated from operations.
See “Material Commitments” below and Note 5 to our Consoli-
dated Financial Statements for further information on our
long-term debt.
The Credit Facility contains customary financial covenants,
which include maintenance of a maximum consolidated
total leverage ratio and a minimum consolidated interest
coverage ratio. We presently are and expect to remain in
compliance with the Credit Facility’s financial covenants for
the remaining term of the facility.
Dividends, Share Repurchases
and Share-Based Compensation Awards
Our Credit Facility imposes restrictions on the amount of
dividends we are permitted to pay and the amount of shares
we are permitted to repurchase. Provided there is no default
existing and the total of our availability under the Revolving
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Credit Facility plus our cash and cash equivalents on hand is
at least $100,000 (the “liquidity requirements”), we may
declare and pay cash dividends on shares of our common
stock and repurchase shares of our common stock if the
aggregate amount of dividends paid and shares repurchased
during 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”) during the
immediately preceding fiscal year and (2) provided our consol-
idated total leverage ratio is 3.25 to 1.00 or less, $100,000
(less the amount of any share repurchases during the current
fiscal year). In any event, as long as the liquidity requirements
are met, dividends may be declared and paid in any fiscal year
up to the amount of dividends permitted and paid in the
preceding fiscal year without regard to the 20% limitation.
During the first three quarters of 2014, we declared a
quarterly dividend of $0.75 per share of our common stock.
Additionally, during the third quarter of 2014, we increased
our quarterly dividend by 33% by declaring a dividend of
$1.00 per share payable on August 5, 2014 to shareholders of
record on July 18, 2014.
The following table highlights the dividends per share we
paid for the last three years:
Dividends per share paid
2014
$ 3.00
2013
$ 1.90
2012
$ 0.97
Our current criteria for share repurchases are that they be
accretive to expected net income per share and are within the
limits imposed by our Credit Facility. Under our Credit
Facility, we may repurchase shares up to a maximum amount
of $100,000 less the amount of dividends paid provided the
liquidity requirements are met. Subject to the limits imposed
by the Credit Facility, in 2014, 2013 and 2012, we were
authorized by our Board of Directors to repurchase shares at
the discretion of management up to $50,000, $100,000 and
$65,000, respectively.
The following table highlights our share repurchases for the
last three years:
Shares of common stock
repurchased
Cost of shares repurchased
2014
2013
2012
120,000
$ 12,473
44,300
$ 3,570
265,538
$ 14,923
In 2014, related tax withholding payments on certain
share-based compensation awards exceeded proceeds received
from the exercise of stock options which resulted in a net
use of cash of $8,457. In 2013 and 2012, proceeds received from
the exercise of share-based compensation awards were
$6,454 and $17,602, respectively.
Working Capital
In the restaurant industry, substantially all sales are either for
cash or third-party credit card. Like many other restaurant
companies, we are able to, and often do, operate with negative
working capital. Restaurant inventories purchased through
our principal food distributor are on terms of net zero days,
while other restaurant inventories purchased locally are
generally financed through trade credit at terms of 30 days or
less. Because of our gift shop, which has a lower product
turnover than the restaurant, we carry larger inventories than
many other 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 worked except for bonuses that are paid either quarterly
or annually in arrears. Many other operating expenses have
normal trade terms and certain expenses such as certain taxes
and some benefits are deferred for longer periods of time.
The following table highlights our working capital:
Working capital (deficit)
$ (14,789) $ (13,873)
$ 18,249
2014
2013
2012
The change in working capital at August 1, 2014 compared
to August 2, 2013 primarily reflected our current maturities
on our debt, the increase in our dividend payable, an increase
in deferred revenue related to the sales of our gift cards and
22
CB Financials_8-14_03.indd 22
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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
debt payments and higher dividend payments in 2013.
Off-Balance Sheet Arrangements
Other than various operating leases, which are disclosed more
fully in “Material Commitments” below and Notes 2 and 9
to our Consolidated Financial Statements, we have no other
material off-balance sheet arrangements.
Material Commitments
Our contractual cash obligations and commitments as of
August 1, 2014, are summarized in the tables below:
Contractual Obligations (a) Total
2015
Payments due by Year
2016-2017 2018-2019 After 2019
Term loan (b)
Revolving Credit
Facility (b)
Operating leases (c)
Purchase
obligations (d)
Other long-term
obligations (e)
Total contractual
$ 187,500 $ 25,000 $ 162,500
—
—
212,500
755,649
—
60,569
—
—
212,500
92,800 $ 83,518 $ 518,762
97,991
61,985
24,899
11,107
—
34,308
1,803
5,912
207
26,386
cash obligations
$1,287,948 $ 149,357 $ 498,611 $ 94,832 $ 545,148
Total
Amount of Commitment Expirations by Year
2016-2017 2018-2019 After 2019
2015
Revolving Credit
Facility (b)
Standby letters
of credit (f)
Guarantees (g)
Total commitments
$ 500,000
— $ 500,000
—
19,567
20,637 $ 1,070
235
111
$ 521,296 $ 1,181 $ 519,802
659
—
$ 235
$ 235
—
—
$ 78
$ 78
(a) At August 1, 2014, the entire liability for uncertain tax positions
(including penalties and interest) is classified as a long-term liability.
At this time, we are unable to make a reasonably reliable estimate
of the amounts and timing of payments in individual years because of
uncertainties in the timing of the effective settlement of tax positions.
As such, the liability for uncertain tax positions of $31,391 is
not included in the contractual cash obligations and commitments
table above.
(b) Our term loan is payable on or before July 8, 2016 and our Revolving
Credit Facility expires on July 8, 2016. Even though our current credit
facility expires in 2016, we have the intent and ability to refinance our
debt to maintain a sufficient amount of outstanding borrowings during
the terms of our interest rate swaps that expire in 2017, 2018 and
2019. Using projected interest rates, we anticipate having interest
payments of $14,821, $29,042 and $28,080 in 2015, 2016-2017
and 2018-2019, respectively. The projected interest rates are our fixed
rates under our interest rate swaps (see Note 6 to the Consolidated
Financial Statements) plus our current credit spread of 1.50%. Based
on our outstanding borrowings under our Revolving Credit Facility,
our standby letters of credit at August 1, 2014 and our current unused
commitment fee as defined in the Credit Facility, our unused
commitment fees in 2015 and 2016 would be $668 and $629;
however, the actual amount will differ based on actual usage of the
Revolving Credit Facility in 2015 and 2016.
(c) Includes base lease terms and certain optional renewal periods for
which at the inception of the lease, it is reasonably assured that we
will exercise.
(d) Purchase obligations consist of purchase orders for food and retail
merchandise; purchase orders for capital expenditures, supplies, other
operating needs and other services; and commitments under contracts
for maintenance needs and other services. We have excluded
contracts that do not contain minimum purchase obligations. We
excluded long-term agreements for services and operating needs that
can be cancelled within 60 days without penalty. We included
long-term agreements and certain retail purchase orders for services
and operating needs that can be cancelled with more than 60 days
notice without penalty only through the term of the notice. We included
long-term agreements for services and operating needs that only can
be cancelled in the event of an uncured material breach or with a
penalty through the entire term of the contract. Because of the uncertain-
ties of seasonal demands and promotional calendar changes, our
best estimate of usage for food, supplies and other operating needs and
services is ratably over either the notice period or the remaining life
of the contract, as applicable, unless we had better information
available at the time related to each contract.
(e) Other long-term obligations include our Non-Qualified Savings Plan
($25,322, with a corresponding long-term asset to fund the liability;
see Note 12 to the Consolidated Financial Statements), Deferred
Compensation Plan ($2,868) and our long-term incentive plans
($6,118).
(f) Our standby letters of credit relate to securing reserved claims under
workers’ compensation insurance and reduce our borrowing
availability under the Revolving Credit Facility.
(g) Consists solely of guarantees associated with lease payments for two
properties. We are not aware of any non-performance under these
arrangements that would result in us having to perform in accordance
with the terms of those guarantees.
CB Financials_8-14_03.indd 23
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RECENT ACCOUNTING PRONOUNCEMENTS
ADOPTED AND NOT YET ADOPTED
See Note 2 to the accompanying Consolidated Financial
Statements for a discussion of recent accounting guidance
adopted and not yet adopted. None of the accounting
guidance adopted and discussed in Note 2 had a significant
impact on our consolidated financial statements. The
Company is currently evaluating the impact of adopting the
accounting guidance discussed in Note 2 which the
Company has not yet adopted.
CRITICAL ACCOUNTING ESTIMATES
We prepare our Consolidated Financial Statements in
conformity with GAAP. The preparation of these financial
statements requires us to make estimates and assumptions
about future events and apply judgments that affect the
reported amounts of assets, liabilities, revenue, expenses and
related disclosures. We base our estimates and judgments
on historical experience, current trends, outside advice from
parties believed to be experts in such matters 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. However, because future events and their effects
cannot be determined with certainty, actual results could
differ from those assumptions and estimates, and such differ-
ences could be material.
Our significant accounting policies are discussed in Note 2
to the Consolidated Financial Statements. Judgments and
uncertainties affecting the application of those policies may
result in materially different amounts being reported under
different conditions or using different assumptions. Critical
accounting estimates are those that:
• management believes are most important to the accurate
portrayal of both our 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.
24
We consider the following accounting estimates to be
most critical in understanding the judgments that are involved
in preparing 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 with the Audit Committee
of our Board of Directors.
Impairment of Long-Lived Assets and
Provision for Asset Dispositions
We assess the impairment of long-lived assets whenever
events or changes in circumstances indicate that the carrying
value of an asset may not be recoverable. Recoverability
of assets is measured by comparing the carrying value of the
asset to the undiscounted future cash flows expected to be
generated by the asset. If the total expected future cash flows
are less than the carrying amount of the asset, the carrying
value is written down, for an asset to be held and used, to the
estimated fair value or, for an asset to be disposed of, to the
fair value, net of estimated costs of disposal. Any loss resulting
from impairment is recognized by a charge to income.
Judgments and estimates that we make related to the expected
useful lives of long-lived assets and future cash flows are
affected by factors such as changes in economic conditions
and changes in operating performance. The accuracy of s
uch provisions can vary materially from original estimates and
management regularly monitors the adequacy of the
provisions until final disposition occurs.
We have not made any material changes in our methodology
for assessing impairments during the past three years and
we do not believe that there is a reasonable likelihood that
there will be a material change in the estimates or assump-
tions used by us to assess impairment of long-lived assets.
CB Financials_8-14_03.indd 24
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However, if actual results are not consistent with our estimates
and assumptions 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’ compensation claims that
exceed $250, $500 or $1,000 depending on the state in which
the claim originates. We purchase insurance for individual
general liability claims that exceed $500. We record a reserve
for workers’ compensation and general liability for all
unresolved claims and for an estimate of incurred but not
reported claims (“IBNR”). These reserves and estimates of
IBNR claims are based upon a full scope actuarial study
which is performed annually at the end of our third quarter
and is adjusted by the actuarially determined losses and actual
claims payments for the fourth quarter. Additionally, we
perform limited scope actuarial studies on a quarterly basis to
verify and/or modify our reserves. The reserves and losses
in the actuarial study represent a range of possible outcomes
within which no given estimate is more likely than any other
estimate. As such, we record the losses in the lower end of
that range and discount them to present value using a risk-free
interest rate based on projected timing of payments. We
also monitor actual claims development, including incurrence
or settlement of individual large claims during the interim
periods between actuarial studies as another means of
estimating the adequacy of our reserves.
