cbrlgroup10k080108.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
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 August 1, 2008
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) 444-5533
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
Name
of each exchange on which registered |
Common Stock (Par
Value $.01) |
NASDAQ Global
Market |
Common Stock
Purchase Rights (No Par Value) |
NASDAQ Global
Market |
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes þ No
¨
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes ¨ No
þ
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 þ No
¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. þ
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer”,
“accelerated filer” and ”smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large accelerated
filer þ
Accelerated filer ¨
Non-accelerated
filer ¨ Smaller
reporting company ¨
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
Yes ¨ No
þ
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
February 1, 2008, was $704,503,251. 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 23, 2008, there were 22,369,449 shares of common stock
outstanding.
Documents Incorporated by
Reference
Document from which
Portions |
Part
of Form 10-K |
are Incorporated by
Reference |
into which
incorporated |
1. |
Annual
Report to Shareholders for
the fiscal year ended August
1, 2008,
portions
of which are
filed as Exhibit 13 to this Annual
Report
on Form 10-K (the “2008 Annual Report”)
|
Part II |
2. |
Proxy
Statement for Annual Meeting
of Shareholders
to
be held November 25, 2008 (the
“2008 Proxy Statement”)
|
Part
III |
|
PART
I
|
|
|
|
PAGE
|
|
|
|
ITEM
1.
|
BUSINESS
|
6 |
ITEM
1A.
|
RISK
FACTORS
|
11 |
ITEM
1B.
|
UNRESOLVED
STAFF COMMENTS |
19 |
ITEM
2.
|
PROPERTIES
|
19 |
ITEM
3.
|
LEGAL
PROCEEDINGS
|
20
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
20 |
|
|
|
|
PART
II
|
|
|
|
|
ITEM
5.
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED |
|
|
STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
23
|
ITEM
6.
|
SELECTED
FINANCIAL DATA
|
23
|
ITEM
7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
|
24 |
ITEM
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
24 |
ITEM
8. |
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
24 |
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
|
|
|
ACCOUNTING
AND FINANCIAL DISCLOSURE
|
24 |
ITEM
9A. |
CONTROLS
AND PROCEDURES
|
24 |
ITEM
9B.
|
OTHER
INFORMATION
|
25 |
|
|
|
|
PART
III
|
|
|
|
|
ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
26
|
ITEM
11.
|
EXECUTIVE
COMPENSATION
|
26
|
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS |
|
|
AND
MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
|
26 |
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR |
|
|
INDEPENDENCE
|
26
|
ITEM
14.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
26
|
|
|
|
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PART
IV
|
|
|
|
|
ITEM
15.
|
EXHIBITS,
FINANCIAL STATEMENT SCHEDULES
|
27
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|
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SIGNATURES
|
|
28
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INTRODUCTION
General
This
report contains references to years 2008, 2007, 2006, 2005 and 2004, which
represent fiscal years ended August 1, 2008, August 3, 2007, July 28, 2006, July
29, 2005 and July 30, 2004, respectively. All of the discussion in this report
should be read with, and is qualified in its entirety by, the Consolidated
Financial Statements and the notes thereto. All amounts other than
share and certain statistical information (e.g., number of stores) are in
thousands unless the context clearly indicates otherwise.
Forward
Looking Statements/Risk Factors
Except
for specific historical information, many of the matters discussed in this
Annual Report on Form 10-K, as well as other documents incorporated herein by
reference may express or imply projections of revenues or expenditures, plans
and objectives for future operations, growth or initiatives, expected future
economic performance or the expected outcome or impact of pending or threatened
litigation. These and similar statements regarding events or results that CBRL
Group, Inc. (the “Company”) expects will or may occur in the future, are
forward-looking statements that involve risks, uncertainties and other factors
which may cause 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,” “expectations,” “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 these forward-looking statements are reasonable; however,
any of the assumptions could be inaccurate, and therefore, actual results may
differ materially from those projected in or implied by the forward-looking
statements. Factors and risks that may result in actual results
differing from this forward-looking information include, but are not limited to,
those listed in Part I, Item 1A of this report below, all of which are
incorporated herein by reference, as well as other factors discussed throughout
this report, including, without limitation, the factors described under
“Critical Accounting Estimates” in that portion of the 2008 Annual Report that
is incorporated by reference into Part II, Item 7 below or, from time to time,
in our filings with the Securities and Exchange Commission (“SEC”), press
releases and other communications.
Readers
are cautioned not to place undue reliance on forward-looking statements made in
this report, since the statements speak only as of the report’s
date. We have no obligation, and do not intend, to publicly update or
revise any of these forward-looking statements to reflect events or
circumstances occurring after the date of this report or to reflect the
occurrence of unanticipated events. Readers are advised, however, to
consult any future public disclosures that we may make on subjects related to
those discussed in this report.
PART I
ITEM 1.
BUSINESS
OVERVIEW
CBRL Group, Inc. (“we,” “us,” “our” or
the "Company," which reference, unless the context requires otherwise, also
includes our direct and indirect wholly-owned subsidiaries), is headquartered in
Lebanon, Tennessee. We are principally engaged in the operation and
development of the Cracker Barrel Old Country Store® restaurant and retail
concept (“Cracker Barrel”). We were organized under the laws of the
state of Tennessee in August 1998 (as a successor to one of our affiliated
companies) and maintain an Internet website at cbrlgroup.com. We make
available free of charge on or through our Internet website our periodic and
other reports filed or furnished to the SEC pursuant to 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.
As of
September 24, 2008, we operated 579 full-service Cracker Barrel restaurants and
gift shops 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. During 2008, for the 18th
consecutive year, Cracker Barrel was named the “Best Family Dining Restaurant”
in the Restaurants
& Institutions magazine “Choice in Chains” annual consumer survey.
For the 7th
consecutive year, Cracker Barrel was named “The Most RV Friendly Sit-Down
Restaurant in America” by The Good Sam Club. In addition, in 2008, we were once
again the top-ranked full service restaurant on Fortune’s Most Admired Company
list for food service companies.
Store Format: The
format of Cracker Barrel stores consists of 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. All stores are freestanding buildings. Store
interiors are subdivided into a dining room consisting of approximately 27% 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. 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 traditional
old country stores. The front porch of each store features rows of
the signature Cracker Barrel rocking chairs that can be used by guests waiting
for a table and are sold by 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 79% of our total
revenue in 2008, offer home-style country cooking featuring Cracker Barrel’s own
recipes that emphasize authenticity and quality. 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). Menu items are moderately priced. The
restaurants do not serve alcoholic beverages. 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, such as gravy and
biscuits and country ham and biscuits. Prices for a breakfast meal
range from $2.59 to $8.79, and the breakfast day-part (until 11:00 a.m.)
accounted for approximately 23% of restaurant sales in 2008. Lunch
and dinner items include country ham, chicken and dumplings, chicken fried
chicken, meatloaf, country fried steak, pork chops, fish, steak, roast beef,
vegetable plates, salads, sandwiches, soups and specialty items such as pinto
beans and turnip greens. Lunches and dinners range in price from $3.69 to
$12.99. Lunch (11:00 a.m. to 4:00 p.m.) and dinner (4:00 p.m. to close)
day-parts reflected approximately 37% and 40% of restaurant sales, respectively,
in 2008. Cracker Barrel may from time to time feature new items as
off-menu specials or in test menus at certain locations to evaluate possible
ways to enhance customer interest and identify potential future additions to the
menu. Cracker Barrel’s menu has daily dinner features that showcase a popular
dinner entrée for each day of the week. There is some variation in menu pricing
and content in different regions of the country for both breakfast and
lunch/dinner. The average check per guest for 2008 was $8.59, which represents a
3.4% increase over the prior year.
Cracker
Barrel also offers items for sale in the retail store that are also featured on,
or related to, the restaurant menu, such as pies, cornbread, coffee, syrups and
pancake mixes. The retail operations, which generated approximately
21% of our total revenue in 2008, offer a wide variety of decorative and
functional items such as rocking chairs, seasonal gifts, apparel, toys, music
CD’s, cookware, old-fashioned-looking ceramics, figurines, a book-on-audio
sale-and-exchange program and various other gift items, as well as various
candies,
preserves and other food
items. Five categories (apparel, seasonal, food, home and toys)
accounted for the largest shares of our retail sales at approximately 20%, 16%,
16%, 15% and 13%, respectively, in 2008. The typical Cracker Barrel retail shop
features approximately 3,200 SKU’s. Many of the food items are sold
under the “Cracker Barrel Old Country Store” brand name. We believe
that Cracker Barrel achieves high retail sales per square foot as compared to
mall stores (approximately $428 per square foot of retail selling space in 2008)
both by offering appealing merchandise and by having a significant source of
retail customers from the high volume of restaurant customers - an average of
approximately 7,350 per week in a typical store in 2008. The
substantial majority of sales in the retail area are estimated to be to
customers who also are guests in the restaurant.
