UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[Amendment No. 1]
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal year ended July 30, 2004
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
---------- ----------
Commission file number
000-25225
---------------------
CBRL GROUP, INC.
(Exact name of registrant as specified in its charter)
Tennessee 62-1749513
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
305 Hartmann Drive, P.O. Box 787 37088-0787
Lebanon, Tennessee (Zip code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (615) 443-9869
----------------------
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Par Value $.01)
Common Stock Purchase Rights
(No Par Value)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K/A or any amendment to
this Form 10-K/A. X
--
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2) Yes X No __
The aggregate market value of voting stock held by nonaffiliates of the
registrant, by reference to the price at which the common equity was last sold,
or the average bid and asked price of such common equity, as of the last
business day of the registrant's most recently completed second fiscal quarter
which ended January 30, 2004, was $1,855,515,626. For purposes of this
computation, all directors, executive officers and 10% beneficial owners of the
registrant are assumed to be affiliates. This assumption is not a conclusive
determination for purposes other than this calculation.
As of September 24, 2004, there were 48,859,733 shares of common stock
outstanding.
Documents Incorporated by Reference
-----------------------------------
Document from which Portions Part of Form 10-K/A
are Incorporated by Reference into which incorporated
----------------------------- -----------------------
1. Annual Report to Shareholders Part II
for the fiscal year ended
July 30, 2004 (the "2004 Annual Report")
2. Proxy Statement for Annual Part III
Meeting of Shareholders to be held
November 23, 2004
(the "2004 Proxy Statement")
Explanatory Note
In accordance with our Current Report on Form 8-K, filed with the
Securities and Exchange Commission ("SEC") on February 17, 2005, regarding our
intent to restate our previously filed financial statements for corrections in
accounting for leases, we are filing this Amendment No. 1 on Form 10-K/A (the
"2004 Form 10-K/A") to our Annual Report on Form 10-K for the fiscal year ended
July 30, 2004, filed with the SEC on September 28, 2004 ("Original Filing" and
the "2004 Form 10-K"). This 2004 Form 10-K/A is being filed to reflect certain
restatements for changes in accounting for leases, in our i) consolidated
statements of income, statements of changes in shareholders' equity and
statements of cash flows for the years ended July 30, 2004, August 1, 2003 and
August 2, 2002, ii) balance sheets as of July 30, 2004 and August 1, 2003, and
iii) related footnote disclosures.
On February 17, 2005, the Company announced that it was restating certain
prior financial results because of changes it made in the way it accounted for
leases. The decision to restate was made following a review of its accounting
policies that was prompted by views expressed on February 7, 2005 by the staff
of the SEC (and similar restatements by numerous other companies in the
restaurant, retail and other industries) that indicated that the manner in which
the Company had been accounting for leases needed to be corrected.
Prior to this review, the Company had believed that its accounting was
consistent with generally accepted accounting principles in the United States
("GAAP"). For purposes of recognizing rental expense, the Company had
historically averaged its lease payments over the base term of the lease,
excluding the optional renewal periods and initial build-out periods, during
which it typically has not been required to make lease payments. For purposes of
depreciating leasehold improvements, the Company had historically amortized the
amounts over a longer period, including both the base term of the lease and the
optional renewal periods.
The Company has now determined that the period in which rental expense is
recognized on a straight-line, or average, basis should include any pre-opening
periods during construction for which the Company is legally obligated under the
terms of the lease, and any optional renewal periods, for which at the inception
of the lease, it is reasonably assured that the Company will exercise those
renewal options. This lease period will be consistent with the period over which
leasehold improvements are amortized. See Note 2 to the accompanying
consolidated financial statements for additional information on the restatement
for changes in accounting for leases.
In addition to the restatement for changes in accounting for leases, the
Company has also made additional corrections as described below:
The last paragraph in Part I, Item 3. Legal Proceedings, of the Original
Filing hereby is replaced in its entirety and should read as follows:
"See also Note 10 to the Company's Consolidated Financial
Statements filed or incorporated by reference into Part II,
Item 8 of this Annual Report on Form 10-K/A, which is also
incorporated herein by this reference."
Footnote (b) to Part II, Item 6. Selected Financial Data, of the Original
Filing hereby is replaced in its entirety and should read as follows:
"(b) Comparable store sales consist of sales of units open six
full quarters at the beginning of the year; and are measured
on calendar weeks. Average unit volumes are normalized to 52
weeks for fiscal 2001."
The description of the cash dividends declared line item on the face of the
2004 Consolidated Statement of Changes in Shareholders' Equity in Part II, Item
8. Financial Statements and Supplementary Data, of the Original Filing hereby is
replaced in its entirety and should read as follows:
"Cash dividends declared - $.33 per share"
The amount of "Other-net" for 2003 and 2002 in the reconciliation of the
provision for income taxes to the provision computed at federal statutory income
tax rate in Note 8 to the Consolidated Financial Statements in Part II, Item 8.
Financial Statements and Supplementary Data, of the Original Filing hereby is
replaced in its entirety and should read as follows:
2003 2002
---- ----
"Other - net" 804 96
For the convenience of the reader, the entire 2004 Form 10-K/A is being
filed herein. Except as required to reflect the effects of the restatement for
changes in accounting for leases and other modifications described above,
information not affected remains unchanged and reflects the disclosures made at
the time of the Original Filing of the Form 10-K on September 28, 2004. This
Form 10-K/A does not describe other events occurring after the Original Filing
or modify or update those disclosures affected by subsequent events. This Form
10-K/A should be read in conjunction with our filings made with the SEC
subsequent to the filing of the Original Filing. Accordingly, this Form 10-K/A
only amends and restates Item 9A of Part II and Item 15 of Part IV of the
Original Filing, in each case, solely as a result of, and to reflect, the
restatement, and no other information in the Original Filing is amended hereby.
Additionally, pursuant to the rules of the SEC, Item 6 of Part II of the
Original Filing has been amended to contain currently-dated certifications from
our Chief Executive Officer and Chief Financial Officer, as required by Sections
302 and 906 of the Sarbanes-Oxley Act of 2002 and rules promulated thereunder.
The certifications of our Chief Executive Officer and Chief Financial Officer
are filed as Exhibits 31(a) and (b) and 32 (a) and (b), respectively, to this
2004 Form 10-K/A.
We have not amended and do not intend to amend our previously-filed Annual
Reports on Form 10-K (other than the 2004 Form 10-K) or our Quarterly Reports on
Form 10-Q for the periods affected by the restatement that ended prior to
October 29, 2004. For this reason, the consolidated financial statements,
independent registered public accounting firm reports and related financial
information for the affected periods contained in such reports should no longer
be relied upon.
PART I
PAGE
----
ITEM 1. BUSINESS 7
ITEM 2. PROPERTIES 17
ITEM 3. LEGAL PROCEEDINGS 19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 19
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 22
ITEM 6. SELECTED FINANCIAL DATA 22
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 22
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 22
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 22
ITEM 9A. CONTROLS AND PROCEDURES 22
ITEM 9B. OTHER INFORMATION 23
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 24
ITEM 11. EXECUTIVE COMPENSATION 24
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 24
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 24
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 24
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 25
SIGNATURES 26
Except for specific historical information, the matters discussed in this
Form 10-K/A, as well as the 2004 Annual Report that is incorporated herein by
reference, are forward-looking statements that involve risks, uncertainties and
other factors which may cause actual results and performance of CBRL Group, Inc.