Our group health plans combine the use of self-insured and
fully-insured programs. Benefits for any individual (employee
or dependents) in the self-insured group health program are
limited. We record a liability for the self-insured portion of
our group health program for all unpaid claims based upon a
loss development analysis derived from actual group health
claims payment experience. We also record a liability for
unpaid prescription drug claims based on historical experience.
The fully-insured portion of our health insurance program
contains a retrospective feature which could increase or decrease
premiums based on actual claims experience.
Our 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. We have not made any material changes
in the accounting methodology used to establish our
insurance reserves during the past three years and do not
believe there is a reasonable likelihood that there will
be a material change in the estimates or assumptions used to
calculate the insurance reserves. However, changes in these
actuarial assumptions or management judgments in the future
may produce materially different amounts of expense that
would be reported under these insurance programs.
Retail Inventory Valuation
Cost of goods sold includes the cost of retail merchandise
sold at our stores utilizing the retail inventory method
(“RIM”). Under RIM, the valuation of our retail inventories
is at cost and the resulting gross margins are calculated by
applying a cost-to-retail ratio to the retail value of our invento-
ries. Inherent in the RIM calculation are certain significant
management judgments and estimates, including initial
markons, markups, markdowns and shrinkage, which may
significantly impact the gross margin calculation as well as
the ending inventory valuation.
Inventory valuation provisions are included for retail
inventory obsolescence and retail inventory shrinkage. Retail
inventory is reviewed on a quarterly basis for obsolescence
and adjusted as appropriate based on assumptions made
by management and judgment regarding inventory aging and
future promotional activities. Cost of goods sold includes
an estimate of shrinkage that is adjusted upon physical inventory
counts. Annual physical inventory counts are conducted
throughout the third and fourth quarters based upon a cyclical
inventory schedule. An estimate of shrinkage is recorded for
the time period between physical inventory counts by using a
three-year average of the physical inventories’ results on a
store-by-store basis.
CB Financials_8-14_03.indd 25
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We have not made any material changes in the method-
ologies, estimates or assumptions related to our merchandise
inventories during the past three years and do not believe
there is a reasonable likelihood that there will be a material
change in the estimates or assumptions in the future.
However, actual obsolescence or shrinkage recorded may
produce materially different amounts than we have estimated.
Tax Provision
We must make estimates of certain items that comprise our
income tax provision. These estimates include effective state
and local income tax rates, 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 of the provision and
historical experience.
We recognize (or derecognize) a tax position taken or
expected to be taken in a tax return in the financial statements
when it is more likely than not (i.e., a likelihood of more than
fifty percent) that the position would be sustained (or not
sustained) upon examination by tax authorities. A recognized
tax position is then measured at the largest amount of
benefit that is greater than fifty percent likely of being realized
upon ultimate settlement.
We file our income tax returns many months after our 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. We
then must assess the likelihood of successful legal proceedings
or reach a settlement with the relevant taxing authority.
Although we believe that the judgments and estimates used in
establishing our tax provision are reasonable, an unsuccessful
legal proceeding or a settlement could result in material
adjustments to our Consolidated Financial Statements and
our consolidated financial position.
Share-Based Compensation
Our share-based compensation primarily consists of
nonvested stock awards and performance-based market stock
units (“MSU Grants”). Share-based compensation expense
is recognized based on the grant date fair value and the
achievement of performance conditions for certain awards.
We recognize share-based compensation expense on a
straight-line basis over the requisite service period, which is
generally the award’s vesting period, or the date on which
retirement eligibility is achieved, if shorter.
Compensation expense is recognized for only the portion
of our share-based compensation awards that are expected
to vest. Therefore, an estimated forfeiture rate is derived from
historical employee termination behavior and is updated
annually. The forfeiture rate is applied on a straight-line basis
over the service (vesting) period and we update the estimated
forfeiture rate to actual at each reporting period.
Beginning in 2014, our share-based compensation awards
accrue dividends. Dividends will be forfeited for any share-based
compensation awards that do not vest.
Our nonvested stock awards are time vested except for
awards under our long-term incentive plans which also contain
performance conditions. At each reporting period, we reassess
the probability of achieving the performance conditions
under our long-term incentive plans. Determining whether
the performance conditions will be achieved involves
judgment and the estimate of expense for nonvested stock
awards may be revised periodically based on changes in
our determination of the probability of achieving the perfor-
mance conditions. Revisions are reflected in the period in
which the estimate is changed. If any performance conditions
are not met, no shares will be granted, no compensation
will ultimately be recognized and, to the extent previously
recognized, compensation expense will be reversed.
Generally, the fair value of each nonvested stock award
which does not accrue dividends is equal to the market price
of our stock at the date of grant reduced by the present value
of expected dividends to be paid prior to the vesting period,
discounted using an appropriate risk-free interest rate.
26
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Other nonvested stock awards accrue dividends and their
fair value 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 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 at the beginning of the period,
up to a maximum of 150% of target, based on the change in
our cumulative total shareholder return over the period. The
probability of the actual shares expected to be awarded is
considered in the grant date valuation; therefore, the expense
will not be adjusted to reflect the actual units awarded.
However, if the performance condition is not met, no shares
will be granted, no compensation will ultimately be recognized
and, to the extent previously recognized, compensation
expense will be reversed.
The fair value of our MSU Grants was determined using the
Monte-Carlo simulation model, which simulates a range of
possible future stock prices and estimates the probabilities of
the potential payouts. The Monte-Carlo simulation model
uses the average prices for the 60-consecutive calendar days
beginning 30 days prior to and ending 30 days after the first
business day of the performance period. This model also
incorporates the following ranges of assumptions:
• The expected volatility is a blend of implied volatility based
on market-traded options on our stock and historical
volatility of our stock over the period commensurate with
the three-year performance period.
• The risk-free interest rate is based on the U.S. Treasury
rate assumption commensurate with the three-year
performance period.
• The expected dividend yield is based on our current
dividend yield as the best estimate of projected dividend
yield for periods within the three-year performance period.
We update the historical and implied components of the
expected volatility assumption when new grants are made.
We have not made any material changes in our estimates
or assumptions used to determine share-based compensation
during the past three years. We do not believe there is a
reasonable likelihood that there will be a material change in
the future estimates or assumptions used to determine
share-based compensation expense. However, if actual results
are not consistent with our estimates or assumptions,
we may be exposed to changes in share-based compensation
expense that could be material.
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
We are exposed to market risk, such as changes in interest
rates and commodity prices. We do not hold or use derivative
financial instruments for trading purposes.
Interest Rate Risk. We have interest rate risk relative to our
outstanding borrowings under our Credit Facility. At both
August 1, 2014 and August 2, 2013, our outstanding
borrowings under our Credit Facility totaled $400,000 (see
Note 5 to our Consolidated Financial Statements). Loans
under the Credit Facility bear interest, at our election, either
at the prime rate or LIBOR plus a percentage point spread
based on certain specified financial ratios. Our policy has
been to manage interest cost using a mix of fixed and variable
rate debt (see Notes 5, 6 and 9 to our Consolidated Financial
Statements). To manage this risk in a cost efficient manner,
we have entered into interest rate swaps. A summary of our
interest rate swaps at August 1, 2014 is as follows:
Trade Date
August 10, 2010
July 25, 2011
July 25, 2011
September 19, 2011
September 19, 2011
December 7, 2011
March 18, 2013
April 8, 2013
April 15, 2013
April 22, 2013
April 25, 2013
June 18, 2014
June 24, 2014
July 1, 2014
Effective Date
May 3, 2013
May 3, 2013
May 3, 2013
May 3, 2013
May 3, 2013
May 3, 2013
May 3, 2015
May 3, 2015
May 3, 2015
May 3, 2015
May 3, 2015
May 3, 2015
May 3, 2015
May 5, 2015
Term
(in Years)
Notional
Amount
2
2
3
2
2
3
3
2
2
3
3
4
4
4
$200,000
50,000
50,000
25,000
25,000
50,000
50,000
50,000
50,000
25,000
25,000
40,000
30,000
30,000
Fixed
Rate
2.73%
2.00%
2.45%
1.05%
1.05%
1.40%
1.51%
1.05%
1.03%
1.30%
1.29%
2.51%
2.51%
2.43%
27
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The notional amount for the interest rate swap entered
into on June 18, 2014 increases by $40,000 each May over the
four-year term of the interest rate swap beginning in May
2016 until the notional amount reaches $160,000 in May 2018.
The notional amounts for the interest rate swaps entered
into on June 24, 2014 and July 1, 2014 increase by $30,000
each May over the four-year terms of the interest rate swaps
beginning in May 2016 until the notional amounts each reach
$120,000 in May 2018.
At both August 1, 2014 and August 2, 2013, our outstand-
ing borrowings were swapped at a weighted 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 are affected by commodity pricing and are,
therefore, subject to price volatility caused by market conditions,
weather, production problems, delivery difficulties and
other factors which are outside our control and which are
generally unpredictable.
The following table highlights the five food categories
which accounted for the largest shares of our food purchases
in 2014 and 2013:
Percentage of Food Purchases
Beef
Dairy (including eggs)
Fruits and vegetables
Poultry
Pork
2014
13%
12%
12%
11%
11%
2013
13%
12%
12%
11%
11%
Other categories affected by the commodities markets, such
as grains and seafood, may each account for as much as 7%
of our food purchases. While some of our food items are
produced to our proprietary specifications, our food items are
based on generally available products, and if any existing
suppliers fail, or are unable to deliver in quantities required by
us, we believe that there are sufficient other quality suppliers
in the marketplace that our sources of supply can be replaced
as necessary to allow us to avoid any material adverse effects
that could be caused by such unavailability. We also recognize,
however, that commodity pricing is extremely volatile
and can change unpredictably even over short periods of time.
Changes in commodity prices would affect us and our competi-
tors generally, and depending on the terms and duration of
supply contracts, sometimes simultaneously. We enter into
contracts for certain of our products in an effort to minimize
volatility of supply and pricing. In many cases, or over the
longer term, we believe we will be able to pass through some
or much of the increased commodity costs by adjusting
our menu pricing. From time to time, competitive circum-
stances, or judgments about consumer acceptance of
price increases, may limit menu price flexibility, and in those
circumstances, increases in commodity prices can result in
lower margins.
28
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CR ACKER BA R R EL OLD COUN TRY STOR E, I NC.
Management’s Report on Internal Control over Financial Reporting
We are responsible for establishing and maintaining adequate
internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) promulgated under the Exchange
Act). We maintain a system of internal controls that is
designed to provide reasonable assurance in a cost-effective
manner as to the fair and reliable preparation and presen-
tation of the consolidated financial statements, as well as to
safeguard assets from unauthorized use or disposition.
Our control environment is the foundation for our system
of internal control over financial reporting and is embodied in
our Corporate Governance Guidelines, our Financial Code
of Ethics, and our Code of Business Conduct and Ethics, all of
which may be viewed on 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. Neither our disclosure controls
and procedures nor our internal controls, however, can or will
prevent all errors and all fraud. A control system, no matter
how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control
system are met. Further, the design of a control system must
reflect the benefits of controls relative to their costs. Because
of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the
Company have been detected.
We conducted an evaluation of the effectiveness of our
internal control over financial reporting based on the
framework in Internal Control—Integrated Framework (1992)
issued by the Committee of Sponsoring Organizations of
the Treadway Commission. This evaluation included review
of the documentation of controls, evaluation of the design
effectiveness of controls, testing of the operating effectiveness
of controls and a conclusion on this evaluation. We have
concluded that our internal control over financial reporting
was effective as of August 1, 2014, based on these criteria.
In addition, Deloitte & Touche LLP, an independent
registered public accounting firm, has issued an attestation
report on our internal control over financial reporting,
which is included herein.