Product
Development and Merchandising: We maintain a product
development department, which develops new and improved menu items in response
either to shifts in customer preferences or to create customer interest.
Coordinated seasonal promotions are used regularly in the restaurants and retail
shops. Our merchandising department attempts to select merchandise for the
retail shop that reinforces the nostalgic theme of the restaurant. In
2008, we continued to build our exclusive music library. The newest
albums include some of country and bluegrass music’s greatest performers such as
Alabama, Aaron Tippin, Ricky Skaggs and Kenny Rogers. By regularly infusing new
talent into our musical offerings, we continue to strengthen the connection
between the culture of country music and the Cracker Barrel
brand. Also offered is The Grand Ole Opry® Live Classics CD series,
which showcases 60 previously unreleased live recordings by some of the Opry’s
biggest stars including Patsy Cline, Loretta Lynn, Johnny Cash, George Jones,
Dolly Parton and Waylon Jennings.
Store Management and Quality
Controls:
Cracker Barrel store management, typically consisting of one general
manager, four associate managers and one retail manager, is responsible for an
average of 104 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, we maintain a bonus plan designed to provide store
managers with an opportunity to share in the profits of their
store. The bonus plan also rewards managers who achieve specific
operational targets. To assure that individual stores are operated at
a high level of quality, we focus on the selection and training of store
managers. We also employ district managers to support individual
store managers and regional vice presidents to support individual district
managers. A district manager’s individual span of control typically
is seven to eight individual restaurants and regional vice presidents support
seven to nine 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 verification of background and experience,
we conduct 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 seven weeks of in-store training and four weeks of training at our
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. We provide our managers and hourly employees with
ongoing training through various development courses taught through a blended
learning approach, including hands-on, classroom, written and Internet-based
training. Each store is equipped with training computers for the
Internet-based computer-assisted instruction programs. Additionally,
each store typically has an employee training coordinator who oversees training
of the store’s hourly employees.
Purchasing and
Distribution: We negotiate directly with food vendors as to
specification, price and other material terms of most food
purchases. We have a contract with an unaffiliated distributor with
custom distribution centers in Lebanon, Tennessee; McKinney, Texas; Gainesville,
Florida; Elkton, Maryland; Kendalville, Indiana; and Ft. Mill, South Carolina.
We purchase the majority of our food products and restaurant supplies on a
cost-plus basis through this unaffiliated distributor. The distributor is
responsible for placing food orders, warehousing and delivering food products to
our stores. Deliveries generally are made once per week to the individual
stores. Certain perishable food items are purchased locally by our
stores.
Four food categories (dairy (including
eggs), beef, poultry and pork) accounted for the largest shares of our food
purchasing expense at approximately 15%, 12%, 11% and 10%, respectively, in
2008, but each category includes several individual items. The single
food item within these categories, accounting for the largest share of our food
purchasing expense, was chicken tenderloin at approximately 6% of food purchases
in 2008. We purchase our chicken tenderloin through two
vendors. Dairy is purchased through numerous vendors including local
vendors. Eggs are purchased through two vendors. We purchase our
beef, poultry and pork each through eight vendors. Should any food
items from a particular vendor become unavailable, we believe that these
food
items could be obtained,
or alternative products substituted, in sufficient quantities from other sources
at competitive prices.
We purchase the majority of retail
items (approximately 81% in 2008) directly from domestic and international
vendors and warehouse them at our Lebanon distribution center. 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 distribution center fulfills retail item orders generated by our
automated replenishment system and generally ships the retail orders once a week
to the individual stores by a third-party dedicated freight
line. Certain retail items, not centrally purchased and warehoused at
the distribution center, are drop-shipped directly by our vendors to our
stores. Approximately 40% of our 2008 retail purchases were directly
from vendors in the People’s Republic of China. We have relationships
with foreign buying agencies to source purchased product, monitor quality
control and supplement product development.
Operational and Inventory
Controls: Our information technology and telecommunications systems and
various analytical tools are used to evaluate store operating information and
provide management with reports to support detection of unusual variances in
food costs, labor costs or operating expenses. 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 information technology and
telecommunications systems, analysis tools and monitoring processes are used to
manage the operations of each 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: We are committed to providing our 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. Our commitment to offering guests a quality
experience begins with our employees. Our mission statement,
“Pleasing People,” embraces guests and employees alike, and our employees are
trained on the importance of that mission in a culture of mutual
respect. We also are 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 district managers and regional vice presidents, management receives
valuable feedback, which it uses in its ongoing efforts to improve the stores
and to demonstrate our continuing commitment to pleasing our
guests. We also have had for many years 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. We have public
notices in our menus, on our website and posted in our restaurants informing
customers and employees about how to contact us by Internet or toll-free
telephone number with questions, complaints or concerns regarding services or
products. We conduct training in how to gather information and
investigate and resolve customer concerns. This is accompanied by
comprehensive training for all store employees on our public accommodations
policy and commitment to "pleasing people." In 2005, we implemented
an anonymous, unannounced, third-party store testing program to ensure
compliance with our guest satisfaction policies and commitments. We
use an interactive voice response (“IVR”) system to monitor operational
performance and guest satisfaction at all stores on an ongoing
basis.
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 62% of advertising
expenditures in 2008, with approximately 1,500 billboards at
year-end. In recent years we have utilized other types of media, such
as radio and print, in our core markets to maintain customer awareness, and
outside of our core markets to increase brand awareness and to build guest
loyalty. In 2008, we conducted television advertising in certain
markets. We define core markets based on average weekly sales,
geographic location, and longevity and brand awareness in the
market. In 2009, we plan to spend approximately 1.9% of our revenues
on advertising. Outdoor advertising is expected to represent
approximately 59% of advertising expenditures in 2009.
UNIT
DEVELOPMENT
We opened 17 new Cracker Barrel stores
and closed two stores in 2008. We also replaced two existing units
with units in nearby communities. Replacements are not counted as
either units opened or closed. We plan to open 12 new stores during
2009, two of which already were open as of September 24, 2008.
Cracker
Barrel stores are located primarily along interstate highways; however, as of
September 24, 2008, 82 of our stores are located near "tourist destinations" or
are considered “off-interstate” stores. In 2009, we intend to open
approximately 33% of our new stores along interstate highways as compared to 53%
in 2008. We believe we should pursue development of both
interstate locations and off-interstate locations to capitalize on the strength
of our brand associated
with travelers on the interstate highway system and to increase sales through TV
and/or radio advertising by having more units in media markets in which
satisfactory interstate locations either may not be available or not available
on reasonable terms. We have identified approximately 700 trade areas
for potential future development with characteristics that appear to be
consistent with those believed to be necessary to support successful Cracker
Barrel units.
Of the 579
Cracker Barrel stores open as of September 24, 2008, we own 409, while the other
170 properties are either ground leases or ground and building
leases. The current Cracker Barrel store prototype is approximately
10,000 square feet including approximately 2,100 square feet in the retail
selling space. The prototype has approximately 200 seats in the
restaurant.
EMPLOYEES
As of August 1, 2008, we employed
approximately 65,000 people, of whom 584 were in advisory and supervisory
capacities, 3,564 were in store management positions and 41 were
officers. Many restaurant personnel are employed on a part-time
basis. None of our employees are represented by any union and
management considers its employee relations to be good.
COMPETITION
The restaurant industry is intensely
competitive with respect to the type and quality of food, price, service,
location, personnel, concept, attractiveness of facilities and effectiveness of
advertising and marketing. We compete with a number of national and
regional restaurant chains as well as locally owned restaurants. The
restaurant business is often affected by changes in consumer taste; national,
regional or local economic conditions; demographic trends; traffic patterns; the
type, number and location of competing restaurants; and consumers’ discretionary
purchasing power. In addition, factors such as inflation, increased
food, labor and benefits costs and the lack of experienced management and hourly
employees may adversely affect the restaurant industry in general and our
restaurants in particular.
RAW
MATERIALS SOURCES AND AVAILABILITY
Essential restaurant supplies and raw
materials are generally available from several sources. However, in
the restaurants, certain branded items are single source products or product
lines. Generally, we are not dependent upon single sources of
supplies or raw materials. Our ability to maintain consistent quality
throughout our restaurant system depends in part upon our ability to acquire
food products and related items from reliable sources. When the
supply of certain products is uncertain or prices are expected to rise
significantly, we may enter into purchase contracts or purchase bulk quantities
for future use.