to differ materially from those expressed or implied by those statements. All
forward-looking information is provided by the Company pursuant to the safe
harbor established under the Private Securities Litigation Reform Act of 1995
and should be evaluated in the context of these factors. Forward-looking
statements generally can be identified by the use of forward-looking terminology
such as "assumptions," "target," "guidance," "outlook," "plans," "projection,"
"may," "will," "would," "expect," "intend," "estimate," "anticipate," "believe,"
"potential" or "continue" (or the negative or other derivatives of each of these
terms) or similar terminology. Factors which could materially affect actual
results include, but are not limited to: changes in or implementation of
additional governmental or regulatory rules, regulations and interpretations
affecting accounting (including but not limited to, accounting for convertible
debt under Emerging Issues Task Force ("EITF") Issue Abstract No. 04-08), tax,
wage and hour matters, health and safety, pensions, insurance or other
undeterminable areas; the effects of uncertain consumer confidence or general or
regional economic weakness on sales and customer travel activity; the ability of
the Company to identify, acquire and sell successful new lines of retail
merchandise; commodity and utility price changes; workers' compensation and
group health costs and liabilities; consumer behavior based on concerns over
nutritional or safety aspects of the Company's products or restaurant food in
general; competitive marketing and operational initiatives; the effects of plans
intended to improve operational execution and performance; the actual results of
pending or threatened litigation or governmental investigations or charges and
the costs and effects of negative publicity associated with these activities;
practical or psychological effects of terrorist acts or war and military or
government responses; the effects of increased competition at Company locations
on sales and on labor recruiting, cost, and retention; the ability of and cost
to the Company to recruit, train, and retain qualified restaurant hourly and
management employees; disruptions to the Company's restaurant or retail supply
chain; changes in foreign exchange rates affecting the Company's future retail
inventory purchases; the availability and cost of acceptable sites for
development and the Company's ability to identify such sites; changes in
accounting principles generally accepted in the United States of America or
changes in capital market conditions that could affect valuations of restaurant
companies in general or the Company's goodwill in particular; increases in
construction costs; changes in interest rates affecting the Company's financing
costs; and other factors described from time to time in the Company's filings
with the Securities and Exchange Commission ("SEC"), press releases, and other
communications. References to years (e.g. "2004") are to the Company's fiscal
year unless otherwise specified.
PART I
ITEM 1. BUSINESS
OVERVIEW
CBRL Group, Inc. (the "Company") is a holding company that, through certain
subsidiaries, is engaged in the operation and development of the Cracker Barrel
Old Country Store(R) and Logan's Roadhouse(R) restaurant and retail concepts.
The Company was organized under the laws of the state of Tennessee in August
1998 and maintains an Internet website at http://www.cbrlgroup.com. We make
available free of charge on or through our Internet website our periodic and
other reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities and Exchange Act of 1934 (the "Exchange Act") as soon as reasonably
practicable after we file such material with, or furnish it to, the SEC.
CONCEPTS
Cracker Barrel Old Country Store
--------------------------------
Cracker Barrel Old Country Store, Inc. ("Cracker Barrel"), headquartered in
Lebanon, Tennessee, through its various affiliates, as of September 28, 2004,
operates 506 full-service "country store" restaurants and gift shops, which are
located in 41 states. Cracker Barrel stores are intended to appeal to both the
traveler and the local customer and consistently have been a consumer favorite.
Cracker Barrel was ranked as the top family dining chain for the 14th
consecutive year in the 2004 Restaurants & Institutions magazine "Choice in
Chains" annual consumer survey. Also, in J. D. Power and Associates' inaugural
study of customer satisfaction in the restaurant industry, Cracker Barrel scored
the highest among family dining chains in overall customer satisfaction in its
core market regions and the second highest in those regions among all family and
casual dining chains. Additionally, Cracker Barrel was named "Chain of the Year"
by Restaurant Hospitality magazine in its August 2003 issue. Except for
Christmas day, when they are closed, and Christmas Eve when they close at 2:00
p.m., Cracker Barrel restaurants serve breakfast, lunch and dinner daily between
the hours of 6:00 a.m. and 10:00 p.m. (closing at 11:00 p.m. on Fridays and
Saturdays) and feature home style country cooking from Cracker Barrel's own
recipes using quality ingredients and emphasizing authenticity. Menu items are
moderately priced and include country ham, chicken, fish, roast beef, beans,
turnip greens, vegetable plates, salads, sandwiches, pancakes, eggs, bacon,
sausage and grits among other items. The restaurants do not serve alcoholic
beverages. The stores are constructed in a trademarked rustic, old country store
design with a separate retail area offering a wide variety of decorative and
functional items featuring rocking chairs, holiday and seasonal gifts and toys,
apparel, cookware and foods, including various old fashioned candies and jellies
among other things. Cracker Barrel offers items for sale in the retail store
that are also featured on, or related to, the restaurant menu, such as pies or
cornbread and pancake mixes. A typical store will offer approximately
2,500-3,000 stock-keeping units (SKU's) for sale. The Company believes that
Cracker Barrel achieves high retail (over $470 of retail selling space annually)
sales per square foot both by offering interesting merchandise and by having a
significant source of retail customers from its high volume of restaurant
customers, an average of over 8,000 per week in an average store. Additionally,
Cracker Barrel offers gift cards and selected merchandise at an online store
accessible on the Internet at http://www.crackerbarrel.com.
Stores primarily are located along interstate highways; however, 65 stores
are located near "tourist destinations" or are considered "off-interstate"
stores. In 2005, Cracker Barrel intends to open up to 88% of its new stores
along interstate highways as compared to approximately 75% in 2004. The Company
believes that it should focus primarily on available interstate locations where
Cracker Barrel generates the greatest brand awareness. Off-interstate locations
are expected to represent a meaningful part of Cracker Barrel's future efforts
to expand the brand. The Company has identified approximately 500 potential
trade areas with characteristics that appear to be consistent with those
believed to be necessary to support a successful Cracker Barrel unit.
Logan's Roadhouse
-----------------
Logan's Roadhouse, Inc. ("Logan's"), headquartered in Nashville, Tennessee,
through its various affiliates, as of September 28, 2004, in 18 states operates
113 Logan's restaurants and franchises an additional 20 Logan's restaurants. The
Logan's concept is designed to appeal to a broad range of customers by offering
generous portions of moderately-priced, high quality food in a very casual,
relaxed dining environment that is lively and entertaining. Logan's restaurants
feature steaks, ribs, chicken, seafood dishes and combinations among other items
served in a distinctive atmosphere reminiscent of an American roadhouse of the
1930s and 1940s. The restaurants are open seven days a week, except for
Thanksgiving and Christmas days, for lunch and dinner, and offer full bar
service. Logan's serves lunch and dinner between the hours of 11:00 a.m. and
10:00 p.m. (closing at 11:00 p.m. on Fridays and Saturdays). The Logan's menu is
designed to appeal to a wide variety of tastes, and emphasizes extra-aged,
hand-cut on-premises, USDA choice steaks, and signature dishes such as baked
sweet potatoes and made-from-scratch yeast rolls. The fun atmosphere is enhanced
by display cooking of grilled items and buckets of complimentary roasted
in-shell peanuts on every table, which guests are encouraged to enjoy and let
the shells fall on the floor. Alcoholic beverages represented less than 9% of
Logan's net sales in 2004.
OPERATIONS
Cracker Barrel Old Country Store
--------------------------------
Store Format: The format of Cracker Barrel stores consists of a trademarked
rustic, old country-store style building. All stores are freestanding buildings.
Store interiors are subdivided into a dining room consisting of approximately
30% of the total interior store space, and a retail shop consisting of
approximately 22% of such space, with the balance primarily consisting of
kitchen, storage and training areas. All stores have stone fireplaces, which
burn wood except where not permitted. All are decorated with antique-style
furnishings and other authentic and nostalgic items, reminiscent of and similar
to those found and sold in the past in original old country stores. The front
porch of each store features a row of the signature Cracker Barrel rocking
chairs that are used by guests waiting for a table and are sold in the retail
shop. The kitchens contain modern food preparation and storage equipment
allowing for flexibility in menu variety and development.