Sandra B. Cochran
President and Chief Executive Officer
Lawrence E. Hyatt
Senior Vice President and Chief Financial Officer
CB Financials_8-14_03.indd 29
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CR ACKER BA R R EL OLD COUN TRY STOR E, I NC.
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”) as of August 1, 2014 and August 2, 2013,
and the related consolidated statements of income, com-
prehensive income, changes in shareholders’ equity, and cash
flows for each of the three fiscal years in the period ended
August 1, 2014. These financial statements are the responsibil-
ity of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with the standards
of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstate-
ment. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such consolidated financial statements
present fairly, in all material respects, the financial position of
Cracker Barrel Old Country Store, Inc. and its subsidiaries
as of August 1, 2014 and August 2, 2013, and the results of
their operations and their cash flows for each of the three
fiscal years in the period ended August 1, 2014, in conformity
with accounting principles generally accepted in the
United States of America.
We have also audited, in accordance with the standards
of the Public Company Accounting Oversight Board
(United States), the Company’s internal control over finan-
cial reporting as of August 1, 2014, based on the criteria
established in Internal Control—Integrated Framework (1992)
issued by the Committee of Sponsoring Organizations of
the Treadway Commission and our report dated September 25,
2014 expressed an unqualified opinion on the Company’s
internal control over financial reporting.
Nashville, Tennessee
September 25, 2014
30
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CR ACKER BA R R EL OLD COUN TRY STOR E, I NC.
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”) as of August 1, 2014, based on criteria
established in Internal Control—Integrated Framework (1992)
issued by the Committee of Sponsoring Organizations of the
Treadway Commission. The Company’s management is
responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness
of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control
over Financial Reporting. Our responsibility is to express an
opinion on the Company’s internal control over financial
reporting based on our audit.
We conducted our audit in accordance with the standards
of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was
maintained in all material respects. Our audit included
obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk, and
performing other procedures as we considered necessary in
the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
A company’s internal control over financial reporting is a
process designed by, or under the supervision of, the
company’s principal executive and principal financial officers,
or persons performing similar functions, and effected by
the company’s board of directors, management, and other
personnel to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the
company are being made only in accordance with authoriza-
tions of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material
effect on the financial statements.
Because of the inherent limitations of internal control over
financial reporting, including the possibility of collusion or
improper management override of controls, material misstate-
ments due to error or fraud may not be prevented or detected
on a timely basis. Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting to
future periods are subject to the risk that the controls may
become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures
may deteriorate.
In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting
as of August 1, 2014, based on the criteria established in
Internal Control—Integrated Framework (1992) issued by
the Committee of Sponsoring Organizations of the
Treadway Commission.
We have also audited, in accordance with the standards of
the Public Company Accounting Oversight Board (United
States), the consolidated financial statements of the Company
as of and for the year ended August 1, 2014, and our report
dated September 25, 2014, expressed an unqualified opinion
on those consolidated financial statements.
Nashville, Tennessee
September 25, 2014
CB Financials_8-14_03.indd 31
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CR ACKER BA R R EL OLD COUN TRY STOR E, I NC.
Consolidated Balance Sheets
(In thousands except share data)
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 and improvements
Buildings under capital leases
Restaurant and other equipment
Leasehold improvements
Construction in progress
Total
Less: Accumulated depreciation and amortization of capital leases
Property and equipment – net
Other assets
Total
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
Current maturities of long-term debt
Taxes withheld and accrued
Accrued employee compensation
Accrued employee benefits
Deferred revenues
Dividend payable
Current interest rate swap liability
Other current liabilities
Total current liabilities
Long-term debt
Long-term interest rate swap liability
Other long-term obligations
Deferred income taxes
Commitments and Contingencies (Notes 9 and 15)
Shareholders’ Equity:
Preferred stock – 100,000,000 shares of $.01 par value authorized; 300,000 shares
designated as Series A Junior Participating Preferred Stock; no shares issued
Common stock – 400,000,000 shares of $.01 par value authorized; 2014 –
23,821,227 shares issued and outstanding; 2013 – 23,795,327 shares issued and outstanding
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total shareholders’ equity
Total
See Notes to Consolidated Financial Statements.
32
August 1, 2014
August 2, 2013
$ 119,361
—
22,704
2,973
165,426
11,997
7,188
329,649
303,933
767,149
3,289
506,323
271,049
15,378
1,867,121
823,837
1,043,284
59,315
$ 1,432,248
$
98,477
25,000
36,261
60,933
26,050
49,825
23,838
4,704
19,350
344,438
375,000
3,239
123,221
57,709
$ 121,718
883
15,942
—
146,687
12,648
4,316
302,194
299,995
746,764
3,289
484,013
255,058
8,704
1,797,823
771,454
1,026,369
59,743
$ 1,388,306
$ 110,637
—
35,076
62,780
24,477
44,098
17,847
—
21,152
316,067
400,000
11,644
120,073
56,496
—
—
238
39,969
(4,733)
493,167
528,641
$ 1,432,248
237
51,728
(6,612)
438,673
484,026
$ 1,388,306
CB Financials_8-14_03.indd 32
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CR ACKER BA R R EL OLD COUN TRY STOR E, I NC.
Consolidated Statements of Income
(In thousands except share data)
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
Income before income taxes
Provision for income taxes
Net income
Net income per share – basic
Net income per share – diluted
Basic weighted average shares outstanding
Diluted weighted average shares outstanding
See Notes to Consolidated Financial Statements.
August 1, 2014
$ 2,683,677
872,758
1,810,919
966,593
506,533
337,793
129,387
208,406
17,557
190,849
58,721
$ 132,128
Fiscal years ended
August 2, 2013
$ 2,644,630
854,684
1,789,946
962,559
482,601
344,786
143,262
201,524
35,742
165,782
48,517
$ 117,265
$
$
5.55
5.51
$
$
4.95
4.90
23,817,768
23,966,015
23,708,875
23,948,321
August 3, 2012
$ 2,580,195
827,484
1,752,711
951,435
464,130
337,146
146,171
190,975
44,687
146,288
43,207
$ 103,081
$
$
4.47
4.40
23,067,566
23,408,126
Consolidated Statements of Comprehensive Income
(In thousands)
Net income
Other comprehensive income before income tax expense:
Change in fair value of interest rate swaps
Income tax expense
Other comprehensive income, net of tax
Comprehensive income
See Notes to Consolidated Financial Statements.
August 1, 2014
Fiscal years ended
August 2, 2013
August 3, 2012
$ 132,128
$ 117,265
$ 103,081
3,058
1,179
1,879
$ 134,007
23,620
9,074
14,546
$ 131,811
17,223
349
16,874
$ 119,955
CB Financials_8-14_03.indd 33
33
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CR ACKER BA R R EL OLD COUN TRY STOR E, I NC.
Consolidated Statements Of Changes in Shareholders’ Equity
(In thousands except share data)
Balances at July 29, 2011
Comprehensive Income:
Net income
Other comprehensive income, net of tax
Total comprehensive income
Cash dividends declared - $1.15 per share
Share-based compensation
Issuance of share-based compensation awards,
net of shares withheld for employee taxes
Tax benefit realized upon exercise of
share-based compensation awards
Purchases and retirement of common stock
Balances at August 3, 2012
Comprehensive Income:
Net income
Other comprehensive income, net of tax
Total comprehensive income
Cash dividends declared – $2.25 per share
Share-based compensation
Issuance of share-based compensation awards,
net of shares withheld for employee taxes
Tax benefit realized upon exercise of
share-based compensation awards
Purchases and retirement of common stock
Common Stock
Shares
Amount
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Shareholders’
Equity
22,840,974
$ 228
$ 7,081
$ (38,032)
$ 298,757
$ 268,034
—
—
—
—
—
—
—
—
—
—
—
—
—
—
14,420
—
16,874
16,874
—
—
103,081
—
103,081
(26,915)
—
897,588
9
17,593
—
(265,538)
—
(3)
4,502
(14,920)
—
—
—
—
—
—
103,081
16,874
119,955
(26,915)
14,420
17,602
4,502
(14,923)
23,473,024
234
28,676
(21,158)
374,923
382,675
—
—
—
—
—
—
—
—
—
—
—
—
—
—
17,839
—
14,546
14,546
—
—
117,265
—
117,265
(53,515)
—
366,603
4
6,450
—
(44,300)
—
(1)
2,332
(3,569)
—
—
—
—
—
—
117,265
14,546
131,811
(53,515)
17,839
6,454
2,332
(3,570)
23,795,327
237
51,728
(6,612)
438,673
484,026
Balances at August 2, 2013
Comprehensive Income:
Net income
Other comprehensive income, net of tax
Total comprehensive income
Cash dividends declared – $3.25 per share
Share-based compensation
Issuance of share-based compensation awards,
net of shares withheld for employee taxes
Tax benefit realized upon exercise of
share-based compensation awards
Purchases and retirement of common stock
—
—
—
—
—
—
—
—
—
—
—
—
—
—
7,924
145,900
2
(8,459)
—
(120,000)
—
(1)
1,248
(12,472)
—
1,879
1,879
—
—
—
—
—
132,128
—
132,128
(77,634)
—
—
—
—
132,128
1,879
134,007
(77,634)
7,924
(8,457)
1,248
(12,473)
Balances at August 1, 2014
23,821,227
$ 238
$ 39,969
$ (4,733)
$ 493,167
$ 528,641
See Notes to Consolidated Financial Statements.
34
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CR ACKER BA R R EL OLD COUN TRY STOR E, I NC.
Consolidated Statements Of Cash Flows
(In thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Loss on disposition of property and equipment
Share-based compensation
Excess tax benefit from share-based compensation
Changes in assets and liabilities:
Accounts receivable
Income taxes receivable
Inventories
Prepaid expenses and other current assets
Other assets
Accounts payable
Taxes withheld and accrued
Accrued employee compensation
Accrued employee benefits
Deferred revenues
Other current liabilities
Other long-term obligations
Deferred income taxes
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of property and equipment
Proceeds from insurance recoveries of property and equipment
Proceeds from sale of property and equipment
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from issuance of long-term debt
(Taxes withheld) and proceeds from issuance of share-based compensation awards, net
Principal payments under long-term debt and other long-term obligations
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 equivalents, end of year
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest, net of amounts capitalized
Income taxes
Supplemental schedule of non-cash investing and financing activities:
Capital expenditures accrued in accounts payable
Change in fair value of interest rate swaps
Change in deferred tax asset for interest rate swaps
Dividends declared but not yet paid
See Notes to Consolidated Financial Statements.
August 1, 2014
Fiscal years ended
August 2, 2013
August 3, 2012
$ 132,128
$ 117,265
$ 103,081
68,389
5,163
7,924
(1,248)
(6,762)
(1,725)
(18,739)
651
(1,701)
(12,160)
1,185
(1,847)
1,573
5,727
(1,960)
3,865
(2,838)
177,625
(91,646)
1,082
1,749
(88,815)
—
(8,457)
(1)
(12,473)
—
(71,484)
1,248
(91,167)
(2,357)
121,718
$ 119,361
66,120
4,057
17,839
(2,332)
(1,333)
—
(3,420)
(1,243)
(1,033)
9,366
(4,628)
(4,143)
(2,069)
6,402
6,628
5,895
(4,872)
208,499
(74,417)
456
555
(73,406)
—
6,454
(125,153)
(3,570)
—
(45,400)
2,332
(165,337)
(30,244)
151,962
$ 121,718
64,467
2,702
14,420
(4,502)
(2,330)
7,898
(1,720)
(2,405)
(4,725)
1,592
7,369
17,729
(2,701)
5,066
2,651
9,973
1,257
219,822
(80,922)
752
623
(79,547)
92,600
17,602
(117,733)
(14,923)
(263)
(22,372)
4,502
(40,587)
99,688
52,274
$ 151,962
$ 15,856
66,444
$ 29,959
47,550
$ 50,357
18,768
$ 5,767
3,058
(1,179)
23,997
$ 6,852
23,620
(9,074)
17,847
$ 5,778
17,223
(349)
9,732
CB Financials_8-14_03.indd 35
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CR ACKER BA R R EL OLD COUN TRY STOR E, I NC.