Adequate alternative sources of supply,
as well as the ability to adjust menus if needed, are believed to exist for
substantially all restaurant products. Our retail supply chain
generally involves longer lead-times and, often, more remote sources of product,
including the People’s Republic of China, and most of our retail product is
distributed to our stores through a single distribution
center. Although disruption of our retail supply chain could be
difficult to overcome, we continuously evaluate the potential for disruptions
and ways to mitigate them should they occur.
ENVIRONMENTAL
MATTERS
Federal, state and local environmental
laws and regulations have not historically had a significant impact on our
operations; however, we cannot predict the effect of possible future
environmental legislation of regulations on our operations.
TRADEMARKS
We deem the various Cracker Barrel
trademarks and service marks that we own to be of substantial
value. Our policy is to obtain federal registration of trademarks and
other intellectual property whenever possible and to pursue vigorously any
infringement of trademarks.
RESEARCH
AND DEVELOPMENT
While research and development is
important to us, these expenditures have not been material due to the nature of
the restaurant and retail industry.
SEASONAL
ASPECTS
Historically, our profits 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. We attribute 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
because of inclement weather. Our retail sales historically have been
highest in our second fiscal quarter, which includes the Christmas holiday
shopping season.
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, we are able to,
and often do operate with a working capital deficit. Restaurant
inventories purchased through our principal food distributor are on terms of net
zero days, while restaurant inventories purchased locally generally are financed
through normal trade credit. Because of our retail operations, which
have a lower product turnover than the restaurant business, we carry 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 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 1A.
RISK FACTORS
Investing
in our securities involves a degree of risk. Persons buying our
securities should carefully consider the risks described below and the other
information contained in this Annual Report on Form 10-K and other filings that
we make from time to time with the SEC, including our consolidated financial
statements and accompanying notes. If any of the following risks
actually occurs, our business, financial condition, results of operation or cash
flows could be materially adversely affected. In any such case, the trading
price of our securities could decline and you could lose all or part of your
investment. The risks described below are not the only ones facing
our company and are not intended to be a complete discussion of all potential
risks or uncertainties. Additional risks not presently known to us or
that we currently deem immaterial may also impair our business
operations.
General
economic and business conditions as well as those specific to the restaurant or
retail industries that are largely out of our control may adversely affect our
results of operations.
Our
business results depend on a number of industry-specific and general economic
factors, many of which are beyond our control. These factors include
consumer income, interest rates, inflation, consumer credit availability,
consumer debt levels, tax rates and policy, unemployment trends and other
matters that influence consumer confidence and spending. The full-service dining
sector of the restaurant industry and the retail industry are affected by
changes in national, regional and local economic conditions, seasonal
fluctuation of sales volumes, consumer preferences, including changes in
consumer tastes and dietary habits and the level of consumer acceptance of our
restaurant concept and retail merchandise, and consumer spending
patterns.
Discretionary
consumer spending, which is critical to our success, is influenced by general
economic conditions and the availability of discretionary
income. Accordingly, we may experience declines in sales during
economic downturns or during periods of uncertainty. In addition, recent
increases in fuel and other energy prices as well as consumer uncertainty that
has accompanied the recent home mortgage and credit “crisis” and general
weakness in housing markets has resulted in decreased discretionary consumer
spending. A continuing decline in consumer confidence or the amount of
discretionary spending could have a material adverse effect on our sales,
results of operations, business and financial condition.
We also
cannot predict the effects of actual or threatened armed conflicts or terrorist
attacks, efforts to combat terrorism, military action against any foreign state
or group located in a foreign state or heightened security requirements on the
economy or consumer confidence in the United States. Any of these
events could also affect consumer spending patterns or result in increased costs
for us due to security measures.
Unfavorable
changes in the above factors or in other business and economic conditions
affecting our customers could increase our costs, reduce traffic in some or all
of our locations or impose practical limits on pricing, any of which could lower
our profit margins and have a material adverse affect on our 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
casual dining sector of the restaurant industry is intensely competitive, and we
face many well-established competitors. We compete within each market
with national and regional restaurant chains and locally-owned
restaurants. Competition from other regional or national restaurant
chains typically represents the more important competitive influence,
principally because of their significant marketing and financial
resources. However, we also face growing competition as a result of
the trend toward convergence in grocery, deli and restaurant services,
particularly in the supermarket industry. Moreover, our competitors
can harm our business even if they are not successful in their own operations by
taking away customers or employees through aggressive and costly advertising,
promotions or hiring practices. We compete primarily on the quality,
variety and value perception of menu and retail items. The number and location
of restaurants, type of concept, quality and efficiency of service,
attractiveness of facilities and effectiveness of advertising and marketing
programs also are important factors. We anticipate that intense competition will
continue with respect to all of these factors. We also compete with
other restaurant chains and other retail businesses for quality site locations
and management and hourly employees, and competitive pressures could affect both
the availability and cost of these important resources. 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, merchandise and utilities used by
our restaurants or merchandise sold in our retail shop could adversely affect
our revenues and results of operations.
Although
we are subject to the general risks of inflation, our operating profit margins
and results of operations depend significantly on our ability to anticipate and
react to changes in the price and availability of food and other commodities,
ingredients, utilities, retail merchandise and other related costs over which we
may have little control. Fluctuations in economic conditions,
weather, demand and other factors can adversely affect the availability, quality
and cost of the ingredients and products that we buy. Furthermore,
many of the products that we use and their costs are
interrelated. For example, the recent focus on ethanol as a fuel, as
well as the emergence of China as a major consumer of food products, has placed
tremendous demands (with attendant supply and price pressures) for corn, wheat
and dairy products, which in turn has increased feed costs for poultry and
livestock. The effect of, introduction of, or changes to tariffs or exchange
rates on imported retail products or food products could increase our costs and
possibly affect the supply of those products. Our operating margins
are also affected, whether as a result of general inflation or otherwise, by
fluctuations in the price of utilities such as natural gas and electricity, on
which our locations depend for much of their energy supply. Our
inability to anticipate and respond effectively to one or more adverse changes
in any of these factors could have a significant adverse effect on our results
of operations. In addition, because we provide a moderately-priced
product, we may not seek to or be able to pass along price increases to our
customers sufficient to completely offset cost increases.
We
are dependent on attracting and retaining qualified employees while also
controlling labor costs.
Our
performance is dependent on attracting and retaining a large and growing number
of qualified restaurant employees. Availability of staff varies
widely from location to location. Many staff members are in
entry-level or part-time positions, typically with high rates of turnover. If
restaurant management and staff turnover trends increase, we could suffer higher
direct costs associated with recruiting, training and retaining replacement
personnel. Management turnover as well as general shortages in the
labor pool can cause our restaurants to be operated with reduced staff, which
could negatively affect our ability to provide appropriate service levels to our
customers. Competition for qualified employees exerts upward pressure
on wages paid to attract such personnel, resulting in higher labor costs,
together with greater recruiting and training expenses.
Our
ability to meet our labor needs while controlling our costs is subject to
external factors such as unemployment levels, minimum wage legislation, health
care legislation and changing demographics. Many of our employees are
hourly workers whose wages are affected by increases in the federal or state
minimum wage or changes to tip credits. Tip credits are the amounts
an employer is permitted to assume an employee receives in tips when the
employer calculates the employee’s hourly wage for minimum wage compliance
purposes. Increases in minimum wage levels and changes to the tip
credit have been made and continue to be proposed at both federal and state
levels. As minimum wage rates increase, we may need to increase not
only the wages of our minimum wage employees but also the wages paid to
employees at wage rates that are above minimum wage. If competitive
pressures or other factors prevent us from offsetting increased labor costs by
increases in prices, our profitability may decline.
Our
distribution risks are heightened because of our single distribution facility;
in addition, our reliance on certain significant vendors, particularly for
foreign-sourced products, subjects us to numerous risks, including possible
interruptions in supply, which could adversely affect our business.
The
majority of our retail inventory is shipped into, stored at and shipped out of a
single warehouse located in Lebanon, TN. All of the decorative
fixtures used in our stores are shipped into, stored at and shipped out of a
single warehouse located in Lebanon, TN. A natural disaster affecting
either of these warehouses could materially adversely affect our
business.