Products: Cracker Barrel's restaurant operations, which generated
approximately 76% of Cracker Barrel's total revenue in 2004, offer home-style
country cooking featuring Cracker Barrel's own recipes emphasizing authenticity
and quality. The restaurants offer breakfast, lunch and dinner from a moderately
priced menu. Breakfast items can be ordered at any time throughout the day and
include juices, eggs, pancakes, bacon, country ham, sausage, grits, and a
variety of biscuit specialties, including gravy and biscuits and country ham and
biscuits. Prices for a breakfast meal range from $2.29 to $8.29, and the
breakfast day-part (until 11:00 a.m.) accounted for approximately 22% of
restaurant sales in 2004. Lunch and dinner items include country ham, chicken
and dumplings, chicken fried chicken, meatloaf, country fried steak, pork chops,
fish, steak, roast beef, vegetable plates, salads, sandwiches, soups and
specialty items such as pinto beans and turnip greens. Lunch (11:00 a.m. to 4:00
p.m.) and dinner (4:00 p.m. to close) day-parts reflected approximately 36% and
42% of restaurant sales, respectively, in 2004. The Company also periodically
features new items as off-menu specials to enhance customer interest and
identify potential future additions to the menu. Lunches and dinners range in
price from $3.19 to $12.99. In 2004, Cracker Barrel introduced a new menu
featuring several new products, including daily dinner features that showcase a
popular dinner entree for each day of the week and a low-carbohydrate section on
both its breakfast and lunch/dinner menus. The average check per guest for
fiscal 2004 was $7.68. Cracker Barrel from time to time adjusts its prices. A
price increase of approximately 1.7% was instituted in January 2004.
The retail operations, which generated approximately 24% of Cracker
Barrel's total revenue in 2004, offer a wide variety of decorative and
functional items such as rocking chairs, holiday gifts and toys, apparel, cast
iron cookware, old-fashioned crockery, handcrafted figurines, a book-on-audio
sale and exchange program and various other gift items, as well as various
candies, preserves, syrups and other food items. Many of the candy items,
jellies and jams, along with other high quality products, are sold under the
"Cracker Barrel Old Country Store" brand name. Cracker Barrel sometimes offers
items for sale in the retail store that are also featured on, or related to, the
restaurant menu, such as pies or cornbread and pancake mixes. The Company
believes that Cracker Barrel achieves high retail (over $470 of retail selling
space annually) sales per square foot both by offering interesting merchandise
and by having a significant source of retail customers from the high volume of
restaurant customers, an average of over 8,000 per week in a typical store. More
than 99% of sales in the retail shop are to customers who also are guests in the
restaurant.
Product Development and Merchandising: Cracker Barrel maintains a product
development department, which develops new and improved menu items in response
either to shifts in customer preferences or to create customer interest. Cracker
Barrel merchandising specialists are involved on a continuing basis in selecting
and positioning merchandise in the retail shop with an overall nostalgic theme
targeted to appeal to travelers. Cracker Barrel introduced the first editions of
the proprietary "American Music Legends" series of CD's featuring music stars
from Elvis, to Patsy Cline, to Louis Armstrong and other music celebrities in
the spring of 2004. This new introduction is in addition to its existing first
editions of proprietary "Heritage Music" CDs featuring various styles of
traditional American music from bluegrass, to blues, to Cajun, to gospel and
other styles. Management believes that Cracker Barrel has adequate flexibility
to meet future shifts in consumer preference on a timely basis, although there
can be no assurance that all of its merchandise selections will be successful.
Coordinated seasonal promotions are used regularly in the restaurants and retail
shops.
Store Management and Quality Controls: Cracker Barrel store management
typically consists of a general manager, four associate managers and a retail
manager, who are responsible for an average of 107 employees on two shifts. The
relative complexity of operating a Cracker Barrel store requires an effective
management team at the individual store level. As a motivation to store managers
to improve sales and operational performance, Cracker Barrel maintains a bonus
plan designed to provide store management with an opportunity to share in the
profits of their store. Additionally, Cracker Barrel has a supplemental bonus
plan, providing managers an opportunity to earn additional bonus amounts based
on achieving specific operational targets. To assure that individual stores are
operated at a high level of quality, Cracker Barrel emphasizes the selection and
training of store managers. It also employs district managers to support
individual store managers and regional vice presidents to support individual
district managers. Each district manager's individual span of control typically
is seven to eight individual restaurants, and regional vice presidents support
eight to ten district managers. Each store is assigned to both a restaurant and
a retail district manager and each district is assigned to both a restaurant and
a retail regional vice president. The various levels of restaurant and retail
management work closely together.
The store management recruiting and training program begins with an
evaluation and screening process. In addition to multiple interviews and
background and experience verification, Cracker Barrel conducts testing designed
to identify those applicants most likely to be best suited to manage store
operations. Those candidates who successfully pass this screening process are
then required to complete an 11-week training program consisting of eight weeks
of in-store training and three weeks of training at Cracker Barrel's corporate
facilities. This program allows new managers the opportunity to become familiar
with Cracker Barrel operations, culture, management objectives, controls and
evaluation criteria before assuming management responsibility. Cracker Barrel
provides its managers and hourly employees with ongoing training through its
various development courses taught through a blended learning approach,
including hands-on training, written and Internet-based training. During 2004,
the Company completed installing training computers in all stores and fully
implemented the Internet-based computer-assisted instruction program used to
train both hourly and management staff consistently at all locations.
Additionally, each store has an employee training coordinator who is dedicated
to training hourly employees in the store through the various training methods
mentioned above.
Purchasing and Distribution: Cracker Barrel negotiates directly with food
vendors as to specification, price and other material terms of most food
purchases. Cracker Barrel is a party to a prime vendor contract with an
unaffiliated distributor with custom distribution centers in Lebanon, Tennessee;
McKinney, Texas; Gainesville, Florida; Elkton, Maryland; and Ft. Mill, South
Carolina. In June 2003 this vendor's contract was renewed through 2007 with no
price increase from 2002 pricing until 2005. The contract does provide for fuel
cost adjustments under certain conditions. The contract will remain in effect
until both parties mutually modify it in writing or until terminated by either
Cracker Barrel or the distributor upon 180 days written notice to the other
party. Cracker Barrel purchases the majority of its food products and restaurant
supplies on a cost-plus basis through its unaffiliated distributor. The
distributor is responsible for placing food orders and warehousing and
delivering food products to Cracker Barrel's stores. Deliveries generally are
made once per week to the individual stores. Certain perishable food items are
purchased locally by Cracker Barrel stores.
Four food categories (dairy, including eggs, beef, pork and poultry)
account for the largest shares of Cracker Barrel's food purchasing expense at
approximately 15%, 14%, 13% and 11%, respectively, but each category does
include several individual items. The single food item within these categories
accounting for the largest share of Cracker Barrel's food purchasing expense was
chicken tenderloin at approximately 7% of food purchases in 2004. Cracker Barrel
presently purchases its beef through six vendors, pork through eight vendors,
and poultry through eight vendors. Cracker Barrel purchases its chicken
tenderloin through two vendors. Dairy and eggs are purchased through numerous
vendors including local vendors. Should any food items from these vendors become
unavailable, management believes that these food items could be obtained in
sufficient quantities from other sources at competitive prices.
The majority of retail items (approximately 69% in 2004) are centrally
purchased directly by Cracker Barrel from domestic and international vendors and
warehoused at the Company's owned Lebanon distribution center. Approximately 35%
of Cracker Barrel's retail purchases in 2004 were directly from the People's
Republic of China, and the Company believes that other of its retail merchandise
vendors may also make such purchases of items sold to Cracker Barrel. The
distribution center fulfills retail item orders generated by Cracker Barrel's
automated replenishment system and generally ships the retail orders once a week
to the individual stores. Certain retail items, not centrally purchased and
warehoused at the distribution center, are drop-shipped directly from Cracker
Barrel's vendors to its stores. The distribution center is a 367,200 square foot
warehouse facility with 36 foot ceilings and 170 bays, and includes an
additional 13,800 square feet of office and maintenance space. The facility
originally was built in 1993 and expanded in 1996. On occasion, other facilities
have been used for seasonal or temporary storage.