Notes To Consolidated Financial Statements
(In thousands except share data)
1 DESCRIPTION OF THE BUSINESS
Cracker Barrel Old Country Store, Inc. and its affiliates
(collectively, in the Notes, the “Company”) are principally
engaged in the operation and development in the United
States (“U.S.”) of the Cracker Barrel Old Country Store®
(“Cracker Barrel”) concept.
2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
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 regarding the components of inventory.
Valuation provisions are included for retail inventory
obsolescence, retail inventory shrinkage, returns and
amortization of certain items. Cost of goods sold includes
an estimate of retail inventory shrinkage that is adjusted
upon physical inventory counts. Annual physical inventory
GAAP – The accompanying Consolidated Financial
counts are conducted throughout the third and fourth
Statements have been prepared in accordance with generally
quarters based upon a cyclical inventory schedule. An estimate
accepted accounting principles in the U.S. (“GAAP”).
of shrinkage is recorded for the time period between
Fiscal year – The Company’s fiscal year ends on the Friday
physical inventory counts by using a three-year average of
nearest July 31st and each quarter consists of thirteen weeks
the physical inventories’ results on a store-by-store basis.
unless noted otherwise. The Company’s fiscal year ended
Property and equipment – Property and equipment are
August 3, 2012 consisted of 53 weeks and the fourth quarter
stated at cost. For financial reporting purposes, depre-
of 2012 consisted of fourteen weeks. References in these
ciation and amortization on these assets are computed by
Notes to a year or quarter are to the Company’s fiscal year or
use of the straight line and double declining balance
quarter unless noted otherwise.
methods over the estimated useful lives of the respective
Principles of consolidation – The Consolidated Financial
assets, as follows:
Statements include the accounts of the Company and
its subsidiaries, all of which are wholly owned. All significant
intercompany transactions and balances have been eliminated.
Cash and cash equivalents – The Company’s policy is to
consider all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Property held for sale – Property held for sale consists of
real estate properties that the Company expects to sell within
one year and is reported at the lower of carrying amount
Buildings and improvements
Buildings under capital leases
Restaurant and other equipment
Leasehold improvements
Years
30-45
15-25
2-10
1-35
Accelerated depreciation methods are generally used for
income tax purposes.
Total depreciation expense and depreciation expense
related to store operations for each of the three years are
or fair value less costs to sell. At August 2, 2013, property held
as follows:
for sale consisted of office space.
Accounts receivable – Accounts receivable represent
Total depreciation expense
Depreciation expense related to
2014
2013
2012
$ 67,620
$ 65,351
$ 63,705
their estimated net realizable value. Accounts receivable are
store operations*
62,746
60,574
58,423
* Depreciation expense related to store operations is included in other store
operating expenses in the Consolidated Statements of Income.
written off when they are deemed uncollectible.
Inventories – Inventories are stated at the lower of cost
or market. Cost of restaurant inventory is determined by the
first in, first out (“FIFO”) method. Retail inventories are
valued using the retail inventory method (“RIM”) except at
the retail distribution center which uses average cost.
36
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Gain or loss is recognized upon disposal of property and
master netting agreement with that counterparty, its credit
equipment. The asset and related accumulated depreciation
risk exposure is based on the net exposure under the master
and amortization amounts are removed from the accounts.
netting agreement. If, on a net basis, the Company owes
Maintenance and repairs, including the replacement of
the counterparty, the Company regards its credit exposure
minor items, are charged to expense and major additions to
to the counterparty as being zero.
property and equipment are capitalized.
The Company does not hold or use derivative instruments
Impairment of long-lived assets – The Company assesses
for trading purposes. The Company also does not have any
the impairment of long-lived assets whenever events or
derivatives not designated as hedging instruments and has
changes in circumstances indicate that the carrying value of
not designated any non-derivatives as hedging instruments.
an asset may not be recoverable. Recoverability of assets is
See Note 6 for additional information on the Company’s
measured by comparing the carrying value of the asset to the
derivative and hedging activities.
undiscounted future cash flows expected to be generated by
Segment reporting – Operating segments are components
the asset. If the total expected future cash flows are less than
of an enterprise about which separate financial information
the carrying value of the asset, the carrying value is written
is available that is evaluated regularly by the chief operating
down, for an asset to be held and used, to the estimated fair
decision maker in deciding how to allocate resources
value or, for an asset to be disposed of, to the fair value,
and in assessing performance. Utilizing these criteria, the
net of estimated costs of disposal. Any loss resulting from
Company manages its business on the basis of one reportable
impairment is recognized by a charge to income.
operating segment (see Note 8 for additional information
Derivative instruments and hedging activities – The
regarding segment reporting).
Company is exposed to market risk, such as changes in interest
Revenue recognition – The Company records revenue
rates and commodity prices. The Company has interest rate
from the sale of products as they are sold. The Company
risk relative to its outstanding borrowings, which bear
provides for estimated returns based on return history and
interest at the Company’s election either at the prime rate or
sales levels. The Company’s policy is to present sales in
LIBOR plus a percentage point spread based on certain
the Consolidated Statements of Income on a net presenta-
specified financial ratios under its credit facility (see Note 5).
tion basis after deducting sales tax.
The Company’s policy has been to manage interest cost
Unredeemed gift cards and certificates – Unredeemed gift
using a mix of fixed and variable rate debt. To manage this
cards and certificates represent a liability of the Company
risk in a cost efficient manner, the Company uses derivative
related to unearned income and are recorded at their expected
instruments, specifically interest rate swaps.
redemption value. No revenue is recognized in connection
Companies may elect whether or not to offset related assets
with the point-of-sale transaction when gift cards or gift
and liabilities and report the net amount on their financial
certificates are sold. For those states that exempt gift cards and
statements if the right of setoff exists. Under a master netting
certificates from their escheat laws, the Company makes
agreement, the Company has the legal right to offset the
estimates of the ultimate unredeemed (“breakage”) gift cards
amounts owed to the Company against amounts owed by the
and certificates in the period of the original sale and amor-
Company under a derivative instrument that exists between
tizes this breakage over the redemption period that other gift
the Company and a counterparty. When the Company is
cards and certificates historically have been redeemed by
engaged in more than one outstanding derivative transaction
with the same counterparty and also has a legally enforceable
CB Financials_8-14_03.indd 37
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9/24/14 6:06 PM
reducing its liability and recording revenue accordingly. For
The Company’s group health plans combine the use of
those states that do not exempt gift cards and certificates
self-insured and fully-insured programs. Benefits for any
from their escheat laws, the Company records breakage in the
individual (employee or dependents) in the self-insured
period that gift cards and certificates are remitted to the
program are limited. The Company records a liability
state and reduces its liability accordingly. Any amounts remitted
for the self-insured portion of its group health program for all
to states under escheat or similar laws reduce the Company’s
unpaid claims based upon a loss development analysis
deferred revenue liability and have no effect on revenue
derived from actual group health claims payment experience.
or expense while any amounts that the Company is permitted
The Company also records a liability for unpaid prescription
to retain are recorded as revenue.
drug claims based on historical experience. The fully-insured
Insurance – The Company self-insures a significant portion
portion of the Company’s health insurance program
of its workers’ compensation and general liability programs.
contains a retrospective feature which could increase or
The Company purchases insurance for individual workers’
decrease premiums based on actual claims experience.
compensation claims that exceed $250, $500 or $1,000
Store pre-opening costs – Start-up costs of a new store are
depending on the state in which the claim originates. The
expensed when incurred, with the exception of rent
Company purchases insurance for individual general
expense under operating leases, in which the straight-line
liability claims that exceed $500.
rent includes the pre-opening period during construction,
The Company records a reserve for workers’ compensation
as explained further under the “Leases” section in this Note.
and general liability for all unresolved claims and for an
Leases – The Company’s leases are classified as either
estimate of incurred but not reported claims (“IBNR”). These
capital or operating leases. The Company has ground leases
reserves and estimates of IBNR claims are based upon a
and office space leases that are recorded as operating leases.
full scope actuarial study which is performed annually at the
The Company also leases its advertising billboards which are
end of the Company’s third quarter and is adjusted by the
recorded as operating leases. A majority of the Company’s
actuarially determined losses and actual claims payments for
lease agreements provide renewal options and some of these
the fourth quarter. Additionally, the Company performs
options contain rent escalation clauses. Additionally, some
limited scope actuarial studies on a quarterly basis to verify
of the leases have rent holiday and contingent rent provisions.
and/or modify the Company’s reserves. The reserves and
During rent holiday periods, which include the pre-opening
losses in the actuarial study represent a range of possible
period during construction, the Company has possession of
outcomes within which no given estimate is more likely than
and access to the property, but is not obligated to, and
any other estimate. As such, the Company records the
normally does not, make rent payments. Contingent rent is
losses at the lower end of that range and discounts them to
determined as a percentage of gross sales in excess of
present value using a risk-free interest rate based on projected
specified levels. The Company records a contingent rent
timing of payments. The Company also monitors actual
liability and corresponding rent expense when it is probable
claims development, including incurrence or settlement of
sales have been achieved in amounts in excess of the speci-
individual large claims during the interim periods between
fied levels.
actuarial studies as another means of estimating the adequacy
The liabilities under these leases are recognized on the
of its reserves.
38
straight-line basis over the shorter of the useful life, with
a maximum of 35 years, or the related lease life. The Company
CB Financials_8-14_03.indd 38
9/24/14 6:06 PM
uses a lease life that generally begins on the date that the
award immediately before the modification. Incremental
Company becomes legally obligated under the lease,
compensation expense for vested awards is recognized
including the rent holiday periods, and generally extends
immediately. For unvested awards, the sum of the incremental
through certain renewal periods that can be exercised
compensation expense and the remaining unrecognized
at the Company’s option, for which at the inception of the
compensation expense for the original award on the modifi-
lease, it is reasonably assured that the Company will
cation date is recognized over the modified service period.
exercise those renewal options. This lease period is consis-
Additionally, the Company’s policy is to issue shares of
tent with the period over which leasehold improvements
common stock to satisfy exercises of share-based compensa-
are amortized.
tion awards.
Advertising – The Company expenses the costs of
Income taxes – The Company’s provision for income
producing advertising the first time the advertising takes
taxes includes employer tax credits for FICA taxes paid on
place. Other advertising costs are expensed as incurred.
employee tip income and other employer tax credits are
Advertising expense for each of the three years was as
accounted for by the flow-through method. Deferred income
follows:
Advertising expense
$ 63,707
$ 59,957
$ 56,198
2014
2013
2012
Share-based compensation – The Company’s share-based
compensation consists of nonvested stock, performance-
based market stock units (“MSU Grants”) and stock options.
Share-based compensation is recorded in general and
administrative expenses in the Consolidated Statements of
Income. Share-based compensation expense is recognized
based on the grant date fair value and the achievement of
performance conditions for certain awards. The Company
recognizes share-based compensation expense on a straight-
line basis over the requisite service period, which is
generally the award’s vesting period, or to the date on which
retirement eligibility is achieved, if shorter.