Our
ability to maintain consistent quality throughout our operations depends in part
upon our ability to acquire specified food and retail products and supplies in
sufficient quantities. Partly because of our size, finding qualified vendors and
accessing food, retail products and supplies in a timely and efficient manner is
a significant challenge that typically is more difficult with respect to goods
sourced outside the United States. In some cases, we may have only
one supplier for a product or supply. Our dependence on single source suppliers
subjects us to the possible risks of shortages, interruptions and price
fluctuations. If any of these vendors are unable to fulfill their obligations,
or if we are unable to find replacement suppliers in the event of a supply
disruption, we could encounter supply shortages and/or incur higher costs to
secure adequate supplies, either of which could materially harm our
business.
Additionally,
we use a number of products that are or may be manufactured in a number of
foreign countries. In addition to the risk presented by the possible
long lead times to source these products, our results of operations may be
materially affected by risks such as:
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fluctuating currency
exchange rates; |
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foreign government
regulations; |
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foreign currency
exchange control regulations; |
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import/export
restrictions; |
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foreign political
and economic instability; |
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disruptions due to
labor stoppages, strikes or slowdowns, or other disruptions, involving our
vendors or the transportation and handling industries; and |
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tariffs, trade
barriers and other trade restrictions by the U.S. government on products
or components shipped from foreign
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Possible
shortages or interruptions in the supply of food items and other supplies to our
restaurants caused by inclement weather, natural disasters such as floods and
earthquakes, the inability of our vendors to obtain credit in a tightened credit
market or other conditions beyond our control could adversely affect the
availability, quality and cost of the items we buy and the operations of our
restaurants. Our inability to effectively manage supply chain risk
could increase our costs and limit the availability of products that are
critical to our restaurant operations. If we temporarily close a
restaurant or remove popular items from a restaurant’s menu, that restaurant may
experience a significant reduction in revenue during the time affected by the
shortage or thereafter as a result of our customers changing their dining
habits.
Our
plans depend significantly on initiatives designed to improve the efficiencies,
costs and effectiveness of our operations, and failure to achieve or sustain
these plans could affect our performance adversely.
We have
had, and expect to continue to have, initiatives in various stages of testing,
evaluation and implementation, upon which we expect to rely to improve our
results of operations and financial condition. These initiatives are
inherently risky and uncertain, even when tested successfully, in their
application to our business in general. It is possible that
successful testing can result partially from resources and attention that cannot
be duplicated in broader implementation. Testing and general implementation also
can be affected by other risk factors described herein that reduce the results
expected. Successful systemwide implementation relies on consistency of
training, stability of workforce, ease of execution and the absence of
offsetting factors that can influence results adversely. Failure to achieve
successful implementation of our initiatives could adversely affect our results
of operations.
We
incurred substantial indebtedness to finance our 2006 strategic initiatives,
which may decrease our flexibility and increase our borrowing
costs.
Our
consolidated indebtedness following our 2006 strategic initiatives is
substantially greater than our indebtedness prior to those undertakings. The
increased indebtedness and higher debt-to-equity ratio of our company, as
compared to that which existed on a historical basis, will have the effect,
among other things, of reducing our flexibility to respond to changing business
and economic conditions and increasing borrowing costs.
Our level
of indebtedness could have important consequences. For example, it
may:
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require
a substantial portion of our cash flow from operations for the payment of
principal of, and interest on, our indebtedness and reduce our ability to
use our cash flow to fund working capital, capital expenditures and
general corporate requirements or to pay
dividends; and
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limit
our flexibility to adjust to
changing business and market conditions and make us more vulnerable to a
downturn in general economic conditions as compared to our
competitors.
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There are
various financial covenants and other restrictions in our credit agreement. If
we fail to comply with any of these requirements, the related indebtedness (and
other unrelated indebtedness) could become due and payable prior to its stated
maturity. A default under our credit agreement may also significantly affect our
ability to obtain additional or alternative financing. For example,
the lenders’ ongoing obligation to extend credit under the revolving credit
portion of the credit agreement is dependent upon our compliance with these
covenants and restrictions.
Our
ability to make scheduled payments or to refinance our obligations with respect
to indebtedness will depend on our operating and financial performance, which,
in turn, is subject to prevailing economic conditions and to financial, business
and other factors beyond our control.
Our
advertising is heavily dependent on billboards, which are highly regulated; a
shift away from billboard advertising poses a risk of increased advertising and
marketing costs that could adversely affect our results of
operations.
Historically,
we have relied upon billboards as our principal method of
advertising. A number of states in which we operate restrict highway
signage and billboards. Because many of our restaurants are located
on the interstate highway system, our business is highly related to highway
travel. Thus, signage or billboard restrictions or loss of existing signage or
billboards could affect our visibility and ability to attract
customers.
Additionally,
as we begin to build stores away from our traditional interstate locations, we
may be required to increasingly utilize what others might consider more
traditional methods of advertising, such as radio, television, direct mail and
newspaper. While we have used these types of advertising from time to
time, their effects upon our revenues and, in turn, our profits, are
uncertain. Additionally, if our competitors increased their spending
on advertising and promotions, we could be forced to substantially increase our
advertising, media or marketing expenses. If we did so or if our
current advertising and promotion programs become less effective, we could
experience a material adverse effect on our results of operations.
Our
business is somewhat seasonal and also can be affected by extreme weather
conditions and natural disasters.
Historically,
our highest sales and profits have occurred during the summer. Winter, excluding
the Christmas holidays, has historically been the period of lowest sales and
profits although retail revenues historically have been seasonally higher
between Thanksgiving and Christmas. Therefore, the results of operations for any
quarter or period of less than one year cannot be considered indicative of the
operating results for a full fiscal year.
Additionally,
extreme weather conditions in the areas where our stores are located can
adversely affect our business. For example, frequent or unusually heavy
snowfall, ice storms, rain storms, floods or other extreme weather conditions
over a prolonged period could make it difficult for our customers to travel to
our stores and can disrupt deliveries of food and supplies to our stores and
thereby reduce our sales and profitability. Our business is also susceptible to
unseasonable weather conditions. For example, extended periods of unseasonably
warm temperatures during the winter season or cool weather during the summer
season could render a portion of our inventory incompatible with those
unseasonable conditions. Reduced sales from extreme or prolonged unseasonable
weather conditions could adversely affect our business.
In
addition, natural disasters such as hurricanes, tornadoes and earthquakes, or a
combination of these or other factors, could severely damage or destroy one or
more of our stores or warehouses located in the affected areas, thereby
disrupting our business operations.
If
we fail to execute our business strategy, which primarily depends on our ability
to find new restaurant locations and open new restaurants that are profitable,
our business could suffer.
Historically,
one of the most significant means of achieving our growth objectives has been
opening and operating new and profitable restaurants. This strategy involves
numerous risks, and we may not be able to achieve our growth objectives – that
is we may not be able to open all of our planned new restaurants and the new
restaurants that we open may not be profitable or as profitable as our existing
restaurants. New restaurants typically experience an adjustment
period before sales levels and operating margins normalize, and even sales
at successful newly-opened
restaurants generally do not make a significant contribution to profitability in
their initial months of operation. The opening of new restaurants can also have
an adverse effect on sales levels at existing restaurants.
One of
our biggest risks in executing our business strategy is locating and securing an
adequate supply of suitable new restaurant sites. Competition for
suitable restaurant sites and operating personnel in our target markets is
intense, and we cannot assure you that we will be able to find sufficient
suitable locations, or negotiate suitable purchase or lease terms, for our
planned expansion in any future period. Delays or failures in opening
new restaurants, or achieving lower than expected sales in new restaurants, or
drawing a greater than expected proportion of sales in new restaurants from
existing restaurants, could materially adversely affect our business
strategy. Our ability to open new restaurants successfully will also
depend on numerous other factors, some of which are beyond our control,
including, among other items discussed in other risk factors, the
following:
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our
ability to control construction and development costs of new
restaurants;
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our
ability to manage the local, state or other regulatory, zoning and
licensing processes in a timely manner;
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our
ability to appropriately train employees and staff the
restaurants;
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consumer
acceptance of our restaurants in new markets;
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our
ability to manage construction delays related to the opening of any
facility; and
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our
ability to secure required governmental approvals and permits in a timely
manner, or at all.
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We cannot
assure you that we will be able to respond on a timely basis to all of the
changing demands that our unit expansion will impose on management and on our
existing infrastructure, nor that we will be able to hire or retain the
necessary management and operating personnel. Our existing restaurant management
systems, financial and management controls and information systems may not be
adequate to support our planned expansion. Our ability to manage our growth
effectively will require us to continue to enhance these systems, procedures and
controls and to locate, hire, train and retain management and operating
personnel.
Individual
restaurant locations are affected by local conditions that could change and
affect the carrying value of those locations adversely.