Cost and Inventory Controls: Cracker Barrel's computer systems and various
analysis tools are used to evaluate store operating information and provide
management with reports to determine if any unusual variances in food costs,
labor costs or operating expenses have occurred. Management also monitors
individual store restaurant and retail sales on a daily basis and closely
monitors sales mix, sales trends, operational costs and inventory levels. The
information generated by the computer systems, analysis tools and monitoring
processes are used to manage the operations of the store, replenish retail
inventory levels and to facilitate retail purchasing decisions. These systems
and processes also are used in the development of forecasts, budget analyses,
and planning.
Guest Satisfaction: Cracker Barrel is committed to providing its guests a
home-style, country-cooked meal, and a variety of retail merchandise served and
sold with genuine hospitality in a comfortable environment, in a way that evokes
memories of the past. Cracker Barrel's commitment to offering guests a quality
experience begins with its employees. Its mission statement, "Pleasing People",
means all people, guests and employees alike, and the Company's employees are
trained and reinforced on the importance of that mission in a culture of mutual
respect. Cracker Barrel also is committed to staffing each store with an
experienced management team to ensure attentive guest service and consistent
food quality. Through the regular use of guest surveys and store visits by its
district managers and regional vice presidents, management receives valuable
feedback, which it uses in its ongoing efforts to improve the stores and to
demonstrate Cracker Barrel's continuing commitment to pleasing its guests.
Cracker Barrel also has for many years had a guest relations call center that
takes comments and suggestions from guests and forwards them to operations or
other management for information and follow up. Cracker Barrel has public
notices in its menus, on its website and posted in its restaurants informing
customers and employees about how to contact Cracker Barrel by Internet or
toll-free telephone number with questions, complaints or concerns regarding
services or products. Cracker Barrel conducts training in how to gather
information and investigate and resolve all customer concerns. This is
accompanied by comprehensive training for all store employees on Cracker
Barrel's public accommodations policy and its commitment to "pleasing people."
In fiscal year 2005, the Company will implement an anonymous, unannounced,
third-party store testing program, to ensure compliance with its guest
satisfaction policies and commitments. In 2005, Cracker Barrel intends to
introduce an improved interactive voice response ("IVR") system to monitor all
stores on a monthly basis. Cracker Barrel has used an IVR system in the past to
monitor the performance of new restaurants and to provide insight into the
performance of poorer performing stores. The use of the IVR system will be
extended to provide information in a highly objective and consistent manner in
order for management to take appropriate action.
Marketing: Outdoor advertising (i.e., billboards and state department of
transportation signs) is the primary advertising medium utilized to reach
consumers in the primary trade area for each Cracker Barrel store and also to
reach interstate travelers and tourists. Outdoor advertising accounted for
approximately 60% of advertising expenditures, with approximately 1,730
billboards as of the end of 2004, of which 230 billboards were gratis to help
celebrate the Company's 35th anniversary. In recent years Cracker Barrel has
utilized other types of media, such as radio and print, in its core markets to
maintain customer awareness, and outside of its core markets to increase name
awareness and to build brand loyalty. Cracker Barrel defines its core markets
based on geographic location, longevity in the market and name awareness in each
market. Cracker Barrel plans to maintain its overall advertising spending at
approximately 2% of Cracker Barrel's revenues in 2005, as it has since 2000.
Outdoor advertising should continue to represent approximately 60% of
advertising expenditures in 2005. New store locations generally are not
advertised in the media until several weeks after they have been opened in order
to give the staff time to adjust to local customer habits and traffic volume,
after which time a full marketing plan may be implemented.
Logan's Roadhouse
Store Format: Logan's restaurants generally are constructed of rough-hewn
cedar siding in combination with bands of corrugated metal outlined in red neon.
Interiors are decorated with murals and other artifacts depicting scenes or
billboard advertisements reminiscent of American roadhouses of the 1930s and
1940s, concrete and wooden planked floors and neon signs. The lively, upbeat,
friendly, relaxed atmosphere seeks to appeal to families, couples, single adults
and business persons. The restaurants feature display cooking and an
old-fashioned meat counter displaying ribs and hand-cut USDA choice steaks, and
also include a spacious, comfortable bar area. While dining or waiting for a
table, guests may eat complimentary roasted in-shell peanuts and toss the shells
on the floor. In the waiting area they also may watch as cooks prepare steaks
and other entrees on gas-fired mesquite grills. Many of the restaurants feature
a complimentary Wurlitzer(R) jukebox in the waiting or bar area. All of these
features are intended to emphasize a relaxed, roadhouse-type environment.
Logan's is in the process of developing and designing a new prototype restaurant
that it expects to test with an opening in late 2005 or early 2006 and regularly
sometime thereafter.
Products: Logan's restaurants offer a wide variety of items designed to
appeal to a broad range of consumer tastes. Specialty appetizers include hot
wings "Roadhouse-style", baby back rib baskets and "Roadhouse" nachos. The
Logan's dinner menu features an assortment of specially seasoned USDA choice
steaks, extra-aged, and cut by hand on premises. Guests also may choose from
slow-cooked baby back ribs, seafood, mesquite-grilled shrimp, mesquite-grilled
pork chops, grilled chicken and an assortment of hamburgers, salads and
sandwiches. All dinner entrees include dinner salad, made-from-scratch yeast
rolls and a choice of brown sugar and cinnamon sweet potato, baked potato,
mashed potatoes, steamed vegetables, fries or other side items at no additional
cost. Less than 9% of Logan's net sales in 2004 were from alcoholic beverages.
In 2004, Logan's introduced a happy hour in most of its restaurants to increase
the incidence of alcohol sales. The happy hour was introduced with continued
emphasis on responsible alcohol service through training and operational
standards. Logan's express lunch menu provides specially priced items to be
served in less than 15 minutes. All lunch salads are served with
made-from-scratch yeast rolls, and all lunch sandwiches are served with
home-style potato chips at no additional cost. In 2004, lunch and dinner
accounted for approximately 35% and 65% of Logan's sales, respectively. Prices
range from $4.99 to $8.99 for lunch items and from $5.59 to $18.99 for dinner
entrees. Logan's generally targets to achieve value parity or advantage relative
to key competitors, especially on comparable menu items. The average check per
customer for 2004 was $11.85, including alcoholic beverages. A price increase of
0.2% was instituted on September 15, 2003, which affected only soft drinks. An
increase of 0.5% was instituted on October 27, 2003 and an increase of 2.3% was
also instituted on May 3, 2004.
Product Development: In 2004, Logan's hired its first full-time senior
director of food and beverage development to increase its focus on enhancing and
developing the brand through improved and appealing product offerings. Logan's
tests various new products in an effort to obtain the highest quality products
possible and to be responsive to changing customer tastes. In order to maximize
operating efficiencies and provide the freshest ingredients for its food
products, purchasing decisions are made by Logan's corporate management.
Management believes that Logan's has adequate flexibility to meet future shifts
in consumer preference on a timely basis.
Restaurant Management and Quality Controls: Logan's restaurant management
typically consists of a general manager, one kitchen manager and three to four
assistant managers who are responsible for approximately 78 hourly employees.
Each restaurant employs a skilled meat-cutter to cut steaks from USDA choice
beef. The general manager of each restaurant is responsible for the day-to-day
operations of the restaurant, including maintaining high standards of quality
and performance established by Logan's corporate management. The relative
complexity of operating a Logan's restaurant requires an effective management
team at the individual restaurant level. As a motivation to restaurant managers
to increase revenues and operational performance, Logan's maintains a bonus plan
that rewards managers for achieving sales and profit targets as well as key
operating cost measures. Logan's expects to increase the emphasis on overall
financial performance for its managers in 2005. Logan's restaurant management
teams typically are comprised of one to two persons who were promoted into
management positions from non-management positions and two to three managers
with previous management experience. To assure that individual restaurants are
operated at high standards of quality, Logan's has regional managers to support
individual restaurant managers and three regional vice presidents and a senior
vice president of operations to support individual regional managers. Each
regional manager supports 4 to 6 individual restaurants, and each regional vice
president supports 7 to 8 regional managers. Through regular visits to the
restaurants, the senior vice president of operations, the regional vice
presidents, the regional managers and other senior management ensure that the
Logan's concept, strategy and standards of quality are being adhered to in all
aspects of restaurant operations.
