CRACKER BARREL OLD COUNTRY STORE, INC - FORM 8-K - EX-99.1

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8-K - FORM 8-K - CRACKER BARREL OLD COUNTRY STORE, INC	d491326d8k.htm

Exhibit 99.1

POST OFFICE BOX 787

LEBANON, TENNESSEE

37088-0787

LOGO


Investor Contact:		Lawrence E. Hyatt
		(615) 235-4432

Media Contact:		Jeanne Ludington
		(615) 443-9115

CRACKER BARREL REPORTS RESULTS FOR SECOND QUARTER FISCAL 2013

Positive Comparable Store Traffic, Restaurant and Retail Sales in the Quarter

LEBANON, Tenn. – February 26, 2013 – Cracker Barrel Old Country Store, Inc. (“Cracker Barrel” or the “Company”) (Nasdaq: CBRL) today reported financial results for the second quarter of fiscal 2013 ended February 1, 2013.

Second-Quarter Fiscal 2013 Highlights

•

Compared to the prior year second quarter, comparable store traffic increased 0.2%, comparable store restaurant sales increased 3.3% and comparable store retail sales increased 3.1%.

•

Fifth consecutive quarter of positive comparable traffic, restaurant sales and retail sales, and outperformance of the Knapp-Track^TMcasual dining index.

•

On a GAAP basis, operating income margin was 8.1% of total revenue, compared with 7.0% in the prior year quarter. Adjusted for proxy contest and severance expenses, adjusted operating income margin was 8.4% of total revenue, compared with 7.5% in the prior year quarter. (See non-GAAP reconciliation below.)

•

On a GAAP basis, earnings per diluted share were $1.47, compared to $1.10 in the prior year quarter. Adjusted for proxy contest and severance expenses, and the prior year benefit from the Work Opportunities Tax Credit (“WOTC”), adjusted earnings per diluted share were $1.43 compared to adjusted earnings per diluted share of $1.20 in the prior year quarter. Second quarter GAAP EPS includes $0.19 per diluted share due to the retroactive reinstatement (effective January 1, 2012) of the WOTC, of which $0.09 per share relates to the prior fiscal year. (See non-GAAP reconciliation below.)

Second-Quarter Fiscal 2013 Results

Revenue

The Company reported total revenue of $702.7 million for the second quarter of fiscal 2013, representing an increase of 4.4% over the second quarter of the prior year. Comparable store restaurant sales increased 3.3%, including a 3.1% increase in average check. The average menu price increase for the quarter was approximately 2.6%. Comparable store retail sales were up 3.1% for the quarter. The Company estimates that inclement weather in the second quarter reduced comparable store traffic, restaurant and retail sales by approximately 0.3%. During the quarter, the Company opened one new Cracker Barrel store, for a total of five new store openings year-to-date.

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February 26, 2013

Comparable store restaurant traffic, average check and comparable store restaurant and retail sales for the fiscal months of November, December and January were as follows:


	November			December			January			Second Quarter
Comparable restaurant traffic		0.6	%		-1.9	%		1.6	%		0.2	%
Average check		3.3	%		3.4	%		2.7	%		3.1	%
Comparable restaurant sales		3.9	%		1.5	%		4.3	%		3.3	%
Comparable retail sales		-8.4	%		11.0	%		5.3	%		3.1	%

Fiscal 2012 was a 53-week year. For Fiscal 2013, the Company calculates comparable store traffic, check and sales using the corresponding prior year weeks.

Operating Income

On a GAAP basis, operating income was $57.2 million, or 8.1% of total revenue, in the second quarter of fiscal 2013 compared with $47.3 million, or 7.0% of total revenue, in the second quarter of the prior year. Adjusted for proxy contest and severance expenses, adjusted operating income was $58.9 million, or 8.4% of total revenue, in the second quarter of fiscal 2013, compared with adjusted operating income of $50.6 million, or 7.5% of total revenue, in the prior year quarter. Lower retail cost of goods, restaurant hourly labor expense, and general and administrative expense as a percent of total revenue contributed to most of this operating income margin improvement.