Certain nonvested stock awards and the Company’s MSU
Grants contain performance conditions. Compensation
expense for performance-based awards is recognized when it
is probable that the performance criteria will be met. If any
performance goals are not met, no compensation expense is
ultimately recognized and, to the extent previously recog-
nized, compensation expense is reversed.
If a share-based compensation award is modified after
the grant date, incremental compensation expense is
recognized in an amount equal to the excess of the fair value
of the modified award over the fair value of the original
taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for
income tax purposes. The Company recognizes (or derecog-
nizes) a tax position taken or expected to be taken in a tax
return in the financial statements when it is more likely than
not (i.e., a likelihood of more than fifty percent) that the
position would be sustained (or not sustained) upon
examination by tax authorities. A recognized tax position is
then measured at the largest amount of benefit that is greater
than fifty percent likely of being realized upon ultimate
settlement. The Company recognizes, net of tax, interest and
estimated penalties related to uncertain tax positions in its
provision for income taxes. See Note 13 for additional
information regarding income taxes.
Comprehensive income – Comprehensive income includes
net income and the effective unrealized portion of the
changes in the fair value of the Company’s interest rate swaps.
Net income per share – Basic consolidated net income
per share is computed by dividing consolidated net income
to common shareholders by the weighted average number
of common shares outstanding for the reporting period.
Diluted consolidated net income per share reflects the potential
dilution that could occur if securities, options or other
CB Financials_8-14_03.indd 39
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contracts to issue common stock were exercised or converted
guidance which limited these disclosures to derivatives,
into common stock and is based upon the weighted average
repurchase agreements and securities lending transactions to
number of common and common equivalent shares out-
the extent that they are offset in the financial statements
standing during the year. Common equivalent shares related
or subject to an enforceable master netting arrangement or
to stock options, nonvested stock awards and MSU Grants
similar agreement. These disclosure requirements are
issued by the Company are calculated using the treasury
effective for fiscal years beginning on or after January 1, 2013
stock method. Outstanding employee and director stock
on a retrospective basis. The adoption of these disclosure
options, nonvested stock awards and MSU Grants issued
requirements in the first quarter of 2014 did not have a
by the Company represent the only dilutive effects on diluted
significant impact on the Company’s consolidated financial
consolidated net income per share. See Note 14 for additional
position or results of operations.
information regarding net income per share.
Use of estimates – Management of the Company has made
certain estimates and assumptions relating to the reporting
of assets and liabilities and the disclosure of contingent
liabilities at the date of the Consolidated Financial Statements
and the reported amounts of revenues and expenses during
the reporting periods to prepare these Consolidated Financial
Statements in conformity with GAAP. Management
believes that such estimates have been based on reasonable
and supportable assumptions and that the resulting
estimates are reasonable for use in the preparation of the
Consolidated Financial Statements. Actual results, however,
could differ from those estimates.
Reporting of Amounts Reclassified
Out of Accumulated Other Comprehensive Income
In February 2013, the FASB issued accounting guidance
which requires companies to provide information regarding
the amounts reclassified out of accumulated other compre-
hensive income by component. A company is required to
present, either on the face of the statement where net income
is presented or in the notes, significant amounts reclassified
out of accumulated other comprehensive income by the
respective line items of net income but only if the amount
reclassified is required by GAAP to be reclassified to net
income in its entirety in the same reporting period. For other
amounts that are not required under GAAP to be reclassified
RECENT ACCOUNTING PRONOUNCEMENTS
ADOPTED
in their entirety to net income, a company is required to
cross-reference to other disclosures required under GAAP
Disclosures about Offsetting Assets and Liabilities
that provide additional detail regarding those amounts.
In December 2011, the FASB issued accounting guidance
which requires companies to disclose information about
This accounting guidance is effective for fiscal years beginning
after December 15, 2012 on a prospective basis. Since the
the nature of their rights of setoff and related arrangements
guidance only affects presentation and disclosure of amounts
associated with their financial instruments and derivative
reclassified out of accumulated other comprehensive
instruments to enable users of financial statements to
income, the adoption of this guidance in the first quarter
understand the effect of those arrangements on their financial
of 2014 did not have a significant impact on the Company’s
position. Each company is required to provide both net
consolidated financial position or results of operations.
and gross information in the notes to its financial statements
for relevant assets and liabilities that are eligible for offset.
In January 2013, the FASB issued additional accounting
40
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RECENT ACCOUNTING PRONOUNCEMENTS
NOT YET ADOPTED
market participants at the measurement date. In determining
fair value, a three level hierarchy for inputs is used. These
Reporting Discontinued Operations and Disclosures
of Disposals of Components of an Entity
levels are:
• Quoted Prices in Active Markets for Identical Assets
In April 2014, the FASB issued accounting guidance which
(“Level 1”) – quoted prices (unadjusted) for an identical
changes the criteria for disposals to qualify as discontinued
asset or liability in an active market.
operations and requires new disclosures about disposals
• Significant Other Observable Inputs (“Level 2”) – quoted
of both discontinued operations and certain other disposals
prices for a similar asset or liability in an active market
that do not meet the new definition. This accounting
or model-derived valuations in which all significant inputs
guidance is effective for fiscal years beginning on or after
are observable for substantially the full term of the asset
December 15, 2014 and interim periods within those years
or liability.
on a prospective basis. The Company is currently evaluating
• Significant Unobservable Inputs (“Level 3”) – unobservable
the impact of adopting this accounting guidance, but it is not
and significant to the fair value measurement of the asset
expected to have a significant impact on the Company’s
or liability.
consolidated financial position or results of operations upon
The Company’s assets and liabilities measured at fair value
adoption in the first quarter of 2016.
on a recurring basis at August 1, 2014 were as follows:
Revenue Recognition
In May 2014, the FASB issued accounting guidance which
clarifies the principles for recognizing revenue and provides a
comprehensive model for revenue recognition. Revenue
recognition should depict the transfer of goods or services to
a customer at an amount that reflects the consideration it
expects to receive in exchange for those goods or services.
The guidance also requires additional disclosures about the
nature, amount, timing and uncertainty of revenue and cash
flows arising from customer contracts. This accounting
guidance is effective for fiscal years beginning after
December 15, 2016 and interim periods within those years.
Early application is not permitted. A company may apply this
accounting guidance either retrospectively or using the
cumulative effect transition method. The Company is
currently evaluating the impact of adopting this accounting
guidance in the first quarter of 2018.
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
Cash equivalents*
Interest rate swap asset
Level 1
Level 2
Level 3
Fair Value
$ 63,068
$ —
$ — $ 63,068
(see Note 6)
—
240
—
240
Deferred compensation
plan assets**
Total assets at fair value
Interest rate swap liability
(see Note 6)
Total liabilities at fair value
25,322
$ 88,390
—
$ 240
—
25,322
$ — $ 88,630
$ —
$ —
$ 7,943
$ 7,943
$ — $ 7,943
$ — $ 7,943
The Company’s assets and liabilities measured at fair value
on a recurring basis at August 2, 2013 were as follows:
Fair Value
Cash equivalents*
Interest rate swap asset
Level 1
Level 2
Level 3
Fair Value
$ 57,767
$ —
$ — $ 57,767
(see Note 6)
—
883
—
883
Deferred compensation
plan assets**
Total assets at fair value
Interest rate swap liability
25,263
$ 83,030
—
$ 883
25,263
—
$ — $ 83,913
(see Note 6)
$ —
Total liabilities at fair value $ —
$ 11,644
$ 11,644
$ — $ 11,644
$ — $ 11,644
* Consists of money market fund investments.
**Represents plan assets invested in mutual funds established under a
Rabbi Trust for the Company’s non-qualified savings plan and is included
in the Consolidated Balance Sheets as other assets (see Note 12).
CB Financials_8-14_03.indd 41
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The Company’s money market fund investments and
Long term debt consisted of the following at:
deferred compensation plan assets are measured at fair value
using quoted market prices. The fair values of the Company’s
interest rate swap asset and liabilities are determined based
on the present value of expected future cash flows. Since the
Company’s interest rate swap values are based on the LIBOR
forward curve, which is observable at commonly quoted
intervals for the full terms of the swaps, it is considered a
Level 2 input. Nonperformance risk is reflected in determin-
ing the fair value of the interest rate swaps by using the
Company’s credit spread less the risk-free interest rate, both
of which are observable at commonly quoted intervals for
the terms of the swaps. Thus, the adjustment for nonperfor-
mance risk is also considered a Level 2 input.
The fair values of accounts receivable and accounts
payable at August 1, 2014 and August 2, 2013, approximate
their carrying amounts because of their short duration.
Revolving Credit Facility expiring
on July 8, 2016
Term loan payable on or before July 8, 2016
Current maturities
Long-term debt
August 1,
2014
August 2,
2013
$ 212,500
187,500
400,000
25,000
$ 375,000
$ 212,500
187,500
400,000
—
$ 400,000
The aggregate maturities of long term debt subsequent to
August 1, 2014 are as follows:
Year
2015
2016
Total
$ 25,000
375,000
$ 400,000
At August 1, 2014, the Company had $20,637 of standby
letters of credit, which reduce the Company’s borrowing
availability under the Revolving Credit Facility (see Note 15).
At August 1, 2014, the Company had $266,863 in borrow-
The fair value of the Company’s variable rate debt, based on
ing availability under the Revolving Credit Facility.
quoted market prices, which are considered Level 1 inputs,
approximates its carrying amounts at August 1, 2014 and
August 2, 2013.
4 INVENTORIES
Inventories were comprised of the following at:
Retail
Restaurant
Supplies
Total
August 1,
2014
August 2,
2013
$ 128,386
22,371
14,669
$ 165,426
$ 112,736
20,214
13,737
$ 146,687
5 DEBT
On July 9, 2011, the Company entered into a five-year
In accordance with the Credit Facility, outstanding borrow-
ings 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, the Company’s outstanding borrowings
were swapped at a weighted average interest rate of 3.73%
(see Note 6 for information on the Company’s interest
rate swaps).
The Credit Facility contains customary financial covenants,
which include maintenance of a maximum consolidated
total leverage ratio and a minimum consolidated interest
coverage ratio. At August 1, 2014 and August 2, 2013,
the Company was in compliance with all debt covenants.
$750,000 credit facility (the “Credit Facility”) consisting of a
The Credit Facility also imposes restrictions on the
$250,000 term loan and a $500,000 revolving credit facility
amount of dividends the Company is permitted to pay and
(the “Revolving Credit Facility”).
the amount of shares the Company is permitted to
repurchase. Provided there is no default existing and the
Company’s availability under the Revolving Credit Facility
42
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plus the Company’s cash and cash equivalents on hand is
A summary of the Company’s interest rate swaps at
at least $100,000 (the “liquidity requirements”), the
August 1, 2014 is as follows:
Company may declare and pay cash dividends on shares of
its common stock and repurchase shares of its common
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 is 3.25 to 1.00 or less, $100,000 (less the amount of any
share repurchases during the current fiscal year) In any
event, as long as the liquidity requirements are met, dividends
may be declared and paid in any fiscal year up to the
amount of dividends permitted and paid in the preceding
fiscal year without regard to the 20% limitation.
6 DERIVATIVE INSTRUMENTS AND
HEDGING ACTIVITIES
For each of the Company’s interest rate swaps, the Company
has agreed to exchange with a counterparty the difference
between fixed and variable interest amounts calculated by
reference to an agreed-upon notional principal amount.
The interest rates on the portion of the Company’s outstand-
ing debt covered by its interest rate swaps is fixed at the
rates in the table below plus the Company’s credit spread.