The
success of our business depends on the success of individual locations and the
success of individual locations depends on stability of or improvements in
operating conditions at and around those locations. Our revenues and
expenses can be affected significantly by the number and timing of the opening
of new restaurants and the closing, relocating and remodeling of existing
restaurants. We incur substantial pre-opening expenses each time we open a new
restaurant and other expenses when we close, relocate or remodel existing
restaurants. The expenses of opening, closing, relocating or remodeling any of
our restaurants may be higher than anticipated. An increase in such expenses
could have an adverse effect on our results of
operations. Also, as demographic and economic patterns
(e.g., highway or
roadway traffic patterns, concentrations of general retail or hotel activity,
local population densities or increased competition) change, current locations
may not continue to be attractive or profitable. Possible declines in
neighborhoods where our restaurants are located or adverse economic conditions
in areas surrounding those neighborhoods could result in reduced revenues in
those locations. The occurrence of one or more of these events could
have a significant adverse effect on our revenues and results of operations as
well as the carrying value of our individual locations.
Health
concerns and government regulation relating to the consumption of food products
could affect consumer preferences and could negatively affect our results of
operations.
Many of
the food items on our menu contain beef and chicken. The preferences of our
customers toward beef and chicken could be affected by health concerns about the
consumption of beef or chicken or negative publicity concerning food quality,
illness and injury generally. In recent years there has been negative
publicity concerning E. coli bacteria, hepatitis A, “mad cow” disease,
“foot-and-mouth” disease, the bird/avian flu, peanut and other food allergens,
and other public health concerns affecting the food supply, including beef,
chicken and pork. In addition, if a regional or global health
pandemic occurs, depending upon its location, duration and severity, our
business could be severely affected. A health pandemic is a disease
that spreads
rapidly and widely by
infection and affects many individuals in an area or population at the same
time. If that occurs, customers might avoid public places in the
event of a health pandemic, and local, regional or national governments might
limit or ban public gatherings to halt or delay the spread of
disease. A regional or global health pandemic might also adversely
affect our business by disrupting or delaying production and delivery of
materials and products in our supply chain and by causing staffing shortages in
our stores. In addition, government regulations or the likelihood of government
regulation
could increase the costs of obtaining or preparing food products. A
decrease in guest traffic to our restaurants, a change in our mix of products
sold or an increase in costs as a result of these health concerns either in
general or specific to our operations, could result in a decrease in sales or
higher costs to our restaurants that would materially harm our
business.
Litigation
may adversely affect our business, financial condition and results of
operations.
Our
business is subject to the risk of litigation by employees, consumers,
suppliers, shareholders or others through private actions, class actions,
administrative proceedings, regulatory actions or other
litigation. The outcome of litigation, particularly class action
lawsuits and regulatory actions, is difficult to assess or
quantify. Plaintiffs in these types of lawsuits may seek recovery of
very large or indeterminate amounts and the magnitude of the potential loss
relating to such lawsuits may remain unknown for substantial periods of
time. The cost to defend future litigation may be significant. There
may also be adverse publicity associated with litigation that could decrease
customer acceptance of our services, regardless of whether the allegations are
valid or whether we are ultimately found liable. As a result,
litigation may adversely affect our business, financial condition and results of
operations.
Unfavorable publicity could harm our
business.
Multi-unit
restaurant businesses such as ours can be adversely affected by publicity
resulting from complaints or litigation alleging poor food quality, food-borne
illness, personal injury, adverse health effects (including obesity) or other
concerns stemming from one or a limited number of restaurants. Even
when the allegations or complaints are not valid, unfavorable publicity relating
to a limited number of our restaurants, or only to a single restaurant, could
adversely affect public perception of the entire brand. Adverse
publicity and its effect on overall consumer perceptions of food safety could
have a material adverse effect on our business, financial condition and results
of operations.
The loss of key
personnel or difficulties in recruiting and retaining qualified personnel could
jeopardize our success.
Our
future growth and success depends substantially on the contributions and
abilities of key executives and other employees and on our ability to recruit
and retain high quality employees to work in and manage our restaurants. We must
continue to recruit, retain and motivate management and other employees
sufficient to maintain our current business and support our projected growth. A
loss of key employees or a significant shortage of high quality restaurant
employees could jeopardize our ability to meet our business goals.
We
are subject to a number of risks relating to federal, state and local regulation
of our business that may increase our costs and decrease our profit
margins.
The
restaurant industry is subject to extensive federal, state and local laws and
regulations, including those relating to building and zoning requirements and
those relating to the preparation and sale of food as well as certain retail
products. We are also subject to licensing and regulation by state
and local authorities relating to health, sanitation, safety and fire standards,
federal and state laws governing our relationships with employees (including the
Fair Labor Standards Act of 1938 and the Immigration Reform and Control Act of
1986 and applicable requirements concerning minimum wage, overtime, family
leave, medical privacy, tip credits, working conditions, safety standards and
immigration status), federal and state laws which prohibit discrimination and
other laws regulating the design and operation of facilities, such as the
Americans With Disabilities Act of 1990. In addition, we are subject
to a variety of federal, state and local laws and regulations relating to the
use, storage, discharge, emission and disposal of hazardous
materials. We also face risks from new and changing laws and
regulations relating to nutritional content, nutritional labeling, product
safety and menu labeling. Compliance with these laws and regulations can be
costly and can increase our exposure to litigation or governmental
investigations or proceedings. The impact of current laws and regulations, the
effect of future changes in laws or regulations that impose additional
requirements and the consequences of litigation relating to current or future
laws and regulations could increase our compliance and other costs of doing
business and therefore have an adverse effect on our results of
operations. Failure to comply with the laws and regulatory
requirements of federal, state and local authorities could result in, among
other things, revocation of
required licenses,
administrative enforcement actions, fines and civil and criminal
liability. Also, the failure to obtain and maintain required
licenses, permits and approvals could adversely affect our operating
results. Typically, licenses must be renewed annually and may be
revoked, suspended or denied renewal for cause at any time if governmental
authorities determine that our conduct violates applicable
regulations.
Our
current insurance may expose us to unexpected costs.
Historically,
our insurance coverage has reflected deductibles, self-insured retentions,
limits of liability and similar provisions that we believe prudent based on the
dispersion of our operations. However, there are types of losses we may incur
against which we cannot be insured or which we believe are not economically
reasonable to insure, such as losses due to acts of terrorism and some natural
disasters, including floods. If we incur such losses, our business
could suffer. In addition, we self-insure a significant portion of
expected losses under our workers’ compensation, general liability and group
health insurance programs. Unanticipated changes in the actuarial assumptions
and management estimates underlying our reserves for these losses, including
expected increases in medical and indemnity costs, could result in materially
different amounts of expense than expected under these programs, which could
have a material adverse effect on our financial condition and results of
operations.
A material disruption in our
information technology and telecommunication systems could adversely affect our
business or results of operations.
We rely
extensively on our information technology and telecommunication systems to
process transactions, summarize results and manage our business and our supply
chain. Our information technology and telecommunication systems are
subject to damage or interruption from power outages, computer, network and
telecommunications failures, computer viruses, security breaches, catastrophic
events such as fires, floods, earthquakes, tornadoes, hurricanes, acts of war or
terrorism, and usage errors by our employees. If our information technology and
telecommunication systems are damaged or cease to function properly, we may have
to make a significant investment to fix or replace them, and we could suffer
loss of critical data and interruptions or delays in our operations in the
interim. Any material interruption in our information technology and
telecommunication systems could adversely affect our business or results of
operations.
A privacy breach could adversely
affect our business.
The
protection of customer, employee and company data is critical to us. The
regulatory environment surrounding information security and privacy is
increasingly demanding, with the frequent imposition of new and constantly
changing requirements. Compliance with these requirements may result in cost
increases due to necessary systems changes and the development of new
administrative processes. In addition, customers and employees have a
high expectation that we will adequately protect their personal information. If
we fail to comply with these laws and regulations or experience a significant
breach of customer, employee or company data, our reputation could be damaged
and result in lost sales, fines or lawsuits.
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.
Our
financial reporting complies with accounting principles generally accepted in
the United States of America (“GAAP”), and GAAP is subject to change over
time. If new rules or interpretations of existing rules require us to
change our financial reporting (including the adoption of international
reporting standards in the United States), our reported results of operations
and financial condition could be affected substantially, including requirements
to restate historical financial reporting.
Failure
of our internal control over financial reporting could harm our business and
financial results.