Diluted Earnings Per Share

On a GAAP basis, earnings per diluted share in the second quarter of fiscal 2013 were $1.47, compared with $1.10 in the prior year quarter. During the quarter, Congress retroactively reinstated the WOTC effective to January 1, 2012, which reduced the effective income tax rate in the quarter to 25.0% compared with 29.5% in the prior year quarter, and contributed $0.19 per diluted share to second quarter earnings. Adjusted for proxy contest and severance expenses and the prior-year WOTC benefit of $0.09 per diluted share, adjusted earnings per diluted share were $1.43, an increase of 19.2% over adjusted earnings per diluted share in the prior year quarter.

“This is the first quarter in more than ten years with positive comparable store traffic against a prior-year quarter with positive comparable store traffic,” said Sandra B. Cochran, Cracker Barrel’s President and Chief Executive Officer. “This was also the fifth consecutive quarter of comparable store traffic and sales growth, and of outperforming the Knapp-Track casual dining index. This quarter’s financial results exceeded our expectations and reflect the continued success of our marketing, menu, and operational initiatives. While we remain confident of our ability to execute our strategic plan, we also remain cautious about general economic conditions and consumer spending.”

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February 26, 2013

Fiscal 2013 Outlook

Based upon year-to-date financial performance, continued food commodity pressures, inclement weather in February, the reinstatement of WOTC, and remaining uncertainty in the economic environment, the Company adjusted its previous full year earnings guidance. For fiscal 2013, the Company expects total revenue of between $2.6 billion and $2.65 billion and adjusted earnings per diluted share of between $4.60 and $4.80. The revenue projection for fiscal 2013 reflects the expected opening of eight new Cracker Barrel stores and projected increases in comparable store restaurant and retail sales in a range of 2.0% to 3.0%. The Company projects an adjusted operating income margin of between 7.3% and 7.5% of total revenue for fiscal 2013.

The Company expects to report earnings per diluted share for the third quarter of fiscal 2013 of between $0.90 and $0.95. The Company reminds investors that its outlook for fiscal 2013 reflects a number of assumptions, many of which are outside the Company’s control.

Fiscal 2013 Second-Quarter Conference Call

As previously announced, the live broadcast of Cracker Barrel’s quarterly conference call will be available to the public on-line at investor.crackerbarrel.com on February 26, 2013, beginning at 11:00 a.m. (Eastern Time). An on-line replay will be available at 2:00 p.m. (Eastern Time) and continue through March 12, 2013.

About Cracker Barrel

Cracker Barrel Old Country Store provides a friendly home-away-from-home in its old country stores and restaurants. Guests are cared for like family while relaxing and enjoying real home-style food and shopping that’s surprisingly unique, genuinely fun and reminiscent of America’s country heritage…all at a fair price. The restaurants serve up delicious, home-style country food such as meatloaf and homemade chicken n’ dumplins as well as our signature biscuits using an old family recipe. The authentic old country retail store is fun to shop and offers unique gifts and self-indulgences.

Cracker Barrel Old Country Store, Inc. (Nasdaq: CBRL) was established in 1969 in Lebanon, Tenn. and operates 621 company-owned locations in 42 states. Every Cracker Barrel store is open seven days a week with hours Sunday through Thursday, 6 a.m. – 10 p.m., and Friday and Saturday, 6 a.m. – 11 p.m. For more information, visit: crackerbarrel.com.