Logan's requires that its restaurant managers have significant experience
in the full-service restaurant industry. All new managers are required to
complete a comprehensive ten-week training course. This course is comprised of
eight weeks of training at a Logan's restaurant and two weeks of classroom
training conducted at the Logan's training facility in Nashville. The entire
course emphasizes the Logan's operating strategy, procedures and standards.
Logan's also has a specialized training program required for managers and hourly
service employees on responsible alcohol service.
Purchasing and Distribution: Logan's strives to obtain consistent quality
items at competitive prices from reliable sources. Logan's negotiates directly
with food vendors as to specifications, price and other material terms of most
food purchases. Where applicable, Logan's works with the purchasing function at
Cracker Barrel to seek possible synergies from combined activities. Logan's
purchases the majority of its food products and restaurant supplies on a
cost-plus basis through the same unaffiliated distributor that is used by
Cracker Barrel. The distributor is responsible for placing food orders and
warehousing and delivering food products for Logan's restaurants. Certain
perishable food items are purchased locally by the restaurants.
The single food item accounting for the largest share (approximately 35%)
of Logan's food cost is beef. Steaks are hand-cut on the premises, in contrast
to many in the restaurant industry that purchase pre-portioned steaks. Logan's
presently purchases its beef through one supply contract. Should any beef items
from this supplier become unavailable for any reason, management believes that
such items could be obtained in sufficient quantities from other sources at
competitive prices.
Cost and Inventory Controls: Management closely monitors sales, product
costs and labor at each of its restaurants. Daily sales and weekly restaurant
operating results are analyzed by management to detect trends at each location,
and negative trends are addressed promptly. Financial controls are maintained
through management of an accounting and information management system that is
implemented at the restaurant level. Administrative and management staff
prepares daily reports of sales, labor and customer counts. On a weekly basis,
condensed operating statements are compiled by the accounting department and
provide management a detailed analysis of sales, product and labor costs, with a
comparison to budget and prior year performance. These systems also are used in
the development of budget analyses and planning.
Guest Satisfaction: Logan's is committed to providing its guests prompt,
friendly, efficient service, keeping table-to-server ratios low and staffing
each restaurant with an experienced management team to ensure attentive guest
service and consistent food quality. Through the regular use of marketing
research, guest feedback to the managers while in the restaurant and an
outsourced "secret shoppers" program, management receives valuable feedback,
which it uses to improve restaurants and demonstrate a continuing interest in
guest satisfaction. Management frequently evaluates new technology and advanced
methods of studying and enhancing guest satisfaction on an ongoing basis.
Marketing: Logan's employs an advertising and marketing strategy designed
to establish and maintain a high level of name recognition and to attract new
customers. Logan's primarily uses radio advertising in selected markets.
Management's goal is to develop a greater number of restaurants in certain
markets to support and enhance the cost-efficient use of television, radio and
outdoor advertising. In past years Logan's has spent approximately 1.3% to 1.4%
of revenues on advertising and expects to do so in 2005 even though it only
spent 0.5% in 2004. With changes in Logan's management during 2004 and the
resulting refocus of management priorities on improving the brand and clarifying
the media message, Logan's accordingly reduced its advertising spending. Logan's
also engages in a variety of promotional activities, such as contributing time,
money and complimentary meals to charitable, civic and cultural programs, in
order to increase public awareness of Logan's restaurants. Logan's also has
certain relationships with the National Football League's Tennessee Titans,
including two concession facilities (named "Logan's Landing") inside the
Nashville, Tennessee Coliseum and various promotions during and around the games
as well as other events, such as home football games for Tennessee State
University. Additionally, Logan's roasted in-shell peanuts are sold at the
Gaylord Entertainment Center, home of the Nashville Predators of the National
Hockey League.
Franchising: Prior to the Company acquiring Logan's Roadhouse, Inc.,
Logan's entered into certain area development agreements and accompanying
franchise agreements. Two franchisees operate 20 Logan's restaurants in 4
states, and have rights under the existing agreements, subject to development
terms, conditions and timing requirements, to open up to 18 additional locations
in those same states plus parts of Oregon. Certain of the agreements provide for
the possible acquisition of the franchise locations by Logan's under specified
terms. Management is not currently planning any other franchising opportunities
in the near future beyond the current development agreements, although Logan's
believes additional franchising could become an opportunity in the future.
Logan's offers no financing, financial guarantees or other financial assistance
to its franchisees and has no ownership interest in any franchisee properties or
assets.
UNIT DEVELOPMENT
Cracker Barrel opened 24 new stores in 2004. Cracker Barrel plans to open
25 new stores during 2005, two of which already are open as of September 28,
2004.
Logan's opened 11 new company-operated restaurants and four franchised
restaurants in 2004. Logan's plans to open 18 new company-operated restaurants
and five franchised restaurants during 2005. Six of the planned company-operated
restaurants already are open as of September 28, 2004.
Of the 506 Cracker Barrel stores open as of September 28, 2004, the Company
owns 365, while the other 141 properties are either ground leases or ground and
building leases. The current Cracker Barrel store prototype is approximately
10,000 square feet including approximately 2,200 square feet in the retail
selling space. The prototype has 194 seats in the restaurant.
Of the 133 Logan's restaurants open as of September 28, 2004, 20 are
franchised restaurants. Of the remaining 113 Logan's restaurants, 58 are owned
and 55 are ground leases. The current Logan's restaurant prototype is
approximately 8,023 square feet with 286 seats, including 24 seats at the bar.
Logan's is in the process of developing and designing a new prototype restaurant
that it expects to test with an opening in late 2005 or early 2006 and regularly
sometime thereafter.
EMPLOYEES
As of July 30, 2004, CBRL Group, Inc. employed 30 people, of whom 12 were
in advisory and supervisory capacities and 7 were officers of the Company.
Cracker Barrel employed approximately 60,000 people, of whom 463 were in
advisory and supervisory capacities, 3,033 were in store management positions
and 36 were officers. Logan's employed approximately 9,200 people, of whom 79
were in advisory and supervisory capacities, 603 were in restaurant management
positions and 6 were officers. Many of the restaurant personnel are employed on
a part-time basis. Competition for and availability of qualified new employees
has always been difficult, contributing to increases in store labor expenses,
but general economic and labor market conditions have been relatively soft in
recent quarters, contributing to less wage pressure than in prior years. None of
the employees of the Company or its subsidiaries are represented by any union,
and management considers its employee relations to be good.
COMPETITION
The restaurant business is highly competitive and often is affected by
changes in the taste and eating habits of the public, local and national
economic conditions affecting spending habits, and population and traffic
patterns. Restaurant industry segments overlap and often provide competition for
widely diverse restaurant concepts. In exceptionally good economic times,
consumers can be expected to patronize a broader range of restaurants and the
breadth of competition at different restaurant segments is likewise increased.
The principal basis of competition in the industry is the quality, variety and
price of the food products offered. Site selection, quality and speed of
service, advertising and the attractiveness of facilities are also important.
There are many restaurant companies catering to the public, some of which
are substantially larger and have greater financial and marketing resources than
those of either Cracker Barrel or Logan's, and which compete directly and
indirectly in all areas in which either Cracker Barrel or Logan's operates.
TRADEMARKS
Cracker Barrel and Logan's deem the trademarks owned by them or their
affiliates to be of substantial value. Their policy is to obtain federal
registration of their trademarks and other intellectual property whenever
possible and to pursue vigorously any infringement of trademarks.