Our
management is responsible for establishing and maintaining effective internal
control over financial reporting. Internal control over financial reporting is a
process to provide reasonable assurance regarding the reliability of financial
reporting for external purposes in accordance with GAAP. Because of its inherent
limitations, internal control over financial reporting is not intended to
provide absolute assurance that we would prevent or detect a misstatement of our
financial statements or fraud. Any failure to maintain an effective system of
internal control over financial reporting could limit our ability to report our
financial results accurately and timely or to detect and prevent
fraud. The identification of a material weakness could indicate a
lack of controls adequate to generate accurate financial statements that, in
turn, could cause a loss of investor confidence and decline in the market price
of our common stock. We cannot assure you that we will be able to
timely remediate
any material weaknesses
that may be identified in future periods or maintain all of the controls
necessary for continued compliance. Likewise, we cannot assure you that we will
be able to retain sufficient skilled finance and accounting personnel,
especially in light of the increased demand for such personnel among publicly
traded companies.
Our
annual and quarterly operating results may fluctuate significantly and could
fall below the expectations of securities analysts, rating agencies and
investors 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 is not static – it changes periodically as a result of many factors,
including those discussed above and:
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increases and
decreases in average weekly sales, restaurant and retail sales and
restaurant profitability; |
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the
rate at which we open new locations, the timing of new unit openings and
the related high initial operating costs;
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changes
in advertising and promotional activities and expansion to new markets;
and
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impairment
of long-lived assets and any loss on restaurant closures or
impairments.
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Our
quarterly operating results and restaurant and retail sales may fluctuate as a
result of any of these or other factors. Accordingly, results for any
one quarter are not necessarily indicative of results to be expected for any
other quarter or for any year, and restaurant sales for any particular future
period may decrease. In the future, operating results may fall below
the expectations of securities analysts, rating agencies and
investors. In that event, the price of our securities could fluctuate
dramatically over time or could decrease generally.
We
are a holding company and depend on our subsidiaries to generate sufficient cash
flow to pay dividends and meet our debt service obligations.
We are a
holding company and a large portion of our assets is the capital stock of our
subsidiaries. All of our subsidiaries are guarantors of our obligations
under our credit facility and their stock is pledged as collateral to the
lenders under that facility. As a holding company, we conduct
substantially all of our business through our subsidiaries. Consequently, our
cash flow and ability to pay dividends and service our debt obligations are
dependent upon the earnings of our subsidiaries and the distribution of
those earnings to us, or upon loans, advances or other payments made by these
entities to us. The ability of these entities to pay dividends or make
other loans, advances or payments to us will depend upon their operating results
and will be subject to applicable laws and contractual restrictions contained in
the instruments governing our debt.
The
ability of our subsidiaries to generate sufficient cash flow from operations to
allow us to pay dividends and make scheduled payments on our debt obligations
will depend on their future financial performance, which will be affected by a
range of economic, competitive and business factors, many of which are outside
of our control and are described elsewhere. We cannot assure you that the
cash flow and earnings of our operating subsidiaries and the amount that they
are able to distribute to us as dividends or otherwise will be adequate for us
to pay dividends or service our debt obligations. If our subsidiaries do not
generate sufficient
cash flow from operations, we may have to undertake alternative financing plans,
such as refinancing or restructuring our debt, selling assets, reducing or
delaying capital investments or seeking to raise additional capital. We
cannot assure you that any such alternative refinancing would be possible, that
any assets could be sold, or, if sold, of the timing of the sales and the amount
of proceeds realized from those sales, that additional financing could be
obtained on acceptable terms, if at all, or that additional financing would be
permitted under the terms of our credit agreement. Our inability to
generate sufficient cash flow to pay dividends, to satisfy our debt obligations,
or to refinance our obligations on commercially reasonable terms, would have an
adverse effect on our business, financial condition and results of operations,
as well as on our ability to pay dividends or satisfy our other financial
obligations.
ITEM
1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
PROPERTIES
Our corporate headquarters and
warehouse facilities are located on approximately 128 acres of land owned by the
Company in Lebanon, Tennessee. We utilize approximately 250,000
square feet of office space for our corporate headquarters and decorative
fixtures warehouse. We also utilize 367,200 square feet of warehouse
facilities and an additional 13,800 square feet of office and maintenance space
for our retail distribution center.
In
addition to the various corporate facilities, we have four properties (owned or
leased) for future development, a motel used for housing management trainees and
for the general public, and seven parcels of excess real property and
improvements that we intend to dispose of.
In
addition to the properties mentioned above, we own or lease the following store
properties as of September 24, 2008:
State |
|
|
|
State |
|
|
|
|
|
Owned
|
Leased
|
|
|
Owned
|
Leased
|
|
|
Tennessee
|
36
|
14
|
|
Oklahoma
|
5
|
2
|
|
|
Florida
|
41
|
17
|
|
New
Jersey
|
2
|
4
|
|
|
Georgia
|
32
|
10
|
|
Wisconsin
|
5
|
-
|
|
|
Texas
|
31
|
7
|
|
Colorado
|
3
|
1
|
|
|
North
Carolina
|
25
|
8
|
|
Kansas
|
3
|
1
|
|
|
Ohio
|
22
|
9
|
|
Maryland
|
3
|
1
|
|
|
Kentucky
|
20
|
9
|
|
Massachusetts
|
-
|
4
|
|
|
Alabama
|
18
|
9
|
|
New
Mexico
|
3
|
1
|
|
|
Indiana
|
21
|
6
|
|
Utah
|
4
|
-
|
|
|
Virginia
|
21
|
6
|
|
Iowa
|
3
|
-
|
|
|
Illinois
|
20
|
2
|
|
Connecticut
|
1
|
1
|
|
|
Pennsylvania
|
9
|
12
|
|
Montana
|
2
|
-
|
|
|
South
Carolina
|
14
|
7
|
|
Nebraska
|
1
|
1
|
|
|
Missouri
|
14
|
3
|
|
Delaware
|
-
|
1
|
|
|
Michigan
|
13
|
3
|
|
Idaho
|
1
|
-
|
|
|
Arizona
|
2
|
11
|
|
Minnesota
|
1
|
-
|
|
|
Arkansas
|
5
|
6
|
|
New
Hampshire
|
1
|
-
|
|
|
Mississippi
|
8
|
3
|
|
North
Dakota
|
1
|
-
|
|
|
West
Virginia
|
3
|
7
|
|
Rhode
Island
|
-
|
1
|
|
|
Louisiana
|
7
|
2
|
|
South
Dakota
|
1
|
-
|
|
|
New
York
|
7
|
1
|
|
Total
|
409
|
170
|
|
|
|
|
|
|
|
|
|
|
|
We
believe that our properties are suitable, adequate, well-maintained and
sufficient for the operations contemplated. See “Operations" and
"Unit Development" in Item I of this Annual Report on Form 10-K for additional
information on our properties.
ITEM
3. LEGAL PROCEEDINGS
See Note 14 to our Consolidated
Financial Statements filed or incorporated by reference into in Part II, Item 8
of this Annual Report on Form 10-K, 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)
to Form 10-K, the following information is included in Part I of this Form
10-K.
Executive Officers of the
Registrant
The
following table sets forth certain information concerning our executive
officers, as of September 24, 2008:
Name |
Age |
|
Position
with Registrant |
|
|
|
|
Michael
A. Woodhouse
|
63
|
|
Chairman,
President & Chief Executive Officer
|
|
|
|
|
N.
B. Forrest Shoaf
|
58 |
|
Senior
Vice President, Secretary and General Counsel and Interim Chief Financial
Officer
|
|
|
|
|
Doug
Barber
|
51
|
|
Executive
Vice President & Chief Operating Officer
|
|
|
|
|
Terry
Maxwell
|
49
|
|
Senior
Vice President, Retail Operations
|
|
|
|
|
Edward A.
Greene |
53 |
|
Senior Vice
President, Strategic Initiatives |
|
|
|
|
Robert
Harig
|
58
|
|
Senior
Vice President, Human Resources
|
|
|
|
|
Diana S.
Wynne |
53 |
|
Senior Vice
President, Corporate Affairs |
|
|
|
|
Patrick
A. Scruggs
|
44
|
|
Vice
President, Accounting and Tax, & Chief Accounting
Officer
|
The following information summarizes
the business experience of each of our executive officers for at least the past
five years:
Mr. Woodhouse has been employed by us
in various capacities since 1995. Mr. Woodhouse served as our Senior
Vice President of Finance and Chief Financial Officer from January 1999 to July
1999, as Executive Vice President and Chief Operating Officer (“COO”) from
August 1999 until July 2000, as President and COO from August 2000 until July
2001, and then as President and Chief Executive Officer from August 2001 until
November 2004 when he assumed his current positions. Mr. Woodhouse has 24 years
of experience in the restaurant industry and 15 years of experience in the
retail industry.