CBRL-F

Except for specific historical information, certain of the matters discussed in this press release may express or imply projections of revenues or expenditures, statements of plans and objectives or future operations or statements of future economic performance. These, and similar statements are forward-looking statements concerning matters that involve risks, uncertainties and other factors which may cause the actual

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February 26, 2013

performance of Cracker Barrel Old Country Store, Inc. and its subsidiaries to differ materially from those expressed or implied by this discussion. All forward-looking information is subject to completion of our financial procedures for Q2 FY13 and 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 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,” “should,” “projects,” “forecasts,” or “continue” (or the negative or other derivatives of each of these terms) or similar terminology and include the expected effects of operational improvement initiatives, such as new menu items and retail offerings. Factors which could materially affect actual results include, but are not limited to: the effects of uncertain consumer confidence, higher costs for energy, general or regional economic weakness, weather on sales and customer travel, and discretionary income or personal expenditure activity of our customers; our ability to identify, acquire and sell successful new lines of retail merchandise and new menu items at our restaurants; our ability to successfully implement or sustain plans intended to improve operational or marketing execution and performance; changes in or implementation of additional governmental or regulatory rules, regulations and interpretations affecting tax, wage and hour matters, health and safety, pensions, insurance or other undeterminable areas; our ability to successfully implement plans intended to promote or protect our brands and products; commodity price increases; the ability of and cost to us to recruit, train, and retain qualified hourly and management employees in an escalating wage environment; the effects of increased competition at our locations on sales and on labor recruiting, cost, and retention; workers’ compensation, group health and utility price changes; consumer behavior based on negative publicity or concerns over nutritional or safety aspects of our food or products or those of the restaurant industry in general, including concerns about pandemics, as well as the possible effects of such events on the price or availability of ingredients used in our restaurants; the effects of our substantial indebtedness and associated restrictions on our financial and operating flexibility and ability to execute or pursue our operating plans and objectives; changes in interest rates or capital market conditions affecting our financing costs and ability to refinance all or portions of our indebtedness; the effects of business trends on the outlook for individual restaurant locations and the effect on the carrying value of those locations; the availability and cost of suitable sites for restaurant development and our ability to identify those sites; changes in land, building materials and construction costs; the actual results of pending, future or threatened litigation or governmental investigations and the costs and effects of negative publicity associated with these activities; practical or psychological effects of natural disasters or terrorist acts or war and military or government responses; disruptions to our restaurant or retail supply chain; changes in foreign exchange rates affecting our future retail inventory purchases; implementation of new or changes in interpretation of existing accounting principles generally accepted in the United States of America; and other factors described from time to time in our filings with the Securities and Exchange Commission, press releases, and other communications.

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February 26, 2013

Any forward-looking statement made by us herein, or elsewhere, speaks only as of the date on which made. We expressly disclaim any intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

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February 26, 2013

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED INCOME STATEMENT

(Unaudited)

(In thousands, except share and per share amounts, percentages and ratios)


	Second Quarter Ended							Six Months Ended
	2/1/13			1/27/12			Percentage Change	2/1/13			1/27/12			Percentage Change
Total revenue	$	702,671		$	673,234		4%	$	1,330,122		$	1,271,671		5%
Cost of goods sold		244,187			235,391		4		442,045			421,698		5

Gross profit		458,484			437,843		4		888,077			849,973		5
Labor and other related expenses		244,871			234,933		4		477,610			455,901		5
Other store operating expenses		122,586			119,136		3		238,451			228,180		5

Store operating income		91,027			83,774		9		172,016			165,892		4
General and administrative expenses		33,830			36,437		(7)		69,511			73,931		(6)

Operating income		57,197			47,337		21		102,505			91,961		12
Interest expense		10,293			11,025		(7)		21,005			22,160		(5)

Pretax income		46,904			36,312		29		81,500			69,801		17
Provision for income taxes		11,736			10,703		10		23,140			20,390		14

Net income	$	35,168		$	25,609		37	$	58,360		$	49,411		18


Earnings per share – Basic:	$	1.48		$	1.11		33	$	2.47		$	2.16		14

Earnings per share – Diluted:	$	1.47		$	1.10		34	$	2.45		$	2.13		15


Weighted average shares:
Basic		23,711,235			22,968,002		3		23,644,405			22,919,451		3
Diluted		23,945,236			23,306,177		3		23,866,431			23,225,963		3

Ratio Analysis
Total revenue:
Restaurant		75.2	%		74.8	%			77.6	%		77.5	%
Retail		24.8			25.2				22.4			22.5