RESEARCH AND DEVELOPMENT
While research and development are important to the Company, these
expenditures have not been material due to the nature of the restaurant and
retail industry.
SEASONAL ASPECTS
Historically the profits of the Company have been lower in the first three
fiscal quarters and highest in the fourth fiscal quarter, which includes much of
the summer vacation and travel season. Management attributes these variations
primarily to the increase in interstate tourist traffic and propensity to dine
out during the summer months, whereas after the school year begins and as the
winter months approach, there is a decrease in interstate tourist traffic and
less of a tendency to dine out due to inclement weather. The Company's retail
sales historically have been highest in the Company's second fiscal quarter,
which includes the Christmas holiday shopping season.
SEGMENT REPORTING
The Company has one reportable segment. See Notes 3 and 9 to the
consolidated financial statements contained in the 2004 Annual Report
incorporated by reference in Part II of this 2004 Form 10-K/A for more
information on segment reporting.
WORKING CAPITAL
In the restaurant industry, substantially all sales transactions occur
either in cash or by third-party credit card. Like most other restaurant
companies, the Company is able to, and may often, operate with a working capital
deficit. Restaurant inventories purchased through the Company's principal food
distributor now are on terms of net zero days, while restaurant inventories
purchased locally generally are financed through normal trade credit. Because of
its retail operations, which have a lower product turnover than the restaurant
business, the Company carries larger inventories than many other companies in
the restaurant industry. Retail inventories purchased domestically generally are
financed from normal trade credit, while imported retail inventories generally
are purchased through letters of credit and wire transfers. These various trade
terms are aided by rapid product turnover of the restaurant inventory. Employee
compensation and benefits payable generally may be related to weekly, bi-weekly
or semi-monthly pay cycles, and many other operating expenses have normal trade
terms.
ITEM 2. PROPERTIES
The Company's corporate headquarters are located on approximately 10 acres
of land owned by Cracker Barrel in Lebanon, Tennessee. The Company utilizes
10,000 square feet of office space for its corporate headquarters.
The Cracker Barrel corporate headquarters and warehouse facilities are
located on approximately 120 acres of land owned by Cracker Barrel in Lebanon,
Tennessee. Cracker Barrel utilizes approximately 110,000 square feet of office
space for its corporate headquarters and decorative fixtures warehouse. Cracker
Barrel also utilizes 367,200 square feet of warehouse facilities and an
additional 13,800 square feet of office and maintenance space for its retail
distribution center.
The Logan's corporate headquarters and training facility are located in
approximately 25,000 and 6,000 square feet, respectively, in Nashville,
Tennessee, under two leases, both of which expire on April 1, 2010.
Cracker Barrel owns and operates a motel in Lebanon, Tennessee which is
used for housing its management trainees when they are in the classroom portion
of their training, and which also serves the general public.
In addition to the various corporate facilities, 33 properties owned or
leased for future development, motel, and 6 parcels of excess real property and
improvements including one leased property, which the Company intends to dispose
of, Cracker Barrel and Logan's own or lease the following store properties as of
September 28, 2004:
State Cracker Barrel Logan's Combined
----- -------------- ------------- -------------
Owned Leased Owned Leased Owned Leased
Tennessee 33 12 12 4 45 16
Florida 39 11 4 2 43 13
Texas 23 4 9 11 32 15
Georgia 26 8 7 3 33 11
Indiana 20 5 6 4 26 9
Ohio 22 9 1 2 23 11
Alabama 14 8 6 5 20 13
Kentucky 17 9 - 5 17 14
Michigan 14 3 2 10 16 13
North Carolina 20 7 - - 20 7
Virginia 15 3 6 1 21 4
Illinois 21 1 - - 21 1
Pennsylvania 8 10 - - 8 10
South Carolina 11 6 - - 11 6
Missouri 12 3 - 1 12 4
Mississippi 8 3 1 3 9 6
Louisiana 7 2 3 2 10 4
Arkansas 4 6 1 1 5 7
Arizona 2 7 - - 2 7
West Virginia 3 5 - 1 3 6
New York 7 1 - - 7 1
New Jersey 2 4 - - 2 4
Oklahoma 4 2 - - 4 2
Kansas 4 1 - - 4 1
Wisconsin 5 - - - 5 -
Colorado 3 1 - - 3 1
Massachusetts - 4 - - - 4
Maryland 3 1 - - 3 1
Iowa 3 - - - 3 -
New Mexico 2 1 - - 2 1
Utah 3 - - - 3 -
Connecticut 1 1 - - 1 1
Minnesota 2 - - - 2 -
Montana 2 - - - 2 -
Nebraska 1 1 - - 1 1
Delaware - 1 - - - 1
Idaho 1 - - - 1 -
New Hampshire 1 - - - 1 -
North Dakota 1 - - - 1 -
Rhode Island - 1 - - - 1
South Dakota 1 - - - 1 -
Total 365 141 58 55 423 196
See "Business-Operations" and "Business-Expansion" in Item I of this 2004
Form 10-K/A for additional information on the Company's and its subsidiaries'
properties.
ITEM 3. LEGAL PROCEEDINGS
Part I, Item 3 of the 2003 Form 10-K is incorporated herein by this
reference.
Part II, Item 1 of the Company's Quarterly Report on Form 10-Q for the
quarter ended October 31, 2003 and filed with the SEC on December 5, 2003 is
incorporated herein by this reference.
Part II, Item 1 of the Company's Quarterly Report on Form 10-Q for the
quarter ended January 30, 2004 and filed with the SEC on March 5, 2004 is
incorporated herein by this reference.
Part II, Item 1 of the Company's Quarterly Report on Form 10-Q for the
quarter ended April 30, 2004 and filed with the SEC on June 2, 2004 is
incorporated herein by this reference.
Item 7.01 of the Company's Current Report on Form 8-K filed with the
Commission on September 9, 2004 is incorporated herein by this reference.
See also Note 10 to the Company's Consolidated Financial Statements filed
or incorporated by reference into Part II, Item 8 of this Annual Report on Form
10-K/A, which also is incorporated herein by this reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
Pursuant to Instruction 3 to Item 401(b) of Regulation S-K and General
Instruction G(3), the following information is included in Part I of this 2004
Form 10-K/A.
Executive Officers of the Registrant
------------------------------------
The following table sets forth certain information concerning the executive
officers of the Company, as of September 28, 2004:
Name Age Position with Registrant
---- --- -----------------------------------
Dan W. Evins 69 Chairman of the Board
Michael A. Woodhouse 59 President & Chief Executive Officer
Lawrence E. White 54 Senior Vice President, Finance
& Chief Financial Officer
James F. Blackstock 57 Senior Vice President,
General Counsel and Secretary
Norman J. Hill 62 Senior Vice President, Human
Resources
Patrick A. Scruggs 40 Vice President, Accounting and Tax,
& Chief Accounting Officer
Donald M. Turner 56 President and Chief Operating
Officer of Cracker Barrel Old
Country Store, Inc.
Cyril J. Taylor 50 Executive Vice President of Cracker
Barrel Old Country Store, Inc.
David L. Gilbert 47 Chief Administrative Officer of
Cracker Barrel Old Country
Store, Inc.
G. Thomas Vogel 40 President and Chief Operating
Officer of Logan's Roadhouse, Inc.
The following information summarizes the business experience of each
executive officer of the Company for at least the past five years:
Prior to his employment with the Company in January 1999, Mr. Evins was
Chairman of the Board and Chief Executive Officer ("CEO") of Cracker Barrel
since its founding in 1969. He continued to serve as CEO of Cracker Barrel until
August 2001. Mr. Evins has 35 years of experience in the restaurant and retail
industries.