The Company’s credit spread at August 1, 2014 and August 2,
2013 was 1.50%. All of the Company’s interest rate swaps
are accounted for as cash flow hedges.
Trade Date
August 10, 2010
July 25, 2011
July 25, 2011
September 19, 2011
September 19, 2011
December 7, 2011
March 18, 2013
April 8, 2013
April 15, 2013
April 22, 2013
April 25, 2013
June 18, 2014
June 24, 2014
July 1, 2014
Effective Date
May 3, 2013
May 3, 2013
May 3, 2013
May 3, 2013
May 3, 2013
May 3, 2013
May 3, 2015
May 3, 2015
May 3, 2015
May 3, 2015
May 3, 2015
May 3, 2015
May 3, 2015
May 5, 2015
Term
(in Years)
Notional
Amount
2
2
3
2
2
3
3
2
2
3
3
4
4
4
$200,000
50,000
50,000
25,000
25,000
50,000
50,000
50,000
50,000
25,000
25,000
40,000
30,000
30,000
Fixed
Rate
2.73%
2.00%
2.45%
1.05%
1.05%
1.40%
1.51%
1.05%
1.03%
1.30%
1.29%
2.51%
2.51%
2.43%
The notional amount for the interest rate swap entered into
on June 18, 2014 increases by $40,000 each May over the
four-year term of the interest rate swap beginning in May 2016
until the notional amount reaches $160,000 in May 2018.
The notional amounts for the interest rate swaps entered into
on June 24, 2014 and July 1, 2014 increase by $30,000
each May over the four-year terms of the interest rate swaps
beginning in May 2016 until the notional amounts each
reach $120,000 in May 2018.
The estimated fair values of the Company’s derivative
instruments were as follows:
(See Note 3)
Balance Sheet Location August 1, 2014 August 2, 2013
Interest rate swaps
Other assets
Interest rate swaps
Interest rate swaps
Total liabilities
Current interest rate
swap liability
Long-term interest rate
swap liability
$
240
$ 4,704
$
883
$ —
3,239
11,644
$ 7,943
$ 11,644
CB Financials_8-14_03.indd 43
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The following table summarizes the offsetting of the
The following table summarizes the pre-tax effects of
Company’s derivative assets in the Consolidated Balance
the Company’s derivative instruments on AOCL for each of
Sheets at August 1, 2014 and August 2, 2013:
the three years:
Gross Asset
Amounts
Liability
Amount Offset
Net Asset Amount
Presented in
the Balance Sheets
Amount of Income Recognized in
AOCL on Derivatives (Effective Portion)
2013
2014
2012
August 1, August 2, August 1, August 2, August 1, August 2,
(See Note 3)
2014
2013
2014
2013
2014
2013
Cash flow hedges:
Interest rate swaps
$ 3,058
$ 23,620
$ 17,223
Interest rate
swaps
$240
$1,159
$ — $(276)
$240
$883
The following table summarizes the offsetting of the
Company’s derivative liabilities in the Consolidated Balance
Sheets at August 1, 2014 and August 2, 2013:
Gross Liability
Asset
Amounts
Amount Offset
Net Liability Amount
Presented in
the Balance Sheets
August 1, August 2, August 1, August 2, August 1, August 2,
(See Note 3)
2014
2013
2014
2013
2014
2013
Interest rate
swaps
$8,441 $13,120 $(498) $(1,476) $7,943 $11,644
The following table summarizes the changes in AOCL,
net of tax, related to the Company’s interest rate swaps for
the year ended August 1, 2014:
AOCL balance at August 2, 2013
Other comprehensive income before reclassifications
Amounts reclassified from AOCL into earnings
Other comprehensive income, net of tax
AOCL balance at August 1, 2014
$ (6,612)
6,836
(4,957)
1,879
$ (4,733)
The following table summarizes the pre-tax effects of the
Company’s derivative instruments on income for each of the
The estimated fair values of the Company’s interest rate swap
three years:
assets and liabilities incorporate the Company’s non-
performance risk. The adjustment related to the Company’s
non-performance risk at August 1, 2014 and August 2,
Cash flow hedges:
Location of Loss
Reclassified from
AOCL into Income AOCL into Income (Effective Portion)
(Effective Portion)
Amount of Loss Reclassified from
2013
2014
2012
2013 resulted in reductions of $62 and $123, respectively, in
Interest rate swaps Interest expense $8,068 $20,773 $35,903
the total fair value of the interest rate swap asset and liabili-
ties. The offset to the interest rate swap assets and liabilities
is recorded in accumulated other comprehensive loss
(“AOCL”), net of the deferred tax assets, and will be reclassi-
fied into earnings over the term of the underlying debt.
As of August 1, 2014, the estimated pre-tax portion of
AOCL that is expected to be reclassified into earnings over
the next twelve months is $6,014. Cash flows related to
the interest rate swaps are included in interest expense and
in operating activities.
The following table summarizes the amounts reclassified
out of AOCL related to the Company’s interest rate swaps for
the year ended August 1, 2014:
Details about AOCL
Loss on cash flow hedges:
Interest rate swaps
Tax benefit
Affected Line Item in the
Consolidated Statement of Income
$ (8,068)
3,111
$ (4,957) Net of tax
Interest expense
Provision for income taxes
Any portion of the fair value of the interest rate swaps
determined to be ineffective will be recognized currently in
earnings. No ineffectiveness has been recorded in 2014,
2013 and 2012.
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7 SHARE REPURCHASES
In 2014, 2013 and 2012, subject to a maximum amount as
specified in the table below and the limits imposed by the
Credit Facility, the Company was authorized to repurchase
shares at management’s discretion.
The following table summarizes our share repurchases for
the last three years:
Maximum aggregate
purchase price
Cost of shares repurchased
Shares of common stock
repurchased
2014
2013
2012
$ 50,000
$ 12,473
$ 100,000
$ 3,570
$ 65,000
$ 14,923
The following is a schedule by year of the future minimum
rental payments required under the Company’s operating
leases as of August 1, 2014:
Year
2015
2016
2017
2018
2019
Later years
Total
Sale-Leaseback Transactions
Total
$ 60,569
48,942
43,858
41,592
41,926
518,762
$ 755,649
120,000
44,300
265,538
In 2009, the Company completed sale-leaseback transactions
8 SEGMENT INFORMATION
Cracker Barrel stores represent a single, integrated operation
with two related and substantially integrated product lines.
The operating expenses of the restaurant and retail product
involving 15 of its owned stores and its retail distribution
center. Under the transactions, the land, buildings and improve-
ments at the locations were sold and leased back for terms
of 20 and 15 years, respectively. Equipment was not included.
The leases include specified renewal options for up to 20
lines of a Cracker Barrel store are shared and are indistinguish-
additional years.
able 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:
Restaurant
Retail
Total revenue
2014
2013
2012
$ 2,137,405
546,272
$ 2,683,677
$ 2,104,768
539,862
$ 2,644,630
$ 2,054,127
526,068
$ 2,580,195
The Company leases 65 of its stores pursuant to a sale-
leaseback transaction which closed in 2000. Under the
transaction, the land, buildings and building improvements
at the locations were sold and leased back for a term of
21 years. The leases for these stores include specified renewal
options for up to 20 additional years and have certain
financial covenants related to fixed charge coverage for the
leased stores. At August 1, 2014 and August 2, 2013, the
Company was in compliance with these covenants.
9 LEASES
As of August 1, 2014, the Company operated 216 stores in
10 SHARE-BASED COMPENSATION
Stock Compensation Plans
leased facilities and also leased certain land, a retail distribu-
The Company’s employee compensation plans are adminis-
tion center and advertising billboards.
Rent expense under operating leases, including the
tered by the Compensation Committee of the Company’s
Board of Directors (the “Committee”). The Committee is
sale-leaseback transactions discussed below, for each of the
authorized to determine, at time periods within its discretion
three years was:
Year
2014
2013
2012
Minimum Contingent
Total
$ 71,123
70,095
67,651
$ 242
232
276
$ 71,365
70,327
67,927
and subject to the direction of the Board of Directors,
which employees will be granted awards, the number of shares
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covered by any awards granted, and within applicable limits,
free interest rate. Other nonvested stock awards accrue
the terms and provisions relating to the exercise and vesting of
dividends and their fair value is equal to the market price of
any awards.
the Company’s stock at the date of the grant. Dividends
The Company has one active compensation plan, the
are forfeited for any nonvested stock awards that do not vest.
2010 Omnibus Incentive Compensation Plan (the “2010
The Company’s nonvested stock awards include its
Omnibus Plan”), for employees and non-employee directors
long-term performance plans which were established by the
which authorizes the granting of nonvested stock awards,
Committee for the purpose of rewarding certain officers
performance-based MSU Grants, stock options and other types
with shares of the Company’s common stock if the Company
of share-based awards. The Company also has stock options
achieved certain performance targets. The stock awards under
and nonvested stock outstanding under two other compensa-
the long-term performance plans are calculated or estimated
tion plans (“Prior Plans”) in which no future grants may
based on achievement of financial performance measures.
be made.
The following table summarizes the performance periods
The 2010 Omnibus Plan allows the Committee to grant
and vesting periods for the Company’s nonvested stock awards
awards for an aggregate of 1,500,000 shares of the Company’s
under its long-term performance plans at August 1, 2014:
common stock. However, this share reserve is increased by
shares awarded under this and Prior Plans which are forfeited,
expired, settled for cash and shares withheld by the Company
in payment of a tax withholding obligation. Additionally,
this share reserve was decreased by shares granted from Prior
Plans after July 30, 2010 until December 1, 2010. At
Long-Term Performance Plan
(“LTPP”)
2013 LTPP
2014 LTPP
Performance Period
Vesting Period (in Years)
2013 – 2014
2014 – 2015
2 or 3
2 or 3
The following table summarizes the shares that have
been accrued under the 2013 LTPP and 2014 LTPP at
August 1, 2014, the number of shares authorized for future
August 1, 2014:
issuance under the Company’s active plan is 1,169,019.