Total revenue		100.0			100.0				100.0			100.0
Cost of goods sold		34.8			35.0				33.2			33.2

Gross profit		65.2			65.0				66.8			66.8
Labor and other related expenses		34.8			34.9				35.9			35.9
Other store operating expenses		17.4			17.7				18.0			17.9

Store operating income		13.0			12.4				12.9			13.0
General and administrative expenses		4.9			5.4				5.2			5.8

Operating income		8.1			7.0				7.7			7.2
Interest expense		1.4			1.6				1.6			1.7

Pretax income		6.7			5.4				6.1			5.5
Provision for income taxes		1.7			1.6				1.7			1.6

Net income		5.0	%		3.8	%			4.4	%		3.9	%

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February 26, 2013

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share amounts)


	2/1/13		8/3/12
Assets
Cash and cash equivalents	$	186,148	$	151,962
Property held for sale		882		884
Accounts receivable		13,338		14,609
Inventory		139,567		143,267
Prepaid expenses		19,229		11,405
Deferred income taxes		9,206		15,181
Property and equipment, net		1,017,930		1,022,370
Other long-term assets		59,301		59,314

Total assets	$	1,445,601	$	1,418,992


Liabilities and Shareholders’ Equity
Accounts payable	$	85,109	$	101,271
Other current liabilities		220,585		217,788
Long-term debt		512,500		525,036
Interest rate swap liability		14,911		14,166
Other long-term obligations		116,660		114,897
Deferred income taxes		61,543		63,159
Shareholders’ equity, net		434,293		382,675

Total liabilities and shareholders’ equity	$	1,445,601	$	1,418,992


Common shares issued and outstanding		23,728,808		23,473,024

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February 26, 2013

CRACKER BARREL OLD COUNTRY STORE, INC.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

(Unaudited and in thousands)


	Six Months Ended
	2/1/13			1/27/12
Cash flows from operating activities:
Net income	$	58,360		$	49,411
Depreciation and amortization		32,357			31,339
Loss on disposition of property and equipment		1,465			1,258
Share-based compensation, net of excess tax benefit		4,120			5,791
Increase in inventories		3,700			14,371
(Decrease) in accounts payable		(16,162	)		(6,087	)
Net changes in other assets and liabilities		(2,860	)		17,876

Net cash provided by operating activities		80,980			113,959

Cash flows from investing activities:
Purchase of property and equipment, net of insurance recoveries		(29,329	)		(38,719	)
Proceeds from sale of property and equipment		333			477

Net cash used in investing activities		(28,996	)		(38,242	)

Cash flows from financing activities:
Net payments for credit facilities and other long-term obligations		(58	)		(76	)
Proceeds from exercise of share-based compensation awards		2,622			2,137
Excess tax benefit from share-based compensation		1,289			155
Dividends on common stock		(21,651	)		(10,822	)

Net cash used in financing activities		(17,798	)		(8,606	)


Net increase in cash and cash equivalents		34,186			67,111
Cash and cash equivalents, beginning of period		151,962			52,274

Cash and cash equivalents, end of period	$	186,148		$	119,385

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February 26, 2013

CRACKER BARREL OLD COUNTRY STORE, INC.

Supplemental Information

(Unaudited)


	Second Quarter Ended				Six Months Ended
	2/1/13		1/27/12		2/1/13		1/27/12

Units in operation:
Open at beginning of period		620		606		616		603
Opened during period		1		2		5		5

Open at end of period		621		608		621		608

Total revenue: (In thousands)
Restaurant	$	528,155	$	503,531	$	1,032,469	$	985,040
Retail		174,516		169,703		297,653		286,631

Total revenue	$	702,671	$	673,234	$	1,330,122	$	1,271,671


Cost of goods sold: (In thousands)
Restaurant	$	146,338	$	138,456	$	281,521	$	266,152
Retail		97,849		96,935		160,524		155,546

Total cost of goods sold	$	244,187	$	235,391	$	442,045	$	421,698


Average unit volume: (In thousands)
Restaurant	$	850.5	$	828.3	$	1,665.7	$	1,625.5
Retail		281.0		279.1		480.2		473.0