Prior to his employment with the Company in January 1999, Mr. Woodhouse was
Senior Vice President of Finance and Chief Financial Officer ("CFO") of Cracker
Barrel since December 1995. Mr. Woodhouse served the Company as Senior Vice
President of Finance and CFO from January 1999 to July 1999, as Executive Vice
President and Chief Operating Officer ("COO") from August 1999 until July 2000
and then as President and COO from August 2000 until July 2001 when he assumed
his current positions. Mr. Woodhouse has 20 years of experience in the
restaurant industry and 12 years of experience in the retail industry.
Prior to his employment with the Company in September 1999, Mr. White was
Executive Vice President and Chief Financial Officer of Boston Chicken, Inc.
from 1998 to 1999, where he was part of a new management team brought in for an
operational and financial turnaround. Mr. White has 17 years of experience in
the restaurant industry and 5 years of experience in the retail industry.
Mr. Blackstock served the Company as Vice President, General Counsel and
Secretary from January 1999 to February 2000 when he was promoted to Senior Vice
President. Prior to his employment with the Company in January 1999, Mr.
Blackstock was Vice President, General Counsel and Secretary of Cracker Barrel
from June 1997 until January 1999. Mr. Blackstock has 11 years of experience in
the restaurant and retail industries.
Prior to his employment with the Company in January 2002, Mr. Hill was
Senior Vice President of Human Resources for Cracker Barrel from October 1996.
Mr. Hill has 25 years of experience in the restaurant industry and 8 years of
experience in the retail industry.
Prior to his employment with the Company in January 1999, Mr. Scruggs was
employed by Cracker Barrel since April 1989. Mr. Scruggs has served as Assistant
Treasurer of Cracker Barrel since August 1993. Mr. Scruggs has 15 years of
experience in the restaurant and retail industries.
Mr. Turner returned to Cracker Barrel in December 1999, serving as
Executive Vice President and Chief Operations Officer until his promotion to
President and Chief Operating Officer in August 2001. Prior to his return to
Cracker Barrel in November 1999, Mr. Turner was retired. Mr. Turner retired from
Cracker Barrel as Senior Vice President and Chief Operations Officer in 1993,
prior to which he served in various capacities since 1976. Mr. Turner has 23
years of experience in the restaurant industry and 25 years of experience in the
retail industry.
Mr. Taylor started his career with Cracker Barrel in 1978 as a Restaurant
Management Trainee and has regularly been promoted to positions of increasing
responsibility and authority, becoming Senior Vice President of Operations in
July of 2003. Prior to becoming Senior Vice President of Operations, Mr. Taylor
was Senior Vice President of Restaurant Operations from August of 2002 to July
of 2003, Divisional Vice President of Restaurant Operations from August of 2000
to July of 2002 and Vice President of Operations Administration from August 1999
to July 2000. Mr. Taylor has 26 years of experience in the restaurant and retail
industries.
Prior to his employment with Cracker Barrel in July 2001, Mr. Gilbert was
employed by Shoney's Inc. as its Executive Vice President and Chief
Administrative Officer from January 1999 to July 2001 and its Senior Vice
President of Real Estate from January 1998 to January 1999. Mr. Gilbert has 26
years of experience in the restaurant industry and 3 years of experience in the
retail industry.
Prior to his employment with Logan's in August 2003, Mr. Vogel was with
Darden Restaurants Inc., since August 1991 serving in various capacities for its
Red Lobster concept, including Senior Vice President of Operations,
West/Southeast Divisions from June 1999 to August 2003, Vice President of Food
and Beverage from November 1997 to June 1999, and Concept Development Director
from March 1995 to November 1997. Mr. Vogel has 18 years of experience in the
restaurant industry.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
The Company's Common Stock is traded on The Nasdaq Stock Market (National
Market System) ("Nasdaq") under the symbol CBRL. There were 14,128 shareholders
of record as of September 24, 2004.
The table "Market Price and Dividend Information" contained in the 2004
Annual Report is incorporated herein by this reference. Item 12 of this 2004
Form 10-K/A is incorporated in this Item of this Report by this reference.
During the fourth quarter of the year ended July 30, 2004, the Company did
not acquire any of its own equity securities.
On May 28, 2004, the Company announced a 2,000,000 share common stock
repurchase program with no expiration date. As of July 30, 2004 the Company had
open authorizations to repurchase 2,892,000 shares.
ITEM 6. SELECTED FINANCIAL DATA
The table "Selected Financial Data," contained in the Exhibit 99 to this
Report, is incorporated into this Item of this Report by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," contained in Exhibit 99 to this Report, is incorporated into this
Item of this Report by this reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," contained in Exhibit 99 to this Report, is incorporated into this
Item of this Report by this reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements (and related footnotes) and Report of
Independent Registered Public Accounting Firm, contained in Exhibit 99 to this
Report, are incorporated into this Item of this Report by this reference.
See Quarterly Financial Data (Unaudited) in Note 13 to the Consolidated
Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
The Company's management, with the participation of its principal executive
and financial officers, including the Chief Executive Officer and the Chief
Financial Officer, evaluated the effectiveness of the Company's disclosure
controls and procedures (as defined in Rule 13a-15(e) promulgated under the
Exchange Act). Based upon this evaluation, the Chief Executive Officer and the
Chief Financial Officer concluded that as of July 30, 2004, the Company's
disclosure controls and procedures were effective for the purposes set forth in
the definition thereof in Exchange Act Rule 13a-15(e).
There have been no significant changes during the quarter ended July 30,
2004 in the Company's internal controls over financial reporting (as defined in
Exchange Act Rule 13a-15(f)) that have materially affected, or are reasonably
likely to materially affect, the Company's internal controls over financial
reporting.
On February 17, 2005, the Company announced that it was restating certain
prior financial results because of changes it made in the way it accounted for
leases. The decision to restate was made following a review of its accounting
policies that was prompted by views expressed on February 7, 2005 by the staff
of the SEC (and similar restatements by numerous other companies in the
restaurant, retail and other industries) that indicated that the manner in which
the Company had been accounting for leases needed to be corrected (see also Note
2 to the Consolidated Financial Statements). Prior to the Company's review, the
Company believed that such accounting was consistent with generally accepted
accounting principles. Some companies have indicated that such a change in
accounting and resulting restatement is a material weakness in disclosure
controls and procedures or in internal controls over financial reporting. The
Company does not believe this to have been the case in its situation as of July
30, 2004, and the effects of the restatement were not material to the Company's
financial position or the results of operations for any prior annual or
quarterly period. The Company has discussed its conclusion with its independent
registered public accounting firm. However, the Company is discussing the
restatement in question in this Part I, Item 9A of this Annual Report out of an
abundance of caution.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item with respect to directors of the
Company is incorporated into this Item of this Report by this reference to the
section entitled "Proposal 1: Election of Directors" in the 2004 Proxy
Statement. The information required by this Item with respect to executive
officers of the Company is set forth in Part I of this 2004 on Form 10-K/A.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated into this Item of
this Report by this reference to the sections entitled "Board of Directors and
Committees" and "Executive Compensation" in the 2004 Proxy Statement. The
matters labeled "Report of the Compensation and Stock Option Committee" and
"Shareholder Return Performance Graph" are not, and shall not be deemed to be,
incorporated by reference into this 2004 Form 10-K/A.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated into this Item of
this Report by this reference to the sections entitled "Stock Ownership of
Management and Certain Beneficial Owners" and "Equity Compensation Plan
Information" in the 2004 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated into this Item of
this Report by this reference to the section entitled "Certain Transactions" in
the 2004 Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is incorporated into this Item of
this Report by this reference to the sections entitled "Fees Paid to Auditors"
and "What is the Audit Committee's pre-approval policy and procedure with
respect to audit and non-audit services provided by our auditors?" in the 2004
Proxy Statement. The remainder of the section entitled "Audit Committee Report"
is not, and shall not be deemed to be, incorporated by reference into this 2004
Form 10-K/A.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) List of documents filed as part of this report:
1. The following Consolidated Financial Statements (as
restated) and the Report of Independent Registered
Public Accounting Firm of Deloitte & Touche LLP are
included within Exhibit 99 to this 2004 Form 10-K/A
and are incorporated into this Item of this Report by
this reference:
Report of Independent Registered Public Accounting
Firm dated September 23, 2004 (March 31, 2005 as to
the effects of the restatement discussed in Note 2)
Consolidated Balance Sheet (As Restated) as of July 30, 2004
and August 1, 2003
Consolidated Statement of Income (As Restated) for
each of the three fiscal years ended July 30, 2004,
August 1, 2003 and August 2, 2002
Consolidated Statement of Changes in Shareholders'
Equity (As Restated) for each of the three fiscal
years ended July 30, 2004, August 1, 2003 and August 2, 2002
Consolidated Statement of Cash Flows (As Restated)
for each of the three fiscal years ended July 30,
2004, August 1, 2003 and August 2, 2002
Notes to Consolidated Financial Statements
2. All schedules have been omitted since they are either
not required or not applicable, or the required
information is included in the consolidated financial
statements or notes thereto.