Mr. Shoaf began his employment with us
as Senior Vice President, Secretary and General Counsel in April
2005. In addition, in March 2008, he was appointed Interim Chief
Financial Officer. Prior to April 2005, he was Managing Director of
Investment Banking for Avondale Partners, LLC. From 1996-2000, he was
a Managing Director of J.C. Bradford and from 2000-2002, a Managing Director in
the investment banking group of Morgan Keegan, a Memphis, Tennessee based
investment banking firm and head of its Nashville Corporate Finance
Office. He is a graduate of West Point and Harvard Law
School.
Mr. Barber has been employed by us
since 2003. He assumed his current position in 2008. Prior
to that he was with Metromedia Family Steakhouse in various capacities since
1979 and assumed his last position held with Metromedia Family Steakhouse as
President and COO in 1995. Mr. Barber has 29 years of experience in
the restaurant industry.
Mr. Maxwell has been employed by us
since 1980. He assumed his current position in 2006. Mr.
Maxwell has 28 years of experience in the restaurant and retail
industries.
Mr. Greene has been employed by us in
his current capacity since October 2005. From August 1996 to October 2005, he
worked for Restaurant Services, Inc., the independent purchasing cooperative
which provides supply chain management services for Burger King Corporation and
its franchisees, serving most recently as its Vice President, Food and Packaging
Purchasing. Mr. Greene began his career with The Pillsbury Company
and has over 30 years of combined experience in the restaurant and food
processing industries.
Mr. Harig has been employed by us since
2000. He assumed his current position in 2004. Mr. Harig
has over 31 years of experience in the restaurant industry and 8 years in the
retail industry.
Ms. Wynne joined us in January 2006 in
her current capacity. Prior to that, she was Vice President, Treasury
for Blockbuster, Inc. Prior to that she served as Senior Vice
President and Treasurer for Metromedia Restaurant Group. Ms. Wynne began her
career with Price Waterhouse Coopers and has over 29 years of experience in the
restaurant and retail industries.
Mr. Scruggs has been employed by us in
various capacities since 1989. He assumed his current position in
2003. Mr. Scruggs has 19 years of experience in the
restaurant and retail industries.
PART
II
ITEM
5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Our Common Stock is traded on the
NASDAQ Global Market (“Nasdaq”) under the symbol CBRL. There were
11,266 shareholders of record as of September 23, 2008.
The table “Market Price and Dividend
Information” contained in the 2008 Annual Report is presented on page two of
Exhibit 13 to this report and is incorporated herein by this
reference.
If there
is no default then existing and there is at least $100,000 available under our
revolving credit facility, we may both: (1) pay cash dividends on our common
stock if the aggregate amount of such dividends paid during any fiscal year is
less than 15% of Consolidated EBITDA from continuing operations (as defined in
our credit facility) during the immediately preceding fiscal year; and (2) in
any event, increase our regular quarterly cash dividend in any quarter by an
amount not to exceed the greater of $.01 or 10% of the amount of the dividend
paid in the prior fiscal quarter.
Part III, Item 12 of this Annual Report
on Form 10-K is incorporated in this Item of this Report by this
reference.
Unregistered Sales of Equity
Securities
Except as
described in the following paragraphs, we did not sell any equity securities
during the period covered by this Annual Report on Form 10-K that were not
registered under the Securities Act of 1933, as amended.
On May 1,
2007, we issued $375,931 in principal amount at maturity of zero coupon senior
convertible notes due 2032 (the “New Notes”) in exchange (the “Exchange Offer”)
for an identical principal amount at maturity of our previously outstanding
liquid yield option notes due 2032 (the “Old Notes”). The New Notes were issued
in reliance on the exemption from the registration requirements of the
Securities Act of 1933, as amended, set forth in Section 3(a)(9) of the
Securities Act. Therefore, no commission or other remuneration was
paid to any broker, dealer, salesperson, or other person for soliciting tenders
of the Old Notes for the New Notes. The purpose of the Exchange Offer
was to issue New Notes with a “net share settlement” feature. Both
the Old Notes and the New Notes were convertible into 10.8584 shares of our
common stock per $1,000 in principal amount at maturity. The net
share settlement feature, however, allowed us, upon conversion of a New Note, to
satisfy a portion of our obligations due upon conversion in cash rather than
with the issuance of shares of common stock.
The
material terms of the New Notes are described in our exchange circular dated
March 20, 2007 filed as Exhibit (a)(1)(A) to our tender offer statement on
Schedule TO filed with the Commission on March 20, 2007 and the
Supplement to exchange circular dated April 17, 2007 filed as Exhibit (a)(1)(E)
to Amendment No. 1 to our tender offer statement on Schedule TO filed
with the Commission on April 17, 2007.
On June
4, 2007, both the Old Notes and the New Notes were redeemed and none of those
notes remained outstanding. In addition, any common stock issued in
connection with conversions of either the Old Notes or the New Notes was
repurchased during the quarter ended August 3, 2007.
Issuer Purchases of Equity
Securities
We did
not repurchase any of our common stock in the fourth quarter ended August 1,
2008. On July 31, 2008, our Board of Directors approved the repurchase of up to
$65,000 of our common stock. These purchases will be made from time to time
through open market transactions at management’s discretion provided that all
such purchases be made only from free cash flow.
ITEM
6. SELECTED FINANCIAL DATA
The table "Selected Financial Data"
contained in the 2008 Annual Report is presented on page one of Exhibit 13 to
this report and 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 the 2008 Annual
Report, is incorporated into this Item of this Report by this
reference.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
“Quantitative and Qualitative
Disclosures about Market Risk” set forth within “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” contained in the
2008 Annual 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 the 2008 Annual
Report, are incorporated into this Item of this Report by this
reference.
See Quarterly Financial Data
(Unaudited) in Note 17 to the Consolidated Financial Statements.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM
9A. CONTROLS AND PROCEDURES
Our management, with the participation
of our principal executive and financial officers, including the Chief Executive
Officer and the Interim Chief Financial Officer, evaluated the effectiveness of
our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) promulgated under the Exchange Act). Based upon this
evaluation, the Chief Executive Officer and the Interim Chief Financial Officer
concluded that as of August 1, 2008, our disclosure controls and procedures were
effective for the purposes set forth in the definition thereof in Exchange Act
Rule 13a-15(e).
There have been no changes (including
corrective actions with regard to significant deficiencies and material
weaknesses) during the quarter ended August 1, 2008 in our 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, our internal
controls over financial reporting.
Management’s
Report on Internal Control over Financial Reporting
We are responsible for establishing
and maintaining adequate internal controls over financial reporting (as defined
in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934,
as amended). 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 presentation 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 condition and
operations. Our disclosure controls and procedures or our internal
controls cannot and will not 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 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, 2008, 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.
|
/s/Michael
A. Woodhouse |
|
Michael A.
Woodhouse |
|
Chairman, President
and Chief Executive Officer |
|
|
|
/s/N.B. Forrest
Shoaf |
|
N.B. Forrest
Shoaf |
|
Senior Vice
President, Secretary and General Counsel and Interim Chief Financial
Officer |
ITEM
9B. OTHER INFORMATION
None.
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
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 following sections of the 2008 Proxy Statement:
“Board of Directors and Committees,” "Proposal 1: Election of Directors,"
“Section 16(a) Beneficial Ownership Reporting Compliance” and the question “Has
the Board adopted a code of ethics for senior financial officers?” set forth in
“Certain Relationships and Related Transactions.” The information
required by this Item with respect to executive officers of the Company is set
forth in Part I of this Annual Report on Form 10-K.
ITEM
11. EXECUTIVE COMPENSATION
The information required by this Item
is incorporated into this Item of this Report by this reference to the following
sections of the 2008 Proxy Statement: “Executive Compensation” and
the question “How are directors compensated?” set forth in “Board of Directors
and Committees.” The “Compensation Committee Report” set forth
in “Executive Compensation” is deemed to be “furnished” and is not, and shall
not be deemed to be, “filed” for purposes of Section 18 of the Exchange
Act.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The information required by this Item
is incorporated into this Item of this Report by this reference to the sections
entitled "Stock Ownership of Certain Beneficial Owners and Management" and
“Executive Compensation-Equity Compensation Plan Information” in the 2008 Proxy
Statement.
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by this Item
is incorporated into this Item of this Report by this reference to the sections
entitled "Certain Relationships and Related Transactions” and “Who are our
independent directors?” in the 2008 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 “Audit Committee Report - 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 2008 Proxy
Statement. No other portion of the section of the 2008 Proxy
Statement entitled “Audit Committee Report” is, nor shall it be deemed to be,
incorporated by reference into this Annual Report on Form 10-K.