Total	$	1,131.5	$	1,107.4	$	2,145.9	$	2,098.5


Operating weeks:		8,073		7,903		16,116		15,756


	Q2 2013 vs. Q2 2012			6 mo. 2013 vs. 6 mo. 2012

Comparable store sales period to period increase:
Restaurant		3.3	%		3.3	%
Retail		3.1	%		2.5	%

Number of locations in comparable store base		600			596

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Cracker Barrel Reports Second Quarter Results

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February 26, 2013

CRACKER BARREL OLD COUNTRY STORE, INC.

Reconciliation of GAAP basis operating

results to adjusted non-GAAP operating results

(Unaudited and in thousands)

The Company makes reference in this release to “adjusted store operating income,” “adjusted operating income,” “adjusted net income,” “adjusted earnings per diluted share,” and “adjusted general and administrative expenses,” excluding the impact of severance and proxy contest expenses and the retroactive restatement of the work opportunities tax credit. The Company believes that excluding these items and their related tax effects from its financial results reflects operating results that are more indicative of the Company’s ongoing operating performance while improving comparability to prior periods, and as such, may provide investors with an enhanced understanding of the Company’s past financial performance and prospects for the future. This information is not intended to be considered in isolation or as a substitute for operating income, net income, or earnings per share or expense information prepared in accordance with GAAP.


	Second Quarter ended February 1, 2013							Second Quarter ended January 27, 2012
	As Reported		Adjust			As Adjusted		As Reported		Adjust			As Adjusted
			(1) (2) (3)							(1)

Store operating income	$	91,027	$	—		$	91,027	$	83,774	$	—		$	83,774
General and administrative expenses		33,830		(1,726	)		32,104		36,437		(3,249	)		33,188

Operating income		57,197		1,726			58,923		47,337		3,249			50,586
Interest Expense		10,293		—			10,293		11,025		—			11,025

Pretax income		46,904		1,726			48,630		36,312		3,249			39,561
Provision for income taxes		11,736		2,637			14,373		10,703		958			11,661

Net income	$	35,168	$	(911	)	$	34,257	$	25,609	$	2,291		$	27,900


Earning per share – Basic	$	1.48		(0.04	)	$	1.44	$	1.11	$	0.10		$	1.21
Earning per share – Diluted	$	1.47		(0.04	)	$	1.43	$	1.10	$	0.10		$	1.20

	Six months ended February 1, 2013							Six months ended January 27, 2012
	As Reported		Adjust			As Adjusted		As Reported		Adjust			As Adjusted
			(1) (2) (3)							(1)

Store operating income	$	172,016	$	—		$	172,016	$	165,892	$	—		$	165,892
General and administrative expenses		69,511		(5,634	)		63,877		73,931		(5,203	)		68,728

Operating income		102,505		5,634			108,139		91,961		5,203			97,164
Interest Expense		21,005		—			21,005		22,160		—			22,160

Pretax income		81,500		5,634			87,134		69,801		5,203			75,004
Provision for income taxes		23,140		3,847			26,987		20,390		1,520			21,910

Net income	$	58,360	$	1,787		$	60,147	$	49,411	$	3,683		$	53,094


Earning per share – Basic	$	2.47	$	0.07		$	2.54	$	2.16	$	0.16		$	2.32
Earning per share – Diluted	$	2.45	$	0.07		$	2.52	$	2.13	$	0.16		$	2.29

(1)	Charges and tax effects of the proxy contest concluded at the Company’s annual meeting of shareholders.

(2)	Severance, other charges and tax effects related to organizational changes.

(3)	Provision for taxes adjusted to exclude the $2.1 million prior year favorable effect of the retroactive reinstatement of the work opportunity tax credit

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CRACKER BARREL OLD COUNTRY STORE, INC - FORM 8-K - EX-99.1 - February 26, 2013

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CRACKER BARREL OLD COUNTRY STORE, INC Reports