3. The exhibits listed in the accompanying Index to Exhibits
are filed as part of this Report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CBRL GROUP, INC.
By: /s/Michael A. Woodhouse
-----------------------
Michael A. Woodhouse
Chairman, President and Chief Executive
Officer
March 30, 2005
INDEX TO EXHIBITS
Exhibit
-------
3(I), 4(a) Charter (1)
3(II), 4(b) Bylaws (1)
4(c) Shareholder Rights Agreement dated 9/7/1999 (2)
4(d) Indenture, dated as of April 3, 2002, among the Company,
the Guarantors (as defined therein) and Wachovia Bank,
National Association, as trustee, relating to the Company's
zero-coupon convertible senior notes (the "LYONs Indenture")
(3)
4(e) Form of Certificate for the Company's zero-coupon convertible
senior notes (included in the Indenture filed as Exhibit 4(e)
hereof) (3)
4(f) Form of Guarantee of the Company's zero-coupon convertible
senior notes (included in the Indenture filed as Exhibit 4(e)
hereof) (3)
4(g) First amendment, dated June 19, 2002, to the LYONs Indenture
4(h) Second amendment, dated July 30, 2004, to the LYONs Indenture
4(i),10(a) Credit Agreement dated 2/21/2003, relating to the $300,000,000
Revolving Credit Facility (4)
10(b) Lease dated 8/27/1981 for lease of Macon, Georgia store
between Cracker Barrel Old Country Store, Inc. and B. F.
Lowery, a director of the Company (5)
10(c) The Company's 1987 Stock Option Plan, as amended (6)
10(d) The Company's Amended and Restated Stock Option Plan, as
amended (7)
10(e) The Company's 2000 Non-Executive Stock Option Plan (8)
10(f) The Company's 1989 Non-Employee Director's Stock Option Plan,
as amended (9)
10(g) The Company's Non-Qualified Savings Plan, effective 1/1/1996,
as amended (6)
10(h) The Company's Deferred Compensation Plan, effective 1/1/1994
(5)
10(i) The Company's 2002 Omnibus Incentive Compensation Plan (10)
10(j) Executive Employment Agreement executed January 15, 2002
between Dan W. Evins and the Company (3)
10(k) Executive Employment Agreement executed July 25, 2002
between Michael A. Woodhouse and the Company (8)
10(l) Change-in-control Agreement for Dan W. Evins dated
10/8/1999 (7)
10(m) Change-in-control Agreement for Michael A. Woodhouse dated
10/8/1999 (7)
10(n) Change-in-control Agreement for Lawrence E. White dated
10/8/1999 (7)
10(o) Change-in-control Agreement for James F. Blackstock dated
10/8/1999 (7)
10(p) Change-in-control Agreement for Norman J. Hill dated
10/13/1999 (8)
10(q) Change-in-control Agreement for Donald M. Turner dated
12/6/1999 (11)
10(r) Change-in-control Agreement for David L. Gilbert dated
10/3/2001 (8)
10(s) Change-in-control Agreement for George T. Vogel dated
October 3, 2003 (10)
10(t) Change-in-control Agreement for Patrick A. Scruggs dated
October 13, 1999 (10)
10(u) Master Lease dated July 31, 2000 between Country Stores
Property I, LLC ("Lessor") and Cracker Barrel Old Country
Store, Inc. ("Lessee") for lease of 21 Cracker Barrel Old
Country Store(R) sites (12)
10(v) Master Lease dated July 31, 2000 between Country Stores
Property I, LLC ("Lessor") and Cracker Barrel Old Country
Store, Inc. ("Lessee") for lease of 9 Cracker Barrel Old
Country Store(R) sites*
10(w) Master Lease dated July 31, 2000 between Country Stores
Property II, LLC ("Lessor") and Cracker Barrel Old Country
Store, Inc. ("Lessee") for lease of 23 Cracker Barrel Old
Country Store(R) sites*
10(x) Master Lease dated July 31, 2000 between Country Stores
Property III, LLC ("Lessor") and Cracker Barrel Old Country
Store, Inc. ("Lessee") for lease of 12 Cracker Barrel Old
Country Store(R) sites*
10(y) CBRL Group, Inc. Long-Term Incentive Plan Cover Letter (3)
10(z) CBRL Group, Inc. Long-Term Incentive Plan (3)
10(aa) CBRL Group, Inc. Long-Term Incentive Summary Plan
Description (3)
21 Subsidiaries of the Registrant (13)
23 Consent of Independent Registered Public Accounting Firm -
Deloitte & Touche LLP
31 Rule 13a-14(a)/15d-14(a) Certifications
32 Section 1350 Certifications
99 Information required by Part II, Items 6, 7, 7A and 8 of this
Annual Report on Form 10-K/A.
*Document not filed because essentially identical in terms and conditions to
Exhibit 10(u).
(1) Incorporated by reference to the Company's Registration Statement on Form
S-4/A under the Securities Act of 1933 (File No. 333-62469).
(2) Incorporated by reference to the Company's Forms 8-K and 8-A under the
Securities Exchange Act of 1934, filed September 21, 1999
(File No. 000-25225).
(3) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
under the Securities Exchange Act of 1934 for the quarterly period ended
May 3, 2002 (File No. 000-25225).
(4) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
under the Securities Exchange Act of 1934 for the quarterly period ended
January 31, 2003 (File No. 000-25225).
(5) Incorporated by reference to the Company's Registration Statement on Form
S-7 under the Securities Act of 1933 (File No. 2-74266).
(6) Incorporated by reference to the Company's Registration Statement on Form
S-8 under the Securities Act of 1933 (File No. 33-45482).
(7) Incorporated by reference to the Company's Annual Report on Form 10-K under
the Securities Exchange Act of 1934 for the fiscal year ended July 30, 1999
(File No. 000-25225).
(8) Incorporated by reference to the Company's Annual Report on Form 10-K under
the Securities Exchange Act of 1934 for the fiscal year ended August 2,
2002 (File No. 000-25225).
(9) Incorporated by reference to the Company's Annual Report on Form 10-K under
the Securities Exchange Act of 1934 for the fiscal year ended August 2,
1991 (File No. 0-7536).
(10) Incorporated by reference to the Company's Annual Report on Form 10-K under
the Securities Exchange Act of 1934 for the fiscal year ended August 1,
2003 (File No. 000-25225).
(11) Incorporated by reference to the Company's Annual Report on Form 10-K under
the Securities Exchange Act of 1934 for the fiscal year ended August 3,
2001 (File No. 000-25225).
(12) Incorporated by reference to the Company's Annual Report on Form 10-K under
the Securities Exchange Act of 1934 for the fiscal year ended July 28,
2000 (File No. 000-25225).
(13) Incorporated by reference to the Company's Annual Report on Form 10-K under
the Securities Exchange Act of 1934 for the fiscal year ended July 30, 2004
(File No. 000-25225).