The following table summarizes the number of outstand-
2013 LTPP
2014 LTPP
ing awards under each plan at August 1, 2014:
62,426
17,441
2010 Omnibus Plan
Amended and Restated Stock Option Plan
2002 Omnibus Incentive Compensation Plan
Total
254,188
41,184
49,948
345,320
Types of Share-Based Awards
Nonvested Stock
Nonvested stock awards consist of the Company’s common
stock and generally vest over 1–3 years. Generally, the fair
value of each nonvested stock award is equal to the market
price of the Company’s stock at the date of grant reduced
by the present value of expected dividends to be paid prior to
the vesting period, discounted using an appropriate risk-
A summary of the Company’s nonvested stock activity as
of August 1, 2014, and changes during 2014 are presented in
the following table:
Nonvested Stock
Unvested at August 2, 2013
Granted
Vested
Forfeited
Unvested at August 1, 2014
Weighted-
Average
Grant Date
Fair Value
$ 59.83
101.45
94.29
—
$ 68.25
Shares
82,854
165,921
(184,710)
—
64,065
The following table summarizes the total fair value
of nonvested stock that vested for each of the three years:
Total fair value of nonvested stock
$ 17,417
$ 7,445
$ 12,981
2014
2013
2012
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Performance-Based Market Stock Units
The following assumptions were used in determining the
The number of MSU Grants that will ultimately be awarded
fair value for the Company’s MSU Grants:
and will vest at the end of the applicable three-year
performance period 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
Year Ended
August 1, 2014 August 2, 2013 August 3, 2012
Dividend yield***
Expected volatility
Risk-free interest rate range
—
25%
0.7% - 0.8%
3.0%
27%
0.3%
2.2%
45%
0.3%
*** Dividends accrue on the 2014 MSU Grants. Dividends will be forfeited
for any 2014 MSU Grants that do not vest.
to a target number of shares set at the beginning of the
The following table summarizes the shares that have been
period, up to a maximum of 150% of target, based on the
accrued under the 2012 MSU Grants, the 2013 MSU Grants
change in the Company’s cumulative total shareholder return
and 2014 MSU Grants at August 1, 2014:
over the performance period. The probability of the actual
shares expected to be earned is considered in the grant
date valuation; therefore, the expense will not be adjusted
to reflect the actual units earned. In addition to a service
requirement, the vesting of the MSU Grants is also subject to
2012 MSU Grants
2013 MSU Grants
2014 MSU Grants
Stock Options
Shares
69,438
35,921
8,897
the achievement of a specified level of operating income
Prior to 2012, stock options were granted with an exercise
during the performance period. If this performance goal is
price equal to the market price of the Company’s stock
not met, no MSU Grants will be awarded and no compensa-
on the grant date; those option awards generally vest at a
tion expense will be recorded.
cumulative rate of 33% per year beginning on the first
The fair value of the MSU Grants is determined using the
anniversary of the grant date and expire ten years from the
Monte-Carlo simulation model, which simulates a range
date of grant. No stock options were granted in 2012,
of possible future stock prices and estimates the probabilities
2013 or 2014.
of the potential payouts. This model uses the average prices
A summary of the Company’s stock option activity as
for the 60-consecutive calendar days beginning 30 days prior
of August 1, 2014, and changes during 2014 are presented in
to and ending 30 days after the first business day of the
the following table:
performance period. This model also incorporates the follow-
ing ranges of assumptions:
• The expected volatility is a blend of implied volatility based
on market-traded options on our stock and historical
volatility of our stock over the period commensurate with
the three-year performance period.
• The risk-free interest rate is based on the U.S. Treasury
Fixed Options
Shares
Weighted-
Average
Weighted- Remaining Aggregate
Intrinsic
Average Contractual
Value
Term
Price
Outstanding at August 2, 2013
Granted
Exercised
Forfeited
Canceled
Outstanding at August 1, 2014
101,138 $ 37.12
—
—
36.70
(2,423)
—
—
(11,583)
40.01
87,132 $ 36.75
1.95
$ 5,220
rate assumption commensurate with the three-year
Exercisable
87,132 $ 36.75
1.95
$ 5,220
performance period.
• The expected dividend yield is based on our current
dividend yield as the best estimate of projected dividend
yield for periods within the three-year performance period.
CB Financials_8-14_03.indd 47
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The following table summarizes the total intrinsic values
of options exercised during each of the three years:
11 SHAREHOLDER RIGHTS PLAN
On April 9, 2012, the Company’s Board of Directors adopted
2014
2013
2012
a shareholder rights plan, as set forth in the Rights Agree-
Total intrinsic values of
options exercised*
$ 169
$ 10,526
$ 14,859
* The intrinsic value for stock options is defined as the difference between the
current market value and the grant price.
Compensation Expense
The following table highlights the components of share-
based compensation expense for each of the three years:
ment dated as of April 9, 2012 by and between the Company
and American Stock 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 was payable on April 20, 2012
2014
2013
2012
to the shareholders of record as of the close of business on
Nonvested stock awards
MSU Grants
Stock options
Total compensation expense
$ 5,762
2,162
—
$ 7,924
$ 15,416
2,335
88
$ 17,839
$ 11,440
1,690
1,290
$ 14,420
April 20, 2012.
The Rights
The following table highlights the total unrecognized
compensation expense related to nonvested stock and MSU
Grants and the weighted-average periods over which the
expense is expected to be recognized as of August 1, 2014:
Total unrecognized compensation
Weighted-average period in years
Nonvested
Stock
$ 1,959
1.69
MSU
Grants
$ 2,745
1.71
The following table highlights the total income tax benefit
recognized in the Consolidated Statements of Income for
each of the three years:
The Rights initially trade with, and are inseparable from, the
Company’s common stock. The Rights are evidenced only
by the balances indicated in the book-entry account system
of the transfer agent for the Company’s common stock or,
in the case of certificated shares, the certificates that represent
such shares of common stock. New Rights will accompany
any new shares of common stock the Company issues after
April 20, 2012 until the earlier of the Distribution Date,
redemption of the Rights by the Board of Directors or the
final expiration date of the Rights Agreement, each as
described below.
2014
2013
2012
Exercise Price
Total income tax benefit
$ 2,438
$ 5,221
$ 4,254
During 2014, the Company issued 145,900 shares of its
common stock resulting from the vesting of share-based
compensation awards and stock option exercises. Related tax
withholding payments on certain share-based compensation
awards exceeded proceeds received from the exercise of stock
options which resulted in a net reduction to shareholders’
equity of $8,457. The excess tax benefit realized upon
exercise of share-based compensation awards was $1,248.
Each Right will allow its holder to purchase from the Company
one one-hundredth of a share of Series A Junior Participating
Preferred Stock (“Preferred Share”) for $200.00, once the
Rights become exercisable. This portion of a Preferred Share
will give the shareholder approximately the same dividend
and liquidation rights as would one share of common stock.
Prior to exercise, the Right does not give its holder any
dividend, voting, or liquidation rights.
Based on the terms of the Rights Agreement, the Rights
will not be exercisable until 10 days after the public
announcement that a person or group has become an
48
CB Financials_8-14_03.indd 48
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“Acquiring Person” by obtaining beneficial ownership
• will entitle holders upon liquidation either to receive
of 20% or more of the Company’s outstanding common stock
$1.00 per share or an amount equal to the payment made
(the “Distribution Date”). Until the Distribution Date, the
on one share of common stock, whichever is greater.
balances in the book-entry accounting system of the transfer
• will have the same voting power as one share of common
agent for the Company’s common stock or, in the case of
stock.
certificated shares, common stock certificates, will evidence
• if shares of the Company’s common stock are exchanged
the Rights, and any transfer of shares of common stock
via merger, consolidation, or a similar transaction, will
will constitute a transfer of Rights. After the Distribution
entitle holders to a per share payment equal to the payment
Date, the Rights will separate from the common stock
made on one share of common stock.
and will be evidenced by book-entry credits or by Rights
The value of one one-hundredth of a Preferred Share will
certificates that the Company will mail to all eligible holders
generally approximate the value of one share of common stock.
of common stock. Any Rights held by an Acquiring
Person or any associate or affiliate thereof will be void and
may not be exercised.
After the Distribution Date, each Right will generally
entitle the holder, except the Acquiring Person or any
associate or affiliate thereof, to acquire, for the exercise price
of $200.00 per Right (subject to adjustment as provided
in the Rights Agreement), 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
Redemption
The Board of Directors may redeem the Rights for $0.01 per
Right at any time before any person or group becomes an
Acquiring Person. If the Board of Directors redeems any Rights,
it must redeem all of the Rights. Once the Rights are
redeemed, the only right of the holders of Rights will be to
receive the redemption price of $0.01 per Right. The
redemption price will be adjusted if the Company has a stock
split or stock dividends of its common stock.
exercise price. In addition, if the Company is later acquired
Qualifying Offer Provision
in a merger or similar transaction after the Distribution Date,
each Right will generally entitle the holder, except the
Acquiring Person or any associate or affiliate thereof, to acquire,
for the exercise price of $200.00 per Right (subject to
adjustment as provided in the Rights Agreement), shares of
the acquiring corporation having a market value equal to
twice the Right’s then-current exercise price.
At August 1, 2014, none of the Rights were exercisable.
Preferred Share Provisions
Each one one-hundredth of a Preferred Share, if issued:
• will not be redeemable.
• will entitle holders to quarterly dividend payments of
$0.01 per share, or an amount equal to the dividend paid
on one share of common stock, whichever is greater.
The Rights would also not interfere with all-cash, fully
financed tender offers for all shares of common stock that
remain open for a minimum of 60 business days, are subject
to a minimum condition of a majority of the outstanding
shares and provide for a 20 business day “subsequent offering
period” after consummation (such offers are referred to as
“qualifying offers”). In the event the Company receives a
qualifying offer and the Board of Directors has not redeemed
the Rights prior to the consummation of such offer, the
consummation of the qualifying offer shall not cause the
offeror or its affiliates or associates to become an Acquiring
Person, and the Rights will immediately expire upon
consummation of the qualifying offer.
CB Financials_8-14_03.indd 49
49
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Exchange
After a person or group becomes an Acquiring Person, but
before an Acquiring Person owns 50% or more of the
Contributions under both plans may be invested in various
investment funds at the employee’s discretion. Such contri-
butions, including the Company’s matching contributions
Company’s outstanding common stock, the Board of Directors
described below, may not be invested in the Company’s
may extinguish the Rights by exchanging one share of
common stock. In 2014, 2013 and 2012, the Company
common stock or an equivalent security for each Right, other
matched 25% of employee contributions for each participant
than Rights held by the Acquiring 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 reclassifica-
tion of the Preferred Shares or common stock.
Amendments
The terms of the Rights Agreement may be amended by
the Board of Directors without the consent of the holders of
the Rights. After a person or group becomes an Acquiring
Person, the Board of Directors may not amend the agreement
in a way that adversely affects holders of the Rights.
in either plan up to a total of 6% of the employee’s compen-
sation. Employee contributions vest immediately while
Company contributions vest 20% annually beginning on
the first anniversary of a contribution date and are vested
100% on the fifth anniversary of such contribution date.
At the inception of the Non-Qualified Savings Plan,
the Company established a Rabbi Trust to fund the plan’s
obligations. The market value of the trust assets for the
Non-Qualified Savings Plan of $25,322 is included in other
assets and the related liability to the participants of $25,322
is included in other long-term obligations in the Consoli-
dated Balance Sheets. Company contributions under both
plans are recorded as either labor and other related expenses
or general and administrative expenses in the Consolidated
Statements of Income.
Expiration
The following table summarizes the Company’s contribu-
The Rights Agreement will expire on April 9, 2015.
tions for each plan for each of the three years:
12 EMPLOYEE SAVINGS PLANS
The Company sponsors a qualified defined contribution
retirement plan (“401(k) Savings Plan”) covering salaried
and hourly employees who have completed ninety days
of service and have attained the age of twenty-one. This plan
401(k) Savings Plan
Non-Qualified Savings Plan
2014
2013
$ 2,167
253
$ 2,180
241
2012
$ 2,026
283
13 INCOME TAXES
The components of the provision for income taxes for each
allows eligible employees to defer receipt of up to 50%
of the three years were as follows:
of their compensation, as defined in the plan. The Company
also sponsors a non-qualified defined contribution retire-
ment plan (“Non-Qualified Savings Plan”) covering highly
compensated employees, as defined in the plan. This plan
allows eligible employees to defer receipt of up to 50% of
their base compensation and 100% of their eligible bonuses,
as defined in the plan.