PART
IV
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
(a) |
List of documents
filed as part of this report: |
|
|
|
|
1.
|
The
following Consolidated Financial Statements and the Report of Independent
Registered Public Accounting Firm of Deloitte & Touche LLP of the 2008
Annual Report are included within Exhibit 13 to this Annual Report on Form
10-K and are incorporated into this Item of this Report by this
reference:
|
|
|
|
|
|
Report of
Independent Registered Public Accounting Firm dated September 25,
2008 |
|
|
|
|
|
Consolidated Balance
Sheet as of August 1, 2008 and August 3, 2007 |
|
|
|
|
|
Consolidated
Statement of Income for each of the three fiscal years ended August 1,
2008, August 3, 2007 and July 28, 2006 |
|
|
|
|
|
Consolidated
Statement of Changes in Shareholders' Equity for each of the three fiscal
years ended August 1, 2008, August 3, 2007 and July 28, 2006 |
|
|
|
|
|
Consolidated
Statement of Cash Flows for each of the three fiscal years ended August 1,
2008, August 3, 2007 and July 28, 2006 |
|
|
|
|
|
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 immediately
following the signature page to 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 on this 29th day of
September, 2008.
CBRL
GROUP, INC.
By: /s/Michael A.
Woodhouse
Michael
A. Woodhouse
President
and Chief Executive Officer
Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant in the capacities on this 29th day of
September, 2008.
Name
|
Title
|
/s/Michael A.
Woodhouse
Michael
A. Woodhouse
|
Chairman,
President and Chief Executive Officer
|
/s/N.B. Forrest
Shoaf
N.B.
Forrest Shoaf
|
Senior
Vice President, General Counsel and Secretary and Interim Chief Financial
Officer
|
/s/Patrick A.
Scruggs
Patrick
A. Scruggs
|
Vice
President, Accounting and Tax, and Chief Accounting Officer
(Principal
Accounting Officer)
|
/s/James D.
Carreker
James
D. Carreker
|
Director
|
/s/Robert V.
Dale
Robert
V. Dale
|
Director
|
/s/Richard J.
Dobkin
Richard
J. Dobkin
|
Director
|
/s/Robert C.
Hilton
Robert
C. Hilton
|
Director
|
/s/Charles E. Jones,
Jr.
Charles
E. Jones, Jr.
|
Director
|
/s/B.F.
Lowery
B.F.
Lowery
|
Director
|
_______________
Martha
M. Mitchell
|
Director
|
/s/Andrea M.
Weiss
Andrea
M. Weiss
|
Director
|
/s/Jimmie D.
White
Jimmie
D. White
|
Director
|
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),10(a)
|
Credit
Agreement dated as of April 27, 2006 among CBRL Group, Inc., the
Subsidiary Guarantors named therein, the Lenders party thereto and
Wachovia Bank, National Association, as Administrative Agent and
Collateral Agent (the “Wachovia Credit Agreement”)
(3)
|
|
|
4(e),
10(b)
|
Amendment
No. 1 to the Wachovia Credit Agreement (15)
|
|
|
10(c) |
The Company's
Amended and Restated Stock Option Plan, as amended (4) |
|
|
10(d) |
The Company’s 2000
Non-Executive Stock Option Plan (5) |
|
|
10(e) |
The Company's 1989
Non-Employee Director's Stock Option Plan, as amended (6) |
|
|
10(f)
|
The
Company's Non-Qualified Savings Plan (7)
|
|
|
10(g) |
The Company's
Deferred Compensation Plan |
|
|
10(h) |
The Company’s 2002
Omnibus Incentive Compensation Plan (“Omnibus Plan”) (8) |
|
|
10(i) |
Amendment No. 1 to
Omnibus Plan (7) |
|
|
10(j)
|
Form
of Restricted Stock Award (7)
|
|
|
10(k)
|
Form
of Stock Option Award under the Amended and Restated Stock Option Plan
(7)
|
|
|
10(l)
|
Form
of Stock Option Award under the Omnibus Plan (7)
|
|
|
10(m)
|
Executive
Employment Agreement dated as of August 1, 2005 between Michael A.
Woodhouse and the Company (7)
|
|
|
10(n) |
Change-in-control
Agreement for N.B. Forrest Shoaf dated 5/12/2005 (7) |
|
|
10(o) |
Change-in-control
Agreement for Doug Barber dated 8/23/08 |
|
|
10(p) |
Change-in-control
Agreement for Ed Greene dated 6/22/06 (10) |
|
|
10(q) |
Change-in-control
Agreement for Terry Maxwell dated 8/14/06 (9) |
|
|
10(r)
|
Change-in-control
Agreement for Patrick A. Scruggs dated October 13, 1999
(8)
|
|
|
10(s) |
Change-in-control
Agreement for Diana Wynne dated 6/22/06 (10) |
|
|
10(t) |
Change-in-control
Agreement for Rob Harig dated 8/23/06 (15) |
|
|
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® sites (11)
|
|
|
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®
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® 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® sites*
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|
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10(y)
|
CBRL
Group, Inc. Targeted Retention Plan (12)
|
|
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10(z) |
CBRL Group, Inc.
Stock Ownership Achievement Incentive Plan (12) |
|
|
10(aa) |
2007 Mid-Term
Incentive and Retention Plan (13) |
|
|
10(bb) |
CBRL Group, Inc.
Severance Benefits Policy (13) |
|
|
10(cc) |
Retirement Agreement
(14) |
|
|
10(dd) |
2009 Annual Bonus
Plan (16) |
|
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13
|
Pertinent
portions of the Company's 2008 Annual Report to Shareholders that are
incorporated by reference into this Annual Report on Form
10-K.
|
|
|
21 |
Subsidiaries of the
Registrant |
|
|
23 |
Consent
of Independent Registered Public Accounting Firm - Deloitte & Touche
LLP
|
|
|
31 |
Rule
13a-14(a)/15d-14(a) Certifications |
|
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32 |
Section
1350 Certifications
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*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 (“Securities Act”) (File No. 333-62469), filed
October 9, 1998.
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(2)
|
Incorporated
by reference to Exhibit 4 to the Company’s Current Report on Form 8-K
under the Securities Exchange Act of 1934 (“Exchange Act”), filed
September 21, 1999.
|
(3)
|
Incorporated
by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form
10-Q under the Exchange Act for the quarterly period ended April 28,
2006.
|
(4)
|
Incorporated
by reference to Exhibit 10(g) to the Company’s Annual Report on Form 10-K
under the Exchange Act for the fiscal year ended July 30,
1999.
|
(5)
|
Incorporated
by reference to Exhibit 10(i) to the Company’s Annual Report on Form 10-K
under the Exchange Act for the fiscal year ended August 2,
2002.
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(6)
|
Incorporated
by reference to the Cracker Barrel Old Country Store, Inc. Annual Report
on Form 10-K under the Exchange Act for the fiscal year ended August 2,
1991 (File No. 0-7536).
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(7)
|
Incorporated
by reference to Exhibits 10(f), 10(i), 10(j), 10(k), 10(l), 10(m) and
10(o) to the Company’s Annual Report on Form 10-K under the Exchange Act
for fiscal year ended July 29,
2005.
|
(8)
|
Incorporated
by reference to Exhibits 10(i) and 10(t) to the Company’s Annual Report on
Form 10-K under the Exchange Act for the fiscal year ended August 1,
2003.
|
(9)
|
Incorporated
by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K
under the Exchange Act, filed August 15,
2006.
|
(10)
|
Incorporated
by reference to Exhibits 10.1 and 10.2 to the Company’s Annual Report on
Form 10-K under the Exchange Act for fiscal year ended July 28,
2006.
|
(11)
|
Incorporated
by reference to Exhibit 10.R to the Company’s Annual Report on Form 10-K
under the Exchange Act for the fiscal year ended July 28,
2000.
|
(12)
|
Incorporated
by reference to Item 1.01 to the Company’s Quarterly Report on Form 8-K
under the Exchange Act, filed August 1,
2005.
|
(13)
|
Incorporated
by reference to Exhibits 10.2 and 10.3 to the Company’s Current Report on
Form 8-K under the Exchange Act, filed August 1,
2006.
|
(14)
|
Incorporated
by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K
under the Exchange Act, filed September 21,
2007.
|
(15)
|
Incorporated
by reference to Exhibits 10(b) and 10(v) to the Company’s Annual Report on
Form 10-K under the Exchange Act for the fiscal year ended August 3,
2007.
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(16)
|
Incorporated
by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
under the Exchange Act, filed August 6,
2008.
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31