2014
2013
2012
Current:
Federal
State
Deferred:
Federal
State
Total provision for income taxes
$ 53,713
4,597
$ 44,853
4,375
$ 34,074
7,928
(2,863)
3,274
$ 58,721
(4,365)
3,654
$ 48,517
886
319
$ 43,207
50
CB Financials_8-14_03.indd 50
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A reconciliation of the Company’s provision for income
Summarized below is a tabular reconciliation of the beginning
taxes and income taxes based on the statutory U.S. federal
and ending balance of the Company’s total gross liability
rate of 35% was as follows:
for uncertain tax positions exclusive of interest and penalties:
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 employee tip income
Other employer tax credits
Other-net
Total provision for income taxes
2014
2013
2012
$ 66,797
$ 58,024
$ 51,201
5,029
5,698
6,424
(9,962)
(3,781)
638
$ 58,721
(9,635)
(5,927)
357
$ 48,517
(9,114)
(4,938)
(366)
$ 43,207
Significant components of the Company’s net deferred tax
liability consisted of the following at:
August 1, 2014 August 2, 2013 August 3, 2012
$ 20,972
$ 18,098
$ 14,167
Balance at beginning of year
Tax positions related to the
current year:
3,989
—
Additions
Reductions
Tax positions related to the
prior year:
1,400
Additions
(1,630)
Reductions
Settlements
(755)
Expiration of statute of limitations (1,144)
$ 22,832
Balance at end of year
3,731
—
3,326
—
191
(280)
—
(768)
$ 20,972
2,556
(1,043)
—
(908)
$ 18,098
August 1, 2014 August 2, 2013
If the Company were to prevail on all uncertain tax
Deferred tax assets:
Compensation and employee benefits
Deferred rent
Accrued liabilities
Insurance reserves
Inventory
Other
Deferred tax assets
Deferred tax liabilities:
Property and equipment
Inventory
Other
Deferred tax liabilities
Net deferred tax liability
$ 10,858
14,900
13,942
11,944
6,212
3,172
$ 61,028
$ 88,543
13,415
9,591
111,549
$ 50,521
$ 16,750
13,535
12,766
12,091
5,669
4,437
$ 65,248
$ 94,179
13,700
9,550
117,429
$ 52,181
The Company believes that adequate amounts of tax,
interest and penalties have been provided for potential
tax uncertainties; these amounts are included in other long-
term liabilities in the Consolidated Balance Sheets. As
of August 1, 2014 and August 2, 2013, the Company’s gross
liability for uncertain tax positions, exclusive of interest
and penalties, was $22,832 and $20,972, respectively.
positions, the reversal of this accrual would be a tax benefit to
the Company and impact the effective tax rate. The following
table highlights the amount of uncertain tax positions,
exclusive of interest and penalties, which, if recognized, would
affect the effective tax rate for each of the three years:
Uncertain tax positions
$ 14,840
$ 13,631
$ 11,764
2014
2013
2012
The Company had $8,559, $7,869 and $6,605 in interest
and penalties accrued as of August 1, 2014, August 2, 2013,
and August 3, 2012, respectively.
The Company recognized accrued interest and penalties
related to unrecognized tax benefits of $691, $1,264 and
$1,225 in its provision for income taxes in August 1, 2014,
August 2, 2013 and August 3, 2012, respectively.
In many cases, the Company’s uncertain tax positions are
related to tax years that remain subject to examination by
the relevant taxing authorities. Based on the outcome of these
examinations or as a result of the expiration of the statutes
of limitations for specific taxing jurisdictions, it is reasonably
possible that the related uncertain tax positions taken
regarding previously filed tax returns could decrease from
those recorded as liabilities for uncertain tax positions
in the Company’s financial statements at August 1, 2014 by
approximately $2,000 to $4,000 within the next twelve
CB Financials_8-14_03.indd 51
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months. At August 1, 2014, the Company was subject to
ultimate liability with respect to these proceedings and
income tax examinations for its U.S. federal income taxes
claims will not materially affect the Company’s consolidated
after 2010 and for state and local income taxes generally
results of operations or financial position.
after 2010.
14 NET INCOME PER SHARE AND
WEIGHTED AVERAGE SHARES
The following table reconciles the components of diluted
earnings per share computations:
2014
2013
2012
The Company maintains insurance coverage for various
aspects of its business and operations. The Company has
elected, however, to retain all or a portion of losses that occur
through the use of various deductibles, limits and retentions
under its insurance programs. This situation may subject the
Company to some future liability for which it is only partially
insured, or completely uninsured. The Company intends
$ 132,128 $ 117,265 $ 103,081
to mitigate any such future liability by continuing to exercise
shares outstanding
23,817,768
23,708,875
23,067,566
Net income per share
numerator
Net income per share
denominator:
Basic weighted average
Add potential dilution:
Stock options,
nonvested stock
awards and
MSU Grants
Diluted weighted average
shares outstanding
prudent business judgment in negotiating the terms and
conditions of its contracts. See Note 2 for a further discussion
of insurance and insurance reserves.
Related to its insurance coverage, the Company is contin-
gently liable pursuant to standby letters of credit as credit
guarantees to certain insurers. As of August 1, 2014, the
148,247
239,446
340,560
Company had $20,637 of standby letters of credit related to
23,966,015
23,948,321
23,408,126
securing reserved claims under workers’ compensation
15 COMMITMENTS AND CONTINGENCIES
During 2014 and through September 25, 2014, the Company
was served with several claims filed as a putative collective
action alleging violations of the Fair Labor Standards Act
(“FLSA”). The Company believes these claims are without
merit and intends to vigorously defend these lawsuits.
These proceedings remain in the early stages. At this time,
the Company cannot reasonably estimate the likely results of
these lawsuits or the economic effects of these lawsuits on
the Company, though an adverse outcome could be material
to the Company’s results of operations or financial
position. See “Item 3. Legal Proceedings” of Part I of this
Annual Report on Form 10-K for further information related
to these claims.
The Company and its subsidiaries are party to various legal
and regulatory proceedings and claims incidental to their
business in the ordinary course. In the opinion of manage-
ment, based upon information currently available, the
52
insurance. All standby letters of credit are renewable annually
and reduce the Company’s borrowing availability under its
Revolving Credit facility (see Note 5).
As of August 1, 2014, the Company is secondarily liable
for lease payments associated with two properties. The
Company is not aware of any non-performance under these
lease arrangements that would result in the Company having
to perform in accordance with the terms of those guarantees,
and therefore, no provision has been recorded in the
Consolidated Balance Sheets for amounts to be paid in case
of non-performance by the third parties by the primary
obligors under such lease agreements.
The Company enters into certain indemnification agree-
ments in favor of third parties in the ordinary course of
business. At August 1, 2014, the Company recorded a
liability of $252 in the Consolidated Balance Sheet related
to legal costs. The Company believes that the probability
of incurring an actual liability under other indemnification
agreements is sufficiently remote so that no additional
liability has been recorded in the Consolidated Balance Sheets.
CB Financials_8-14_03.indd 52
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16 QUARTERLY FINANCIAL DATA
(UNAUDITED)
Quarterly financial data for 2014 and 2013 are summarized
as follows:
2014
Total revenue
Gross profit
Income before
income taxes
Net income
Net income per share –
basic
Net income per share –
diluted
2013
Total revenue
Gross profit
Income before
income taxes
Net income
Net income per share –
basic
Net income per share –
diluted
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
$ 649,141 $ 698,491 $ 643,298 $ 692,747
470,440
443,212
441,791
455,476
39,830
27,160
54,235
37,055
40,886
28,728
55,898
39,185
$
$
1.14 $
1.56 $
1.21 $
1.65
1.14 $
1.55 $
1.20 $
1.63
$ 627,451 $ 702,671 $ 640,407 $ 674,101
463,444
429,593
438,425
458,484
34,596
23,192
46,904
35,168
33,978
24,602
50,304
34,303
$
$
0.98 $
1.48 $
1.04 $
1.44
0.97 $
1.47 $
1.02 $
1.43
CB Financials_8-14_03.indd 53
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CR ACKER BA R R EL OLD COUN TRY STOR E, I NC.
Corporate Officers
Sandra B. Cochran
President and Chief Executive Officer
Beverly K. Carmichael
Senior Vice President and Chief People Officer
Christopher A. Ciavarra
Senior Vice President, Marketing
Laura A. Daily
Senior Vice President, Retail
Anthony P. Guadagno
Vice President, Restaurant Operations
Michael T. Hackney
Regional Vice President, Restaurant Operations
Kathleen A. Hansen
Vice President, Retail Operations
Sandra K. Hayes
Regional Vice President, Retail Operations
Nicholas V. Flanagan
Senior Vice President, Restaurant and Retail Operations
Ray Johnson
Regional Vice President, Restaurant Operations
Edward A. Greene
Senior Vice President, Strategic Initiatives
Lawrence E. Hyatt
Senior Vice President and Chief Financial Officer
Charlie E. Austin
Regional Vice President, Restaurant Operations
Robert E. Bowman, Jr.
Vice President, Internal Audit
Michael W. Mott
Vice President, Human Resources
Thomas R. Pate
Vice President, Training and Management Development
William M. Prentice
Regional Vice President, Restaurant Operations
Beth J. Quinn
Regional Vice President, Retail Operations
Michael J. Chissler
Vice President, Restaurant and Retail Operations Support
Mark W. Romanko
Regional Vice President, Restaurant Operations
Brenda L. Cool
Regional Vice President, Retail Operations
Cindy M. Sasse
Regional Vice President, Retail Operations
P. Doug Couvillion
Vice President, Corporate Controller and Principal Accounting Officer
Michelle R. Scott-Ramirez
Regional Vice President, Retail Operations
Leon De Wet
Vice President, Information Services and CIO
Robert F. Doyle
Vice President, Product Development and Quality Assurance
Alan L. Emery
Regional Vice President, Restaurant Operations
Deborah A. Fratrik
Regional Vice President, Restaurant Operations
Scott A. Gardner
Vice President, Distribution and Logistics
Drew A. Germain
Vice President, Merchandise Planning and Allocation
Joshua L. Greear
Vice President, Financial and Strategic Analysis
David R. Swartling
Regional Vice President, Restaurant Operations
Walter W. Tyree
Regional Vice President, Restaurant Operations
Bart F. Vig
Regional Vice President, Restaurant Operations
Bradley G. Wahl
Vice President, Marketing
Jeffrey M. Wilson
Vice President, Operations Analysis
Michael J. Zylstra
Vice President, General Counsel and Corporate Secretary
54
CB Financials_8-14_03.indd 54
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CR ACKER BA R R EL OLD COU N TRY STOR E, I NC.
Corporate Information
Corporate Offices
Cracker Barrel Old Country Store, Inc.
P.O. Box 787
305 Hartmann Drive
Lebanon, TN 37088-0787
Phone: 615-444-5533
crackerbarrel.com
Transfer Agent
American Stock Transfer & Trust Company
59 Maiden Lane
Plaza Level
New York, NY 10038
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
Nashville, Tennessee
10-K Report
A copy of the Cracker Barrel Old Country Store, Inc. Form 10-K
Annual Report for Fiscal 2014 filed with the Securities and
Exchange Commission, may be obtained without charge through
our Internet website, located at crackerbarrel.com and (without
exhibits) by writing to the Company, attention: Investor Relations.
If requested in writing, exhibits to the Form 10-K Annual 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
Although our company does not sponsor a dividend reinvest-
ment or direct stock purchase plan, our transfer agent, American
Stock Transfer & Trust Company, LLC (“AST”), sponsors and
administers such programs. You may call AST at 800-485-1883
or 718-921-8124 to obtain enrollment forms.
Unless specifically noted otherwise, references in this annual report to “CBRL,”
“Cracker Barrel” or “The Company” refer to Cracker Barrel Old Country Store, Inc.
and its subsidiaries; or its Cracker Barrel Old Country Store® concept.
“Cracker Barrel Old Country Store” name and logo, “Cracker Barrel”,
“Pleasing People”, “Wholesome Fixin’s”,“Homestyle Meals with a Lighter Twist”
and “CB Old Country Store” are trademarks of CBOCS Properties, Inc.
©2014 CBOCS Properties, Inc.